Crip1

As indicated in an earlier post, I deeply regret that I cannot attend this year, but would offer up a suggestion. Specifically, grabbing a pint (or cup of coffee, or what-have-you) afterwards as well. James said it well regarding "running out of time" so extending the evening to perhaps discuss knowledge put forth by whomever from Fairfax is able to attend would be definitely beneficial. This is a once-a-year proposition so best to make the most of it. Enjoy, folks. -Crip

To anyone who has not gone to the "Fairfax-Sanj-Fest", I would highly recommend doing so. The whole night starting with pre-dinner beers with some board members (Thanks again, James, for orchestrating), the dinner at Baldali's is terrific and it is very cool to hear the off the cuff comments of Frances, Sam and others. The FFH Meeting was quite good as well. Prem is engaging, frank and enthusiastic. I came away from that feeling even better that much of my retirement is being funded on the shoulders of Prem and crew. I did not make it to the MPIC meeting so cannot comment on that. Recommendations: * Make sure that you don't book your flight Thursday too early. I would suggest early evening or maybe even staying until Friday morning. I had to leave the FFH meeting too early (had a connecting flight and wanted to get home before midnight) and missed the after meeting reception...would not make the same mistake twice. * If you have not visited Toronto previously, stick around for a few days...I really like the city (Hockey Hall of Fame is worth the time) as well as the variety of ethnic dining experiences. * The well-known quip of "God gave you two years and one mouth, so listen twice as much as you speak" applies, but I would recommend listening about ten times as much as you speak...there is much to learn over these few days. My job and other issues dictate that I cannot make it up there this year, but I will try for 2011. Have a great few days, all. Take care. -Crip

Let's marry a couple of thoughts here. First, ubuy: "I "think" I am a pretty good investor however I KNOW that both Prem and Warren are GREAT investors hence my willingness to deploy a portion of my capital in their direction when it appeared that I was paying little for that expertise." Next, bookie: "You can get all the education in the world ( and it helps) BUT you can't teach common sense." Ubuy's post points to a key componant of investing which is humility. Having one's ego is check is part of emotional control. My employer is a very smart man, and has been quite successful in business life, but is not a good investor. His ego does not allow him to look at a Prem Watsa and say "I want to let this person be a steward for my capital" as he feels that he can and would do more with it then Prem. He feels that he is smarter than most anyone else and his ego is way out of whack. The acknowledgment that there are others better than you at investing/managing is common sense, really, as technically only one person can be the absolute best at anything. This is not a difficult concept to grasp, but there are those out there whose ego will not let them grasp this. I've said this before a few times but look at the gurus that are followed on this board...Buffett, Wunger, Watsa, Berkowitz...all individuals who are quite humble (despite Charlie's blackbelt in "chutzpah"). The members of this board are much more likely to demonstrate a high degree of humility then the Cramers of the world. Humility, really, IS common sense. -Crip

Ubuy, This discussion has interested me for quite a while to be sure, and I tend to agree that there is an "IT" factor, but would opine that the "IT" factor is more a confluence of traits rather than a single gene, and would comprise the following: * Numeric Prowess - Investing does not require one to understand differential and/or integral calculus, but one does need to be comfortable with numbers and needs to be able to analyze numbers. The example is that my wife can balance a checkbook, but she is not wired to be a numeric analyst. * Intellectual Curiosity - There needs to be an internal drive to understand how businesses function. This drives the would-be investor to be educated in how companies work, how they make money, and how financial statements reflect (or, in some cases, DON'T reflect) the economic reality of this. * Emotional Control - Buffett often cites this as the most important factor, and who am I to argue with him! It is not easy to see the price of an investment plunge, whether it is company stock, mutual fund, etc. Peter Lynch opined that more investors LOST money on his fund then MADE money, despite an absolutely stellar run. This is because as the NAV fluctuated, many "investors" became scared when the price declined and sold at a loss. Fear overcame analysis. * Drive - A very wise man once told me that knowledge and intelligence are additive to one's overall success in business, but drive is a multiplier. An individual with mediocre education and mediocre "brains" but superior drive will be more successful than one with superior education and "brains" but mediocre drive. Bill Porter (http://en.wikipedia.org/wiki/Bill_Porter_(salesman)) clearly demonstrates the levels of success based on high amounts of drive. Conversely, a former co-worker of mine, named "Bill", was a Masters degreed Mensa member who waited tables. If one were able to assign a numerical "score" to these traits, successful investors would have differing "scores" for each but the ending sum/product of these scores would achieve a certain level. Of course, there are some outliers like Buffett/Munger who score at or near to top in ALL factors but most of us are only mediocre in one or two of the factors listed above. The sum/product still allows for a level of success, but not the "off the charts" success of Warren or Charlie. -Crip

