twacowfca

Glad to be helpful. :)

Statistically, you played it right. Run ups in price after favorable earnings reports tend to peter out quickly. :) This seems to conflict with the numerous studies on Post Earnings Announcement Drift. I would argue that prices tend to drift in the direction of beat or miss for some time (weeks to months) after earnings. Am I mistaken? Perhaps the play on these options is to have an actual (or mental) rolling stop in place to participate in the drift? Just a thought. That's often the case to a modest degree except in bearish markets, but the time decay on short term options compels a quick exit while real and implied volatility is high. Most price curves that I've seen for post earnings announcement drift show a sharp bump up after a multi sigma big positive surprise and then a pause with often a slight decline before the price begins to slowly drift upward. :)

Statistically, you played it right. Run ups in price after favorable earnings reports tend to peter out quickly. :)

Good perspective. However, beyond the motivation to demonstrate an action that shows the owner cares about his staff and customers, it's not irrational to assume that the risk of another robbery happening there is greatly increased. Robbers like targets of opportunity and tend to revisit the scenes of successful crimes, especially if protection isn't visibly increased.

A flood of macro views on this board or by pundits with hypergraphia (think Tilson) signals a paucity of compelling investment ideas: a yellow flag if not a red one for future returns. ???

Right. Did this change yesterday? No. Will it change in the near future? Very unlikely. Where will all those people who sold gold going to put the money? Yan? Yuan? Euro? Bitcoin? Commodities? Everyone starting to realize the real China story and its implications. US stocks are IT. There is not going to be a real crash just yet, maybe a quick dip. I'm still holding on. Agreed. The spigot is still wide open. M2 and WSBASE continue the acceleration in expansion of recent quarters. This is the big driver that has overwhelmed the tendency for an overvalued market to return to its moorings. However, any hint of a pullback from QE in the last two years has prompted the market to decline significantly. The S&P put we bought is merely a little insurance against being trampled in the rush to the exit when that fateful day arrives.

I hedged the BAC with $12 puts 2014 in my taxable. In my RothIRA, I bought the BAC $12 2014 calls. That freed up my buying power to head back into FFH. Worst case, FFH declines and I also lose the value of the BAC put. I'm willing to eat that additional loss because I believe in the end BAC will turn out really well -- I just may have to roll calls along for a while. I also today hedged 20% of notional with Russell 2000 puts. This leaves me with: 100% notional long BAC (85% hedged at $12 strike, and 15% hedged at $10 strike) 87% notional long FFH 20% notional short IWM (Russell 2000) I didn't do this as a reaction to the markets today. I did this after meeting another board member yesterday. I talked about what I was doing and went home firmly convinced that it was still too risky. So I planned to move the majority of the BAC puts to $12 and bought more FFH. Then I decided to add the Russell 2000 puts. I don't know, I just suddenly got extremely bearish. Normally, I'm the most optimistic. But I thought about how I'm usually the last to lose my nerve during bull markets, so I used that logic to convince myself that if I'm getting this nervous then it's time to do more than just worry about it. We bought a sizeable SPY put last week as a hedge. We do this periodically when the market reaches a possible turning point. Sometimes we win big on these, but more than half the time we have to eat a modest loss. Why now? 1) "Sell in May, and go away",draws nigh. 2) higher taxes plus spending cuts are starting to bite. 3) the "Illustrious Ruler" demigod of N Korea may let the genie of war out of his bottle. It's been quite some time since we've had a nuclear war. 4) The Fed is between a rock and a hard place. 5) 90% of portfolio managers who make decisions by anticipating what The Fed will do are between a rock and a hard place. 6) Valuations are high, entirely sustained by the biggest spigot of liquidity ever in the US. 7) etc. etc. etc.

Yup. That was first said before the share repurchase announcement up to 110% of BV in September, 2011. I think Warren and the BRK BOD had prearranged to have a share repurchase announcement read upon the announcement of his death. Now, with the most recent repurchase threshold at 120% of BV, there is less room for a big bounce. Warren has recently stated that BRK's IV is definitely more than 120% of BV, but he wasn't sure one could say that BRK was definitely undervalued at 130% of BV or 135% of BV. Therefore, upon his death, I would expect a raise of the repurchase threshold to be up to no more than 125% to 129% of BV or perhaps prearranged to be at the closing price on the day before that announcement.

