So Whos makin money?

SharperDingaan · February 7, 2012

Watsa: Welcome back :D

It's always nice to have some independent thought, & the macro category makes a lot of good sense.

SD

Parsad · February 7, 2012

Simply put, If there was a way to block you I would have done so by now as you provide zero intellectual stimulation, contrary to posters such as Bmichaud and Munger, who I thoroughly enjoyed engaging with even when I disagree.

This is not directed at Santayana, but I have had the desire to block or at least "prioritize" posts in some way. Anything where you could "follow" specific people, or threads were assigned stars (like yahoo finance), where you could quickly sift through what is a BS thread and what is not.

In addition, I'd like to vote to add a "Macro" category. It seems like a lot of discussion under investment ideas or general discussion is related, I think this would help organize the board better.

my 2 cents.

Hi Watsa, I understand your sentiment, but I don't want a board where if someone doesn't like what someone else is saying, you just block them out completely so you don't have to listen to them. How un-American would that be! Do you know how often I wish I could just censor Newt Gingrich or Glenn Beck! ;D But that wouldn't be right would it.

Having to listen to other people's opinions should only reinforce your own analysis and logic if it makes rational sense. When we tune out others, it's actually ourselves who we are limiting from the intellectual debate.

Generally I have a chat with anyone who causes issues, and they are given fair warning before they are kicked off. I'm not averse to one poster having an exchange with another poster, as long as it is brief. The way me and my family work, and I consider this board and its members part of my online family, is that if you have something to say, you say it, and that usually clears the air.

So I would suggest that the two posters (Santayana and Moore) focus on the post, rather than attack each other. You guys have gotten it out of your system...great done! Move on. You are both right in fact, but neither may want to admit it. Obviously most of you know I was pretty long in the last few months, and I don't think investors were being intellectually honest with what the actual economic numbers were showing. There was a recovery in the United States, and the numbers plainly showed it. At the same time, it is far too early to call it a full-blown, long-term recovery, as growth is very weak and housing remains completely stalled. I'm more concerned of a Depression in Europe than I've ever been, so all of us longs need to get off of our recent high-horses...things will remain choppy for some time.

As someone else stated, this is a value board...who cares how we did in the last few months, or even in the last few years! Cheers!

February 7, 2012

Santayana's original point is a good one though. Moore's results were negative last year (per what he wrote earlier), what are the odds you attributed that 12 month underperformance to ignoring the macro? Yet two months of good results are attributed to the fact that you ignored the macro? I'm not a macro guy either, in fact I can't even identify the current unemployment rate or gold price off the top of my head. However, I am someone who would fold to such stunning cognitive dissonance.

moore_capital54 · February 7, 2012

Santayana's original point is a good one though. Moore's results were negative last year (per what he wrote earlier), what are the odds you attributed that 12 month underperformance to ignoring the macro? Yet two months of good results are attributed to the fact that you ignored the macro? I'm not a macro guy either, in fact I can't even identify the current unemployment rate or gold price off the top of my head. However, I am someone who would fold to such stunning cognitive dissonance.

This post is hilarious, as all that matters in the end is the NAV. Ignoring the macro turned 100 dollars into 122 as of today even though it was worth 95 at the end of the year. If we chose to we could end the year right now and add another fantastic year to our track records.

February 8, 2012

Santayana's original point is a good one though. Moore's results were negative last year (per what he wrote earlier), what are the odds you attributed that 12 month underperformance to ignoring the macro? Yet two months of good results are attributed to the fact that you ignored the macro? I'm not a macro guy either, in fact I can't even identify the current unemployment rate or gold price off the top of my head. However, I am someone who would fold to such stunning cognitive dissonance.

This post is hilarious, as all that matters in the end is the NAV. Ignoring the macro turned 100 dollars into 122 as of today even though it was worth 95 at the end of the year. If we chose to we could end the year right now and add another fantastic year to our track records.

Again, I actually agree that ignoring the macro and just picking stocks is a great strategy, hell it's mine. But everyone is different and it's not necessary for all.

