TwoCitiesCapital

I wish more companies would operate like this. Companies have three primary stakeholders - their stock/debt holders, their employees, and the communities that they operate in. Obviously, all three have conflicting goals for the company and each wants their cut of the benefit. By aligning the incentives by encouraging ownership of the company through employees and communities you simplify the equation quite a bit and better align incentives for EVERYONE to be working in the same direction to the same end. Is a better form of capitalism for the employees to be the primary stockholders IMO

The deficit was largely unchanged from the prior year. So in absolute terms its somewhat static - surprising for all of the savings DOGE was supposed to get us and all of the fraud supposedly enacted by the welfare state. Where did it all go?!? It is falling as a % of GDP - for now. The history of the deficit/debt levels under Republican leadership for the last 30-40 years leaves much to be desired and suggests that it will likely get worse from here.

Just about everywhere I look, I'm seeing public Bitcoin miners selling production, their stack, and or pivoting to AI. This feels like a capitulation. I'm hesitant to call a bottom given the deteriorating geopolitical and economic situation, but I'm thinking $60k might have been the bottom. This would also fit with my thoughts that we didn't need an 80+% drop for the bear market to end since we never got the euphoria preceding it.

I'd have a hard time imagining how - but maybe? What's crazier is that they're selling the hardest asset on earth for disposable assets in bombs. Would have been better if simply reinvest it into their own economy.

One is the illusion of a system that isn't corrupt. One has no illusion. Many of us prefer the truth rather than a lie with a veneer. I invest in both, but don't believe the US is in any way the moral superior nor that China is any more or less risky as a result. We literally have a government that stole Fannie Mae Freddie Mac, bailed out the banks at the expense of tax payer, is actively defending known pedophiles because they're wealthy party donors, and is now using its leverage to coerce companies like Anthropic to do things it has opted not to do. How is this any different than what people fear out of the CCP?

Only 'suckers' and 'losers' ger burnt. Real heros avoid injury or dodge the draft - just ask DJT.

Only 'suckers' and 'losers' ger burnt. Real heros avoid injury or dodge the draft - just ask DJT.

I think the problem is that this country has been run by boomers for boomers for decades. The reason SS is in the shape it's in? Boomers. The reason the federal debt/deficit is where it's at? Boomers. I understand not all boomers are extravagantly wealthy - but there is definitely a view from other generation that we're getting stuck with all of the shit consequences of their decades of decisions while it's a political third rail to hold them in the least bit accountable by making them carry some of the load - whether via reduced benefits or higher taxes. If you're grandma (or mine) didn't want her SS benefits reduced or more heavily taxes, her generation should have supported policies that made those distributions sustainable instead of just saying "future generations will clean this up for me". I hope there is some sort of middle ground in terms of raising eligible wages that SS taxes come out of, some reduction in benefits for higher income earners receiving it, and higher taxes applied to the distributions for ALL recipients.

You invest in the US, right? Where prediction markets, crypto markets, and public stocks are all being front-run by the administration?

Don't forget "have fun staying poor" And the license plate for my Red Cayman GTS is 21M MAX

I remember a few years back when there was a debate about which one people should own and which one would hit $1k first and out perform. I don't think it was as clear cut at that time and many people preferred Markel and Markel ventures. I'm glad to have picked the right horse.

I never said the change was large. But it's a change in trend which is worth noting after 4-years of consistent continual contraction (barring the 2023 bank failures).

How come all the AI and LLMs didnt update this for us by going through the 10K/10Qs? Methinks they're too lazy to steal out jobs.

New charter rates LESS the rising insurance costs on all of their boats to reflect the elevated risks? Not sure this is gonna be a net plus for them? New charter rates LESS the rising insurance costs on all of their boats to reflect the elevated risks? Not sure this is gonna be a net plus for them? Edit: I was under the impression the "insurance" the govt was providing were envoys to accompany the ships. Did the government say they'd be providing actual underwriting of property insurance for the boats?

While at a premium to its NAV, it's still at a discount to its BTC per share. The BTC/share is what is going to matter for equity returns and the debt is responsible for adding leverage to that. It's still at a discount to its BTC per share and I expect that BTCs future performance will be enough that the debt doesn't get repaid, but converts to equity at higher prices, gets refinanced, or gets replaced by preferred pending market conditions. But I don't expect it gets "repaid".

