UhuruPeak

Buffett apparently mentioned Galbraith's 1929 crisis book (ok, so I have a brain freeze, but I think that's the book)

same here

I sold have my positions yesterday in non-taxable accounts. Not sure what to do in taxable account however, probably nothing as usual (and I'll underperform in that account as usual, thus is my curse)

Oh, now something that's not so good I guess: by "applauding" your post, I notice your other posts also benefit from the karma - much like the number of posts updates automatically when you write a new one. Was this intended?

Sanj, I just did "smite" on your post just above, and the count of "Karma" went down from 3 to 2. No offense intended obviously, I just just testing the functionality. Perhaps I should just applaud you to even it out? ;D

Thx Grenville

Thx Snailslug. While I have never looked at Sears from an investing pov (I own and root for WMT, which I believe will keep destroying their competitors), I do wish Lampert the best and hope Sears will find a profitable niche going forward

But of course, all this assumes the market prices remain where they are. So when some of us board members argue that the market increase since March 9 is not the real thing, that prices will come down... we also need to be consistent and accept that FFH's book "value" may come down again. I don't think the market's level is completely sustainable; I don't like adjusting FFH's and BRK's book values based on day-to-day or even quarter-to-quarter stock price changes; and I don't want to mentally value FFH higher today than I would have 2 months ago. UhuruPeak, massively long FFH, long BRK and long a POS in the utility industry that would benefit greatly from higher economic output and power prices.

They also did that last year when giving us an update on the CDS value. Now, I do understand your point, and I like it (and yes, I'll admit, I didn't think of it myself)

http://finance.yahoo.com/news/Berkshire-wont-release-apf-15070113.html?.v=2 OMAHA, Neb. (AP) -- Warren Buffett's Berkshire Hathaway Inc. will not release its first-quarter earnings report this week on the eve of its annual meeting. In each of the past three years, the Omaha-based company released its quarterly report on the Friday before its shareholder meeting. This Saturday, the company expects more than 35,000 people to attend the annual meeting to listen to Buffett and Vice Chairman Charlie Munger answer questions for more than five hours. But Berkshire spokeswoman Carrie Kizer said Wednesday the company's earnings report won't be released this week. Kizer says the release date has not been set. Berkshire owns a diverse mix of more than 60 companies, with major investments in such companies as Wells Fargo & Co. and Coca-Cola Co.

Well, yes you are right - the yield will only move so far; the big move is in the price however: if rates go from 6 to 5, the price of your formerly-6% bond will jump up to the point where it now only yields 5%. As a bond-holder, you now sit with a healthy profit...

Can't you make that 25 or 30 years? But I agree Mungerville, he has been perma-right. I remember learning about him around '00 and seeing the leverage that long bonds would have in a decreasing rate environment (like 20% upside for 1% rate decrease for the duration I was looking at back then) - like an idiot/rookie/whatever, I decided I could do better in high tech small caps at the time. Needless to say, my prediction ability only matched my portfolio returns. :) It would take me another couple of years before deciding that the Buffett way was the right way; in the mean time, the lesson was expensive!

AGS has been calling for deflation since the early 80s or so, when he correctly figured the rates would go down long term (dis-inflation). I read his book (one of his books, but they are all the same) and like to read him when I get a chance - mostly to get thought-provoking moments however, not necessarily to heed his advice. I don't know his track record, but wouldn't be surprised if he had handily beat the markets for 2 or 3 decades now. His fairly advanced age also gives him a long personal investing experience to draw from. Finally and fwiw, John Mauldin regularly includes a letter from AGS in his weekly "outside the box" letter.

got it - thx

sreenr, I too think underwriting at FFH has room for improvement; definitely! oldye, I'm not sure what your point is? I'm a little sleep deprived, so that will be my excuse :)

Hello, welcome. Please let me address this concern since I think I finally saw the light on this reasoning. Unexpected losses will always be around - this is why insurance companies exist in the first place of course. While some of the losses are just "business as usual", there are also the cat ones that can make or break a year. How do we know if the underwriting is good when such a cat comes? There are basically only two ways: (1) "proof is in the pudding", the losses are manageable and lower than our competitors'; or (2) "let's look at it without the cat losses, and then you can add a few % points to smooth out the normal cat impacts". BRK and some others are such good underwriters that most years they will just show a negative cost of float. I think you need to see FFH's explanation as just a tool to help you understand their underwriting score, not as an excuse for sub-par performance; perhaps you can add 5% annually to account for the average impact of cats. Does that help?

