Parsad

Why not just meet at BRK annual? I'll be there, anyways. Unfortunately, I won't be going to Omaha this year. Going to Toronto next month and Vegas in early June. The gathering here is more for people to just get to know one another, and for me to meet with several people who wanted to have lunch or coffee and things just haven't happened. I figured why not do a larger get together where everyone can meet, talk and network. Cheers!

Very good post Oec2000! I think you straddled both camps well. You should work for the U.N.! ;) What isn't clear is whether Sanjeev's camp is suggesting that buy and trade can actually provide better returns in the long run. To this, I would say we should look to the example of the succesful investors we admire (Watsa, McElvaine, Chou, Cundill, etc) - the evidence is overwhelmingly in favour of buy and hold, imo. To answer that question for you, three of the four are very good friends of mine and whom I consider my mentors. The fourth was a friend and mentor to one of them. Those three are the best investors I know...I would also dare to throw in Sardar and Mohnish in there (recent results notwithstanding). I can only hope to be as good as them one day! Of the first three, two are passive and one enjoys active investment management at times. While they mainly adhere to buy & hold (not unlike myself), they do swing into the buy & trade camp rather regularly. Who here is going to tell me that the CDS investment was a buy & hold, long-term investment idea? It was a pure macroeconomic event-based decision, and used to protect the portfolio while reaping stellar gains. That is more like Soros, than Buffett or Graham. All three adhere more to Graham than present day Buffett. Although when markets make it available, they do like to buy quality for cheap. Prem and Francis are very much old school Graham for the most part. Don't let the recent purchases of JNJ, KFT and WFC fool you. They really do prefer hard assets behind their purchases. Neither buy & hold, nor buy & trade are necessarily better than the other. Neither guarantees better long-term results than the other, as there are many great investors in both camps. It is completely based on execution and the emotional makeup of the investor. Is Tiger Wood's golfing philosophy better than Phil Mickelson's? Is his skill set any better? I would suggest execution and emotional constitution make virtually all the difference between 14 Major Championships and 3 Major Championships. Cheers!

Over the last few years, I've often had offers from people to get together here. Sometimes I try and meet people individually, but it becomes difficult. I was wondering how many boardmembers would like to meet here in Vancouver, BC. I know there is probably at least ten or more people in the area who have asked to get together before. It will probably be somewhere local in mid-May. Please let me know if you are interested. Cheers!

Stock, I'm guessing you were probably not down 50% like many other value managers in 2008. And if you weren't, did you achieve that result without hedging, shorting or market puts? Was it done simply by being long on quality businesses at great prices for the long-term? And having 50% in Fairfax doesn't count. ;D Cheers!

It all comes down to whether you are buying a stock, or a business. If you are confident of the business you are buying into, why worry about the vascillations above and below "intrinsic value" that will always occur as the business grows? You stand to make far more over a long time with very low taxes if you monitor the business, and not the tick by tick. It's just one way of doing things. This business allows any number of players to make a profit in any number of ways. Fisher's way worked for him(and continues to work for me), and others have their way of investing. I was just expanding on my comment about Fisher's method. You can do that with your own personal account, but not if you are managing other people's money. Take a look at all of the value investors who have gotten completely hammered in the last year. Many are complete Graham/Buffett/Fisher acolytes, who had impeccable track records and hold investments for the long term. Now they've done exactly what many of you are espousing (which I espouse as well...in theory), which would not have been a problem if they were looking after their own capital, since they can handle extreme volatility. But suddenly when half your fund is being redeemed and you have to generate liquidity, Buffett, Graham and Fisher go out the window because you are hooped...either close the fund, or liquidate and hurt remaining partners. So in theory, buying and holding quality businesses at great prices is efficient and ideal...but static behaviour is not as easily translated to pools of public capital in distressed periods like we witnessed. Investors don't care about management philosophy when they are panicking about their retirement funds. Cheers!

