Parsad

Congratulations Jordan! Yes, you definitely count in that first group...anyone who has the balls to bring his girlfriend to an investing gathering on his first date, and then somehow get her to marry him, is a talented guy worthy of some note. In regards to the hotel, I'm trying to get some ideas and feelings about the event from attendees, and then I'll work out various quotes to see what is the best fit for the price and our needs. Cheers!

Prechter's fundamental analysis is not based on technicals AT ALL. And the vast majority of his book is a fundamental analysis. And this wave he talks of has nothing to do with technicals or charts. What a blowhard. The book may have some fundamental analysis, but Prechter is known as a technical analyst. He says it himself. He's on the board of the Market Technicians Association. Now Munger, I don't know if you're some eager college student with a massive ego or what, but I've refrained from any name calling. Your previous post suggests you need to calm down a bit. I would recommend you take a break and come back, or move on to another thread.

I have read his book, among many. I am not a huge believer in an "elliot wave" but the Prechter's fundamental analysis seems directionally correct -- just wouldn't then move to the conclusion that there are these long general waves that recur throughout history and are predictable. Many years were required for the US to reach the current state -- whether this is part of some predictable, recurring wave, I'm highly skeptical. But again, I think his fundamental analysis of the current problem is thorough and generally accurate. Well, that friggin' explains why I've felt like I'm hitting my head against a rock during this whole thread! Geez Munger, you could have saved me alot of time by just telling me that in the beginning. ;D I think technical analysis is the antithesis of rational thought when it comes to the investment process, and there are enough nutterbugs already in the world chattering away about gold, depression, guns and ammo. Cheers!

The deflation insurance purchase gives further clues as to Prem's mindset. Although, it has been explained as protection for the insurance business, I don't quite understand why because their business seems more vulnerable to inflation and higher interest rates than deflation and lower rates. In any case, the fact that they bought deflation rather than inflation insurance is a very good clue as to what his macro views are. Let me ask you something? And this is coming from the guy that worships at the feet of Buffett and Watsa...do you think Prem could be wrong? Do you think there is the possibility that Hamblin-Watsa's thesis could be wrong, or at the very least, not a prolonged deflationary period? Personally, I don't think Prem even knows for sure by any means. I think he's got an idea, and they've seen first hand what has happened in Japan, so his natural instinct is to protect the capital because he's not going through another God-damn "seven lean years!" Then also ask yourself, exactly what does Prem have to lose if he is wrong? The hedges cost 1-2%, he has tons of high-yield muni bonds that will produce plenty of interest income, and much of the equity portfolio he holds will also yield 2.5-3.5% in growing dividends annually. He is leveraged 3.5 to 1, so all he has to do is get about a 4-4.5% yield from his entire portfolio and he's laughing. Why would Prem invest in equities when he doesn't even have to! Now let me ask anyone here if they operate with 3.5 to 1 leverage...outside of your home or any other real estate? Cheers!

Good ideas everyone! Oec, I like the idea of a poll, as well as the idea of having two groups...those that would like to attend the dinner and presentation and those that would like to attend the presentation. The only problem is that we have no guarantee from Fairfax that someone will come to our dinner. Of course, they've never let us down and Francis always shows up...neither rain, nor snow, nor sleet or hail can keep Francis away...but I've never had any sort of verbal agreement with Fairfax to have guests. Prem has just graciously done it and the fantastic guys from Hamblin-Watsa have no interest in letting Prem or the shareholders down. I just don't want people to expect them to always be there...something could come up and they may be busy...thus the reason we do the dinner, so at least boardmembers can interact and have a good time. Cheers!

How do you get more dollars Packer? Before investing, everyone should fully understand how the system works -- this error in thinking is stunning and scary because I'm sure Packer is not alone. Munger, what makes you so sure you understand how the system works? Please don't take this the wrong way, but some of your posts have the faint whiff of hubris. Exactly what specific trait, aptitude, or track record would suggest that you understand the circumstances better than Packer? It takes a certain amount of intelligence to say "to hell with the world, I know I'm right because of my reasoning", but it takes just a modest amount of humility and common sense to say "there is always the possibility I may be wrong". That goes for me too. Take it for what it's worth. Cheers!

How could I be anchored in my opinion if you agree with the analysis/facts? Your assumption is that some of us are saying to buy any large-cap stock or that the markets cannot go down from here. That's not what we are saying, or at least I'm not saying. You're basing your investment philsophy around macroeconomic circumstances, and I think for the average investor, that is pure folly. There are industries that will do very well going forward, depression or not. Some of those companies are undervalued in present circumstances. Can they go cheaper? Sure! And they can go a hell of a lot higher as well. And that was why I provided the page showing the growth in Coca-cola when both stock and reinvested dividends are included. In a case like Fairfax, they have huge insurance reserve liabilities, and their ability to meet those responsibilities could be severely undermined if markets moved down. Thus, they are protecting their portfolio due to the leverage they operate with. This is not the same circumstance for the average, unleveraged investor. Too many people are assuming that they need to do what Prem is doing, but that would only be true if you shared the same risks. Even Francis, one of the right-hand men at Hamblin-Watsa for many years, is saying that some things are undervalued. Can they go cheaper...let me reiterate, yes they can! But if you can tell me when and how certain that is, then you should be running Fairfax Financial and not Prem Watsa. Cheers!