Yup. Adams was no dummy, but a big reason he was successful was that he listened to Abigail, at least some of the time. :) I am skeptical… Europe IS NOT the US. It has never been, and I don’t understand why it should ever become to resemble the US… Like Mrs. Thatcher was used to saying: “In my lifetime all the problems have come from continental Europe, and all the solutions have come from outside continental Europe.” Eurobonds without giving up state sovereignty? Wouldn’t it be for Germany like assuming all the duties without any right attached? Why should they accept? If I give you money, I also want some control on how you spend money, right? Mr. Hamilton founded a Treasury, right? Which would decide how to allocate capital for the whole nation, right? Then, of course, you can decide to give money to indebted states. Because you know you have at least some control. Even without a Treasury, imo, it could be done… provided that there really is the will to become a true nation! I can trust you, if I am sure we want the same thing, and we are striving together towards that goal: to give up in time each single state sovereignty, in the name of a truly new and united nation. Unfortunately, I don’t see that happen. A single nation with 20+ different languages…?!? C’mon!! It really is as simple as that! I don’t see a United States of Europe without Germany either. If Germany leaves, the rest of the north will follow suit… what would then be the point of keeping France, Italy, Spain, and Greece together? I don’t understand. As always, paraphrasing Mr. Keynes, when the facts change, I will change my mind. :) giofranchi “As time goes on I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think that one limits one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence. One’s knowledge and experience is definitely limited and there are seldom more than two or three enterprises at any given time which I personally feel myself entitled to put full confidence.” - John Maynard Keynes The USA States after the Revolutionary War under the Articles of Confederation were more fractious than the Eurozone is now. Commerce between the states was taxed. There were as many slaves in New York as in Georgia, but slavery was on the way to being repealed rapidly in the northern states while still institutionalized in the southern states. Citizens who had been loyal to the Crown migrated to Canada under threat of lynching. Many revolutionaries were violently opposed to having a powerful central government. And yes, the wealthier US States that were capable of paying their debts didn't like the idea of bailing out their poorer relations that were basket cases. However, the power of the Federal government to tax made it relatively easy for the bail out to succeed. All states were of one mind that the bailout was a one time deal, never to be repeated. And that's the way it has worked since then. In the latest crisis there was no serious talk of bailing out the most indebted US States. All the USA states have acted responsibly. Even California is on the verge of being in surplus. A friend works for an agency in one of the USA states. The number of employees in his department is now half what it was when he went to work there in 2004.

Yup. Adams was no dummy, but a big reason he was successful was that he listened to Abigail, at least some of the time. :)

That will work. The same scheme worked for the mostly insolvent USA states when Hamilton was US Secretary of the Treasury in Washington's administration. :)

Thank you, Jack, for your note. :)

Those companies have been around for 100+ years and have demonstrated staying power and pricing power or low cost advantage with favorable prospects as far as the eye can see. :)

Hear! Hear!

Yes , I was saying valid point. As in, the US is not a private system. It is clear the US system is a failure. Maybe a "real" private system would work. It seems the US is in some pergatory of getting all the bureaucracy of large government without the results that come from single payer. What would a private system look like? Is there a success story country out there? I would regard many single payer systems as successes (measured against the current US system). I'm not arguing "a true private system" doesn't work. I'm just not familiar with the examples. The best health care system in the world, all things considered, is arguably Switzerland's. it costs about 10% to 12% of GDP vs 17% approaching 20% in the US. The insurance is mandatory for a policy that covers the basics, but no more. Coverage is provided by private companies. People shop for the policy that suits them. If the cost is more than 8% of income for a basic policy, the state subsidizes the rest of the cost. Surprise! People are smart shoppers. They generally choose a policy from a company that keeps a lid on costs and thus keeps the premium low. But they can buy an expensive policy if they think it's worth it. Insurance companies have the legal right to recover fees paid to doctors that order unnecessary tests or surgeries or treatments. They will put a doctor on notice if he runs up costs too much on most policies. This gets their attention. Doctors don't have quotas, they generally spend more time getting to know their patients and their ailments than in the US. The Swiss legal system discourages ambulance chasing lawsuits. Therefore, doctors put the health of their patients ahead of playing defensive medicine . Bottom line: Outcomes and general health are among the best in the world. Satisfaction among the citizens is off the charts. Why? Incentives are more or less market based,

Early on, I sold my wife on this concept. :D Was that a hard sell or a soft sell? ;)

It's really hard to give money away effectively to make a big impact on a recipient. In North America, money is usually not the factor that limits effectiveness, but time and intelligent effort. Lack of money is not the root cause of poverty or social ills in an affluent society. That's why most of our giving goes to poor countries through organizations that are good managers of the funds. However, giving is often a greater blessing for the giver than the beneficiary. Be proactive. Seek out recipients where your gift will make a big difference. Then, you'll get an even bigger blessing. :)

I was thinking about this delta return today. Implicitly it means they have confidence that their delta will exceed what they could otherwise earn in fixed income. Otherwise, why not just buy bonds instead? Yup. They go by the balance sheet, giving it a lot more weight than I would when it's a crappy business. For this reason, there is huge basis risk in their "hedging". Nevertheless, It's hard to argue with their long term success. You also had that "Buffett put" strategy with Berkshire trading down near 1.1x book value. Fairfax bought none! That seemed to be a possible holding for them that wouldn't require too much (if any) hedging, and could compound away tax-deferred for a long time. Perhaps they think they can do better than Berkshire with their delta? Or they don't believe in the Buffett put, or they don't want to own Berkshire. Or they believe the hedges won't take long to be wildly useful. Hmm... It's got to be better than JNJ as a defensive blue chip holding, either way. That makes sense, but I doubt the rating agencies would see it that way, even though both companies have ultra low PML's for all sorts of catastrophes. The rating companies would think: here are two insurance companies that should have a high correlation for losses in extreme events. Also, FFH and BRK have done a non insurance deal with each other, but they are surely competitors in a lot of lines. Owning BRK stock might cause confusion with regulators and managers. BRK has taken size able stakes in European insurers but only with the wholehearted approval of the other company.

