berkshiremystery

Yeah I know a few guys who have $5-20mm+ TFSA's doing stuff similar to Eric but mostly on TSX V Juniors during the good years (1999-2010) I think what Eric has achieved is quite rare, it reminds me of what the guys at Cornwall capital did in Michael Lewi's book. Essentially taking huge asymmetric bets on LEAPS. I look forward to following Eric's performance with great interest over the coming years (hopefully you continue to be transparent) I believe that investors should have no qualms about sharing their performance and nominal dollar figures. I think being ambiguous about such things is a red flag.. especially given that we are all relatively anonymous here. Moore,... Only this poll has some results that I had expected,... our board members portfolio size doesn't reflect the general public.

Well,.. sure Uccmal,... I know the possibility of a margin call, but anyway... I'm myself in a completely different situation since my US online broker doesn't allow me to hold my Canadian FFH position as marginable, thus only on the cash side of account. So my collateral base seems to be artificially lower, even if it isn't. Anyway, ... these written puts on AIG,... even if they are currently profitable,... I had them almost forgotten myself,... Hahaha ;D. .... you know,... I only tried some months ago to test this option writing technique, because after calling my brokers customer support hotline nobody could give me some sufficient answer. Anyway that was only some toying around,... the nominal value of the "cash on hold" is only 2% of the account equity. So I'm light years away from any dangerous,... at least I got some nice free income while writing these puts I know all those option language terms can sometimes be very confusing,... so at least I try to keep it simple for myself,... always double-check every phrase at my brokers site.

Yeah,... as you say, it eats up margin capacity,... that is some drawback also for me.

twacowfca, If I want to write put options on something I would like to own at a lower price, and use the proceedings to invest somewhere else – for instance in something that I like as much, but I consider to be already at a price undervalued enough –, do you know a broker that works also in Italy and that will allow me to do so? I tried with both Banca Intesa and Unicredit, but I failed… They don’t let me do that on companies listed in stock exchanges outside Italy… Maybe it’s a silly question, because you don’t know anything about Italy, but you seem a master of the trade, so I try to ask you anyway. ;) It would surely be very nice to have some float I could work with! Thank you very much, giofranchi giofranchi,... you will definitely be able to write put options in real time with "Interactive Brokers" http://www.interactivebrokers.com/ibg/main.php http://www.interactivebrokers.com/en/ibglobal_sites.php They also have a multi-currency platform, thus... USD, EUR, CAD... you can have integrated sub-accounts in any currency with your main account. Interactive Brokers are worldwide leaders for option trading. And some board members mentioned that they are also customers. Hope this helps. Cheers! Thank you very much berkshiremystery! You are always very helpful! And I will check them out asap. Just one more question: Do you think they will let me write naked put options, or that they will ask me to cover them with cash? My idea of getting some float to invest doesn’t work, if I must put aside the cash to eventually buy shares at the strike price. Right? giofranchi Gio,... I just asked this question Eric,... because he seems to be with IB,... ::) so let's wait for his answer,... I'm as curious as you to know this.... ;) Damm,... I almost forgot to tell, that I wrote some small amount of puts on AIG, some months ago,... but they are already profitable,... so theoretically I could repurchase them a lower prices to close them out. But I plan to let them run out,... the only disadvantage I got, like you mentioned... they put some "hold" on my margin equity base,... but I currently don't use IB.

I actually don't keep cash, I keep some part of the position hedged with puts -- I can sell the underlying stock and put and buy the corresponding strike call if I need to raise cash. This is a $4 strike put, doesn't cost all that much. In the meanwhile, I have a large margin borrowing capacity and just have an automatic monthly withdrawal setup to transfer to my checking account from IB. Eric,.. might I ask you the same question as our giofranchi just asked me,... ... does IB allow you to write your uncovered puts naked ???? ... or do they require some "cash collateral", I mean,... put some "hold" on your margin equity base. Because this is usually Some of the biggest drawbacks, if brokers don't let you write naked puts.

twacowfca, If I want to write put options on something I would like to own at a lower price, and use the proceedings to invest somewhere else – for instance in something that I like as much, but I consider to be already at a price undervalued enough –, do you know a broker that works also in Italy and that will allow me to do so? I tried with both Banca Intesa and Unicredit, but I failed… They don’t let me do that on companies listed in stock exchanges outside Italy… Maybe it’s a silly question, because you don’t know anything about Italy, but you seem a master of the trade, so I try to ask you anyway. ;) It would surely be very nice to have some float I could work with! Thank you very much, giofranchi giofranchi,... you will definitely be able to write put options in real time with "Interactive Brokers" http://www.interactivebrokers.com/ibg/main.php http://www.interactivebrokers.com/en/ibglobal_sites.php They also have a multi-currency platform, thus... USD, EUR, CAD... you can have integrated sub-accounts in any currency with your main account. Interactive Brokers are worldwide leaders for option trading. And some board members mentioned that they are also customers. Hope this helps. Cheers!

