Xerxes

Great discussion with J. Currie https://www.bloomberg.com/news/videos/2020-12-17/goldman-s-currie-sees-tell-tale-signs-of-commodity-super-cycle-video Going back to the reasons as to why we had such a long bull market in bonds, economist typically point to three major points: 1 - deflationary nature of technology 2 - changing in demographic, the baby-boomers hitting peak salary in the past few decades, therefore in aggregate creating a surplus of capital at about the time when the demand for capital was diminishing (point below) 3 - last couple of decades most of the investment has been in information technology sector that doesn't require as much capital as CAPEX heavy old economy. Therefore less capital was needed, putting downward pressure on rates. I think going forward, (1) still is in play more than ever, but (2) will flip as old economy + infrastructure that have been starved for capital need major investment

Awesome interview with Grantham. Longer than the one on Bloomberg Front Row, and more interesting. The part about the comment people left for him after Front Row is pretty funny. For a value investor he has a good sense of humor, in fact i think funnier than Bloomstran's humour. https://podcasts.apple.com/gb/podcast/jeremy-grantham-uncertain-crisis-invest-like-best-ep/id1154105909?i=1000477283884

ICUMD My view has been that both FIH and ex-FAH were more investment firm with permanent capital that could really make additional investment either by (1) selling another holding (2) issuing equity. The latter was out of option given the huge discount and if you are riding a macro wave, it doesn't makes sense also to sell a holding that has long term potential. Flipping asset makes more sense in a more developed economies. The missing key has been third-party fee, which now they are getting through their revamped African business re-named Helios, and hopefully through something similar with Anchorage. Major difference between the two but ultimate aim is to get that fee machine going.

So, the general idea is that we had a four-decade bull market (1980 through say 2020 for simplicity). And for argument sake let's say we will have a slow grinding bear market over the next 40 years (2020 through 2060). Fairfax long term view was that the bull market ended (or was soon to end) when they switched out in 2016, and have been keeping on the short end only. After a few false start, (i.e. The initial stages of the pandemic contributed to the pause on the narrative), lets say it is now slowly heading that way. I understand if they were to stay on the short end, they will float like a boat and ride that wave, while never having material exposure to capital loss. But at some point, let's say 20 years from now for illustration's sake, they will gradually lock in because they perceive that the rate has peaked. That "lock-in" itself could be 20 years too early, if the actual peak rate arrives in 2060. That is what I meant. These long term interest rate movements are very long term and very gradual, where you could be in the middle inning of what is actually a larger first inning (i.e an inning within inning). Think these are very much outside the scope of most observers. Even now, only in hindsight, economists are looking back to explain why we had a 40 years long drop in interest rate. But maybe none of this matters, because by then we wont be around anyways i think and/or already enjoying retirement on Planet Mars, thanks to SpaceX-Tesla consortium.

well said !

I think he is smart, hardworking but at time abrasive and in search of deciding who he is in this world. Just like Social Capital is going through different stages, so is he. He definitely looking in his own way after the retail with "All about retail" being his battle-cry. That is fair. That said the power of Twitter platform can be intoxicating, hence my comment about sheep and the Messiah. Just personally, I prefer people who keep their heads down, and just do a good job and are being good citizen. Let the society recognize you for your past good deeds, rather you needing to buy goodwill via buying call options. Goodwill acquired through derivative instrument tend to have a decaying time premium to it.

All these celebrities treat their Twitter followers like sheep and themselves like a Messiah of a sort.

wow 4x the current interest/dividend income over a long i imagine and over much larger float? As an newbie on the topic, the way i see it, the think with a long-term bear market in bonds, is that as interest rate slowly go up, and if any fixed-income investor decide to lock in those higher rate, while they naturally get higher income, they also automatically expose themselves to incur long-term unrealized capital losses as decade goes by and interest rate continues to grind higher. It is much easier to be in a long-term bull market in bonds.

The only authority worth learning from on the Decline penned a total of six volumes on the topic. I read all six something like 20 years ago, unfortunately as great historical work that was, it was not easy to pin down one element. As a side note, Asimov's Foundation Trilogy was partially based on Edward Gibbon' work. Perhaps there is a gem worth exploring in the Foundation Trilogy that can be linked to Fed M2 expansion.

