TwoCitiesCapital

Same model as MSTR, right? The premium to the BTC holdings doesn't have to make sense - people will still spin the narrative.

I think that neither party is serious about being fiscally conservative and that we're finally getting to the point where interest on the debt is untenable and only going to be payable via issuing more debt/printing money. It's already the second largest budget item with the first being social security (also indexed to inflation/interest rates). I DO think inflation is going to be incredibly volatile going forward, but I do NOT have conviction in trying to guess a specific level of average inflation over the decade other than saying it'll likely be higher than 0-4% which is the sweet spot for equities the last 20 years. I think gold, BTC, and other real assets will be the winners over the course of the decade, but they'll be incredibly volatile around the business cycle which is why I also like fixed income here in the near term. At some point, even that may become untenable at times pending what average inflation levels come out to - but am comfortable owning it now at 4-7% rates with where the trajectory on near term inflation is. Buying equities on dips (requiring selling on rips to have liquidity) will likely work even better than gold/short term fixed income/etc. But I remain unconvinced of buy/hold in this environment. I'm at ~65/35 today - up from 50/50 back in 2021/2022ish. Partly due to appreciation of equities and partly due to adding beaten down names in recent months like Alibaba and Prosus. I think 65/35 is probably the highest I want to be to equities though in the event my luck runs out and the sentiment on the names I own starts to turn for the worst.

Fingers crossed. Would love an opportunity for Fairfax to use newfound liquidity to take out another slug of shares.

I would argue that it was the benefit of foresight informed by history. I made the case for Gold/varying fixed income over general equities at that time and since. My equity allocations have overall done better than this (and better than fixed income), but there was no guarantee they would/will continue which is why I'm not all in on them and am trimming gains as they happen. The thesis was that equities, generally, are not the place to be during volatile and/or rising inflation. That is playing out right before our eyes even outside of a recession and even with the index as a whole near it's highs. It's not like we're cherry picking timelines unfavorable to equities. On average they've underperformed t-bills over the last 3 years. I expect a reasonably good probability they may underperform intermediate bonds over the next 2-3 years. Especially if we finally get that recession leading indicators have been screaming about for ~2 years. And gold will likely crush equities over the course of the whole decade. Its happening now right before our eyes. Just like it has in prior inflationary shocks.

I say bonds generally for all fixed income. In late 2021 I was buying t-bills and iBonds which I owned for much of 2022. 2023 is when I started adding spread and duration once you were getting paid for it. I've been increasing spread/duration all through 2024 as well. To further illustrate - S&P equal weight is barely positive over that period nominally and definitely negative on inflation adjusted terms despite having 3-years to catch back up with revenues and profits.

While everyone is on about the relative performance of bonds after a strong 2023-2024 (and 2022 all but forgotten), I'd like to remind the board that there are plenty of blue chips not keeping up. All of the below are in the top 100 of the S&P 500 currently (after such terrible performance) which implies many other companies in the index did the same/worse. It's also not exhaustive - it doesn't include everyone that is flat to down in that top 100 list - just the ones that were obvious to me as I was scrolling down the list of tickers. Performance figures and the ATH reference are eyeballed form the chart and not intended to be accurate to the date/decimal. UPS: down ~45% since ATH early 2022 Disney: down ~53% since ATH early 2021 Tyson: down ~40% from ATH early 2022 J&J: down ~15% from ATH range mid 2021 Home Depot: down ~15% from ATH early 2022 Accenture: down ~20% from ATH late 2021 Danaher: down ~10% from ATH in late 2021 Honeywell: down ~7% from ATH mid 2021 Medtronic: down ~40% from ATH mid 2021 Schwab: down ~30% from ATH late 2021 Nike: down ~60% from ATH in late 2021 Proctor & Gamble: ~flat to ATH in early 2022 United Health : ~flat to ATH in early 2022 Texas Instruments: ~flat to ATH in late 2021 ADP: ~flat to ATH range in 2022 These are nominal price returns that don't include dividends OR the impact of inflation over the last ~3 years which would make the calculations look way worse. This is what I mean when I say stocks are not an inflation hedge and that I'd rather own bonds when the tide is obviously moving against me. If you didn't own the most expensive stocks blue chips of 2021 (the mag-7 and a handful of others), your performance looks more akin to this. I don't trust my ability to concentrate into 10 names that will do well while the remainder of the index does horribly. The stocks I've picked have worked well for the last 3 years, but there was the chance that they wouldn't have just like all of the above. Bonds give you the certainty of return and that you get to keep it. Stocks? Obviously not so much.

Unless if the Tether are convertible into BTC, which I don't think will happen, they won't. But I can see where they may trade at a slight premium to other stable coins as a result of hard-asset backing and hope. Realistically, what this means is that Tether will be able to issue more and more TUSD against the surplus capital as BTC rises as a % of underlying assets as well as up their salaries/bonuses paid out of the return on that Treasury.

