twacowfca

Thanks, Sanjeev, for the graphs. Please note that the second graph displays growth in TBV, not TBV/SH. FFH's growth in TBV/SH for 25 years was 17%+, not 26% as shown on the graph. :). Do they also have a graph for growth in TBV/SH for the same cos?

And Faulkner was the town liar for many years until he put pen to paper and received honors instead of ridicule. Nell (Harper) Lee struggled to earn a living as a writer until someone staked her for a year to compose To Kill a Mockingbird. Some layabouts deserve a swift kick in the rear, but history would certainly have been much different if Einstein, "that lazy dog", as one of his professors called him, had had a full work schedule at the Swiss patent office instead of loafing most of the time, thinking about the big clock on the square.

Effective philanthropy is just as difficult as highly focused value investing if not more so. Buffett said he couldn't do it effectively. That's why he turned his money over to Gates. Peter Lynch once did a study of the outcome of his fund's investments in companies where there was much promise,but no verifiable long term, successful track record. The results: of 37 companies every single one of them were losers, mostly big losers. We did a similar study of dozens of relatively small donations of a private foundation to organizations that they knew little about other than what they purported to do. A close follow up study was unable to verify any lasting positive effect from any of those donations. This foundation now concentrates most of its giving on a handful of organizations that they know from intimate contact are highly effective. I'll try to come up with a short list of a few highly effective organizations in the next few days, but this should be only a starting point. Check out their track records, what they have actually done, not what they say they have done or what they hope to do. IMO the most satisfying giving isn't sending money to a distant charity, but going to the most out of the way regions of under developed countries on medical mission trips to help people who have no access to medical care or no pure water other than the well the missionary organization helped provide. Here are two charities with ROI that's about as high as it gets: Living Water International has a long track record of success installing and then helping communities maintain fresh water pumps in poor countries, over 9000 wells now and counting. they leverage donations by training volunteers and getting churches and other NGO's to sponsor specific projects. I personally saw the tremendous impact the installation of one of their wells made in a Honduran village of about 2000 people. One year after the community's fresh water well was installed, infant and childhood mortality from endemic water born illnesses dropped to zero and the older members of the community reported that their gastrointestinal illnesses were a tiny fraction of the former incidence. See: www.water.cc Free Wheelchair Mission ships robustly designed, easily maintained wheelchairs made with common off the shelf parts like mountain bike tires to poor countries and distributes them free of charge. It was started by a MIT PhD mechanical engineer who saw a poor woman in Morocco dragging her legless body on a dirt road with her one good hand several years ago. $59.00 will give a person like her a new life with wheels. See: www.freewheelchairmission.org There are many other effective organizations that do good works. the two organizations listed above are merely a good starting point for giving.

LRE estimated $39.1M initially for net liability for EOY 2006 accident year. Three years later the estimate of ultimate liability for accident year 2006 was $27.6. Their EOY initial estimate for accident year 2007 was $151.2M. Two years later the estimate of ultimate liability for that accident year was down to $99.5. Their EOY initial estimate for accident year 2008 was $408.9M. One year later the estimate of ultimate liability for that accident year was down to $370.3M. They appear to reserve conservatively and to have significant redundancies in their reserves beyond what has already been released. :)

The decline of the role of the NYSE specialist explains most of this stuff. In the good old days it was almost unheard of for a NYSE co to go no bid.

how?

Superman* Thats a good one! :)

Obviously. Objectively, are they not simply telling it like it is?

IQ tests taken at young ages are unreliable. When I was 12, I discovered in my mother's drawer an " IQ " test given to me when I was five that scored all the answers correct but one. However, It was obvious that the teacher had made an error and that I had gotten all the answers correct. This suggests three plausible explanations: [Choose one] A) My corrected IQ was 200. B). My teacher's IQ was 20. C) I tested better merely because I could read well at an early age. If you picked answer A or B, your score on this short test indicates your IQ is below normal. In our business our associates take all sorts of tests, including an IQ test. A few years ago, I noticed that all of our associates who did not have English as their native language had done relatively poorly on the IQ test. We then secured accurate translations in the native languages. Presto! An amazing jump of 30 to 40 points in average IQ for all those who wanted to be retested! In the 1930's, Terman used IQ tests in California to identify high IQ students for special attention and programs of accelerated development in California schools. A few years ago, there was a study to see how well they had done in their subsequent careers. Surprise! They were above average! Bigger surprise! Terman's testing failed to identify more than half the subsequent Nobel Prize winners from California who grew up during the period of his testing!

The policy would have to have been bought by a client ( not a bookmaker )that would have suffered a legitimate economic loss if France had won. However, the policy could have been priced rationally by checking the odds the bookies were offering. Does ____ Nike? Have an endorsement contract with every major national team but France? Comments? What sort of organization would have suffered a loss if France, but not a different country, had won?

Tomorrow after the close is the reconstitution day for the Russell indexes. We will be exiting our BRK trade and our July BRK calls probably with a market at close order because new Russell admissions typically decline in price for a few days after the reconstitution day. We hedged our trade a few days ago with SPY puts because the market looked like it was getting squirrelly again. If the market looks ugly tomorrow, we may keep the puts to give us a little hedge on our remaining portfolio even as we build up our cash once again as we do not anticipate a bull market. I think that what we are doing is prudent action that increases our margin of safety, but buy and hold value investors might call it day trading. Am I just fooling myself? Your opinion will be much appreciated.

