Parsad

Wells would be smart to take Merrill. Depending on what happens over the next period, if BAC does have to raise capital and can't sell a depressed stake in China Construction, their ownership of Merrill could go. Cheers!

Probably not pretty. And of course as soon as he's sold and filled the requests, the stock market will move up 800 points. Cheers!

Article discussing the possibility of Buffett making a preferred investment as he did with Goldman and GE. Cheers! http://www.thestreet.com/_yahoo/story/11213991/1/can-buffett-save-bank-of-america.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA

I was at a picnic Saturday night at my "old money" mother-in-law's "country club" just quietly gasping at the 40-50 year old heirs of old fortunes nervously chattering about the debt downgrade and the markets etc... This morning I just figure these people are all getting out and the mutual funds just have to sell to meet redemptions. The fund managers want to buy, not sell, but what can they do? Cash levels in funds are at record lows. So once the last marginal retail investor has panicked, guess whas' gunna' happin? Yup, same thing. I was at a wedding Saturday night, and everyone was asking me about the downgrade and the markets. They all sounded really nervous. I don't think my rational explanation of how markets worked calmed anyone. The types of questions I was getting were "My broker told me that Royal Bank is going to do well next year...will it?" I said to myself..."Oh boy, this is going to be tough to explain." Cheers!

Tom, Fairfax had more firepower ready than any other company I know, so they are probably buying many of the things you want to buy. For example, I'm sure they are adding to their stake in DELL. And their treasuries must have hit a home-run today, so they are almost definitely moving some of that cash to equities. Hold the Fairfax and don't worry about buying Dell! Cheers!

Eric, either you are going to continue to really enjoy retirement, or you may be coming out of retirement! ;D I'm betting on the former. Cheers!

I'm doing a bit of buying with the small amount of cash I have available, but it doesn't look like many large value investors are stepping in yet. They are. It's the non-value guys that paid up who are selling. We'll know who was buying and selling when the 13-F's come out later on. Cheers!

Maybe, maybe not. But it can only go to zero, and we're hell of a lot closer to that than it's 52 week high. ;D Cheers!

They aren't going bankrupt anytime soon. They've got assets they can sell to raise cash. They've got a ton of cash as it is right now...so they can continue funding their business. But these types of situations can create a lack of confidence, and if you have enough people pulling deposits over time...if there is sustained downward pressure on the stock...then it is possible over the longer term. You know as soon as the hedgies hear the word "bankruptcy", they pile in with the shorts. So that downward pressure over a period of time can push a company to the brink if they have no other source left for financing. Berkowitz is going to get killed like he did in 2008, and then rebound over time. Cheers!

I thought I would start a new thread, as this day deserves its own alongside the "What a Lovely Frickin' Day" post. Is everyone enjoying the ride? ;D Never panic, never sweat folks...it will all be over in a while. Cheers!

Should be an interesting call Wednesday. I'll be listening. Cheers!

Bloomberg article on Buffett and Berkshire stock investments. Cheers! http://www.bloomberg.com/news/2011-08-08/buffett-bet-on-stocks-before-rout-by-spending-most-since-2008.html

I'm watching all these analysts and reporters going nuts over the credit rating downgrade and the stock market correction. Yet, what they don't realize at all is that the dynamics of American corporations are completely different than 3 years ago. That downturn, corporations were leveraged and had little cash on the books. Corporations in this correction are very liquid and have the ability to buy back enormous amounts of their shares. You may see liquid corporations retire 5, 10, 20% of their outstanding shares if the prices continue to dip. For many, even if they don't dip any further, shareholders would be well-served for the company to buy back significant amounts of shares. Especially for businesses that are liquid and are trading at large discounts to net asset value. Think about a company like Winn-Dixie...and this is just one of many examples out there right now. What does the company benefit by spending on capital expenses, rather than buying back their shares presently? The majority of their stores have been remodelled in the last couple of years. They have excellent free cash flows, but much of that goes back to basic maintenance of existing stores, or building whole new prototype stores. Why spend the money on these prototype stores, which will only improve same store sales by 2-3% annually, when you can buy back your shares at a 50% discount to book? It makes zero sense. You will see executives...be it at their own behest, or the eventual demand of shareholders...buy back their stock! Cheers!

If the futures are the indicator tomorrow (only a few hrs now) markets will get Beotch smacked again to the tune of 2.5-3% I'm ok with that. The more the markets get hammered, the more money patient and rational investors will make over time. That's why it's so hard for many people to do. It will once again clear out some of the "professionals"! One third of them disappeared after 2008/2009, and new ones popped up and replaced them in 2010. It was very funny to watch last week as Ron Insana was brought on to CNBC as an analyst, yet his fund collapsed in eight months when he launched it in early 2008! Everyone is panicking, yet nothing at all...not in the slightest...has anything changed in what Ben Graham and Warren Buffett have taught us. Nothing at all. Cheers!

There is risk. If the company is acquired for the strike price or less, then your warrants are worthless. We've bought the government warrants for various institutions, but make sure no one goes crazy on them. Stranger things have happened, especially when executive bonuses are on the line. Cheers!

Sorry Cardboard! Shows how much I know about credit ratings. Also shows how much I pay attention to them! ;D Cheers!

