Cigarbutt

For the groupies, https://www.mercurynews.com/2018/08/24/billionaire-warren-buffett-chops-price-on-his-laguna-beach-home-to-7-9-million/ The house now includes (image 13 of 15) a television with CNBC on at all times, a copy of the Wall Street Journal and an open bottle of Coke. :) The Laguna Beach and Dana Point beachside areas are really nice. Even where Richard Nixon was "retired" nearby is quite nice. Looking at the pictures, it looks like the new owner will need to upgrade the flooring, cupboards and cabinets and the property is not directly "sitting" on the beach.

I'm not sure I understand what you need but, along similar lines, I have found Financial Shenanigans by Howard Schilit to be useful. http://bus.emory.edu/scrosso/Fall%202014/Weekend%20case%20complete/Prework%202.shenanigans_schilit.pdf If you're looking for more details found in the edition that came after the first one, feel free to send a PM.

So a potential question: Should a group rely on expert opinions (diagnosis at a distance) and what are the circumstances that could allow a group to make a good collective decision? If you read Gustave Le Bon's The Crowd, the crowd will tend to act on instinct (gut feelings), to skip rationality, to be influenced by superficiality and perhaps to become less civilized versus the members of the group taken individually. So, the crowd could be mesmerized. At the other extreme, if you read James Surowiecki's The Wisdom of Crowds, given a certain level of efficient aggregation of diverse, independent and individual private opinions, intelligent collective decision making is the likely outcome. The "truth" is probably somewhere along the spectrum and I would say that collective intelligence may be somewhat cyclical. Individually, we have ingredients for destruction and for enlightenment and I think this applies to groups as well. Perhaps optimist but I would submit that the crowd along human history, even if not experts in psychiatric diagnoses, has been able, mostly, to figure out where to place its confidence. Mistakes have been made though and History is not fully "efficient". What to do? I would say that the group does not need conditions to reach unanimity, it needs an environment that allows a critical mass to meet the conditions defined by Surowiecki. I would add that basic civic education, credible media (traditional and social, with civility) and balanced powers within a sound institutional framework are likely essential aggregating elements. If life puts someone with a manipulative NPD on your path, you can try to adapt or put a distance. Do not expect to change the person.

https://publish.manheim.com/en/services/consulting/used-vehicle-value-index.html "The strange summer price appreciation in used cars is partly a function of a strong economy at its peak, with mounting affordability challenges for the consumer that favor growth in used vehicle sales at the expense of new. These conditions have supported strong used vehicle prices for over a year. The catalyst for even stronger price movement this summer is the fear of import tariffs’ leading to higher prices in the future. Higher prices and the related declining level of supply create a psychological feedback loop for consumers, encouraging buying now with the expectation that prices may be higher later." The numbers suggest the possibility that we are quite late in this cycle but who knows? CACC is up 36,3% since this "short" thread was initiated 5 short months ago...

Another interesting aspect is that people afflicted with such disorders can end up in powerful positions. One way to describe this is the "dark triad" that is often associated with "dark" leadership. I would say many CEOs have such profile, at least partially. There are "tricks" at the individual level but would like to read your thoughts on how to address this collectively. http://observer.com/2016/01/how-to-deal-with-a-narcissist-5-secrets-backed-by-research/ Don’t fight narcissism, starve it?

Why do you think it is a horrible car? https://www.telegraph.co.uk/cars/renault/renault-zoe-review/ Want to hear about your perspective but please remember that a segment of the population (growing?) may see a car as a commodity to go from point A to point B.

Don't want to clogg the thread but since you're asking about "local" initiatives that may be relevant for perspective. In the Montreal area, Uber has met resistance mostly due to regulations. There is a private start-up (indirectly supported by government) called Téo Taxi which is an interesting intermediate disrupter: focus on technology (client interface, taxi fleet management), electric vehicles and salaried drivers and which is led by a dynamic character. The firm is expanding and appears to gain market share (within taxi industry and car "sharing" in a durable way). Interesting that it may benefit from the car disaffection that seems to characterize the younger generations. https://electrek.co/2017/09/29/montreal-fleet-of-electric-taxis-and-trucks-teo/ http://www.ccmm.ca/en/news/blog_three_things_to_take_from_alexandre_taillefer_visit/ http://chairelogistique.hec.ca/wp-content/uploads/2017/11/infor_article.pdf At some point, these new trends are bound to impact, somehow, traditional auto makers.

