JEast

http://www.nypost.com/p/news/business/another_legal_headache_for_sac_cohen_9JBC1oKToBPn0AvO6qhuYP

I see that you were not fooled by the numbers as it is all relative (as nearly always) when consumption is increasing over time. True that we will never run oil, just the price we pay.

Call your references when you know they will not answer the phone. Leave a message to only call back if they have a reference. This gives the original reference a chance to say no-way without being put on the spot.

A little dated, but a nice refresher. Benoit Mandelbrot, the eighty-year-old Polish-born mathematician awarded the Japan Prize in Science and Technology and the Wolf Prize in Physics, sees the markets and their movements much differently. The 'inventor' of fractal geometry---a mathematic discipline that attempts to measure and explain "the roughness" of observations---submits market prices do not follow a bell curve (normal distribution) and prices are very much dependent and have 'memories'. http://www.familyofficereview.com/article-pdfs/896/mandelbrot-s-multi-fractal-view-of-financial-markets-verses-modern-financial-models Cheers JEast

So much for Peak Oil, maybe :) http://blogs.wsj.com/moneybeat/2013/05/30/u-s-oil-stockpile-highest-in-more-than-80-years/ Cheers JEast

Yes, there are reasons to be skeptical everywhere. But does not the market rise on a wall of worry? Plus, does one realize how huge under-investment in North America has had over the last 5-6 years? Companies are so flush with cash now (as the Priceline story tells) that they will eventually do something with it (smartly or not) -- Buffett is. If the spigots open for capital expenditures, watch out as you/we may get left behind. Disclosure: I hope I am wrong as cash hurts and I may get left behind too :(

Pipeline safer than railcar?? Really?? Not so fast young man. If you have a pipeline that bursts/fails as happened in Arkansas not too long ago that pumps 90,000 barrels per day of crude, it only takes a few hours to have a big spill versus a 750 barrel tanker car that actually may be contained if derailed. On the whole, pipelines may be safer statistically but one must look at the what if(s). The if(s) are if a pipeline fails -- it is usually way bigger than a railcar or two or three. Safer?? Consequences are what matter here I think.

I have seen the item below, but it is not exactly accurate as railcars actually only average around 25-30mph after taking into account traffic, switching, and moving through more populated areas. Still faster than 10-20MPH, but unsure of the volume differential.

I agree with you in total, but if you are the hiring manager or in HR screening how can you tell? If I have three (3) candidates with one that graduated from University or Minnesota, the second from University of Washington, and a third from Apollo. Guess which resume gets left in the file?

At this year's annual during the Q&A, it was pointed out that railcars could move more volume and faster than an oil pipeline. Just wonder if anyone actually followed up on this as when I asked the rep at the BNSF booth, he thought it was a little off. Anyone? Cheers JEast

Maybe to you personally, but not to the hiring manager. I have thought for sometime that online classes were somewhat suspect. I now have examples. One example is of a local lady in my area that makes $200k a year - cash - by taking tests for people. Her biggest clients are taking tests for would be nurses!! True that educational resources are available, just like any resource. The question has always been how you use that resource, is it not? Cheers JEast

Company reports break even on the underwriting front soon. Can it be true and can it be maintained? Time will tell, but at least the news is brighter than from a few years ago. http://articles.economictimes.indiatimes.com/2013-05-17/news/39336605_1_motor-pool-400-crore-306-crore

Economist Hyman Minsky in emphasizing the relationship between finance and business, identified the progression thru at least five (5) distinct stages beginning with – Merchant Capitalism (1607-1813), Industrial Capitalism (1813-1890), Banker Capitalism (1890-1933), Managerial Capitalism (1933-1982), and Money-Manager Capitalism (1982-present). If I can be so bold, I say that we have entered a new stage. Never before have central banks scratched each other’s backs to such an extent as they have presently, and continue to do so. Take the U.S.’s own FED and what they have done so far. One example will suffice – the central bank of the US, supported by the US government and its constituents has been adding liquidity to other government’s central banks. To do this, the FED is/was using a mostly obscure mechanism called ‘temporary U.S. dollar liquidity swap arrangement.’ As I understand the charter of the FED, bailing out foreign banks surely was not defined as part of the FED’s objective and probably is illegal and reason lawyers use the word temporary for wiggle room. Of course, laws flow with the times as water under the bridge and with the current mores of society as a whole. Nevertheless, given that the genie is now out of the bottle now, I suspect that we are in a phase change (think of ice to water) where the Money-Manager Capitalism has changed to Global Central Bank Capitalism, or a type of crony capitalism. Much of the world has already been on this system and is not frowned upon as they just call it ‘business.’ Reference: Jeffrey Towson What Would Ben Graham Do Now?: A New Value Investing Playbook for a Global Age. Many today complain that if the genie is indeed put back into the bottle then the markets will crash or at least have a setback. How many market participants do not believe this? The genie is indeed free and only a very clever trick will get him/her back into the bottle of times of old. In other words, the likelihood of it happening is very slim. What should one do? Still trying to figure it out myself as I am very micro with a small (m) meaning very company specific. Overall I trying to not fight the last war with the recognition that a new war is at front and center presently. One possibility is to buy the dips as big genie will support you and preferably large cap value when you can as alpha should pull you along. Cheers JEast