That is an interesting way to look at: "Pre-tax operating earnings for nine months (excluding the $10.6 billion pre-tax write-down at Precision, which lowers book value by $10.4 billion – writing-down goodwill is not tax deductible) amounted to $19.4 billion. So, Berkshire spent over 80% of operating profit repurchasing shares at an average price 15% below where they opened the year and at 105% of average book value per share. Right, the guy is washed out." Given that most folks (in the media, here and myself included) tend to compare the size of the buyback to the size of cash pile. The way he is saying is that 4/5 of excess cash was being used for buybacks. This view however implies that Buffet does not use the same mental bucket for buyback vs. other large M&A. Buybacks are "funded" through operating earning. Any M&As (large or small) are "funded" through the balance sheet.

Thanks I can save on my printer

Just based on how confident he sounded on Q4 call, the complete lack information he provided on BB, and having the mechanics in place to do something, plus a healthy dosage of value investor mentality (must squeeze when overvalued), i think we can be fairly certain that he found a way to squeeze the BB lemon. What i do want to see is the same TRS treatment on Stelco and Resolute (on the long side), since it is unlikely that he would have added to the shares.

This a great point of view on BRK 13F. https://www.cnbc.com/video/2021/02/19/josh-brown-why-berkshires-stock-moves-arent-relevant-to-investors-anymore.html Personally, I feel that Buffet is doing what he likes best. Reading and investing all with pocket money, none of those moves says much to an outsider looking in, ... but every now and then, he goes back to work, rolls up his sleeves, and knocks it out of the park with an Apple giant-size bet ... but then reverts back to his side activity of medium-term trading.

I got a silly idea, Why can DFV not be nominated as candidate for the next edition of the book Greatest Trade Ever. They even gave a nod I think to B Ackman with a column in Barron's with his shorts.

I think the short squeeze could have been a lot worse had Robinhood didn't what i did. Looking back now, listening to some commentaries, it seemed that the wobbling in the S&P500 in January may have at least had some relation to the infinite squeeze that didnt but could happen. Like a vortex that what just slightly pulling the carpet (S&P500), due to the hedge fund leverage. Sure, this is a lot bigger than GameStop, but as El-Elrian said today at Bloomberg, market was smelling and was trying front run hedge fund who wanted to make a dash for liquidity. I'll try to find the stat of the out of wack the position where. I realize it is silly to think that such a irrelevant company (GameStop) could cause the almighty S&P500 to wobble. On DFV, i think due to the unneeded popularity that this caused (and because he is a nice person) he felt obligated toward his Brethren and not just dump his shares.

I wonder if he visits here at all. Sanjeev should recruit him ;D LOL indeed

This is a great clip that was posted elsewhere. Just watched it now. Somehow 6 months of discussion in this forum were condensed into 1 hour and delivered superbly. I think it belongs here. https://moiglobal.com/jeffrey-stacey-202101/

Allow Xerxes to reveal to you an new way to measure FFH's rising intrinsic value. In this very forum, there were: - 50 pages in the 2021 FFH Thread; and we are not even in March - 88 pages in the 2020 FFH Thread - 14 pages in the 2019 FFH Thread - 51 pages in the 2018 FFH Thread - 16 pages in the 2017 FFH Thread If this is not a technical bullish signal from the Faithful populating this forum, then i don't know what is.

This guy is genuine, he deserves every penny of his gain (sorry, should say, he deserves every million of his gain) I'll trade him for 1,000 Chamath anyday. And other high-IQ all-about-me characters that seem to be everywhere now in the investment world. If ever retail investor community needed a face as public ambassador, his would be the right one. Just a working man. I like that. My only regret he wasn't on this board and decided to be on Reddit. Opportunity cost for sure, but it is not like I would have invested in GameStop (would have put that in the value-trap pile)

https://markets.businessinsider.com/news/stocks/warren-buffett-berkshire-hathaway-investment-gain-japanese-stocks-trading-houses-2021-2-1030087776 Was kind of wishing these could be a much bigger part of Berkshire.

