Munger_Disciple

Is it crazy & overly pessimistic to think ST rates may go lower and thus affect interest income negatively? We have a President & a Fed Chair hell bent on lowering rates. What is an optimistic or pessimistic scenario is in the eye of beholder.

FWIW I agree with @Parsad on this. Show some empathy & class guys! Be kind to others and don't be a$$wipes.

Yes the two points I made are related but not the same. I think short term rates are likely to be lower going forward and no one really knows what happens to the LT rates (10-Year US treasuries). I am just saying that Fairfax is not going to get another big re-rating in its price-to-book. And ST T-bills are likely to yield a lower interest rate which further could pressure on price-to-book. Finally I think we would be wise to heed Charlie Munger's sage advice: "Secret to happiness in life is low expectations."

+1

+1

Part of the run-up in the last 5 years was due to (justified) re-rating of the stock: price-to-book went up from 0.8 to 1.4 (at a CAGR of 12%) in the last 5 years, and it's unlikely to be repeated. Thus we should definitely lower our expectations for the next 5 years. Another reason is that ST treasury yields went up from nearly 0% to 4% in those 5-years, and this rate of earnings growth is also unlikely to be repeated.

Damn! Feel very sad for him & his family. My thoughts & prayers are with him.

I don't know; too many unknown & unknowable factors can drive the average ROE over the next 5 years. Interest rates, whether there are cat/super cat losses, whether there is a dislocation in the markets (which can open up opportunities) etc. What I can say for sure is that I am happy to own both. I consider Berkshire the ultimate "sleep well at night" stock. And I expect Fairfax to be riskier but one that can potentially (as opposed to guaranteed) compound book at a higher rate than Berkshire (by a couple of percentage points, am delighted if it is more). Size is the limiting factor for Berkshire but then Greg can buyback a lot of stock and/or put the cash pile to work if there is a huge dislocation in the economy/markets.

I don't think Fairfax deserves a higher P/B than Berkshire. Berkshire is a lot safer & lot less leveraged both operationally (writes a lot less premium volume relative to insurance group net worth and has a multitude of diversified non-insurance earnings) and financially (fortress balance sheet with a huge portfolio of marketable securities & T-bills). So Fairfax should trade at a higher "risk-premium" than Berkshire. In other words, investors demand a higher return to hold Fairfax relative to Berkshire.

IIRC I remember reading that Sokol sold all of his Berkshire shares either before or soon after he left the company.

I tend to agree... I think it was Ajit's name in the envelope earlier and Greg's later.

Well my comment about safety is partly based on the experience of my friend’s daughter who travelled alone in India. But be a conspiracy theorist and ignore the facts.

Southern India is very safe for women (single or otherwise). Almost never hear of horrible incidents. Northern India has more iffy reputation. Interestingly, south Indian states as a group have higher GDP per capita the northern states.

Fortune magazine article on Buffett & Berkshire: https://fortune.com/2025/12/30/warren-buffett-blind-spot-tech-investing-apple/

My understanding is that 40% of $15 million came from his dad and the rest from two close business associates of his dad.

It's a circular argument. How exactly does a US person acquire such a non-dollar based asset in the first place?

Sure, dollar can & does depreciate against other assets like real estate, gold, stocks etc. especially over the long course. Anyone with real assets or businesses knows that. That's kind of built into the system & a different issue from the discussion about dollar selling by foreigners as a whole.

That's a good point. I suppose the only way for foreigners to reduce their dollar based holdings is for the US to run a trade surplus, which is highly unlikely.

Foreigners in aggregate, cannot reduce their dollar based holdings. So this thing about foreigners selling dollars doesn't make sense to me.

Prem actually has much higher 43.2% of voting control due to his control of lhe 1.548 million multiple voting shares. Even if he sold all his subordinate voting shares, he will still have 41.8% of the voting control. But economically he has roughly 6% interest in the company.

In terms of Berkshire & FFH CEO comp, it's an apples to oranges comparison. You are leaving out the fact that Warren (basically the founder of Berkshire) kept his salary at $100K for 60 years & he reimbursed the company 1/2 of his salary for personal expenses like postage. And Prem is wisely following in Warren's enormous footsteps thus setting the tone from top at FFH, which is very admirable. And Greg's comp was hardly a bump from $21mm he earned last year as Vice Chairman of non-insurance ops and very reasonable for the CEO of one of the top 10 companies in the US. And that's his total comp, as Berkshire doesn't award any stock based comp to any of its executives unlike FFH. My math says Prem's economic interest in FFH is roughly 6.1%, not 9.2%. And Warren's economic interest in Berkshire today is roughly 15% after giving away half his BRK shares to charity since 2006.

Spot on!

And there are pesky taxes to worry about as well.

Yes. It says so on my iPad (reprinted from the Dec 12th article).

It's very hard to control this. I urge posters to be self-aware, control their own behavior & be respectful of opposing views.