But what I love is people like you, who are certain they are right about everything, and cannot even attempt to see the other point of view. They get all hot and bothered because they are having a good month, and fully attribute this short term blip to the brilliance of their ideology. When their strategy underperforms... Like for say, a year... this is just random noise and doesn't take away from their investing brilliance. And of course when they are doing well, everybody needs to hear about it.

To summarize:

You underperformed the market last year. You don't blame ignoring the macro for this.

You've outperformed the market for the first month of this year. This is fully attributable to brilliantly ignoring the macro.

Anybody who doesn't ignore the macro like you is an idiot.

ERICOPOLY · February 8, 2012

The last few years have been exciting. Going forward I am going to look at value investing as bending over to pick up 50 cent receivables. In recognition that I really don't know what the hell is going to happen while I'm bent over.

I changed the word "dollars" to "receivables" due to recognition that macro forces are at work.

watsa_is_a_randian_hero · February 8, 2012

Simply put, If there was a way to block you I would have done so by now as you provide zero intellectual stimulation, contrary to posters such as Bmichaud and Munger, who I thoroughly enjoyed engaging with even when I disagree.

This is not directed at Santayana, but I have had the desire to block or at least "prioritize" posts in some way. Anything where you could "follow" specific people, or threads were assigned stars (like yahoo finance), where you could quickly sift through what is a BS thread and what is not.

In addition, I'd like to vote to add a "Macro" category. It seems like a lot of discussion under investment ideas or general discussion is related, I think this would help organize the board better.

my 2 cents.

Hi Watsa, I understand your sentiment, but I don't want a board where if someone doesn't like what someone else is saying, you just block them out completely so you don't have to listen to them. How un-American would that be! Do you know how often I wish I could just censor Newt Gingrich or Glenn Beck! ;D But that wouldn't be right would it.

Having to listen to other people's opinions should only reinforce your own analysis and logic if it makes rational sense. When we tune out others, it's actually ourselves who we are limiting from the intellectual debate.

Generally I have a chat with anyone who causes issues, and they are given fair warning before they are kicked off. I'm not averse to one poster having an exchange with another poster, as long as it is brief. The way me and my family work, and I consider this board and its members part of my online family, is that if you have something to say, you say it, and that usually clears the air.

So I would suggest that the two posters (Santayana and Moore) focus on the post, rather than attack each other. You guys have gotten it out of your system...great done! Move on. You are both right in fact, but neither may want to admit it. Obviously most of you know I was pretty long in the last few months, and I don't think investors were being intellectually honest with what the actual economic numbers were showing. There was a recovery in the United States, and the numbers plainly showed it. At the same time, it is far too early to call it a full-blown, long-term recovery, as growth is very weak and housing remains completely stalled. I'm more concerned of a Depression in Europe than I've ever been, so all of us longs need to get off of our recent high-horses...things will remain choppy for some time.

As someone else stated, this is a value board...who cares how we did in the last few months, or even in the last few years! Cheers!

Parsad: I am not saying ignore others opinions. I'm saying time is a scarce resource.

Maybe we should "invert." Rather than an option to ignore certain posters, what about an option to "follow" certain posters? Where you could either view all posts, or click a button and immediately view only posts made by those that you are following.

Or something where posts are "starred" or "thumbed up" (or down) by the community.

something...anything...to help sort through the number of posts. The board has seemed to have grown (or I could be getting lazy)...but there are a lot of posts lately. For someone like me, who visits maybe 3-4 times a week, literally hundreds of posts could occur between visits. Something to help sift through the posts would be helpful. I understand if you have time constraints on your end though and this isn't feasible (btw, thanks for moderating!).

Ben Graham · February 8, 2012

*Suggestion

To better serve this message board, might we all try to follow one of Prem's principles on Values: no “egos”. A confrontational style is not appropriate.

__________________________________________________________________

Fairfax Guiding Principles

VALUES:

We are team players – no “egos”. A confrontational style is not

appropriate. We value loyalty - to Fairfax and our colleagues.

http://www.fairfax.ca/Theme/Fairfax/files/newsletters/FairfaxNewsletter7%2012-20-11.pdf

Liberty · February 8, 2012

Everybody here has the ability to look at who wrote a post and decide not to read it if they don't want to, or not to reply to it. Doing this requires very little discipline compared to the willpower required to invest money, so I think the people here should be able to manage it.

link01 · February 8, 2012

The last few years have been exciting. Going forward I am going to look at value investing as bending over to pick up 50 cent receivables. In recognition that I really don't know what the hell is going to happen while I'm bent over.

