Liberty

Demography is hard. Makes my brain hurt when I think too much about it. In a way, a lot of the extra growth that comes from higher population growth only goes to create jobs and stuff for those new people being added, right? So if they aren't there, growth being lower doesn't necessarily make things much worse per capita (the pie's a bit smaller, but there are fewer slices, so maybe the surface area of each slice doesn't change that much). And since a lot of what people are spending on now tend to be more intangible and qualitative (media content, IP in things like smartphones, telecommunications, services, better foods, better cars, etc), it's a lot easier to keep increasing consumption per capita than back when most things that people spent on where physical and about sheer quantity of stuff (you reach a hard limit on how much crap you can consumer faster). But I don't know about demography. It's outside my circle, for sure. Certainly seems like you'd rather want fewer healthier and richer people than more poor unproductive people (birth rates falling rapidly in poorer countries as they get richer and more educated aren't necessarily negative for global businesses selling to them). So that's good. As for the US and such, I don't know. Immigration seems like it still has a long runway, and what truly matters is per capita anyway, so this goes back to my first paragraph above.

Wrong, if it is a) being malinvested which is sadly quite normal when money is this cheap or b) being spent on buybacks (which obviously grows per share earnings but not earnings per se). You think that the world's entrepreneurs and businessmen all lost any ability that they had to invest capital when they reduced dividends on average? I mean, sure lower interest rates can lead to some stupid things taking place, but plenty of stupid stuff happened in the 60s, 70s, 80s, etc. It's just one factor. When you almost have deflation in many places because people are still deleveraging from the last crisis, high interest rates aren't exactly required to cool things down... I don't know. I look at all the things that I have in my life that didn't exist, or weren't nearly as good a few decades ago, and I read a few articles about all the things going on around the world, and the hundreds of millions of people getting out of abject poverty over the past few decades, and I'm thinking we're not wasting all this capital (or 'malinvesting' it, to use the ever-pessimistic Austrian terminology). Sure, but some industries are inherently higher margins and scale better than others (software), and things like globalization and the internet make it a lot easier to reach more customers quickly. Facebook was barely a dorm room project a decade ago. Youtube was founded 10 years ago. Heck, the modern smartphone didn't exist 10 years ago (iPhone came out in 2007) and look at the size of that industry now. There's fast growing and fast growing.

I guess technical analysis isn't just for individual stocks, eh. Just a few thoughts. I'm not making a prediction - we could have a crash tomorrow, who knows - my point is that things aren't that easy to predict. You can't eyeball a chart and say "oh, see, things moved like that, so they're bound to move like that again". Thinking that everything stays the same is just as bad as thinking that everything is different. For example, consider that for most of the past couple centuries, businesses paid out a lot more of their earnings in dividends than they do now. Now a lot more is reinvested internally. That has to change growth rates, right? Also, consider that what you're looking at is an index. Is that index static? No. What changes? Well, maybe now there's more things like services, pharma, software, etc. More business with very large international operations in faster growing economies rather than just national. Etc. Is that stuff higher margin than what was in the index in 1950 or whatever? Probably, right? Markets are unpredictable. Animal spirits, feedback loops, black swans, etc. But also entrepreneurship, resilience, billions of people trying to do something constructive every day. Could go one way, or another, but over the long arc of time, things usually keep getting better. That's why I try to focus on quality businesses that sell things that people want, run by good capital allocators that will find ways to create values in all kinds of environments. Otherwise, if you're eyeballing a few charts and ratios to make decisions, many would have been out of the market for most of the past 20 years, and where would that have gotten you? Buffett is buying a big business today, and he'd do more if he could, I'm sure. And yes, all long-term exponential charts look crazy on the right compared to the left. Log would be better. Tell someone in 1965 that the Down would be 18,000 fifty years later...

http://www.philosophicaleconomics.com/ Lots of good related stuff. Dig in and see for yourself.