Comment I received by email: Hi Sanjeev -- Since I'm a reader of the Corner of Berkshire & Fairfax Board and not a writer, I thought I'd write you with my preference re: the Fairfax dinner. My preference is as follows: 2. Since I have to eat anyway I prefer it with dinner. As to cost, I would be happy to contribute more than the cost of my dinner. I would not like to see any attendee not come because of the cost of dinner. If 2 or more will contribute the cost of a meal at McDonalds, I'll be happy to pick up the rest. 3. Good, but I still have to eat dinner. 1. OK I really appreciate the attendance of the guest speakers. I'll agree to anything they wish. 2nd I like the interface with the board members and Fairfax shareholders. I guess dinner comes in 3rd. Cheers!

How and why should I respond to someone who clearly didn't read the analysis/facts and yet firmly offers a subjective opinion, with no relation to the analysis/facts? Part of the problem -- everyone wants to believe...no one wants to do the work. I think the articles premise is correct and there is nothing I disagree with. But you are anchored to your position, thus no one will be able to convince you otherwise, facts be damned. http://ir.thecoca-colacompany.com/phoenix.zhtml?c=94566&p=irol-stocksplit Cheers!

Article on various value hedge fund managers and Microsoft. Cheers! http://www.cnbc.com/id/38923455

Article by Bill Fleckenstein on Siegel's comments: http://articles.moneycentral.msn.com/Investing/ContrarianChronicles/the-next-bubble-is-in-punditry.aspx Cheers!

Article discussing Professor Siegel's recent comments. Cheers! http://www.istockanalyst.com/article/viewarticle/articleid/4452563

BNSF will be featured on Green Magazine Television. Cheers! http://www.businesswire.com/news/home/20100830006104/en

Looks like this turkey got the presidential pardon (smile). Greetings, love the board. Yup! Your place has been taken by Glenn Beck! ;D Welcome to the board Maestro. Cheers!

I was reading the comments section of the article and it looks like Seeking Alpha copied the article but changed some of the words. Here is the original article within which Plan Maestro actually mentions that Francis does list the risks. Cheers! http://variantperceptions.wordpress.com/2010/08/29/francis-chou-on-large-bank-warrants/

Large banks are sound with strong balance sheets but they can still suffer some hits to their long term earnings potential and Francis Chou conveniently ignores some of these potential negative events. Who is this turkey "Plan Maestro" anyway? He copies portions of the letter (and I'm sure without consent), in which Francis lays out risks of investing in the banks, and then says that "Chou conveniently ignores some of these potential negative events" of investing in large banks. Bizarre! Cheers!

Hi Folks, Now that summer is almost over, I'm in the process of planning the early stages of next year's Fairfax Financial Shareholder's Dinner. For five years, we've held the dinner at Joe Badali's. In our first year we had about 9 people show up, then about 23, then 34 and 48, and in our fifth year we hit about 70! The private room we use in the back of Joe Badali's was jam packed last year, and they do have a neighbouring room we could expand to, but unfortunately the kitchen noise would be obtrusive, especially when our guest speakers arrive. Even with a speaker and microphone this year, it was sometimes difficult to hear because the kitchen noise was so loud. In this our fifth year, with tremendous generosity from our attendees, we raised $4,870 for the Crohn's & Colitis Foundation of Canada. The funds were in memory of Prem's executive assistant, and our dear friend, JoAnn Butler. We will continue the dinner going forward in memory of JoAnn. Now, this is where I need ideas and suggestions from boardmembers, in particular, those that attend the dinner. I have a couple of ideas for our 2011 Fairfax Shareholder's Meeting (held the night before Fairfax's AGM), but each has their own positives and negatives: 1) Continue to hold the dinner at Joe Badali's. Use the private room only for seating and listening to speakers. Dinner held in neighbouring room next to kitchen. Positives: Continuity at Joe Badali's; Costs would be only admission and you pay for your own dinner. Negatives: Outgrowing the place; Kitchen noise still affects private room. 2) Hold the dinner at a hotel...maybe a smaller ballroom. Positives: Unlimited space to grow; Quieter environment for speakers. Negatives: Costs will be significantly higher to attend; Set menu or buffet, so cost per person will be higher. 3) Book a large room at either the Metro-Toronto Convention Centre, or perhaps even at Roy Thomson Hall where Fairfax's meeting and the MPIC AGM are already booked. No dinner, but we would have h'or d'oeurves and a cash bar. Positives: Enough space for seating; Cost significantly lower than the hotel; Quiet environment for speakers; Familiarity for Fairfax attendees; Slightly lower or roughly the same cost as what the average attendee to Joe Badali's would normally pay. Negatives: No dinner gathering I'm leaning towards 3) and then 1), but please give me your feedback. Remember, we have very wealthy patrons who attend the dinner and some shareholders that are significantly younger and not quite as well to do, so we would like the environment and cost to be accessible to any shareholder who wants to attend. Look forward to your responses! Cheers!

