Mephistopheles

Agreed, though I was referring to the long term. If he had to hold either gold or cash for the next 100 years, he'd pick gold.

Might have been revenge on Munger for saying that gold buyers are uncivilized. lol

I think Buffett would rank gold higher than cash. He mentioned in this year's annual letter that gold will most likely increase in value long term, just not nearly as much as productive assets. On the other hand, he always mentions how cash is a long term loser.

Funny that he picked Omaha as the town that can be covered up by every U.S. note placed end to end.

Interesting because, I like watching CNBC for Becky Quick. :) Also, I've got down on GuruFocus too, because I agree, to much of the same material floating around.

Are we talking only television/radio media or everything? I don't watch any financial TV except for interviews of value investors that are posted on sites like this one. Until recently, I used to put on CNBC in the morning just to see how the futures are doing and what the headlines are, but now I don't even do that anymore because I can't bear all the nonsense that they put on. I can honestly say that I feel much better not having put on CNBC for several weeks. As far as reading, I used to spend a lot of time going through the WSJ, but have cut down a lot on that. Now I read mainly just the Money&Investing section. I also check out the FT, the Business section of the NYT, and the Economist, but don't spend too much time on those either. Most of my reading time is spent on value sites and blogs, and this forum. I've learned so much more from these than I have from all other sources.

An insurance company, most definitely. Maybe Markel?

From what I read in TBTF, Fuld called Buffett to talk about a possible deal. Buffett mentioned off the bat that he would want a minimum of 9.5% preferred securities, and at-the-money warrants, and that only if he felt comfortable after doing his DD. Fuld felt that was an outrageously expensive and leaned against the idea. Later, Buffett went through the 10-k and found way too many questionable items that he opted against a deal on any terms.

Mephistopheles, I think the key is that once a lease is entered into, it is non-discretionary. A firm can stop buying inputs into a manufacturing process if it wishes to slow manufacturing, the firm can lay off excess employees. But if it decides to stop paying its leases, bad things can happen. Ch11-type bad things. Not a whole lot different than if it defaulted on some bonds. Or so the thinking goes. Ah, that's what I assumed, thanks!

I'm a fairly new investor, and I've always had a question regarding this. Why should operating leases be put on the balance sheet, or considered as liabilities even if not on the balance sheet? Why do they just not count as regular expenses, in the income statement?

I remember once Charlie said that Google has the biggest moat that he's ever seen, and he doesn't know how anyone would be able to compete with it. But at the annual meeting this year, both he and Buffett said how they can't predict what either Google or Apple would look like in 10 years, like they can of IBM, and therefore they wouldn't invest in either. Can anyone explain the contradiction?

Does the 1.1x cutoff include the noncontrolling interests or no? I would think not, but I'm no expert.

I agree, unless he is actively involved (and not all are of course) in making up laws to suit his own needs: http://www.bloomberg.com/news/2012-02-07/private-equity-lobbying-protected-romney-s-tax-benefit-of-carried-interest.html That's otherwise known as corruption, but it's legal corruption because it's not illegal to hire a lobbyist and to make campaign contributions. Only the rich can do it. So while this Facebook guy gets a nasty headline, the specific individuals organizing these lobbies to change tax laws in their own favor do not get their personal names smeared. And isn't it worse to be changing the laws to suit your own needs, using your power and influence, than it is to be just avoiding taxes by playing under the rules as they already are set? The Facebook guy could organize a lobby to have that law changed, and then nobody would be pissed at him because there would be not tax to be dodged. Agreed. I feel that actively lobbying for something so wrong is being a whore for money.

I don't see what the big fuss is. He is just tax planning in order to pay the least amount possible. I think that almost everyone does that, albeit with much smaller sums. If you don't like the tax law, blame Congress, not the taxpayer. I even feel the same way about carried interest. I think that it is a completely fucked up tax law, but if a hedge fund manager took advantage of it, I would never blame him.

So the stock is at $20 and the potential deal would be for $24.75. Do you guys think that this is a good speculative trade to bet a small amount of money on? I was thinking of buying a little on Monday, before AVP replies.