I was thinking about this delta return today. Implicitly it means they have confidence that their delta will exceed what they could otherwise earn in fixed income. Otherwise, why not just buy bonds instead? Yup. They go by the balance sheet, giving it a lot more weight than I would when it's a crappy business. For this reason, there is huge basis risk in their "hedging". Nevertheless, It's hard to argue with their long term success.

Don't be hesitant to average in going down if you're sure what you are buying is a great value. If you're not sure, then why would you be buying the stock?

This smells like Scrushy's mess. Six or more of his direct reports were convicted of fraud, but they all testified that Scrushy never told them specifically to do anything explicitly fraudulent. He would tell them they had to come up with the numbers he wanted. he made it clear that he didn't want to know the details of how they did it. They would get together and bring him their best efforts. If that wasn't good enough, he would send them back to work up better numbers. Scrushy's first trial was like the OJ Simpson trial. His lawyers put a parade of witnesses on the stand who were well known in the community who testified how much Scrushy had helped them and the minority communities. The government never could get all 12 men and women on the jury to agree that he was guilty. However, on the third try, Scrushy finally was convicted on a charge that was tangential to the charge of fraud. I think it's interesting that Cohen's deposition that was forced on him by Fairfax in their lawsuit may turn out to be his Achilles Heel.

The only difference is that the Government of Ireland actually took measures to fix the country's problems, while the Greeks seem to be more interested in denying/delaying. Buying into temporary disorder is potentially interesting, but buying into perpetual chaos? Not sure this is the best idea! SJ Greece is certainly not as strong as Ireland. Still this is interesting to study. I remember in 2012 Q4 letter, Dan Leob also pointed out that they bought a ton of Greece national debt and feels bullish about Greece's future. Ireland wasn't as strong as Ireland two years ago. There are preferred shares NBG.pr.a that trade in the US. The dividend is non- cumulative, and suspended. I am going to look at the prospectus when I am flying in two weeks to see if they can issue new prefs before they re-instate the dividend on existing issues. They have also been tendering for prefs that are cumulative. I did very well on RBS preferreds. IMO, it's not really about whether Ireland was in better shape 2 years ago than Greece is now. Rather, it's a cultural thing about whether a country has a propensity to have an adult conversation to acknowledge the situation that it's in, identify practical solutions, and then accept the bad tasting medicine. Canada did it 15 years ago. Ireland did it. The United Kingdom is doing it. I have faith that the Americans will eventually have that adult conversation and make adult decisions. All of them are primarily anglophone, advanced economies. On the other hand, I am completely unconvinced that the southern european countries are able to actually have that adult conversation and actually take the bad tasting medicine. I hear ridiculous denial from people when I travel to France. In Spain, I wander around in disbelief about how things are run...or are not run. The Greeks that I have spoken to point the finger at the Germans for their problems. All of this is unbelievable. Maybe I have mis-assessed our southern European friends, but I just don't think that they have the collective emotional maturity to take the bad tasting medicine. Sorry to all those whom I've offended. SJ Blast from the past. In late December, 1992, we decided to take our very young children and their French teacher and the French teacher's young children plus her mother and sister on a trip from the states to Paris where the French teacher had lived a few years before then. At that time the US was starting to take its medicine after unwise financial choices whose chickens had finally come home to roost. I imagined we would stay at a first class hotel in downtown Paris with off season rates. Did I get a shock. The lowest rate for a first class room was $300 US up to $600 US per night! And we needed two or three rooms plus a small suite. That price was outrageous so we wound up staying at a one star hotel in Vincennes recommended by some low budget missionary friends. Madam Roberta reverted to the mode of her student days at The Sorbonne. We rode the metro. Madam Roberta showed us wonderful sights that tourists never see, and we met gracious French nationals. We walked miles and miles every day from Christmas through the New Year. We lived on bread and cheese. Each of us lost 5+ pounds of extra weight. (Although we did eat once at moderate priced Goldenbergers for the best French dinner we had ever experienced). It turned out to be the best vacation we had ever had. I think if our Southern European friends would go off the Euro to a devalued national currency that they might have to live mostly on bread and cheese for a couple of years. They might wind up a few pounds lighter without starving. And then they would enjoy life more with a full employment economy. :)

AM Best has upgraded Odyssey Re's issuer credit rating from a to a+, reflecting risk adjusted total return plus good underwriting and breadth and depth of exposure. :)

Thanks, Gio. I quess this means I'm a herd follower as I've read most, but not all of the books in the consensus cloud. Or is the cloud actually following me ??? Or, could this merely be : "The Wisdom of Clouds". ;)

;D ;D ;D ;D giofranchi “As time goes on I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think that one limits one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence.” - John Maynard Keynes Not quite, but it is definitely an Angelaphile. :) (Actually, it reminds me of the infamous Naked ice borer discovered by Aprile Pazzo) :) Google: Aprile Pazzo Naked ice borer Discover Magazine