I changed the word "dollars" to "receivables" due to recognition that macro forces are at work.

and with a 'risk on' trade in the middle of a possible 100 year macro storm we are potentially more likely to see our 'receivables' become payables.

in lieu of which i've for the 1st time last year i held a portion of my portfolio in bond mutual funds. never owned a mutual fund of any stripe before. and my portfolio turn over was worthy of a schitzo. tax man is gonna be happy. me, i've always preferred buy, hold, compound. but i confess that macro skepticism & confirmational market volatility changed my game plan temporarily on all but a handful of holdings

rmitz · February 8, 2012

Everybody here has the ability to look at who wrote a post and decide not to read it if they don't want to, or not to reply to it. Doing this requires very little discipline compared to the willpower required to invest money, so I think the people here should be able to manage it.

Actually, it would be great if we could see the author when reading in RSS...

Santayana · February 8, 2012

I don't think I've ever heard anyone on this board suggest paying attention to the macro forces in lieu of picking good stocks that you want to own. Where the disagreements seem to come from is whether it ever makes sense to consider the macro when deciding whether to hedge, whatever your method of hedging may be.

Some posters have said that hedging is always wrong, no matter what. I've always been of the opinion that it's more about the individual's risk tolerance than anything else. I like having dry powder, it helps me sleep at night, but that hasn't kept me from making money the past few months from MSFT, SSW, WFC and CIM.

petey2720 · February 8, 2012

Many on this board with small or larger resources have outperformed all mutual funds and all indexes over a few years. I learn from most everyone, even the most aggravating posters. It doesn't take very long to move from small to larger once you get a process that works for you.

Uccmal, thank you for the above. I am banking on the last sentence!!!

bmichaud · February 8, 2012

Basically what this entire debate comes down to is some investors worry about the general level of the market (myself, Grantham, Hussman, BPL Buffett) and those that do not (Moore, Peter Burke, Berkshire Buffett). Whenever the general valuation level of the market comes up in discussion, it turns into a "macro" debate b/c those who do not like to worry about the general market level believe worrying about the general market level is a "top-down" exercise, and thus is a macro discussion. Further, I believe the debate comes down to those who believe we operate in a central-bank manipulated world where there is a perpetual put under the market and thus general market corrections are not to be of concern, versus those who believe while central banks can kick the can and manipulate in the short term ultimately long-term valuations exert their power over the market. This is where Moore's experience and monetary expertise has been a phenomenal lesson, at least for me, in taking the power of the central bank into consideration. I grossly underestimated the power of the ECB to manipulate the market's perception of the underlying deflationary pressures currently ravaging the Eurozone economy and the risk posed to the global economy, and as a result, I reduced risk in the portfolio far too early.

With regard to whether general market valuations matter - as always, I cite BPL Buffett who intentionally allocated capital to "workouts" based on where the general market was trading. This point isn't really up for debate, as he explicitly writes about it in his early letters, and it is discussed in the "Snowball". What is up for debate is whether or not his early approach is relevant to us as portfolio managers - this point brings about some pretty heated debates, but as some have said in this thread, it's a matter of personal preference both for whether or not to hedge and how to hedge. For example, those holding big positions in Fairfax are in fact quasi hedging their portfolios since it is largely deemed an inversely correlated security due to hedges and treasuries in place at the corporate level.

With regard to central bank manipulation - ultimately, I believe long-term valuation measures will win out, as evidenced by the fact that while the "greenspan put" has been in place since the 1998 "asian contagion" Lehman Brothers still collapsed and valuations ultimately fell to fair value and BELOW in the fall of 2008 and in early 2009. The "Schiller PE" using 10-year median real earnings is currently around 20 times and back at the end of September got as low as 17.53 times. The long run median Schiller PE is approximately 15.61 times - so back at the 2011 low, the market never got THAT cheap, especially considering the low/no-growth environment, European risk, and the supposed oncoming recession per the ECRI - thus I did not become THAT aggressive outside my normal market exposure parameters. And FWIW, Buffett packed up shop in the late 1960s at around current Schiller PE levels (see attached spreadsheet). Current valuations are only cheap within the context of the credit-fueled/Fed-manipulated bubble of the last 15 years.