I might be wrong but I think I've read elsewhere as well that he invested 75% into AXP.

One more question. Will it be possible at all to maybe meet/shake hands/take a picture with Buffett, Gates, or Munger? Or it's next to impossible?

A few questions about Saturday: 1) When is the best time to line up at the arena if I want decent seats? 2) When is the best time to shop around at the booths if I don't want to miss any of the Q&A? 3) When is the best time to visit NetJets, and how much time would it take, including shuttle time, if I don't want to miss the Q&A? 4) If you get up during the meeting to shop/eat lunch/visit NetJets, do you lose your seat? 5) In the visitor guide it says the only way to visit the NetJet private jet is by shuttle from CenturyLink. But on this thread someone mentioned we can drive over to the airport. So which is true? 6) Any other suggestions for the meeting day? Thanks everyone for answering.

If I am trying to get a job/internship at a good value fund, would this weekend be a good place to try to meet fund managers, get contacts, etc.? If so, at what specific events should I attend in order to network? This is my first annual meeting so I am not familiar with all of the little events. I am planning on going to the Yellow BRKer party and cocktail party at Borsheim's. I also heard that T2 Partners will be holding an event, is that correct? Thanks for your responses.

Thanks for your reply and advice. I've passed on the idea of opening up a small fund to run family any time soon. I've decided that I want training in the hedge fund field first, by working for a good value manager. I don't particularly love running a business, but I wouldn't hate it either. I do love investing and so eventually I hope to be in the fortunate position to be able to run a fund of my own, by having enough money to live off of until I would start to see a consistent profit. For the time being, like I said, I would just love to work for a good value manager, from whom I can learn a lot from.

Kinda off topic, but for those of you who have piggybacked Ackman on his trade of buying HKD call options, what broker did you use? Do you need a broker that offers forex + options, or one that offers only options is good enough?

Nice article. As far as the question in the title of thread. What is everyone's thoughts about it? Clearly Prem has generated incredible returns for Fairfax over the last 30 years. And as an $8 billion market cap, it seems like it has a long way to go. So, does the fact that it's selling only slightly above book value make it an incredible bargain, to own over the course of a lifetime?

Assuming each acre is worth $10,000 today (a lofty assumption), then that is a compounded annual growth rate of roughly 6.27% pre-inflation. The Louisiana Purchase wasn't really a "trade" in the traditional sense, since it was kind of taken by force from the native Americans, who were already occupying it. But that doesn't account for all the wealth that the territory has produced over the last two centuries.

Interesting. I didn't realize that I could charge a management fee, but that makes sense given that non-rich people can invest in mutual funds. Yea I've heard that IB has a good platform for this. Thanks again.

I am not a lawyer but have started a hedge fund in Washington state. If you are less than $25 million in AUM you will not be required, nor likely allowed, to register with the SEC. It will be on the state level. I cannot speak to NJ requirements. Every state is different. Some follow SEC rules exactly, others are more strict, some probably less. You need to find out NJ law. Six years ago it cost around $30 to $50k in legal costs to set up the partnerships and write the fund documents. You might want to call a reputable firm and ask for an estimate. Expect ongoing legal costs as well if the state is strict. What you describe has a performance fee which can only be charged to "qualified" clients. I'm pretty sure there are articles online on How to Start a Hedge Fund. Lastly, you said later that you would run it out of your home and handle the administration. That may or may not be doable. In my state you would not be allowed to self-administer. I must have a custodian, a third party administrator, a yearly audit, and an independent representative to authorize all disbursements from the fund. This adds to yearly operating costs. I know in other states you can self administer. Lots to think about. If it is overwhelming then it may be that you are not cut out for running your own fund. You end up being more than an analyst. You have to be an administrator and marketer as well. Thanks for the info. This makes me think that I should probably wait for some time until I've gathered enough wealth to be able to spend $50k in legal costs. Also, I would probably me managing friend&family money, many of them who are not "qualified clients". I think the whole "qualified client" rule is just ridiculous. Why do you have to be rich to be able to invest in hedge funds? I'll call the NJ Securities Bureau to find out state specific rules, but thanks for giving me a rough estimate.