jfan

Thanks @Longnose That was a really interesting perspective. I purchased the entangled life book. Seems promising. On a side note, I find it amusing that the law firm representing the GBTC lawsuit against the SEC, is none other than Munger, Tolles & Olsen.

I have a friend who was a successful CEO of a public traded company that got bought out. His dream was always to become a doctor. He got into medical school in his 40s and trained for 8 years to become a specialist. He is now in his 60s. Still practicing and working harder than most people younger than himself. I think he loves the work, but I know he doesn't love the healthcare system and all its friction points. Being a doctor, you have a different set of task masters you have to answer to and the constant grind of interpersonal conflict is, imo, the source of their burnout. But if it is a passion of yours, do it earlier, the training demands good health and fair degree of energy.

Are you referring to jpm annual energy report? They cover a breadth of topics and is around that length.

Did anybody attend the hfp agm yesterday? Will they be posting up the agm video?

tpl

Ffh

An aside to this topic of FFH still being cheap despite the run up in pricing and the question of what to do at this point. I think the concept of economic elasticity might be helpful: ie: - Thinking on the margins instead of absolutes - What is the return/risk on the next marginal dollar? - Anchoring bias on the prior absolute purchase price vs what the purchase price today means relative to its fundamentals My normalized EPS is ~ $110 USD or $140 CAD. Even if I'm wrong, and EPS is really 1/2 of this, at these current prices, the earning's yield is 7.8%. Compared to the S&P 500 historical return of 7-8%, my general feel of the risk of margin compression, top-line growth deceleration, persistent share count dilution, probability of reinvestment success, etc between these 2 options, FFH seems better positioned. The question for me is: "what is the rational thing to do with my future savings"? I posted before that I would probably continue to hold my position, but the more I think about it, perhaps the rational thing to do is buy more given the opportunity set I have in front of me.

This paper from Research Affiliates gives some historical base rates for inflation rate movements. The price of time by Ed Chancellor is an interesting historical summary of interest rates across long spans of time across ancient, medieval, and modern societies. 965-history-lessons-how-transitory-is-inflation.pdf

Agree with @Spekulatius and @Munger_Disciple. Speaking for myself, I'm definitely a below average investor and would have likely did better just investing in a few indices. Perhaps I am just stubborn and hold some eternal hope that self-improvement is possible, and that even an average Joe could achieve some degree of investment success over time. I think an investor needs to earn the right to concentration because concentration requires 2 important attributes: 1) correctness of your variant view AND 2) ability to change your mind with new information. If you can ingest large volumes of information at great velocity, have great analytic horsepower, and have the ability to change your priors with new information and act on your posterior probabilities quickly and decisively, concentration makes a lot of sense. The unfortunate thing is that most of us have difficult to do this. There is a particular danger confusing correlation with causation as it pertains to concentration and investment success. The risks of concentration also dependent on age and future earning potential. This is counter-balanced with the fact that often wisdom and tacit experience comes with time. Swing/Value trading even with a 5+ year time frame for the average Joe is really difficult. Getting all the following right is a herculean task: 1) valuation accuracy 2) correct read on the business fundamentals 3) the right gut feeling/judgment of the people involved and 4) timing of catalysts. Hence @dealraker idea of letting life happen with long holding periods of productive businesses +/- averaging down smaller quantities over time after familiarity in the name builds up, is much more achievable (As long as one is willing to roll up your sleeves to read and learn about the business). The beauty of this approach is the humility in admitting that you don't have to be perfectly correct on the above 4 factors. This limits the impact of any bad investment decision and relies on a bit of luck in finding that wealth-contributing compounder to do its thing reinvesting in itself over time. Will concentration occur in this type of portfolio? I don't have the data, but given the opportunity, my guess is that a portfolio will behave with power law dynamics, but in this latter case, the business earns its way to portfolio concentration. It makes intuitive sense that if I can't maximize any informational or analytic advantage, taking an extreme behavioral strategy (especially if my investment returns don't dictate my employment status) is the only advantage retail investors can capitalize on. The key I guess is that with a @dealraker approach, is narrowing your field of view to productive profitable businesses with quality long-duration assets. If you can get great capital allocators that is a bonus. Perhaps the only variation I could think of is taking the occasional swing at some very asymmetric bets especially if the risk of a zero is unlikely. So for me, a buy and hold strategy makes more sense to me than concentration. I'm a slower learner and reader and can't change my mind quickly. Having 1-5% position sizes makes sense. Following ~20-30 positions will allow me to do some semi-regular diligence with an element of benign neglect as long as I stick with more liquid, > mid cap + companies, have a good opinion of management, can grasp at least the rudimentary key drivers of the business fundamentals, as well as favor long-duration quality assets. I like @Viking approach of asking oneself of how large a % do I want to make this? How sure am I of this mispricing? How familiar am I with the nuances of this business? What is the certainty I have around the valuation ranges? Is there alot of uncontrollable/hard to predict elements that necessitate a more gradual approach (eg land development timing, emerging market sentiment changes, etc). I finished a night shift last night, so I apologize for the rambling.

