twacowfca

Re EasyHome: The rent to own business is probably the least predatory and most socially beneficial of all cos that have subprime costomers. I'm familiar with Aarons, the best in the industry. The only general criticism against them that is probably justified is that smart shoppers with good credit can buy merchandise much cheaper than the rent to own price. Their customers are the lowest of subprime: troglodites. Their credit is zilch, yet the failure to return rate is far less than subprime default rates on loans: about 1%-2%. The reason for this amazingly low rate? They get 5 references from relatives or others in the community before agreeing to a contract. These interested parties then have a vested interest in encouraging the renter to follow through on his commitment to pay the rent or return the merchandise, which 98%-99% do. It's a beneficial service if performed ethically as Aarons does in almost all their business with the units they own and working with their franchisees. Other cos may not serve this market so well as Aarons, but when well done this type of business can be very helpful in low income areas.

This is a major interest . Can you refer me to some of his publications on this topic. Would be much obliged.

Blowing up refers to all your tradeable assets going down the drain, almost always because of leverage for loans that are supported by uncertain assumptions about the future. By this definition, he has never been close to "blowing up" even if a couple of major investments may have come close to going sour. Cheers!

There have been hints over the years that WEB's personal account has increased in value much more than BRK's during the last several years. One of the disappointments of Schroeder's book is the lack of information about personal performance. I believe this was intentional because critics would have jumped on the difference in performance.

True, but when was the last time that Buffett bought a Dollar for 50 cents? To me at least, Buffett has been using two approaches in his investment career. The first is the pure Ben Graham approach of buying unloved stocks that are selling below book value. If Taleb refutes this approach, he clearly doesn't know what he's talking about as we have actual (Graham-Newman, Buffett Partnership, Schloss Partnership) long-term outperformance. The later approach that Buffett uses (the buying and holding of great businesses) is impossible to evaluate considering Buffett is really the only investor who has a record of long-term performance. Therefore, Taleb does actually have a point that Buffett may actually be lucky (post-Pertnership days anyway). Buffett once said he was 15% Phil Fisher and 85% Ben Graham. If you ask me, he's the other way around now. If you look at the BNSF deal, the only Ben Graham characteristic there is the margin of safety. It's certainly not cheap, not unloved, not depressed, and not a cigar butt by Graham standards. I think it's kind of funny. So many people cite Ben Graham and the demonstrable proven performance his methods bring, but yet so few actually use his method as intended. Even with you guys, from what I can see of your portfolios and the stocks you talk about, the majority of you do not invest like Ben Graham. That's not a criticism of anyone by the way, obviously Ben Graham isn't the only investment philosophy around! From what I can see though, it is wrongly cited. Buffett may be one of the few investors with an extensive long term record for comparison, but that's not needed for statistical analysis. All that's needed is to run a Monte Carlo simulation of what a large number of ignorant monkeys would have picked during the same period, and use that for comparison to determine if skill was involved in Buffett's picks. Buffett has been an investor mainly in what are simplisticly called large cap growth stocks for the last 35 years. This is a most difficult category for outperformance because you're going against the headwind of small cap advantage, and you're competing against those who concentrate on the most analyzed stocks on the planet. Therefore, Buffett's record is even more remarkable!

Sounds fishy. Your broker should receive new shares automatically in most cases. Suggest you contact your broker through a means you know is secure, in person or by phone, not by clicking on a link or responding to a phone number on the message sent to you.

Interesting closing price for those who like numbers. That's all. :)

Yup! If you look closely at the up front fee for five years of the policy on the 81 year old woman, apparently, the viatical co may keep the balance if she dies sooner than her life expectancy predicts.

A recent post referenced a thorough statistical study of WEB's stockpicks over several years. The conclusion: he could be merely a lucky monkey if you look at just the percentage of picks that increaced in price. But, if you look at the magnitude of his outperformance, there's no doubt that skill is involved. Taleb should read that study before he next expresses his opinion.

Premier Exhibitions does the "Bodies" exhibits, seemingly educational, but when you dig deeper, you'll learn that their founder was run out of Germany because of Nazi ties and doubts about where he got the bodies. He got a peirmit to bring his subsequent exhibit to the US, but these bodies now seem to have come from an area of China where the government had a prison where disidents were kept. One of the bodies in the exhibit a few years ago apparently had a bullet hole in the back of the head. In my opinion, everyone associated with this co deserves to go to the place they richly deserve to be.

