wisdom

I thought the deal was subject to due diligence being completed. Saying that I have financing does not imply I will close the deal. I think people are reading what they wanted to hear rather than what was said.

http://www.theglobeandmail.com/report-on-business/watsa-high-debt-deal-not-right-for-blackberry/article15242905/

The reason for looking into the same old tired names is because I know very few companies well enough that I can hold large concentrated positions in them. I have confidence in these positions to not sell during panics. I might even add. Every so often Mr market offer up a nice price and i add more. I dont sell as often either. It is due to my limitations, but, so far it has worked.

Hoping that it gets down to the new BV. I would love to add at that price.

I am interested in knowing the knock on effects - 1) how did the developers pay back the lenders? 2) have the lenders written off the debts that were not paid as it has been a while since these projects were funded? It would be great if you could provide additional information. TIA.

Cash keeps dropping because of the run up in the portfolio. Not sure where to harvest additional cash from - down to 26% cash as a result. It was 31% a couple of months ago.

The assumption is that the govts have maxed out all the policy responses - this is the reason it hasn't been mentioned. They have to play all the cards perfectly from here on out. Australia has had a golden run because they have commodities that China needed and their proximity to China made it cheaper to ship them from Australia. But, China is changing its model and this will impact Australia as their mortgage debt is at historical highs. This will be unsustainable if the Chinese do not buy as much in natural resources. Australia's advantage is the low level of govt debt. The cost of labour in Australia is so high, that they cannot compete in a global world for anything other than mining. What happens when China doesn't buy as much. Look at the recent mining projects that have been cancelled by BHP, Rio Tinto etc and the new port being built by Glencore, etc that will be operating at 50% capacity and thus, the Chinese owners will have trouble making payments on the financing. Commodity based economies have always had large swings. I don't see anything different other than the fact that this cycle lasted longer.

BTW - I agree with Packer and JEast as much as I agree with my statements. I have no ability to predict or know. There is no black or white in this - but, we can share thoughts and learn to hold opposing views at the same time. It is good to get a different perspective.

According to Ray Dalio, this stage has the most risk as errors in policy could be made - due to bad judgement, political pressures, etc. What is the risk/reward here? If the de-leveraging is perfect, things continue to run. Any errors will lead to massive swings in the asset prices due to the lack of confidence and no margin for error. And, it is not just one country that has to get everything right - Japan, France, US and China right now has to all get it right. This does not rule out a run up until an error is made.

Cash on sidelines and cash from QE sounds more like selling to a greater fool to me rather than fundamental analysis based. Do I want to risk my capital based on that?

JEast - What would be the arguments for being bullish (other than short term QE). - profit margins are extremely high. - interest rates are at historical lows. - we have QE. - growth is slow and we have de-leveraging. - mkts are fairly valued - govt debt levels are high - The govts are involved in something they haven't done before. I cant come up with many bullish arguments even though this run up might continue for a while. But, that also happened in 99 and 06.

I can only look at indicators but can't predict: - a lot of stocks are hitting highs - debt levels across most of the world are at an extreme - one really has to look around for an investment opportunity that is cheap - P/Es are rising but earnings aren't keeping pace - there are risks in Europe, US, Japan and emerging markets These are not the conditions that I look for when I am looking for a good investment. I will wait for better opportunities when the current buyers become forced sellers. I believe the debt will make things more volatile everytime there is a negative surprise across the world. Thus, one should get really good entry points sometime in the future as long as you have dry powder. Need patience and discipline.

http://blogs.wsj.com/moneybeat/2013/10/16/tracy-britt-cool-on-management-lessons-from-warren-buffett/?mod=yahoo_hs another article. different perspective.

I also look at value investing like evolution. Asteroid hits - dinos are wiped out. Mammals that were food for the dinos and tiny survive and prosper leading to humans who come to dominate. Spoils go to the one who survives. This has been true time and again over billions of years. I do not think we could conduct a better experiment. Value investing discipline allows you to be that survivor.

