JEast

oddballstocks -- Good point on the age difference of inflationary perceptions. If you are a new mother then your affinity for non-gluten, non-hormonal, organically fed, massaged and towel wiped cow milk for $9.00 a/gallon at Whole Foods far exceeds my inflation perceptions for my Costco milk at $2.54 a/gallon. Also, one should not confuse increasing healthcare costs or increasing taxes as inflationary as any increase in either are actually very deflationary. Think austerity.

A thread bump: Keeping cursory tabs on the 'expectations' of inflation and that this item on Europe from Bloomberg interesting. http://www.bloomberg.com/news/2013-11-14/euro-area-recovery-fizzles-as-germany-slows-france-contracts.html Many talk about inflation, but I just do not see it (at least in my small circle). As a quick example, nearly 20 years ago I bought an airline ticket from Atlanta to Orlando for $140. I remember this because I could hardly afford the $140 at the time. Today, I see that you can buy a ticket from Charlotte to Orlando for $87 round trip, no joke and not a special. Maybe this is self selection bias, but I see similar stuff all the time. One place I don't see it though is at Whole Foods! Cheers JEast

When you snub your nose at the global economic system and the rule of law, bad things will happen. Now some folks love when governments fight ‘the man’ (e.g. Sean Penn and others), but those idealistic days are over in the age of Corporatocracy. So Greece for their malfeasance lost 20-30% of their wealth, but the majority of the Venezuelans have lost nearly 95% of their wealth since the new regime and going to 99%. Greece is indeed heaven in comparison.

In the old Lucy TV show, about every third show or so, you could hear Ricky shout “Lu-uu-cy!!, you go some s-plaining to do.” In an attempt to do such, this sometimes knuckle-dragging analyst offers the following: FFH has morphed into something else. But first, let me offer what it is not. It is not a stock (in the traditional sense), it is not an owner operator, it is not a deep value asset play (though may be in the future), and it is not an insurance company (again in the traditional sense). On the other hand what the equity may be is a global macro hedge fund without the fees (e.g. an alternative investment) and analyzed as such (if possible). If you had not figured this aspect out by now, the events of the last few weeks should make this distinction more likely. This morphing process from a somewhat normal insurance company stock with a demonstrated investment acumen started (in my mind) around the 2005/06 timeframe. I am of the believe that the investment committee of Lace, Martin, Watsa, Bradstreet, Mitchell, Chou and others did not strategically plan this transformation, it just came about due to circumstances. The core of FFH has always been centered in the investment committee (and to a lesser degree ORH since 2002). This nucleus searches the globe in India, Poland, Ireland, Brazil, China, Greece and elsewhere in search of assets either that are cheap or strategic. This process has a basic need in that it demands to be fed on a regular basis and they have some insurance companies that help feed it. However, this newer global appetite/process also needs to be hedged for initial execution risk, at least for the next few years. To side step briefly, some very astute investors that many of us admire in this community have commented over the years that BRK was/is deemed as a kind of cash equivalent holding until something really-really interesting popped up. I too have deemed FFH in similar fashion as a cash equivalent since around 2007. Presently, being roughly 100% hedged on the equity side, and the remaining assets mostly in munis, treasuries, and commercial real estate, why would you not consider it a cash equivalent? So for the newer folks to this board (welcome) and even some of you from the old ‘stockhouse.com’ days, your concerns of today should not be overly overwhelmed about present possible or factual mistakes. If one wants to find fault, one should look more at mental model errors than anything else. I put forth possible areas such as group-think or sunk cost fallacy. Or my own view is swayed to the influence-from-mere-association error because of what I heard last year at the annual meeting when the comment/reason for an investment was that ‘he is a genius’, bells started to ring loudly. I have committed all three of these errors several times so it is not the end. It is just lost opportunity on the road of 3 steps forward and 2 ½ steps backward. Irrespective of my comments, FFH may have a place in your portfolio as an alternative (which it is) mainly for diversification purposes. Should be another fun event for us come this April! Cheers

I have been reading FFH’s quarterly reports for nearly 15 years. That is a lot of quarterly reports my friends. Upon reflection, I believe that the correlation to what I expect and what gets reported quarterly is running at about a (-)0.90! In other words, you nearly have to be a masochistic to own it as I still do :) But I guess that trait has to be at least a little present to be a value investor. This wonderful correlation also makes it hard for the average analyst or portfolio manger that stays in their job around 3 years to ever get a handle on this company. Oh well, 3 steps forward, 2 steps back in the slow drip of time arbitrage. Cheers JEast

Since I am confident that you will want to be the best giofranchi that you can be, and do right by the folks you will support, I suspect that the effort will take more time than you suspect. Just expect it to take more time then your original estimate.

