Santayana

10 years ago I could buy a beer after work for $5, tax and tip included. Now I can't do it for $10.

https://fred.stlouisfed.org/series/CUUR0000SEHA https://fred.stlouisfed.org/series/CSUSHPINSA It may have accelerated post-Covid, and of course there is a lot of regional variation. But both rents and home prices were increasing faster than 3% over that time. I'll withdraw my comment about *extreme* inflation, although where I live the numbers are much higher than the average, but it's still 50% higher that their target inflation rate. Inflation has been real for much longer than the CPI tells us.

The problem with that argument is that it ignores the extreme housing inflation we've had for the past 10 years while rates have been extremely low almost that entire time.

I think he meant he was 100% Fairfax vs. also holding some Fairfax India.

To me, what's really highlighted here is how much order of returns matter. Equities basically went sideways for 20 years from the 1973 highs while bonds were giving substantial returns. If the interest rate moves had been reversed, very low rates at the beginning and double digit rates more recently, the numbers would be very different.

You are assuming that the bond investor took that interest payment every 6 months and just buried it in their backyard rather than reinvesting.

I don't think there is an onus on anyone on this board to prove their assertions to anyone else. If you're convinced an argument is wrong and want to disregard it, that is on you. I think the point he was trying to make is that a savvy bond investor would have outperformed equities over that time especially given the huge advantages the bond investor had in the first half of that time period. Will we ever see a time like that again? I don't think so, but that's what makes a market.

Good point. Though honestly you'd have to pay me more to do that kind of work than engineering work!

I think it's fair to question whether they're asking for to much, but I really wouldn't call them unskilled labor. You don't want your car assembled by guys that jumped in the back of your truck in front of Home Depot.

A much better comparison would be stocks with dividends reinvested and bonds with the semi-annual interest reinvested.

One problem with trying to compare the two is the idea of just buying and holding from some arbitrary starting point without ever adding new capital.

I'm not necessarily saying that's the sensible comparison to make. But it is what Dinar and TwoCitiesCapital were talking about.

Are you sure you looked at the performance of the 30 year over that entire time?

In my house we go through a couple dozen per week, so those 6 dozen wouldn't even last a month!

I completely understand @Munger_Disciple's points about the risks, but I feel like the biggest risks to Fairfax at this are actually industry risks, and that Fairfax is better positioned than most right now.

M

I feel certain that he thinks IV is far higher than 25% above BV, which he says he thinks is understated.

Took a flier on some TSLA puts. November 275.

And/or close out the TRS position.

And on good volume...

SPY puts 2 years out. Don't think it will take much to pop VIX back above 20 even if just for a minute.

Whoever the counterparty is, I can't imagine they're not hedged.

Unfortunately what "should be" isn't the reality of many people. Where I live, the cheapest single family home currently on market is $419,000 for a 780 sq/ft 2BR/1BA. The median household income is $54,000.

I've got a 3% mortgage. Taxes and insurance make up about a 1/3 of my total payment, and those are definitely going up faster than my income.

Schwab charges me $6.95.