Complementary information and potential impact on pent-up demand. The impact of vehicle inspections on safety is relatively controversial. Two reports with different conclusions: https://scholarsarchive.byu.edu/cgi/viewcontent.cgi?article=1319&context=fhssconference_studentpub https://www.globalfueleconomy.org/media/44073/wp4-car-fleet-renewal-schemes.pdf Opinion: fatalities and injuries are bad news but the effect of inspections now and going forward is quite likely to be marginal, given the improvements already achieved and the "quality" of the existing fleet. I would tend to say though that the "spirit" of regulations in Europe is more stringent and the policy goals may not be so much about safety as about pollution control and fuel efficiency. This factor IMO explains a lot of the differential. In the US, the inspection regulations are much less severe and the trend is going in the opposite direction as several states are discontinuing their programs. Also, it seems to me that buyers are taking advantage of fuel efficiency by buying larger vehicles... So, pent-up demand could increase if (big if) the "spirit" of regulations change because bringing vehicle fleet age from 12 to 8 would mean a lot of new cars on the road.

That is an area I'm following and try to incorporate it in the pent-up demand concept that is being described by some. Last time I checked, in the US, the average age of cars and light trucks is 11,6 years and about 40% of vehicles are 12 years or older. In Europe, for some reason, the average age of the fleet is much lower. https://www.energy.gov/eere/vehicles/articles/fact-997-october-2-2017-average-age-cars-and-light-trucks-was-almost-12-years https://www.eea.europa.eu/data-and-maps/indicators/average-age-of-the-vehicle-fleet/average-age-of-the-vehicle-8

Some more food for thought (and actions): https://www.wired.com/story/oscar-health-ceo-mario-schlosser-interview/ "There are all kinds of middlemen in that process. And what the middlemen do for the most part is remove the competition in the health care value chain that would go towards building something that’s a compelling, seamless user experience. They remove the cost containment pressures as well. That’s one big reason why health costs in the US have risen so much. In the end, you as an individual can’t really vote with your own feet, and oftentimes don’t even realize how much health care costs behind the scenes." When the incentives are so far away from the "customer", starting from scratch may be a viable option.

Thank you also. The report illustrates very well the valuation challenge (based on closely following the company for over twenty years) associated with a tendency for uncorrelated and lumpy results. Often the earning power appears to be underestimated by the market and looking for reversion to the mean (like now) but somehow, to jump in, one has to agree with or have full confidence in their "seer" capability, a topic that has been discussed in another FFH thread (Ericopoly and others) before.

Anecdotal evidence is tricky. https://rationalwiki.org/wiki/Anecdotal_evidence "Anecdotal evidence is not accepted as proper proof or scientific evidence for good reason, yet they still dominate people's thinking. This is because while facts and figures may be true, they are difficult for people to relate to. Anecdotes have convincing and strong narratives that resonate with people on a key individual level — someone telling an anecdote will lead the listener to think that it just could happen to them too. There are further biases at work. Anecdotes, even implausible ones, can contain a high level of detail. It is this detail that causes people to become involved in the story and to imagine it more clearly..." Humans are social animals. When analyzing a company, I try first to look at numbers and objective facts and then try to incorporate the "story" part into the thesis. It is a form of reasonable confirmation when the story supports the data as it may help to project what is ahead. I remember scotthall describing this phenomenon rather well elsewhere on this Board although he seemed to put a large emphasis on the story part.

This thread is likely relevant if one is looking at Altius, Brookfield Asset Management etc Hard to say if this is just noise, as most of the times, it is. Looked up an old file on the 1997 Asian crisis and 1998 Russian default that followed. After the fact, many voices heard to explain why it happened but it seems that most, prospectively, felt that a Russian default was not in the cards (nuclear power etc). Around that time, LCTM was thriving. It was composed of very bright people using advanced risk management tools and yet they did not see how noise could become contagion and how a relatively ordinary flight to safety movement could bring its demise. After the fact, they described a "perfect storm"...Also, mostly after the fact, many expressed views that the LCTM flaws were obvious (leverage and investments in relatively esoteric and illiquid securities (like Danish mortgage bonds :)...). The point of this post is that it may be very hard to know when noise becomes contagion and the contagion phase is when you "see" hidden risks that were there all along. LCTM looks now like a blip on the chart but, then, was felt to be significant enough to cause larger systemic issues and to necessitate a Wall Street banks consortium bailout brokered by the maestro. Surprises will come "but timing, degree, & liklihood is anyone's guess." How about China? Not an expert but interesting to note that debt intensity (unit of GDP generated per unit of debt) has been coming down rapidly and has joined the downward trend and level of more "advanced" economies. China has achieved this "milestone" way before its planned transformation from a capital intensive model to a domestic consumer model. Add to that that debt and GDP numbers may not be reliable and GDP there is not really an output measure but ends up where it ought to be. One can question how the "West" deals with failures and transitions but, for China, this is history in the making and I doubt that dealing with inevitable failures to come will be easy.

