Fairfax 2026

[Intelligent_Investor]

The bottom line is if a 20% decline in stocks materially changes your QOL, you shouldn't own stocks. Otherwise, you should be okay with just holding the stock (or buying more). Selling shouldn't be considered unless the facts change around the company's prospects. Should be something that takes about 30 seconds of mental energy before you move on.

[Maverick47]

1 minute ago, Intelligent_Investor said:

The answer is buy more lol, you are overcomplicating this and getting emotional about returns. As Charlie Munger said, if you aren't able to handle your stock investments declining by 50% once every few decades you shouldn't own stocks. I'd assume most of us are wealthy enough to not be on the streets with a 20% down year...

Agreed.

 Is the company still in solid shape?  Is it maintaining or, better yet, increasing in intrinsic value?  Is management trustworthy?  Are their interests aligned with mine as a long term shareholder?  
 

Is the company soundly financed?  Is it buying back its own shares, or buying in minority shares of associates, and is it otherwise taking actions to work for me as an individual shareholder?

 

Does Bret Horn of Morningstar acknowledge its continued strong operating results and investment performance yet still call it a poor underwriter whose investment results are likely to be hit or miss,  listing it as overvalued?  
 

If I can answer myself in the affirmative to these questions, then I don’t worry myself about short term market price weakness.  I remind myself and my spouse and other interested family members that the only accurate prediction one (even such a one as Bret Horn) can make about the market price of a security in the short term is that “it will fluctuate” and that if it is currently moving in either a direction or magnitude I would not otherwise expect based on my assessment of its intrinsic value, it is because “in the short run the stock market is a voting machine” but that “over the long run it is a weighing machine.”

[dealraker]

1 hour ago, bearprowler6 said:

Happy Birthday in advance. My home is worth about the same. It seems many on this board are very uncomfortable with discussing these very valid issues. Whether Fairfax is in an uptrend or a downtrend I believe we all need to address what to do with our holdings on a regular basis. We owe that to ourselves, to our families and ultimately to our heirs. If Fairfax, is in one of its extended sideways periods (I don't know whether it is or not) then it is very reasonable to ask yourself the question whether the funds should be deployed elsewhere to benefit those that rely on us.

I give credit to thinking unlike my own particularly to someone like Sanjeev who has skills that I do not...although I have successfully experimented with his suggestions in my retirement account LOL.

 

Over decades it worked like this for me.  Parents died when I was young so I watched the old guys, particularly the guys in my investment club.  So many of them lived healthily until their mid 80's.  None, that's zero, of them "sold out" or "cashed in" to "make it" out of this world.  They all were businessmen but they all made most of their wealth by owning stocks over decades.  They all died with many millions.

 

Contrast that the the come-and-go whippersnappers who had shorter term visitations being members of our investment club.  This bunch was high strung, the in-and-outers who knew more than the rest of us, timing was their game and "concern"  for the times was their focus.

 

Lots of wealth, and I mean a LOT OF WEALTH, was handed down from the old "hold" guys.  Never knew any of the come-and-go members whose children or wives...or whoever was part of their family...ever in any way projected any wealth accumulation.  

 

My wife's parents were quite philanthropic to her during her father's lifetime.  He tried to control the family with his money, but he quickly realized with me that wasn't gunna fly.  When he died?  The SOB who attempted to control with his gifts- and of course suggestion on how we lived and voted-  had "invested" in short term CD's and annuities...and he had a pension.  What did he leave his wife?  What passes down to my wife and on down from him?  About $400k and a house.

 

If you want to build wealth you better be in business...that's called stocks.

[Castanza]

20 minutes ago, bearprowler6 said:

And those who had to sell (deaths, divorce, funding business needs etc) Berkshire during 1999-2000 never benefited from the recovery.

