kevin4u2 Posted February 9, 2013 Share Posted February 9, 2013 IMHO, Mr. Watsa has a strong religious faith which should never be under-estimated and is something that Buffett lacks. That adds zero value (be it one of faith or not) to either of them. There are plenty of people, both of faith and athiests, who do very stupid and unethical things. I would not allocate faith with any sort of value as a manager. Cheers! I would add that Buffett's character and values are beyond what many people of "faith" profess. Character should be evaluated person by person. In the sake of full disclosure I am a Christian but often like to distance myself for many other so called Christians who walk around like they are better than everyone else. I would recommend Dan Ariely's "The honest truth about dishonesty" if you want to read about what makes more or less honest. I did not find it ironic that during research cheating stopped when he had people swear on a bible or recite the ten commandments for both atheists and people of faith. Without the moral reminder, cheating was the same for both groups. Link to comment Share on other sites More sharing options...
Guest longinvestor Posted February 9, 2013 Share Posted February 9, 2013 IMHO, Mr. Watsa has a strong religious faith which should never be under-estimated and is something that Buffett lacks. That adds zero value (be it one of faith or not) to either of them. There are plenty of people, both of faith and athiests, who do very stupid and unethical things. I would not allocate faith with any sort of value as a manager. Cheers! I would add that Buffett's character and values are beyond what many people of "faith" profess. Character should be evaluated person by person. In the sake of full disclosure I am a Christian but often like to distance myself for many other so called Christians who walk around like they are better than everyone else. I would recommend Dan Ariely's "The honest truth about dishonesty" if you want to read about what makes more or less honest. I did not find it ironic that during research cheating stopped when he had people swear on a bible or recite the ten commandments for both atheists and people of faith. Without the moral reminder, cheating was the same for both groups. +1 We have no business judging anyone for their personal beliefs but if I look for a role model no matter whether it was based on faith or on independent thinking, His humility, respect for fellow humans, compassion for the less fortunate etc are traits I would love to live by. Buffet is a fine role model. His views on charity, of not attaching his name for posterity (as many other big donors do) is stellar! If as alleged, Buffet is not religious and he has turned out to be so good, I'd say "bring it on". I'll have one of what he is having :D Link to comment Share on other sites More sharing options...
Packer16 Posted February 9, 2013 Share Posted February 9, 2013 I think Buffet groupie is onto something you may have missed. If you look at Prem and his mentor John Tempelton, they have similar approaches to investing and life in general. They have an ability to build teams around them and give them meaningful responsibilities (even in their areas of expertise). They also have a sharing temperment and a stewards mentality about their business. They don't own the business they are stewards. While Buffet easily shares his knowledge and wealth, I think he has a hard time giving up control of the investing part of the business. Look at how long it has taken to find successors and he has always enjoyed the lime light and publicity. Many in the value investing community are loners by nature and faith I think has stretch a few of them beyond the loner mentality (I know it has for me). In any case, I think this would be an interesting question to put to Prem and see what his response is. The net impact on the businesses each of these gentleman leave behind I think will be the test. From my observation, I think Buffet will be missed more than Prem due to their differences in viewpoint in stewardship which I think is in part shaped by their faith. I think leaving the faith question out of who these guys are is ignoring an important aspect of who they are. I am not saying people of faith are going to have a better or worse investment record, they go about it in a different way. Each person is going to have to judge for themselves which one they like better. Packer Link to comment Share on other sites More sharing options...
Junto Posted February 9, 2013 Share Posted February 9, 2013 There are threads with arguments on why their underwriting is crappy. I agree that in the past they underperfoms; going forward I disagree, having been a P&C underwriter and knowing full well that there are no superstar underwriters out there that only write 70% CR's, your CR is as good as the markets you serve. RLI writes in such a small pie with little competition and they are able to price their way. You can look at HCC and basically this goes for most insurance...you're size determines the markets you serve and your economics. There are no insurance companies with 10Bn market cap and consistent 80% combined. Chubb and TRV are special though, but even they don't avg 80% through a full cycle. It is because the history is that their underwriting is unpredictable and unreliable. Nearly all the value created by the business historically has been use of float for investment gains. It has not been through underwriting profits. This is a very large variable that takes time to get comfortable with and why I think some of the longer term investors provide more affiliation than someone who is just looking at the history and reading the letters. Given the current rate environment and Watsa's negative tilt on the markets, his firm will underperform other insurers who are better underwriters and have a more positive outlook and position in their portfolio. Link to comment Share on other sites More sharing options...
wknecht Posted February 9, 2013 Share Posted February 9, 2013 Given the current rate environment and Watsa's negative tilt on the markets, his firm will underperform other insurers who are better underwriters and have a more positive outlook and position in their portfolio. Might be right in the short term, especially if the market continues marching higher. But the stock price seems to reflect this sentiment, and I personally wouldn't bet against them in the long run. Link to comment Share on other sites More sharing options...