Very interesting man. “Our greatest enemy by far is ignorance.” Consider myself an ignorant but working hard to improve that. Randi’s work and thoughts have many ramifications. From Carl Sagan, describing Mr. Randi, the “angry man”: “Randi is rambling, anecdotal, crotchety, and ecumenically offensive. He raises questions that many of us would prefer not to consider. But I think it is important that we pay attention. It is not only a matter of rooting out bunko and cruelty directed to those least able to defend themselves and most in need of our compassion, people with little other hope. It is also a timely reminder that mass rallies and television and mail-order technology permit other kinds of lies to be injected into the body politic, to take advantage of the frustrated, the unwary, and the defenseless in a society with political illnesses that are being treated ineffectively if at all. We may disagree with Randi on specific points, but we ignore him at our peril.”

I don't know where interest rates are going but it may make sense to get "protection" for certain outcomes or to position a fixed-income portfolio to take advantage of (future) opportunities. Historically, FFH has been very good at that. When you look at insurance companies, most follow a similar investment strategy and is is quite possible that FFH eventually ends up with a significantly different result. If inflationary forces do, in fact, manifest, as WR Berkley recently explained (excellent long term underwriter), it is reasonable to expect a delayed response on the underwriting side too with mid to long term implications for the longer tail book of business as the new generation learned inflation from the history section of their training. Even if agnostic however, I wonder if the death of long term bonds has not been declared too rapidly as FFH used to quote Hoisington not so long ago.

Very interesting Boilermaker. - for medical research I am looking for the obvious. If 5+ studies come to the same conclusion and none or 1 against, then seems like a high probability that the 5+ studies are the one to bet on. I am no experts in statistics, so lack there, but some data I can evaluate. It really depends. I am trusting the scientists - which does leave open the wrong conclusion. I look for conclusions that are generally clear in one direction though. For investing: This is a really involved question on the research. I usually try to disprove my thesis for the big drivers of value. Interesting perspective. If I understand correctly, there is an element of « gut feeling » which apparently can be improved with deliberate practice. Would add that one should be aware of what is described as the Bing Crosby methodology which has many meanings in research (and can be applied to investing decisions) but can be used to explain that the results that one “sees” may not reflect a sound process (from publication {selection bias} to the reader {confirmation bias}) and may simply reflect a form of cherry-picking. But I see your point for health issues where the price of being wrong can be high and would tend to assess the price to abate the information asymmetry that exists and determine if the effort is worth it. What is great about investing is that one can simply walk away if the target does not go through the basic filters. Next. Trust is often a key variable in those cost/benefit decisions when we meet the lawyer, doctor, car mechanic or whatever on a daily basis. So, what makes an expert? However benign or life-changing, we (consciously or not) should? go through the following steps: 1-level of relevant knowledge acquired from training and practice 2a-offered conclusions are based on a disclosed set of facts 2b-offered conclusions are based on sound and well delineated reasoning 3-opinion not offered as authority but as a basis to understand and solve a specific problem or question The underlying problem often resides in the bridge that needs to be crossed from research (often uncertain and controversial) to policy that works well if simple and clear (without nuance), the same way that an investment recommendation may not convey the uncertainty of the outcomes for a specific security. @LC I liked the video. If I understood correctly, the leader had a hard time convincing his Congress until he started to use their own language. Experts come in different varieties.

Since you seem to have a significant attachment to the halo effect, you may be interested in: https://deepblue.lib.umich.edu/bitstream/handle/2027.42/92158/TheHaloEffect.pdf?sequence=1&isAllowed=y "When considering the establishment of rules concerning blind review, conflict of interest, nepotism, and the like, it would therefore seem advisable to consider more than the possibility that some individuals in the system may be venal and corrupt. The protestations of even the most virtuous and disinterested participants that they are capable of independent judgments should be considered suspect." Beware of the venal and the virtuous?

My questions have to do with the research part. In investing, isn't it the goal to become an "expert" about a company/industry and profit from the discrepancies, if any? How do you go about the selection and triage of data? If you don't evaluate the merits of the data, how do you appraise the conclusions?

