Parsad

Because he's one of the biggest idiots on television giving investment advice! ;D I saw that same segment right now too, and God is he the dumbest guy I've ever listened to. I thought he was stupid when I talked to him about Fairfax 4-5 years ago at the first VIC, and it seems he's gotten dimmer as time has gone by. I quickly flipped to Bloomberg immediately after that! I'm not sure why Buffett goes on CNBC rather than Bloomberg. The reporters on CNBC are mostly Wall-street type morons, whereas the reporters on Bloomberg are actually quite a bit more knowledgable. Cheers!

I can't avoid this guy if I try! ;D We've been buying Red Robin for about a month and a half now. It's our third largest position. There is also another hedge fund who controls a significant amount of Red Robin. The founder of Glass Lewis is also on the board and is working for the hedge fund. Now Sardar is there. They are already searching for a new CEO. Red Robin generates tremendous cash flows, but some of their expansion was too rapid. They've subsequently had to take back a number of franchisee stores. This is pretty much a Steak'n Shake turnaround again for Sardar, but one in much better shape than SNS was when he took over. He'll also find alot of support from some of the current owners, but hopefully they won't be put off by his compensation proposal at BH. Refranchise stores, close the underperforming ones, sell those assets, generate increased traffic and refunnel cash flows into better ideas while expanding intelligently through franchising. He's a big fan of Red Robin, so this doesn't surprise me. Cheers!

Excellent Op-ed piece by Intel founder Andy Grove. Cheers! http://www.bloomberg.com/news/2010-07-01/how-to-make-an-american-job-before-it-s-too-late-andy-grove.html

I agree! This whole thing really bothers me, yet none of the regulators, media, brokerages, etc. know what happened. How scary is that? Cheers!

I don't know if I'd bet on Wal-Mart being around for the next 50 years either as a sure thing. Retailers seem to have a short shelf-life (no pun intended). I don't think anyone was saying Walmart will be as dominant in 50 years. Just that they should be around in 50 years. Take a look at JC Penny's (1902), Nordstrom's (1901), Sears (1899), Macys (1820) & Hudson's Bay Company (1670). Their market share has withered with age and shopping preferences but they are still around. If you are projecting out cash flows, you can probably project out with some certainty that Walmart will be around in a fairly significant position 30 years from now. I'm not sure you can do that with Microsoft or most other retailers, including companies like Amazon.com. McDonald's will be selling more burgers thirty years from now...Coke will be selling more pop...and Walmart will be selling more merchandise. Why? Because of their dominant distribution system. Krogers, Circuit City and Walgreen's may have had good management, but they do not have dominant distribution channels. Cheers!

Yes. That's why I thought the article would be somewhat provoking, as I don't believe anyone knows exactly what is going to happen. Cheers!

Op-Ed piece in the NY Times by Paul Krugman on his belief that we will see a third Depression. Cheers! http://www.nytimes.com/2010/06/28/opinion/28krugman.html?hp

Why buy Microsoft when you can buy something as dominant, as cheap, and it will be around for the next fifty years...Walmart! I would not be surprised to see Berkshire take another big chunk in this company at current prices. Cheers!

I'd hate to be the trainer or laundry clerk who handles those two bags of shirts and shorts! ;D Or the shoes! Cheers!

I just think this idea of comparing him to Buffet's current salary etc. is silly. I agree with you on this. I was fine with Sardar getting the $900K salary HE proposed and got. I would have been fine if he added a bonus component at that time as well. The problem I've had with this whole thing from the name change and then the new proposed compensation package is that you can't reshuffle the deck whenever you like. That is what Sardar is doing. He's afraid of anyone displacing him at the helm, and this is the best way he can control more of the stock over time...rename the company and create an incentive plan where he will get more in intrinsic value and ownership than he originally proposed. That is the whole problem with this thing...not the compensation package itself, but the whimsical way in which he is implementing each of these components. Almost haphazardly, by gaining a step in reputation and then going backwards two with shareholders by some new idea. Each step he ends up controlling more, but shreds his reputation with the loyal shareholders who were hoping to grow with him. I respect his talent, but not the culture he is now building. Cheers!

It's almost like a 3-day cricket match! ;D Cheers!

I'm quite the tennis fan, and I'm following this match along on my computer at the office...23rd ranked U.S. player John Isner and unranked Frenchman Mahut have now played over 9 hours! The 5th set tiebreaker is at 58 to 57! Cheers! http://www.wimbledon.org/en_GB/news/log/index.html http://www.wimbledon.org/en_GB/scores/index.html

I agree RRJ. I think that self-deprecating sense of humor allows us to form a bond with the likes of such managers. They are human afterall, not gods! Cheers!

