scorpioncapital

If Berkshire is a buy at $185 now, what was it 5 years ago at half this price? "Could anyone take Berkshire's mkt cap in cash & re-create the company?" I think yes, easier than others, except the private owned businesses. From this I conclude the vast value is in the excess of goodwill over purchase price (almost always cash) over the years not accounted for (revised upward) on the balance sheet. Although the market price may reflect some of that difference. Still the input of energy, time, and opportunism definitely is the bulk of the value. In investing, unlike what some cigar butt investors claim, the bulk of the value is in factors that cannot be measured on a balance sheet or income statement. Most value is hidden which makes number crunchers somewhat uncomfortable :)

I'd say #2 with the understanding not to make a loss over time and defining a loss as not beating an index - for you could always buy an index otherwise. I consider not beating an index a loss - perhaps not of money but of time and effort.

When i stopped looking for the next jockey and invested with Warren, my returns really improved. And this was less than 10 years ago...Great jockeys don't have an expiry date , short of death or retirement.

Many companies think they can borrow money for an opportunity or do a stock-cash swap. Lots of tricky games you can play because the market value of your stock can be used as currency. Some party, buyer or seller groups can really get burned. I would just look at Berkshire's model. Have enough cash lying around that you can make a deal if it comes around. If it goes wrong, it's easy to see, likewise if it goes right.

cheap? verdict is out. Expensive? Doesn't seem so. You could do this - take all of their 4 major categories, financial products, insurance, manufacturing & retail, energy and calculate the sectory P/BV. Then weight it according to the size of that business to Berkshire. Then you can see if it's below that.

Actually everything is after tax. 80k @ 10% is almost the same as 150k @ 50%. You can make half as much and still end up with the same amount.

I just get a slip at the end of year with my net capital gains and dividends. I input that into Turbotax. That's it. I don't even care to download anything...but I believe you can OFX direct into Quicken, not sure if it helps...

And yet the former communist countries are the most free and capitalist while the western developed nations are the most controlling and socialist these days. Just look at marginal tax rates Including capital taxes , 40 percent plus in developed "non socialists" west and 10 to 15 percent in the east. I have not been able to see a difference in services to justify this difference. Even health insurance you can just buy a policy for 2000 a year and yet we are told 50 percent taxes are needed for the services we receive ! I rather take user fees + insurance. The west is cooked . I see nothing but slow or negative growth and a massive dose of inflation, a double tax to pay for the massive borrowing which cannot be unwound.

Is the mode of operation basically to push the limit of tightening until the market crashes by some scary but controlled amount after which they then come on the TV and say we are going to stop or even reverse if it gets really bad? Like a kind of controlled detonation?

So the mass panic of 2007 was a case of total drunkenness with very few leaving slowly? :) And yet, isn't this the definition of a bubble? Like 99% not leaving, and then leaving at once? His example sounds nice but I'm not sure that's how bubbles break.

Many investors have the right philosophy, but there is a gap between execution and philosophy, theory and practice. The bridge is sometimes experience, sometimes temperament. More times than they would admit , they don't actually understand the theory in deep detail. Also, sometimes you just can't find anything great.

The future is in the southern lands as they are more understanding of human nature, unfortunately Canada has no southern lands :)

Which makes me think: If Buffett here is trying like crazy to find stable , LONG term investments that he won't have to touch for ages (fingers crossed) this liability is most certainly a grey area, in that one could consider it as a deduction to equity or maybe not. What's the liability of a stock you hold for 100 years?

Cool. I think everything except $27.8 billion is associated with unrealized investment gains. The other amounts might be included in the 10x valuation of the operating businesses if you choose to include it there. Might be an extra $4.5 per B-share of IV!!!! :)

Very nice and concise write-up. Just wondering if the deferred taxes on the investment portfolio are in fact 50% if sold. Isn't the top corporate tax rate on income or capital gains 35%?

You can also live practically for free if you move to Mexico and made all your money in the USA. Lots of retirees do it. I think this issue of automation also has to look at the global economy and how systems integrate - or don't integrate all around.

Most countries have 100% free college. The US is a bit of an aberration with the $50,000 or $100,000 student loans. I suspect the nation is rich enough to figure it out.

That $1 you buy for 70 cents can become worth 70 cents. Or it can remain at $1 or it can grow. If it goes to 70 cents, you wasted time. If it remains at $1 you get a one time gain - maybe, even this is somewhat questionable because feels like the market doesn't like people that go nowhere. If it grows you have a great deal. High quality assets I feel are the protection you get for that $1 in value. And if it's really high, it will grow. It's like a moving part. In a huge downturn it's interesting to see if a pile of cash in a corp goes down less than a quality company. But since downturns usually recover at some point, the pile of cash is still cash and the active business has the potential to capture some real advantage.

I strongly disagree with this statement, "“Superior results don’t come from buying high quality assets, but from buying assets – regardless of quality – for less than they’re worth. It’s essential to understand the difference between buying good things and buying things well" How has his performance been?

Who says they are filing with CRA? CRA does not enforce any of these offshore structures. Instead, if you overstate your public bus pass credit or claim a moving expense that's not to their liking, you will get a red flag. Meanwhile how many billions are flowing through offshore or undeclared tax havens with Canadians in the middle? Just look at the dollar as a sign of the strength or weakness of the economy. I'd say it's getting weaker.

Pay up for quality. Don't go into certain industries, avoid them all together, leave the profits to someone dumber smarter. Don't use excessive leverage.

The difference between renting and owning is that in one, the government is your landlord, and in the other, your fellow citizen. You can decide which you feel is the better option.

True but I would argue most homeowners are borrowers, few buy all cash, some perpetual borrows for life. And also , in a bubble, the gains are far in excess of inflation. Actually, I like what the British do, they have a base capital gains exemption each year. It's sort of a middle ground between the other two methods and you can adjust up and down. But it's generic enough not to cater to one type of activity versus another. The goal of fairness for all I feel never works. It always degenerates into unfairness for all. This is a consequence of the reality that you can't cater to every special interest group that shouts the loudest or has the most lobby dollars.

Btw, the best capital gains tax is a bubble. if anyone dares to sell it pops. and if they just hold it, there's no tax, but also no way to use the bubble money :) However, I think they should stop the principal residence gains exclusion and instead allow deductibility of mortgage interest from income. capital gains taxes are lower and why should owners of real estate get an advantage over other forms of gains? Likewise income taxes are unacceptably high in Canada so a deduction makes sense to me.

The thing with insurance it's fun while not paying out, but when you have to pay out, things can get messy. It's like theory vs practice .