You would think I would have gone to the West Van location already. It's less than a 10-minute ride from my office. I keep thinking about the one in Langley which is a good 45 minutes away. Cheers!

Yeah Tariq...that happens often. Also, the bulk foods section is often more expensive per 100g than many packaged products. You would think that without the packaging they would almost always be able to pass on the savings...not so. That's Sanj's grocery shopping tip # 134...I feel like I should have a blog on MSN Money or write one of those articles "How You Can Save Big on Your Grocery Bill During The Next Market Crash!" ;D Cheers!

I haven't been much into getting/using coupons. Apparently if you spend enough time at it and get enough of a back catalog of coupons, your grocery bill can be cut by a significant margin. Yeah, I've been cutting coupons since I was 21! It's like a game...no different than trying to find bargains in the stock market...I do the same thing for airmiles too...I look for mispricing in the coupon or airmiles, just like I do with investments. It's a hell of a lot of fun...at least for me! ;D The big ones are when you can combine a manufacturer coupon with a store coupon and get the item for free, or airmiles deals where the item is almost free once you combine the value of the points. I do this sort of thing for just about everything. Recently, Telus offered a deal where if you switched to them, you would get a HD-PVR and a free laptop. So we switched from Shaw to Telus, but they didn't tell us that we would need a second box for the other tv, and I got them to give it to me for free. About $1500 worth of equipment for free, and my cable and internet bill is 10% cheaper each month. For Buffett it's Bridge, for me it's bargain hunting at the Grocery store. Cheers!

Their margins are lower than Amazon's and their customer satisfaction scores are on par or better. Overstock's affiliate business is where the money is on a consistent basis. The direct business was giving them some problems earlier because it accounted for too much of their business when the economy was humming...direct inventory prices provided lower profit margins in a good economic environment, while in a depressed economy overstock inventory prices are cheaper and negotiable...companies want to unload excess inventory. The business now runs on a profitable 1st Q, break-even 2nd Q where they start to ramp up inventory and infrastructure, slightly profitable 3rd Q as they continue to ramp up, and then a massive swing in operating cash flow during the big 4th Q...similar to See's ramp up where they generate most of their revenues and profits in the 4th Q. So far, we are seeing huge spikes in Overstock's revenue growth...30%+ growth quarter over quarter, year over year...I expect that trend to continue through the 3rd and 4th Q's. They have a long way to go to make a dent in Amazon's business, but that's not really the point. Kind of like Walmart and Costco...they aren't necessarily competing with each other, but stealing market share away from Krogers, BJ's, Safeway, etc. where they are less competitive on cost and do less volume. Overstock's long-term rival may be Amazon, but right now their primary rival are all the other online retailers with less competitive business models. That's who they are going to take share away from. Cheers!

I've been waiting a long-time for Mozilo to get his comeuppance. The case is set for October and the "man with the permanent tan" is in for a doozy! Now when is Einhorn going to actually go on the record and talk about what happened to New Century? Cheers! http://www.cnbc.com/id/38881849

Not really a war yet, but Nick Nejad writes an interesting article on Overstock.com's future...will they be the low-cost retailer for overstock goods or will they disappear into the sunset. http://www.fool.com/investing/general/2010/08/27/overstock-declares-war-on-online-retail.aspx While we're still five months out, I will go on the record and make a little bet...I think Overstock.com is going to make a substantial profit this 4th Q in 2010. I think people will be surprised by the swing in operating cash flow. Cheers!

Stick to your circle of competence Sanjeev, Lakers don't stand a chance against a healthy Lebron If LeBron manages to win a championship, it will only be because he was riding the coat-tails of a healthy Dwayne Wade! ;D That's the one snag with LeBron's move to Miami...it's a lose-lose proposition. If he loses, they'll say he chokes. If he wins, they'll say it was because of Dwayne Wade and his leadership. LeBron may get a championship, but the respect won't come until he wins one on his own. Kobe's won two now without Shaq...yes he has Gasol and Odom, but they're not a Wade, LeBron, Garnett or Pierce. Kobe really carried that team to two championships. LeBron's going to have to really lead his team to get any respect. Now about that Tiger Woods...looking pretty good this week! Cheers!

Either way this has to be one of the most brilliant trades inside of a public company ever! Yup, it was pretty brilliant! I would say Fairfax's shift from treasuries/CDS to municipals/corporates/equities was equally fantastic. They were pretty much 90%+ out of the CDS' at the bottom, and bought $6B of Berkshire-guaranteed, tax-free munis paying on average about 5.5-6%. They also closed their S&P500 and other basket hedges right at the bottom, while snapping up WFC, GE, JNJ at or near the bottom...as well as many of the preferred deals Berkshire got...other than Goldman. Cheers!