Parsad sorry I'm going to take these out of order. * You are kind of all over the place and at the same time talking right through my points. Look, I'm trying to make the case that you should never sell an excellent business purchased at a cheap price even if offered a rich price for it. My assertion does not imply that an excellent business is the only way to make money or beat the market, it's not, but I am asserting that an investor would be foolish to give up this excellent business to attempt some other investment operation. Not saying that I would necessarily sell every business I own for any rich price, but why would this be foolish? Summed up, an excellent business that has been purchased at a cheap price is the most optimal investment operation an investor can achieve in the long run. I'm not debating whether it's easy or hard to find an excellent business at a cheap price and besides, you only need to find one in your investment career, the sooner the better . Not necessarily optimal. Perhaps more efficient, but not necessarily more optimal. Peter Lynch had 1500 stocks in the Magellan Fund at one point. We don't invest like that...we don't hold more than 10-12 ideas maximum. But optimal is not the appropriate word for what you are describing. * Now, with regards to my comments about an index. The point I was trying to make was that one could argue that if given a sufficient premium price on your excellent business, that those proceeds could then be channeled into an index. Point being that both the index and an excellent business will allow for a consistent long run operation. Any investment operation short of replacing your excellent business with an index will give rise to questions pertaining to longevity of the that alternative operation. Remember my point is that an excellent business purchased at a cheap price will provide you both longevity and high returns per year (i'm sorry i used 10 to 12 percent, I thought I was being conservative. One would hope the excellent business purchased at a cheap price would imply higher than that, but it's relative anyway, that is, if the excellent business purchased at a cheap price produces 10% per year then that implies that the average business will offer less.) If you are aiming for 10-12 percent, then your method of looking for quality businesses at undervalued prices will hit your mark over the long-term. Unfortunately, or perhaps fortunately, we aren't aiming for 10-12 percent. * You say generally stocks become undervalued due to fear or manipulation. I disagree, stocks become undervalued mainly due to fixations on short term issues at the expense of longer term dynamics. That's what I said...short-term issues result in the fear. Many stocks are also manipulated. * What are Fairfax's durable competitive advantages. Higher than average returns over a long period is a necessary result of durable competitive advantages, but high returns, exclusively, does not necessarily point to durable competitive advantages. I think this is semantics. Some would argue the same thing about Buffett, but I believe anyone would be a fool to do that. * You say, "Buying quality businesses and holding them for long periods of time while beating the markets, is actually significantly harder than buying modest or poor businesses at a significant discount to their underlying asset value. Other than many of the firms we always hear about, time tests the metal of virtually any business. There are only a handful that will exist for any young investor's investment horizon." I disagree. Unless you have the ability to actually purchase enough shares without driving the price up on yourself and resting control of the business in the hopes of liquidating the assets at a sufficient price to those with a more efficient use or making use yourself of the assets more efficiently, then buying businesses in todays world at discounts to underlying assets is a recipe to suffer the ills of managements that will suck out whatever value remains in those assets (before you get a chance to salvage them). If you don't have enough money to buy control, its a dangerous operation. Also, your point is somewhat limited in that you are talking about liquidation value and turn arounds. I'm sure as you say there are ample opportunities to do this, but I again get back to my point, I would not give up an excellent business purchased at a cheap price to partake in this. But this is exactly the way Buffett made his fortune. The competitive advantages at the Washington Post are only apparent to investors like you or me, because it had Katherine Graham at the helm. Otherwise the Washington Post would have been a has-been. Geico's apparently easily discernable competitive advantages are only visible because Jack Byrne saved it, and then Tony Nicely and Lou Simpson grew it. If I asked you to find me fifteen great businesses with durable competitive advantages twenty years ago, you would have almost certainly included Kodak, Boeing, AT&T, Bethlehem Steel, GM, Goodyear, Phillip Morris & Sears. Yet the world has changed enormously in that span, and the competitive advantages of these businesses have been decimated. Or the costs related to their operations destroyed shareholder value like Phillip Morris. Those are just some of the hugely successful businesses that had their world turned upside down over the last decade or two. America thrives because it's citizens are terrific at destroying competitive advantages of other businesses. Why do you think both Google and Microsoft came from the U.S.? Or Amazon and Ebay. Nothing is impossible in the U.S. * I'm not sure about your Geico and WPO examples nor am I sure about their relevance to my points. As to investors identifying their completive advantages, I think some would and some wouldn't, but as you suggest, most would not buy. They would have fixated on the then more recent troubles at the expense of the long term. Buffett even suggest that others where fully aware of the value of WPO, but there belief that the market was going lower kept them out. Well that's exactly right. I would say that perhaps one investor in a hundred would have recognized any durable competitive advantage in those two businesses when they were in turmoil. And only one in 250 would have actually acted on their instincts and invested. Roughly the same ratio as those that actually attach themselves to the value investing fraternity. * You say, "For example, much of the Wells Fargo we bought at $9.50 two weeks ago, we sold out at $17. That cash is sitting there and will be deployed into something we think will be under the same sort of pressure or more likely deeply distressed. Markets don't go up linearly. They bob and weave! Our partners do not have the stomach when volatility hits the way it did