Parsad

I assume that he is referring to the fact that most of these policies were sold based on an investment return, before expenses, of 8%+ which isn't going to be the experience that most policy owners have. Consequently, the policies will not perform as designed and require cash infusions to support them and ultimately many of the policies will be lapsed as the policy owners will not be able to afford to maintain them, Yes, that is what I meant. Thanks SeaIsland. Cheers!

Thanks dcollon! Cheers!

I have also tried to investigate the Japan example as well, they have had 0% interest rates since the beginning of the 90's. But I could not quite find any studies or long term data on the Japan life industries. The only thing I could find out is that Japan life insurers had some kind of oligopoly where they can set rates by meeting with each other. Maybe someone with a Bloomberg terminal could get the charts of the main insurers to look at... Japanese insurers suffered considerably during the mid-late 90's. The demographics and types of policies written are also important. Not everyone is going to face the same demographic collapse the Japanese did, with such a large percentage of the population supported by so few working taxpayers. But the Japanese life insurers also wrote far fewer variable life policies unlike North American insurers who favored them...we are already seeing the initial effects of these policies. If we face any sort of prolonged low interest rate environment, the cost of these liabilities will be substantial. Eventually insurers shrink certain types of business, increase premiums and lower benefits, so longer term it won't be as detrimental as they will adjust, but for a few years it will be painful. Cheers!

I'd like to hear exactly what Charlie had to say. That seems to be excerpts, and I can't find any video of the whole interview. I think Buffett is saying we won't see a double-dip, but Munger is saying that certain sectors are still going to get hammered. I agree with both. Cheers!

Nothing yet. I think things will get tougher for insurers before they get better. Many are too heavy in treasuries and will now pay the price. Alot of them didn't think that interest rates could come down so far on the long end. Their longer term risks are now mismatched. As they start to lose money, the hard market will come. Unlike W.R. Berkley, I don't see the hard market coming for at least another year or longer, unless we see large scale catastrophes. This will be a long-term problem for insurers. Cheers!

Charlie weighs in! Cheers! http://www.cnbc.com/id/39180384?__source=yahoo%7Cheadline%7Cquote%7Ctext%7C&par=yahoo

Congratulations to John! Great news for Mustang. Cheers!

Article on Fairfax by an investment manager in California. Cheers! http://seekingalpha.com/article/225041-just-one-stock-hitching-a-ride-on-returns-of-canada-s-warren-buffett?source=yahoo

Pension plans are going to have a difficult time over the next few years. I suspect this low yield environment is what will eventually lead to a hard market for property/casualty. And probably difficult times for many life insurers over the next decade. Cheers! http://www.bloomberg.com/news/2010-09-14/company-pension-funds-in-u-s-falling-behind-payouts-amid-low-bond-yields.html

Buffett has been calling this crisis an economic war from the beginning. One of the best examples is the Pearl Harbor terminology during the financial meltdown. He is the CEO of one of the most admired companies in the world and many people listen to what he says; in essence he is like a general in this war. A war cannot be won without morale. I would agree with you here that he is cheerleading too. And yes given the strength and profitability of Berkshire, he can afford to invest and wait without any fear for a long long time. I have to disagree with the cheerleading reference. I'm not sure how much more emphatic he can be...he said that there will not be a double-dip recession at all...that Berkshire's businesses are showing improvement across the board. Immelt said the exact same thing. About two months ago, I started to say the same stuff...about buying quality large-cap stocks that were relatively cheap...that things were improving...about buying WMT & JNJ, RRGB, LUK, etc...that when the turn comes it comes hard. Yet, the permabears were out in full force talking about another depression! Alot of investors are anchored...alot of investors have missed this second correction and turn. Cheers!

No, I think the difference is that Prem and Seth have taken a longer-term macro-view based on their own circumstances...not unlike Prem's CDS bet in the past. Seth runs a fund...his clients can pull their cash. Prem uses more leverage than Berkshire, and doesn't have any non-insurance operating subs to diversify his stream of income. While Buffett is also subject to mark to market accounting, more of Berkshire's assets and income is derived from outside of the investment portfolio. Buffett just goes chugging along like he always has, macro be damned. There's a certain license taken and laissez-faire demeanor maintained, when your company spits out cash like an ATM and your shareholders worship at your feet. Remember, Buffett said he doesn't see a double-dip, but he's not saying there won't be problems five or ten years from now. Cheers!

Actually my number one reason for loving Fairfax: Will never rip you off and put their own interest ahead of shareholders! Cheers!