if you are selling some FFH at low 800s CAD, I'll buy some from you BAM seems fully priced, not sure about redeploying it to BN as it is a decent position size for me already

ntdoy

BAM

A couple articles for those interested: Do cryptocurrencies have a place for value-oriented investors? | Benefits Canada.com The second is an attached pdf from the Federal Bank of Reserve New York. Here is the abstract: sr1052.pdf

2021 Workers Compensation Financial Results Update (ncci.com) The data is slighly dated but it gives a idea of the longer term WC market. As per @Cigarbutt post above, it seems that WC has significantly turned around since 2013 and continues to have <100% CR, premium growth, and 20% operating margins. There is a slight uptick in CR, and drop in premium growth and operating margins, so maybe some slight short term headwinds, but it is my first-level thinking, that with WC suffering 20+ years poor profitability, and now has 8 years of profitability, that there might be some long-term tailwinds for Stonetrust here. Also for those interested, using 3-year rolling geometric means for Chou Associates returns since inception, it seems that he outperforms the market ~ 65% of the time. His worst 3-year rolling average return was -8%. He is ~ 10% return investor wrt to his long-term track record. I did the same with another Canadian deep value investor, for contrast, although this investor had a 3-yr average of 11%, the dispersion was quite a bit more significant, where he outperforms ~44% of the time, with gains up to 80%+ but losses -20% over time. Chou's style married to a conservative insurance business seems to a good match. <0 21% 1 to 7 15% 8 to 10 15% 11 to 15 26% >16 24%

thanks for the link. I assume the last part was particularly polarizing. I haven't yet read that book, but have been working through A Noble Function - How Uhaul Moved America. This one is more about the initial early years of the company's founding.

Do you have that video link?

Congratulations on your new addition! Enjoy every moment. I have a 4% position on FFH. I haven't yet earned the privilege to take concentrated positions yet. But a few thoughts about my ownership from this point on: 1) If Prem and team continue to stay in charge for the next 10 years, I think it would be reasonable to expect that they will pull interesting tricks out of their hat from time to time. They do better with value now and value not so far in the future investments. In a higher or for long interest rate environment and global reach, I feel fairly confident that they will always find something to do. 2) They don't run private non-insurance businesses or do turnaround activism very well, but they always seem to be able to attract good capital allocators to partner with. Hopefully they continue to build out this platform which might have long-term positive outcomes. 3) I'm also fairly sure that Prem and team recognize that at some point in the future, the insurance market will go soft. If they position their float now (assuming they can maintain decent retention rates) to generate a decent amount of interest, dividends, and more capital gains than losses, they will continue use those opportunities to buyback shares given that they've slowed down the expansion of their insurance geographies. If they do the above, I think I would be content to enjoy the ride and hold on to it. However if the following happens, I would trim or sell out: 1) more insurance company purchases with FFH shares 2) large macro bets 3) position sizing hard on too many turnarounds or deep value plays with too many macro externalities

With ffh changing significantly in terms of underwriting consistency and investment focus fixed, what will you do when it hits $1200 or 1.5-2x BV? Sell? Trim? Or hold for 10+ years? Is there a case to be made that ffh will be a compounder like brk?

