Ben Graham

Cash available to buy deeply discounted companies with a margin of safety to intrinsic value with good management is a perfect hedge! ************************************************************************** No, it doesn't. I always said that if you are fully invested, then hedging would be a good idea. We are rarely ever fully-invested. Our hedge is cash, and we move in and out of cash as the market gives us opportunity. I don't hedge otherwise, and I won't do it ever, other than the occasional purchase of market puts when things seem completely out of whack. The other circumstance in which you may want to hedge, is if you are close to retirement or require a significant portion of your nestegg in the near future, where you would be in some distress if your investments fell dramatically. Otherwise, no point in hedging because of the frictional costs. What Prem makes completely clear in that article, as I've always said, is that they hedge because their capital levels would decrease if markets dropped, which would mean they couldn't write as much business. If markets fell enough, and they are leveraged 4-1 asset to equity, they could lose their qualified credit rating for property casualty insurance, in effect putting the whole business into run-off. So there is a very distinct reason why Prem hedges, and that is because of the insurance business. Cheers!

Think Value

Often overlooked in the debate over tax policy is the success of the Clinton-era tax reductions -- reductions that, though fairly recent, are unknown to most Americans. That may be no accident. It was tax relief that improved receipts following the disappointing outcome of the 1993 tax hikes and made the Clinton economy successful. The 1997 rate reduction on capital gains unleashed the economy, causing capital investment to more than triple by 1998 and double again in 1999. Treasury receipts for this category of tax obligation increased dramatically. Without tax relief and the internet/communications revolution, the second Clinton term would likely have seen tax revenues decline in a lagging economy. http://www.americanthinker.com/2010/09/the_successful_clinton_economy.html

Six Reasons Why the Capital Gains Tax Should Be Abolished YouTube Video:

If Herman Cain has his way, the estate tax and capital-gains tax would be gone for good. So would most tax deductions, including the one for mortgage interest. Instead, there would be a 9 percent flat income tax, a 9 percent corporate tax and a 9 percent national sales tax. http://www.npr.org/2011/09/28/140851786/cains-catchy-9-9-9-tax-plan-draws-interest-doubters

