CanadianMunger
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Posts posted by CanadianMunger
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This deal is peanuts for Berkshire. He's just getting Berkshire's name out there for when one of the big 5 banks need capital. Savvy, even in his old age :)
-CM
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"This cheery prediction comes, however, with an important caution: If an investor’s entry point into
Berkshire stock is unusually high – at a price, say, approaching double book value, which Berkshire shares
have occasionally reached – it may well be many years before the investor can realize a profit. In other
words, a sound investment can morph into a rash speculation if it is bought at an elevated price. Berkshire
is not exempt from this truth."
The above is an excerpt from Buffett's essay "Berkshire - Past, Present and Future" in the 2014 AR.
Most of the valuation approaches I have seen peg Berkshire's current IV at 1.65-1.75 book. So yes, buying at double book value would be a premium to intrinsic value currently.
However, with Berkshire's shift to purchasing operating businesses, the gap between book value has grown over the last decade and is virtually certain to increase over the next few decades (ie. the value of operating co's are never written up).
So why would Buffett make the above comment in the future section of his essay? Its definitely true now, but is it not plausible that a few decades hence, Berkshire's intrinsic value will be double book value?
-CM
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I wish I had something intelligent to add, but I don't. I'll defer to one of the foremost experts on (real world) risk:
Original quote by journo:
@daveweigel:
The GOP rush toward a "stop letting in refugees" position reminds me of the "travel ban NOW or we all die of Ebola" fad of last year.
Response from NNT:
@nntaleb
Illustration of how journalists are incompetent in grasping risk, precaution,probability & multiplicative effects.
-CM
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People can't be trusted, but they somehow get a set of angles wings once being elected or appointed to a position of mostly unaccountable power?
Therein is the answer you seek. Elected positions in the USA aren't mostly unaccountable, they just seem that way sometimes.
Good one!
I almost forgot about the yearly calls from the IRS fund raisers detailing what the government plans on doing with my money in the next year (what companies they plan to subsidize, what weapons they plan to build, who they plan to send drones to murder, etc) and asking me if I'd still wish to contribute. "Can we count on the same generous donation as last year?"...
Silly me, I'm acting as if I don't pay they'd send armed men to kidnap me and put me in a cage like an animal, or kill me if I
resist.
If you remove government you get anarchy. This has been proven time and time again. You get a power vacuum, and you get the same situation in Somalia, or a new government. People want to be led. Just study history.
Also just because you guys in the US really suck at running a normal government does not mean a government is all bad. A lot of countries do it right.
And incidently, most countries with a strong government (but not overly dominating like in North korea) have done extremely well economically. Just look at Singapore, strong government keeping it all together. All the surrounding countries had weak governments resulting in a dysfunctional rule of law and crappy economies and corruption.
Imo, read Better angels of our nature, and you will be a lot less libertarian. Incidently, in a lot of dysfunctional poor countries a lot of rational actors all act in their own best interest, and that is not always the best interest of the group as a whole.
Pure libertarian systems are flawed for the same exact reason communism is flawed, it all works great in some theoretical fairytail world, but not in the real world.
If the entire population of a country would consist of well natured engineers that had complete information, it would work great. But that is not the reality.
Additionally, your assumptions of 'people acting rational and everything will be alright' is majorily flawed for another reason: incomplete information. Went into that in my last post.
Also if the US government wasn't there, you honestly think no other group will come and ask some form of tax? Again look at poor countries with next to no government. Maybe in some future utopia this is possible. Where we are all genetically engineered to have iq's of 180 and high empathy levels where robots do all the work for us. Maybe some libtertarian system is possible there, but we are not there yet.
Pinker and his Better Angels thoroughly debunked by Taleb & Cirillo:
http://www.fooledbyrandomness.com/violence.pdf
-CM
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I've thought about it a number of times, but I haven't taken the plunge. I need my college and professional football.
Had a friend who argued to his wife that it was cheaper to go to the bar to watch the games, plus there was a sense of community there.
Around here bar's have deals for Steeler games. Usually you can get a Miller or Coors for $2, figure five beers and the NFL "costs" $160 or so. I'd say he had a point considering that seems to be the average monthly Comcast bill around here.
Yeah but what are the costs when after said 5 beers the waitress starts looking more and more like Megan Fox?
-CM
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How does dividend tax work for the OTC ? 30% withholding?
rb is correct. My divvies on LRE come in with no tax withheld (no outgoing withholding tax from the UK).
-CM
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What you said about holding pink slips for securities that trade on a CRA approved market is really interesting though. Do you know where I can find more detail on that?
Fannie Mae, which used to be traded on both the New York Stock Exchange and the Chicago Stock Exchange, was delisted in June 2010 began trading on the OTC Bulletin Board, which is not a designated exchange; however, because it also listed on the Stuttgart Stock Exchange in Germany, it appears its shares do qualify for investment by TFSAs, regardless of which exchange the shares are purchased through.
I recently moved some LCSHF which is listed OTC into my TFSA at Scotia I-Trade without any problems.
-CM
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I hold my sons RDSP at TD Waterhouse, which does indeed have access to global markets. However the commisions are obscene. I purchased 1600 shares of Lancashire directly in London last year, and the cost was $225, with a healthy forex clip. However I do intend to hold LRE indefinitely.