Full disclosure, I am US born and bred and though I never played, I have always thought that hockey was a great sport...a remarkable blend of what's normally thought of as polar opposites: Brute Force and Poetry-in-Motion. Consistent with the theme of polar opposites, I give you the Gold Medal hockey game of the 2010 Olympics. The game itself had plenty of action, some stellar goaltending, skillful pinpoint passing, crushing body checks, etc. While it can be argued that there have been better played hockey games through the years, today's game was quite enjoyable to watch, even if it was not the outcome I wanted. The banter between fans of both sides of the border, however, fell far short in terms of quality compared to the game today. It ranged from ill-informed to ignorant to downright banal. I was mortified that fellow Americans would speak with such disdain of Canadians and heard plenty of the citizenry from the Great White North which was equally nauseating. It is fascinating, bewildering and highly disappointing that the grace and guts that is well-played hockey is tainted by a huge collection of a**holes on both sides of the US/Canada border. I would offer this as a member of US hockey fandom: I thought that it was fitting that the game today went into overtime, that it was so even in terms of shots on goal, faceoffs won, etc. The Gold and Silver medal winning teams were certainly head and shoulders above the rest of the hockey world this year and both squads are to be commended. Without question, I would have been overjoyed had our boys from the US, a young and relitively inexperienced team, been able to capture gold in Vancouver. If that was not to be, then without question there is no other country in the world I would rather see wearing gold than Canada. Perhaps it is due to our cultural similiarities, or several trips I have enjoyed to the GWN, (or the fact that I have made some serious money on a certain Toronto-domiciled insurance holding company), but hockey is Canada's sport and Canada's passion, and I am genuinely happy for the players, coaches and fans of Team Canada. They were the best team on the ice today and deserved the gold. Congratulations one and all, and please know that while we have plenty of ignorant numbskulls here in the US, there are a multitude of others like me who respect and admire the hockey team and the country of Canada. All the best. -Crip

"This acquisition is atypical for Watsa, who tends to buy insurers that need to be overhauled. That's not the case at Zenith. Fairfax said it is retaining the management team, and the company will continue to operate from its California headquarters." Lessons learned... -Crip

Echoing others' appreciation for the posting, thanks txlaw, that was a good read indeed. First and foremost, macro-economics is not my strong suit, so I am looking at this with an admitted amount of naivety. That said, I would really like to see/hear a similarly well-thought-out counter-argument to the thesis Koo presents. Much of the conservative ramblings I hear are a collection of 7-second sound bytes or arrogant declarations of how liberals' spending habits are a combination of foolhardiness and pure evil. If anyone knows of a cohesive counter-argument, irrespective of whether or not they agree with it, then please post it. All above being said, I am not sure that I agree with Koo's assertions of the ineffectiveness of tax cuts. His referencing that 88% of the Bush Tax Rebate being used to reduce debt may be factually correct, but as the recipients of those rebate checks knew full well that those rebate checks were a one-time "windfall", they most certainly would spend those checks differently then small to medium businesses would a permanent (or as close to permanent as any governmental policy driven) tax-cut could be. I agree that tax cuts for individuals may generate more debt-reduction than spending, but for small to medium businesses, I would opine the opposite. This would, presumably, also stimulate the employment situation as well. Also, I would add onto Woodstove's point #2 regarding the capital investments. If the government needs to spend money, would it not make sense to spend money on reducing the US's dependence on foreign energy? This has the advantage of "spending our way" out of the Balance Sheet Recession (supposing that this is indeed the situation in which we find ourselves, which I am not totally sure is correct, but will use that assumption for this suggestion) and stemming a transference of money from the US to those countries who, frankly, do not like the US? Furthermore, if this investment is, at least in part, in the form or renewable or inexhaustible (Wind, Tidal, solar, etc) energy, then the result would be easing of the recession, reducing dependence on foreign energy and ecological benefits. -Crip