Guys (and gales) – don’t get so pedantic, but do love the banter. Heck, I have been buying 25+ zero coupon bonds this year! That can’t be all that bullish, I am just saying. That ‘Packer’ guy is smart so I think his rebuttal is much better than I could give. I will attempt to add a little color though. - profit margins are extremely high. Red Herring – Grantham and company say this all the time. Do these folks not see what is going on inside of businesses with their internal costs? 60% of which is labor. In general and if you own a business in the US, why would you hire anyone with absolute uncertainty of what that employee will cost you because of confusion on regulations. You don't, and reason unemployment rates are not coming down and margins should continue to stay high. Do you think this will change in one year, two years? Do think BAC’s margins are too high? - interest rates are at historical lows. Short-term, not long-term. - we have QE. And should be turned on for some time. When QE is turned off rates are going lower (see Japan). - growth is slow and we have de-leveraging. That is great for existing businesses as competition will be less with little capital expenditures because of de-leveraging and uncertainty. - mkts are fairly valued Sounds like a semi-bullish remark. - govt debt levels are high Compared to what? GDP? Not so high compared to assets. Just one point of hundreds, 25% or all oil and gas in the US is on federal lands of which we nearly drill zero. That is about to change in the not too distant future. - The govts are involved in something they haven't done before And will continue to be. If you think governments on the planet will become less involved going forward, then you are delusional. - in the end You don't have to be bullish or bearish monolithically, don't forget we can also be long/short. Cool and tough stuff, eh. I have folks that I highly respect that are 60% plus in cash and others that are fully invested. Both can be correct in the sand pile they play in -- and you can too.

I am not making any point but just pointing out that there is a tremendous amount of cognitive dissonance everywhere. On the one hand you have this, and on the other you have that with very compelling arguments on both sides. Again this is just macro tourism talk anyway and this community (as I see it) are stock pickers, but I find the subject fascinating drama. Earlier this year I questioned folks with high cash levels as a lot of stuff just seemed cheap during that time. Not so cheap now, maybe, but we still have smart folks in this community that are finding great investment opportunities. I still see some very, very, cheap stuff out there and all of them have been mentioned here! If I were starting a brand new portfolio today, I could easily take five/six of these stocks and put 10-20% each and be nearly fully invested presently. If I were to make a point it would be that at this juncture in the market one better be adapting because the natural selection process will possibly be weeding a few folks out in the next few years. Time of course will tell.

There are roughly about 5,000 US listed companies, subject to what one considers listed. The funny thing is that the Wilshire 5000 has only 4,113? constituents in the index. The intent of the number is to imply that the supply is small compared to 10 years ago and somewhat getting smaller. Irrespective of the number, is the bull market just getting started?

I know a lot of you are sitting on a bunch of cash, but is a Bull Market starting to get a head of steam? Curious minds want to know. I ask as I noticed that nearly 200 companies are making not just 52-week highs but new all-time highs today. They are not run by night companies either, but FedEx, Mastercard, Chubb to name a few. Quite impressive when there are only about 4,000 listed companies we are fighting over. Cheers JEast

Two snippets from a larger piece by Albert Edwards on why we should be watching Japan. Of note, only two occasions when implied inflation turned negative for the US and that was in '08 and during the '97-'98 Asian crisis. If you recall, the Asian crisis was primarily the result of a weakening Yen. http://www.cnbc.com/id/101086245 http://www.businessinsider.com/japan-bigger-for-markets-than-the-fed-2013-10?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+businessinsider+%28Business+Insider%29 Why is it that Japan has implemented a QE that on an apples-to-apples comparison that is more than 3X larger then the US and their bonds are again approaching all-time lows? Head scratcher, or is it. Cheers JEast

Interesting, or maybe not. http://www.ft.com/intl/cms/s/0/6f949e8c-34c1-11e3-8148-00144feab7de.html#axzz2hidjWc2X Cheers JEast

A few days ago, someone asked about routing orders to Canada from the US. Below is one example for TD Ameritrade (US Specific): [*]You enter an order using the OTC equivalent ticker symbol, [*]Make sure you enter the dollar amount correctly for currency translation, [*]Call the broker 800 number and ask them to route it to Canada, London, or wherever. Side note: TD Ameritrade takes both a $0.005 p/share take, plus the higher brokerage commission -- still not too expensive. Also and though frowned upon, I would use an 'all or none' designation as several small partial fills runs up commissions quickly. Cheers JEast

I bought a used hardcopy a few years ago and enjoyed the read for its financial history content. Anytime an investor can get a little financial history, you should. For Sage himself, the author paints the picture that he was considered the lender of last resort and most hated him for it. But the times were somewhat different (or were they?) and he was not trying to make friends. Cheers JEast

Awful, a John Bogle Primer on expenses at best. True that expenses are a part of the investing endeavor, but to write a book that goes on and on about expenses versus some actionable experience about investing from a 30 year professional seems sad.