I guess one would assume that Valiant [sic] wasn't disciplined on price? That is quite interesting based on his position in ACT and the bid made for AGN. Further, is it not true that the dollar amount that ENDP was offering in their cash+stock deal was at a higher pps than the final "Valiant" price? Certainly an interesting use of "price discipline." I think it's nonsense. Valeant (not "valiant") won mostly because they paid all cash and quickly, without conditions that created a lot of uncertainty (uncertainty being the last thing that Salix's interim management wants at this point), while Endo offered 75% stock and required a couple of shareholder votes over a couple of quarters. Valeant had to raise its bid a bit to be sure to win, because the cash and speed might not have been worth quite the difference between the bids, but it's not like their earlier bid was their maximum (how many times did they raise it for Allergan? clearly they don't start at the top of their range). If their track record is anything to go by, they'll over-deliver on synergies at Salix too, stoke the organic growth, and use the new GI platform to further deploy capital with lots of bolt-ons. Results should be quite satisfactory, even if they paid a bit more than they would have if Endo had never shown up.

I heard 100k from a good source too.

Thank you Partner24, I appreciate you sharing your perspective.

http://www.bizjournals.com/triangle/news/2015/03/24/salix-allergan-actavis-valeant-accounting-problems.html

Thanks, that was a good read.

Partner, has your thinking on the firm changed in the years since you posted the above? Same question for Sanjeev or anyone else who wants to share their current opinion on Giverny. Thanks.

This made me think of this very interesting article in a recent Economist: http://www.economist.com/news/technology-quarterly/21645497-tech-startups-are-moving-food-business-make-sustainable-versions-meat No doubt this kind of stuff is the future long term, as our current animal farming is not sustainable and doesn't scale (as well as not being humane, and not always healthy).

There is and Liberty, you are a smart and thoughtful investor and I guarantee you have thought more about Valeant than I have and thus it is more squarely in your circle of competence than mine. No worries if you don't want to discuss it. I'm always looking for more info in case I come across a line of thinking or a piece of info that I hadn't considered before, which might make me change my mind. Just promise that if you have something groundbreaking, you'll private-message me or post it in the Valeant thread ;)

I'm starting to do some research on Giverny and Rochon. Always looking for good places to invest my capital if I ever decide to stop managing it myself (in part or all), or maybe for my wife's. Seems interesting so far. Anyone knows what's the minimum investment in their fund? Sounds like you can only invest through a National Bank account. Is that correct? Thanks in advance.

Care to elaborate on your views of Valeant? Not really. If you don't have anything nice to say....as the saying goes. Actually, it is not that I don't have anything nice to say, I absolutely admire what they have built and what the value that Mike Pearson has created. But I have other thoughts too that aren't positive, so I'll just leave them alone. But negative thoughts is exactly what I was looking for.. :-\

Why? They are both activist investors, run concentrated portfolios, like the same kind of businesses (S n S, Burger King), they both look for securing permanent capital, etc. I can see many similarities. Of course, Biglari is also much more controversial than Ackman… Gio Just a guess. Have you ever seen them compared before?

Care to elaborate on your views of Valeant?

Probably the first time ever that Ackman has been compared to Bilgari.

Thanks.

More: http://www.philosophicaleconomics.com/2015/03/decomp/ http://www.philosophicaleconomics.com/2015/03/payout/

http://brooklyninvestor.blogspot.ca/2015/03/markel-2014-annual-report.html http://brooklyninvestor.blogspot.ca/2015/03/markel-ventures.html?spref=tw

This seems so strange. Does it really exist and does it have a legitimate use? It does exist, it doesn't have a legitimate use. At one point in Flash Boys they find that some exchange had created something like 25 undocumented order types that most people don't have access to, or even know exist, but scammy HFTs uses them to sniff things out and bait orders.

The fashion magazine onslaught continues..

Financiers nakedly pursue their own self interest and the pursuit of self interest is widely regarded as immoral. It's worse when you are taking money from other investors who 1) are playing by the rules 2) don't know what's happening and 3) can't do much about it. Having cheaters in a casino stealing from the house is one thing (and if the house found out, they used to break your legs, rather than sell you their deal flow and help you by creating new game rules that only you know about), but cheaters stealing from other players is another. The big institutional investors are in good part pension funds and such, it's not all hedgies getting skimmed. The trick that the high speed scammers are playing is they're trying to conflate all HFT, and then say "but spreads are lower than at any time". That's BS. Electronic trading is good, eletronic market makers are good. But people who front-run orders (to which they have access, or via weird order types that aren't meant to be filled) between exchanges by buying what people are trying to buy before them and then reselling higher has zero utility. It's basically letting a bunch of mosquitos in your house. If you removed that yucky part of HFT but kept electronic trading and market makers, it would have zero negative impact and many positive ones.

His "novel" is kicking a bunch of parasites in the teeth, so at least there's that :D

You never know.