OMG! I didn't realize it was that bad! A little payback for American hockey teams winning the Stanley Cup for the last 17 years! ;D Incidentally, on the subject of the United States and Canada, and similiar credit ratings: Canada had to balance their budget and pay down their debt through the nineties and early part of the new millenium...we didn't suffer, univeral healthcare survived, old age security and Canada pension plan checks were paid, teachers didn't commit hari-kari due to increased class sizes, and the world didn't come to an end. Our economy is far better off for it, as are the generations to come. One aspect of what helped Canada get through that period was the influx of wealthy, entrepreneurial immigrants from Hong Kong and Taiwan. With all the worry and discomfort in other parts of the world, especially Europe and Japan, the U.S. may have to consider opening up the flood gates to immigration. In particular, immigrants of the business-class type visas that would invest capital and start small businesses. They would need homes, automobiles, food, clothing, education, etc, and increase tax revenues. Maybe even open up such visas to regions that have greatly suffered economic hardships such as Nevada, Arizona, Florida, Southern California, Michigan, etc. Food for thought. Cheers!

I agree too...S&P is actually doing their job for once. But I also agree with Buffett that this is almost meaningless in the grand scape of things. Credit rating agencies work in hindsight and provide no indication whatsoever what will happen in the future. Shouldn't the U.S. have been downgraded before the whole debt ceiling debate? Same political parties...same debt load...same GDP...same tax revenues. Fairfax is still rated A- for Pete's sake! The U.S. now has the same rating as Canada and France...big deal! The market may react, or they may not...do we really care? If they go down, we buy some more. The main thing is as many have said, politicans need to start working on the problems, and that means creating the right incentives, proper stimulii, equitable opportunity and confidence. Cheers!

I'm not a shareholder of BH or CAW, but if I was, I would view this as a good development. Depends on whether you are happy with just creation of economic value or you also want to be treated like an owner. You'll probably get the former, but not the latter. In other news, BH's special AGM was started then postponed to September 5th today...looks like not enough votes for a quorum or something. Are shareholders feeling disenfranchised? Also, someone indicated to me that the leveraging of SNS was suggested in ISS's report, and that Biglari could use the funds to buy back shares and get more control. Did anyone read the report? Cheers! http://www.sec.gov/Archives/edgar/data/93859/000092189511001561/defa14a07428_08052011.htm

I definitely wouldn't buy the market as a whole. But there are many individual companies that are dirt cheap right now.. Yup! There are actually quite a few companies that are now trading lower than they did during the worst parts of 2008/2009, and their income and balance sheet statements are far, far better. Cheers!

It doesn't matter who is in Congress when the economy suffers, asset prices collapse and panic sets in. Both Democrats and Republicans will do anything they can to stem the blood-letting...damn any future consequences if they see their own IRA's diminishing. They will print when push comes to shove...print all the way and maintain a zero rate policy. Will it do what they want long-term? Probably not. But they will print once they start to panic...just human nature! Cheers!

I think you'll have a clearer picture tomorrow. If the jobs report is good, you probably won't see QE3 anytime soon. If the jobs report is bad, and markets react anywhere near how they did today, then I think you'll see some coordinated action over the weekend and into next week. You've got a frickin' election year coming up, and the President is not going to go without trying everything to get the economy going and win a re-election. Cheers!

I for one am really hoping for a correction. Like, others here, I am heavily invested in Fairfax, and until there is a correction Fairfax won't have an opportunity to unhedge and aggressively go after capital gains. Also, like others on this board, I have bought long-term puts on salesforce.com. I think we'll need a market shakeout to see that stock go down to where it belongs. There is as much risk in Fairfax's strategy as those buying on significant downturns. For example, Fairfax missed much of the rebound through 2009 and 2010, as they invested very little in equities. Fairfax's strategy is far more essential to their success as a leveraged insurance company than the effect it would have for the average investor...thus the comparison is not a practical one by any means for the average unleveraged individual investor. Corporations, including financial institutions, are in remarkable shape, because they passed their risk on to government. Balance sheets are impeccable, earnings are terrific considering the weak global economy, and cash hoardes await deployment. When the S&P500 fell below 700 in 2009, there was a very signficant probability that many businesses, especially financial institutions, could go under. The circumstances are night and day now. Earnings have grown for many of these businesses in the ensuing three years, while their valuations are on par or less than they were during 2008/2009. This may be the early part of the correction, or it may be all there is...who knows? As long as you aren't leveraged and you are buying below intrinsic value, you will do fine long-term. Cheers!

Hey we bought both today! Both are really cheap and completely undervalued. Cheers!

If you don t mind me asking, are you scaling in 1-2 % at a time or are you buying 5-10%? We were scaling smaller than 1-2% for the last couple of days, and then today we started scaling in through the day in 1-2% shots! We went in big today! If things continue to fall, then we go in with what cash we have left. If they fall further like in 2008 (I don't think we'll get anywhere close...maybe 1000 on the S&P at best) then we sell some stalwarts and continue to buy cheaper stuff. If we see anything worse, we do what Buffett did and sell things at 5 times earnings to buy stuff at 3 times earnings. Cheers!