Jurgis

Good letter. I liked their thoughts about their underperformance.

Government took him to Area 51 and replaced him with artificially grown clone. 8)

Guys, let's create a new thread for the food/drink/coke discussion. merkhet, can you do it? 8)

March 14th no longer works for me. Since I did not get any replies, I am going to cancel plans in March. I'll post here if/when our group plans a meeting in April. If any of you want to get together for a lunch or something, feel free to drop me a line. Sorry that this did not work out this time. :)

Yep, bought at $120 presplit, sold at $175 presplit IIRC. Does not ease the pain at all. ::)

Great post. +1

I really want to sell 20 year $3B bond at 1.68%. Where can I apply? ;D

Be sure that you know how to deal with PFIC if you buy this in taxable account in US.

Mephisto - the company will always deny and dispute short accusations whether they are valid or not. No company ever admitted that shorts and their accusations are right.

Available right now on ebay for $999 or best offer: http://www.ebay.com/itm/The-Memoirs-of-Walter-J-Schloss-A-Personal-And-Family-History-1st-Addition-/111463937416?pt=LH_DefaultDomain_0&hash=item19f3c4b588 I am not buying, so it's still there.

I think there might be some investors who made a lot of money when FFH was targeted by short sellers. Also maybe AFSI. Also EBIX. Also HLF? So there is potentially a good money to be made by buying companies accused of fraud by short sellers. There is also risk. Caveat emptor and all that. My personal experiences: FFH was before I knew about it. AFSI: made some money on sideline MHNC prefs - coulda made more. EBIX - sold near bottom. HLF - not involved. Had a bunch of Chinese reverse mergers that went bust on fraud allegations. Made money on some before they collapsed, lost money on others as they collapsed. No positive stories from that area.

Rrrright.... So not counting 2009, which Buffett's recent purchases have been "obvious"? Or perhaps you can tell which of your recent purchases have been "obvious"? :)

Now I know why my girlfriend left, my cat died, my canary is glowing in the dark, me left foot is shorter than the right, my manhood does not censored, my investments are dropping and my debts are rising. It's all LL fault. How can I sue? Do I need to buy LL flooring first?

How about Miley Cyrus? Is she a board member? We can invite her. 8)

The important question here is: was that fishing pole bought at LL? ;D No serious contribution here, move along.

How about Miley Cyrus?

Not to derail people from the straight and narrow of not checking stock prices every day, but... Even with the "efficient market" ;D , if you are investing in microcaps, sometimes there are opportunities to buy (or sell) that last a day or less. Even with large caps, TLM takeover investment opportunity lasted only one day and yielded about 48% return ( http://finance.yahoo.com/echarts?s=TLM+Basic+Tech.+Analysis&t=3m see Dec 15 - 16). Obviously, this needs to be weighed against your investment style, your time cost, etc. For five stock, Buffetty, hold forever portfolio daily price checking is definitely not productive or useful. :) For some value investors it might be.

cwericb, can you summarize for tl;dr? Thanks

tombgrt, You are right, but only partially. I would love to buy BRK/FFH/BAC at 2009-2011 prices. I can't though. So should I hold cash? Maybe, but likely not. You say "In a few years the same will happen again". If we knew that it will, we could hold cash. But we don't know. Maybe it will, maybe it won't. With that in mind, there are few opportunities in current market and BRK/FFH/BAC might still be the best places for money even though they are not as cheap as they recently were. BTW, I don't think that BRK is currently trading with Buffett-discount. I think price with Buffett discount is about 1x to 1.2xBook. Current price is not "quite-overvalued 2xBook", but not with discount either.

Amen! Watsa usually thinks like vulture investor, like Marty Whitman. He invests with one eye on bankruptcy. He buys shares, but he prepares to buy distressed bonds, BK, recap, etc. So, yes, like cwericb says, you should not follow Fairfax into weak companies. They have exits that you don't and they may make money where you won't.

