Liberty

Not that I'm a big fan of Andreessen, but to be fair: https://twitter.com/pmarca/status/448576195223773184

Part 2: http://brooklyninvestor.blogspot.ca/2014/03/buffett-market-timer-part-2-berkshire.html It includes this interesting aside:

He wrote:

It's not exactly like it's a well-kept secret. I think it takes a certain kind of person to really get it and act on it :) Hopefully that movie is as well-made as Moneyball. That would be entertaining.

Very sad news...

I found this a good read and thought others here might enjoy it: http://oraclefromomaha.wordpress.com/2014/03/24/random-thoughts-on-moats-and-competition/

Thanks for the update, looking forward to your findings!

I've read all the FFH letters and I never got the impression that this was a multi-decade bearish view and that their stock-picking was dependent on their macro views. Maybe I need to read again. Personally, I'm more with Buffett. I believe that people wake up every day and try to find new ways of making things better; building new factories, inventing better machinery, creating new services and ways to delivers them, etc. That's why the lower middle-class today has access to things that only rich people had not so long ago, if at all (cheap air travel, safe and reliable cars, big screen color TVs, large music and film collections, appliances that do a lot of housework, wirelessly networked pocket supercomputers, etc). We can expect a lot of value to be created over the next 10-20-30 years. It's certainly possible to make good macro calls and avoid big catastrophes, as Fairfax did with the CDS during the GFC (though it's also possible to be wrong in such calls...). But being hedged for years and years in a symmetrical way (unlike the CDS) with no ceiling on how much can be lost doesn't make sense to me. You're betting against history and human industry. Even if the market was to drop by 33% (which means we'd be 50% overvalued), this likely wouldn't make up for the lost opportunity of the past few years, and what are the chances of perfectly timing the bottom and removing the hedges at the right time? All the money that went into the hedges up to now could've been used to buy great operating businesses that could easily survive a big recession with Fairfax's backing. Heck, just buying more WFC rather than selling it would probably have been a good idea, as WFC isn't going away any time soon. Anyway, this has been discussed elsewhere so I'll stop now.

What's the RSS link? I can't seem to find it! http://brooklyninvestor.blogspot.com/feeds/posts/default

The epicenter of that crisis was housing, and that part of the economy did go through a depression (in Buffett's words) and will take some years to get out of it and back to where it was: http://www.economist.com/blogs/graphicdetail/2014/02/us-house-prices My understanding is that on the stock market side, it's not like we suddenly realized that almost everything was worthless (like the NASDAQ after the dot-com bubble), but rather that liquidity froze and for a while nobody knew if they could meet their obligations and had to try to sell assets are fire-sale prices to raise cash. Re-injecting cash in the system did help because that was a big part of the problem. Injecting cash in the dot-com bubble would've been pointless. So you looking at the SP500 to see the fallout might be missing part of the story. Look at housing, and at the value of many financials now compared to 2006, and you'll see that the crisis left deep scars (though not everywhere as deep). From what I know, the Great Depression had quite a different effect on the 'real' economy than the 2008-2009 crisis and the reaction by governments was also very different (I've alluded to some aspects in a post above), and so it's not surprising that the recovery to both looks different. Just my 2 cents, though, I could be wrong.

Hi Stahleyp, That's a good point, but at the same time, hindisght bias can go both ways and picking particularly bad periods might not tell us more. Looking back 30 years seems fairly statistically significant, especially since as you pointed out this period includes the GFC as well as the dot-com bust and various other smaller recessions. 30 years is pretty much my whole life (I'm 31), so while it's not going back to the civil war, it's also not like going back just 5 years.. If you go back 30 years from 1982, this probably look different than if you just take a bad decade like the 70s. I also think the future will probably be more similar to the past 30 years than to the 30 years before that, or the 30 years before that... just because the economy isn't a static thing. If a large portion of the economy is now services, software, pharma and other asset-light, IP-heavy stuff, globalized multinationals, etc, it is bound to have had an impact on things like profit margins, cyclicality, and various other trends (which I can't pretend to understand or predict, but I just know that the past 30 years are more similar to present day in many ways than 1900-1930, for example). I think we must be careful to separate business fundamentals from morals. Should we repent or not for some mistakes isn't relevant if fundamentals are doing ok and getting better. It's also important to remember that in 2008-2009, we didn't go through the Great Depression. We avoided it. We had huge liquidity problems and we were on the brink and lots of things went really badly, but we didn't get 25% unemployment and global protectionism and fascist dictators rising and a huge part of the world economy splitting off into communism and such. When comparing, we must look at the differences too, not just the similarities.

