twacowfca

I've seen realtors compared to Klansmen, but that's the first time I've seen the animal huggers painted! I think that at least one scientist who used animals in his research has been murdered by these harmless people. All arson is terrorism then, because there is a risk of killing someone. An arsonist of any stripe is a domestic terrorist, and a group of them is a "terror cell". I can tell you that when I hear on the news today that there are "terror cells" in the United States, I feel like (after the Joe Dibee incident) they are talking about a broad stripe of criminals including people who have absolutely no motivation to kill people. Accidents happen... a kid driving a car drunk at 100 MPH can kill two little girls just like some drunk driving Klansmen once did. So does that make him a drunk driver that should go to prison for involuntary manslaughter, or does it make him a "domestic terrorist". I'm drawing a distinction between "accidental" and "deliberate". It's semantics, I think arson is a crime and he should go to prison for it. My gripe is that I think this is political. I have nothing more to add.

If the US government declared that half the natural gas reserves in the country were now off limits, what effect do you think that would have on prices going forward? Invert.

Likewise. I had assumed that all the "server stopped responding" messages were merely excueses for ATT's poor network. Many thanks Sanjeev. :)

I've seen realtors compared to Klansmen, but that's the first time I've seen the animal huggers painted! I think that at least one scientist who used animals in his research has been murdered by these harmless people.

Did I ever own MSFT stock? I got stock options starting when I was hired in 1997... at age 26 I think I was suddenly worth about $500k on paper (largely unvested) and then all of it but about $80k blew up. I know I won't get any sympathy complaining about an $80k options paycheck in 2001... but I had psychologically locked in that $500k so the anchoring made it very tough. Better to have loved and lost? Hmm... Serves me right though, because I argued with my recruiter (Lyzette was her name) that the stock was overvalued (she told me that the stock would likely appreciate 20% a year). She retired in 1998 -- didn't buy her own story perhaps? I think there are two ways in that my work experience translated to my investment success, and neither of them had anything to do with stress testing. One of them was the stock bubble (and the experience of that devastating paper loss), and the other was the DOJ trial. IE was an interesting place to work because it was ground zero. I learned that the story in the media can be completely false, yet people believe it because it's in the media. These people who say that the market is efficient because all the facts are known... well they are naive rubes apparently. They assume the media is reporting unbiased facts! That's a freaking obvious weakness of that argument -- for the market to be efficient you have to take a tremendous leap of faith that the market participants are getting unbiased facts from the news outlets. I can't really get into the details, but there were numerous instances where the facts were clearly distorted and despite a tremendous effort by the PR folks the media just wouldn't budge. It was just a fiasco and my view of what I read in the newspapers has been forever changed by that experience. The media is not accurate, so therefore there is opportunity for profit as prices therefore won't be accurate. Why do I still use IE and Vista? People who have ugly kids still love them all the same I suppose. I really don't mind Vista because I use it to browse and to run my jscript files. It works just fine as far as I'm concerned -- all the bugs that really pissed me off I complained about and had fixed while I worked there. It sits by my bed and I pick it up first thing in the morning, check a few stocks and read some news. It never gets rebooted so the shutdown/reboot time is inconsequential. I also know why many features exist in their present form -- somebody else might find a particular feature really stupid and annoying but in some cases I remember the product manager telling me the justification for not changing it... sometimes it makes sense after hearing his reasoning. There was actually a guy on the IE team who was still running Win95 on one of his computers because he liked it's speed on new hardware (and as you might guess, he was on the Win95 product team). I also worked 3 doors down the hall from this guy: http://www.mostwantedhoes.com/sex/dibee-j.php He worked on the team with me for years (he was there I think from day one, or maybe hired just after me), I even shot him in a paint ball game that we had as a team morale event (that's more than the FBI has been able to do by the way). So it's funny, you go to lunch with the same group of guys every day for years on end, and then one day the guy doesn't come in to work. After a couple of weeks his office is locked off and it's a big secret what happened to him -- then I hear about him on the news. Turns out he got mixed up with some people in Oregon who were burning down animal research laboratories -- just, you know, radical animal rights activists. They always made sure that nobody was in the building -- nobody was ever hurt. Now, granted, that's vandalism and arson. But terrorism? Come on. Somebody in the FBI is desperate for some political headlines. Ten years ago I doubt it would have been "terrorism". That word evokes images of people flying planes into buildings full of thousands of people -- not people who deliberately make sure that those buildings are vacant. Whatever. Not really terrorism because no one was in the building?! Seems like the same reasoning used by the Klansmen who blew up the church in Alabama in the 1960's. "Those little girls weren't supposed to be in the church that early."

It's very easy in theory to balance the budget merely by cutting the subsidies for all the unproductive stuff. Everything from tuition subsidies for flower arranging to agriculture subsidies and bribes for placing hazardous solar panels on the roof. Attic fires anyone?