Parsad Posted February 9, 2013 Share Posted February 9, 2013 I think Buffet groupie is onto something you may have missed. If you look at Prem and his mentor John Tempelton, they have similar approaches to investing and life in general. They have an ability to build teams around them and give them meaningful responsibilities (even in their areas of expertise). They also have a sharing temperment and a stewards mentality about their business. They don't own the business they are stewards. While Buffet easily shares his knowledge and wealth, I think he has a hard time giving up control of the investing part of the business. Look at how long it has taken to find successors and he has always enjoyed the lime light and publicity. Many in the value investing community are loners by nature and faith I think has stretch a few of them beyond the loner mentality (I know it has for me). In any case, I think this would be an interesting question to put to Prem and see what his response is. The net impact on the businesses each of these gentleman leave behind I think will be the test. From my observation, I think Buffet will be missed more than Prem due to their differences in viewpoint in stewardship which I think is in part shaped by their faith. I think leaving the faith question out of who these guys are is ignoring an important aspect of who they are. I am not saying people of faith are going to have a better or worse investment record, they go about it in a different way. Each person is going to have to judge for themselves which one they like better. Packer The funny thing is that Buffett has already conceded to giving away all of his wealth to the world, and has begun to do so. I think Buffett's belief in retaining control was simply because he understood that he could grow it faster than anyone else...that the sole goal was to give away as much as he could, and that meant he had to retain control for as long as he could. I can't imagine anything more selfless as he could see the future. Buffett could have chosen to give all his wealth away when it was only at $1B, but he understood that he could create 1000 times more change by delaying the inevitable. I'm of the belief that God does not exist...but we as human beings are empowered to act as "God" would and create the world that we would want to live in. Instead of praying, we are empowered to make change...and that is not based on faith in someone or something, but in ourselves. I think the idea of religion simply enables a trait that is already inherently within every person. So it's why I'm giving religious faith zero value...it's really upon the individual if that trait is active...be it by choice or enabled by faith. Cheers! Link to comment Share on other sites More sharing options...
giofranchi Posted February 10, 2013 Share Posted February 10, 2013 Given the current rate environment and Watsa's negative tilt on the markets, his firm will underperform other insurers who are better underwriters and have a more positive outlook and position in their portfolio. Might be right in the short term, especially if the market continues marching higher. But the stock price seems to reflect this sentiment, and I personally wouldn't bet against them in the long run. I keep on buying Fairfax... and buying, and buying, and buying... giofranchi “As time goes on I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think that one limits one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence.” - John Maynard Keynes Link to comment Share on other sites More sharing options...
giofranchi Posted February 10, 2013 Share Posted February 10, 2013 I'm of the belief that God does not exist... Parsad, may I ask why? I have just bought the book Mr. Munger suggested at the DJCO Annual Meeting: “Something Out of Nothing”. It seems that Mr. Krauss “shows” how a universe doesn’t need a Creator. And I am really curious to know the true reasonings that stay behind such a statement, and to which conclusions they might lead the author. Even if it were plausible that something could be created out of nothing, I believe Mr. Pascal judgment is still very relevant: I cannot be sure if God exists, and I cannot be sure if God doesn’t exist. Therefore, I choose to believe in the existence of God, because it is more convenient for me. And I choose to act accordingly. Please, don’t misunderstand me: this has nothing to do with investment results. I don’t know if faith adds or subtracts value, as far as investment results are concerned. I don’t think I have paid enough attention to which consequences faith might have on investment results… so, I really cannot judge. My question strictly pertains to your statement, that I have quoted. Thank you, giofranchi “As time goes on I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think that one limits one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence.” - John Maynard Keynes Link to comment Share on other sites More sharing options...
obtuse_investor Posted February 10, 2013 Share Posted February 10, 2013 I keep on buying Fairfax... and buying, and buying, and buying... giofranchi giofranchi: can you stop for about a week? I need my bid filled at 0.9xBook :) Link to comment Share on other sites More sharing options...
giofranchi Posted February 10, 2013 Share Posted February 10, 2013 I keep on buying Fairfax... and buying, and buying, and buying... giofranchi giofranchi: can you stop for about a week? I need my bid filled at 0.9xBook :) ;D ;D ;D giofranchi “As time goes on I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think that one limits one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence.” - John Maynard Keynes Link to comment Share on other sites More sharing options...