This was before I found out that I can hold a pink sheet security in a registered account if the underlying security trades on a CRA approved market. The Munger quote about being too late smart definitely applies to me here ;)
-CM
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If oil prices stay low, are they finally the straw that breaks the Canadian housing markets back?
-CM
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What's Mohnish's position on moustache sizing? When does he decide to "trim"?
Did Mohnish influence Buffett on trading the P&G position for fear of reduced shaving demand among value investors as they try to shamelessly clone Mohnish?
-CM
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Here's a goody that seems like a joke, that I am not making up.
A fellow board member told me about how Kmart was giving out 30 cent off a gallon coupons at a local gas station for every fifty bucks you spend. You could put three together to get 90 cents off a gallon, up to fifteen gallons. I drive a hunk of junk, gas guzzling truck, with a 34 gallon tank, so I could use a lot of them pretty quickly, or, just give them away to friends.
I went to Kmart bought a 50 dollar gift card, using my discover card that gets 2% cash back. To my surprise, I got a coupon. Then, I bought another 50 dollar gift card, and used the original gift card to pay for it. Along came another coupon... I did this like 20 times, just standing at the same register. Each coupon probably cost them about 4 bucks, if the gas station subsidized them a hair. Eventually, the system stopped letting me do it. I then spent the last gift card on some heavily discounted, or competitively priced stuff that I needed for rent house projects.
The beauty here, is that SHLD likely lost ~100 bucks and I effectevly made nearly 100, for me spending about thirty minutes in the store... Plus, I made their same store sales look better, to the tune of $1000 or so. I'm no expert in retail, but that seems like a bad business model to me.
If I'd had a moustache at the time, I was definitely twirling it.
I shit you not.
Pure gold!
-CM
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We should NOT be looking at their performance on a YoY basis but using a 5 year yardstick similar to Buffett. As Graham eloquently said, “In the short run, the market is a voting machine but in the long run, it is a weighing machine.”
Tks,
S
I'm not sure if Ted Weschler is having a good year being that he a a pretty considerable position in GM which has been terrible this year
Isn't it something like a 7 year yardstick now? I thought he changed it when 5 years didn't work so well. Maybe I'm wrong.
Just curious - why the anti-Buffett under tone in many of your posts? Is that you, Alice?
-CM
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Me too, but I'll also have more respect for someone who does their own thinking than a BuffetBitch who takes every word that comes out of our favorite friend's mouth as purer truth than the laws of nature. When you think for yourself, you give yourself a chance to improve. When you follow like a blind sheep, you stay a blind sheep.
Interesting. So would you classify Pabrai as a blind sheep?
-CM
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Hmm. Warren Buffett vs Palantir. Thats a tough one.
-CM
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Thanks very much for the post.
-CM
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I'd be shocked if BRK didn't sell/spin out some of its businesses during my lifetime.
How long are you planning on sticking around?
-CM
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By Mr. NormR ;)
"Problem is, it is extraordinarily difficult for giant companies to grow at above average rates for a long time."
I would generally agree.
But wouldn't meaningful buybacks with moderate increases in earnings power from the subidiaries continue to grow operating earnings in the double digits for a considerable stretch of time? (I'm thinking of the IBM model here)
-CM
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I'm sure many on this board have been influenced by the great man.
Happy 90th Mr. Munger (January 1), and thank you.
-CM
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A new Czech nymphing fly rod!
8)
I had to..ahem.. google that one ;)
-CM
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Remind yourself that money is the slave, not the master. There is no point to investing unless you intend to use the gains, & do it within your lifetime - while you are still able. Life is short, & it should be as well lived as you can possibly make it.
SD
This is a great point. I co-own a business that I was lucky to buy into with my family when I turned 18. I worked hard for the past 17 years, averaging 60-70 hours per week. We began to realize that we were becoming slaves to the money so we paid up for some very competent help. I calculated what I would need to be comfortable, and used the look through earnings from my portfolio plus my wages to achieve this number.
I'm down to 25 hours per week and just finished watching Breaking Bad all five seasons in 2 weeks while indulging in Oreo Cheesquake Blizzards from DQ.
Life is indeed good when you make money the slave.
-CM
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a quick google search brought up multiple copies. Tilsonfunds has the OID pages while valueplays.net has Tilson's notes from the meeting.
http://www.tilsonfunds.com/Mungerwritings2001.pdf
http://www.valueplays.net/wp-content/uploads/The-Best-of-Charlie-Munger-1994-2011.pdf
Thank you.
-CM
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btw - Did he reveal his mystery stock on the weekend?
-CM
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I'm re-reading Buffett's letter to shareholders. Towards the end of the 2000 letter Buffett comments:
I’m enclosing a report generously supplied by Outstanding Investor Digest of Charlie’s remarks at
last May’s Wesco annual meeting. Charlie thinks about business economics and investment matters better than
anyone I know, and I’ve learned a lot over the years by listening to him. Reading his comments will improve your
understanding of Berkshire
Anyone have a copy of this?
Thanks,
-CM
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It's strange that management would have the confidence to increase the dividend in January, only to face a potential debt covenant breech 6 months later.
Lets hope my investment portfolio is not the Titanic that sinks on this Glacier :P
-CM
I traded mortgages and mortgage derivatives before, during and after the GFC
in General Discussion
Posted
Thank you for taking the time to share.
Your writing style is superb and the content is very interesting!
-CM