Cigarbutt

The pattern of country-of-origin immigration has followed a very similar course for both the US and Canada with Europeans now forming a minority. In my line of work, brain drain to the US (and those looking for larger incomes) in the 1990's was a relatively significant problem but the trend has become neutral and (numbers show) has started to reverse. In general, my understanding of the net migration number between the US and Canada is that it has been pretty much neutral for a while. The US continues to be a potential magnet for talent (students and professionals) and I would say that the net migration for the retiring/retired will be in the direction of the US because of climate unless you like ski-doo (that could eventually be my case). https://www.migrationpolicy.org/article/canadian-immigrants-united-states

This anecdote reminds me of a conversation I had in 2007 with a same-year graduating colleague who wanted to relocate from Fresno, California, who had bought a larger mansion in 2006 and had kept the previous one for "investment" purposes. https://fred.stlouisfed.org/series/ATNHPIUS23420Q Like the Toronto investor you describe, sometimes I get a feeling that the renter is on the right side of the transaction. I haven't spoken to this person for a while but I hear that he hasn't relocated because he wanted to stay relatively close to the ocean. I would bet though that he may still be still underwater.

The US and Canada have a lot in common and IMO continue to be great potential destinations for immigrants. But there are "cultural" differences in the host countries and that may account for unobservable self-selection differences for the immigrants, which is difficult to measure. The host countries selection criteria are also different and shalab, whether his questioning is genuine or not, may have a point. The Canadian immigration system has evolved, over the years, to increase the level of education and skills for incoming immigrants. This has been shown to "work" in the sense that the immigrant profile shows a higher education level. However, some research shows that this has not translated into a better economic result (income, poverty level), at least for the initial period after arriving in the host country. The US, somehow, for this part, seems to be better even if no similar changes have been made in the selection criteria. Helpful to remember that there is an awareness and a process going on to improve the integration challenge. The difference between the European descent and other places in the world can be explained, at least for the initial period, because the cultural distance is greater. Over time, these differences tend to disappear especially with the second generation and this phenomenon has also been shown in the US. Immigration is a two way street, but people usually emigrate in order to increase the range of opportunities. https://sencanada.ca/en/senators/ataullahjan-salma/ http://www.parl.ca/iia/Default.aspx?DCId=4&DTId=1&P=1388_interview-SalmaAtaullahjan&Language=E

^For 1) either keep the share-based compensation as a "true" expense or add it back and use the diluted share number. Tough question especially since this line item can be quite large and since, in a way, this expense can be seen as a discounted loan from existing shareholders to management/employees where the ultimate value (value of which one could derive with company's disclosures using models but which often end up very far from estimates) to be "paid back" upon maturity is still unknown. This can "become" a more expensive owner expense over time but, fortunately, if that's the case, as a share holder, you likely end up rewarded by the market too unless management is better at timing of exercise and sale of shares. For 2) NOPAT is an unlevered measure.

I'll give it a shot. Mr. Buffett has defined some assumptions: -ROE and inflation are not proportional and not even sticky -Higher inflation periods are typically associated with poorer general economic conditions with +/- lower demand and higher partial fixed capital utilization His take seems to be that firms with stronger pricing power would be relatively less punished (or swindled) versus capital intensive firms which, typically under these circumstances, would have delayed and partial pricing power and would have a relatively higher amount of capital sitting idle (so lower ROEs). The reinvestment of retained earnings question remains open but Mr. Buffett has shown the ability to deal with that specific question over time. Given BH's huge size now, this would also explain his interest for large utilities with contractual indexing and pretty much guaranteed capacity utilization. If you like to think along multiple dimensions, here's an unrelated example. I'm into cycling and sometimes do racing. Conditions vary but the best time to "attack" or to differentiate, in general, is not when going downhill or on rolling terrain, it is when going uphill, at a time when your relative competitive advantage or power/weight "moat" may grow larger with gravity working against you. If you have time or interest, here's a collection of what Mr. Buffett has said about inflationary conditions. A lot of the comments have to do with the effect on reserves but a lot of it has to do with your question. http://csinvesting.org/wp-content/uploads/2015/01/Buffett-inflation-file.pdf

This could be the beginning of a partial answer to your question: "Fixable but unfixed bad performance is bad character and tends to create more of itself, causing more damage to the excuse giver with each tolerated instance." ---Charlie Munger "If you surround yourself with people who are better than you are (high-grade people) you will end up behaving more like them, and they, in turn, will get it back from you. It’s like a planetary system. If you hang around with people who behave worse than you, pretty soon you’ll start being pulled in that direction.” ---Warren Buffett Maybe, the quote you're looking for does not really exist and you'll have to create it yourself. :)

https://www.bloomberg.com/graphics/2018-shrinking-hedge-fund/ Why search for "alpha" with Mr. Einhorn and other high-profile hedge fund managers when all one has to do is to ride the wave, the wave with no end in sight. "And yet it moves", he apparently muttered.

