FFH Results

[mcliu]

Wow, sorry but I have to strongly disagree.

 

Fairfax should do much better than the 7.5% trailing 10y annualized return going forward. The return was so long due to the $4 billion loss in equity hedges and CPI contracts. If FFH was not hedged between 2010 and 2013, BV should be at something like $560 per share which will get you to around 15% annualized for the past 10 years.

 

This clearly shows that the investments at FFH has performed solidly, but the results were detracted by their hedges. So unless you believe that FFH will forever be hedged, then yes, their returns will be lower. When the hedges come off, which they will, FFH should return to their 15% target.

 

Obviously not every investment is going to be successful. No one is that good, but clearly FFH has had more investment success than not.

[T-bone1]

Gio, I held FFh shares for 15 years in some form or another so I have really paid attention to FFh over the years.  I got so I would cringe everytime they announced a new stock buy.  FFh has not shown the same ability by any stretch of the imagination as Buffett has in assessing people or businesses. 

 

A few names come to mind: Canwest; sfk/fbk/ resolute; tom ward; RIM (although Chen seems like the real deal finally); TIG/C&f, midland walwyn, lindsey morden.  This is not an argument about character or integrity, but capability.  I admire where Watsa has bought the company but I think he needs a very strong Munger or Buffett on board these days. 

 

We have had this argument before but it is unlikely they will reach their 15% bogey, and they are still a small company.  It is getting harder each day. 

 

Whatever they have compounded book value at in the last 10 years is likely closer to the norm going forward.

 

I would add a question that perhaps Sanjeev can answer: Who if anyone is (effectively) the chief investment officer?  Is this Prem and if so, does he have time to do this while growing his operating businesses?

 

Cundill, among others, has talked about the danger of investing by committee.  I could be way off base here, but it just seems like a lack of focus in their investing . . . It made a lot of sense when Prem said they were buying quality businesses for the long term (KFT, JNJ, etc.) in 2008 . . .  it made a lot less sense when they started buying over-levered crap after that and hedging with the Russell . . .

 

These guys individually and collectively have great long term records and I have benefited from their investing prowess as a shareholder in the past.  I'm just trying to understand their current investment process now:

 

1) Is Brian in charge of Macro?  He has done this better than anyone in the past, but is this an official designation?  Do they have any sort of designated "devil's advocate" to argue for inflation in their investment meetings?  I've had very worthwhile conversations with some of the guys from Hamblin Watsa about this, but they seem disturbingly all on the same page.

 

2) What is the goal of their energy investments?  Are they trying to get exposure to cheap natural gas, use this as an inflation hedge, or do they just see SD and XCO as great investments.  Do they talk to consultants or have anyone from the field actually look at these assets before they buy them? 

 

3) Is it a policy to focus some portion of the portfolio on Canadian investments?  If so, they should make this official.  The fact that they elected to pay the Abitibi/Bowater pensions in full (when the Unions were prepared to take a large haircut in Bankruptcy) is more disturbing than the BBRY investment in my book.

 

Overall, their investments just seem disorganized.  MKL has one guy at the top, BRK has two and then Todd and Ted below them.  FFH has what?  A committee at Hamblin Watsa along with an unofficial group of former employees, friends and business partners?  Regardless of the quality of all of the people involved, it would seem they would be much better served with some sort of clear and concise investment philosophy, framework, and medium term allocation.

 

 

 

 

[tiddman]

Fairfax should do much better than the 7.5% trailing 10y annualized return going forward. The return was so long due to the $4 billion loss in equity hedges and CPI contracts. If FFH was not hedged between 2010 and 2013, BV should be at something like $560 per share which will get you to around 15% annualized for the past 10 years.

 

This clearly shows that the investments at FFH has performed solidly, but the results were detracted by their hedges. So unless you believe that FFH will forever be hedged, then yes, their returns will be lower. When the hedges come off, which they will, FFH should return to their 15% target.

 

Well unfortunately we can't all go back and undo our worst investing mistakes of a few years ago, if we could we'd all be getting 15% CAGR returns...

[mcliu]

Fairfax should do much better than the 7.5% trailing 10y annualized return going forward. The return was so long due to the $4 billion loss in equity hedges and CPI contracts. If FFH was not hedged between 2010 and 2013, BV should be at something like $560 per share which will get you to around 15% annualized for the past 10 years.

 

This clearly shows that the investments at FFH has performed solidly, but the results were detracted by their hedges. So unless you believe that FFH will forever be hedged, then yes, their returns will be lower. When the hedges come off, which they will, FFH should return to their 15% target.