Nicholas Taleb has some new book coming out! [amazonsearch]Antifragile: Things That Gain from Disorder[/amazonsearch] Publication Date: November 27, 2012 From the bestselling author of The Black Swan and one of the foremost thinkers of our time, Nassim Nicholas Taleb, a book on how some things actually benefit from disorder. In The Black Swan Taleb outlined a problem, and in Antifragile he offers a definitive solution: how to gain from disorder and chaos while being protected from fragilities and adverse events. For what Taleb calls the “antifragile” is actually beyond the robust, because it benefits from shocks, uncertainty, and stressors, just as human bones get stronger when subjected to stress and tension. The antifragile needs disorder in order to survive and flourish. Taleb stands uncertainty on its head, making it desirable, even necessary, and proposes that things be built in an antifragile manner. The antifragile is immune to prediction errors. Why is the city-state better than the nation-state, why is debt bad for you, and why is everything that is both modern and complicated bound to fail? The book spans innovation by trial and error, health, biology, medicine, life decisions, politics, foreign policy, urban planning, war, personal finance, and economic systems. And throughout, in addition to the street wisdom of Fat Tony of Brooklyn, the voices and recipes of ancient wisdom, from Roman, Greek, Semitic, and medieval sources, are heard loud and clear. Extremely ambitious and multidisciplinary, Antifragile provides a blueprint for how to behave—and thrive—in a world we don't understand, and which is too uncertain for us to even try to understand and predict. Erudite and witty, Taleb’s message is revolutionary: What is not antifragile will surely perish.

I never understand these kinds of statements. Maybe I'm naive. I think people spend too much time listening to Buffett and his statements about things like if a nuke goes off in NYC people will still go on buying gum. If "BAC goes to zero and some others with it", just stop there. I don't get it. It's like these major financial institutions will be worthless and what? You're just going to keep looking for great investments? I assure that if BAC, GS and "others" are worthless you won't need to worry about that. Likely you will be concerned with looking for guns, ammo and canned goods. I cannot envision a scenario where THE major financial institutions in the world are worthless and life just keeps on keeping on. Same shit, different day. I suppose any one of these institutions could be put into some kind of receivership, but all of them? The world would be a fundamentally different place. The only event where every major financial insitution migh go worthless, might be some event where over 90% of their counterpart disappears,... i.e. all customers are suddendly dead,.... how likely is such an event where perhaps 270 million U.S. citizens die, and this board would have almost no readers. Seems to me only some Yellowstone super caldera eruption. The three super eruptions occurred 2.1 million, 1.3 million, and 640,000 years ago. Cheers!

Man, have you got some cojones! With your protections, how much would you estimate the downside to be, given a worst case scenario? Sportgamma + Eric,... what,... only some BlackSwan-like Armageddon you are all lusting for,.... *wink/roll eyes I got the gut feeling over the years, that by reading our board member posts,... that we all, or at least some of us,... are some sort of Armageddon like oil drillers,... almost like Bruce Willis wacho oil drilling crew,... well,... at least I got that impression while sitting at the shareholders dinner table. Other friendly table neighbors had this nice attitude,... ignore the crowd, be fearless, pick the rewards, and have afterwards some humble grin ;D

Those shares were acquired around August 2001 from Service Corp, and McElvaine Investment Trust was also part of the group acquiring shares. Cheers! While we currently speak about older historic purchases,... I was always curious how deep Fairfax's involvement in Dr. Michael Burry's Scion Capital partnership was. As we all know,... Francis Chou and Brian Bradstreet were the masterminds behind Fairfax own CDS positions, but to some lesser extent we know about Fairfax's involvement in the Scion Capital partnership. As I remember,... well at least through Uccmal's good knowledge,... Brian knew Dr. Michael Burry around the time frame of the big short. Well, he talked with him, but has never met him in real and what had struck me by a little surprise is that they (i.e. Fairfax) also had some money with him. I just wonder how deep that relationship was. They almost wanted to buy his old partners out, but Burry wanted to torture them a little longer. But that idea would have been rather strange,... Fairfax would have bought out Greenblatt and White Mountain. I only wonder why Michael Lewis has never mentioned this in his book. I just went through Amazon's search inside book feature,... and couldn't find any references. At least I remember that we here at the old MSN BRK board also mentioned occasionally Burry/Scion many years before the big short. Cheers!

Well,... seems to me the same way, that the single pieces individually are worth more than the current BAC share price. Comparable with the FFH situation years ago, where it traded below the individual value of ORH and NBFC.