Fed is no longer in runoff. Fed's balance sheet started expanding again in December. Is the only upward shift in trend, barring the March 2023 bank failures, since it started contracting in 2022 so is meaningful in signaling a policy shift.

I'd guess just straight equity since it's publicly traded? GP/LP might make sense for the private assets like the airport, but for something that's publicly traded that FIH is just buying a large stake in - does it make sense others would participate for a few when they can just buy it on the open market?

I disagree. Losing a trillion is significant no matter how it's measured. Particularly when losing $1 trillion 4-years ago would have wiped out the entire sector and now it doesn't even lead to a single bankruptcy.

In % maybe, but not in $ terms. The loss in Q4 2025 dwarfs the entire market cap of BTC in 2021/2022. Bitcoin would have had to have gone to zero with leverage for the monetary losses to approach what the system is currently sustaining - and we haven't yet had a single bankruptcy of any notable firm or even much in the way of miner capitulation. That's impressive.

I think the problem with pricing a company "correctly" is the margin you have to be right by. Two companies are identical. They both deliver a 20% RoE and both have a 7% cost of capital/discount rate. If company #2 misses in year 20 and has 0 earnings for that one year, the impact to the DCF to today's valuation is ~13%. If that miss occurs in year 1 instead of 20, the difference in valuation today is ~16%. And that's if the company compounds at 20% per year in 95% of observations. What if it only happens 90% of the time? Or 80%? Both still result in phenomenal track records of compounding revenue/profit/book, but dramatically change your returns as an investor if you paid up for the 95% and only got 80%. If Fairfax was valued at 3x book, I'd be a seller all day. Maybe it looks stupid up front, particularly if they keep compounding at 20% for 1, 3, or 5 years. But all it takes is 1-2 bad years in 20 of not hitting your 20% goal to screw your returns if it was priced at perfection (and this is BEFORE considering multiple contraction that would also likely occur). Just look no further than CSU - was a market darling the last 5-years and has a phenomenal track record. Is now down more than 50% from its highs despite still hitting its return goals. People just got scared that it may not and now there is an active debate back and forth in that thread if it's STILL too expensive or not after the 50% drawdown. If you bought 1-year ago, you paid for 100% execution and you may only get 80%.

The drop from $69k to $20k in 2022 killed Terra Luna, FTX, Three Arrows, Block Fi, and Celsius. The drop from $125k to $60k in 2025 hasn't killed anyone yet (though Gemini seems stressed). This is a significantly larger loss - and yet, the ecosystem is proving more resilient despite the narratives of death spirals at treasury companies and how "leveraged" MSTR is. Majority of the flows have remained in the ETFs, treasury companies have largely maintained their stacks, sell-offs have been orderly, and no major infrastructure/crypto native firms have gone under as a result of a $1+ trillion drop in market capitalization. I think this is telling. Just like the lows get higher and the highs get higher every cycle, the industry resilience is improving too.

I think the problem is you 1) know that there are going to be catastrophes that result in some portfolio liquidations and 2) that markets will go down. You can't really afford both to happen at the same time if using regulatory capital. A year like 2022 proved to be a disaster for the insurance industry even WITHOUT equity exposure which would have made it worse. Is my understanding that even Fairfax uses primarily fixed income for regulatory capital and only invest it's "equity" (or the equity of its subs) in equities.

The state has already investigated. They found no evidence of widespread fraud or of mistakes that would have changed the results of the election. So basically the same results as every other Republican led investigation into election fraud. DJT can't stand the truth and thus continues his weaponization of every federal branch into a retribution machine What we DO have are audio recordings of Trump pressuring Georgia officials to "find the votes" - but there's nothing suspect in that at all!

I'm going to guess there will be more of them. As of the most recent quarterly release, they estimate ~11% in mortgages. While mortgage spreads have been coming in (in the U.S. at least), they're still at attractive levels for agency bonds. I imagine CRE debt/mortgages is trading distressed and offering high yields even for solid properties - you just have to be selective with the credit risk you take. KW also gives them a platform to invest a larger portion of the fixed income through if/when Brian Bradstreet retires. He's been doing this for 40+ years and will leave behind big shoes to fill. Who else would we want to managing $40 billion of the fixed income? Perhaps it's better if its a bit more dispersed.