" Thou shalt not muzzle the ox that stampeth out the corn" The administration proposal also is for whacking off a big chunk of the most regressive tax of all, the payroll tax. This is huge! It will finally get the unemployed back to working again! Three cheers for JFK, Reagan, Bush II and now Obama!

Empire Gold in NYC will offer a much better price by registered mail than pawn shops. Perhaps 10% less than spot, if you have a significant amount to sell, but that's just a guess. I know someone who sent a whole box of hundreds of diamonds to them, sorted by sizes and aspects of quality, and got about 10% less than he would have received had he peddled them directly to the trade. :) Hey, Sanjeev! Maybe we should turn this board into a gold and silver exchange! Diamonds too! They have a wider spread because they come in a bazillion varieties. Ragnar, you could be our pirate (Oops, sorry, I mean buyer). Then, we'll demutualize and IPO and get rich. ;D

Maple Leafs, Krugerrands etc. should sell for a small premium to spot. Junk gold and silver should sell for a small discount to spot if you have enough to send to a refiner. Otherwise, you'll take a haircut, possibly a big haircut if you are in a market with few permanent dealers. WE BUY GOLD shops or pawn shops will have the worst prices. 47th st in NYC is a good place to start asking, or Mumbai. Empire Gold on 47 th st in NYC has had a very good long term reputation for dealing fairly with long distance customers through the mail. If that's too far away, ask an independent reputable local jeweler where he sends his scrap gold for cash. Nice pieces of old gold can bring a pretty premium, but it may take time to find a buyer who will pay a good price. ebay? :)

You've got that right! They were one of the early investors in LRE. Then, as LRE became increasingly solid and dramatically lowered their PML risk level, they became sellers as the price rose, even though LRE continued to trade in a range equivalent to about FDBV/SH!

That's what's worked best for us, but we take it to a lower level. Much lower! Meaning we wait for a pick from a tip top guru to tank and then see if we can understand the company, the situation and the probabilities of different possible outcomes. If so, we may sometimes then jump in with both feet. Right now we're starting to accumulate something that's large, but not very liquid. Something that could become a ten bagger in a couple of months -- or a zero. You'll never guess what it is, so don't ask. We'll let the cat out of the bag when we get enough. It's very easy to understand, but not without having a good macro view. It's one of those can't see the woods for the trees things. We'll be the envy of the board or have egg all over our face. ::)

FWIW Wife orders Kindle. Trys it out. Downloads Kindle app for iPad. Trys it out. Returns Kindle for refund.

The most important aspect of the annual report is the BS coefficient. The outperformance is huge for companies that have clear annual reports with no BS that frankly discuss the bad as well as the good, compared to companies with annual reports that are full of obfuscation, issue dodging, blame shifting and weasel words.

Taking a very quick look it underperformed from its inception till late 1999. Most of the out performance came from 2002-2007 period. Maybe the manager improved his skill. To really assess his performance, reading up his letters to see how he thinks might give you a better indication of his performance. You might find more feedback on the Morningstar board about this fund. Vinod The period from 2002 - 2007 was one of the best ever for outperformance of long equity value funds. many managers looked like geniuses during this time. Monish Pabrai's first fund was the best performer of 2000 funds, including hedge funds, during this period according to a study I saw then. Yet, some on this board outperformed Monish, and have continued to outperform the market under very different conditions since then. The true test of outperformance is the long haul, including periods of underperformance. I was mostly out of the market by 1997 and completely out by 2000 before the bubble popped. If I had been a fund manager, I would have been killed as an underperformer then. But it sure was nice to be 100% in cash while the market melted down and then be a buyer of bargains instead of a forced seller. :)

Agree. Bernanke has had to play the hand he was dealt. It's unrealistic to expect any more from the Fed than what they accomplished: halting an asset deflation affecting almost everyone's pocketbook before it gridlocked the economy and bankrupted every person and corporation dependent on credit. Atempting to restrain a huge bubble through monetary tightening alone, precipated the 1929 crash. Continuing that policy turned a potential recession into the great depression. The Fed policy of excessive accomodation was a contributing factor to the bubble preceding the current recession. But the requirement for banks to judge risk by ratings assigned by a government mandated olligopoly was like a fatal flaw in architectural blueprints. Then, the promotion of regulatory laxity by congress and the administration allowed a bootleg brew to ferment and led financial institutions to sell and even drink their own toxic radiator antifreeze hooch.

Also, they seem to be selling their great businesses and keeping their value traps that are chronic low ROE or no ROE businesses. Do they have any outstanding businesses left?