 

Well unfortunately we can't all go back and undo our worst investing mistakes of a few years ago, if we could we'd all be getting 15% CAGR returns...

 

Well at least you agree that it's not their stock-picking that's hindering returns, but their macro hedging.

 

As for the macro, it's only been 3 years. Fairfax started hedging in 2004 before things blew up in 2009. It may be too early to criticize their strategy. Once they close these hedges, maybe that would be an appropriate time to judge their abilities.

[Uccmal]

Mcliu, The thing is it is always something with Fairfax.  I dont see that changing.  If its not some investment botch-up, or hedging mistake, then there is a soft market (which will be coming quick).  Alot of it they bring on themselves.  I got tired of the building the company for the long term mantra. 

 

Take any starting point from 2000 to 2004 and you get a growth of book value that tops out at 12, maybe 13%, including the dividend.  A respectable return but nowhere near 15%, and nowhere near what many other companies earn.  That includes the years of the CDs windfall, and the hard markets after Katrina, and one of the worst bears and best bull markets of all time. 

[tiddman]

Their results are driven by portfolio returns, underwriting results, hedging, macro forecasting, and anything else they do with their capital such as acquisitions.  It also has to do with their level of leverage and risk.  Shareholders can't pick and choose.

 

Doing poorly in any one of these areas can lead to mediocre performance. You could say that there are 5 primary factors each with a 90% chance of success, but that adds up to a 60% chance of success.

 

Historically they've done well overall but they'd have to walk a tight rope to get 15% returns IMHO.

[giofranchi]

I don’t believe in “fixed capabilities”. I think we can improve and get better. And I want to partner with people who constantly strive to improve and get better.

Imo FFH is showing precisely that attitude with its insurance and reinsurance operations: barely a couple of years ago they seemed doomed to always underperform, instead now they have improved their underwriting remarkably, to the point they are even making a profit out of it! And I believe Mr. Barnard won’t behave complacently going forward, instead he will keep pushing to make things better and better.

The same applies to their investment capabilities: imo those capabilities have always been very good, but nonetheless I think they will keep improving. How? Well, FFH will focus more on acquiring whole businesses and on searching for quality. Their recent moves already show this tendency, and it will become ever more pronounced.

 

Math imo doesn’t lie: with a small underwriting profit, they must average a return around 6% in their portfolio of investments to compound capital at 15% annual. In the past they have averaged 8.9%. That's my idea of margin of safety! ;)

 

T-bone1, I will try to answer your question: Mr. Prem Watsa. For the next 20 years he will have the last word on any decision about capital and resources allocation that really counts. This doesn’t mean he won’t listen carefully to every suggestion coming from the many talented people he surrounded himself with. :)

 

Gio

 

[DCG]

Wow, sorry but I have to strongly disagree.

 

Fairfax should do much better than the 7.5% trailing 10y annualized return going forward. The return was so long due to the $4 billion loss in equity hedges and CPI contracts. If FFH was not hedged between 2010 and 2013, BV should be at something like $560 per share which will get you to around 15% annualized for the past 10 years.

 

This clearly shows that the investments at FFH has performed solidly, but the results were detracted by their hedges. So unless you believe that FFH will forever be hedged, then yes, their returns will be lower. When the hedges come off, which they will, FFH should return to their 15% target.

 

Obviously not every investment is going to be successful. No one is that good, but clearly FFH has had more investment success than not.

 

 

That's assuming they remove their hedges at the right time, and they've been dead wrong on timing for the last 6 or so years. Their hedges have blocked an enormous amount of shareholder value.

[petec]

 

Overall, their investments just seem disorganized.  MKL has one guy at the top, BRK has two and then Todd and Ted below them.  FFH has what?  A committee at Hamblin Watsa along with an unofficial group of former employees, friends and business partners?  Regardless of the quality of all of the people involved, it would seem they would be much better served with some sort of clear and concise investment philosophy, framework, and medium term allocation.

 

They have one of the clearest philosophy of almost any company I know: buy things with a margin of safety.  That underlies everything they do, I believe, with the possible exception of the hedges which, for better or for worse, are there to protect the equity in case the Fed's attempt to reflate an overindebted economy fails.

 

I don't find that hard to understand and the record is pretty good.  What I do find amusing is how this board seems to have exploded with questions about their (investing) sanity/organisation/philosophy/competence/etc. after one bad investment (the hedges).

