Ross812

The assets are only worth the future cash flows they will produce discounted using whatever interest rate you are comfortable with. The problem with a lot of these assets is there are no plans to monetize them so how do you discount them? Take a made up real life smaller example. I collateralize my home worth 1M at today's assessed value and should at least match inflation + 2% as it is in a hot area. I retain controlling interest. I rent it out occasionally on AirBnB and show you the cash flow of 40k/year which I use to pay for expenses and give myself a small salary for management. I can sell/give my controlling interest to another party (my heirs) if I want to. How much do you pay for a 49% share of my home? Its certainly not worth 490k. 250k? 20 years down the line the asset will be worth 3.2M (assuming a 6% ROI) but I will still have no plans to sell it and monetization will be in line with inflation. You are hopeing one day I get tired of controlling it and sell the entire stake to someone else - including your stake at market value.

A nice watch is a status symbol. Mercedes versus a Honda.

1700 SF with another 600 finished out in the basement here (3 br/3 ba); its a 100+ year old home so the space is chopped up. We entertain a lot and I do wish we had a large gathering space with a wet bar and some seating off the kitchen. We live in the city on a lot that is less than 1/10 acre so we will not be adding on. $/SF in the city is 3x what it costs 15 to 20 miles out and I can't afford the entertainment space in our current location but I would never move further out for more room. We have a 1400 SF (3/3) vacation home on a lake. We solved our entertainment space by adding on a 500 SF covered deck and a hot tub, shower and bar area under the large deck. We now do the bulk of our entertaining at the lake and have talked about upgrading to a larger lake house at some point as we would actually use 4+ bedrooms often.

Bough HUM this morning as well.

Added to NNI.

26% FFH 9% BRK.B 9% $ 6% USB 5% LUV 5% NTDOY 5% HQI 4% ADSK 4% GOOGL 4% DFIN 4% MSGE ($30 CCs on full position) 4% CASH ($50 CCs on full position) 3% HUM 3% NNI 2% TOITF 2% CHDN 2% HSY 2% JCI 1-2% in tracking positions - BAC, ASHTY, LHX, META, CPNG calls, BABA, BABA calls

22% in aggregate across all accounts which includes a 25% ish cash position (emergency funds, short term, and dry powder because a recession is supposed to come right? ). My main trading account was up 46% mostly due to concentrated positions in META, FFH, and DFIN.

I voted no. From @Viking: For Fairfax, today only 20% of their various income streams comes from underwriting profit and 80% comes from other sources (40% from interest and dividends, 20% from share of profit of associates and 20% from mark to market equities and investment gains). Underwriting profit is a much more important income stream for traditional P/C insurers. So even if the CR at Fairfax declines slightly in the coming years (this is not a given), given its small relative size, it will likely have a small impact on Fairfax’s total earnings - the total $ decline will likely easily be absorbed by another income stream. To get to $2000 I'll make the optimistic assumption that EPS are $200 in 2024-2027 and FFH rerates to 1.2x BV. I assume that interest rates are headed back down a couple of percentage points which means over the next few years the ability to easily reinvest cash (both retained earnings and maturities) back into treasuries/bonds becomes less profitable. The 40% share of profit from interest and dividends comes from the float and I don't see the float increasing at 20%+ percent a year which means FFH has to rely on other sources - underwriting profit, profit from associates, 20% MTM investment gains. Declining interest payments is a big hole to fill and FFH hasn't done it in the past, even if you look at the profitability of the SOTP ex-hedges in the past. Remember there is a high probability (40-50%) underwriting disappoints in one of the next 4 years. Maybe that extends/renews a hard market and FFH ends up better for it over a full cycle, but that could be a significant whack to earnings in any one year. To get to $2000, a lot of things have to go right: a) high interest rates continue -or- they knock investments out of the park (maybe 30% chance) b) no super cats in the next 4 years (50% chance) c) market rerates FFH to 1.2x BV (I'd say 80% chance) So that is a 12% chance FFH ends up at $2000. My estimation: Starting BVPS - $890 2024 - $170 EPS 2025 - $175 EPS 2026 - $180 EPS 2027 - $170 EPS Underwriting: super cat year knocks off $40 one year Rerate to 1.2x BV BVPS - $1545 Price - $1850 That's a CAGR of about 18% which is good enough for me, 15% of my NW is in FFH.