last year or early this year. We have to temper that volatility by buying cheap and selling dear. A 50% drop doesn't even make us blink twice in our corporate portfolio, but it does for some of our investment partners, so we have to manage the funds with market risk as a consideration." Again, not relevant to the points I was making, but also, this doesn't even make sense. As you say, once you deploy the money (buy a stock) how is it that you control the other shareholders to guarantee the avoidance of a 50% drop? Forgive me if this sounds a bit like "channeling stocks to win." I know you've read Bill Miller's piece on buying at the bottom and selling at the top (and let's stick to his point and overlook his results) and I wrote something along those lines in another thread (post), so does it not in the least seem to you that this is what you are trying to do? What's the value of Wells Fargo? From your post you seem to imply it's somewhere in between 9.50 and 17, is that so? A 50% drop does not make you blink twice, that sounds like something Buffett would say. If he's the best, are you suggesting you are as confident in your abilities as he, or that some level of willful ignorance is bliss? I think I'm as smart as the next guy and luckily i've never had a 50% drop in a position, but 20% and I'm back at the drawing table checking that I didn't miss something. I blink. Twice. Why do you presume that I would even entertain such a thought of comparing myself to Buffett. I think when people do this, they actually create an antagonistic environment for posts, because you are automatically putting people on the defensive. Probably better to approach it differently. I've had quite a few stocks drop 50% or more on me. Hell, Fairfax in 2003 dropped 70% on me! If our analysis continues to make sense, we continue to buy and average down. If we think we made a mistake, we sell and take the loss. To your last point, okay on the liquidation value, I partially addressed that above and am not objecting to it but mainly it has nothing to do with my previous posts, but as for your notions of intrinsic value, that's a little problematic. What you think a business is worth is not the same as intrinsic value. What you think intrinsic value is is not the same as the real intrinsic value. If you follow what I'm saying then you'll realize that your notions of intrinsic value must by default be a guess. It may be a good thoughtful guess, but a guess implies imprecision and imprecision implies a range that gets summed up by its midpoint in the context of intrinsic value estimates by investors. Short of short term risk free securities, intrinsic value estimates are always a range and the longer you go out the wider that range tends to get. Other aspects of the investment will vary that range as well, but there is always a range from the standpoint of the analyst/investor. He/she after all can not predict the future exactly, but they can make an educated/probabilistic guess. My point is that your probability of sustaining exceptional returns long term using the methods you describe are low. Not to say you can't do it. Just that the probability is low. You are practicing a masked form of market timing, and their are too many variables that, as they have worked in your favor, can also as easily work against you. How can you be so sure? How can you say that with such exactitude and certainty? Or is it that is just what you believe, and anything else is not possible. Keep an open mind. BTW, why did you get into Wells Fargo at 9.50? Why not 10.50? Or 11.50? We've bought WFC on several occasions. This time we happened to choose $9.50 as our execution price. We bought WFC $20 2011 call options at higher prices (around the $15 range down to $11)...which we still hold. We decided that the stock at $9.50 was one of the silliest valuations we had seen in this era and the odds were in our favor that this was an inefficiency. So we bought a considerable amount of stock. We have WFC's intrinsic value pegged significantly higher than what we sold the shares at. But we don't get greedy. We average in and we average out. During the same discussion a couple of weeks ago, we also mentioned that we thought GE's price was equally ludicrous. We bought a ton of GE 2011 call options and some equity. We continue to hold those. As the price rises to intrinsic value, we will average out. If it drops further, we will buy alot more. It's not nearly as complicated as you make it seem. Sorry for the long post, it's just that here I am describing why one should not leave there wife if they think she's as close to perfect for them as they can find, and out come replies to my post that there are other fish in the sea. As if I didn't know that and besides it's missing the point. Jack, if I owned all of See's Candy (or at least 51%), I wouldn't ever sell it for any amount of money. But I don't. If I can't own a controlling interest in any public equity, then there is no guarantee that any excess future cash flows will be allocated in the fashion I would like to see. As much as I love Warren Buffett, Prem Watsa or Sardar Biglari, they are always going to do things that aren't exactly what I would have done. On most occasions, their result will be far better than mine. But there is always the possibility that one event or investment that I don't agree with could take down the ship...think GenRe (derivatives exposure), TIG & C&F, or nearly 100% of capital into SNS. All three are exceptional investors that are far better than I could ever be, but each did something that jeopardized the entire business. Whether you like it or not, unless you control the business, you will always be at the whim and mercy of a manager. If you are fortunate, they will be quality managers like the three I described above or many others out there. If you are unfortunate, then you are done...competitive advantages be damned! We average out of investment positions to prevent that possibility. We aren't going to let an investment run and account for 40-50% of the fund, which would be completely devastating to our partners if that manager makes a horrible mistake. Look at the catastrophes we've seen last year...many people thought AIG and Bear Stearns were impenetratable. As lovely as "buy and hold quality businesses at cheap prices" sounds, the average investor cannot handle the volatility. And forget about the average investor. I bet only perhaps ten out of 100 diehard Buffett disciples can handle it. Take a look at how so many value investors were panicking in the last year. You said yourself that you've never had a stock fall 50%...well Berkshire fell almost 50% in the last year. For many hardened Berkshire shareholders that is too much, and they've been immersed in the Buffett culture. Cheers!

