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Prem doesn't look too bullish


goldfinger
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Guest ValueCarl

Can someone please teach an old rube a new trick? I am completely confused by Watsa, etal, and what they're attempting to say here. Why in the world would it ever matter whether or not Joe Q. Public was buying securities in the marketplace, unless professionals are seeking to pick the pockets of non-professionals? Aren't Wall Street's liquidity masters pricing securities each day? And, if so, is Watsa, etal, stating that the market is "EFFICIENT" when sucker money is excluded from the tables?  :-[  

 

Stated differently, if the set of businesses that one is investing in are growing all the business metrics to be valued, then Wall Street will price them "fairly" right? Of course, if the economy sucks, that's a horse of a different color-follow the yellow brick road-because of "multiple contractions."  

 

 

 

 

U.S. Stocks

 

Still, Mr. Watsa said there are valid concerns about the U.S. market. He worries, for instance, that U.S. investors are so psychologically battered by a protracted recession that they might not return to equities at all.

 

His concern stems from Japan’s experience over the past two decades. Even though the Nikkei index has plummeted 75 per cent and some of its companies are trading at less than the value of their cash and liquid assets, the Japanese won’t invest in their own market. They would rather buy government bonds yielding 1 per cent because they can’t forget the initial crash in 1990.  

 

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ValueCarl - just a guess: FFH may be under different constraints than ordinary investors, due to insurance regulator rules.  So, for normal longs, if a stock goes down, holding until it comes back up and rises above is fine - but FFH may be required to maintain certain ratios of available cash or equivalents.  I expect others on the board can explain this better, or correct this guess.

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Guest ValueCarl

I see it a little more clearly now, I think. It must be this arcane system of dumb mutual fund money being forced to invest-long securities-which bolsters the banks and insurance companies into becoming the largest asset owners, inclusive of the ornate buildings that they possess around the globe.

 

If we take this money flow out of the pot, the market is "EFFICIENT." Seems like a good thing to me.

 

Where are Fairfax's real estate meccas spanning the skies today?   

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