 

P

 

Edit: I should have added that I do wonder when they will shift from value to quality on the investing side, as they seem to have done on the insurance acquisition side.  A Buffett conversion yet to come? 

[Valuebo]

My whole point is that Prem, who you label as a great business man, hasn't lived up to the expectations and has a history of overpromising and underdelivering instead of the opposite (which you value highly!). You are simply choosing to ignore those facts and are guided by hope. You can't just throw around some quotes and show how Buffett (only one of the very best investors and business men ever with a wide stable of connections!) did well by picking great people to prove your reasoning. Of course anyone will agree that this is a sensible way to go if one is able to pick those people as needles out of a haystack! The hard part is being right on who those great people and not being late to the party. In Prem's/Fairfax' case, you might be way to late if you're goal is to compound capital at 15%.

 

Honestly, am I the only one thinking like this?  :o Sorry for being so blunt about it. I simply think it's a shocking way to think about investing and business, no offense. That doesn't mean I deem it entirely unlikely that Fairfax does indeed do very well in the future. Given history, I just don't rely much on specific return guidance anymore.

 

Tom,

please read what I write with carefulness, before you quote and answer my post…

Read very well line number 3 of my post and think it over a little bit…

I am not only quoting… I am giving you my daily experience… working with many entrepreneurs, engaged in many different endeavors!

Then, of course, I am also pleased by the fact that, studying the methods of the best entrepreneurs present and past, I find proof of what I experience every day. ;)

 

You think Mr. Watsa didn’t live up to the test? Well, then put him among those 4 or 5 out of 10 that under delivered! Imo it simply makes no sense at all!

 

Gio

 

 

Gio,

 

I'm glad that you work with many entrepreneurs but I believe that is true for a lot of people here. I have yet to meet anyone who puts as much weight on management to make an investment decision. I would even argue that it trumps valuation in your assessment of companies.

 

Of course capable people are running companies that are doing well, they wouldn't be there if they weren't talented! Top management generally is at the top exactly because they have a flawless track record. Talk about survivorship bias!

You don't think there are many managers capable of running 99,9% of the companies out there if leadership has to be replaced? The world is filled with talented people but we have a tendency to praise those people in successful companies because something called attribution bias.

 

Sorry to say but in the real investing world your daily experience with business people will barely mean anything. What makes you such an outstanding judge of character that millions of others in the field clearly lack? Buffett and a few others are prodigies with a lot of connections so please don't mention those again, I beg you.

 

Also, you would profit a lot from some books on why companies and people fail, not on why they succeed.

 

I have read your posts with great care. If I have to base myself on your reactions, I'm not entirely sure whether you do the same. You have a general tendency to counter every argument with generalities about partnering with good management, looking at the long term, etc. and dropping some heavy quotes (and your daily experience, although I'm not entirely sure what value that has in this context, especially since it is all so vague...). I could go on and on but I honestly just don't see the point if you are unwilling to at least consider some of the counterarguments.

Maybe you can find some value in jschembs new topic: http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/confronting-behavioral-biases/msg170773/?topicseen#msg170773 I know I will!

I hope you don't mind but it's unlikely I will reply often to your posts in the future as it clearly leads nowhere for both of us.

 

Tom

[petec]

 

So how is that any differnt?  Buying vs holding?  Other than taxes and psychology, they are the same bullish sentiment.  Having cash and buying is basically the same vote of confidence as holding and not selling to raise cash (other than taxes and psychology).

 

Not for me.  I'll happily hold great companies at fair prices, but I try to buy them at cheap prices.

 

Taken to its logical extreme, your argument suggests I'd only ever hold 100% cash or 100% of my favourite investment.  I'll very seldom do either because the risk of being wrong is just too high.

[giofranchi]

Gio,

 

I'm glad that you work with many entrepreneurs but I believe that is true for a lot of people here. I have yet to meet anyone who puts as much weight on management to make an investment decision. I would even argue that it trumps valuation in your assessment of companies.

 

Of course capable people are running companies that are doing well, they wouldn't be there if they weren't talented! Top management generally is at the top exactly because they have a flawless track record. Talk about survivorship bias!

You don't think there are many managers capable of running 99,9% of the companies out there if leadership has to be replaced? The world is filled with talented people but we have a tendency to praise those people in successful companies because something called attribution bias.

 

Sorry to say but in the real investing world your daily experience with business people will barely mean anything. What makes you such an outstanding judge of character that millions of others in the field clearly lack? Buffett and a few others are prodigies with a lot of connections so please don't mention those again, I beg you.