Here is an article from the WSJ showing that companies buying Life Insurance policies have sub-par returns for their investors. http://online.wsj.com/article/SB10001424052748704094304575029581062228168.html

Only one boneheaded mistake. The marketable holdings were up by the end of 2009 almost three times the portfolio value EOY 2008. But a very large illiquid derivative we held was up only about 50% , mark to model. All of the big mistakes were made in 2008 when we were down about 36%. We took some quick profits from some bottom fishing in Nov 08 and had some cash available when the market hit bottom in March 09. How did we know that was the bottom? Well, we didn't know this in an absolute sense, but if early March wasn't going to be the bottom, the continuing decline would have been worse than the extent of the great crash of 1929. That looked like good odds. Unlike the situation after the 1929 crash, which was followed by an even worse drop, The Fed was throwing $$ at the system as if the greenback were play money. That also looked like good odds. When the market challenged the limits of the 1929 decline in early March, we jumped in with both feet, using our cash and selling high quality issues that were only down moderately to buy companies down about 90% that looked like survivors. We also bought preferreds and other issues that were yielding 20% or so. The only boneheaded decision was loading up on BankAmerica at the bottom instead of WFC because WFC, although much higher quality, seemed to not have quite as much upside. We had a lot of short term losses from 08 as tax offsets, so we sold these lower quality issues in early summer and moved back into FFH and our favorite Bermuda Re's as well as getting back in BRK at the end of 09. Lest this account seem too wonderful, I did some absolutely stupid things in 2008. The question concerns 2009, but I'll relate details about the poor judgement I used in 08 to provide balance if anyone's interested.

Why? Did the price of the call drop? If so, that may have been partly the downturn in the market and partly because there wasn't a sufficient margin of safety in the pricing of the option in view of the high regular dividend they pay. They raised their dividend just after you bought the calls. This will tend to lessen the value of future capital appreciation and the attractiveness of owning a call. All is not lost, however, you bought a leap and it's very likely that we may get substantial inflation before the leap expires. If so, they should earn much more on their portfolio, and this surge in their earnings may lead to a higher price for the stock, despite the drag on increasing BV from the high dividend.:)

Suggest you read Mr. China by Tim Clissold LOL :)

Strips?! I guess Warren's running naked now with his balance sheet exposed for all to see how well reserved BRK is -- 90% more than his competitors in many cases.

" Enquiring minds want to know.". :)

Welcome, alwaysinvert. :). If I could communicate in a foreign language half as well as you do in English, I would be very proud of myself.

They are moving into our area and have no hesitation building a store right next to the drugstore of an established chain. Like Publix' moving in on Kroger, they view the competition as little more than a nuisance.

I think you're right on. Who says Warren is bitter? Not Warren. Imagine that you are a woman who has spent 1500 hours of face to face conversation with a man, discussing at times the most intimate details not only of his life, but the lives of all his friends and family members. He says to tell it all like it is. "Always use the less flattering version when you write my biography". He knows some of his story will seem tawdry, but he wants the definitive work on his life to be the whole truth. What a man! I couldn't do that. He knows that he won't react well to criticism; so he doesn't even read the final manuscript before it's published. When it goes on sale, the smelly stuff hits the fan and gets all over his wife, his daughter, his sons and their families. They say, "Warren, don't have anything to do with that hateful woman." The result: "Sorry, Ms. Schroeder, Warren's not available. He can't take your call. ... No, I'm sorry, he can't take your call next week either. Goodby".

Checking out Schroeder's bio on Wiki: She has had two other controversies besides her lese majeste with Warren. She refused to change her rating on Chubb in 2002 to conform to the ratings of other analysts, despite great pressure from First Call. She reported last year that Goldman Sachs bigwigs had taken out pistol permits during the financial crisis to their displeasure. She was also the lead analyst involved in rewriting the FASB standards strengthening the standards for how insurance cos account for long tail reserving. All in all, she appears to have had a good reputation until she spilled the beans -- per WEB's advance instructions-- about his personal life. Time for Alice and Warren to kiss and make up? :)

Toyota is a great company in a lousy business. It's a long term value trap. Their ROC doesn't come close to beating a minimal threshold for an equity premium. ROC has been no better than 7%, even in their BEST year in their recent cycle!

Sanj, it's time to come clean. What's the truth about YOUR love - hate relationship with Alice? :)

Let's rephrase the question. Are insurance companies that are prepared for the huge increase in interest rates that is certain to kick in within another year or two cheap? WFC is giving up $1-2B in interest per year to keep their portfolio short duration, certainly through WEB's influence. They are a bank, but I mention them to highlight the importance WEB attaches to this. As for insurance companies, BRK certainly qualifies, HCC also qualifies because Gen Re manages their portfolio. Who else qualifies?

The effect of liquidity on price was the impetus for changing our allocation between FFH and BRK late last year. FFH's move to TSX meant less liquidity and potentially lower price; BRK's split and almost certain addition to the S&P500 meant the opposite -- plus we get the forced buying by all the funds that now must own BRK. Therefore, we shifted our allocation from 80% FFH, compared to BRK to a very large overweight of BRK, relative to FFH. Both are still great cos, and with the recent trend, FFH becomes an increasingly compelling bargain for such a great co with great owner operator leadership, the main thing we look for in long term holds. :)

Good observation. I think this is often the case, especially in recent years and on exchanges where short sellers and program traders are active and always trying to beat the gun. Are there objective studies on this effect? Regarding higher or lower multiples of price: I think there are a number of studies showing that greater liquidity generally is associated with higher prices. The most amazing example of this has been IDT where the less liquid class of shares has generally traded at a significant discount to the other class -- even though the less liquid class has superior voting rights!