As parents, we teach (preach) to our kids to be smart, not gamble, and "own up to our responsibilities". Very simple ideals, but ones which are often times lost as we get older. Pity. -Crip

Agreed, liked the whole thing. I can't say that it was better than China's, or worse really, just different. Atkins definitely did a heckuva job with less budget. Arbitrager, Never having been there, I cannot confirm or refute, but it would be instructive to create list all of the metropolitan areas in the world with a million plus people who do not have some drug and slum problems. Hmmm...let me see...OK, my list is below: -Crip

Sanj, Everyone I have ever met who has been to Vancouver has remarked how beautiful it is. After watching the first part of the Opening Ceremonies broadcast, it's clear that those remarks were woefully inadequate. I'm sure that the next couple of weeks will be a wonderful experience for you city. Enjoy. -Crip

I like that idea as well... -Crip

"To mitigate future public excesses, Aronstein said, legislation should be enacted that would hold elected officials to the same standards of fiduciary accountability and conflict of interest restrictions as money managers, he said." Wow...THERE'S an interesting thought... -Crip

Admittedly, I haven't done any research on the company but my first (emotional) reaction revolves around the notion that a lot of our world's financial problems stem from people wanting and buying things they can't really afford and that companies similar to easyhome contribute to the problem. I don't want to look any further into the company because of my initial reaction. Is this irrational? FFHWatcher, I do not think that is irrational at all. Understanding that there are shades of "grey" here, if you were to buy like Easyhome, there are three potential outcomes: 1) You lose money...which will cause you to feel like a doofus, or 2) You break even or make a little...which will cause you to think "what if" you had invested the same money elsewhere, or 3) You make a boatload of money, then feel remorseful that you essentially did so by taking advantage of individuals who were not sophisticated enough (or were so eager to over-extend) that they did financial harm to themselves. My guess is that neither of these are good outcomes from your perspective. If so, it seems like a no-win situation for you. -Crip

From the Reuters article posted by Viking: "The biggest price cuts are being taken by the largest carriers, according to the most recent survey by the Council of Insurance Agents and Brokers (CIAB) in October. Large property-casualty insurers were paid about 7.4 percent less for policies in the third quarter compared with the more modest 3.6 percent average decline recorded by smaller players." I'm speculating that the reason larger players are seeing more pricing pressure than smaller ones is due to AIG cutting rate drastically since, well, they are backstopped by Uncle Sam. Can anyone in the industry confirm or advise to the contrary? -Crip

A quick look at HALL and it seems to me that this would be a nice little bolt-on acquisition for Markel or Fairfax, but with 70% insider ownership, any buyout would need to be "friendly". Will need to read more to see if I am interested, but it looks compelling on the surface. -Crip

BeerBaron, you are spot on regarding Peter Drucker. I've heard him called the "Warren Buffett of management" and that's not a bad description. The only issue which I have with him is that his books are not a "light read". He's brilliant to be sure but his writing style is more easily digested by folks waaaaay smarter than me. I remember on several occasions needing to read the same sentence 3 or more times to understand what he was saying. To be clear, that is more a criticizm of me than of him, but there is a higher level of challenge in reading his stuff than the vast majority of what else is out there. -Crip

