Parsad

Sanj, speaking of hedging, if you only own FFH is that in itself a hedge or will Fairfax's stock also tank in a stock market crash despite their own hedges? It would depend on what the general sentiment is in the market. If people are seeking liquidity at any cost, not unlike the crunch time in 2008/2009, then Fairfax stock will tank too. But usually, a stock like Fairfax would fall after much of the market, because investors finally give in and start selling the stocks that have held up, because they need the money or want to buy cheaper investments. The thing is, investors shouldn't confuse stock price with intrinsic value. They see the stock price go down and they panic, when really they should only panic if intrinsic value is decreasing. Fairfax's stock price today is nearly 33% lower than its peak 12 years ago, yet intrinsic value (book value being an approximation) has increased about 300%! So at some point, investors would recognize that the hedges prevented serious damage to intrinsic value, and the stock would eventually move back closer to intrinsic value. Cheers!

It's a regressive plan. Those in lower income tax brackets will see a greater percentage of their income go to sales tax, as they spend more of their income on necessities. Wealthy individuals who set up personal corporations would be down to 9% tax rates and then they could just dividend themselves an income. Or, they may find a loophole and their income could be treated as capital gains. In the meantime, they'll run most of their expenses through the corporation, writing off much of it, and paying 9% tax! I'd like to see lower tax rates across the board, but unfortunately you can't do that because someone has to pay down the debt. So, the burden has to be more equal. You have staggered income tax rates, with a slight reduction for all; no change on dividends or capital gains taxation; a modest national sales tax...5-6%; estate taxes on estates valued at over $100M in all states. Cheers!

I'm so disgusted when I read about executives blowing wads of cash on such luxuries. They all have the Microsoft or Google campus mentality, yet those guys had money coming in when they built their offices. Executives like this should be held accountable and their own personal assets should be seized. Cheers! http://www.bloomberg.com/news/2011-09-28/solyndra-s-733-million-plant-had-whistling-robots-spa-showers.html

When I first saw the title of this article, I thought it was about Sam Antar or Barry Minkow. Instead, there seems to be another felon who has the ear of investors and the media. Munger should enjoy this article about economic cycles. When I read the bit below, I nearly choked on my bagel this morning! Cheers! http://www.bloomberg.com/news/2011-09-28/felon-forecaster-blogs-on-8-6-year-economic-cycles-after-11-years-in-jail.html A New Jersey native who didn’t graduate from college, Armstrong said he built a theory of “confidence cycles” when he discovered in the 1970s that financial panics from 1683 to 1907 were separated by 3,141 days on average. He later realized that number was equal to 1,000 times pi, whose value is the ratio of any circle’s circumference to its diameter.

Here's an article on the Samsung deal. Microsoft, the old gal, still has some tricks left in her bag...making profits out of thin air, where somebody else did all the work. Cheers! http://online.wsj.com/article/SB10001424052970204226204576598661866214854.html?ru=yahoo&mod=yahoo_hs

No, it doesn't. I always said that if you are fully invested, then hedging would be a good idea. We are rarely ever fully-invested. Our hedge is cash, and we move in and out of cash as the market gives us opportunity. I don't hedge otherwise, and I won't do it ever, other than the occasional purchase of market puts when things seem completely out of whack. The other circumstance in which you may want to hedge, is if you are close to retirement or require a significant portion of your nestegg in the near future, where you would be in some distress if your investments fell dramatically. Otherwise, no point in hedging because of the frictional costs. What Prem makes completely clear in that article, as I've always said, is that they hedge because their capital levels would decrease if markets dropped, which would mean they couldn't write as much business. If markets fell enough, and they are leveraged 4-1 asset to equity, they could lose their qualified credit rating for property casualty insurance, in effect putting the whole business into run-off. So there is a very distinct reason why Prem hedges, and that is because of the insurance business. Cheers!

Pretty darn good interview! Cheers!

Here is the interview with Prem on Gurufocus. Cheers! http://www.gurufocus.com/news/146628/gurufocus-interview-with-fairfax-ceo-prem-watsa#

This other article shows exactly how full of crap this guy is, and exactly what type of "cancer" is presented through the media to investors. Cheers! http://www.telegraph.co.uk/finance/economics/8792829/BBC-financial-expert-Alessio-Rastani-Im-an-attention-seeker-not-a-trader.html

They thought the guy was part of a hoax, but after the BBC investigated, they couldn't find any evidence to prove so. This nutjob does think that way! But there alot of people that think that way right now. http://www.dailymail.co.uk/news/article-2042291/Alessio-Rastani-Claims-greedy-dealer-praying-recession-FAKE.html?ito=feeds-newsxml Cheers!