So yes I was dead wrong to "reduce risk" back in October at Dow 11,800 - at least for now. However, that does not mean I am capitulating on my long-term outlook for valuations and the current hideous macro outlook. Biggest lesson learned for me over the past 5 months is to be more aggressive while still maintaining market exposure discipline - hopefully I'll have a chance to implement that lesson at some point in the near future 8)

Schiller_Data_January_2012.xls

merkhet · February 8, 2012

Basically what this entire debate comes down to is some investors worry about the general level of the market (myself, Grantham, Hussman, BPL Buffett) and those that do not (Moore, Peter Burke, Berkshire Buffett).

...

With regard to whether general market valuations matter - as always, I cite BPL Buffett who intentionally allocated capital to "workouts" based on where the general market was trading. This point isn't really up for debate, as he explicitly writes about it in his early letters, and it is discussed in the "Snowball".

bmichaud,

What you're saying here is right, but I would pose the question of "why?" Why does Berkshire Buffett not give a hoot about market valuation and BPL Buffett did?

I would posit that BPL Buffett allocated to workouts based on the general market level because he was worried about business risk and not investment risk. He was worried about the emotional sensibilities of his clientele and knew that he could put 40% into AMEX if he could use market-neutral (activism, arbitrage, etc.) methods to blot out most of the volatility associated with the 40% allocation to AMEX.

Some posters have said that hedging is always wrong, no matter what. I've always been of the opinion that it's more about the individual's risk tolerance than anything else.

Santayana and bmichaud,

I don't know if you guys are individual investors or if you're managing OPM. I'm sure you indicated one way or the other in the long thread about market values, but to be completely honest, it was very long and I wasn't terribly interested in the discussion, so I only skimmed it. :P

The one thing I'd point out is that I think you both might share a sense that thinking about market valuation or macro is about risk tolerance. It's not. It's about volatility tolerance, and that's a separate thing entirely.

If you're managing OPM, then thinking about volatility tolerance might be good -- depending on your client base. If your clients are flighty, then you might want to blot out volatility. If your clients are not, then you might not want to bother.

If you're managing your own money, then the analysis is the same.

bmichaud · February 8, 2012

What you're saying here is right, but I would pose the question of "why?" Why does Berkshire Buffett not give a hoot about market valuation and BPL Buffett did?

I would posit that BPL Buffett allocated to workouts based on the general market level because he was worried about business risk and not investment risk. He was worried about the emotional sensibilities of his clientele and knew that he could put 40% into AMEX if he could use market-neutral (activism, arbitrage, etc.) methods to blot out most of the volatility associated with the 40% allocation to AMEX.

BRK Buffett invests behind a corporate veil, and as a result, has a natural hedge in the form of free cash flow pouring in the door on a daily basis as well as the ability to keep operating businesses marked at book value as oppose to book value. Let me explain....If you own 100% of Burlington Northern, it's on the books at $20 billion and you earn $2B, your ROE is 10% regardless of what general market is doing. Now let's say you only own 10% of BN common, or $2 billion worth of the company - further, let's say you receive 50% of your share of annual earnings ($200 million) in the form of dividends. If your investment stays flat, you earn 5%, or $100 million on a $2 billion investment. Well if the market re-values your investment down to $1.5 billion, your return for the year is then -20% including dividends. Yes over the very long run the investment, whether 100% or 10% owned, should generate the same return - but one must admit there is a rather stark difference between the two types of operations. BPL Buffett didn't try to allocate toward "Controls" for no reason.....

Perhaps BPL Buffett allocated to "Workouts" in order to appease clients (i.e. for "business risk" purposes), but I think not. He specifically says in his letters that "Generals" were at risk of declining "in sympathy" with the market in the event of a general market decline. Also - leading up to his October 2008 op-ed "Buy American. I Am.", Buffett was 100% in US treasurys. If the greatest investor on the planet did not care about the general market, isn't it likely that he would be able to find a place to invest $500 million in a $13 trillion equity market?