Buffett_Groupie Posted February 13, 2013 Share Posted February 13, 2013 Without a strong religious faith, it's difficult to withstand 5 years of pain from 2003 to 2008 watching the markets going up and up! Link to comment Share on other sites More sharing options...
obtuse_investor Posted February 13, 2013 Share Posted February 13, 2013 Without a strong religious faith, it's difficult to withstand 5 years of pain from 2003 to 2008 watching the markets going up and up! Ok-- I'll bite. Perhaps religious faith helps, but strong financial sense and rationality must be the base behind long standing contrarian positions. To be successful in this game, one must be not only be a contrarian but also be correct! Religious faith only helps satisfy 50% of the requirement. Link to comment Share on other sites More sharing options...
Buffett_Groupie Posted February 13, 2013 Share Posted February 13, 2013 Being correct and rational for 5 months or 5 quarters may be manageable for many, but 5 long painful years would take an extraordinary individual. Simply conviction and faith in reason and rationality may not be enough. The market can be irrational longer than you can stay liquid. Hence, I figure it must be religious faith. Link to comment Share on other sites More sharing options...
rkbabang Posted February 13, 2013 Share Posted February 13, 2013 I think to be successful and make a positive difference in the world you need to believe and have a tremendous amount of faith.... in yourself. "But you're a profoundly religious man, Mr. Roark—in your own way." Link to comment Share on other sites More sharing options...
mhdousa Posted February 13, 2013 Share Posted February 13, 2013 I click on this thread because I think I'm going to read interesting thoughts on Fairfax. There are about a thousand other places on the web I can go to read people's thoughts on religion. Please stop. Link to comment Share on other sites More sharing options...
obtuse_investor Posted February 13, 2013 Share Posted February 13, 2013 I click on this thread because I think I'm going to read interesting thoughts on Fairfax. There are about a thousand other places on the web I can go to read people's thoughts on religion. Please stop. I second that motion. (sorry for taking the bait earlier-- it was against my better judgement) Link to comment Share on other sites More sharing options...
Buffett_Groupie Posted February 14, 2013 Share Posted February 14, 2013 You're underestimating or ignoring the power of faith and prayer! Link to comment Share on other sites More sharing options...
ECCO Posted February 14, 2013 Share Posted February 14, 2013 I click on this thread because I think I'm going to read interesting thoughts on Fairfax. There are about a thousand other places on the web I can go to read people's thoughts on religion. Please stop. I second that too. Link to comment Share on other sites More sharing options...
leftcoast Posted February 14, 2013 Share Posted February 14, 2013 “The market, like the Lord, helps those who help themselves. But unlike the Lord, the market does not forgive those who know not what they do.” - WEB Link to comment Share on other sites More sharing options...
Alekbaylee Posted February 20, 2013 Share Posted February 20, 2013 Fairfax's CPI/deflation bets in Europe may soon prove right. France is reporting a 0,5% fall of the Index in January. Link to comment Share on other sites More sharing options...
lessthaniv Posted February 20, 2013 Share Posted February 20, 2013 You're underestimating or ignoring the power of faith and prayer! Buffett and Gates are agnostic. They've done alright. Link to comment Share on other sites More sharing options...
wknecht Posted February 22, 2013 Share Posted February 22, 2013 Michael Wacek (Odyssey CRO) making a few open market purchases. http://www.canadianinsider.com/node/7?ticker=FFH Link to comment Share on other sites More sharing options...
giofranchi Posted March 1, 2013 Share Posted March 1, 2013 Fairfax is not the strongest ark that I've ever seen. Being defensive does not necessarely mean having a strong ark. What if the sun shines too much (inflation goes up, interest rates go up, stock indexes go up, etc.)? Not the strongest ark in that scenario. No comparaison with Berkshire. It's very shiny? No problem. It rains a lot? No problem. That does not making me staying away from being a Fairfax shareholder (10 years and still counting), but you have to understand that it is not as safe as Berkshire. Cheers! Partner24, I had missed your comment till now… sorry! While I understand your point, I cannot completely agree with it. Let me explain: the safeness of an investment is not the safeness of the business you invested in. It is quite different. I think we all agree on that. As I see things, FFH at BV is a safer investment from a risk/reward perspective than BRK at 1.3 x BV: 1) A lower multiple: not the most important thing, probably the least important thing, but I like it anyhow. 2) FFH is much smaller than BRK, and Mr. Watsa could be at the helm for the next 20 years, while Mr. Buffett surely will not. Less capital to invest, more room to grow. The longer the founder stays at the helm compounding capital, the better I like it. I am not saying BRK won’t find the right solution. I am just saying that, as far as a good business is concerned, I HATE CHANGE. We are talking about risk, right? 3) In a down market no one will shine like FFH, either in the short and in the long term. In a up market (and no market stays exuberant forever…) I believe FFH will lag behind BRK in the short term, while still being profitable, but it will do at least as good as BRK in the long term, probably even better! Of course, you might disagree with me, but those are the reasons why I said FFH is the strongest ark I know of. giofranchi “As time goes on I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think that one limits one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence.” - John Maynard Keynes Link to comment Share on other sites More sharing options...