Parsad Let me ask you this, what's your average annual return over the past 5 years. I only ask because when I read your post it sounds like you are compounding money at a very high rate yet at the same time you say "allowed us to keep our lead on the markets," but the markets are down big and if your strategy was really working as flawlessly as you suggest you should be easily trouncing the markets. Jack, if I provide you any numbers, would that actually change your mind? Of course not! Buying quality businesses and holding them for long periods of time while beating the markets, is actually significantly harder than buying modest or poor businesses at a significant discount to their underlying asset value. Other than many of the firms we always hear about, time tests the metal of virtually any business. There are only a handful that will exist for any young investor's investment horizon. Now, the above and your reply to me is a mute point. Well, that's what I figured. I'm debating what's the best logical strategy once you have identified an excellent business at a cheap price, and you counter argue with a few deft trades over a relatively short time span. In addition to that, I'm not sure if Fairfax should be considered an excellent business. And again, I don't think you can apply the point of my previous posts to an average business or poor business. Individually, the poor or average business and even just a good business does not lend themselves to a long enough run which is needed to prove out my points. Meaning the lack of durable competitive advantages is non existent or little existent in these types of businesses and therefore the high rates of returns over decades has a much lower probability of playing out. With the excellent business at a cheap price decades of high average annual returns is a given (assumed). I think it would have been better if you had countered me with an index. At least with an index like the S&P 500 you get the high probability of longevity that is required. If my intention was to match the index, then you are correct. I would simply buy and hold the index. My goal isn't to match the index, but surpass it. In regards to quality businesses, how can you propose that Fairfax is not one or that Coca-cola is? Isn't Fairfax's compounded return since inception on par, if not better than Coca-cola's first 23 years? Your subset of quality businesses that have durable competitive advantages becomes incredibly small using the characteristics you describe. There is a whole other world outside of those businesses where significant inefficiencies can be exploited. Also, you are making the mistake of not only using a small data set, but also during a period of generally lower prices with massive volatility. I suspect that if you were confronted with a moderately rising market for a long stretch, the results would have been very different. Though I will acknowledge that individually stocks are usually pretty volatile over a 12 month period. Actually the data that supports the Graham philosophy is significantly longer than Fisher's. In fact, Buffett's greatest returns came from his partnership days and early Berkshire when he was buying entire businesses utilizing insurance float. While the Washington Post and Geico had certain competitive advantages that would last for a long time, I bet you virtually any investor today (including Buffett acolytes) would not have been able to say that for certain. Especially during the period when Buffett bought them and they were under tremendous pressure and turmoil. Both businesses almost went under at the time. Also, Fairfax and Overstock where or are two heavily manipulated stocks. Instinctively I want to say that they aren't good test for what you are advocating. I'll give that some more thought. Generally, stocks become undervalued due to fear or manipulation. What about WFC and BRK that I mentioned? Are they being manipulated. What about all the distressed debt I've bought in the last few months? Their yield is around 25-28% till maturity. In fact, two tranches mature in another month and a half, where the annualized yield would be about 24% over four months. These businesses have enough cash to pay off all their 2009 and 2010 maturities and the certainty of recouping our investment is probably about 99.9%. Their competitive advantages play no part in the analysis. Lastly, you say, "something cheaper always comes along with investing." I don't know what that means. You've got to define that better. I want to say it's a flawed assertion, but I don't know what you're trying to say. Your statement is a relative statement and it will take many many decades to prove it out. Let me clarify that. I assume an excellent business will be one that will continue as such for many many decades. You say you can always find something cheaper, but if it is "not" an excellent business you can't, within a high probability, even hold out that it will be around 10 years from now let alone decades. But to prove out your notion of a cheaper price you need it to run as long as the excellent business, and as I've defined an excellent business there is a very low probability that your cheaper priced business can make the same long run. For example, much of the Wells Fargo we bought at $9.50 two weeks ago, we sold out at $17. That cash is sitting there and will be deployed into something we think will be under the same sort of pressure or more likely deeply distressed. Markets don't go up linearly. They bob and weave! Our partners do not have the stomach when volatility hits the way it did last year or early this year. We have to temper that volatility by buying cheap and selling dear. A 50% drop doesn't even make us blink twice in our corporate portfolio, but it does for some of our investment partners, so we have to manage the funds with market risk as a consideration. Sorry, one last thing, if you are not dealing with an excellent business or even a good business, it is not at all easy to say I know what it's worth therefore I can trade around that value. You can't do that. It's impossible to use this strategy successfully long term with poor or average businesses. The reality is is that nobody knows what a poor or average business is worth. It's unknowable, therefore you don't have an advantage over other market participants. Unless your telling me you have a device to figure out the average price "guesses" of the other market participants. Jack, it's not about some sort of trading range. Often we'll look at a business' current liquidity relative to their total debt...a net-net. We love those things and have been able to find several in this environment. It's easy to buy a business (good or bad) when you subtract all their debt from their cash and receivables and it is still trading at half that value. We buy things we like when people are panicking, and then we are out by the time they start to get giddy about it. Sometimes we aren't out completely. We average in and we'll average out, so we may hold a little or alot of any one business at any given time. But it is completely predicated on their valuation...getting in cheap below liquidation value/intrinsic value and selling out as prices rise close to liquidation value/intrinsic value. Cheers!