Just a random thought... If I purchase a bunch of BTC at $15K/coin, the price runs up to $100K/coin. I use that BTC to purchase a house by transacting fully in BTC with the seller. Do I pay capital gains tax on my BTC purchases? What is the Canadian tax law surrounding this? Does the home seller declared capital gains or losses at the point they convert to the local currency?

Just to add some more charts to continue fuel this debate. The following is 2 charts: 1) BTC's 1 year volatility relative to other asset classes https://charts.woobull.com/bitcoin-volatility-vs-other-assets/ 2) BTC's 60 day volatility relative to FOREX https://charts.woobull.com/bitcoin-volatility/. @Parsad is correct that at the current state volatility is very high relative to other choices which makes transacting in dollar terms somewhat impractical. That said, volatility of "money" does not necessarily, according to Hayek, equate to lack of value. Hayek discusses this on page 70- 72 in his book attached here: https://nakamotoinstitute.org/static/docs/denationalisation.pdf . The biggest question is will a money over the long-term (probably measured in years to decades) be able to purchase a basket of commodities (stuff that fulfils the most basic of human needs) from point A to point B in time. The BTC bulls would say that as adoption increases, and the remaining coins to be mined are gone, that this volatility will mitigate in the future. This is obviously still speculative. The volatility charts attach above have not shown definitive proof over its lifetime. I do think that it is premature to close this aspect of this debate due to present data. As in the FFH 2023 thread, @Viking quite intelligently points out that FFH's historical ROE is not a good reflection of its future ROE. I have to run to work, will add more thoughts on illiquidity after.

Not that I'm a genius but Claude Shannon spent significant time and effort studying the mathematics of juggling, wrote poetry, and rode unicycles at bell Labs writing chess programs for fun. I just prefer to spend my part of time and brain cells exploring ideas even if it leads nowhere but just satisfy my curiosity. Hopefully this helps reduce the probability of developing Alzheimer's.

I tried to find a good link explaining the difference between a hard and soft asset but my brief search came up lacking. This was a fair one on the subject: https://fundrise.com/education/real-estate-is-a-hard-asset It seems that trying to peg assets as hard or not is similar to separating value vs growth investing. Perhaps it might be a useful exercise to examine the dichotomies of descriptors/characteristics of an asset: 1) atoms/tangible/physical vs bits/intangible/non-physical (emotive, cognitive, psychological) 2) scarce/non-reproducible/non-replaceable vs plentiful/reproducible/easy to substitute 3) directly serves a basic human need (Maslow's hierarchy of needs) vs indirectly acts as a conduit to satisfy a basic need (eg financial assets) 4) Unencumbered/Bearer asset vs Derivative of another asset/promise of an authority or institution 5) Requires energy to produce vs Requires human consensus/policy to produce These are some of the distinctions off the top of my head. Any others? BTC: 1) Intangible 2) Scarce 3) Indirect conduit 4) Unencumbered 5) Requires energy to produce

Thanks @Viking That makes a ton of sense. The average basic shares outstanding during this period was 25 million. So these equity and CPI hedges cost them $21-22/share each year in earnings. (I know the math is not precise) Their average EPS during this period was $21/share on an average BVPS of $406/share USD. IF we add these unforced errors back to their average EPS, this would suggest that they SHOULD have achieved 10% ROE through this time period unhedged. IF the investment team is still roughly the same and have incorporated their painful lesson for future decisions, and the current portfolio state, I am hopeful too that past is not reflective for the future. Many thanks.

Sorry I'm a slow learner but FFH's ROE since 2002 has averaged 8% (with a wide dispersion) and a median of 6% (IQR25 2%, IQR75 12%). With it trading at P:E of 6x, is the investment narrative here that FFH can sustain its current earnings for a longer period of time relative to its historical performance? Is then the hope here, that their PE multiple will expand to 10x?

what is the definition of a hard asset? physical? vs scarcity?