longterminvestor

more Lou Simpson. attached. Learning from Lou Simpson — Investment Masters Class.pdf

Insurance Companies have lots of tools to get more premium in both regulated and non-regulated markets. If a carrier wants to get an increase, they will find a way to do it. And the smart one get off the risk if they can't get the rate they want for the account. Insurers "rates" are regulated by individual state insurance commissioners - this is called the "Admitted Market" or standard market. Carriers can get rate in other ways if regulators do not approve increase in rate. They can increase the insured values on property for "inflation" and then the "approved rate" is based on an inflated property value = higher premium even though the rate stayed the same. However there is another market that is growing fast - Excess & Surplus Lines Market - known as E&S or non-admitted market. Same game here with inflating values to get more premium. I have seen carriers increasing building values due to increased cost of construction. this is helping the insurance market get more premium in an already very hard market. "Double Whammy" for insureds. The rate is up AND the value of building is up. I have seen 60%-75%-100% increases in property premiums where we do business - Florida. Everyone is complaining about no capacity available in marketplace. and personal lines in Florida is as bad as I have ever seen. Clients are getting crushed.

Mr. Munger just looks annoyed the entire time Mr. Buffett is talking. Great clip.

@ValueMaven Will be doing the same. See attached 1970-1985 breakdown showing the rate as calculated using formula now. This period is considered the most inflationary time in history so I wanted to run the simulation. For the rate to stay above 7% in 2022, the March 2022 CPI-U has to post above 284. Which would be a 7.22% increase for 12 months. From 1970 - 1985, the annual change from March to March was above 7% 5 years out of the 15 year period. My Mr. Buffett "And then what" analysis leads me to be optimistic about short terms prospects for this instrument however long term (beyond 3-5yrs) it becomes less interesting. I see it as a good place to stash cash and earn decent, completely safe return. 1970-1985 NUMBERS.pdf

see attached spreadsheet that checks out with formulas to track. IBOND SAVINGS CALCULATION.xlsx

AND THAT LADIES AND GENTLEMAN IS WHAT I CALL THE BLINDING FLASH OF THE OBVIOUS!! THE CODE IS CRACKED.

First off, I should be looking for great businesses to buy. But since I can't find any, I am here, chasing down CPI-U index in the US Bureau of Labor Statistics. To say that I am annoyed I have not cracked the code on how the interest rate sets is an understatement. I pride myself on cracking the code when problem solving. Been looking at all the CPI data I can find, using percentage changes YOY on numbers however can't seem to get the math to check out. My work has been mainly focused on the below paragraph: We set the inflation rate every six months (on the first business day of May and on the first business day of November), based on changes in the non-seasonally adjusted Consumer Price Index for all Urban Consumers (CPI-U) for all items, including food and energy. weblink: https://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds_iratesandterms.htm My thoughts as of now....and hoping someone can take this a step further or help me with what I am missing. Looking for the blinding flash of the obvious. 1. The "we" is the Treasury? - dont know exactly who the "we" is 2. the key word above is "BASED ON" - could be arbitrary, may not be science. maybe they just base it on CPI-U and make a call on where to set rate 3. the "non-seasonally adjusted Consumer Price Index for all Urban Consumers (CPI-U) for all items, including food and energy" leaves a ton to un-pack. The best I can find is "All Items" with a footnote saying not seasonally adjusted. 4. First business day in May and Nov means to me they would have to use data from the previous month that is posted in current month to use for the following first business day. For example, The Sept numbers for 2021 were posted on Oct 13, 2021 for use on the "first business day in November" The closest number I could find is 5.4% increase from Sept 20 to Sept 21 defined as "all items". https://www.bls.gov/news.release/archives/cpi_10132021.htm 5. I am not concerned with when the interest rate starts ticking on the bonds I bought, I am 100% focused on trying to find the number that tracks the interest rate. I am probably gonna call some 1-800 number I find and get directed to the department of agriculture who re-routes me to the bunker in Nevada where there's a couple guys who are like "um...I can't help you however I am looking for my stapler....."

I'm with you ValueMaven. When discussing this instrument, everyone is like - well its not fixed and the rate will go down over time. What I have been thinking about lately is "what happens if the CPI-U actually INCREASES?" and the rate goes from 7.12% to 8%-8.5% (even higher???). Could be my confirmation bias creeping in. But I think its actually possible, even likely.

I opened 1 for my wife, 1 for me, and then inside mine I "linked" minor accounts for both our kids. We have 4 total accounts with 2 separate logins - the minor accounts are accessed through the log-in with my account. Little annoying but its definitely set it and forget it. Will be re-loading in Jan for the full amount.

its somewhere in the US Bureau of Labor Statistics. I haven't found the actual number yet but when I do will let you know. https://www.bls.gov/news.release/cpi.nr0.htm

Instrument comes SALT Free! Not subject to state/local tax - didn't mention cause I live in SALT Free Florida.