 

Also, you would profit a lot from some books on why companies and people fail, not on why they succeed.

 

I have read your posts with great care. If I have to base myself on your reactions, I'm not entirely sure whether you do the same. You have a general tendency to counter every argument with generalities about partnering with good management, looking at the long term, etc. and dropping some heavy quotes (and your daily experience, although I'm not entirely sure what value that has in this context, especially since it is all so vague...). I could go on and on but I honestly just don't see the point if you are unwilling to at least consider some of the counterarguments.

Maybe you can find some value in jschembs new topic: http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/confronting-behavioral-biases/msg170773/?topicseen#msg170773 I know I will!

I hope you don't mind but it's unlikely I will reply often to your posts in the future as it clearly leads nowhere for both of us.

 

Tom

 

Tom,

 

First of all I was not saying you didn’t read every post of mine with carefulness… I was only referring to my last post you commented in this thread!

Well, you said I was just quoting other successful entrepreneurs, while instead I obviously start from my daily experience, and only look for confirmation in the experiences of other people more successful than me! That’s what I do. And I think it was very clearly expressed in my post… This is the reason why I thought you read that last post of mine not very carefully… That’s all! :)

 

Second: many many many companies simply survive… Top management is at the top because they have a flawless track record?!?! You truly believe that?! That’s not my experience at all!! I know, as you say, that a lot of people on this board have connections with a lot of entrepreneurs… but I have to ask: do YOU work on a daily basis with entrepreneurs? Because so many of the things you say make me wonder how two business experiences like yours and mine can be so much different! :o

My experience is that a lot, way too much!, of top management is arrogant, overbearing, and too self conscious to be truly reliable, and got where they are basically through personal or political connections. Others have merits: for instance, they were very good technicians, or very good sales people… but unfortunately lack those requisites as strategic thinkers and in allocation of capital that are necessary in a CEO to make almost any company truly successful… Result: I know a lot of top managers for whom I have very low esteem… Maybe, where you live things are different… ???

 

Third: you say that what I look for is vague? I would say “qualitative”… but the characteristics I look for in a manager are very clear (at least to me!)… far from vague!

 

Fourth: I am only saying that what I do in investing is driven by my experience in business… I have never said it is the way to go!!

Believe me, I have read many books on those psychological stuff you very often point me to… It is not really true I am unwilling to consider counterarguments… Actually, I am here on the board exactly because I want to hear the reasonings of people who disagree with me! ;)

Those counterarguments, though, must be extremely strong to somehow convince me… Because it is extremely difficult for me to wear a hat while managing my business, and to change it while investing its fcf… You might understand that to manage two different ways of doing things is much more difficult and time consuming than to manage only one! Even if I am open to admit that two ways might be better than one. But the question is: how much better? Does the reward truly justify the effort?

 

Gio

 

[giofranchi]

Just to be even clearer:

 

I would even argue that it trumps valuation in your assessment of companies.

 

Only because I am willing to pay more than you for what I like, doesn’t mean I don’t put great emphasis on valuation.

 

You don't think there are many managers capable of running 99,9% of the companies out there if leadership has to be replaced?

 

Who cares? I never ask if someone is replaceable or not… I don’t care! I only look for what I like. Is it there? Is it not? That’s all I am interested in. If I find what I like, I invest. Otherwise, I pass.

 

What makes you such an outstanding judge of character that millions of others in the field clearly lack?

 

Never said I am outstanding… Probably, I am average at best… And my results will therefore be average. But I will always do only the things I understand and judge reasonable and rational.

 

Cheers,

 

Gio

[Uccmal]

 

So how is that any differnt?  Buying vs holding?  Other than taxes and psychology, they are the same bullish sentiment.  Having cash and buying is basically the same vote of confidence as holding and not selling to raise cash (other than taxes and psychology).

 

Not for me.  I'll happily hold great companies at fair prices, but I try to buy them at cheap prices.

 

Taken to its logical extreme, your argument suggests I'd only ever hold 100% cash or 100% of my favourite investment.  I'll very seldom do either because the risk of being wrong is just too high.

 

I concur.  I hold a few positions I wouldn't buy at the present prices.  There are all kinds of reasons:

 

1) bird in hand worth two in the bush - redeployment of funds error increases with each new investment, even though it may be cheaper on a comparable basis. 

2) good growth prospects but not enough to pay up for.

3) great and/or growing dividend

4) cant find anything better on a risk adjusted basis. 

5) concentration - I try to limit my holdings to 20% (SSW).  I would like to buy more but if something odd happens, such as fraud, or a combination disaster, then I get creamed with too much concentration.