Interesting perspective about credit growth outpacing provisions and as to why Fiat and Subaru may have outperformed. https://insight.factset.com/car-companies-face-liquidity-risks-due-to-rising-auto-loan-delinquencies?utm_campaign=Insight&utm_source=hs_email&utm_medium=email&utm_content=65839202&_hsenc=p2ANqtz-8ft7T0EpIaJFIXS0bQ3026HG9zP9_nGYVOiDl3ffIkFAqf8_7MrVTc680WHDy4r4oa51AOfycuJeKHAIQsRfrnAE644A&_hsmi=65839202 At the same time, Credit Acceptance (which is the main idea behind this thread) keeps recording gradually higher provisions for credit losses but this negative trend is drowned by a very strong growth in the number of loans and a 35% growth in the dollar amount of loans over the past year. The size of the loans keeps getting bigger while the credit scores keep going lower. (?) What I'm trying to analyze now is the significance of the increase in the volume of borrowers rolling negative equity from an old loan to a new loan, as trees don't grow to the sky.

Thank you wondering. That was useful. Here's a recent AMBest report that offers complementary info on different topics including the impact of the ILS market. http://www3.ambest.com/bestweek/DisplayBinary.aspx?TY=P&record_code=277679&URatingId=2855493 -most relevant pages of the document (3-9 and 34-39). As you likely know, Markel has been expanding in a big way into the ILS space whereas Fairfax hasn't. The cat-bond space appears to be a huge success, seemingly may have made the underwriting cycle irrelevant and people involved with transactions are getting comfortable, as most participants no longer require an independent rating agency opinion. However, in 2017, from adequate sources, the average coupon on the bonds is about 5% and average expected loss stands at 2,7%. Seems like an awfully thin margin but, so far, so good.

I may understand better your perspective. To be clear, -Do you think that Mr. Einhorn was/is right but was/is unable to wait long enough for his thesis to work out given the unusual preeminence of a population of momemtum and price action investors and the larger proportion of passive indexing? -Have you considered that he may have been fundamentally wrong or that he may have overestimated his capacity to predict a shift in investor sentiment? -What makes you say that bulls have total control of the market?

We've entered the dark ages of balance sheet investing but, at times, book value can be useful. 1-In the past, I have valued Fairfax based on earning power multiples but also used adjusted book value measures because it was a relevant measure in the insurance/finance industry and because it helped define a lower bound in intrinsic value. 2-Listening to Mr. Bruce Flatt in the video submitted recently on the BAM thread, he mentions that he likes to buy "real" assets at a discount to replacement value because of the a)direct consequence of better returns on capital invested and also b)because of the relative competitive moat it creates versus future competitors. Neat concept.

@mwtorock and Liberty Many ways to skin a cat but if someone is selling equities, there must be some other buying. Reminds me of the Dalbar studies suggesting that the individual investor may be his or her worst enemy (in terms of fees, taxes and especially timing). Liberty, Do you know if the funds data showed by Bluegrass include ETFs? Equity funds often consist of retail and smaller individual investors. It seems that the small investor has not enjoyed the ride. Mathematically, some did as this is, outside of fees, a zero-sum game. I've seen data that the top 10%'s share of stock holdings has been increasing and foreign investors have also loaded up. From 2009 to 2017, I understand that US total market cap went from 15,1T to 32,1T, including buy-back activity. https://data.worldbank.org/indicator/CM.MKT.LCAP.CD?locations=US&view=chart If the mutual fund and ETF crowd has increased ownership only by 0,2T, the difference has been made up by others: direct holders of equity, rest of the world (international investors, sovereign wealth funds and even central banks) as well as public and private pension funds, insurance company funds and hedge funds. It's very hard to distill insights from all this but the growth in market cap has been driven by a fundamental recovery but also by a significant increase in price multiples and the latter can be related to sentiment somehow. Who knows what the future holds? Philosophicaleconomics tried to answer this question around 2013 by looking at average household equity allocation and subsequent return. Interesting to note that the long historical inverse correlation trend has broken down recently. New plateau? For investors like Greenlight Capital, using certain value metrics has resulted in relatively poor results on the long and short side.

