wisdom

I would agree with Gio - BRK has shown the way and FFH is smart enough to copy and learn from the best. All they have to do is emulate BRK at different stages and it is very likely that they end up like BRK. That is where they are headed.

For FFH - The hedges and cash at holdco negate/reduce a lot of the risks. This is a lesson learned from BRK - $20B cash at all times.

But, not BRK and few others. BRK has -ve cost on float - they get paid to underwrite.

http://money.cnn.com/2013/12/16/investing/penny-stock-trader-millionaire/index.html?iid=Lead

I would add - immigration levels have been high. Historically, Australia reduces number of immigrants coming in when there is a slow down. Not that any other society is any different. I would also argue that the individuals have probably taken on too much debt when you consider that they have nothing else to fall back on if mining and real estate slow down or turn down. Negative gearing to reduce taxes is used widely in Australia - you buy a property for its negative cashflow to write off the losses against your income and hope to make up the difference in capital appreciation.

Manufacturing is leaving Australia because of the high cost of blue collared wages/minimum wage. They had a 20 year boom with no recessions. Unemployment levels have been extremely low and the mining companies increased demand for labour over the last 10 years especially. If commodity prices drop for any reason what does Australia fall back on? The economy today is reliant on mining, finance (again related to the mining companies and Sydney has been the big beneficary), tourism, manufacturing (Melbourne) and real estate related construction. 1) Tourism has been slowing because of the high AUD. 2) Mining has recently started slowing and several projects have been called off due to Chinese demand not being there. 3) House prices are high and personal debt levels are fairly high as well - real estate can't go much further. 4) If mining companies slow down and the demand for capital isn't as high - Sydney would slow down. 5) There aren't many jobs for engineers other than the car companies and mining related stuff in Australia. If the car companies leave and mining slows down their wages will not be rising anytime soon. I wasn't referring to white collared wages as much. If my cost of labour to manufacture is high, I don't see how engineers would have anything to design or build unless you manufacture locally.

Australia's cost of labour is so high that it has priced itself out of all markets other than commodities. If commodity prices (iron-ore/coal) drop, it will not be pretty. GM recently announced that it is walking away from Australia. Luckily for them the government has a strong balancesheet and can stimulate further.

a) was prevalent in Vancouver prior to GFC. Stated income and equity programs (asset based lending) were common. No proof of income was required for either option. In addition, certain first nations groups to whom regulations did not apply were offering 100% financing with no proof of income. Brokers and bank lenders have been beating the system: Most banks do not report mortgages on credit bureaus in Canada. From what I understand it has been common practice amongst brokers and lenders to educate their clients not to include other properties owned but financed at other institutions so that debt servicing is within guidelines. There is no way to know unless advised by the client. This is why individuals who work the system borrow from banks and avoid HELOC's as those get reported. Mortgages under corporations do not get reported on bureaus either. The system is full of holes and there will be consequences in Vancouver as the system has been exploited to an extreme. Everyone has chosen to look away as there was so much money to be made. Why do you think individuals have been able to buy houses when the average house price is at 10x average household income.

https://www.grneam.com/WebDocuments/GRNEAM/REFLECT/JZ1XPD5JJW8X46H2H1QK1Z6S98/ENGLISH/Reflections201312-en.pdf Gen-re - more is line with what Gio has been saying. talking about systemic risks created by the central banks.

It would not be a bad idea to start COBF coins. Based on this experience everyone on this board could be a millionaire many times over given enough time. Why waste our time doing anything prodcutive?

incredible!!

Marks makes a good point - People are not necessarily bullish but are being forced to act bullish by the central banks. Thus, they are taking on risk that they would normally not be comfortable with. In case, there is any shock or unexpected outcome in the major economies - those individuals who have moved up the risk curve without being comfortable with it are going to run for exits. I expect this to present good opportunities at some point.

http://www.bloomberg.com/news/2013-11-21/stock-funds-lure-most-cash-in-13-years-as-market-rallies.html we could be starting the final stage of the cycle

27% cash 17% BYDDY 16% SHLD 15% BAC-WTA 14% AIG-WT 8% FFH 3% BRK/LUK, etc.

Summers and Krugman are proposing something similar. I was reading someplace a possibility of sharp drop in rates (say negative 4%) to shock the savers into buying assets. It would be like a tax.

http://www.bloomberg.com/news/2013-11-18/credit-driven-china-glut-threatens-surge-into-bank-crisis.html Chinese debt and over capacity.

Anecdotally, everyone I know wants to talk stocks once again and they think I know what I am doing. I view these as negatives. I would not regard the view on this board as the norm out there.

http://www.theglobeandmail.com/globe-investor/carl-icahn-warns-market-could-have-big-drop/article15491901/ Icahn about earnings being fueled by low borrowing costs rather than good management.

This can only be known after the fact. Why waste your time speculating whether it is a secular bull or not? It is far easier to consider if opportunities with large margin of safety are abundant or not. Why complicate something that can be kept simple, or is it a reflection of lack of opportunities - the fact that we keep discussing macro to entertain outselves while we wait.

Input costs such as commodities and wages have been dropping or stagnant over the last 3 years. Globalization should lead to deflation as production moves to the lowest cost producer.

Munger came across this when he was a lawyer. He had several clients who were involved in real estate development. He thought a lot of them weren't the brightest but, still managed to do well in real estate development. They made more money then him back when he practiced law. He decided to get into developing real estate.

Will the manufacturer's need to buy insurance - in case, of accidents caused by their self dirving cars. The total premiums should drop due to lower accident rates. This may leave families with more $s to spend on other things. There will be other opportunities.

Agree with Jbird, Kraven and Zarley - Doesn't matter if you have money to burn. I would question her decision making - would you not consider your future before taking on that amount of debt? But, people learn through experience and she might be wiser for the experience - $250k in debt. Impossible to know unless you know the person.

http://www.bloomberg.com/news/2013-11-08/central-banks-renew-reflation-push-as-prices-weaken.html central banks still attempting to ward off deflation. It is still a risk.

If I had the ability, I would not be investing in FFH. I would be doing it on my own. It is easy to throw out opinions which is what most of us are doing. How many here have managed a few billion successfully?