giofranchi

The range of opportunities is simply amazing! ;) Cheers, Gio

wisdom, thank you very much for posting these articles! Watsa’s comments on education are particularly interesting to me… for obvious reasons! ;) Cheers, Gio

The answer to your question is: yes, of course!! But I don’t think that catches the perspective of my question correctly… So many shades of gray… And they matter a lot!... Uncomfortable… as it is supposed to be! ;) Gio

??? ??? Gio

I am thankful because I am free to do with my time whatever I choose. --Pearl Jam Cheers, Gio

Also wbr, Joel, and others, please tell me what you find so wrong about this statement of mine: In fact, all entrepreneurs I know, who run just one business, always have lots of cash ready at hand! Cash might have no place in a widely diversified, statistically assembled portfolio of stocks… But you all already know that’s not what I am involved with… From a strictly entrepreneurial point of view, cash makes a lot of sense! Gio

Gio, its worth your time to read these articles. All they will do is help you better interpret Hussman's stuff and CAPE - I don't think they change the fact the market is overvalued right now but it may change your outlook on 1) how long it could take to mean revert on the "E" in the P/E (ie longer than in the past potentially), and also 2) some slight adjustments to interpreting CAPE/Shiller p/e. Its just helpful - one level more detailed - stuff to interpret Hussman etc, and (maybe?) understand why Marks, Buffett and Munger are not quite at the point where they want to call this a bubble (whereas Hussman is, and Grantham with another 10% rise in the S&P from here will be). Truth be told, I had started reading those articles some time ago… But I remember quitting under this impression: looking for too much precision in something that is more instinct than true knowledge… Anyway, I might have judged too quickly, and therefore wrongly… I will give them another chance! ;) Thank you, Gio

Then, please, answer the question I asked anders just a few posts ago... Gio The answer is obvious and he already gave it to you. The point is that your initial post and how it's written suggests that you positioned yourself for a crash by having a high cash allocation and limiting your spectrum of investments as opposed to allocating cash "naturally". I would argue that I have no idea whether we are in 1996 or 1999. For all I know the market could start a 30% slide tomorrow because [reasons that will be apparent only after the fact] or keep going for years. As long as there are compelling opportunities you should seize them and avoid forming a strong opinion about the market (à la Hussman) which can put a big part of your capital on the sidelines for a long time. Ok, I will put again my question here below: If I have understood you well then, your answer is: because I am wrong. Right? Thank you, Gio

This imo doesn’t make any sense at all: You want to be an activist when you find a company with a management whose behavior is non-entrepreneurial. That’s the definition of “active investing” according to Icahn and others. I regard Biglari as entrepreneurial as a human being could possibly become… therefore, this imo doesn’t make any sense at all!! And I will leave it at that. Gio

Then, please, answer the question I asked anders just a few posts ago... Gio

Hussman not only prints graphs about stock market predictions and subsequent actual returns, he also give a numerical correlation. Does the blog point that out? If it doesn’t, I am already suspicious… ;) Gio

I will do. But let me tell you right away what I think from the quote you have posted: imo they are trying to be much too precise… Because I consider the following of the pendulum to be more a “feeling” than something precise… In other words, what might be truly misleading surely is not to be interested and vaguely aware of where the pendulum is at any given time, but to think you could know its precise position! ;) Gio

This kind of things only validate what Biglari has been doing until now. What you call “burdensome agreements” are nothing but well thought out precautions. Any shrewd entrepreneur, who has no complete control over the company he runs, should do what Biglari has done. If a change of the board won’t happen, like I believe, it is because Biglari thought about how to deal with such a situation well in advance, and prepared himself. I have more respect for Biglari today than I had yesterday. Cheers, Gio

Sorry!... Didn’t want to sound sarcastic… My fault! In theory I agree. But in practice there is no way escaping the fact we are investing in the stock market, and what the general market does is like enjoying tailwind or suffering headwind for all our investment ideas. That’s why Mark’s concept of “the pendulum” is and will stay highly relevant. Let me give you two examples: BH selling at BVPS and LMCA selling below NAV are imo incredibly cheap today… Yet, I wouldn’t be surprised at all if in a market crash they both decline faster than the general market… And, though I do believe 10 years from now they will turn out to be great investments, I know I will have to wait a long time, before my thesis is finally validated. It will be far easier to wait, if in the meantime I am able to average down… So, the question is: I have 3 ideas that I think are very good businesses which could be purchased at fair/good prices today… Why am I only 70% invested in them, instead of 100%? Your answer might be: because you are wrong! Another answer might be: because of Mark’s pendulum… ;) Cheers, Gio