I guess it depends what you're looking for. Time is precious, waste it wisely. I like also: https://deconstructingrisk.com/ A lot of generic topics but useful insights for some industries, like (re)insurance. Some posts are about specific names. For instance, some work on CenturyLink, a security that has been discussed here but for which I spend no time 'cause it's out of my league.

Thank you for the references. FWIW, the Flynn effect (rising IQ over time) may have reached a plateau or even started to regress in "developed" countries. Collective intelligence may be cyclical (genetic basis, envronmental or otherwise). https://www.gwern.net/docs/iq/2016-dutton.pdf

There is a file which contains a few items, which is labeled "look again in 5 to 10 years", which lists potential missed specific investment opportunities. But, there is a also a section on passive investment risk. When looking back, often the conclusions is that you were wrong to be right or right to be wrong. Sometimes, to be approximately right can be extremely rewarding. To modify conclusions along with evolving evidence/anaysis and to "publicly" do so is one of the things I value most in people. You may be interested in the following: https://www.bostonfed.org/publications/risk-and-policy-analysis/2018/the-shift-from-active-to-passive-investing.aspx Their institutional conclusion basically translates into adjustments and soft landings. I would say that the major (and difficult to envisage) difficulty is not the math, it's the behavioral side. Mr. Marks's conclusion: "What, then, will be the route to superior performance? Humans with superior insight. At least that's my hope."

Another "side effect" of high #MDs per capita is the possibility (for visitors and locals) of obtaining affordable house calls (or hotel, Airbnb etc). Indeed Italy scores well overall in healthcare costs/outcomes but fiscal constraints may change that. They also have regional disparities (North-South) to deal with. Other secondary considerations include the need to pay cash for certain out-of-pocket expenses and related party nominations at regional agencies.

https://www.reuters.com/article/us-berkshire-buffett-healthcare/amazon-berkshire-jpmorgans-healthcare-venture-names-coo-idUSKCN1LK2JX Mr. Stoddard was with Comcast but was also involved before in strategy with Accolade for many years. Accolade has shown it is possible to lower costs, improve results and patient satisfaction simultaneously (!). The idea is to introduce patient-centered technology tools with "concierge health assistants" using guidelines and data to help patients navigate through the "system". https://d10j0m6hqftivr.cloudfront.net/Whitepaper_PopulationHealth_July2018.pdf https://d10j0m6hqftivr.cloudfront.net/Paper_CFO_Accolade_Impact-of-Healthcare-Waste_July2018.pdf https://d10j0m6hqftivr.cloudfront.net/Accolade-Maya-One-Sheet-May2018-.pdf What's the point? At this point, an incredibly high proportion of people are not getting the right services, at the right time and by the right people. Still early in the game. Some will decide to compete, some to collaborate and some to ignore. Interesting parallel development with "Oscar": https://www.cnbc.com/2018/03/27/oscar-health-raises-165-million-at-3-point-2-billion-alphabet-founders.html

By that, I guess you mean the basic NPV question of legal costs and settlements. But did they have a choice? Once the 2006 lawsuit was launched, most "critics" were silenced and I'd say that was a good thing. I would also say that this wasn't about winning, it was about not losing. https://www.sec.gov/comments/s7-31-08/s73108-39.pdf "In July 2006 -- after nearly four years of having been the target of a relentless campaign of false rumors, dirty tricks, harassment, and market manipulation by certain short-selling hedge funds and those working with them --Fairfax had no choice but to institute a lawsuit to stop this illegal conduct." "Thus, when Fairfax's reputation was attacked through the spread of false rumors, not only its short-term success, but its entire existence, was threatened." That 2006 period with restatements and all, in retrospect, was an excellent contrarian period. And I didn't mind the large legal costs.

Reminiscence http://securities.stanford.edu/filings-documents/1037/FFH_01/2007116_f01k_064197.pdf http://www.deepcapture.com/tag/john-gwynn/ From today: https://ca.investing.com/news/stock-market-news/brieffairfax-settles-lawsuit-with-morgan-keegan-1258851

Hmmm.. That will be the end of the discussion from my perspective but I guess it would be interesting to hear from Dynamic. Not too long ago, Mr. Munger's list of recommended books, along Guns, Germs and Steel, included The Selfish Gene by Mr. Richard Dawkins who has voiced opinions on the concept of designer babies. In the book, the author marvels at how historical bottlenecks have been solved by the random jostling of small particles. https://www.inc.com/jessica-stillman/10-book-recommendations-from-warren-buffett-s-right-hand-man.html https://www.express.co.uk/news/science/673390/Richard-Dawkins-Designer-babies-HITLER-selfish-gene Handle with care?