I'm sure Charlie Munger will be none too pleased with the compromises being made to toughen financial industry rules. It looks like compromises will have to be made to the Volcker Rule of forcing banks to restrict trading and investments in hedge funds. Personally I like the rule and would like it to pass as is, but that won't be the way it will go I guess. Cheers! http://www.bloomberg.com/news/2010-06-23/volcker-rule-under-attack-as-lawmakers-seek-hedge-fund-loophole.html

Andy Kilpatrick, author of the Berkshire bible "Of Permanent Value", has a new website. I love the quote by Buffett on the top of the page about Andy's tome! Cheers! http://www.andykilpatrick.net/

Berkshire had insured a client for $30M if France won the World Cup. With France out, chalk up another nice fat premium for Ajit Jain and National Indemnity! Cheers! http://www.bloomberg.com/news/2010-06-22/buffett-wins-30-million-world-cup-bet-as-france-falters-in-tournament.html

Chalk up another one of the Fairfax miscreants whose alternate career lasted but a millisecond! http://www.cnbc.com/id/15837548/cid/176746 Sweathog Herb Greenberg, who vehemently defended several hedge funds shorting Fairfax through his columns, has left the stock research firm he created two years ago. Lob Greenberg in with Fabrice Taylor's short-lived stint as chief editor of "Frank" magazine, which he ran into the ground in a year, and Pastor Peter Eavis, who left his New York church and went back to writing. These three numbnutzes were reporting everything John Gwynn and John Hempton had to say in their supposedly independent and objective articles. Karma's a bitch! Cheers!

In ICP's case, one of their traders, William Gahan, actually put up the $200K bond for Spyro Contogouris back in 2007 when he was charged. I'm not sure if Gahan is still at ICP, as alot of the key people have left. Ironic how key people have left ICP, but not a single person left Fairfax when ICP was alledging that Fairfax was involved in fraud. Cheers!

Am I wrong to believe that this one-sided charity argument is short on some facts? Buffett and Gates waited a lifetime after building giant businesses to donate. At that point they were able to donate far more than others, thus by deferring charity until they did, they were able to offer MORE charity - a net positive? Likewise, the article says that if one person had a cheaper car, a homeless person could get another meal, but what about the many indirect benefits of wealth in society? How many workers made that Mercedes and were able to eat? How much does Mercedes as a corporation donate in relation to each car purchased (I'd think the profit margins are quite large). I don't think anyone is arguing these points. The point of their actions were that anyone can make a difference. Some do it with their time (volunteers), some give back through their careers (teachers), and some can do it through charitable contributions. Cheers!

Looks like Buffett's request to some of the world's richest billionaires to donate half of their wealth, could also apply to many other people who have done well. Here's a story of a family who sold their mansion and donated half to charity: http://www.bloomberg.com/news/2010-06-21/family-sells-2-million-mansion-gives-half-to-charity-review.html Cheers!

Prem need not care -- his primary business is not that of making loans. Prem might care if he were asked to boost reserves every time the market got scared that a hurricane was imminent. Sure he cares! Fairfax has had to report under FASB 157 like everyone else. They've had to mark to market their investment portfolio for a while now. That means they have to readjust reserves if their capital ratios rise or fall. And that's what all other institutions will have to do. It will hurt in the beginning, but it will reduce the total amount of risk that institutions expose themselves to...or at the very least, you won't see risk capitulate in such a manner as the last few years, but you'll see institutions having to readjust capital levels on a regular basis. My question was.. is it a disaster waiting to happen? Will this cause all the banks to have to simultaneously have to raise capital and take huge markdowns again? If it passes my guess is it will.. Especially since they are supposedly requiring it for equities and loans this time. Not a disaster, but it could have some short-term impact on institutions as they increase their capital base. If they enact it in a draconian fashion, forcing institutions to raise huge amounts of capital immediately, then it could be a problem, but I think mark-to-market is better used as a tool to indicate current circumstances and force institutions to assess their current risk levels. Here's a good blog post article on your mortgage analogy and the way mark to market should be enforced. Cheers! http://jenniferfitz.wordpress.com/2009/03/11/warren-buffet-mark-to-market/

Might be related to the $330M in 2017 C&F notes. Cheers!

Ken Heebner's struggles at CGM continue. What's even more sad is that everytime anyone talks about an underperforming fund manager, poor old Bill Miller's picture is shown instead! ;D He's been the whipping boy for underperforming managers the last couple of years. Take a look at the article: http://www.bloomberg.com/apps/news?pid=20601108&sid=ald5h_nPY5Ro Cheers!

Mark to market did not precipitate the credit crisis. Overleveraged institutions did. Mark to market will force some accountability on the amount of risk financial institutions expose themselves to. Why is it that financial institutions feel comfortable with 20-1, 30-1 leverage? They shouldn't! Why do they believe that volatility in portfolios or pension assets should not occur? Or how they mark reserves in insurance companies? Prem has no problem with mark to market. I don't think Buffett & Munger do either. Those businesses with good underwriting practices on loans, insurance policies, etc will do fine long-term under MTM. It's those businesses that have less than stellar practices that should be worried. Cheers!

What a fantastic letter! The humility & earnestness in those words. Wow! Cheers!