The climate in '96 was not that bad for value investing. In '97 it was getting a little tougher but still not excruciating. However and by the time '98 rolled around and into all of '99, boy it was tough. Not tough finding value, because it actually got a little easier, but tough and excruciatingly painful psychologically. Value was everywhere, but if you bought something in the value camp it only went lower and in fairly short order. One of several items that helped hold the faith was rereading 'Extraordinary Popular Delusions and the Madness of Crowds' by Charles Mackay. Maybe I should dust it off and reread it again -- ha. Cheers JEast

Maybe not, but interesting. http://www.motherjones.com/kevin-drum/2013/09/somebody-stole-7-milliseconds-federal-reserve http://www.nanex.net/aqck2/4436.html While the above is related to HFT, the research that Nanex has published is starting (or has determined) that HFT is actually drying up liquidity via front loading the major market systems with fake quotes. This is counterintuitive, but is the result/output of the computer versus computer ecosystem and the data shows it. I also see it with reported numbers by IB as transactions have continued to be weak the last few years. http://www.nanex.net/FlashCrash/OngoingResearch.html Cheers JEast

Just curious if the Grantham Research Institute on Climate Change has any influence on his Malthusian views?? http://www.lse.ac.uk/GranthamInstitute/About/home.aspx

It would appear that the infamous ‘widow maker’ has continued to be the ‘widow helper’. This is in reference to the JGBs since as of today the 10-year is 11bp below last year and the 30-year is 15bp lower. Sorry for the repeat of a previous post, but I am fascinated by the drama (my personal financial porn if you will). On the other hand and of a more serious note, is it just possible that the more money one prints the more dominant one becomes. Take a mental exercise of a four (4) person monopoly game with four (4) different currencies. Eventually and for possible reasons such as a trade or a deal to get all the rail roads, whatever the reason, you eventually only have three (3) currencies because it is just easier. Play that out over and over, and ultimately you get just one currency. Is it possible that when Nixon took the world off the gold standard and Kissinger negotiated with the Arab world to trade only in US dollars, that we are in our own monopoly game on a global scale?? Cheers JEast

Come on guys. Our moderator is just pulling our leg as we all know that there is no such thing as great opportunity or a $100 bill laying on the sidewalk in an efficient market.

Uh! Oh! Start of new (or extended) Bull Market, or the nearing of a top. Twitter files S-1. http://news.yahoo.com/twitter-announces-plans-stock-offering-211413352.html Cheers JEast

I liked the FED and Strategy discussion. Maybe I liked it because my ears perked up when he hinted that he was long bonds several months ago (reading between the lines) because he thought the market might turn down, but admitted he was totally wrong. Or maybe I was hearing things due to my own bias, ha ha.

I believe Buffett has talked about never writing an insurance policy without having a cap on it. You never want to have an unending run on a policy. Not exactly, but the travel insurance companies in India have been writing policies in Rupee but paying in foreign currency like US or Euro dollars. With the Rupee now down around 25% in the last several months, oops! Loss expenses now just went up 25% and could go higher. It does not appear they were hedging currency exposure to account for such potentialities. http://www.business-standard.com/article/finance/travel-insurance-segment-feels-pinch-of-rupee-fall-113090600118_1.html

It is true that we all should study the master, but one should not conclude that we are in the same environment. Micro Caps in the 50s had an open playing field unlike today. Today's challenges and competition in the space are more tough from medium to large caps. A few of several examples are that large companies approve of regulations that they know smaller companies can not handle (think freon), plus insurance costs from directors to healthcare. Toss in every increasing auditing fees, scale factors and the list just grows of chipping away at the advantage. Finally your small company wins the big contract and then has to file because they ran out of capital supporting the contract. I just would be more cognizant of the playing field instead assuming things are like they were.

[amazonsearch]Accounting For Value[/amazonsearch] With this new effort coming out of the Columbia Business School, I have the belief that Benjamin Graham would be pleased with the achievement. From an investor that uses Graham's work on nearly a daily basis, this is a nice addition to the library shelve. http://www.overstock.com/Books-Movies-Music-Games/Accounting-for-Value-Hardcover/5075838/product.html?refccid=F7W4V6WCI3ILTQSH76D5XQDAUQ&searchidx=1 Cheers JEast