Buckle up: Traditional TV is in for a heck of a ride By Habib KairouzSep. 24, 2011, The first wave of commercialization on the Internet had a tremendous impact on our lives and has disrupted most — if not all — industry value chains. The print industry was in the eye of the storm, with decline in readers and advertising budgets forcing many major magazines and newspapers to shut down, while the survivors continue to scramble to deal with the disruption. The primary reasons for the debacle of the print industry were: High fixed cost structures left incumbents unable to match the niche segmentation requirement and accountability benefits of online advertising Professional publishers denied consumers’ appetite for short form and user-generated content High debt loads on the legacy businesses created an inability to cannibalize core revenues Content was still in demand, of course, but consumers were increasingly turning to blogs and websites for access to on-demand, personalized information. Soon websites from iVillage, WebMD and CNET to the Huffington Post became household names, not to mention lucrative business models and attractive acquisition targets for the likes of AOL. But print media is only one example of the inevitable generational shift that is unfolding in the way we consume content. It is more than a trend; it is a fundamental change in consumer behavior that will impact businesses across all industries. The next frontier is TV. But will the disruption in the TV world be similar or different than the downslide of print media? A 2010 Forrester study showed that for the first time, Americans now spend as much time on the Internet as they do in front of the TV. Is it inevitable that like print media, consumers will turn to the Internet for their TV and video content and eventually drain the profits from TV’s ad-driven business model? According to Pew’s annual State of the Media report, local TV news is still the No. 1 news source for the majority of people, and it still leads in revenues. The Web came in second. While safe for now, the TV industry is on high alert, dragging its feet, but substantially better prepared to protect its turf than its print brethren were. It is now widely accepted by the major industry stakeholders, content owners, MSOs, CE manufacturers and new startups that the following trends are unavoidable: Consumers will demand linear and on demand, short-form and user generated videos, to be viewed anytime, anywhere and on multiple devices. I believe that companies that build models to meet that demand will win. Those that deny it will go on life support. TV rooms in homes will have multiple screens running simultaneously, presenting a much better form factor to interface with the TV set than the traditional remote control. Most new TV-viewing devices will be Internet connected in 10 years. A substantial percentage of programming will have on demand, time shifted and interactive capabilities. New formats of programming with embedded interactive applications will emerge, and social TV will take off. Advertising will be targeted and personalized, at the individual and household levels, using legacy data from the settop box as well as ongoing rich data being generated every day, unless regulators step in to over restrict that. Smart marketers are already challenging the convention of TV time buying by demanding the same accountability that they are getting in their online buys. This is going to be a much tougher fight than the last round of disruption, and here’s why: The stakes are enormous. Both in capitalizing on new opportunities (e.g., building high margin, recurring service revenues for the CE manufacturers), as well as protecting legacy lucrative revenues (e.g., CATV subscriptions). Content owners are positioned to benefit. The distribution fight emerging between the MSOs, IPTV service providers and over-the-top newcomers is poised to benefit content owners. While they might facilitate the newcomers’ emergence, make no mistake, they will ultimately require payment for viewing their content. The more competition emerges among the distributors of content, the better the programmers’ negotiating position will be. They also stand to potentially build direct relationships with consumers through the interactive programming features. This will strengthen their position even further, particularly as they start generating direct billing (e.g., the iTunes model). While quality content will continue to be king, its owners are nevertheless worried about piracy and the loss of viewing time to free content. Content owners with the most to lose, however, are those with low ratings and viewers today, heavily relying on the sacred “bundling” distribution structure of the CATV industry. On-demand viewing will severely challenge the bundling model. MSOs are frienemies. The MSOs are everyone’s “friend wannabe” and simultaneously “enemy No. 1.” Today, they hold the key to the house through the coax cable. In addition, they have many weapons in storage, including the historical viewing habits data, the connectivity business that will continue to thrive as the over-the-top vendors grow, and most importantly, the substantial checks they send to the programmers every month. But whereby the old print industry went on the defensive of their legacy business in the 90s, and ultimately lost to consumer preferences, the MSOs are pursuing a dual strategy of protecting their turf while simultaneously aggressively pursuing new opportunities such as buying and owning traditional content (Comcast-NBC) as well as emerging interactive content (Comcast-Daily Candy), using set-top data for targetable advertising, and promoting TV everywhere with tiered pricing. In other words, they are hedging their bets across the board in the event their tight grip is loosened. TV Manufacturers See Opportunity with Embedded Software. TV manufacturers have been fighting low margin business models for decades and finally see an opportunity to build recurring, more profitable business models by bundling Internet services onto the devices. But if the PC industry provides any guidance, one can conclude that this strategy will be very tough to pull off unless they actually decide to own and operate the content and service companies. Contrary to the MSOs, this will be a fundamental culture shock for the CE industry. New Entrants Ignition for the Entire Disruption. These new entrants range from companies (i.) providing the physical bridge between the Internet and the TV set to (ii.) those providing navigation portals, (iii.) to those offering overlay services to enable interactivity, consumption and payment, and (iv.) to those who will own and provide the content. These include tech giants as well as startups that VCs like me are looking to back. The TV industry is historically known for having an extremely high barrier to entry, but tech giants including Google, Apple and Netflix have positioned themselves to pose real threats to industry incumbents. Netflix, once an unknown upstart, successfully displaced well-known players such as Blockbuster in an already crowded and established market. The company launched in a downturn economy, stayed dormant for some time and then transformed into one of the emerging on-demand media giants. It is a fixture in the mail, online and through mobile channels. Netflix now has as many subscribers in the U.S. as Comcast does. The question is not if a market disruption is looming. It is. The question is who will lead the charge and end up on top? Will the MSOs be able to innovate and keep consumers tuning in on their terms? Will the digital media houses continue successfully on their transition into the market? Or will smaller players find a way to fill the gap and create the next generation dynasty? My bet is on companies that will embrace rather than fight the trends, control at least one end of the value chain (content or consumer interface) and build sticky or proprietary assets such as viewing data and recommendation engines, billing or storage of personal content. Only time will tell, but one thing is for sure, we’ll all be tuning in (on multiple devices) to find out. http://gigaom.com/video/buckle-up-traditional-tv-is-in-for-a-heck-of-a-ride/?utm_source=GigaOM+Daily+Newsletters&utm_campaign=0cd228dc41-c%3Amob%2Ctec%2Cvid+d%3A09-26&utm_medium=email

Telemedicine Telemedicine Advances-Mayo Clinic video YouTube video of Telemedicine at Seattle Children's Hospital: http://www.youtube.com/watch?v=cbipnLbQrvc&feature=related Coaching Video of Stroke Patient Examination:

Warren E. Buffett is and always will be a partner you can rely on forever more.