Parsad That's unfortunate that you would sell Fairfax at 2x book considering you have such a low cost basis. I presume that after selling you would look to buy back at a lower multiple of book, but what multiple? 1.5x? 1x? And if it's 1x what if it never gets back there, or what if it gets back to 1x but book value has grown so that it is at a value greater than when you sold at 2x? I've probably done that at least ten times in the last seven years...both in my own portfolio, CMC's corporate portfolio and in MPIC's portfolios. Not necessarily selling the whole investment, but certainly portions at higher prices only to buy it back cheaper. And not even at 2 times book. The last time we did that was just in November when we sold all of our Fairfax only to buy other investments at dirt cheap prices. We purchased in the money call options on the shares we sold for a 3% premium, which was paid back by the dividend in January when we exercised them and got our shares back. Our partners may have paid LT capital gains on that investment, but we made considerably more on that capital when we invested it and it allowed us to keep our lead on the markets. If we had stayed pat, we would have lost ground as Fairfax shares finally fell this year after the 1st Q report. We ended up buying back more of our shares at cheaper prices. We've done that with Overstock on several occasions. With Wells Fargo three times over the last year and a half. As well as Berkshire Hathaway. Each time, we've made anywhere from 20-30% to 300-400%. As much as we love Prem, Warren, etc., we don't fall in love with the stock. I'm assuming an excellent business so I don't want to give people the impression that I'm suggesting these notions be applied to any and all stocks. I firmly believe it's an outright fools folly to sell an excellent business just because you are offered a rich price, and I think Buffett and Munger would agree with me. I think selling an excellent business at a rich price with the belief that you can pick up another excellent business at a cheap price is a very slippery slope fraught with problems. Actually it does apply to all stocks. The stock market gives you this opportunity. For many investors, it is pure folly because they treat it with a casino mentality. We don't do that, but we operate within a fairly strict mandate of buying below our estimate of intrinsic value and then averaging out as we approach it or go over. Sometimes we even take into consideration the economic environment and make a calculated decision to sell...as we did with Wells Fargo. Generally though, the investments we do make, we are content to hold the stock for the long-run. It's just that we don't necessarily have to. The point is that something cheaper always comes along with investing...always! Cheers!