Given that the story of the demise of the Yen and especially the Japanese Bonds is so much reported about, so known in the market, so overly predicted by nearly everyone -- is this not the worry now? To paraphrase, it is not what you know that kills you its the stuff you do not know about that does. I guess the question is what is it about the Japanese experience and the possible triggers/outcomes that we do not know is the question. Does anyone really think that any major quasi-government body is not going to not pump, not going to pull out any and all stops, not going to go the distance, or even signal that they will not manipulate during a crisis? In other words, don't fight the FED as they are in a fight for survival and they are not going to back down. Just a thought.

It's not hedge funds that have missed the rally, it is pension funds. At the next board meetings, they are sure to start allocating more to equities. And who can blame them when they have discount rates of 7.5% and bonds are yielding below 5% on average, you got to make that up somewhere. If so, it would seem that the summer will be interesting with potential 2% (or more) swing days.

Agreed - a default in an major advanced economy. I do not believe that a default by Lesotho or Swaziland will rock the markets much and some countries are actually on the US dollar like Ecuador and Panama. Cheers JEast

I will take a little friendly action on the predication of a sovereign default. I wager a pint to be paid in April of 2015 in Toronto that no sovereign will default. My thesis is that most will kick the can down the road as interest rates will continue to stay low (or lower) helping the situation. Call it the anti-Bass theory. Cheers JEast

Thanks for the clarification and maybe the Ambassador Bridge did not (or does not now) have as big as a competitive advantage as I thought. Still would like to know if it was Warren or Charlie that sold the position though and to the possible reasons why they sold.

I have wondered for years about the back-story on Berkshire’s selling of their 25% holding of the Detroit International Bridge Company. What is curious is why Berkshire every sold as it emphasizes one of the biggest moats and comparative advantages available. Anyone know why/who (Warren or Charlie) sold the position? Or was it just that Warren was still in the cigar butt stage and flipped it for a quick profit? Cheers JEast

I assume you board members are still out there, just have not heard from you in awhile. I agree with most of you that the US dollar is not on strong footing but I still do not know what a bad US dollar should be compared with. The typical response used to be anything was better and especially Gold, but if commodities have now turned over – is the $ now the strongest of a bad lot? Cheers JEast

I need some help fellow board members. Can someone remind me if the saying is ‘Sell in May and go away’ or is it ‘Buy in May and stay’?? I may have it backwards :) Cheers JEast

I surely enjoyed my cup of tea while watching the presentation!! This is another reminder to me of one of the better mental models I have learned over the last few years which is pessimistic meta-induction of science. Essentially whatever we know today is surely to be wrong in the future -- except value investing of course :) I was surprised that the great author Jarad Diamond has been attacking the anthropologists so much, but then again not really surprised as he has a huge invested interest in the theory being wrong. On the other hand, I think Diamond's Third Chimpanzee was his best book and Germs, Guns and Steel was great. I guess Mr. Diamond forgot the message from Germs, Guns and Steel. Cheers JEast

— Heck — bring back the days when recoverables were the biggest concern. Looking back on it all (10+ years), all that stuff accounts for little today. However and more importantly it took a lot of hard work over the years, and means/implies a lot today that we have the team in place to work thru the issues and they have been tested. For you old school punkers out there, The Mighty Mighty Bosstones had a song called Knock On Wood I'm not a coward, I've just never been tested I'd like to think that if I was, I would pass Well, HWIC has passed in my book. At roughly $400 today, holding FFH is similar to holding a cash equivalent which is safety to some extent. I would have preferred that HWIC had gone into the hedges as a half Kelly, but maybe a full Kelly helps one sleep better at night. In the end, none of us know what the alternative histories will be. So we take a percentage or two off our longer term returns. Does it matter as the alternative history turned out not to have happened? Heads you win, Tails you don't lose too much. Cheers JEast

For a small DTA, just ignore it. For a very large DTA, there are other considerations besides if a company can earn a profit. For example, would a large DTA be valuable to another company?? I think an 80% haircut for a very large DTA is way too conservative. Cheers JEast

Racemize - flag me down as I am wearing a red sweater. Nice to meet fellow boardmembers.