According to an investor in Peninsula, Mr. Weschler recently told shareholders that $100 invested at the fund's inception on Jan. 14, 2000, had grown to $1,134, net of all fees, by last month. Over the same period, $100 invested in the Standard & Poor's 500-stock index grew to $104.08, according to Morningstar, an investment-research firm. Jimmy Wheat, a private investor in Richmond, Va., who has invested alongside Mr. Weschler, says the fund manager's investing philosophy echoes Mr. Buffett's. "Ted's investment philosophy is knowing everything you can before you invest and sticking with it through thick and thin after you invest," said Mr. Wheat. "He's not going to start acting like a kid in a candy store." http://www.linkedin.com/news?viewArticle=&articleID=767182800&gid=88752&type=member&item=70303231&articleURL=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB10001424053111904353504576566372894483578.html%3Fmod%3DWSJINDIA_hpp_LEFTTopWhatNews&urlhash=K4Ge&goback=.gde_88752_member_70303231

Ted Weschler - PENINSULA CAPITAL ADVISORS LLC Portfolio Summary Filing Report Date : 2011-06-30 He only holds nine companies in his portfolio, and six of the below listed companies stand out as related to the industry Walter Scott is in, with his communications company merging with Global Crossing. I'm sure Walter and Ted will be talking about some possibilities. Walter Scott can give him a personal tour of the Level 3 Network. DIRECTV (DTV) Liberty Media Corp. (LCAPA) Valassis Communications Inc. (VCI) Cogent Communications Group... (CCOI) Cincinnati Bell Inc. (CBB) Fiber Tower Corp. (FTWR) http://www.j3sg.com/Reports/Stock-Insider/Generate-Institution-Portfolio.php?institutionid=5080&DV=yes

Warren Buffett selects Ted Weschler of Peninsula Capital Advisors to manage portion of Berkshire Hathaway's investment portfolio. PENINSULA CAPITAL ADVISORS LLC http://www.j3sg.com/Reports/Stock-Insider/Generate-Institution-Portfolio.php?institutionid=5080&DV=yes Portfolio Summary Filing Report Date : 2011-06-30

Is Fairfax Financial a better value than Berkshire? Fairfax Financial is the best stealth dividend stock in the world Using the Tilson method Fairfax’s intrinsic value would be just the book value of their per share investments. As of the end of 2010, that number is $1,139 in investments per share. With Fairfax trading at $385 that would make the company a screaming value and a better one than Berkshire. This entry was posted on Friday, June 24th, 2011 http://investingforaliving.wordpress.com/2011/06/24/is-fairfax-financial-a-better-value-than-berkhsire/ In summary, both Berkshire and Fairfax are compelling values today. Both companies trade at significant discounts to history and to intrinsic value calculations. However, in a head to head comparison Fairfax Financial is a better value.

