Mungerville

Sanjeev, Who was the key witness?

I think it is probably worth $800 per year - but I have not yet subscribed.

I like long-term out of the money calls and puts on the market and gold/silver.

"12 replies and 6 people think gold is the bubble. Hmm." Does that mean its a bubble or its about to take off because it is undervalued?

Good interview. Thanks.

Buffet is not doing much better in this decade relative to gold.

Gold has done way better than $US cash, $ cnd cash, killed the S&P 500, and not far off Berkshire's performance in the last decade. US policy is to devalue the currency. Everybody knows it. Why do you think Buffet sold the puts on the indices?

f**k*rs

Well, I am happy about the share split. Means more volatility, which means more money for me. I'll take that.

$65 was a low ball bid as I said. Not even close to fair value if you know what you are doing which those investment bankers clearly don't. $65 is by definition a 50 cent to 70 cent dollar given who was buying.

I find it funny the way those guys would flaunt their returns in the Globe and Mail adds until the crisis. And then all of a sudden, no numbers in the ads! and the ads now say something like "a recovery is underway, a recovery is underway" - as if they know.

How about the shit the need to make the batteries - these rare earth metals - apparently they are all in China, a bit in Canada, and a bit in US. I would be interested in board member views on this area if any have followed it.

I should just buy a basket of these fuckin things and get it over with. What the hell is wrong with a 10% return that you barely have to hedge against the S&P and the USD?

Yum if you think growth in China will continue as they have a lot of revenue and it is growing briskly in China. KFC is the #1 foreign brand there - stronger than Coke.

Those two are no brainers. If you want to save the cost of hedging, better to buy when Cnd dollar is high. You may still want to hedge a bit of the currency - say 50%. KO is like a commodity play, its currency neutral given 80% revenues from overseas. JNJ has similar attributes but with less overseas exposure. I am invested in 1. Silver 2. KO, JNJ, COP, somewhat hedged against USD or using longest term in the money options on these instead of hedging 3. Deflation/low interest rates - large variable rate Cnd mortgage partially funding certain investments 4. Puts on the US stock market (and long BRK to get some yield to offset that a bit) Call that my macro positioning. Half my portfolio is in cash and I need good bottom up small/mid cap traditional value investing ideas for that - if I find them, I will hedge them against USD and S&P risk at least 50%.

Can you elaborate on the opportunity here if any? I.e. 1) what are his plans? and is FUR good value to get into at these prices and why; 2) what is the background (current assets/business model) of FUR and how does that relate to the opportunity ahead - i.e. will current situation be main driver or will his future plans be the main driver of value?

2008: up 80% 2009: up 20% In late 2007, I was pretty sure we would see a collapse of more than one large NY brokers, banks and the stock market at a minimum. Looking back, I should have made a lot more in 2008 shorting but you do what you can. I was 150% long and 150% short through 2008 and my longs held up fairly well (mainly ORH). Usually had been in Berkshire and other investments but did not want to touch those or any financial holding company that was not hedged. Was generally wary of various investments in stocks and diversified strategies. I was down about 25% earlier this year as my portfolio remained 50% hedged and my longs were not doing well. Also got screwed on the declining US currency for the first bit of the decline - I was expecting the stock market to continue to go lower after March 2009 and the US currency to continue its artificial rally. I am pessimistic. None of the problems have been solved and now there is more debt to GDP. The economy needs pain now in order to avert collapse later if pain continues to be put off. It is that simple. Suggest others remain cautious when everything seems rosy on the surface because the under currents are significant and dangerous. The monkey is still on our backs - total debt to GDP now 400%.

Count me as a fan. Thanks, I have been looking for this.

Yes Shalab, it is if you are paying attention like Eveillard.

I know his average across all funds is better, but beating the index in $US terms by 3% annually means you are either breaking even or losing global purchasing power as the $US continues its decline. Sequoia has these results for the last 10 years - sounds like Pabrai is doing better than that though across his funds. Said otherwise, simply investing in $Cnd government bonds with staggered maturities would have trounced those Sequoia returns. I don't mean to be negative. This has been a very tough environment and I am glad Pabrai is up so much this year - he deserves it and will likely have much better absolute performance in the next decade while beating the index by at least the same amount. He has character and experience, interest and intelligence - what else to you need? The lesson here is that sometimes, like this decade, macro matters. I agree with Eveillard from First Eagle: you have to look for opportunities bottom-up but sometimes you have to watch the macro side as well - you can not just ignore it. Hedging can be very valuable and many value investors are finding that out. What looks like a P/E of 10 can become a P/E of 20 if earnings drop in half because revenues dropped 10% - so it wasn't value in the first place even though it looked like it.

Ericopoly, What was the gold price in 1980 and that house price in 1980 and what does that imply using your same calculation about gold vs housing today?

Oldye, you mean calls on gold etf right? I have calls on the silver etf which I think will lose money because I think the Hoisington view will come to roost in short-term pushing off inflation again.

Hidden tax they don't see is the US dollar dropping. The S&P is down 30% this decade - i.e. from 1999 to today in $US. However, in $cnd or relative to gold or relative to a basket of internationally currencies, it is down well-over 50% over the last decade.

No bloody way I would touch UK currency or real-estate other than shorting both. I share Viking's view. Rather than cash, however, I think my dual hedging strategy may work out reasonably well - but cash is a hell of a lot easier and may in the end be wiser.

Depends on inflation expectations and real growth expectations - back then he thought there would be more of both and then saw just how bad the fundamentals were as well as the deflationary forces. Now, maybe he'll change his tune again and say look, the real growth is still no good but Bernanke has a printing press making stocks worth more. We are talking +/- 15% though here in terms of Grantham's flopping on valuations - no big deal, who said this was a precise science. I am just saying he thinks FV is not 30% higher than were we are now. The more inflation, the more stocks are worth in the home currency even if the home economy is not growing in real terms. Problem is, apparently, you should not buy them because the P/E will contract as the market demands a lower multiple because of the inflation. Not easy. So what do you buy, can't buy stocks or sit in cash, no bonds, so I think as a value investor you buy stocks because they are worth more even if Mr. Market makes them worth less for a few years. Do that with half your money, keep other half in cash and buy options on precious metals waiting for those P/Es to contract.