AAPL is actually not a bad comparison. I expected it to perform much worse than it has done so far. So, yeah, kudos to Tim Cook. And yet the story is far from over. There is still high risk that Jobs' shoes are tough to fill. Neither Apple nor Berkshire are going to collapse immediately after the key person dies. But there is a high risk of slow rot: lower performance, losing the cachet, fewer innovations, etc. And I still consider this risk to be present in Apple, even with all respect to Tim Cook. (Of course, I'm probably going to be crucified by Apple fans for saying this, so be it.) In case of Berkshire, the risks are: - Will sub heads be happy to work for someone else than Buffett? - Will sub heads be happy to give extra cash flows out of the sub to someone else than Buffett? - Will the new leader solve the internal issues (NetJets, BNSF, GenRe, etc.) as well as Buffett did? Plus the external issues: - Will companies still regard BRK as white knight for selling to it, financing, etc? - With Buffett and Gates foundation selling BRK shares, are the new shareholders be happy/patient/understanding with new CEO? I'm sure I miss some other stuff. There have been other people on this forum that discussed this quite well.

Sorry, but Cambridge public library and IBM discussion is not going to happen. This is postponed to sometime in April or May. Anyone wants to have a lunch and mingle on March 14th (or 15th) instead? Please propose location(s), since I don't drive into Boston/Cambridge often, so I don't know good places. I'm closer to Burlington/Woburn/Stoneham/Melrose/Winchester if people prefer to meet in suburbs - I doubt it, but throwing it out as possibility. :)

Where do you get no capex? They spend huge amounts and I don't think they would ever spend less than they need. Despite that, cash keeps piling up quickly. Makes total sense to return it if you can't spend it. It was a joke. If Apple decided to spend most of the cash pile on iCar, for example, would you complain as shareholder?

I think that most investors have no clue whether the company they buy has "limited opportunities to put cash back to work". People usually don't do deep enough DD and don't know business well enough to know that the incoming cash has no good uses. Management and investors are usually optimistic and expect that "side lines" will be as successful and profitable as the main business. Or that they are necessary for main business to continue succeeding. I think most investors in AAPL and MSFT think that they should invest in new businesses more rather than just return cash pile to shareholders. Well, perhaps AAPL fans think that Apple can return the cash pile, since the new revolutionary products come out of Steve Jobs' and John Ive's heads with no capex. ;) Anyway, I doubt that there's significant push for companies to return cash to shareholders vs. invest in business. It looks like a lot of companies are already doing that voluntarily. I think there's a lot of press that companies are spending their record profits on buybacks and divvies and not capex. There were threads and press already about the opposite issue: how to make companies to capex more. Finally, I am not sure if Buffett's choice with See's was right. He tells us that chocolate brand does not travel, so See's expansion outside California was not worthwhile. However, this is not really true. Look at Ferrero or Lindt. There are successful pushes of chocolates outside their core markets. Of course, I don't know how profitable they are. (BTW, completely off topic, I have lived in California, I have bought See's chocolates and IMHO they are crap like most American chocolate. Can't compare to European chocolate like Lindt, Neuhaus, etc. :)).

Bad reason to lower it. ;) Personally, I'd rather buy stock that is above Intrinsic Value based on consistent discount rate - so I can compare it with my other past and present analyses - than to change discount rate to get Intrinsic Value above the current price. But there are people who do it differently. For example, they take risk free (treasury) rate or they take company's cost of capital or whatever else. Currently, almost everything is undervalued if you take treasury rate. Even if you take cost of capital - for good businesses now this is below 10% - a lot of stocks would be undervalued too. You have to decide yourself if these are good rates to use and if stocks are really undervalued as they'd appear at these discount rates. :) The risk of using 15% discount rate for me is dual: - Not buying a great business, since it looks expensive at this discount rate - Selling shares in great business, since it looks expensive at this discount rate Unfortunately, I have done both. :) So it's something to think about. Conversely though, there were great stocks that appeared cheap even at 15% discount rate in last couple years. AAPL was one. Banks were too and somewhat still are. So it might be unwise to change the rate just because there are no cheap stocks based on it right now. (BTW, there are obviously stocks which appear to be (somewhat?) cheap at 15% discount rate even now. They are the stocks of companies in doghouse. E.g. AGCO/DE/CF in agri, Buffett's IBM, some oil stocks - HAL maybe. Of course, the issue is that these companies are encountering headwinds, so it's tough to give them a growth rate that would make them cheap at 15% discount. But if you have some insight that crowd misses, then perhaps some of these might be worth it. Alternatively, there might be international and small/micro-cap stocks that are cheap at 15% discount rate ;). Good luck! )