[amazonsearch]Margin of Safety - Seth Klarman[/amazonsearch] Klarman has written one of the most coveted books on value investing , Margin of Safety. The book is out of print, is one of the most stolen books from libraries, and sells for thousands of dollars online . At the recent CFA Institute Annual Conference , Klarman stated which books he recommends investors read. Below is the list: Benjamin Graham’s The Intelligent Investor: This is not surprising, as the Intelligent Investor is literally the bible of value investing Joel Greenblatt’s You Can Be a Stock Market Genius: Uncover the Secret Hiding Places of Stock Market Profits: Greenblatt’s book explains how best to invest such as spin-offs, mergers, risk arbitrage, etc There are a lot of similiarities between Greenblatt’s book and Klarman’s Margin of Safety. Martin Whitman’s The Aggressive Conservative Investor : Martin Whitman is one of the greatest thinkers, and Value investors of our time. In a very brief conversation I had with Walter J. Schloss, Schloss highly recommended Whitman, need I say more? Whitman is chairman of Third Avenue Funds, a value fund with a great long term track record.. The book contains a lot of value concepts, and practical applications that are vital for a value investor to be familiar with. James Grant is the author of The Interest Rate Observer. You can add James Grant to the list of people who predicted the housing bubble. Grant was a huge critic of Greenspan’s low interest rate policy, which Grant believes caused the bubble. Klarman has recommended any book by James Grant. Below are a list of books authored by Grant: Mr. Market Miscalculates: The Bubble Years and Beyond Money of the Mind Minding Mister Market:: Ten Years on Wall Street with Grant’s Interest Rate Observer John Adams: Party of One The Trouble With Prosperity: The Loss of Fear, the Rise of Speculation, and the Risk to American Savings The Trouble With Prosperity: A Contrarian’s Tale of Boom, Bust, and Speculation Bernard M. Baruch: The Adventures of a Wall Street Legend (Trailblazers, Rediscovering the Pioneers of Business) Klarman has recommended any book by Roger Lowenstein. This list would include: Buffett: The Making of an American Capitalist: One of the best books about Warren Buffett. While America Aged: A great book about the big, and increasing problems of unfunded pension funds in private companies, and the public sector. When Genius Failed: The Rise and Fall of Long-Term Capital Management: This bestseller is the tale of the collapse of Long Term Capital Management (LTCM) in 1998. The Hedge fund management team consisted of some of the greatest minds of our time. The End of Wall Street: Lowenstein’s tale of the financial crisis. Origins of the Crash: The Great Bubble and Its Undoing: Lowenstein’s tale of the tech bubble, and the collapse of Enron, and Worldcom. Klarman recommends any book by Michael Lewis, this list includes: Moneyball: The Art of Winning an Unfair Game, Liar’s Poker, and The Big Short: Inside the Doomsday Machine. All these books were bestsellers when they were released, and are still quite popular many years after their release. The Big Short: Inside the Doomsday Machine is Lewis’s most recent book which discusses several, obscure individuals who shorted the housing market before its crash. Too Big to Fail: This phenomenal book by Andrew Ross Sorkin about the financial crisis was the #1 best seller for many weeks in a row. Also check out Jamie Dimon’s recommended reading list. Jamie Dimon’s recommended reading list and Warren Buffett’s recommended reading list Other Articles That May Be of Interest Whitney Tilson Webpage Update Warren Buffett’s Recommended Reading List Dan Loeb’s Recommended Reading List Klarman Tops Griffin as Investors Hunt for ‘Margin of Safety’ The Clash of The Titians: Martin Whitman versus Bruce Greenwald http://www.valuewalk.com/articles-about-gurus/seth-klarmans-book-recomendations/

I think billionaires have the luxury of having a time horizon of 100 years. (Munger/Buffett) BYD is waiting for the internet ecosystem to become complete before it can build the electric car that can totally accommodate all the bandwidth apps that will be installed in the vehicles. Cars can become nodes on Muni-Wi-Fi networks, Wi-Fi hotspots, and home Wi-Fi networks. The possibilities are nearly limitless for what that could mean. Here is an old article explaing what I mean: http://www.readwriteweb.com/archives/the_next_node_on_the_net_your_car.php

Level 3 Communications (LVLT) has all seven of the characteristics. Also, Howard Marks initiated holdings in Level 3 Communications Inc. in the first quarter of this year. His purchase prices were between $0.98 and $1.47, with an estimated average price of $1.28. His holdings were 10,000,000 shares as of 03/31/2011. Did Howard Marks write the book on Level 3?

William Ashley China Store's windows cool video clips display A cool video display at Ashley store's windows. They used one single projector to display three or two independent video clips on a circular glasses pinned on the windows. Ashley is located between at Young/bloor and Bloor/Bay in Toronto,Canada. If you live in toronto or u happen to be here, go and check it out. It is really a cool technology called Vikuiti Rear Projection Film.

Value Investors, Here's How You Can Profit from Mr. Market's Insanity http://seekingalpha.com/article/285558-value-investors-here-s-how-you-can-profit-from-mr-market-s-insanity

Warren Buffett Secrets When a company should buy back shares According to Warren Buffett, a company can add value to its shares by buying some of them back: a. where it has surplus funds; b. where it can buy them back at a price below intrinsic value. http://www.buffettsecrets.com/share-buy-backs.htm

Down to the Wire- U.S. Reports Harry Reid and John A. Boehner agree: http://coveringdelta.files.wordpress.com/2011/04/debt_ceiling_19034935.jpg Obama shoots for the moon: http://2012patriot.files.wordpress.com/2011/07/debt-ceiling-failed-stimulis1.jpg