Repurchases are done at the holding co level with hold co cash. Stelco cash and investment portfolios are held at the insurance subs level and have to maintain certain levels for the insurance they underwrite.

It happens when you pay the guy required to write the code in pizza parties and department meeting shout-outs Obviously his boss either didn't "trust - but verify" or didn't have the ability to and has been coasting for years.

Best play would probably be to pull a Tesla. Issue stock, convertible bonds, etc as much as the market will bear. Turn that into capital that provides a floor to the valuation and invest it in growth, acquisitions, or pay a portion back out as dividends. Fairfax may not capture 8x BV this way, but they can absolutely lock in some of the benefit while maintaining control and long term exposure.

Perhaps - but I've got to work with what I've got and nobody is giving me leverage in my IRAs/401ks/etc where the vast bulk of my investable assets are. This is why I have to get it via the investments themselves like mREITS, discount CEFs, and the PIMCO/RAE Plus funds. They get better rates on the financing than I would too. My taxable accounts are currently nearly 100% Bitcoin and will remain that way for the foreseeable future and I don't really want to have that as collateral for my leverage so I do what I can elsewhere.

So despite NOT doing a lot of things, he still managed to run the largest peace time deficits and failed to solve the "border crisis" with his wall? Glad we're on the same page here. I have plenty to show for plenty of my fixed income positions. The only ones doing poorly are the TLT/ZROZ duration plays that admittedly won't do much until the Fed cuts. The emerging markets funds I've owned have done ~10%/annum over the last 2-years. The CEFs had double digit returns in 6 months before I closed them out. My levered mortage exposure in mREITS is up mid-teens from a year ago. Sure - not the same returns as the SPY, but hella-good annualized returns w/o falling rates and the difference is you'll keep most of it in a recession scenario. Can't necessarily say that about the S&P or any stocks.

is this what happened his first time around? Or was he running the largest peace-time deficits ever to fund tax cuts for the wealthy even pre-covid?

back to where they traded a year ago - if not lower

+1 +1 I didn't think it would be terribly significant - but anything that is up 400% can quickly become so.

Any of y'all know how much Cairo Mezzanine Fairfax holds from the prior spin-off/restructuring of Eurobank? according to IB - my shares are up ~4x since October and so am wondering what kind of impact that has on their balance sheet at as one of the largest holders of Eurobank prior to spinning off these loans.

Me neither - should've been buying STLC again instead of CLF over the last few months

https://www.coindesk.com/business/2024/07/12/makerdaos-1b-tokenized-treasury-investment-plan-draws-interest-from-blackrocks-buidl-ondo-superstate/ MakerDAO looking to put $1-2 billion of its $5 billion reserves in tokenized Treasury products. I'm not sure I follow all of the benefits of tokenization of traditional asset classes just yet - which are basically already digital ledgers with no physical records trading - but we'll see. It'll be interesting to see how far the government allows this to go - like what happens if Russia buys a ton of MakerDAO's USD stable coin as a reserve asset - how do we apply sanctions to tokens backed by treasuries or the stavlecoin itself?

You're telling me the head of the Treasury has no control over the lawyers he employs?

Can't buy lottery tickets in my IRA... Also, I think the odds here are just a hair higher than the odds in an actual lottery ticket

The primary complaint over the last decade has been the amount of capital that flooded into the market due to ILS was largely what was keeping insurance pricing too low and keeping the market soft. Investors loved these things as a truly diversified income stream. This is good as tens of millions of investors should be better able to absorb the risk than a handful of reinsurers and there is no systemic risk. It's bad because most of those investors likely lack the same expertise in pricing as the reinsurance industry has and so may be more likely to underprice the risk - which will eventually lead to their exit from the market OR an improvement in their pricing. Not sure which is more likely, but these are products that have now been around 10+ years so I would hope the market participants are better at pricing the ILS

Counting on Trump last time, and the courts before that, also proved to be poor strategies. At this point I'm simply holding it because it can still make a significant impact on my returns if par is returned at any point in the next 10 years, but is small enough relative to the rest of the portfolio that there isn't much performance drag from continuing to hold it.

I still don't buy it. Trump could've directed Mnuchin what to do if this was a priority for him. It wasn't. I still hold my preferreds as a lottery ticket, but y'all need to stop buying into the hype that Trump will do a 180 from the last time he had influence/power to get it done. Trump only cares about himself. If he announced a personal stake in the companies, I might actually believe he'd attempt to get something done.

It's all words. They had the opportunity, and didn't. They could've dropped the lawsuits. They didn't. The could've ended the net worth sweep. They didn't. They simply hamstrung the next administration from accessing the profits that Trump was more than happy to spend his 4 years. I don't judge their words - I judge their actions.

Shows us how little faith anyone on the board has that Trump is going to do any more for this his second time around. He had every opportunity to get something done the first time and opted not to.