 

[ERICOPOLY]

Taken to its logical extreme, your argument suggests I'd only ever hold 100% cash or 100% of my favourite investment. 

 

That isn't true.  The first clue is that I didn't make such a statement (nor would I).  I figure that whenever you have to stretch somebody else's statement, you've probably changed the meaning of what they are saying and therefore shouldn't do so.

 

Your statement is no different from claiming that when prices are cheap enough (the price at which you buy at) you only take 100% positions.  Now, is that what you actually do?  Do you only take 100% positions when things are cheap enough where petec is convinced to buy a new position?

 

You are making a straw man argument.  We aren't discussing positions sizing at all. 

 

Instead, I am saying (for example) that if a 10% position is worth holding at $50 per share on the way back up (from the lower price where you bought it at), then it is also worth buying it at that price for the first time if you don't already hold it.  The rest is psychology (and possibly taxes).

 

[gary17]

Gio - I am curious as to if you have invested in Berkshire stocks.  Assuming you have not (because I don't see you talk about it much) -- why not?  It meets all your criteria - Greatest management on the planet with the longest track record and integrity and was selling around book! Gary

[petec]

Taken to its logical extreme, your argument suggests I'd only ever hold 100% cash or 100% of my favourite investment. 

 

That isn't true.  The first clue is that I didn't make such a statement (nor would I).  I figure that whenever you have to stretch somebody else's statement, you've probably changed the meaning of what they are saying and therefore shouldn't do so.

 

Your statement is no different from claiming that when prices are cheap enough (the price at which you buy at) you only take 100% positions.  Now, is that what you actually do?  Do you only take 100% positions when things are cheap enough where petec is convinced to buy a new position?

 

You are making a straw man argument.  We aren't discussing positions sizing at all. 

 

Instead, I am saying (for example) that if a 10% position is worth holding at $50 per share on the way back up (from the lower price where you bought it at), then it is also worth buying it at that price for the first time if you don't already hold it.  The rest is psychology (and possibly taxes).

 

Ah - that (your last paragraph) is *not* how I read your original post, primarily because it is not what you actually said.  However my intention was not and is not to rile you so I apologise if I did.  I understand your point better now.

 

On a philosophical level, however, I disagree with you about stretching someone's argument - mine or someone else's.  I generally (but not always) find that following things to their logical (if extreme) end-point makes me think quite hard!

 

Pete

[giofranchi]

Gio - I am curious as to if you have invested in Berkshire stocks.  Assuming you have not (because I don't see you talk about it much) -- why not?  It meets all your criteria - Greatest management on the planet with the longest track record and integrity and was selling around book! Gary

 

Gary,

certainly I have invested in BRK. But I have no position now.

Among my “qualitative” criteria are:

- A owner/manager who can be at the helm for the next 15-20 years: the only owner/manager who probably doesn’t satisfy this criteria in my firm’s portfolio right now is Mr. John Malone… who nonetheless is 10 years younger than Mr. Buffett.

- A business that is still relatively small: the only business that probably doesn’t satisfy this criteria in my firm’s portfolio right now is VRX… which nonetheless is much smaller than BRK.

I know Mr. Buffett is a genius. I just have an hard time believing that an 83 years old man can grow at high rates a $315 billion company for many years into the future…

Gio

 

[ERICOPOLY]

Ah - that (your last paragraph) is *not* how I read your original post, primarily because it is not what you actually said. 

 

I originally wrote the following (what I "actually said"):

 

Otherwise, it's all too easy to sell and go to cash.  Just as easy in fact as having cash and buying the shares at the same price.

 

No comment was made by me as to quantities. 

 

You jumped to the 100% extreme, and you don't like 100%, so you didn't like my comment.  However you could have instead jumped to the 1% extreme -- in which case if you like 1% position sizes then there would be nothing to disagree with.

 

Thing is, by not mentioning position sizing it was simply not even part of my message at all.  Thus my message was changed when it was debated using an extreme position size (that was the straw man being knocked down).  Essentially debating things that were off-topic.

 

Had I been talking about position sizing, I wouldn't have minded your comment.  As you say, taking things to their logical extremes can be helpful in thinking about things.  As long as you aren't changing the topic!

 

However, message boards can be like Rorschach tests (the ink blot tests) -- given that I'm "the 100% guy" on the board, I figure that when I make a comment people may innocently read 100% into it, even when it isn't there.  I would probably do the same thing if our positions were switched and I was petec and you were ericopoly.

