Viking

Carvel46, thanks for the link... if you follow and scroll down you can also access Jesse Livermore's How To Trade In Stocks (1940 ed). Love reading historical stuff!

I am hoping: 1.) with their recent ratings upgrade this will help them attract business at better rates 2.) other companies (to survive) are being less conservative with their reported underwriting numbers (which we will not know for years... i.e. look at all the stuff that came out of the closet in 2000-2005). I would like to see FFH improve with their underwriting results. That would make this stock a core, long term hold in my mind.

I think Fairfax is a very hard company for most people to wrap their head around. I am not sure how institutions would value the company. Their business model has evolved so much over the past 36 months. You cannot simply look at what has happened the past 5 or 10 years and then simply roll that forward. For insurance companies, most analysts lean heavily on predictable operating earnings. Looking at FFH the past 5 or 10 years on this metric would be difficult. How do you build in investment gains? Canwest? Abitibi? They have made some interesting purchases. Bottom line is the majority on this board feel good about FFH's future because they TRUST management and feel the bets they have made (and will make in the future) will work out (similar to the past 5 years). FFH appears to be evolving into a hedge/mutual fund with their core business being earning above average earnings off their investment float. I expect their share price to continue to have a lot of volatility as Mr Market does its thing.

On Friday I also bought a small position in BRK.B and smaller in Wells Fargo - WFC. I am debating if I should increase BRK to 10% of my net worth. If it sells off, I would double up. Rather than pick up the individual names (i.e. WFC) just go with BRK at current prices. FFH also got my attention today.

Boy have I been sounding bearish lately! Regarding home prices, some large markets like Vancouver saw increases in excess of 100% since 2000. In Vancouver, sales are off more than 50% and listings are up 50%. Months of inventory are at historic highs. This spring will tell the take (outright bust of simple slowdown). If prices fall another 20% this year (in Vancouver) someone will be taking it on the chin. Want to see serious oversupply? Check out the Vancouver condo market (I also read somewhere that Toronto is the condo capital of NA). The economy is just starting to slow in Vancouver. We are about 12-18 months behind the US. 18 months ago everyone in the US thought everything was going to be just fine. Yes, our banks appear to be in better shape than the US and our mortgage practices appear to have been more disciplined. However, given the size of the bubble (yes, it was a bubble) and as the economy slow and unemployment increases we will see our fair share of pain. Time will tell how our institutions will fare.

Uccmal, don't worry, I have thick skin. "Why should company earnings get worse going forward?" Regarding earnings, yes, the financials have taken some very large write offs. However, many of the commodity companies posted very high earnings in 2008. As well, as the economy slows in 2009 and unemployment increases I would expect the sectors of the economy that rely on consumer spending to also post year over year declines in earnings. What sector (ex gold companies) do you think will post growing earnings in 2009? "Your friends and financial advisor do not represent the general markets which are down 45% on massive volume - obviously the majority were selling" True. However, my guess is much of the was driven by institutionals (i.e. Caisse). "According to Buffet, we are supposed to greedy when others are fearful. Are you guys still waiting for the more fearful moment to come? Last Nov was pretty scary." Yes it was. But most people are still COMPLACENT. They fully expect the good old days to start up again. Everyone has had a scare, but my guess is most have not changed their outlook or more importantly portfolio weightings (to any great degree). From my perspective, to be fully invested right now one has to have some sort of strong view of what will be happening in the economy over the next 12-18 months. I think the stock market expects the government to figure this thing out and a recovery to be on the way in 2H 2008. I am not so sure. As I have said before, if I am wrong I forgo some return. If I am right I am positioned very well. I missed the downdraft last year but got roughed up in Dec. Early Jan bailed me out. What I learned last year is that the current environment is VERY trecherous. I just don't think we have seen the worst of it.

2008 was the year of the financial crisis. 2009 will be the year the recession hits. - The bad news has not yet hit mainstreet. Unemployment will likely hit double digits. - Company earnings will likely get worse going forward (not just financials). Talking to my friends and financial advisor it appears to me that most people are very fearful but still 'invested for the long term'. Most research pieces I read bank on a 2H 2009 recovery (as all the stimulus takes hold). The scenario most think unlikely is another 30% drop in the markets. I was reading somewhere that investors in the Great Depression did not get wiped out with the '29 crash in the markets as they bounced back somewhat in '30. It was the 30 to 32 fall that really cleaned people out. My read is the risk of a further material drop is quite high. I do not see enough upside opportunity in the next 12 months to want to risk my capital. I will invest a small part of my portfolio to take advantage of some opportunities. However, capital preservation is my new mantra.

I'm not sure what this has to do with W Buffett??? Peter married her mother. Peter has lots of cash. If anyone should be discussed in this article is it not him? Perhaps we have not heard the whole story...

My strategy today is simply to keep what I have = capital preservation. I think people are wayyy to optomistic about how cheap the market is, how cheap companies are etc etc. Yes, in 12 months we will look back and there will have been certain sectors and companies that will have done extremely well. Individuals who invested in said companies will have performed very well and may attribute it to skill. I think we are in a very dangerous time. Paradigms are shifting. What was 'common sense' will no longer be so. This is not a regular recession. Cash is king. We are no where near then end of the pain... how can one 'invest' right now and not have a better understanding of whether we are in the 2nd inning or the 7th inning of this mess?

Packer, I see the amount they have fallen and also am tempted. But I wonder if asset prices continue to fall (i.e. stocks and corporate bonds continue to fall in value) and with treasuries at such low yields are life insurers still too speculative to consider as a sound long term investment. Sorry for not answering your question!

I agree with what CM proposes... However, US politics appear to be so divided (kind of like BC politics) and so interest group driven I do not have much confidence that his advice will be taken seriously.