Here's a follow up by the author of the piece link in the first post of this thread: http://brooklyninvestor.blogspot.ca/2014/03/buffett-market-timer-part-1-partnership.html

You can certainly see in hindsight that it worked for some, but can you use it looking forward and win more than you lose? I think that's the crux of the matter.

This post isn't just about wmt, but worth a look. It includes a link to the 1974 wmt annual report. http://philosophicaleconomics.wordpress.com/2014/03/22/wmt/

He mentioned it here http://brooklyninvestor.blogspot.ca/2014/03/email-updates-not-working.html RSS still works, though.

Hi Sanjeev, and everybody who has the chance of going to the FFH dinner this year. I won't be able to make it because of family obligations. I know its a bit last minute, but I was wondering if it would be possible for someone (anyone, as long as you have permission from the organizers) to put a video camera on a tripod near the stage (if it can be plugged in the audio board even better, but as long as we have sound) and later upload the video to youtube for those of us who can't make it? Or even just an audio recording from a smartphone uploaded somewhere would be really great. These are so interesting that it's a shame they're not preserved online, and I'm sure a lot of people wish they could go but can't for various reasons. But if it's not possible or too complicated, I understand. I just thought I'd suggest the idea. Thanks! :)

Sounds like a great time! I'll definitely be getting the book. Sanjeev is between Guy and Monish.

http://brooklyninvestor.blogspot.ca/2014/03/perils-of-trying-to-time-market-ii.html I thought this was a good read, just wanted to share it with you guys.

Do you have any nominations? :) If you want something close to Berkshire in structure and philosophy but without the size, I'd probably say Markel. I don't think they're quite at the level of brilliance of Buffett (who is?), so I don't think they'll have a similarly spectacular long-term book value growth record when all is said and done, but they should do very well nonetheless.

No, the average person doesn't have an edge on any stock, small or large. The average person should buy index funds. Exactly. If you think you have an average understanding of a situation, you definitely shouldn't invest thinking you'll spot a mispricing. You could still do well by buying a wonderful business at a fair price and holding for the long-term, though, but determining what is a wonderful business isn't easy either. But it's not because a company is big and scrutinized that the consensus is correct. Just look at BAC and AIG during the past few years for an example of this.

Those who are looking a Schiller's CAPE might want to have a look at this. I think it makes good points: http://philosophicaleconomics.wordpress.com/2013/12/13/shiller/ This is an interesting follow up: http://philosophicaleconomics.wordpress.com/2014/03/16/the-u-s-stock-market-is-expensive-and-it-should-be/

I can't remember if he said to sell (probably not explicitely), but his Sun Valley speech clearly talked about overvaluation around the dot com bubble.

I think the internet + globalisation changed expectations significantly because it means that these asset-light software companies can grow much faster than before. Software in the 80s was mostly sold on diskettes and/or installed by IT departments, and companies took a lot longer to get out of their home country and expand internationally. Now, in a few years a company like Facebook can go from a university dorm to over a billion users around the world. That certainly makes a difference in investor expectations, and so they will pay more because they expect more growth.. This land grab mentality also makes it a higher priority to grow first and then monetize rather than wait around to find the best business model and then try to grow. Just a theory. I'm not saying it won't end in tears for many.

One thing I wanted to do when I was reading the recent letter but haven't had time yet; calculate their CAGR if you remove the first year that is like 180%. It's an outlier with such a small amount of capital that it doesn't seem like it's useful to include.

http://oraclefromomaha.wordpress.com/2014/03/08/standardized-faulty-thinking-bad-assumptions/ Good piece on a basic mistake that Gross made when he called the 'death of equities', comparing GDP growth to stock market returns (comparing a flow variable with a stock one).