Partner24 Posted March 1, 2013 Share Posted March 1, 2013 Hi Giofranchi, the safeness of an investment is not the safeness of the business you invested in. It is quite different. I think we all agree on that. I do not agree. A stock is a share of ownership in a business. If you have 1/1 000 000 of a business that is not safe, you shouldn't think that what you own is safe. I'm not talking about Fairfax here. Just a concept. 1) A lower multiple: not the most important thing, probably the least important thing, but I like it anyhow. Price is what you pay, value is what you get. 1 dollar of FFH book value is not worth 1 dollar of book of Berkshire. But I'm sure you understand that. 2) FFH is much smaller than BRK, and Mr. Watsa could be at the helm for the next 20 years, while Mr. Buffett surely will not. Less capital to invest, more room to grow. The longer the founder stays at the helm compounding capital, the better I like it. I am not saying BRK won’t find the right solution. I am just saying that, as far as a good business is concerned, I HATE CHANGE. We are talking about risk, right? That's a good point. A business is not just it's assets. It is run by people. So, to me, you have a good point here and I agree with it. That being said, to me actual and future intrinsic value of Berkshire is less dependant on it's actual CEO than Fairfax. Berkshire subsidiaries are very independant. I mean, will people stop buying DQ ice creams when Buffett is no longer at the helm? People will not stop buying insurance at FFH subsidiaries neither, but investment acument is crucial at FFH. 3) In a down market no one will shine like FFH, either in the short and in the long term. In a up market (and no market stays exuberant forever…) I believe FFH will lag behind BRK in the short term, while still being profitable, but it will do at least as good as BRK in the long term, probably even better! No one will shine like FFH, not sure about that, but yes they are well protected. In a up market, it depends a lot on their own investments. If they do not go up with the market, we will get hurt, that's for sure. That's a risk. Regarding your long term prediction about FFH/BRK I do agree, mostly because FFH is a smaller business and have larger room to grow. Cheers! Link to comment Share on other sites More sharing options...
giofranchi Posted March 1, 2013 Share Posted March 1, 2013 the safeness of an investment is not the safeness of the business you invested in. It is quite different. I think we all agree on that. I do not agree. A stock is a share of ownership in a business. If you have 1/1 000 000 of a business that is not safe, you shouldn't think that what you own is safe. I'm not talking about Fairfax here. Just a concept. Well, of course I agree! If you have read any post of mine, you understand why nobody agrees more than me! What I meant, though, is a bit different. Let’s put it this way: would you judge the whole American economy “safer” than any single business? I guess so: as safe as a single business might be, there is always a slight probability that something completely unexpected goes terribly wrong… But what about the whole American economy? It will never go bust! So, does it follow that an investment in the whole American economy is always “safer” than an investment in any single business? No. Why? Because the safety of an investment is always a risk/reward affair. And the balance between risk and reward is what matters. The whole American economy might be less risky, but it will grow 2% to 3% for the next decade. If your reward hurdle is 10% annualized, an investment in the whole American economy is the “riskiest” thing you could do, because the probability to never achieve your hurdle is almost 100%. 1 dollar of FFH book value is not worth 1 dollar of book of Berkshire. But I'm sure you understand that. I do not agree that 1 dollar of FFH BV is worth less than 1 dollar of BRK BV. If I assign the same probability to the fact that FFH increases BV at a 15% annual compound rate over the long term, as to the fact that BRK increases BV at a 10% annual compound rate over the long term, which is the case, 1 dollar of FFH BV is worth more, not less, than 1 dollar of BRK BV. Regarding your long term prediction about FFH/BRK I do agree, mostly because FFH is a smaller business and have larger room to grow. The reason why I assign the same probability to the fact FFH will be able to compound BV per share at 15% over the long term, and to the fact BRK will be able to compound BV per share at 10% over the long term. giofranchi “As time goes on I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think that one limits one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence.” - John Maynard Keynes Link to comment Share on other sites More sharing options...
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