Zorrofan

Here is one link.... http://seekingalpha.com/article/160188-unemployment-casts-a-long-shadow-over-economic-recovery cheers Zorro

Actually, that's wrong. 10% of the workforce is unemployed, not everyone else is working (i.e students, retired people). When you factor in individuals who have stopped looking (i.e. given up) and dropped out of the workforce along with the number of people who are working but have had their hours reduced unemployment is closer to 16%. (sorry I can't find the link right now but will post it later if I can find it). In some states, California for example, the number is closer to 20%. Then there is the CRE mess to deal with, ARM mortgages starting next year, all in all, it should be interesting! cheers Zorro

Cardboard You raise some very good questions. I would like to ask two questions. 1. As the total US Federal debt grows from $10 trillion today to $24 trillion in the next ten years is the most likely outcome the government devaluing the dollar and the country suffering 1970's style inflation if not worse? Is there any other way out for the government? seems unlikely? 2. Is it as bad in other parts of the world as it is in the US? China & India are still growing, even now. Demand for commodities, as these counties industrialize and absorb some 300 million+ people into the middle class, is going to grow. And China, the largest foreign holder of US dollars is buying hard assets - oil, other commodities, and yes gold. Will this demand outweigh the drag from the US? You almost tempt me to sell my BRK and buy gold.....I am not sure what the answer is, but these are interesting times! cheers Zorro

Buffett may have that opinion publicly, however his biggest disclosed portfolio move last quarter was to sell COP and buy JNJ. I'm only saying that because it doesn't look like he is backing up the truck on metals or commodities. The only move I've seen him make is to lighten up on commodities (oil) via that COP sale. Don't get me wrong , I think very highly of JNJ. In fact I have posted in the past that I wished Prem had bought more JNJ instead of the likes of Canwest, The Brick and Torstar. But given that the IEA has said that due to lack of investment oil production may tight by 2012, that you have the massive industrialization underway in China and India, and the weak outlook for the US dollar I don't see commodities as a bad place to be. It would also seem like an area where WEB could make a large investment (although he has said in the past he doesn't like commodity type businesses). LUK does however - they have invested in oil drilling, in iron ore, as well as copper I believe. Interesting though. cheers Zorro

I notice Francis bought some ICO..... cheers Zorro

Cardboard, I couldn't agree more. I think commodities in general will be an excellent hedge against the dollar. They only thing I don't like about gold is it has very little practical application. Other commodities should do well (oil, copper, etc) and have practical uses. That is also another reason I am glad to see WEB & Prem invest more outside the US. Longer term energy should do well as the economy recovers... cheers Zorro

Although this belief about the economy following the market is widespread, it is obviously a fallacy. The highest the S&P 500 ever got was just before the market meltdown. If markets indicated the future, we should still be enjoying the most robust economy in history. I like the logic your reasoning. i.e. "This belief is common, but it is obviously wrong." Anyways, the market obviously over-shoots and under-shoots. So you just have to be astute enough to pick it off when it happens. Obviously in 2007 it over shot, and probably now it's a bit frothy. Back in Q109, the bottom was priced, even though unemployment and the real economy was getting worse. It wasn't until July/August that we started seeing unemployment stabilize - if you had invested by then (i.e. now), you would have missed the boat. All the best bargains are gone now. My question is have we missed the bottom? If commercial real estate is the next shoe to drop it could turn the current rally into a bear rally...which is what I think this is anyways. There is still more deleveraging that needs to occur and once the stimulus package is spent then what? Comsumers are still deep in debt, unemployment is high, governments are also deep in debt...what is it Sanj called it? Green poop not green shoots? Interesting times though.... cheers Zorro

If we are going to vote - my vote is that it isn't over, not by a long shot! Many investors have forgotten a few things already...... Mortgages to refinance http://www.bloomberg.com/apps/news?pid=20601109&sid=arb3xM3SHBVk Unemployment still high http://www.foxnews.com/opinion/2009/08/07/john-lott-unemployment/ We live in interesting times! cheers Zorro