Even though I do manage OPM, I don't care one bit about their tolerance or lack thereof for volatility. All I care about is the math of generating superior long-term returns by losing less in market declines - i.e. one must generate a 100% return in order to break-even after losing 50%. As a simplistic example - I'd rather return 50% of the market return on the upside in order to generate 50% of the market return on the downside. So if the market returns 10% and I return 5%, then the next year the market declines 20% and I decline 10%, I've returned -2.8% per annum versus -6.2% for the market. Going a step further, it would be my hope that coming off a low such as after a 20% decline, I would be able to strongly outperform the market on the upside because the starting point would be from attractive general valuations. In hindsight, the 2011 low would have been the perfect opportunity to get very aggressive and outperform through now - I just did not think that was the opportune time due to the reasons I've cited ad nauseum. My strategy worked to a T last year, as I strongly outperformed on the downside, and kept up decently in the rally due to increasing net exposure at the bottom (I just was not aggressive enough as I said earlier, in order to really outperform).

Parsad · February 8, 2012

Many on this board with small or larger resources have outperformed all mutual funds and all indexes over a few years. I learn from most everyone, even the most aggravating posters. It doesn't take very long to move from small to larger once you get a process that works for you.

Uccmal, thank you for the above. I am banking on the last sentence!!!

You got it Petey! That's the whole poiint of this forum. Uccmal was a relatively smaller investor before he bought Fairfax when people were throwing it away. He could retire now if he wanted to. Ericopoly was a relatively smaller investor too before he bought Fairfax...he did retire after! ;D Now Eric is working on what he's going to leave his children with his recent investments going full throttle! Ten years ago, I wasn't running a fund. I started a message board with 9 of my friends so that we could just talk about Berkshire Hathaway...I didn't know Francis...I didn't know Prem...and I barely knew Mohnish...and I certainly didn't know all the wonderful people that have come and gone on here.

The three stories above are just a smattering of what has happened to people on here over the years. There are so many similiar stories! That's why this forum remains open to people's opinions and we encourage everyone, from the small investor or large investor, to share your stories. It doesn't matter how big the bank account is or how much in assets you manage, it's what you have to say and where do you go from here! I don't know too many investors, professional or otherwise, that have done as well as Uccmal or Ericopoly in terms of return over the last 8-10 years...there are lessons there for everyone! Cheers!

racemize · February 8, 2012

Many on this board with small or larger resources have outperformed all mutual funds and all indexes over a few years. I learn from most everyone, even the most aggravating posters. It doesn't take very long to move from small to larger once you get a process that works for you.

Uccmal, thank you for the above. I am banking on the last sentence!!!

You got it Petey! That's the whole poiint of this forum. Uccmal was a relatively smaller investor before he bought Fairfax when people were throwing it away. He could retire now if he wanted to. Ericopoly was a relatively smaller investor too before he bought Fairfax...he did retire after! ;D Now Eric is working on what he's going to leave his children with his recent investments going full throttle! Ten years ago, I wasn't running a fund. I started a message board with 9 of my friends so that we could just talk about Berkshire Hathaway...I didn't know Francis...I didn't know Prem...and I barely knew Mohnish...and I certainly didn't know all the wonderful people that have come and gone on here.

The three stories above are just a smattering of what has happened to people on here over the years. There are so many similiar stories! That's why this forum remains open to people's opinions and we encourage everyone, from the small investor or large investor, to share your stories. It doesn't matter how big the bank account is or how much in assets you manage, it's what you have to say and where do you go from here! I don't know too many investors, professional or otherwise, that have done as well as Uccmal or Ericopoly in terms of return over the last 8-10 years...there are lessons there for everyone! Cheers!

As I am relatively new here, this is great to hear and very encouraging. Good luck all!

merkhet · February 8, 2012

So let's see if I understand this correctly, because I think a lot of conflict on this board is a result of misunderstandings and not real disagreement... nonetheless, apologies for the long post.

