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Does anyone else want to meet up before the dinner? I should arrive in Toronto a little after noon. Packer

Maybe I will go off a cliff but there still appear to be many bargains out there namely: SGA (getting closer to FV), SALM, LNET, FLL, MGAM, SURW, OWW, WOLF, AM, CKEC, NRG, GRVY, TSYS, CSC, ITEX, WDC, LXM and SSW. All of these sell @ FCFx less than 7x and don't include some of the interesting financial like AGO, MBI, BAC.WTA and PNC.WT. Warning my portfolios typically go down by the same amount as the market but up more. Packer

I think the price the hedge is going for makes a huge difference on whether you buy it or not. FFH got a great deal on its deflation hedge. Packer

You are right I must have messed up the meeting time and place

There is a chapter in the book about Peter Cundill "There's Always Something to Do" Chapter 19 Packer

I agree they typically are not high quality names but there are few gems in these screens and they typically are small and have some hair on them. Two that I owned from looking at names from an industry perspective are SURW and SGA. These 2 have had a good run though. One other I am looking at now is ACY. Packer

If you go on the AAII site (if you are a member), they track many value screened ideas over time. The screens also provide a good source of ideas. This shows how well each of the value screens works over time. As you would expect it, the outperformance varies over time. One interesting observation is that these screens appear to better in upswings than the market and about the same in downswings. I wonder how much of the outperformance of value managers in downswings is due to holding cash versus equities that decline less. I have observed the same thing with my typically 100% equity portfolio. Packer

I agree that they have bad options but if they don't have a long term goal (lets say debt level to GDP or some other type of mesaure) then you wander for years frittering away your savings. Look at Japan. It has huge trade surpluses (giant importations of wealth) and a large savings rate (2 great wealth building characteristics) and still has racked huge amounts of debt trying to stimulate an unsustainable level of demand for its country. With population declines, demand/GDP should go down at least relatively. This artifical demand (created by polititians) will eventually eat away at real demand as the money borrowed has to be paid back. I think Japan's best option to get out of this spiral is a partial default. Iceland provides the best example of how this actally works versus Japan is an example of how not to deal with debt. BTW, that may be our only option in the US if we cannot correct this problem soon. This is my issue with many of these economists is that they appear to think that demand can be created out of thin air by the gov't by borrowing. All you are doing is borrowing from tommorows demand to pay for todays growth. This apparent demand can be like a narcotic hooking a country until it becomes too late to do anything but default. I think a Japanese default would be a good lesson to show that governments will not continue to crush its citizens with taxes to pay for debt they should not have incurred in the first place. Packer

These are nice ways to deal with the problem in the short/intermediate term but what is Koos end game and are the actions getting any closer to that result. I would think the goal would be to balance supply and demand, however, with the gov't pumping demand how does it ever get into balance? Maybe in Japan it is to increase consumer demand but is gov't deficit spending the way to do it or does it just dig a deeper hole that has to paid for with tax increases further lowering demand? Could Japan be going in a spiral the wrong way? Increasing debt and decreasing future demand via higher taxes or default? Default may be a way to break this downward spiral and provide money to create demand. One contrary thought is that the prescription for Japan/China and the US today may be different due to savings habits and that may also be why the stimulus worked in China and in the US in the 1930s but not here today. Given the propensity to save in China and Japan, the gov't acts contrary by forcing spending via projects (which in China's case added value versus Japan's which added less value). If there is propensity to spend in the US shouldn't we provide incentive to go against the wind and save? Just a few thoughts. Packer

Am I missing something? How does borrowing more money for stimulus help the problem of overindebtiness? As far as I can see Japan is still not of its balance sheet recession, so why would you want to take this advice until it is shown to work. As far as I can see, the reason Japan has not collapsed is internal investors have funded deficit spending in exchange for small returns (in essence the gov't has consumed the savers savings). An interesting point will occur when Japan can no longer rely on internal savings to fund this spending. I suppose a default will occur as has always occured to lighten the debt load and the savings will be gone. If someone can show me where I seem to have missed something that would great. Packer

Sanjeev, I agree with you but I have found these books to provide a good introduction (before reading the Intelligent Investor) to value investing. Many in my family who are beginners liked the Little Book as it was wrtitten in a story format and easy to read. Just my 2 cents. Packer

I agree we need to do something about entitlements and it looks like both sides are putting out plans (Ryan plan on one side and Obama's plan next week). This is the best news I have heard in awhile. We really need to do something because at this point we are winning the 2011 budget balance to GDP contest @ 9.9% per the last page of the Economist and the baby boomers are just starting to retire. Even Greece has a lower ratio @ 8.1%. Packer