 

What's your point? You're asking the board to make a personal finance decision for you. The question you pose in short is not only asking people to forecast the future share price, but also asking whether you should hold, buy, or sell. That's a personal question based on personal finances. As someone else mentioned up chain, all equities are subject to this. If you want some steady reliable income stream then move funds to t-bills etc. Are you investing (looking at the Intrinsic value of said company vs the share price and hoping for price discovery) or are you simply looking at the share price? Just being blunt, but you're sort of letting the tail wag the dog with this framework. End of day I don't think it's valuable to hold any equity unless you're consistently looking out  5+ years (voting machine vs weighing machine). You can't apply the logic of bonds (duration and expected return) to equities. 

 

 

[longlake95]

Remember, we are here for a lumpy 15%+, not a smooth 12%. 

[Wanderer]

The general question that's worth to be discussed on this forum is, how do deal with a "tension" between the intrinsic value and the stock price.

 

To take an example we all know, Fairfax India is worth much more than it is traded for. If you just look on the financials, you should "go all in", build a huge position. But, as everybody is aware of, the big question is, WHEN will this intrinsic value be reflected in a market price you'll want take to cash out of the investment?

 

I personally am very hesitant to put a lot of money into something like Fairfax India, because I know, they'll be cash restrained for a long time. They don't take the low stock price as an invitation to buy more, because they'd have to cash out of investments they also consider to be undervalued.

 

Fairfax, the mother company, is a different animal though. They produce cash continously and are known for being opportunistic. They use all kinds of means to increase the value per share, including buybacks. Just look at what they did in the last years.

 

That's why I'm very confident, that the "drop for no reason" will either be irrelevant or beneficial in the long run.

 

It you feel uncomfortable about the stock price falling off from an all time high, you should reconsider your weighting or how often you discuss your performance with your husband or wife. I personally never talk about the size of our portfolio with anyone, including my wife, so I don't have any pressure to "perform".

Edited 1 hour ago by Wanderer
typo

[bearprowler6]

1 hour ago, longlake95 said:

Remember, we are here for a lumpy 15%+, not a smooth 12%. 

I love you guys that blindly quote this stuff. Life is far more nuanced. At some point you will learn.

[Castanza]

4 minutes ago, bearprowler6 said:

I love you guys that blindly quote this stuff. Life is far more nuanced. At some point you will learn.

How about you tell us what we should be doing. You’re unhappy with the answer of Hold, and buy more so that leaves sell. How about you justify why we should all sell FFH because of the second coming of “seven lean years”. 
 

 

[bearprowler6]

1 hour ago, Castanza said:

 

What's your point? You're asking the board to make a personal finance decision for you. The question you pose in short is not only asking people to forecast the future share price, but also asking whether you should hold, buy, or sell. That's a personal question based on personal finances. As someone else mentioned up chain, all equities are subject to this. If you want some steady reliable income stream then move funds to t-bills etc. Are you investing (looking at the Intrinsic value of said company vs the share price and hoping for price discovery) or are you simply looking at the share price? Just being blunt, but you're sort of letting the tail wag the dog with this framework. End of day I don't think it's valuable to hold any equity unless you're consistently looking out  5+ years (voting machine vs weighing machine). You can't apply the logic of bonds (duration and expected return) to equities. 

 

 

Many current investors into Fairfax have bought in in the last 4-5 tears and have only known the good times. This years' unexpected price decline, which no one predicted, has caused a few long time posters on here to raise a few good and very valid questions. These tended to be older individuals who now who a very large amount of Fairfax stock both in dollar amount and percentage terms. In discussing this years performance with their spouses, which is the right thing to do in my view, they struggled to really explain why it happened which is a difficult situation. I then posed the question, if the recovery take more than 5 years what are they thinking about doing now? This question seems to really upset a number of you here. I suggest you should be reflecting on this question  far more than you are rather spouting out  the usual talking points about intrinsic value because at some point it will be a very valid question for you and your family and based on what you wrote you will fail them miserably.

 

 

[Cod Liver Oil]

All stocks have unpredictable returns. We can only assess them probabilistically with limited information about the present and future conditions. This is why we diversify a bit. I don't mind being top heavy, but having 50% of your net worth in one company is intense even if you run the company yourself.

Edited just now by Cod Liver Oil