 

 

 

[petec]

 

However, message boards can be like Rorschach tests (the ink blot tests) -- given that I'm "the 100% guy" on the board, I figure that when I make a comment people may innocently read 100% into it, even when it isn't there.  I would probably do the same thing if our positions were switched and I was petec and you were ericopoly.

 

Ha, there was probably an element of that.  However, just for interest, this was my actual thinking:

 

You wrote "So how is that any different?  Buying vs holding?  Other than taxes and psychology, they are the same bullish sentiment.  Having cash and buying is basically the same vote of confidence as holding and not selling to raise cash (other than taxes and psychology)."

 

I read that to mean that if I'm bullish enough to hold, I'm bullish enough to buy, which logically ends up with me being 100% invested or 0% invested.  Simple misunderstanding.

[ERICOPOLY]

I read that to mean that if I'm bullish enough to hold, I'm bullish enough to buy, which logically ends up with me being 100% invested or 0% invested.  Simple misunderstanding.

 

That part was correct.  I did indeed mean to convey that if you are bullish enough to hold, you are bullish enough to buy.  How much of a position, that varies from person to person.

 

Similarly, everything you hold today was at one point in time trading for a price where you were bullish enough to buy.  However, just because you were bullish enough to buy didn't make you go overboard with your position size.  You didn't go to 100% (the logical extreme) merely because you were bullish enough to buy.

 

Think back to when you were last bullish enough to buy.  Did that mean that you went 100% into it?  I guess what I'm saying is that in your past history that was never the case, but you are raising it as a point in your arguing against me.  So I'm thinking that if you go back and look at your own behavior you'll find that it wasn't relevant.  Being bullish to buy has nothing to do with 100% or anything.

 

[petec]

I read that to mean that if I'm bullish enough to hold, I'm bullish enough to buy, which logically ends up with me being 100% invested or 0% invested.  Simple misunderstanding.

 

That part was correct.  I did indeed mean to convey that if you are bullish enough to hold, you are bullish enough to buy.  How much of a position, that varies from person to person.

 

Similarly, everything you hold today was at one point in time trading for a price where you were bullish enough to buy.  However, just because you were bullish enough to buy didn't make you go overboard with your position size.  You didn't go to 100% (the logical extreme) merely because you were bullish enough to buy.

 

No, for two reasons:

1. I (nearly) always keep some cash for better opportunities later; and

2. I had other good ideas. 

 

I don't really regard either of those as tax or psychology related reasons.

[ERICOPOLY]

I read that to mean that if I'm bullish enough to hold, I'm bullish enough to buy, which logically ends up with me being 100% invested or 0% invested.  Simple misunderstanding.

 

That part was correct.  I did indeed mean to convey that if you are bullish enough to hold, you are bullish enough to buy.  How much of a position, that varies from person to person.

 

Similarly, everything you hold today was at one point in time trading for a price where you were bullish enough to buy.  However, just because you were bullish enough to buy didn't make you go overboard with your position size.  You didn't go to 100% (the logical extreme) merely because you were bullish enough to buy.

 

No, for two reasons:

1. I (nearly) always keep some cash for better opportunities later; and

2. I had other good ideas. 

 

I don't really regard either of those as tax or psychology related reasons.

 

Likewise, I too do NOT regard those two reasons as being either tax or psychology related reasons.  I have not made any claims otherwise.

 

 

[ERICOPOLY]

No, for two reasons:

1. I (nearly) always keep some cash for better opportunities later; and

2. I had other good ideas. 

 

Incidentally, earlier you wrote:

 

Taken to its logical extreme, your argument suggests I'd only ever hold 100% cash or 100% of my favourite investment. 

 

These two reasons you give here could have been offered in refutation.  That's one of the problems with the "taken to the logical extreme" approach. 

 

Once I took your own buying to the logical extreme, you immediately came up with two reasons that quickly dismissed the logical extreme approach.  However, you didn't do that when you yourself presented the logical extreme argument.

 

Anyways, "logical extreme" approach is often just a "slippery slope" fallacy.  They usually seem better reasoned to the giver of the argument than to the taker (who immediately can see how the situation is more nuanced than that).

 

 

 

[petec]

 

Likewise, I too do NOT regard those two reasons as being either tax or psychology related reasons.  I have not made any claims otherwise.

 

I thought you made exactly that claim, because I understood you to say that tax and psychology were the *only* reasons why, if I was bullish enough to hold, I might not be bullish enough to buy.  Perhaps that's where the misunderstanding lies.