RRJ

Fairfax is doing a lot of acquisitions of tuck in international insurance operations. Growing the float is undoubtedly a good thing, and I suspect the international markets are fair less fully valued than domestic insurers, with more room to run as more Asian economies grow and need more insurance. So seems great to me if they can get the underwriting profit where they need it, and they appear to be doing much better at that as well. But what are the added risks in buying international insurers over domestic ones? There has to be incremental risk to this above what Berkshire faced earlier on in the float growth stage, though it ended up huge in international insurance obviously.

I'll ring in just to say I agree with everything cardboard has said on this thread. I think it is very arrogant to think that such a large number of your countrymen have no point and must be morons, and leave that as your explanation. It takes a real intellectual snob not to at least see some reason behind the big swells of public opinion. No one is so smart or so stupid as to be 100% right or 100% wrong all of the time. Ask yourself, what need of the body politic is being filled by the Trump phenomenon? It may not be your cup of tea, and it might not be pretty, and it might have no class, but it is reality and it is big, and if you add Sanders' votes to it, it is about double that number that are sick of the status quo, but who are more PC minded. People are sick of the existing political elite shoving how they are supposed to think down their throats, on both sides. Another way to put it: we have a jury system that empanels 12 people to come to very difficult decisions. It's imperfect, and it's often ugly, and often seems not to make sense, but if you know enough about what went on in the jury room, usually the jury has a valid reason for what they do. A presidential election is in effect a jury of a hundred and fifty million people. There is a deeper wisdom that, while not apparent to me, is there by its very nature. This should not be dismissed or ignored. To get back to value investing, that would be like ignoring the reality when your stock thesis turns out to have been wrong. It never ends well for you. Better to find out what element you are ignoring and face up to it and admit it too has some merit that you should have considered.

I agree with this and think there is something off about all this. I've been wondering if OPEC's announcement is a policy that Saudi Arabia dictated, or one that was putting a good look on a de factor policy because the other OPEC members (Venezuela, Nigeria) were basically up front telling the Saudis they were not going to curtail output. In other words, was this a strategic decision by the Saudis and OPEC members, or just making the fact that they can no longer exert control over their members look better by making it "our policy." Has anyone got any insight into this possibility and what it would mean if OPEC were losing control of its members (assuming it has not already)? I apologize if this has been covered already on this strand.

Interest rates were also significantly higher in the 70's and early 80's. Interest rates are at the lowest levels today since the 1930's. Your alternatives to GIC's, treasuries and corporate debt is equities whose annual dividend yields are twice as high, while actual yield on investment is more than triple what fixed income would get. Very big difference than equities trading at 3-4 times earnings in the 70's, but interest rates were at 6-7% or higher. Cheers! But this is why I am so cautious now. Interest rates ar at historic lows, and central banks are printing money, undermining the currency and ultimately ensuring that folks will demand higher interest to buy our bonds, eventually (who knows when). So if interest rates will have to go up sometime, and it will be the bond market that starts the process, doesn't that mean that equities will be worth less when that happens, along with every other cash flow stream? After all, interest rates were one of the reasons stocks got to 3 and 4 times earnings in that period of the 70s and early 80s.

I've been meaning to post this question for a while. I am wondering if the CPI linked derivatives are the best protection against deflation risk, since the governments control the CPI numbers. I remember Prem at the annual meeting saying that Japan experienced 14% cumulative deflation over the past 15 years, as did the U.S. in the 1930s Depression. However, I have seen figures that Japan's CPI deflation was actually quite mild, and the U.S. In the 1930S was tied to the gold standard and so might not be a good model for what would happen in a fiat currency deleveraging. Isn't it more likely that we will have asset price deflation in certain classes, and currency devaluation in nominal terms? Bernanke was very approving of the 40% currency devaluation that Roosevelt's administration caused to occur in the 1933-1935 time frame. I believe he would love to do that here, and has been reading from his 2002 playbook straight down the line. Given this, would't we have both deflation and inflation in the sense of currency devaluation, which the CPI linked derivatives would not really defend against too well?