BRK Buffett invests behind a corporate veil, and as a result, has a natural hedge in the form of free cash flow pouring in the door on a daily basis as well as the ability to keep operating businesses marked at book value as oppose to book value. Let me explain....If you own 100% of Burlington Northern, it's on the books at $20 billion and you earn $2B, your ROE is 10% regardless of what general market is doing. Now let's say you only own 10% of BN common, or $2 billion worth of the company - further, let's say you receive 50% of your share of annual earnings ($200 million) in the form of dividends. If your investment stays flat, you earn 5%, or $100 million on a $2 billion investment. Well if the market re-values your investment down to $1.5 billion, your return for the year is then -20% including dividends. Yes over the very long run the investment, whether 100% or 10% owned, should generate the same return - but one must admit there is a rather stark difference between the two types of operations. BPL Buffett didn't try to allocate toward "Controls" for no reason.....

BRK doesn't have to care about general market risk for two reasons: (1) they have free cash flow generated from operating companies that operates as a periodic inflow of money and (2) their wholly-owned companies are marked at book values as opposed to (what I assume you meant to write) market value. Those are fair statements, but it kind of goes against the whole BRK Buffett doesn't care about market valuations theory. In fact, he might still care, but it's irrelevant to him because of (1) and (2).

I would disagree that there is a "stark difference" between the two types of operations. I mean, even you say that "over the very long run" the investment should work out the same. That's sort of the entire thesis of Graham and Dodd, right? The question is whether short-run deviations from the long-run matter... They might. They might not. I fall in the latter camp...

Perhaps BPL Buffett allocated to "Workouts" in order to appease clients (i.e. for "business risk" purposes), but I think not. He specifically says in his letters that "Generals" were at risk of declining "in sympathy" with the market in the event of a general market decline. Also - leading up to his October 2008 op-ed "Buy American. I Am.", Buffett was 100% in US treasurys. If the greatest investor on the planet did not care about the general market, isn't it likely that he would be able to find a place to invest $500 million in a $13 trillion equity market?

What you say here is, again, very true. However, I wonder about the "in sympathy" statement. He was definitely worried that his Generals might decline in sympathy with the market, but it doesn't say why he was worried. I keep going back to AMEX, but if he was really worried that AMEX might decline further after his purchase, then 40% is quite a large allocation, no?

Additionally, I think the fact that he was in 100% Treasuries could mean that he either (1) couldn't find a place to invest $500 million in a $13 trillion equity market or (2) couldn't find a good deal in a $13 trillion equity market. The two have the same phenotype (outward appearance or outcome) but vastly different genotypes (inward cause)...

And, of course, lastly, he might not have had his money 100% in Treasuries because markets were "expensive" but rather because "risk was rampant." The two often coincide, but they need not be a 100% overlap.

Even though I do manage OPM, I don't care one bit about their tolerance or lack thereof for volatility. All I care about is the math of generating superior long-term returns by losing less in market declines - i.e. one must generate a 100% return in order to break-even after losing 50%. As a simplistic example - I'd rather return 50% of the market return on the upside in order to generate 50% of the market return on the downside. So if the market returns 10% and I return 5%, then the next year the market declines 20% and I decline 10%, I've returned -2.8% per annum versus -6.2% for the market. Going a step further, it would be my hope that coming off a low such as after a 20% decline, I would be able to strongly outperform the market on the upside because the starting point would be from attractive general valuations. In hindsight, the 2011 low would have been the perfect opportunity to get very aggressive and outperform through now - I just did not think that was the opportune time due to the reasons I've cited ad nauseum. My strategy worked to a T last year, as I strongly outperformed on the downside, and kept up decently in the rally due to increasing net exposure at the bottom (I just was not aggressive enough as I said earlier, in order to really outperform).

Again, there's nothing I disagree with here, except for the following -- implicit in your example of a company that falls by 50% and has to generate 100% is a theory that generating 100% is a hard, possibly Herculean, task. And generally that statement might be true. However, I think the numbers suggest a "logic" that is out of touch with... "reality" logic.