In the past I've purchased companies that were HWIC, Berkshire, of Fairholme holdings. There is of course no guarantee that they'll do well, but they've passed the balance sheet sniff test. Those guys can catch any obvious balance sheet analysis red flag, so I figure why bother. I just then have to focus on the narrative. This protects me from making the basic entry level errors, which I'd surely suffer a lot of hurt from if I struck out solely on my own. Buffett is looking at long run earnings power, he looks at the balance sheet no doubt and at management because there is no sense investing for the long run earnings power if the company won't be around in the long run. That's one reason why I like his interest in BAC, even if it is via the preferreds -- he thinks in terms of not wanting to risk his opportunity cost, not just his capital invested.. Eric,... your intellect seems to play this adaptive behavior process the most expressive way. You search for recognizable investing patterns, that you can understand the easiest way for yourself, and where you can compound money in quantum leaps. Some sort of artificial intelligence and/or adaptive emergence behavior like this little boy in Steven Spielberg's movie A.I.. A highly advanced robotic boy longs to become "real" so that he can regain the love of his human mother and searching for the tooth fairy. I might also refer to John Holland's masterpiece book "Emergence" from the Santa Fe Insitute or Richard Brodie's "Virus of the Mind" book. Brodie was also at MSFT, Bill Gates's personal technical assistant and he wrote Microsoft Word. Someone can have a weakness by not understanding everything in every comer of a balance sheet, like Eric said, but through some collective adaptive learning, someone gains some wisdom advantage. Well,... actually I view most regular posters and board members as some bunch of collective adaptive brain. I would call us all some sort of artificial swarm,... or sort of swarm intelligence. Our board/ we members here are like a flying swarm of birds in the sky. But also swarms, part, build new branches or merge together. Thus we have our personal individual portfolio weightings, build by our knowledge how to fly and navigate with our wings.

Ding-dong,... damn, why didn't I came on her earlier.

By the way,... speaking of outstanding female ladies in financial business. Lauren Templeton was in Toronto last April. Prem has introduced her at the Value Investing conference at the Board of Trade, First Canadian Place. Here is a link with more information: http://www.bengrahaminvesting.ca/Outreach/2012_Conference/2012_Conference.htm Of course Mohnish was also there, as was Jeff Stacey, Tom Ward, Marc Bertrand, William McMorrow, Richard Garneau. Here is Lauren Templeton's Power Point Presentation (PDF-file) April 25th, 2012 - Toronto http://www.bengrahaminvesting.ca/Outreach/2012_Conference_PPT/Lauren_Templeton.pdf

Yeah,... but sadly, if you would ask me for names of female hedge fund founders,... I could currently only recall knowing that Joel Greenblatt's sister Linda Greenblatt/Gordon runs a hedge fund called "Saddle Rock Partners". And there is also Lauren Templeton, a niece of Sir John M. Templeton.

Well, that I did wonder,... about the percentage rate of female readers/investors of this board here. It has struck me to surprise at Sanjeev's shareholder dinner at the Fairmont Royal York,... that we are here almost ~98% guys,... maybe I can recall seeing only 2 or 3 female attendees. Or maybe it was only my impression. So to me, private, semiprofessional or professional investing seems to be unfortunately still only some male domaine. At the FFH AGM were of course some more female attendees,... probably at least over 10%, or maybe even higher 20%,... but you would have to correct me. I guess most female attendees came from the nearby financial firms at Toronto's Bay Street. After the AGM, I did spot at least Prem's wife Nalini standing in the lobby with friends and family,... greating people. Sanjeev said once, that she also cares to ask him how his business is doing.

Shhh, or the 60+ might wake up and kick me out of the tree house too. ;) At least,... I'm already above Uccmal's hurdle age,... ::) but I still like it to be viewed as some big kid,... if some cashier wants to offer me occasionally some student ticket as some admission card ;D

At least he didn't mention we're all going to die eventually, so he must be optimistic. What I took from it is that he considers corporate bonds as a decent investment option. The rest, to sum it up is: looks bad, really bad, but it's so complex maybe something new will happen and make it better, not the same as before, just better than how it is now. Or maybe it was bad before, we just didn't notice, so it's actually not that much worse now. I read another article yesterday how cheap energy and 3D printing is going to give the USA the edge over Asia and the needed boost to its economy (seems to be quite a few of these lately.) Sounds right to me. We might not only get 3D printing, but probably also in a decade some transparent iPad,... where you only hold some type of transparent display/screen in your hands. Like Tom Cruise in the movie "Minority Report". I had last week the chance to see and test this technology in real at some event of SAMSUNG. http://vectorpoint.co.uk/archives/2909 http://beforeitsnews.com/science-and-technology/2012/01/samsung-wins-ces-innovation-award-for-smart-window-display-1667269.html http://blog.gadgethelpline.com/wp-content/uploads/2012/02/mreport.jpg The real thing, a transparent computer display from SAMSUNG: http://www.sinbadesign.com/wp-content/uploads/2012/01/Samsung-Smart-Window-at-CES-2012-1.jpg http://www.sinbadesign.com/wp-content/uploads/2012/01/Samsung-Smart-Window-at-CES-2012-2.jpg http://www.sinbadesign.com/wp-content/uploads/2012/01/Samsung-Smart-Window-at-CES-2012-3.jpg

