TwoCitiesCapital

I don't disagree. I was also quite a bit more cautious early one. The first two stocks I ever purchased were Ford and Bank of America in 2006/2007 respectively. Watching them go down by 90% might've influenced something in me. I still place a lot of importance on macro, and still watch things like inflation trends, interest rates, etc. but have moved more towards the center of buying things when cheap (like I'm still buying JACK, and MOH, and Foran Mining, Fairfax Finacial, and Fairfax India today). But that being said, I don't think this progression you linked above is necessarily natural and the right way. I think it's just a reflection that we have had ~25 years of the Federal Reserve and Federal Government bailing out markets at any point there is trouble. Something that may end sooner rather than later. Any history pre-2000 shows that macro is, in fact, important. Investing through the 70s was catastrophic. -50% inflation adjusted returns over the course of a decade is a far cry form the 7-9% and positive real returns we were told to expect and count on for retirement. The market has spent the last 20 years loading up on duration that was mispriced for a low rate environment (long high multiple tech). That concentration still exists in the market structure today but the low rate/low inflation environment might be changing. And I believe it is precisely the WRONG concentration to have if interest rates/inflation are not going to be remain at generational lows and may move to a higher equilibrium. You want energy and materials - probably the sectors that are most underweighted in the indices today. We don't need runaway inflation of the 70s to get terrible returns for the average equity - you just need inflation average 3-4% year to wreck equities trading at 20-30x earnings which make up the majority of the index. It gets even worse if that 3-4% isn't a consistent 3-4% but rather spikes to 9+% and valleys of 0-2%. I think we might be witnessing the regime change that makes something like a Tobin's Q all the more important again. Hard assets > GPUs for the next 5-10 years IMO.

Is that what happened in 2007? I tend to think you're right here. Even after what was experienced in 2021/2022, it basically guaranteed higher average inflation for the decade. And here we are again in another energy shock. Does it play out the same? Flat GDP with inflation turning back up a la 2022? Or do we actually get a recession and government spending a la 2020/2021? Either we see the inflation from the energy shock OR we see the inflation from the money printer IMO. Question is how much and whether it's a 2026 or 2027 event. I think Gundlach might already be right. He has talked for a few years about high yield's ability to refinance in a rising rate environment. Look what's happening to private credit and PIKs and finding buyers banks to fund these ventures now? HY spreads are still quite contained, but I expect the trend upwards may continue.

If rates are normal at 4-5%, is argue that should mean 'normal' positioning - i.e. offsetting their liability duration of ~3.5-4. Moving to zero when rates are 0% is fine. But they're no longer at 0%, are no longer "rising" as defined by the longer term trend, have been well in excess of trailing inflation for the last few years. That doesn't guarantee rates are going to go down, but I'd argue at the very least it should imply neutral positioning instead of an underweight. I just want to know that when the TRS is bleeding cash, and their equity portfolios are cratering, which will happen at some point, that Fairfax has the guarantee of billions in fixed income interest coming in and doesn't find themselves rolling bonds at 0% too ..

It just depends - we could go back and forth on what the "right" positioning was every 6-months when they go up, or down, 0.50% in response to something. Even with this rise, they're still not as high as they were in 2023, or mid 2024, or most of 2025. So maybe it wasn't the best they ran at 2.5 years? My point of view isn't so much I think they should be going long bonds because bonds are going to kick ass or that rates are going to crater. It's more of that the neutral positioning for Fairfax shouldn't be 0-years of duration, but rather the duration of their liabilities. They can make moves around that, but ~3.5-4 years should be the default if they don't have a view on rates. Rates were broadly declining for the last year (until the last 1-2 months) and as mentioned are still lower than many points over the last 3 years. Maybe in 6-months, the energy shock will have sent the global economy into a recession to ease off the energy demand and we're back below 4s and will be wishing they had locked in 4.33% for the next 3-4 years

Man, I'll admit, I'm jaded by being in this trade for damn near 15-years. So I try to take my own attitude with a grain of salt. So you should too. But this is the most hopeful bunch of shareholders I've ever encountered. And is honestly the only reason I'm looking to buy more of the preferred's if they hit single digits of $50 par. Im beyond thinking that these things get paid, recapped, released, or that justice gets served. But I'm not beyond making a trade buying on despair and banking that another group of hopeful individuals who think the President will just give these things away will come by over time.

It's not at all unusual. As a matter of fact, activity like this in crypto, prediction markets, and stocks has been observed since the start of the Trump administration. The two couldn't possibly be related though! Just let me know when Fannie Mae/Freddie Mac spike on no news and then we might be onto something.

I used to know a prior analyst at Sempur Augustus. In 2021/2022, I had pitched both Fairfax and Fairfax India to him. He said they'd never buy Fairfax because of the wildcard on the investments side (pointing to CDS as well as the deflation shorts and equity shorts) and basically extended that to Fairfax India despite it being an entirely different structure with no similarities in that regard. More for me.

+1 Wars are highly inflationary. Productive resources are diverted from market demand to build military equipment that largely gets destroyed. Less supply of labor and material input la means higher prices for everything else. Destroying those outputs just means it was all "unproductive". As a side note, Bitcoin's price in 2014 ranges between $300s and $700s vs the $70,000 it's at now.