Not only: I think cash might be useful even in a rising market, at least for a portfolio as concentrated as mine. Given the fact I hold just a few companies, the volatility of my portfolio can often be much greater than the one of the general market. And cash helps me take advantage of opportunities that might arise irrespective of what the general market is doing. ;) And don’t you think the fact you are experiencing difficulties in finding investments that meet your criteria and the fact the Shiller PE of the S&P500 is approaching 29-30 might be somehow correlated? Another thing I would point out about the markets from 1996 to 2000 is that, as Hussman has often said, the average stock today is already more pricy than it was in 2000. In other words, those who keep saying the Shiller PE of the S&P500 was over 40 in 2000, keep missing the fact that internet and technology stocks substantially distorted the picture back then. Gio

anders, as I have already said, I think I am quite prepared to see the Shiller PE of the S&P500 go well beyond 30… And if that happens, I am sure I will make a lot of money! ;) In my experience every time I failed to make money cash was never the culprit… Instead my investments were, simply because they didn’t perform as I expected! You still want to be 100% invested when the Shiller PE of the S&P500 gets above 30? Well, as I have already said, then you will always find some rationale to be fully invested, and you will never hold cash. Period. Maybe you’ll do fine… But it is just not my style! Gio

No... And it is pretty funny that Mr. Seth Barkley has 0 shares and wants to be elected as a director. What a truly "independent" director! I think it is just a cheap PR strategy to get his fund known by people. Otherwise who would have heard of Groveland Fund? I have no horse in the BH race, but in my experience Seth and Nick are trustworthy and serious in their endeavors. I have run into them on SODI and AIRT and have nothing but respect. IMO they initially bought a token share to throw their hat in the proxy ring, but I wouldn't dismiss their interest in advocating for the OPMI (sorry for the Marty Whitman reference). If anything, as an OPMI I'd be ecstatic to see them involved. +1 I don’t know who they are, and as a BH shareholder I just don’t care. Please, get out of the way as soon as possible! If I am right about Biglari, I will make a lot of money. If I am wrong about him, I will lose money. And I just want to keep it as simple as that! Thank you! ;) Gio

muscleman, I hope you are right! And in theory I also agree with you! ... In practice, though, many things could go wrong … Just ask mateo999: he believes Stake and Shake won’t be successful as a franchiser! :( Gio

David, Malone is 10 years younger than Buffett and Liberty Media is much smaller than Berkshire; Watsa is 20 years younger than Buffett and Fairfax is very much smaller than Berkshire; Biglari is 47 years younger than Buffett and BH is very very (add as many “very” as you want) much smaller than Berkshire. ;) Anyway, I agree: if the price of LMCA and/or BH gets too high in a market bubble, I will sell them and redeploy the proceeds into Berkshire! :) Gio

original mungerville, This is what Hussman had to say in his latest weekly commentary: Which is basically what the Shiller PE of the S&P500 is telling us right now. Of course you might answer Hussman is not a good investor, he has not made any money for his shareholders in a while, etc. … And I might even agree with you … This doesn’t change the fact than when it comes to general market valuation no one that I know of, and I repeat: no one!, has done a more accurate, thoroughly researched, and convincing work than Hussman. Period. Anyone who doesn’t read his weekly commentary should start doing so. If the Shiller PE of the S&P500 truly gets to 30, valuations will be even more stretched! Furthermore, just look at the ups and downs of the markets in the 20s’ and 30s’: those were two decades of unbelievable booms and busts! And, although the Shiller PE might not have been very useful in the midst of those booms and busts, surely it acquired meaningfulness at the extremes! It never got lower than 6… and it never got higher than 30! If it approaches 30 again, I strongly believe you should take notice. I simply repeat this: In 1929 the Shiller PE of the S&P500 reached 30… a market crash of more than 80% followed… If the Shiller PE of the S&P500 gets to 30 again, and you don’t become defensive… you will never be. Gio wmc141124.pdf

Of course! Unfortunately, the problem is sustaining a ROA of 20% annual on average for many years!! ;) Gio

Of course, I fully agree! :) Gio

If you add the value of treasury shares, which are shares held by the Lion Fund on behalf of BH, you get to a BV of $733 million, which equates to a BVPS of $355, instead of $309… Anyway, as I have often repeated, compounded growth in BVPS during the last 5 years is misleading, simply because investments in 2010 and also 2011 were still too small… Restaurant operations give Biglari the resources to shape and close new deals, but no one expect they could grow BVPS at a fast pace by themselves… BVPS will grow fast because of new acquisitions and because of stock market investments: now they are large enough to move the needle, back in 2010 they weren’t! AL2014 Again, I tend to agree with Biglari. ;) Gio

Newton suffered from something we all have instead spent lots of time thinking about: he ventured outside his circle of competence! ;) Gio

Hi Vinod, please take a look at the slide in attachment. Of course, if you think SIRI is wildly overvalued, that won’t be of great help to you… Anyway, buybacks at SIRI just keep going on (share repurchases year-to-date at the end of 2014Q3 totalled nearly $2.1 billion), and Malone is not someone who likes buybacks if he thinks the price of the shares is overvalued! ;) Gio