Seeing FFH is shooting up on the same day that BB plunges, i think, in some weird way indicative that the market is looking past all these little noise about movement of equity holdings quarter to quarter and looking at the whole picture.

Thanks What i did was to sell MSTR this morning north of $1,000 per share. Wish did that last Tuesday when it soared to $1200. Need the dry power in my TFSA for other things. Outside my TFSA, i added more to that pile. So sold it at the premium, and bought the underlying. I prefer the direct exposure. That said, happy about multi-bagger that MSTR was in the past 6 weeks. MSTR was a very unique case, because it had such a low market cap and an outsize bitcoin position that gave it a high-torque, and with a rich premium to the underlying. You wont get that with Square' $50 million investment on its balance sheet against its giant market cap. I just think that there has to be reaction when the capital flows out of "sponges" back to the real economy, when the world re-opens.

I posted this in the MSTR section. Appreciate any comment/feedback from the crypto-to-the-moon crowd: "While all the pro-Bitcoin argument are valid, being deflationary and good hedge etc. etc. The reality is that today as it stands, Bitcoin represents the apogee of liquidity excesses. The real test is when the economy open and tens of billions move from financial assets into the real economy. If Bitcoin can hold itself and go up in that re-opening economy environment with the 10-year bond yield marching higher, I would say it past the ultimate test. The argument that the M2-expanding-money bulls are making is neglecting that key event. Right now, i think it acts as sponge for excess liquidity and in fact maybe the very manifestation of those excesses. That is not to say the bull case is wrong. I just think it is about to get tested. Somehow I tripled that investment over a month and half and in my non-tax account I don't have unlimited capacity. So need dry powder by selling inflated assets. I still hold some exposure outside my non-tax account on BTC, so there is that. Lastly, while the BTC payment adoption is getting traction, I may be wrong, but I don't see another major corporation to convert its treasury to Bitcoin, unless captained by a maverick like Musk or Saylor. Both UBER and Paypal are happy to have BTC as an interface but have no interest to have balance sheet exposure to it. The one company that I think will do it is Oracle. It has a lost of free cash flow, and the CEO is maverick and a going against the trend like Musk and Saylor. If anyone has feedback on these thoughts would be appreciated"

Viking, We need to give an award to you and the rest of the team here for the very detailed analysis you guys provide. Some years in the future, I think we can move away from BV as the measure of Fairfax's intrinsic value. I think BV has a purpose as a proxy when looking as a floor, but when it comes to growth potential of FFH' many franchises, I think that proxy understates its potential. For instance how is India' massive growth potential to the entire Fairfax operations captured in the backward looking book value or for that matter how is the growth in the insurance businesses (the upswing due to hardening cycle) captured in the book value and of course the associates are captured in the BV only when FFH' portion of the associates' earning (net of dividends) flows through its income statement (i.e. you don't register the upswing in the stock price that is discounting future growth). I think these are the elements that makes FFH an interesting holding, cheap compared to its growth potential and disguised as a mere insurance name and valued as such via antiquated accounting book value. On a different note, let me throw a question to the team here: You all know what i think about RFP and Stelco from a position sizing and timing point of view when FFH first got in. The pandemic gave a front-loaded energy bar to the technology sector and rear-loaded energy bar to the commodity, financials, energy, insurance etc. The word commodity super-cycle is now being uttered. I am not surprised at all. It all goes hand in hand with low US Dollar, the rise of emerging market, the CAPEX holiday O&G sector had, and the mother of all pent up demand (synchronized at that) etc etc. People are going to LIVE and spend like there is no tomorrow. We know that Fairfax did not add to its existing RFP and Stelco positions because they were already large enough and they didnt have the dollars. But I bet they are savvy enough to see the same trend that might be in fact powering these two dormant positions. Knowing what we know about their use of Total Return Swap on their shares, is it not inconceivable that they also entered TRS positions on these two commodity related names, using minimal outlay by getting extra juice ?

This was posted before, but best to be posted here. Druckenmiller comment about this is not 1999 makes it related and no can accuse Druckenmiller of not seeing many cycles as he is more a bear.