Buffett and Businesswire will be ringing the NYSE bell on September 30th to celebrate Businesswire's 50th Anniversary. Cheers!

all Buffett did was give him the Option of buying back his stock. He never said it was a certainty. Tilson doesn't make much sense here. Buffett knows that anything can and will happen in markets. If we do get a repeat of 2009 Buffett will just do whatever is rational "at the time". Sometime I wonder why people have to write something every time Buffett sneezes. He sneezed?! When? I didn't read anything about it. ;D Cheers!

I believe #2. Insurance premiums are hardening. Rail traffic continues to increase and Buffett believes that housing will stabilize and turn up in the next couple of years...thus Berkshire's various subsidiaries related to housing are going to turn. Berkshire became one of our largest holdings a few days ago. And that was simply because the operating subs should be trading at 1.5-2 times book value...the entire company was trading at about book. So you have the best insurance businesses in the world, along with some of the best non-insurance businesses in the world, all trading at book value. It was as ridiculously cheap as it was in February 2000. Cheers!

They did the exact same thing in 2000...the last time the stock was so cheap. I expect it to outperform the S&P500 for the next year now! Cheers!

Just saw the movie on the weekend. Think it's the best movie of the year. Believe it or not, Brad Pitt was pretty damn good as Billy Beane...Oscar worthy! Cheers!

Funny animated video of Mark Zuckerberg explaining Groupon to Warren Buffett. Cheers! http://video.nytimes.com/video/2011/09/23/business/100000001069282/ipo-blues.html

Finally, somebody is brainstorming at Sears. Lately we've seen a number of ideas implemented that they should have done long ago, including licensing their core brands to other retailers, and now subleasing store space inside their Sears stores. Cheers! http://www.bizjournals.com/milwaukee/news/2011/09/23/sears-to-sublet-store-space.html?ana=yfcpc

Here is BH's reply after Cracker Barrel instituted a poison pill. He can't go over 10% now, so I don't know exactly what change he's going to effect. Cheers! http://www.sec.gov/Archives/edgar/data/93859/000092189511001847/ex991to13da407428021_092311.htm

Yup, those are ok, but nothing copyrighted. Thanks!

Nope. Not going to happen. Twcowfca is a book publisher, so ask him how he would feel about that or his authors. So, please do not attach any copyrighted material, otherwise it will be deleted. Anyone found transmitting copyrighted material to other board members through the site, will have their memberships deleted with no warning. Cheers!

It's sort of the same thing as why are derivatives allowed? Why are stock options allowed? It serves a purpose, although less so in terms of HFT. The geniuses behind Wall Street like to get creative, seeking out any way to get an edge, so you have such innovation...if you can call it that! Once there is enough people on the bandwagon, then as Given said, they carry much more clout by the dollars behind them and the lobbyists they hire. And once they are entrenched, you cannot get rid of them. Thus even more important to not follow the herd. Cheers!

Sanjeev, I respect your opinion a ton. With that being said, for Tim's performance, we are not talking about the short term. 14 years through an environment that has (mostly) favored the value style. Heck, with a small asset base, he could of bought a variety of indexes and done better. He didn't even beat the benchmark he chose. You might very well be right that over 20-30 years he'll do better. His long term track record would suggest otherwise. He also seems like a pretty decent fellow. You know him much, much better than I'm sure I ever will. However, if someone would've had faith in him and invested from when he first started his firm (according to his track record), he would have done them a disservice. On top of that, best I can tell, he is not like Chou and lowering his fees. So...he basically did a pretty bad job after taxes and still wants to get paid quite handsomely. I don't know how ethically sound that really is. Hi Paul, The underperformance came almost solely from one year of damage...2008. If you looked at his track record until then, it was one of the best in the industry. So he got hit bad in one year...and now he has to gain it all back, just like Mohnish or Prem did. But if there was one guy I would bet on to do that, it would be him. And if any investors were with him from day one, they should be doubling down on the guy right now, or moving other investments to him. In regards to the fee, I agree with that. I'm not a fan of the "1 & 20" or "2 & 20" type fee structure, simply because of outlier years like a 2008. If you miscalculated, then you don't eat until you make it all back. Unfortunately, Tim is not unique in this but the industry as a whole works this way. Any mutual fund, most hedge funds, etc, operate exactly the same. Tim, his family and his staff, all have most of their investments in the McElvaine Trust. I think that helps a bit in regards to the compensation structure, since he has taken the same hit as every one of his partners. For me, and this is a personal choice, honesty & ethics come first, then investment management philosophy and finally compensation structure. The latter two don't matter if you don't have the first two. Cheers!

Not me! Volatility doesn't bother me. We aren't leveraged, we don't short and we've bought alot of quality businesses at discounted prices in the last couple of months. I've still got cash and am buying things I like. Cheers!

The money they allocate would be the capital outside of my Fairfax shares. They know not to sell those! Cheers!

I think you will probably see something as well. Cheers!