+1 Wars are highly inflationary. Productive resources are diverted from market demand to build military equipment that largely gets destroyed. Less supply of labor and material input la means higher prices for everything else. Destroying those outputs just means it was all "unproductive". As a side note, Bitcoin's price in 2014 ranges between $300s and $700s vs the $70,000 it's at now.

#PermissionlessMoney

And yet, I'm not sure there is an example in existence of Trump giving up something in exchange for nothing which is what asking him to give up 100% control over 100% of the cash flows for a 10% divvy is doing. Not sure he cares much about a paper gain that can't be monetized on the 80% equity - especially if it means giving up the 100%. And yet people expect something different out of the same administration this time. Absolutely. I think the thing that would change my mind on these is if Don Jr joined the board. Or if Trump disclosed owning the common. Than it would be pretty easy to assume he's acting in his own self interest and enrichment and I'd bet on that continuing. But as of yet, I've heard no disclosures of Trump owning this.

I still think the preferred are the safer bet with plenty of upside. I think it'll be difficult to IPO the common without settling the preferred in some fashion: 1) the preferred are the regular reminder the government can, and has, stolen the companies before given that they are owned by the parties who brought most of the lawsuits 2) must have their dividends turned on before the common 3) not necessarily the best capitalization going forward pending how they prefer to be structured. 4) providing clarity on what the conversion rate is, if any, from preferred to common in a recap as well as the liquidation preference owed to government Ackman and Burry both disagree; however, and see further upside to the common. I just don't have the confidence that common don't get wrecked OR that don't preferred don't do well first.

I did not appreciate Iran had so much surplus gas!

The point isn't that these critiques are meant to keep people from buying Fairfax. It's my top position. Petec has mentioned owning it as well. It's to keep your eyes open and not be blinded wearing hindsight biased rose-tinted glasses as you make the narrative fit the share price. Fairfax was a miserable investment in the 2010s. It's been fantastic in the 2020s. What changed was the inflation regime, interest rates, and their investment style coming back into vogue, and COVID providing the opportunity to buy plenty more thing cheap. Not that they changed their investment style. Just like it was obvious Fairfax had nowhere to go but down in 2018 when the rate cycle changed, insurance was still soft, and they hadn't locked in duration, and Blackberry wasn't doing anything. Similarly, it was obvious they had nowhere to go but up in 2021 when inflation/rates were accelerating, the market were recovering, and it languished while the broader market raged. Seeing reality allows you to catch the flip

two views of seasonality and one of network adoption trends. Power/Law model and BTC/Gold ratio also pointing to a bottom. All models are wrong. Some are useful. But when nearly all of them are pointing to capitulation....

was going to say, I'm pretty this is fake. There weren't even 900k outstanding at that time, let alone a developed market place to buy it. But then when I went to quote you, the AI disclaimer came through. Lol

This was exactly my thought. They could be dripping extra shares into the market every day. Just be a small % of trade volume - like 5% or less - and announce you're doing it. As the traded float grows - so to does the amount you can drip into the market. And then after 3-5 years you've meaningfully reduced these positions without all this headache - and to the populace no less! Rather than a foreign buyer.

+1 People hated StelCo when it was made. Turned out wonderfully. And then they held onto the CLF shares which have not. Eurobank? A goddamn disaster before it became a home run with the massive 'doubling down' done at a recap that resulted in a 90+% loss on the origin basis. And don't get me wrong. I was personally in Eurobank - both before and after - and was in StelCo and held CLF. This isn't a critique of Prem. Is just to say I'm not going around telling everyone about a new investment approach. There is no old/new framework IMO. The only difference today are rates/inflation (has favored value investments) and no shorting (which has been huge). Not that their fundamental style changed or that they have a new approach.

Another week like the last one - and these things will be at the single digit prices I was waiting for. I missed selling the hype on these in 2019. Glad I didn't miss it in 2025. But I hear an IPO is imminent...

FFH up 6% in the last 5-days vs S&P down ~1% over the same period. Seems like Fairfax NCIB doing its work. Maybe another 2022 like year coming where it's up significantly while indices are down.

A bid of 100 INR in 2024 may also mean they're willing to come up to 115 INR today due to growth, retained earnings, etc. so maybe you don't have to wait 6-months

I believe there was a separate thread for dynastic, European hold cos at one point. I have owned Exor since ~2015 myself. I've been watching the European luxury names like Richemont, Montblanc, and LVMH to enter - almost got there last year but still waiting.

Harsh words. Though IIRC, it was Charlie that made that pronouncement. I still prefer Warren and Charlie to Keiser though. A gentler way to make his point is that asset owners, those with access to debt financing, and those that create the money all benefit from a system of perpetual inflation while those who provide the capital for that debt financing and wage earners suffer. All Bitcoin does is end that systematic exploitation of those two classes via inflation. It doesn't end the already privileged positioning of asset owners, people with access to debt, and the money creators (though maybe this katter group should worry). All it does it prevents the total monetary exploitation by those three groups to get even further ahead.

Time to restart the bidding process

And the stock price is largely unchanged from mid-January 2025. Is why I loaded up in December and increased the position by 50%. I'm disappointed with how the bank turned out. And the delays in the Anchorage IPO - but the value keeps compounding and the market keeps ignoring it. We have clients at my job paying extraordinary fees for private infrastructure investments and here we have one of the crown jewels of the group for nearly free....