Value investing works because of human nature. I do not think that is about to change anytime soon. So, value investing should provide someone who has the right temperament an edge.

Sales 2013 MBI position earlier this yr 40% of BAC WTA during the summer Buys 2013 increasing my SHLD position summer) 27% cash 18.5% BYDDY 17% SHLD 14.5% BAC WTA 14% AIG WT 9% FFH

Cardboard Prem has never been the CEO of BBRY. He is CEO of FFH and was on the board of directors for BBRY. He did not sign off on the projects and I do not believe his understanding of technology involved is good enough to be the running BBRY. They will have other people with the technical expertise running the company.

german elections will be done soon - so Europe could again get interesting. debt ceiling coming up. Potential tapering. Things could get interesting once again. list I might add from - COWN DVA DJCO CHEUY LUK

There are too many variables and it is too complex for anyone to analyze correctly. I try to let history be my guide in these scenarios rather than trying to look for a particular cause. We can keep talking about it for the next 10 yrs and end up with different conclusions and still not know if they are correct.

It is worth looking at times when we have had deflation in the past. I had read somewhere that we get deflation every time we have free trade across the globe. That is why 1950 onwards was such as exception because we had the iron curtain. When we look at high debt levels - US in the 30s or Japan in the 90s - we get deflation. If the QEs and deficits being run by all the large countries have not been enough to ignite inflation - what are the chances that the deflationary forces will overwhelm the inflationary steps being taken even though the govts need inflation. The largest consumers in the world over 50% of the worlds GDP (Europe and US have high debt levels and need to de-leverage0 You have higher corporate profit margins. Capitalist/democratic societies are self correcting to a large extent and thus, it is not sustainable and there will be a rebalancing - whether it is increased competition or redistribution - who knows. We have a fairly valued mkt on top of that with limited mispriced opportunities compared to the last 4 yrs. The only reason to believe inflation is the way forward is - money printing. odds aren't in my favour to make bets saying the mkts going much higher and we will have inflation. Though anything can happen.

My bet is - it is a rehash from the earnings call. That is what they normally do. please correct me if I am wrong.

I find that we often limit ourselves to our local experiences. A lot of new standards could be set by China in the future as they would have economies of scales. So we must remember that China is more likely to set transportations standards for the world going forward. I cannot imagine a Shanghai or Beijing going the way cities in the US have where virtually everyone has their own car. I would look towards Asia (China specifically) to see how they plan to proceed. They are looking at self driving cars and they could develop different models and the people who haven't driven before might be open to newer ideas.

I am taking into consideration that in many countries self driving cars may be mandated just like seat belts for safety reasons - you don't have drink driving - no 18 yr old with 4 other teens speeding and crashing, etc. - how much money will trucking and bus companies save in costs.

Ajc - I have been thinking of the same outcome. Self driving cars should reduce traffic jams as these cars could be shared for people travelling to the same neighbourhoods and computer driven cars are more efficient in moving traffic than humans while causing fewer accidents. This is a 2nd order effect that I have been thinking of: Cars are currently the 2nd largest expense for an average household after housing. If you free up all that capital and it is either spent or invested back into the economy - it is interesting to imagine what impact it might have on our society. Currently, you have a car that sits in your garage all night. Then you drive lets say on average for 40 minutes to work. The car again sits there for another 8 hours. At this point you drive back and spend 40 mins in the car. In the evening you may drive another 30 mins. I consider this a massive waste of capital for the whole society which could be freed up for better uses. It could have a large positive impact on society. The liability for cars will move from the drivers to manufacturers as it would be their technology that would be responsible for crashes. What happens to Geico, etc?

I agree Packer - FFH deflation hedges and cash would be great assets if we rely on the 2 examples you have sighted. Based on these cases, IMHO, Gio is making the correct decision whether we get deflation or not in the near to medium term.