Some more comments from the Montana Economic Development Summit. The best quotes were by Jeffrey Immelt, CEO of GE: Immelt said angry political rhetoric is not helpful and headlines are too focused on finding negative indicators. He said business at GE, one of the world's largest companies, is improving. Immelt said the country is going to need to adjust, though. The economy since the 1970s has been driven by consumer credit and a misguided notion in building a "lazy" service economy, he said, and manufacturing, with an aim to reduce the trade deficit, is the key. "It was just wrong. It was stupid. It was insane," Immelt said of the push for a service-based economy. "The future of our economy has to be as an exporter." He said GE is now finding it profitable to build manufacturing and service centers in the United States rather than overseas, because it is finding it more competitive to do so. More investment is needed in technology innovation, exports need to be rejuvenated, and clean energy and affordable health care need to be given top billing for policymakers, Immelt said. But the corporate leader said he recognizes a polarizing environment in Washington makes it unlikely a national energy policy and other helpful guidance will ever take hold. Instead, he urged local business leaders and government officials in the audience to come up with their own local solutions. "Anger is not a strategy. Anger does not create growth. Only optimism creates growth," he said. "Be the contrarian. Everyone is mad today. Be happy." http://www.cfnews13.com/article/news/ap/september/150464/Buffett-Ballmer-predict-bright-economic-future Cheers!

I would have to agree. There is nothing in the short-term that would make be believe we could experience a double-dip right now. There is enough stimulus and tax credit packages at work around the world; monetary policy is still very loose; interest rates are low; China & India are humming; manufacturing, inventories and transportation are picking up. Retail is slow but picking up, consumption is improving slowly, house prices are stabilizing. Unemployment is still high and it will take time to come down. I think the deflationary period has subsided and we may start to see some inflation in the next year or so. What will happen five years from now when interest rates start to rise, I don't know...things could get very tough...but I think the economy is slowly, but surely picking up in the short-term. Cheers!

I don't think I'll be changing the policy, regardless of the vote. Too difficult to enforce and the line would be constantly moving. The fact is that the board does get read by people at Berkshire and I know many people read it at Fairfax. So if you are saying anything stupid using a moniker - well they are reading it! Remember, Prem's going after the hedgies...don't give him any ammunition to go after you too! ;D Cheers!

Great Sanjeev! If that happens, what will be important is to try to keep the culture that we have enjoyed over the last years intact. So far, so good! If it starts to get out of hand, we can always limit the number of members, so it won't be problem. Cheers!

Interesting! Cheers! http://www.cnbc.com/id/39100317

About friggin' time! I wrote about this in our quarterly letters over the last few years. Cheers! http://www.cnbc.com/id/39098905

If this vote passes and its policy is implemented, I hope the FAKE MUNGER identifies which moniker he has changed to. I think you hit the nail on the head yourself Carl! There is no way to enforce anyone to identify their new moniker. It would be an enormous pain in the ass for me to do that. We have over 800 members and that will double over the next two years! "Munger" or anyone else could easily pass on that moniker and adopt some other one...how about "ValueCarl2"! ;D Then we wouldn't know if it is you or someone purporting to be you! Cheers!

You're only as old as you feel. I think Buffett has more energy than most 20 years olds, so that would categorize some of those guys as senior citizens! ;D Cheers!

It was a generic response Smazz, not in reference to anyone in particular...meaning that really the only thing we have to concern ourselves with is maintaining a courteous board. Cheers!

Numbers are looking good for a modest recovery. Cheers! http://www.bloomberg.com/news/2010-09-09/u-s-rail-freight-carloads-for-week-ended-sept-4-table-.html?cmpid=yhoo

Good article on Walmart and CEO Mike Duke. Cheers! http://money.cnn.com/2010/09/07/news/companies/mike_duke_walmart.fortune/index.htm?source=cnn_bin&hpt=Sbin

Is Byrne ready to take out AMZN in one fall swoop because it has been pummeled to the ground, for example? No need to take out Amazon, nor any hope of doing so. Did Costco take out Walmart? And Sam's Club is not having any luck taking out Costco either. You can build a niche and focus on your core market...in other words build a moat. If you can do that, and you are a low-cost provider, you can build a substantial business. Overstock needs to focus their energy on that niche, and they will do perfectly fine long-term. Cheers!

Underperforming companies and worried management teams may soon start buying the domain name enhance[company].com ;D Why remake the wheel? I run a partnership, identical to another partnership (Pabrai), based on another partnership (Buffett). It's worked ok for all of us! ;D Cheers!