JEast

Well, if you really want to feel/see what is the 'true' story (if there is such a thing in insurance), one needs to go thru the NAIC's Schedule P for the underwriter. The Schedule P breaks down the line of business in more detail and by state, at least for the US line of business. Leucadia used to own Colonial Penn and I would review the Schedule Ps for my DD on LUK. Oy vey! -- would reading that blow your mind. At the end of the day, it all falls back to the management. If you do not trust the management, walk away and very fast. Cheers JEast

If you are a newbie to FFH, I would not conclude anything by just looking at the annual, or even past annuals. Over the years there has been so much movement that one could not, with any accuracy, conclude assumptions going forward on insurance. On the other hand, difficulty with accuracy on assumptions is the case with nearly any non-monoline insurance business. That said, almost any comment (including mine) on underwriting should be taken with a side of salt and is probably poo-poo. My bête noire has, since about 2000, always been Crum & Forster. The numbers above are actually worse than stated for C&F after one adds back in the movements, discontinued operations, run-off, the mystery meat that keeps giving, etc. No need to regurgitate the past as we are living in the present, but things have hints of improving at C&R. One can not tell it today, but the ship may, emphasis on may, be actually turning to port or starboard, I care not, just turn please with Doug Libby at the helm. (It takes at least three years to turn a line around and 2013 is Doug's third year). The emphasis on C&R is because I have always seen them as the tipping point for FFH's insurance. If we can finally correct the listing of this ship, truly good things can happen to the overall bottom line at FFH. Cheers JEast Long FFH

A Mental Model: Pessimistic Meta-Induction from the History of Science - Because even the most seemingly bulletproof scientific theories of times past eventually proved wrong, we must assume that today's theories will someday prove wrong as well. This mental reference may help keep the skeptical eye open. Cheers JEast

Deserving of the Hall and my favorite line by Neil Peart is in Tom Sawyer's “mind is not for rent/to any God or government.” Great song, great lyrics. He has since grown out of his Ayn Rand stage as a more mature man and as Munger advises -- you can overdose on Ayn Rand as some do. Cheers JEast

The life of a value investor. We always sell too soon! More art than science and we are mainly geeks :) But glad we could sell though.

The idea is fairly strait forward, but I am of the belief the you and the analyst still need to spend a fair amount of facetime together to understand the subject at hand. At the end of the day, one of you will get unintentionally fooled via email and phone misunderstandings as the only form of communication. The other question at hand is renumeration. Is the person full-time, part-time, contract? This also plays into the soft-science of quality of work. I have attempted remote analysts over the years, but with no success yet but I am still hopeful that it can work. Cheers JEast

Mohnish must have a shipping holding now. Otherwise one would not be reading 'The Shipping Man' otherwise. Both a good read and good book on what I called 'Pulling Back the Veil' on the shipping industry. Cheers JEast

As the German mathematician Jacobi says, Always Invert. Then let us suppose that we are all wrong that printing too much money is an inflationary course of action and invert the premise. Suppose that printing more money is non-inflationary and actually beneficiary for your currency. Though Shilling, Van Hoisington, Hamblin/Watsa, et al, have all been correct for the last 10 years that interest rates would continue to fall – what if they were right but for the wrong reasons? Maybe we all have this printing business upside down and the strange phenomena is that the more you print the better you are, much like the first to market advantage. The amount of Yen outstanding now is so large that I can not even get my head around how big the numbers are, but nevertheless, the Yen is worth more today than it was worth 40 years ago! Think about that for a moment. This seems to be the case, in general and compared to everything else, for the US dollar too. Unlike the collapse and hyperinflation of Weimar Republic in ’23, there were other choices when they printed too much and the currency collapsed, including many other reasons of course. Same for Zimbabwe, other choices. Not so for Japan and the US as the more they print, it just puts other currencies in the minority all the more so and who really wants a splinter currency these days. Sure, maybe Singapore or the Yuan may stay strong, but is that just because there is such a deficiency of supply? I am referring to the long-term super-macro theme here and as more US dollars are printed it may actually drive yields down even further because it is the only game in town. If I am Venezuelan I want dollars, if I am South African I want dollars, if I am Russian I want dollars, and the list goes on. If in 10 years the Euro kicks half the countries out of the union, does your thought process think that will strengthen or weaken the Yen/Dollar hegemony? The more you print the more it seems like folks want it as it is a known product and is convertible into nearly anything. Just an inverted thought -- I will now go back into my cave. Cheers JEast

We have had this debate for some time that the US dollar sucks and it will eventually implode due to printing, etc. I have, in general, responded with 'against what?' Against the Chinese Yuan, Brazil Real, Gold is the most common response – maybe not. If the Yaun is 'the one', they will have to print a lot of it just to get it into circulation to even make a viable global alternative. For now, it is in short supply and therefore scarce (insufficient supply). If they print a lot of it to make if viable, then is it really valuable. Both Japan and the US have been printing (or digitally creating) in a race to the bottom for 4 years now with only marginal success to weaken either. The amount of Yen outstanding is so large that I can not even get my head around how big the numbers are, but nevertheless it is worth more today than it was worth 30 years ago. Like that little pink bunny, it keeps going and going. Maybe we all have this thing upside down and the more you print the better you are, much like first to market advantage. If I am Venezuelan I want dollars, if I am South African I want dollars, if I am Russian I want dollars, the list goes on. Just a thought. Cheers JEast