Last year at the Fairfax dinner it was described as follows. Others please add detail if you can, my memory may not be the greatest. In the mid-2000s, the folks at Fairfax were looking for a place to invest some funds and could not find very many places to invest. They felt the structured finance area (subprime mortgages and related insurance cos) were vulnerable due to the bad loans originated. Before 1986, they invested in CDSs (see page 10 of 2008 for details of losses and gains) and lost a cumulative total of 75% of value by year end 2006 and invested more at that time. Doubling down before the big crash. The key aspect for these instruments is they were like buying put options on subprime bonds and related firms bonds for very small premiums (like picking up pennys in the front of a steam roller). Another trade is described in the "Big Short" in detail if you need more info. Packer

In theory this is fine but in pratice it can be much more complicated especially when the wealth is in the form of a privately held business or real estate/farm. In Buffett's case, the problem is simple due his investment fund being BRK's primary asset (even his non security assets were not personally built by him). But, in the case of a private businessman who wants to pass his business/farm to his children who also want to run the business does it make sense to have them to pay cash on an inherited illiquid asset and in some cases force them to sell non-liquid assets to pay a gov't bill? Packer

Unfortunatley (as a US resident), the procrastination in making a reservation for the FFH meeting has cost me $. Packer

Has anyone found a broker that allows you to trade foreign securities in an IRA account? I know TD Ameritrade does not and was wondering if anyone is doing this today. TIA Packer

Top 10 represent about 80% of portfolio. 3 major industry groups represent about 90% + Media/Telecom/Entertainment - ACME, SALM, SGA, SURW, LICT, LNET, MGAM, WOLF, FLL Finance/Insurance - FFH, SSW Energy - NRG, Petrobank and PetroBaaken and smaller O&G plays This is the limit of my circle of competance today. I would like to expand to banks as I think these will recover as RE improves. Packer

Thats what it appears on the surface but once you dig you will see both have growth prospects because for SGA's focus on the local community versus the large consolidators and SALM's focus on a growing demo versus an overall decline. Packer

How about some radio assets like SALM and SGA. These are both throwing off alot of FCF and have defined niches (SGA small town stations and SALM in the Christian demo). Another play could be SURW as they could fund the fiber build-outs arond their core rings. Distribution companies that also throw off FCF but have defendable niches are DIT and CORE. Packer

I agree. If style boxes were the answer, then Morningstar would be hitting the ball out of the park. These tools are primarily for those who don't as Marty Whitman (I think Ben Graham also) says have the "know how", therefore, are relying on diversification. And the best way to get diversification (if this is what you want to do) as Bogle and others have stated is a low-cost index fund. You can also add a value tilt to this as Greenblatt and others do to add some additional value. I think the real way to determine if a manager is good and fits your style is to examine his largest holdings and see if they fit your investment style. As for McElvaine, he has many securities I would hold (Glacier Media, Swiss Decaf Coffee Income Fund (love that name) and EGI Financial probably the cheapest auto insurer in NA today among others) so I would be attracted to this fund. The same goes for the Chou Fund. If you approach fund selection this way, I think you will have a focused list of buyers that fits your style the best. Just my 2 cents. Packer

I look at the allocation a little more broadly to include income producing stocks (SSW and FTR) in the bond category as they are the same as bonds (from a cash flow perspective) with a different name. Packer

I think you have to look at more than past record to get an idea of future expectations. You have to look at process and would you buy these securities for your own portfolio. One item Tim has erred on has been allocation weighting which he has commented on and fixed. If you look at his portfolio today, I think it is great. Past performance is only indicative of future performance if you use the same strategies as in the past. Tim has learned to stay away (or at least not highly weight) from too leveraged firms ( I had and still may have this issue myself) and his portfolio today looks different than the only produced the large losses. I had the same issue in 2008 being down about 50% but changed some holdings in 2009 and ended up over 110%. Tim has just changed a little later so I think he should recover also. Just my 2 cents. Packer

Depending on where the land is there has been some transactions in water rights especially in the Western states. There are a number of publications which publish transactions. I can look these up if you can tell me which state it is in. A few years ago we valued one of these types of assets. There are four publicly traded water rights cos: PICO (also an insurance co.), Pure Cycle, Cadiz and Two Rivers along with water rights being buried in some operating water utilities. Packer

Has anyone read The Great Wave: Price Revolutions and the Rythm of History? It provides some good insight into the history of prices what drives them and thier relation to demogrphics. Its thesis is that we are at the end of a price revolution and the future will be more deflationary than inflationary due to demographics. Historically, price revolutions have not ended well (the last one ended in the French Revolution and the Napoleanic Wars). However, some of the causes of the revolutions have been removed (progressive taxation which has provided for lower incomes some of the wealth generated from the top and the depedence of large portions of the the economy of agriculture and weather). However, some of his observations may be telling. In the periods of price revolutions, the holders of capital assets (land and money) do well versus labor. However, in times of price stabilty the opposite occurs (labor - real wages increase) and land and money decreases in value. At the end of the price revolutions there is a lag where wealth inequality increase for a while then it becomes more stable as labor gets a larger piece of the pie. Interesting reading and falls in place with FFH's thinking. Packer

Salem or Saga Communications or possibly Sure West. All three have great return on assets and generate alot of excess cash. Packer