Sanj...you nailed it. I have nothing to add. -Crip

This would not bode well for market hardening in 2010. -Crip

Does anyone see why (besides general undervaluation) Fairfax has risen over 11% in the past 7 trading days? -Crip

For those US-based board members looking for a solution to this, I called Schwab shortly after this announcement and inquired about how this would affect my holdings. After talking to a couple of reps who were certainly eager to assist, though not sure of the answer, I was connected to an individual on the International Trading desk. He confidently indicated that, due to the manor with which Fairfax did this, the conversion and subsequent holding would be effectively invisable to me. Full disclosure is that I do not have any leaps, calls, etc, so cannot comment on whether Schwab would be an answer for those who margin. -Crip

I agree with you on Downtown Chicago...trying to distance myself from hometown pride, it is truly a great place to visit or live. Regarding pizza..., dude, you’re a great guy but your comments are pure heresy! The mere thought of a two-inch thick combination of firm yet tender crust, Italian cheeses (mozzarella, provolone and romano are my preferences), olive oil, ripe tomatoes, Italian spices and artery-clogging globs of sausage is enough to bring me to my knees in anticipation of a culinary experience far to wonderful for mortal man. It’s pure gastronomical nirvana. This is accentuated by the fact that being down here in Dallas, I cannot get anything close to it. Though they are great folks, Texans can't make pizzas to save their lives. ValueCFA - A-men, brother. -Crip

I grew up in Chicago which, climate-wise, is much like Toronto. As a matter of fact, though I still live in the states (Dallas), I find Toronto to be more like Chicago all the way around than Dallas is. Before moving down here, I would have gladly lived in Toronto or areas around there...but after 4 years in the south, it's going to be like pulling teeth to get me up there, especially now that NHL Network shows Hockey Night in Canada every Saturday. ;D I can live with days in the low 100's (35-37) if I do not have to deal with temps much below 20 (-6). Furthermore, we typically get a day or two each month where the temps get up to 70 (21) or so...THAT breaks up the winter quite nicely. I always told southerners that the cold winter temps "built character"...after 40+ years, I have enough "character". It would be nice, though, to have Tim Hortons down this way... -Crip

I would think that a down year would be an advantage to the Fund of Funds as, like the article said, they can short. I do not recall from the original coverage of this bet but do we know the remuneration arrangements from these funds. The reason being that if these funds take a percentage of the gains, then they would be facing headwinds in years where the markets are up (as the managers take a portion of the gains leaving the rest to the investors). My take is that Buffett is trying to highlight that these funds of funds, with their "stacking" of fees, are beneficial only for the managers of the funds and not for the investors. What better way to do this than to bet, which gets plenty of free media coverage? The $1M going to charity is pocket change to him should he lose and is well worth the education afforded the investing public should he win. I think it was Munger who said that these managers add nothing to society. Stating that fact only goes so far...demonstrating that fact speaks loudly. -Crip

We've seen much evidence come out in discovery, etc, over the past several months. This would look to be the tip of the proverbial iceberg. The remainder of the evidence will come out, eventually, and in that evidence we will likely see the reasons why Prem and Co. named the individuals in the lawsuit. My best guess as to why Eavis, Taylor and Greenberg went un-named is simply lack of indefensable evidence. Rather than name everyone under the moon and stars, Prem and company only named the individuals for whom they had substantial evidence. That's certainly not to say that the three individuals noted above are not guilty, but the more focused and targeted lawsuit, the better the chances of success. It is bitterly disappointing that the wheels of justice churn so slowly in instances such as this. The lawsuit was filed, what, 3+ years ago? And we are still many months away from any verdict (which will undoubtedly be appealed if the alleged are found to be guilty). Because of this...these criminals (and they are just as guilty as theives, murderers and rapists) are still allowed to commit their crimes. Nauseating. Justice needs to come, and right soon. -Crip

"Fairfax Financial, a Canadian Insurer, still has it in their head that some of the most feared and respected hedge funds got non-public information about the company and spread it around the street encouraging their buddies to short the heck out of the stock." Well...there's some objective journalism. ??? -Crip