I wrote that? Someone must have hacked my account! Of course after I wrote that, the Yen continued to strengthen and the bonds continued to rally. Irrespective, the values were just too compelling not to put some capital into play for some select exporters. Still have some exposure to one exporter, but have since closed all other positions and the Yen short. It may still be in the early innings for the equity market and have a couple of exporters 'on deck.' Let's see what happens as we enter the summer. Cheers JEast

Is ABX still a gold company ;) Cheers JEast

Costs are high in the US due to cultural issues and lack of any pricing mechanism. This is changing though. On the cultural side and for the most part, companies were the one’s that provided healthcare in the US starting around the ‘50s. As a benefit, companies usually had either zero (0) or very-very low deductibles. This has educated an entire generation to go to the doctor when one has a toothache and to not have any clue of what healthcare truly costs. This fact then leads to the lack of the pricing mechanism. Just like when Cartier or Sees raises their prices and it becomes more desirable, same for healthcare. If it is that expensive and someone else is paying for it, it must be good and I want it!! And the feedback loop continues… Cheers JEast

Really, recognize that the 10-year price is up 100% over the past 12 months. Maybe someone is just recouping some of their massive loses. Cheers JEast

Something smells bad for GMO. Commodities are turning and the bond bull looks like it will continue. If this is the case, those unsustainable, can't go on any longer, high profit margins will also continue. Good for equities?? Of course, just my 2¢ as a backbencher. I still can not see why a reversion to the median could not just last a few more years, or longer. If I am GE, P&G, et al, my input costs are either going down or remaining the same as labor costs are surely going nowhere in 2013 and into 2014. Cheers JEast

How dare those dirty, uncaring, bigoted folks make that much money. What, those folks made it and earned it -- never mind, they still should not have that much. Envy runs the world.

valueInv - come to Toronto next week and we will be glad to fill you in. Recognize that this board is much like the Matrix in that this is the third revision to the code :) Previous versions were Stockhouse.ca, then the Microsoft blog, and now a third rebirth with an undisclosed server.

I read "Yellow Kid" Weil: The Autobiography of America's Master Swindler earlier this year. It is amazing that what went on in the 1890s is not much different than what goes on presently. The master swindler said, 'I think most people will go to great lengths to get something for nothing.' Great lengths indeed. To paraphrase Jim Grant, 'Financial wisdom is not cumulative' as we continue to repeat the same mistakes over, and over, again. Cheers JEast

First, I am a micro guy and have never been influenced by the macro stuff. I just buy stuff when its cheap and sell when it is dear. However, the Cyprus, then Canada, then even in New Zealand stuff about taxing (taking) deposits of troubled banks has me thinking of implications. A possible implication is surely folks will start taking cash out and investing it in tangible 'stuff.' Of course this is exactly what the FEDanistas want - increase the velocity of money instead of hoarding it on bank's balance sheets. In addition, I have started to quietly hear from high information folks indicate in general "screw it, I am taking my cash and buying something." Bull market continues? High yield bubble continues? Farm land bubble continues? Maybe so. Cheers JEast

The points above are understandable, but my general observation is relative to understanding the banking industry. For the very large institutions they are indeed just black boxes, just ask Bill Miller as he was playing reversion to the mean. I agree with his strategy, but it had nothing to do about reading the bank's balance sheet because one (for the most part) can not perform due diligence with any true understanding. Of course all investments are black boxes to some degree, inventory, accounts receivable, deferred tax asset, ... the list goes on. But unlike banks though, you usually don't have the risk of truly blowing up though the balance sheet looked reasonable. Analyzing a bank's balance sheet more than just the bare minimum basics (in my view) is time that could be used analyzing something more tangible. For example, just wait for a community bank to fall to 50% of TBV and buy -- no analyzing need -- in the Benjamin Graham spirt. Cheers JEast

Don't bother as they are all black boxes these days. Either you are investing in the very large institutions with brand or with sticky deposits/relationships or you are investing in smaller shops that are really key man investments. Of course there are exceptions, but if anyone knows how to read bank financial statements -- please stand up (I gave up around '96-'97). It would appear that neither the regulators know how, or even some CEOs. Anyway, as a banker today you are mostly beholden to the FED for the next 10-years, at least. Cheers JEast Disclosure: I do own some bank stocks presently.

Big fine put on hold after buying Picasso and new house. http://www.cbsnews.com/8301-500395_162-57577081/for-hedge-fund-baron-cohen-one-picasso-too-many/

My own skeptic mind says this is some type of global plan to pump the markets even more as folks start pulling their deposits out and into other assets. The preppers are going to have a field day with this new trend :) Cheers JEast

Any anecdotal evidence on the April 1st renewal season. Premium flat with tighter T&Cs? Higher premium with same T&Cs? Cheers JEast

I have been hearing about a 'market reentry program' advertised on the radio during my lunch break for the last month. http://www.mutualfundstore.com/blog/2013/february/marketreentry Cheers JEast

It is always refreshing to read Graham. Out of interest and based on his rough formula for the market value, at 1550, the market is only 15-25% above median value. Not that excessive. Or stated another way, very cheap market only a year or so ago. Cheers JEast