You raise controversial questions similar to what is discussed in "The Bell Curve". It really seems that Mr. Munger believes in "their innate quality". There's also the additional dimension of jumping from individual IQs to the "intelligence" of a nation as a whole. Hard to say what the future holds and Mr. Munger has mentioned that it does not hurt to try to learn from history. In the last years, during free time, I've spend time reading on the introduction of the Industrial Revolution and how it caught on (and did not) in various regions of the globe. Another controversial question. Any relevance to today's challenges?

I live in the Montreal area and you are correct in underlining significant local and regional variations. Interesting because if you look at the Calgary (and Edmonton) area real estate index from the National Bank link listed above (p.3), you may find a very close correlation between oil prices and the index with a probable strong causal effect from oil to housing as the most important variable among many. In the reference provided below there are some useful comments that are relevant for commercial real estate. I looked at the CDN oil and gas sector in 2015 and 2016 and felt a rebound was reasonable within a lower for longer environment. Interesting to remember how difficult it is to "forecast" oil prices. https://www.avisonyoung.com/documents/20342/571064/AYWhitePaperEnergySectorImpactCREMktApr1_15Final.pdf/33928470-d9b0-454e-862e-dd7e801eeb48 Despite or perhaps because of "national" trends and risks in housing and real estate in Canada, you may have to include an outlook for oil prices in your intrinsic value and margin of safety assessment in Calgary. One might even say that you may need to include an outlook for political resolution of the pipeline resistance which may stubbornly prevent the differential from closing to historical levels. Good luck.

Anecdotal experience on my part also suggests that adopted Chinese and Asian children tend to "outperform" but, from a humble perspective, the adoptive parents also happen to be VERY different from the general population. This is hard to study but seems to be corroborated: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2398719/ FWIW, I think the conclusion of genetic superiority should be be considered carefully and after other explanations have been ruled out. Parents who are financially secure and who have certain attitudes towards effort and education can definitely move the needle. No?

Anecdotal Neighbours on my street put their house for sale (not eager to sell and tagged with a full price) on the market and sold it (papers signed) within 3 (three) hours. Context Reading shalab's recurrent threads that suggest Canadians are wealthy (and implicitly implying that the wealth is owed...) and wondering if the house is built on sand. From 1990 to today, both household assets and household debt (and so household net worth) have grown at an annual compound rate of 6,9% and I continue to be haunted by the divergence (US-CDN) that occurred in 2008-9. Understanding the evolution is difficult and short term forecasts are impossible but the real estate sector in Canada is one of those non-linear equilibriums marred by perhaps an illusory sense of stability and fraught with linear extrapolation risks. Conclusion There is a significant amount of discomfort that is at least based on some rationality. Maybe we will muddle through somehow but painful adjustments are possible and, thinking of creep mechanics, there is the possibility of sudden collapse with a sea of red ink. To "explain" the evolving real estate conundrum, some suggest that households simply react rationally to the underlying incentives supported by financial innovation while others suggest that there are deep deficiencies in financial literacy. I still believe in cycles. Preparing for all scenarios. https://www.weforum.org/agenda/2017/12/canada-s-household-debt-levels-are-the-highest-in-the-world/ https://www.nbc.ca/content/dam/bnc/en/rates-and-analysis/economic-analysis/economic-news-teranet.pdf https://eppdscrmssa01.blob.core.windows.net/cmhcprodcontainer/sf/project/cmhc/pubsandreports/housing-market-assessment/2018/q3/canada/housing-market-assessment-canada-68456-2018-q03-en.pdf?sv=2017-07-29&ss=b&srt=sco&sp=r&se=2019-05-09T06:10:51Z&st=2018-03-11T22:10:51Z&spr=https,http&sig=0Ketq0sPGtnokWOe66BpqguDljVgBRH9wLOCg8HfE3w%3D

Same here. What I find interesting is the tension that exists between the necessity to do a large buyback at a significant discount to make a meaningful impact on intrinsic value per share and to manage the uncomfortable cash pile while, at the same time, keeping the magic opportunistic formula loaded in order to maintain the capacity to outperform. Despite the soft-spoken aphorisms, I still picture Mr. Buffett as a warrior with a knife between his teeth. His thinking has always been long term and I would say that this may be even more important at a time when he is defining his legacy. The Oracle has to balance the weighted opportunity cost of holding excess cash now and for the next few years. Simple but not easy.