I did an analysis on this - poke holes in it if you can. Thanks! VIDEO: Beck Quick Video: https://youtu.be/0bLP7F-UWSQ ATTACHED: Bloomberg Article NY Times Article John Lim article (guy from Becky Quick video) Basic Info on I Savings Bond from treasurydirect.gov FAQ on I Savings Bond Tax Consideration Rate Calculation Formula OPPORTUNITY: Save $10K per Family Member now till 12/31/2021 and $10K additional window available from 1/1/2022 thru April 2022 Family of 4 can lock up max $80K in next 5 months (discounting the additional $5K available thru tax refund) at floating semiannual rate of 3.56% (7.12% annualized if CPI stays flat in May ’22) Rate Formula (component of fixed + inflation with fixed at 0.0%): Fixed rate: 0.00% Semiannual inflation rate: 3.56% Composite rate = [fixed rate + (2 x semiannual inflation rate) + (fixed rate x semiannual inflation rate)]: [0.0000 + (2 x 0.0356) + (0.0000 x 0.0356)] Composite rate: [0.0000 + 0.0712 + 0.0000000] Composite rate as percentage: 7.12% OPINION: Good option to put money in a safe place rather than bank earning 10 beeps or less Additional $5K thru Tax refund is not appealing– more paper work and the tax refund option is issued as a paper bond – different than electronic bond available in $10K bucket. Paper bond is money good, just gotta keep paper records - redeemable in person only at local bank. TAX - Like the option to defer tax to maturity rather than paying tax annually PROS: Inflation adjusted in a time where inflation risk is real 30 year bond maturity with 1 year lock up (if withdrawn within 5 yrs – the last 3 months of interest is deducted as “penalty”) Unlike TIPS, the bond value cannot go down – the rate cannot go negative US Gov Issued – indisputable best credit available Interest compounds semiannually Tax Advantaged if you defer taxable event to maturity Frictionless - no transactional fees CONS: Floating rate subject to CPI semiannually – May & Oct Consumer Price Index (CPI) has its flaws Money locked for 1 year Too small, $10,000 per yr max cap does not move the needle (uncertain if this product will be offered post April 2022) Gotta purchase thru treasurydirect.gov – set up account, attach bank account, set up additional account for spouse, set up minor accounts linked to parent account. Little annoying but the juice is worth the squeeze. Best Savings Rate_ U.S. Government Series I Savings Bonds Offer 7.12% - Bloomberg.pdf I Bonds, Offering a Safe Space for Cash, Get a Big Rate Bump - The New York Times.pdf John Lim - Opinion_ This simple investment can earn you more than 6% with no risk - MarketWatch.pdf Individual - Series I Savings Bonds.pdf Individual - Series I Savings Bonds FAQs.pdf Individual - Tax Considerations for I Bonds.pdf

Mr. Buffett bought preferred shares of GE back in 2008. Considering GE has been a powerhouse business for half a century - he has been studying the business since he was in the womb (exaggerating but you get the point). If there is anyone on the planet qualified to purchase shares or an entire business unit - its Mr. Buffett. I'm curious like all of us could he/would he buy some assets from GE. I sleep easy thinking that if there is an opportunity at our price, Mr. Buffett will execute. My hope is Mr. Buffett is discussing his thoughts on transaction with Gregg and/or Ajit. Thinking in terms of perpetuation. The GE spin off is a great learning opportunity for managers to see - complicated and complex with tax implications. Interesting to ponder - no doubt they got a call on something GE related.

really great take. changed my thought process on the DIS sales (twice). thank you for sharing.

thanks for reminding to stay within my circle of competence.

CovePoint was part of the Dominion purchase. I see Pipelines as "Axes, Picks, and Shovels" of the oil/nat gas biz - great way to get exposure to the sector without taking on the commodity risk. The shut down is probably Greg Abel investing some capital into the pipeline to make it run better - my guess.

Why buy bonds? Berkshire does not buy bonds for cash flow, they buy for store of value. and interest rates can only go up which means the price of the bond goes down. Agree, doesnt make any sense.

I have been thinking about Disney and Berkshire. Here is an investment that came into his world not once but twice. The first time he salivated the purchase was when DIS was selling at a "Multiple of Rides" - great line in one of his letters - getting too old to look in my files for the exact year and quote it word for word. Then he got a second bite of the apple when CapCities merged with Disney and he was able to extract more value from the transaction with some warrants if I remember correctly. Sold it both times! I have gotten better at letting go of my errors of omission/commission and there's shred of doubt in my mind Mr. Buffett sleeps soundly but to think of what could have been.... Any lessons from the wise CornerCrew on why he sold or lessons learned from the Disney error? An allegory or two would be appreciated.

Mr. Buffett and Mr. Munger have always been quoted as saying "No company ever went out of business having too much cash", however they forgot to mention what to do in an inflationary environment.....Schiller P/E at these heights scares me for sure. Where do you put money?? I just keep saying to myself, trust quality and invest in great businesses - things will be good over the long term. LASTLY - I stopped looking at the P/E ratio on BRK a long time ago. The websites/algorithms crawling the data can not seem to get the Class A/Class B share distribution correct so the algo takes financial data reported and divides by share count of the A or B and mis-reports a P/E ratio and any other per share ratio. I stopped worrying about P/E ratio on BRK so I don't even know of a website/source that does the math correctly. wish I could recommend one to you.

I didnt see this until now however the post says it was uploaded on Wednesday. seems like there was a delay on my end. Feedback for Parsad.

My math is a little different: Count as of Dec 31 Class A equivalent: 1,543,960 Count as of March 31 Class A equivalent: 1,525,655 (Count reduced by 18,305 shares or 1.2%) Count as of April 22 Class A equivalent: 1,522,371 (Count reduced by 3,284 shares or 0.2%) TOTAL BUY FROM DEC 31 TO APRIL 22 21,589 Class A equivalent shares or 1.4%

I listened, and your sentiments are correct. Same old stories, nothing new. Seemed like he took an outline from The Snowball.

3 hour podcast about Berkshire - Titled Part I. I haven't listened start to finish but wanted to share: https://overcast.fm/+Faxl9ffQE

Understood on Gates Foundation being gifted B shares. I knew that. But to circle back, wouldn’t Gates Foundation, under mandate to dispose of shares in 12 years, naturally give BRK first right of refusal on the shares gifted by Mr. Buffett ? My point is 30% of the entire firm will be sold 12 years postmortem. That’s a certainty. So we already know the volume will be there - just hoping the price is right. And wouldn’t Mr. Buffett anticipate this and provide a rough plan to execute. I always have thought about this - interesting. Hope he loves to 100!