With less than three weeks to go, we have 40 guests coming to the dinner this year. To date, the list of attendees includes: - Sanjeev P. - Alnesh M. - Andrew C. - Paul R. - Eric A. - Jim B. - Brian B. - Stephen C. - Stephen C. (Crip) - Jordan C. - Marc C. - James E. - Gregory F. - Stuart F. - Stephane G. - Leon G. - David H. - Simon H. - Gary H. - Tom J. - Charles K. - Stephen K. - William M. (possibly a guest) - Stefaan M. (possibly a guest) - Mark M. - Eng-Chuan O. - John P. - Norm R. - Al R. - Keith S. - Brian S. (possibly a guest) - Jeff S. - Nicholas S. - Martin Van B. - Jack W. - Ilya Z. If you haven't already given me your RSVP for the shareholder's dinner, then please do so. Details about the dinner are below. Cheers! For the fourth year in a row, we will be holding a Fairfax Financial Shareholder's Dinner in Toronto. About nine people showed up the first year, and last year we had about 30 shareholders attend. For the last three years, Sam Mitchell and Francis Chou have graciously attended, where they have entertained questions from shareholders for over an hour. Many attendees left with sage advice that served them well through the volatility of 2008! Fairfax Financial Shareholder's Dinner Tuesday April 14, 2009 Joe Badali's 156 Front Street West Toronto, Ontario (416)977-3064 Drinks: 6:30pm-7:00pm Dinner: 7:00pm-9:00pm RSVP: sanjeevparsad@shaw.ca

