WarrenWatsa

I think you have to tailor your valuation method to the type of company you're looking at, keeping in mind that there are three overarching valuation approaches: 1. Net asset based valuation 2. Free cash flow based valuation 3. Comparables based valuation #1 is the most conservative and #3 is the most aggressive. Technically, a company that has no moat should have a valuation around or not much more than the liquidation value of its net assets. This is because a competing company can begin at anytime at a cost of the replacement value of the net assets of the company with no moat, and take potentially all of the business of the company with no moat accordingly. What I'm saying is, most companies should not be worth much more than #1, even if they're making money. It's similar to asking how many companies out there really and truly do indeed have moats around their businesses.

I checked the website and the FPA Crescent fund's holding about 25% cash right now.

He seems to say some smart things. But, I have not seen any performance of his or track record. So, I question his skill. On the other hand, his colleague Eric Sprott is definitely is a strong investor with a fairly strong track record.

Over the very very long-run (20+ years), I'm thinking less than 5% of investors (retail, institutional, whatever) can beat the index by more than an average of 5% per annum.

As far as I'm concerned, making 2 or 3 correct recession calls, which is all that the ECRI has done in its brief life, doesn't mean anything - especially when it's accompanied by a wrong call as we've just seen. I see them as no better or worse than any other forecaster. In other words, I wouldn't waste my time bothering to listen to them because they haven't been around long enough to even speak with as much as cockiness as they do on their Bloomberg and CNBC appearances. They're getting a lot of flack not because they made a mistake, but, because they were so adamant that there 100% would be a recession that would've started by now. Unlike many of those who forecast, they left themselves no room whatsoever for error or for even the possibility of being wrong - basically dismissing anyone who disagrees with them. They purposely put their reputation on the line as part of this recession call, and now they're getting criticized for blowing it - no surprise there!

It would be healthy only if the ECRI came out and admitted their mistake or, at least, that they were too early in making their call. So far, none of that.

ECRI made a recession call on Sept. 23, 2011, for its clients. 9 months later and still no sign, and the US stockmarket has once again gone up. ECRI looking like fools. Tremendous amount of credibility has already been lost. If they hadn't been so downright insistent on a recession having begun by the middle of this year, perhaps they wouldn't look as bad as they do right now.

From what I understand, he barely uses a desktop computer, so, I'm not sure what he'd be doing roaming around with a netbook or whatever.

Dang. I was hoping STD would get cheaper before this happened.

edit: wrong thread...meant for LUK thread

That was a deflationary meltdown. In an inflationary meltdown, it would be the other way. I agree with you, but, just wanted to add this.

If you're a value investor, never think about the low yield on cash. It has a huge return if it's deployed at a carefully chosen time.

General principle, although there are exceptions to it: pay more for what you use most, and pay less for what you use least. For example, say you use our computer and cell phone more than almost anything else (I think this is the case for most of us on this board). Get the best of the best when it comes to these items, because you will derive a lot of satisfaction from it and really benefit from the extras that you're paying up for. On the other hand, say you rarely use your car, then maybe it's not something you should spend much money on - especially as it depreciates quickly.

Does Faber have a good track record? Does he have a published track record? What are his historical average annual returns like? It seems like, and I haven't done the research to say this, but, it SEEMS like he makes a lot of predictions - a few of which work out and many of which don't. I'm just not sure the guy is worth listening to. There are so many "gurus" out there who don't fare much better than the average investor and sometimes fare even worse. I'm not sure Faber is any different, and would like to see strong evidence to the contrary (such as a recorded history of market outperformance).

Very interesting article. Clears things right up, too. Thank you for sharing it.

Parsad, To my knowledge, future amounts owing on an operating lease agreement are not shown on the B/S (unlike on a capital lease agreement). Operating leases are not presented as liabilities except for the portion that has been expensed and remains unpaid.

I think I've heard about this before. It was Fuld who wouldn't accept Buffett's terms, from what I can recall.

In substance, an operating lease is a debt and thereby a liability. I would support an initiative to put operating leases on the B/S as opposed to income statement.

This is a good week to look at: DELL, HPQ (reports tomorrow), STX STX got hit hard today. As they say: you can have good news or cheap stock prices.

Maybe Sanjeev could make it so that more threads are shown on one page than already are, so that one doesn't need to click to the next page as often as currently. You can change it yourself under your profile options: http://www.cornerofberkshireandfairfax.ca/forum/profile/?area=theme Thanks. Didn't know that.

ARLP Here's a brief intro to it: http://seekingalpha.com/article/493551-how-to-profit-from-coal-using-alliance-resource

Maybe Sanjeev could make it so that more threads are shown on one page than already are, so that one doesn't need to click to the next page as often as currently.

This. We're in an unusual environment right now. The broader stock market is fair-to-expensive, but, there are many stocks still that are quite cheap and not far from their lowest valuations in, say, the past 20 years at least. This includes well-known companies known to everyone, such as Berkshire and Goldman Sachs, for example.

...or so this article appears to imply, wherein BCA Research's Chief Economist makes a scary statement: "It’s only a matter of time. It’s a question of when, not if, the markets do to America what they did to Europe. The markets will turn to the U.S. like a pack of wild dogs once they finish chewing Europe out." Personally, I'm hoping the bond vigilantes go after Japan before the US. You know, just to delay the inevitable yet several months more (after Europe is dealt with). How about you?

Wow. What a mess. I'm thankful that the US has avoided that...so far. Could something like this be coming to the US? When will the American government start tackling its debt woes?