ERICOPOLY

Do you have a link to it?

IRS lingo is "sham".

I started this thread when common was at $12 and warrant at $5.65. Today, common up 47% and warrant up 26.5%. Ouch.

What was first, deflation or lower oil prices? Well in Japan they had deflation even with rising commodity prices. We're not seeing deflation here yet, but we are seeing lower commodities. Real purchasing power is rising as is employment. So far anyway :-X

lower commodity prices means you can make stuff cheaper. productivity gains mean you can make stuff cheaper. lower commodity prices mean consumers can buy more stuff with same paycheck, leading to higher factory utilization and employment gains, higher productivity means we make products with fewer people. lately I believe productivity has disappointed during an environment of cheaper commodities. Isn't this a bullish combination for capacity utilization and employment gains? Somehow I believe that is a headwind to deflation.

They don't seem to care about the client's tax bill either. They expect the index to plunge or go nowhere, so they stick a capital gains tax bill on the client to free up cash for pursuing their pennies in front of steamroller play. It's highly questionable. Also, the put option premiums are taxed at ordinary income rates. Further, the benefit of selling calls on an index (instead of writing puts) is that if the index goes up, you have deferral of taxes as the option can perhaps be rolled without taxes. Oh well.

You aren't including the effect of the calls that have been written.

Owning the stock and writing the call has the same profile as selling the downside volatility. That's a truth. Your point though sounds right that there may be a more liquid option market for the index vs individual names. They could own the index and sell calls, or hold cash and write puts -- whether or not they want to be business owners is irrelevant.

Actually there is look-through goodwill in their equities portfolio. They held JNJ before at market value, but market value was vastly in excess of JNJ's per-share tangible book. It was implicit goodwill that fluctuated with the market value of JNJ shares. So then JNJ is a huge bargain at today's prices which we can view as merely book value :-)

It says they are selling out of high quality equities like JNJ. But get this... they did so in order to write index puts, among other things. They might have just written calls on their stocks. I wonder why they prefer the downside of the hideously expensive index over the downside of their high quality names?

Historically Fairfax purchased things at discounts to book. The goodwill asset started to grow materially upon the Northbridge takeover... since then the premiums paid over book value have been piling up. It trades around 1.5x book I believe.

That's the multiple that sits ABOVE another multiple. Out of the $8.5b common equity, you've got nearly $1.5b goodwill. I could take Fairfax private at $1,000 per share and then sit here and argue that it was a mere bargain at $600 when it traded at 40% discount to the new book value.

A government program to pay starting bonuses to incentivize white kids to drop out of school and become armed street-level drug criminals should help to improve police relations with the black community. We don't have enough racial diversity in armed drug-related street crime.

Personally I think the war on drugs is responsible for the police behavior. It's why in their minds every black kid is about to reach for their gun. Imagine if we'd never had the concept of a criminal drug user or a criminal drug dealer. What are the police biases towards blacks today and where in the law might they be cultured? Who do they feel they are in mortal combat with as footsoldiers in this "war on drugs".

Just awesome! http://money.cnn.com/2014/12/03/news/companies/coke-milk-ads-sexist/index.html?iid=HP_LN

Unfortunately the old MSN board archives were lost. Somewhere near May/June 2006, Mungerville (now original_Mungerville) posted that after the original boardmembers had spent years of battling the FFH shorts and fully explaining the FFH thesis, a new person could just walk up and read the full thread history and hit the fat pitch off the tee. That's pretty much how that one worked for me. Good timing, generous board discussion. Everything I knew about that company at the time came from that thread. As Cardboard once put it, it was easier for copycats to hold on due to the steady drumbeat of board discussion. Without that kind of group involvement, I find it harder to hold conviction. So there is more to the story than just following gurus -- the community discussion here has been very important to me. Walking across a minefield, it feels like your odds are improved if many reputable mine-sweepers have been searching that field for a while before you step in yourself.

I usually begin reading them after the discussion has been going on for a while.

So if you bet big on something and it didn't work out well, and less people started to like the ideas, what would you do? Worry. Maybe sell. Depends.

I think if I really believed in my abilities, I would start picking out my own original investment ideas and very quickly lose money. So stop trying to sabotage my system. I don't know anything, I'm here to cheat off of others if enough gurus like the idea... and when even I can understand it... because it's actually obvious enough for me to understand.

That's what I admire about your investment approach. Your theses are elegantly simple Simple is as simple does. Can't that be true?

Are you able to share your thought process for selecting companies for spreading downside risk? I am assuming they are not generally in the same industry, curious to know how you go about shortlisting them? Not much process to be shared. I really don't think you guys really understand how little I know. Remember in the Wizard of Oz where this little man with a gentle voice steps out from behind the curtain? Well, it's sort of like that.

I have yet to meet anyone locally who is interested in discussing individual stocks. Except the local veterinarian who held TSLA but sold too soon (my car introduced the topic).

No regular dividend protection on GM warrants. May be I am reading this incorrectly, but the 8-A shows that there is dividend adjustment http://www.sec.gov/Archives/edgar/data/1467858/000119312511103292/d8a12b.htm If we make a dividend or other distribution to all holders of our common stock of shares of (i) our capital stock (other than our common stock), (ii) evidences of our indebtedness, (iii) rights or warrants to purchase our securities or assets, or (iv) property or cash (excluding ordinary cash dividends and excluding any dividend, distribution or issuance covered by the two bullets above), then the exercise price will be adjusted based on the following formula: EP1 = EP0 x ((SP0 – FMV) / SP0) where: EP0 = the exercise price in effect at the close of business on the record date; EP1 = the exercise price in effect immediately after the record date; SP0 = the Current Market Price (as defined above) as of the record date; and FMV = the fair market value (as determined in good faith by our Board of Directors), on the record date for such dividend or distribution, expressed as an amount per share of outstanding common stock. Specifically excluding "ordinary cash dividends".

I figured he lives too far away.

Hey, as long as we're quoting song lyrics... I'm just a no class beat down fool and I will always be that way I might as well enjoy my life and watch the stars play