You all got me on the HSY thread and I started a 1% position. @valueventures reminded me about NNI today. I restarted 2.5% positions in my tax advantaged accounts. I still have 100 shares of NNI in a taxable account that I never sold and have been sitting there since 2015 that are up 3x with dividends reinvested. @dealraker would be proud.

I restarted a position in BABA.

Trimmed ADSK and GOOGL.

LUV - easily has $4+ in earnings power and even after this run up is at 2014 prices or the "end of air travel" covid prices. FFH - should add 15% this year if P/BV ratio remains the same. HUM - new add for me, but I've followed it for a long time. Last time the P/FE ratio was this low was October 2019 and it has returned 15% CAGR since then. HUM today is leaner and more focused than 2019 after dressing up for a sale that fell through.

I think worst case is a super cat year comes along in the next few years and this ends up even money to down slightly if they sit at 0.8 to 1 x BV. The bear case is 0 to 5% CAGR over 3 years - the bull case is 1.3x on a 2026 BV of $1300 - that's a CAGR of 23% over 3 years. My position size in Fairfax is 25% and I haven't sold a share yet.

I talked with my neighbor who is a salesman for JCI. He works with HVAC engineering firms who spec JCI equipment and said JCI is really the only game in town when it comes to campus wide HVAC control and the products sells itself. His job as a "salesman" is maintaining relationships and introducing new products. I asked about potential competitors, but he said engineering firms are not going to risk their reputation on new entrants and the controls are a small component of the overall price tag. I think Humana is getting hit by sector rotation, tax loss selling, loss of the Cigna deal, and employee RSUs just vested. They dressed themselves up for sale to Cigna and I have a feeling the next year or two are going to look good. Its on sale for at least 10% under fair value and is a good/great company.

Sold ITM options on my MSGE position. I've been in and out of this for a while, but I really don't like these "secret" asset type investments. Show me the money!

Added to JCI and bought a 1% position in HUM.

Trimmed HQI back to a 5% position. Back up to 15% cash.

Sold LHX, ASHTY, and PNC. Sold some ITM calls on my CASH position.

I sold $30 ATM calls for January on a quarter of my position yesterday and a few $27 January calls last week . I'm up to an 8% position which is a little bigger than I wanted to be in the name. Too much LUV? I'm a bit shocked it is down 5% today on no news.

Thank you for this. I researched this a couple of years ago and never bought, but like the company. I'm going to start a small 0.5% position here as well and catch up on what has happened with the company.

Trimmed HQI after getting a little over aggressive buying into the sell off with earnings. Sitting at a $13.60 cost basis. Sold out of BTI. I've always been a little on the fence morally about investing in the tobacco industry and I was devoting too much thought to the question with my largish position so I decided to no longer be an owner. Took a small loss. Trimmed ADSK at $216 then rebought after the earnings selloff.

My 235 limit order for Ashtead is getting close... Buying a little more LUV too; for the holidays!

Because a wealth tax taxes those by the percentage of all the goods they control. The top 10% own 70% of the wealth and will pay 70% of the wealth tax. The bottom 50% hold 2.5% of the wealth and pay in proportion. 2% wealth tax would collect 3.2T and a 3% wealth tax would collect 4.8T so the wealth tax collects the lions share of tax receipts and is progressive.

We need to replace 5T in tax receipts. FICA would be no easier to get around than it already is. A wealth tax could be difficult for some assets, but I'm sure all the accountants put out of work figuring up the current income tax rules could figure out a way to value those assets . I'm not against a sin tax, but I seriously doubt it would raise a meaningful amount of revenue. Fortune 500 companies are using SBC for mid-level workers to assist with "tax management". A wealth tax get rid of a lot of shenanigans.

I think a wealth tax of 2 to 3% a year, maintain FICA (with no income limit), and a 10% VAT tax would be far more "fair" than the income tax system we have now. FICA and VAT are essentially flat taxes that tax everyone equally based on income and consumption. The wealth tax would tax those in proportion to the wealth they hold.