If I buy ABC for $20 a share, and I know that its intrinsic value is $40 a share, that's a pretty good deal. If the price then drops to $10 a share, I've suffered a 50% loss, and you're correct that I need a 100% gain just to break even. And yet, we are not quite operating in a vacuum, because while it sounds difficult to get a 100% gain, the stock's intrinsic value is still worth $40 a share or 400% the current share price.

Does that make sense? I re-read it, and I'm not sure it's all that clear to anyone other than me. When you're looking at just the stark percentages on their own, then it does seem like a 50% drop is terrible because it requires a 100% increase to break even -- however, that doesn't take into account the magnitude of undervaluation. Sure it might take 100% of increase to break even, but that seems somewhat meaningless if you're looking at a 400% increase from the 50% initial drop, no?

Now, a permanent capital loss of 50% is an entirely different story, but I'm not sure that's what we're talking about at this juncture, but please correct me if I'm wrong...

Cheers!

[Note: I edited to add "Cheers!" because I'm worried I sound too confrontational, and I've always felt that Parsad's signature of "Cheers!" takes a bit of the bite out of any post -- ;D -- though I'm not sure that's his intent.]

jeffmori7 · February 8, 2012

Ten years ago, I wasn't running a fund. I started a message board with 9 of my friends so that we could just talk about Berkshire Hathaway...I didn't know Francis...I didn't know Prem...and I barely knew Mohnish...and I certainly didn't know all the wonderful people that have come and gone on here.

And just to be curious, as I'm not aware of the answer, what was you full-time job back then Sanjeev, before the fund?

Parsad · February 8, 2012

Ten years ago, I wasn't running a fund. I started a message board with 9 of my friends so that we could just talk about Berkshire Hathaway...I didn't know Francis...I didn't know Prem...and I barely knew Mohnish...and I certainly didn't know all the wonderful people that have come and gone on here.

And just to be curious, as I'm not aware of the answer, what was you full-time job back then Sanjeev, before the fund?

When I started the message board, I was a supervisor for Loblaws! I quit that year and started working as a mutual fund and insurance dealer because I wanted to get into the financial industry after meeting Buffett. I had no idea how, and I quit university after my father died when I was 21, so that was my stepping stone into the business. But over the next few years I was really frustrated with the incestuous relationship between the dealers and brokers in the industry. They do a complete disservice to the investor!

It wasn't until 2006 when I started the fund...the best thing I ever did. And it would never have happened if I didn't have lunch with Prem, who said just start the fund with whatever money you have saved and can raise...build a track record! But that lunch only occurred because we contacted Fairfax regarding the short attack in 2003, which we only noticed because a handful of us Fairfax shareholders had gathered on this board and were wondering what the hell was going on! Very funny how little things can make a big difference in someone's life and how interconnected they all are! ;D

That first time I went to Fairfax's office was incredible! Francis and JoAnn just spent the whole day taking me around to everyone's office, and then I was allowed to sit with each person in their office and ask questions for about 20-30 minutes. You name them, I spent time with them that day...Fairfax executives, vice-presidents, Hamblin-Watsa principals and analysts. I also got to see their archive room, where they have an actual part-time librarian who catalogs and organizes all of the historical annual reports Prem has accumulated through the years...thousands and thousands! I saw the trading desk where Frances Burke constantly executes their trade orders directly from. In the middle of all that, I had a nearly two-hour lunch with Prem in the boardroom...Indian food! I barely ate anything because I was so busy asking him questions and listening to what he had to say.

Every year, I would go visit the office and spend some time there. I remember one year I was supposed to meet Francis for a while, so JoAnn arranged for us to meet him in the smaller boardroom at Fairfax, since he had already left his vice-president position and was now solely at the Chou Funds. We sat there and talked for about four hours making little cappucinos from the automated coffee machine Fairfax has in their kitchen! ;D Francis, my friend Dr. Ajay Desai, our director Andrew Cooke (whose father JoAnn originally worked for before joining Fairfax), Alnesh and myself...four hours plus just sitting there and talking about investing! JoAnn would come in and check up on us every half hour and see if we needed anything. She was fantastic! That's why I do the dinner in her memory now, and why we raise money for "The Crohn's & Colitis Foundation of Canada". You've got me reminiscing. Anyway, so that's a bit of that. Cheers!