Old School Graham taught to think like an intelligent private business person in buying and selling publicly traded equities. The only downfall to the theory was that private business people put their businesses up for sale much less seldom than does a common stock operator. Buffett obviously converted himself to the business ownership aspect -- but with a major cavaet: that he would only buy outstanding franchises. Don't get me wrong, I have the utmost respect for Graham -- however, if people are buying sub-par businesses do so with eyes open (and perhaps 'trade often' would be good advice). Time is not necessarily a friend of the sub-par business as it is with the outstanding one -- tremendous margins of safety are of the essense. I don't disagree with you at all Uncommon. Though the operative word is "private" business when it comes to Berkshire. Public equities have a bid/ask on them every second, of every hour, on every day. Public businesses don't go on sale that often. Cheers!

Hi Jack, No there is nothing wrong with what you are proposing. What it does leave you open to though is market volatility such as what we are currently experiencing. Look at Wesco for example...COST, KO, AXP & WFC. That's pretty much it for the last ten years, and Wesco has done perfectly fine. But the portfolio naturally experiences tremendous volatility during that ten years. Buying well below intrinsic value and then selling when the investment is at or above mitigates that market risk. Yes, you may pay slightly more in taxes, but generally returns will be slightly better while volatility will be less. Even Buffett suggested that he should have sold Coca-cola when it was over $80/share back in 1998. If someone offered me two times book or better for Fairfax, I would be a seller, not a buyer. This is not present day Buffett, but old school Ben Graham. Cheers!

Yep, Another Buffett myth blown completely apart. He has always used economic analysis particularly at times of great flux in the economy. No, not really a myth. What Buffett does with Berkshire is very different than what he may have done in his partnership days, early stages of Berkshire, or currently in his own personal account. Berkshire for some time now, has to operate under the assumption that Buffett won't be here in a decade. Thus "buy & hold" is what has to be reinforced in shareholder's minds, because that is what the vehicle is now. It has to run autonomously because that is pretty much what will be happening when he's gone. It also happens to be a public trust in many ways, since virtually all of his stake will go to charity. It can't operate based on exploiting macroeconomic factors because that means someone has to actually make active decisions. Finally, the "buy & hold" philsophy is espoused for very obvious reasons in economic terms, because Berkshire is trying to acquire private businesses where the owners probably don't want to depart with their stake. The fact that Berkshire promises to never sell those businesses, is what gives these owners the comfort of selling to Buffett. Otherwise they would probably tell him to take a hike! So "buy & hold" has a very specific mandate, that probably doesn't apply to the investor with some ability. It really became the twisted mantra with which mutual fund and investment companies sold their wares. Buffett tried to turn that around by encouraging those without much aptitude for investing to buy and hold index funds instead. Cheers!

Yup, that's an important distinction Eric. I would propose that half that drop is also primarily related to financial stocks. There are alot of non-financial companies that were dragged down with the market, even though their earnings are down less than 10-15%. Investors should remember that they aren't buying the market, except those that jumped in with both feet and bought index funds or ETF's in the last few years! >:( Cheers!

Really? FFH's stock price is flat today. Maybe you should add a salad or fries to your sandwich...... Hey I think Prem should just buy shares back, rather than me carrying the load...literally carrying the load if I eat those fries! Cheers!

Well, Burger King is now suing Steak'n Shake over the name for the sliders. Burger King calls theirs "BK Shots" and Steak'n Shake calls their "Steakburger Shots". Maybe they should just go with "Shooters". And of course my "L'il Steaks" is completely available. Any SNS shareholders have some other good names to suggest? Cheers! http://southflorida.bizjournals.com/southflorida/stories/2009/03/16/daily84.html

What are you guys holding right now? A sandwich in one hand, and a cup of coffee in the other. I'm typing with my toes! ;D Cheers!

Those that can...they do! Those that can't...they write! Let guys like Olive write what they want. I remember Fabrice Taylor writing often about how Prem couldn't run an insurance company, yet Taylor ran his magazine "Frank" into the ground in less than a year. Buffett is being treated about the same as when Jordan decided to take some time off and try his hand at baseball. To the press, you're only as good as your last game, and it was an off year for just about every investor out there. What did Jordan do when he came back after his stint in baseball? He went out and won three more championships! Cheers!