Thx Watsa

I am just a little concerned with the hope for a hard market "soon". We've been thinking it is just around the corner for over 2 years now; I personally don't understand all the ramifications of the gvt's actions, TARP money, bail-outs & the like. Propping up AIG means hurting the good companies like BRK & FFH. How long will it last? I like both these companies, but am not counting on any hardening of the market. I worry when it has to become part of the equation to "make it work". PS: Obviously this is no ding on Mungerville's post, which is pretty good as usual.

Thx oec, this is interesting

As a policy holder, you can (typically?) only surrender "for cash value" after quite a few years of dutifully paying your premiums. Even though I worked in that area right after school, I did buy such a policy, which I canceled a few years later when it became too painfully obvious that I had made an error. The amount I recovered was close to 0 in spite of having put roughly $300/month for over 2 years, perhaps 3. So Watsa, I'm not sure that it such a valid reason? Or at least I'm not sure it is the only one. My own understanding of why Life/Health insurance isn't such a good thing is that you are taking a much bigger risk on the underwriting front. With P&C, you know very quickly if you have to adjust prices; the lead time can be measured in decades in the long-tailed insurance businesses. Then again, I'd think customers are not very price sensitive in Life/Health insurance, since (1) it is so hard to compare prices, and (2) the fees are so hidden that even the insurance brokers don't know how they are calculated (only the company actuaries do). The credit rating may be a key factor as well. Now, there might be some regulation issue as well, I dunno? New York Life and a few others seem to be doing just fine. Thoughts?

jeez Viking, you've been smoking good! While I did a couple of round trips as well, I didn't do anywhere near as well as you seem to have (or uccmal/ericopoly/others have done with the leaps). I should really go back to looking at the Joe/Jane 6pack investors who lose their shirt in the market to make myself feel better in comparison ;D

FFH as a % to what? "general holdings", "investable assets", "net worth", non-401(k) investments.... Depending on what you count, FFH is probably between 30% and 80% for me (and I am way too lazy to actually calculate); it will go higher if BRK does well before the summer as I sell it and reinvest at least part in FFH. I basically view Fairfax and more risky short term but ulimately more profitable than my "same as cash" Berkshire. PS: No, I am not the ultimate nut in here, some do over 100% of investable assets through leverage :)

Increasing electricity demand may not require new investments or lead to higher power costs. Don't forget, the Holy Grail in the Electricity world is storage capacity: without it, prices remain very volatile and ultimately expensive for all of us. Currently, the best storage we have are (1) hydroelectricity, where you pump the water back up during the night when the cost is low; (2) under ground air compression. I don't know much about (2) but (1) is clearly wasteful and doesn't seem all that cheap. One of the many theoretical advantages that a fleet of electric vehicles would bring is storage capacity: you charge the car at night when power demand is low (and cost is therefore low as well - not to mention that is when wind blows the best); cars parked during the day can then be used to draw power from during peak hours, thereby clipping the cost peaks. Obviously a lot needs to happen before that, massive investments will be required - just not necessarily power plant investments: you will need charging stations, smart grid (the poles & wires rather than the power plant itself). Should this come to fruition, we could potentially have cars running on electricity generated by wind turbines. Now this is getting pretty darn green!

I am having a hard time understanding the purpose of your questions, basl1. Either I completely misunderstand you (and have completely misunderstood your last half dozen questions on this board), or you should probably spend more of your time on things you can control rather than performing intellectual masturbation of the sort. How could we know if BRK will buy Swiss Re? Say everyone here agrees that is what Buffett should and will do - it would actually be a pretty compelling argument to the opposite. We never know what the Oracle will do next; for the record, I also typically don't know what is in the future. Actually, I'm still trying to get over this one! :-[

I was going to point you to the Matthews funds before I saw the last sentence :) Isn't there some ETF for China yet?