scary article

[Parsad]

Are you saying this is a sell signal for FFH?

 

No, just that no one was talking about him in 2007, and now everyone is talking about him.  You go on the Fool board or Yahoo board, and so many people have Prem lumped in with Buffett now.  Three years ago, Chanos was still shorting Fairfax and he was getting all the press.  Even most value investors were siding with the likes of Chanos, Herb Greenberg and at one point...Mark Cuban!  Remember that?  Cheers!

[Guest Bronco]

Sell signal?  I know that wasn't a serious comment, but I feel you can almost use FFH as a hedge, knowing that much of the investments in the portfolio are hedged.  If the market tanked again, FFH would be more than ok.

[Munger]

1/1/07 - 8/1/07 "Jim Chanos" = 553 hits

 

1/1/10 - 8/1/10 "Jim Chanos" = 54,600 hits

[opihiman2]

BTW, much thanks for the citation, Parsad.  I'll have to dig into that later.  Also, Munger, I agree with you on the absurdity of using Google's result set size to prove a point.  Although, I think it's a healthy exercise to see how faulty it can be.  I forgot to mention that Google Trends and result sets can be gamed or misled.  4chan has been doing this all the time.  To game Glenn Beck, they had lots of people doing searches for Glenn Beck murdering some girl in the 90's.  It was pretty funny; if you looked at the Google trend for Glenn Beck, it would show his top search keywords to include murder.  They also recently did this to Oprah Winfrey.  

 

Anyways, I agree with Parsad that it's a good time to be a buyer of stocks.  Although, my reasoning is based on Graham versus Google.

[Munger]

Anyways, I agree with Parsad that it's a good time to be a buyer of stocks.

 

That's what makes a market.  Honestly hope your investments prove highly profitable. 

[opihiman2]

Anyways, I agree with Parsad that it's a good time to be a buyer of stocks.

 

That's what makes a market.  Honestly hope your investments prove highly profitable. 

 

:)  Yes.  Well, to be frank, I only a few companies: FFH (for a long time too), GOOG (since IPO), and recently AEO.  Although, a lot of the large cap stocks offer decent returns with very little risk for the long term buy and holder like myself.  I like JNJ, since Berkshire has been adding, and BDX has a long term track record for double digit ROI.  I also liked Kraft, although the Cadbury purchase was questionable.  I also liked INTC, but what is it doing buying McAfee?  You don't see any large cap stocks that look good for long term buy and hold?

[Guest broxburnboy]

A little gallows humour might help us here:

 

http://www.youtube.com/watch?v=1loyjm4SOa0

[Munger]

You don't see any large cap stocks that look good for long term buy and hold?

 

I do think that if you buy and hold many of the stocks you mentioned for 20 years, you will likely earn a reasonable return over that period -- with much of the benefits realized during the latter part of that period.  

 

The difference between myself and Buffett is that new capital gushers into (and will continue to flow into) BRK's coffers every day -- so he is willing to accept (and in some ways must) a less than optimal risk/reward (or certainly less than he would have required during his early years) and he knows that if the great companies he is buying today sell off as part of a broader market downturn, he will have plenty of capital to buy more -- most of us don't have that luxury.   Remember Buffett brilliantly pulled completely out of the market in the late 60s/early 70s and moved to cash because he didn't like the risk/reward.  My personal hero, Charlie Munger remained almost fully invested and got beat up pretty bad during that period.

 

At this point, I prefer to wait for Mr. Market to give me a better risk/reward.  If I'm wrong -- so be it...I miss out on 7-9% returns (nothing that will change my life) and there will always be opps in individual stocks at some point in the future, regardless of what the market does.  But if I went meaningfully long with prospect of earning 7-9% returns and the macro does prove as bad as appears likely, I'm destroyed and my life changes dramatically for the worse.  So I'll happily sit on my ass for the time being and not try to be a hero.

 

I would also add that anyone who takes the time to do the work on what I would call the "global balance sheet" and doesn't conclude that we are headed for a massive day of reckoning that could easily approach (and possibly surpass) the 1930s is effectively arguing 1+1 does not equal 2.  The math is the math.

[opihiman2]

You don't see any large cap stocks that look good for long term buy and hold?

 

I do think that if you buy and hold many of the stocks you mentioned for 20 years, you will likely earn a reasonable return over that period -- with much of the benefits realized during the latter part of that period.  

 

The difference between myself and Buffett is that new capital gushers into (and will continue to flow into) BRK's coffers every day -- so he is willing to accept (and in some ways must) a less than optimal risk/reward (or certainly less than he would have required during his early years) and he knows that if the great companies he is buying today sell off as part of a broader market downturn, he will have plenty of capital to buy more -- most of us don't have that luxury.   Remember Buffett brilliantly pulled completely out of the market in the late 60s/early 70s and moved to cash because he didn't like the risk/reward.  My personal hero, Charlie Munger remained almost fully invested and got beat up pretty bad during that period.

 

At this point, I prefer to wait for Mr. Market to give me a better risk/reward.  If I'm wrong -- so be it...I miss out on 7-9% returns (nothing that will change my life) and there will always be opps in individual stocks at some point in the future, regardless of what the market does.  But if I went meaningfully long with prospect of earning 7-9% returns and the macro does prove as bad as appears likely, I'm destroyed and my life changes dramatically for the worse.  So I'll happily sit on my ass for the time being and not try to be a hero.

 

I would also add that anyone who takes the time to do the work on what I would call the "global balance sheet" and doesn't conclude that we are headed for a massive day of reckoning that could easily approach (and possibly surpass) the 1930s is effectively arguing 1+1 does not equal 2.  The math is the math.

 

That's a good point.  Buffett did side-step the 70's carnage by liquidating and returning capital to partners.  I forgot that Munger got swamped in that period.  So, if Munger is your hero, wouldn't you stay fully invested?  :)  J/k'ing. 

 

Well, although I recognized two major asset bubbles, and avoided the ensuing carnage, I don't have the ability to see a clear theme that could derail equities going forward.  In the case of the bubbles, I agree with you that there was a chorus from the gurus like Prem and Buffett, and even major media outlets, warning everyone about what was to come.  Lately, I've read so much conflicting opinions, it almost seems evenly split: deflation, inflation, double dip, Japan, etc...  I don't know.  It seems to me that like you, I'll just have to take a side and wait and see.

[biaggio]

"Reality is that people read what they want to believe and hear what they want to hear.  And no one wants to hear that their life will soon get a lot worse."

 

Agree. Personally I am always fighting that. Sometimes it is hard to see what is the actual fact and what is our or other's imagination i.e, their opinion