I like the "operating margin" concept that you describe. One quarter does not mean as much as long term trends. So NPW increased by 44.1% and underwriting profit went up (108.4M to 115.8M) by 6,8%. The CR went from 94.9% to 96.1%, seemingly by a small amount but the conceptual number that really counts long term is the difference from 100% underwriting, ie the difference went from 5,1% to 3,9%, a very significant difference if it represents longer term trends. Reserve releases continue to be favorable on an absolute basis but are coming down on a relative basis, a trend I expect to continue at Fairfax and across the board. @petec There is disclosure about the Brit buyback. They report an 88.0% ownership in light of post quarter financial events. I reviewed past disclosures also and cannot figure out how they end up at 88.0% but they are going in steps and your valuation seems to be on the mark.

The story on corporate taxes will be dynamic but will remain an important factor for the bottom line. Link with potentially useful inputs for different industries: http://budgetmodel.wharton.upenn.edu/issues/2017/12/15/effective-tax-rates-by-industry

No, I've already shared way more thoughts on this story than my share. But since you brought it up, I'd love to see your numbers and assumptions on it. I think this specific thread has three levels of questioning. 1-Is the story interesting/of interest? I value your posts (investment and others) and I continue to assume that you filter your posts on necessity and relevance. I thought the reddit story was relatively interesting. Healthy reminder that rare events occur rarely but when it's you, it's a 100%. 2-Is the story true? That's the question you're asking me. As the thread evolved, many fellow members questioned if the story was true. My answer: I don't know. 50% +/- 50%. Maybe 51% at this point given the nature of the alleged crime and given the status of the information available now. The first step is circle of competence but how can one derive a precise conclusion with such a fragmentary and anonymous on-line piece of evidence? 3-How biases can interfere with critical thinking and decision making? That's the question that I find most interesting in this thread when my impression is that conclusions are reached and some steps are skipped. Legitimate complaint or fake news? Trying to balance an open mind with a healthy dose of skepticism.

A "story" can be appraised for its level of interest (true or not) and can also be appraised for its validity. It can be a two-step process. Given the nature of this Board, the fact that the red flag detector gets activated should not be surprising. Imagine you are the investigator taking the complaint. You need to balance an open mind with a healthy dose of skepticism. Some people appear to be very good at it (verbal and non-verbal cues, checklists etc). A lot of work however shows that, in general, we are poor at BS detection and individual auto-evaluations at this show a particularly high level of overestimation of capability. If you read this Liberty, could share a +/- number on your 70% assumption? For those who have time or who are interested, here are two potentially useful links. The first one is from Carl Sagan who offers a version of a baloney detection kit (what to do and what not to do) and the second link draws a nice parallel to business decisions, including the risks involved with emotional tagging. BTW, a lot of related work can be found on Google Scholar :). https://www.brainpickings.org/2014/01/03/baloney-detection-kit-carl-sagan/ http://hansvanelk.nl/uploads/HBR%20Why%20Good%20Leaders%20Make%20Bad%20Decicions.pdf

An interesting message is that a sustained involvement with a solid and convincing story may be sufficient to get constructive pieces of legislation through democratic institutions. From what I've read on this topic, it appears that Russia has put an incredible amount of resources to resist the passage of the Act and associated sanctions. Another interesting aspect is that Natalia Veselnitskaya, the lawyer with ties to the apparatchiks, who, among many interesting roles, actively lobbied against the passage of the Magnitsky Act, was part of the (in)famous June 9th, 2016 meeting where 8 people were present and where (I would guess) there was more to discuss than international child adoption practices. Then some say that War and Peace was too melodramatic. Sometimes truth is stranger than fiction.

Thank you for bringing up the story of Bill Browder. I haven't read the book yet but I've watched the link provided by JanSvenda and did other basic research. Bill Browder seems to be a nagging pebble in the shoes of the big shot Politburo people. If you have an interest in propaganda and counter-propaganda, perhaps worthwhile to surf the web and try to find and visualize: Magnitsky Act: Behind the Scenes. The movie tries to show the other sides to the story. https://www.thedailybeast.com/dissident-director-helped-trumps-russia-comrade-attack-us This story (Red Notice, which I assume to be the true part) helps reminding me how important it is to preserve our institutions.

I have often used CDC data and have found the methods to be strong and reliable. The reports are not predictive in nature as they tend to focus on observational data and use analytical tools to improve the presentation and reporting of the data. Of course, this can always be improved. In this specific case, the mortality data is obtained essentially from the death certificates. https://www.cdc.gov/nchs/nvss/deaths.htm Other data come from surveys. They describe the limitations of their reports and, for this specific topic, it is likely that the alcohol problem is significantly under appreciated. https://www.cdc.gov/pcd/issues/2014/13_0293.htm