Is Smart TV an opportunity? Intel predicts Smart TV is the device of the future Read more: http://www.theinquirer.net/inquirer/news/2084234/intel-predicts-smart-tv-device-future#ixzz1T4A4k8s4 Videos on Smart TV: http://www.intel.com/pressroom/kits/smarttv/video.htm _________________________________________________________ BEDFORD REPORT: INTEL PREDICTS SMART TV IS THE DEVICE OF THE FUTURE CHIPMAKER Intel believes that the Smart TV is the electronic device of the future. Erik Huggers, VP of Intel’s digital home group, says, “The Smart TV is the opportunity. The market is wide open. The landscape in the TV market (estimated to be $500 billion strong) is so fragmented, everyone is doing their own thing.” At first it was TV, then VCR, DVDs and DVR players, and now it’s Smart TV! According to a report from Nielsen, 94% of consumers said that they would prefer to be able to access digital content or surf the web on their TVs. Huggers' reasons behind backing the Smart TV of the future is mostly based on the fact that the market is wide open. Connected TVs will rise to 67 million units in 2011, up from 40 million in 2010 The new Smart TVs support the diverse requirements of streaming, entertainment and high speed Internet services on a truly converged yet cost-effective platform. With continued focus on providing consumers the best in digital home entertainment technologies like the Smart TV, manufacturers are advancing the adoption of these devices. Users now can exercise control over choice and personalize their viewing experiences while always being connected. _____________________________________________________________ Microsoft is evaluating setting up as a “virtual cable operator” with web delivery, or alternatively using the Xbox to “authenticate existing cable subscribers to watch shows with enhanced interactivity,” perhaps offering interactive adverts or extras. http://www.slashgear.com/microsoft-smart-tv-in-negotiations-tip-insiders-29116658/

Ray Dalio founder of Bridgewater Associates Read more http://www.newyorker.com/reporting/2011/07/25/110725fa_fact_cassidy#ixzz1SdPlEGkB

While the focus recently has been on Facebook & Microsoft/Skype, Google+ for gaining control over the world's eyeballs. StumbleUpon sends more traffic to US websites than Facebook http://gigaom.com/2011/07/05/stumbleupon-unseats-facebook-traffic-driver/?utm_source=GigaOM+Daily+Newsletters&utm_campaign=82c9d8c333-c%3Amob%2Ctec%2Cvid+d%3A07-06&utm_medium=email Video will be the big sea change/tsunami of all business models hence forth. The future is NOW!

The tablet will be the center of the connected lifestyle. http://gigaom.com/video/the-tablet-will-be-the-center-of-the-connected-lifestyle/?utm_source=GigaOM+Daily+Newsletters&utm_campaign=dbe6527324-c%3Amob%2Ctec%2Cvid+d%3A07-04&utm_medium=email

Calix (NYSE:CALX) describes itself as the equipment that sits between users’ devices and the cloud. Specifically, it has hardware and software that power “nodes” — the boxes you sometime see on street corners where traffic from anywhere from 32 to 64 fiber users converges. That traffic is then sent on to a central facility, which Calix can also power, before being sent onto the internet’s fast lanes. Though not a household name, Calix says it is the leader in fiber deployment with more fiber nodes deployed than any other company, including Verizon, which heavily invested in fiber optics with its FIOS service for U.S. consumers. Just in the efforts on broadband stimulus alone, Calix says it’s helped bring fiber optic connectivity to some 2.3 million homes — a good start on the national broadband plan’s goal of having 100 million U.S. houses having 100-Mbps net connections by 2020. “All content is moving to the cloud, and there are broadband devices everywhere,” said Calix’s chief marketing officer Geoff Burke. “We are the people that sit between those devices and clouds. That puts us in very powerful position.” The only question is how long will it take for the United States to become one nation connected by fiber. http://www.wired.com/epicenter/2011/07/rural-fiber-internet _______________________________________________________________ Fundamentals Calix, Inc. (Calix) is a provider in North America of broadband communications access systems and software for fiber- and copper-based network architectures that enable communications service providers (CSPs) to connect to their residential and business subscribers. The Company enables CSPs to provide a range of revenue-generating services, from basic voice and data to broadband services, over legacy and access networks. Calix focuses solely on CSP access networks, the portion of the network, which governs available bandwidth and determines the services that can be offered to subscribers. The Company develops and sells carrier-class hardware and software products, which it refers to as its Unified Access Infrastructure portfolio. On February 22, 2011, Calix completed its acquisition of Occam Networks, Inc. With Calix's access equipment, your bandwidth runneth over. Calix (Latin for "cup")

Buffett Partnership Ltd. Warren E. Buffett, General Partner May 29th, 1969 To My Partners: http://www.gurufocus.com/news/6620