Beware,... we might soon get some free Halloween-like graveyard tour at next years AGM ;D Ah,... just kidding of course,... but I can recall Peter Lynch also made a fortune buying into the funeral and cemetery business Service Corp, which had no analyst coverage. Dull names, dull products, dead industry - Lynch loved simple mundane, colorless businesses.

I enjoyed reading it,... thanks for posting

Here's some interesting article about new "Super Options",... some type of new LEAPS that have a maturity range of 15 years. http://www.fool.com/investing/options/2012/09/11/span-langenthis-new-tool-could-change-long-term-i.aspx CBOE Holdings' (Nasdaq: CBOE ) Chicago Board Options Exchange has asked the Securities and Exchange Commission for permission to issue a brand-new type of option. If approved, it could act as a replacement for regular stock and potentially change the way you invest. ----- Taking a LEAP Many long-term investors ignore the options market because the lion's share of options trading involves short-dated options. With new options expiring every month, traders often try to take advantage of options either to capture small gains on a regular basis or to take a longshot at a big payoff if a stock moves dramatically. ----- TARPs superheroes are already flying All this may sound theoretical, but investments very similar to ultra-long-dated options already exist. In connection with the TARP bailouts in late 2008 and early 2009, the U.S. Treasury obtained warrants from the financial institutions to which it provided capital. These warrants typically had 10-year expirations and gave the Treasury the right to buy additional shares at a specific price, closely resembling a call option. They don't trade in anything close to the volume as their underlying stocks, but they do trade. For instance, Bank of America (NYSE: BAC ) , Citigroup (NYSE: C ) , and Hartford Financial (NYSE: HIG ) are just a few of the many financial institutions with outstanding long-dated warrants.

I can sympathize with this line of thinking.... RE: http://holdings.nasdaq.com/asp/OwnerPortfolio.asp?FormType=OwnerPortfolio&CIK=0001336528&HolderName=PERSHING+SQUARE+CAPITAL+MANAGEMENT%2C+L%2EP%2E Well,... only that he put the money in PG surprised me,...this might get him only a mediocre return. If he would have bought GM or CHK, as Mohnish has done, or even DELL, that would have been fine in my opinion, but PG... :o

I bump this up again,... some interesting weeks are ahead. Sep. 10th, 3 claims go to trail in Fairfax case ------- Fairfax Had ‘Massive’ Loss in Morgan Keegan Case: Judge http://www.bloomberg.com/news/2012-06-28/fairfax-had-massive-loss-in-morgan-keegan-case-judge-says-1-.html?cmpid=yhoo Canadian insurer Fairfax Financial Holdings Ltd. (FFH) suffered “massive” economic loss because of a campaign of negative information that led it to sue broker-dealer Morgan Keegan & Co. and Exis Capital Management Inc., a judge ruled. A state judge in Morristown, New Jersey, narrowed the lawsuit yesterday, dismissing a claim against Morgan Keegan, Exis and two others, while allowing three claims to go to trial on Sept. 10. Fairfax seeks $8 billion in damages through its lawsuit, filed in 2006. Fairfax, which owns stakes in Canadian and U.S. insurers, claims that Morgan Keegan and Exis coordinated with stock analysts to drive down its stock price by spreading false rumors in a so-called bear raid. “There is no question that there was a campaign of negative information being circulated about Fairfax,” Superior Court Judge Stephan Hansbury ruled. “There is absolutely no question in this litigation, and defendants do not contest, that plaintiffs’ suffered massive pecuniary/economic loss in this case.”

giofranchi,... thanks for posting. and finally you are in AIG,... even with probably only some tiny percentages indirectly ;-) http://holdings.nasdaq.com/asp/OwnerPortfolio.asp?FormType=OwnerPortfolio&CIK=0001040273&HolderName=THIRD+POINT+LLC

I might want to quote some of my favorite authors,... Richard Dawkins: “Science flies you to the moon. Religion flies you into buildings.” http://www.goodreads.com/author/quotes/1194.Richard_Dawkins