I have no problem with Congress trying to do anything to get the bonuses back. The U.S. government owns it, and they should treat it like they are the owner. I have a problem with the moral outrage that they show, in particular the shellacking Liddy took, when he's working for peanuts to turn this thing around after being brought in specifically to do so. How about each Congressman take a pay cut for missing the boat too, as well as Chris Cox, Alan Greenspan, Hank Paulson, Ben Bernanke, Sheila Bair, etc. I believe the taxpayers pay their salaries as well. What about Bush & Cheney? Cheers!

Yup, that's a pretty good analogy. What I hate about Congress is how after every debacle, they get on this friggin' high horse and hang a few people. Yet, they never explain how all of them or the regulators missed all of this as well. - Didn't Congress approve the increased leverage that Fannie Mae and Freddie Mac started using a few years ago? - Didn't they also approve the merger of banks and investment companies? - They also created the precedent a decade ago by approving the merger of banks and insurance companies...remember Citibank and Travellers merging? - Why didn't Congress enact any legislation preventing 100% or 110% mortgage financing back when Angelo Mozillo was sitting on CNBC talking about it? This era's Milken or LTCM will be AIG & Madoff! Cheers!

I'm not sure which is the bigger joke...the whole financial industry debacle or how the political parties operate after such a crisis! Cheers! http://www.globeinvestor.com/servlet/story/RTGAM.20090319.wAIGtax0319/GIStory/

Yeah, that's pretty much what they did! Bloomberg ran a story today on the report, Lehman Bros and naked short selling. Cheers! http://www.bloomberg.com/apps/news?pid=20601109&sid=aB1jlqmFOTCA&refer=home

Interesting report issued by the Inspector General of the SEC, on how the Enforcement Divison is hampered in investigating naked short selling, due to some deficiencies in how complaints are referred. Doesn't quite bluntly state that they are not doing their job, but does infer that enforcement of naked short selling is not being handled in an appropriate fashion. Cheers! http://www.sec-oig.gov/reports/AuditsInspections/2009/450.pdf

I can vouch for this; I had one of each of the shooters today-no surprise, they were all delicious... I watched them cook all the food, and you are dead on on the technique. The shooters certainly have ridiculously awesome margins for the company. What do you mean had one of each? Do they come in different varieties? Another point of note, one of the cost cutting measures was to take the red ink off the 'to go' shake cups... they finally gave me a shake in a cup that had none. They also rolled out a new, simpler menu that is much better than the last one (from 8 pages to 4, and organized so that you can understand it). Like Sardar said, if we can save 1K/month at each restaurant, that equates to well over $5 million per year in cash! Yeah, I think that is where the focus is probably now. They've made great strides on G&A, but restaurant operating costs, and cost of food and labour is where they need to make progress to get back to the same margins they had in 1995. I think you should see some benefit as food costs and labour costs should have dropped and will continue to drop for the next six months. But if they can find inefficiencies and eliminate them now, that should bode well for them when food costs do rise again in the future. Heating and electricity, construction costs, advertising rates, productions costs all have come down. This should bode well for the bottom line of businesses where the owners have been proactive and run a more efficient operation. Cheers!

If the market now returns 2x the average, say 10% per year, it will take 10 years to get back to 1500 - 2020 is almost exactly 20 years. Dude, without a calculator...the rule of 72. 72 divided by 10% equals 7.2 years. Thus 2016 is when you should get back to 1500. But you are pretty close. The S&P500 hit a 12-year low last month, so add 7.2 years and you get pretty close to 20 years. Remember though that the market does not move in a linear fashion. Cheers!

I am under the impression (from the guy I talked to in investor relations) that the Reg D filing was to pay advertisers in order to "align their interests with that of the company". I didn't like it because they are diluting my claim on the future cash flows of the company... which presently are being valued for much less than they are worth. I'm not sure it is a bad idea at all. First, why shouldn't advertising companies have a vested interest in the marketing they do. If the marketing is successful, their compensation increases. Second, we don't know exactly what price those shares were issued. They could have been issued at $5 or $10...we don't know yet. In terms of future cash flows, if the advertising company has a vested interest to do a good job, naturally Steak'n Shake will generate greater cash flows which trickle down to your shares. Cheers!