The second third and fourth readings will be much quicker if you dog ear and underline the most important passages on the first reading. :)

That's a great chart. Thanks for sharing it with us and for all the time it took to prepare it. :)

Effective philanthropy is just as difficult as highly focused value investing if not more so. Buffett said he couldn't do it effectively. That's why he turned his money over to Gates. Peter Lynch once did a study of the outcome of his fund's investments in companies where there was much promise,but no verifiable long term, successful track record. The results: of 37 companies every single one of them were losers, mostly big losers. We did a similar study of dozens of relatively small donations of a private foundation to organizations that they knew little about other than what they purported to do. A close follow up study was unable to verify any lasting positive effect from any of those donations. This foundation now concentrates most of its giving on a handful of organizations that they know from intimate contact are highly effective. I'll try to come up with a short list of a few highly effective organizations in the next few days, but this should be only a starting point. Check out their track records, what they have actually done, not what they say they have done or what they hope to do. IMO the most satisfying giving isn't sending money to a distant charity, but going to the most out of the way regions of under developed countries on medical mission trips to help people who have no access to medical care or no pure water other than the well the missionary organization helped provide.

Check out WEB's largest holdings. They've all been in existence doing basically the same things for over one hundred years. :)

Simple, yet profound observations. :)

Or, as the New England Puritans phrased it: "Do well by doing good". ( Prem got this one backwards although he meant well ). :)

. These are above average companies in my favorite fishing hole: Bermuda. There are no corporate taxes on the profits of Bermuda companies, except for taxes on subsidiary profits for those that have subs in taxable jurisdictions. AXS is a good choice if you are scared of hurricanes. Aspen also has below average hurricane exposure compared to the most exposed Bermuda Re's. My personal favorite and largest holding by far is LRE for many reasons that have been discussed on the board. The downside with LRE is that their results may sometimes be lumpier than Aspen, Axis or some other good Bermuda Re 's because they have more cat exposure and very little casualty exposure which tends to be slower in loss development than property exposure.

The $275M should increase their ability to pay claims if they put it in cash or marketable securities. :)

grabs fistfull of dirt, looks into camera earnestly. . . "It's the land!" Who said that?

Index funds and quasi index funds sometimes ignore smaller companies at the tail end of the index cut off or are less scrupulous in buying enough shares of smaller companies in their universe to get an exact balance if failure to do so would not lead to significant tracking error. They do this for the very reason you mentioned: less liquidity with smaller caps. Failure to get an exact balance with a mega cap company like BRK will definitely produce significant tracking error. Even large cap funds that claim to be actively seeking alpha will ignore BRK at their peril of falling behind their benchmark. :)

BRK has advanced much more than the Russell 1000 and the S&P 500 during the last few days. This is almost certainly related to its addition to the Russell 1000, effective after the close of the market June 25. The same thing happened early in the year before BRK's addition to the S&P 500 when it outperformed that index dramatically. This outperformance is a phenomenon that happens regularly. The outperformance is especially pronounced with large companies,like BRK, that were not previously part of an index until the year of their inclusion. In view of this, we took most of our cash and bought BRK a few days ago and also bought July calls. This worked very well for us in Q1 before admission to the S & P500 and seems to be working nicely this time as well. :) The amount of BRK stock that will have to be bought by Russell index tracking funds before June 26 is astounding, about four percent of BRK's shares outstanding! :)

Soros is known for changing his opinion at the drop of a hat. This is his edge: no fixed views on directions in markets.

Generally, the US is the 400 pound gorilla in the international monetary system. Very few countries are not affected by what happens in the US, but sometimes the US and other highly developed countries can shrug off what happens in developing countries.

Twacofca, Are you using the movement of the WSBase to predict the general market direction? Is this not similar to using the old M3 to try and predict a downturn in the economy? roughly what is the lag between the WSBase and S & P movement? thanks for a most interesting post! cheers Zorro The money supply does affect the economy and credit markets and the stock market. Changes in the monetary base have the quickest effect. Most of the time in recent decades with slight movements in the monetary base the association is almost imperceptible. Before the creation of The Fed, the arrow of causality often went both ways. Fiscal policy would increase or decrease the money supply, but banking panics would have the most drastic effect and rapidly drain the reserves in the banking system, the key part of the monetary base, sometimes almost overnight. The 2008 financial panic was so severe that The Fed took unprecedented action and doubled the monetary base within a few weeks. The lines of the graphs of the stock market and the monetary base crossed each other, one like a rocket ship going almost straight up, the other like a VII rocket falling on London. If a naive statistician looked at that short section of the series and extrapolated from it, he might erroneously conclude that the change in the monetary base lagged the change in the stock market and that the correlation was strongly negative! In truth, this action more than any other type of stimulus, saved us from another Great Depression. The stock market has exhibited great sensitivity to changes in the monetary base since then, as shown on the updated graph. The lag during the last 18 months has been from two weeks to two months before the market has turned down by an appreciable amount after a downward change in the monetary base, but the lag has been generally no more than about 4 weeks before an upturn in the monetary base is associated with a reversal in a downward direction in the S&P 500. I personally don't think it's a sure thing that a reversal of a decline in the monetary base by the Fed will always be able to arrest a decline in the stock market. If the market should generate a sufficient amount of downward momentum, the stampede over the cliff might become irresistable.