Then why would you fall for the pitfall of trying to time such an event? It's just silly and not very value like imo. Timing seems hot lately, both for individuals stocks and the macro situation, and I don't get it. What if Buffett is at the helm for another 5 years or longer and IV nearly doubles before the stock takes a hit from this event? It's just not a valid argument imo. If we do drop 10-20% because Buffett suddenly resigns then I'll just sell some common and start buying long dated calls because it would imply BRK is trading at 50-55c on the dollar based on my estimates. Look what Apple's stock did after Jobs' resignation. I bet plenty of people thought it would go down as well and the MOS and general quality of the company is a lot less than Berkshire's at the moment. The longer it takes for Buffett to resign, the smaller the eventual opportunity loss will be in terms of performance as Buffett's extremely rare qualities will have lesser effect each passing year. And if you did a poll on the board some months ago I bet at least 50% would have believed Buffett would never buy back shares. If he's there 5 more years and the stock doubles, then my already substantial position will do just. As for "silly", I guess I'm just darn lucky I don't have to answer to you as to whether I'm a "good" value investor. Funny how the world works out that way. Jeez.

I'm a buyer of BRK at these prices, in addition to what I already hold. However, it occurs to me that something like this might be a preparation for a soon to be announced reduction in Buffett's responsibilities at Berkshire. At this point, with Buffett's retirement at least partially priced in, a removal of that uncertainty might well help the price, but I would still bet on a further drop in price if and when he reduces his responsibilities. I guess I'm just mentally holding some cash in preparation for that further opportunity to up my BRKB holdings to what I consider the full holding. Of course, pretty much everyone on this board knows that a reduction in Buffett's managerial duties (as opposed to capital allocation duties) would be pretty much meaningless to the company except for symbolic.

Could not agree more. It is staggering how much this has cost savers.

I found this far less good than Poor Charlie's Almanack. Not bad, just less good. It's kind of a compendium of Munger and others' theories, interspersed with educational vignettes from the author summarizing points. Not necessarily the most fluid book either. Kind of jumps around in my opinion. Still, interesting and worth reading for the review of Mungers' principles and those of others.

Do any of you more knowledgeable folks have the feeling that the fed could be buying stocks or futures directly as a way to bolster the market? This would ostensibly be to increase the wealth effect and consumer confidence, to help stave off deflation. I realize this would be somewhat unprecedented, but Bernanke at least hinted at such "other tools" in his 2002 speech, and Einhorn has repeatedly stated that the fed is "obsessed with the stock market" (see Charlie Rose interview).

Yeah,I think they did not catch this reference to another complaint they recently filed. Be careful using forms. Boy that looks bad to a law clerk reviewing the complaint. Cookie cutter class action.

It seems to me that anyone who posts things out of consensus on any blog is usually labelled "a troll" and dismissed out of hand. This strikes me as a form of confirmation bias and exclusion of anything other than the groupthink. It can, on occasion, be seen as an ad hominem attack rather than a legitimate willingness to debate the points raised. I could be wrong -- I'm certain there are trolls around. I just don't think I've seen one posting here lately. I don't see any ill will on either side here, just honest disagreement and a feeling of not being heard properly and struggling to get one's point across. If it's annoying posts you object to, aren't there always going to be those, depending on your position, and how to draw the line? One man's annoyance is another man's confirmation that at least he is not alone in a world that stopped making much fiscal sense a long time ago. My opinion.

This is a very good point. There is no way these two areas could continue to raise prices like they have if they were not subsidized so heavily. It seems like most things government touches end up like this. It's the law of unintended consequences on steroids. Politicians try to " help" a bad situation and it always makes it worse. Yo now have a whole generation of college and grad school graduates who have leveraged their future with student loans that are subsidized by the government, and the schools were therefore able to keep raising tuition FAR in excess of the rate of inflation.

Just so we all know how "crazy" and "irresponsible" and "uncompromising" all the House Republicans are, here is Harry Reid talking in 2006. President Obama said the same exact thing. http://www.youtube.com/watch?v=ELkbDdPeL7I&feature=youtu.be Where you sit depends entirely on where you stand I guess.

I do not like to talk politics on this board, because I do not see that as its primary function, and I do not see people swayed by each other much on political issues -- they convince themselves or they do not get convinced, so why poison the debate. That said, political and macro issues today are very important for investing -- 2008 proved that to even the most hardened bottom up investors. I have noticed though that whenever anyone espouses anything remotely conservative on this board, there is a pretty much uniform gang up from the other side, with a few of them adding that the poster should not post political commentary. That seems like being a bit of a last word freak to me, and not wanting opposing viewpoints to be heard. I'm conservative fiscally, but I always start from the premise that 50% of my fellow citizens cannot be completely without a point. I would hope others would give the same courtesy to Southern Yangee, and Myth, and all the other viewpoints espoused. If you don't want political thoughts on this board, just don't read them. As long as people are courteous, I for one see no reason to shut down opposing viewpoints.