Looks like Prem is loaning more money to the Brick.... http://www.integratir.com/newsrelease.asp?news=2131022632&ticker=T.BRK.UN&lang=EN Great if it works out, not so great if the recession drags on longer than expected. cheers Zorro

Sanj, didn't you hold any investment in this company? Do you still or are you at least able to comment? thanks Zorro

We think we are in a long and deep recession, with many unintended consequences. But as value investors, we continue to see some excellent opportunities and common stocks and bonds and we're taking advantage of them. This is a market of stocks and bonds and for those willing to look there continues to be many long-term opportunities available. The current period reminds us of the 1975 to 1996 time period. We had many ideas then and it is no different now. This is a golden opportunity to gifted investors like Prem et al...... cheers Zorro

Interesting read - thanks for posting! cheers Zorro

Sanj, I will toss in my $0.02 worth. IMHO gold is not an investment, rather it is insurance. The reason for holding gold is for a hedge against economic collapse pure and simple. Other than that you are IMHO correct that owning shares in a well run business will provide a superior long term returns. Cheers Zorro

I hope they have done both! Plus buy back a few more shares at these prices too! My assumption is the 2Q results will be out on July 30th? cheers Zorro

Are ALT-A mortgages the next shoe to drop? http://seekingalpha.com/article/144200-alt-a-mortgages-the-new-subprime-meltdown I have to vote with the bears as I think the market will correct and by a significant amount. You can still find good investments (JNJ for example) but be prepared for the price to drop further. Of course, I could be wrong, but I don't think so..... cheers Zorro

Bill Gross, always an interesting read, mentions not only the current deficit problems but the looming social security & medicare/medicaid ones as well. Potentially $40 TRILLION....might be a bit of pressure on the dollar! http://www.pimco.com/LeftNav/Featured+Market+Commentary/IO/2009/IO+June+2009+Staying+Rich+in+the+New+Normal+Gross.htm cheers Zorro

I have been pondering whether oil would make a better hedge than gold if we are entering a period of higher inflation/lower US dollar. Non-rhetorical question, does anyone have a comparison of gold/oil during the 70s? A Canadian oil trust pays a dividend, and if oil increases with inflation/lower dollar the trust should rise as oil price rises. Thus you get the same hedge effect as gold....I think. Comments? cheers Zorro

I am thinking more along the lines that it has become personal for "the shorts" FFH is suing rather than a fresh short attack cheers Zorro

Does anyone else think that this smacks of desperation on the part of the shorts? Its so absurd that I can't think of any other explanation.... cheers Zorro

If one is worried about inflation and through in a possibly much weaker US dollar, I think you would be better off investing in either gold or oil/nat gas. With something like COP (WEB owns it still IIRC) or an oil royalty trust and you get a dividend, inflation protection as oil will rise in price, and if the dollar falls oil rises in US dollar terms. Seems like a better bet. And then there is peak oil....... cheers Zorro

It may or may not make you an insider, but at the very least it makes you privy to insider information. Didn't Martha Stewart do some jail time for that? I am getting old but it dosen't make sense to me...... cheers Zorro

I took a look at them a few years back when they started setting up institutional investment funds. They seem to have structured it so that they (management) personnally earn a sizable chunk when the investment fund does well (performance bonus), Onex shareholders not so much....just my $0.02 cheers Zorro

thanks for the update Watsa...always interesting to see what Prem et al are up to! cheers Zorro

To me it seems that FFH has 80% of its equity investments (approx $5B out of a $20B portfolio) invested in undervalued largecaps. The rest seems to be in (hopefully) high-yield, merchant bank type investments such as helping Canwest and the Brick restructure. These may or may not payoff but if they do, they might be very profitable in the mid to long term..... cheers Zorro

On the other hand, a few years from now when things improve, FFH will own/control the Brick. This might be a nice little money spinner five years from now.....its not JNJ but hey, who knows? cheers Zorro