This one shouldn't be terribly difficult for the counterparty to hedge... (if they were prudent). the bigger risk would be what Hamilton points out... having a counterparty that doesn't hedge properly. Your maximum loss is the notional value of the contract plus interest... and that's hedged with the short equity swaps. And the cash from the shares sold are probably invested in something relatively safe that could be used for this purpose, and if not, the rest of the portfolio is fairly large compared to any potential loss. I really would tend to think that the other equity swaps serve the purpose sufficiently. 1) Counterparty risk exists whether the counterparty hedges their position or not. They could fail for unrelated reasons. But, given FFH's past caution with counterparty risk in their CDS positions, it should be reasonable to assume that they have covered this angle. 2) The question is why do the TRS, if not to obtain leverage? If leverage is the reason, then what's the rational? The only other reason I can think of for doing the long TRS is that maybe it reduces the burden of the periodic cash settlements for their short TRS positions - because the positions are offsetting. Without the long TRS, with the market moving against their short TRS positions, they may have had to pay up significant amounts of cash at each reset. While their (previous) long equity positions would have economically offset the losses on the short TRS, they would not have generated the cash to settle the short TRS. oec2000, is what you're describing an example of what some have called "portable alpha"? if so, does anyone know the pros and cons of this or similar strategies? Also, as Eric has mentioned, what are the tax consequencies?

That's pretty much what Jeremy Grantham said -- he just feels like Graham's ideas are a "Duh" (his word). You could summarize The Intelligent Investor as -- "Buy low and sell high". Obviously, that's a "Duh". Graham emphasizes that you must appraise the value of the business in order to have an informed opinion of "high" and "low" -- once gain, "Duh". I know an interesting story from a value investor who once had a ten bagger buying a stock that Ben Graham himself trashed, in his own nice way, in the 1973 edition of The Intelligent Investor. If anyone can guess the name of the stock, I'll tell the story. :) That was the year I was born. Around that time, Graham was telling Davis to buy GEICO -- Graham giving a stock tip! That was a terrible time to recommend GEICO!!!! Right before it collapsed. Speaking of the Davis family, there was the spectacle of their holding onto their billion dollar position in AIG after it had grown too complex for them to understand, and seeing it go almost to zero! So much for blindly following gurus or past successes!

That's pretty much what Jeremy Grantham said -- he just feels like Graham's ideas are a "Duh" (his word). You could summarize The Intelligent Investor as -- "Buy low and sell high". Obviously, that's a "Duh". Graham emphasizes that you must appraise the value of the business in order to have an informed opinion of "high" and "low" -- once gain, "Duh". I know an interesting story from a value investor who once had a ten bagger buying a stock that Ben Graham himself trashed, in his own nice way, in the 1973 edition of The Intelligent Investor. If anyone can guess the name of the stock, I'll tell the story. :)

I dont want to challenge this thinking and am pursuing an idea of future giving to a charitable cause. I would love to bake in 25+% return, the charitable cause will be handsomely funded for posterity. Anybody on this board have estate ideas including future giving? Would love to hear ideas people have for this. Suggest you give the relatively small amount you hope to compound at 25+% to a donor advised fund. Then the returns will compound tax free until you make a large donation in the future to a charity you select. You can make more tax deductible donations in future years that will also compound tax free. The donor advised fund should allow you to self direct how the funds are invested in the separate donor account set up for your advice. However, it's difficult, if not impossible, to set up a formula that will give a reliable, very high return after the advisor passes away. This is food for thought. ???

Buffett's returns before he started his partnership were> 50%/annum. :) However, it's helpful to be wired a certain way. The first time I read The intelligent Investor, my impression was that everything the author said was obvious. Yet, many intelligent people just don't get it when I tell them clearly the simple secrets of our investing success.

A lot less than our rate of return for the last ten years. Increasing scale is going to be a greater drag, and "pride goeth before a fall". :)

I don't think so. That seems like finagling. Brobdingnagian is after Swift's land of the giants of prodigious proportions. :)

Shane, You have touched a phenomenon of great importance that most accountants would dismiss with a chuckle. The apparent excess cash and marketable securities on Fairfax's balance sheet is of course needed to support their ratings and their implied ability to pay claims. Generally, most assets have to be kept in fixed instruments with liquid, readily ascertainably market values in order to receive full credit from the rating agencies or regulators towards solvency. Other assets are steeply discounted. For example, the more volatile market value of shares of common stocks is discounted 40% to 50% by rating agencies when they assess the adequacy of an insurance company's capital for paying claims. Most insurance companies adhere to the norm and keep almost all assets in conventional, fixed income instruments, even when these sell for bubble prices, like the now 30 year bubble in treasuries. When most insurance companies reach for more yield, they will suspend belief and buy things like the crummy MBS many companies bought a few years ago if the rating on the securities is high enough to satisfy rating agencies. The conundrum of how to effectively leverage insurance company assets explains why Prem hedges so much. The large amount of munis he bought is pure genius. These should keep a high rating for full credit from the rating agencies and provide a higher tax adjusted return over time than Treasuries. However, the stocks FFH bought probably require a hedge to enable FFH to keep an acceptable rating if there should be a bear market. :)

Yes. As long as you do your homework who cares if you copy. That doesnt make much sense but you know what I mean. As Lynch would say, It all spends the same. The real question is do you have any ideas worth stealing? "As long as you do your homework, who cares if you copy?" I love it! That's classic, Myth. Yogi Berra probably wishes he thought of that one first! :D As mere ideas are free and on this board plentiful, when you steal, steal smart!