Your 2008/2009 Experience

[BG2008]

I am fascinated by the 2008/2009 experience.  Every year that goes by, it seems like people are forgetting what an extraordinary time that was.  At the time, I was working at Citigroup as a real estate investment banker.  When Citigroup reached $3/share, they decided to get rid of my group entirely.  I only had my 401Ks in the market and no personal portfolio.  When the market tanked, I started buying net nets and great franchises at 4-5x FCF.  I would like to hear some feedback on what people's 2008/2009 experience were like. 

 

1. How were you positioned going into 2008/2009, % cash, leverage, what were you holding? 

2. How did you shuffle your portfolio during 2008/2009?  Were there liquidity constraints?  Were you able to swap into better ideas?

3. Any permanent impairments? 

3. Did you have permanent capital or did you need the capital for personal expenses or fund redemption?

4. How did you emerge from the crisis?

5. Would you do anything different? 

 

I spoke with someone who manage a fund.  In short, he was down 50% peak to trough.  Big picture:

 

20% Brk and Fairfax - drop by 20-30%

40% small cap quality ideas - no liquidity, drop by 50+%

10% - total impairments - drop by 90+%

30% large cap quality ideas - some liquidity, drop by 40%

 

In short, he swapped out of BRK and Fairfax into other more attractive ideas.  He in essence utilized the proceeds to invest in special sit and workouts.  He made about 100% on that 20% (now 14-16% of a original AUM).  He mentioned that the special sit and workout were important in case the market dropped more.  The cash in and cash out allowed him to earn a decent return that was market neutral at the time. 

He was stuck in the small cap quality ideas - It was illiquid and selling would've been the wrong thing to do.  Some of the ideas did come back, some of the businesses could not earn its pre-crisis peak earnings

The total impairments - no way out and no way of coming back

30% large cap - he swapped out of some of the large cap ideas and started buying net-nets and generally undervalued securities

 

When you're down 50%, it takes a 100% fund return to hit your previous high water mark.  This took a few years rather than being down 30% and being up 42% to come back.  the stress from LPs from being down 50% was also enormous. 

 

In hindsight, he would probably have hold more cash, bought more puts, or invested more in special sit/workouts.  Please share your 08/09 experience.  Especially those that were down a bunch and how you managed to come back.

 

 

[randomep]

 

Hi, this is a great topic!

 

I think alot back to those days. It definitely confirms the saying: bear markets are when you really make money, you just don't know it at the time.

 

I had 25% cash going into the Lehman backruptcy which was fall 2008. I started buying then. My formula was simple, every X number of points drop in the S&P500, I would buy a fixed amount. I would buy at a rate such that my money would be zero at S&P500 = 600.  Of course execution and plan are two different things. I started around 975 and made my last buy at a little over 700. S&P reached a low of 666.

 

It mostly just increased my existing positions; eg. SEB @ 900, today : 2700, PM 35, today: 86.

 

My permanent impairments: C, AIG, Countrywide (BAC)

 

The biggest mistake was then selling back too soon. By late 2009 I was selling, then I realized that the market has staying power and I bought back what I sold.

 

One note about what you said about the Hedge Fund manager. An investor performance is the result of his actions and style, if you say in hindsight he should have had more cash, then maybe he would've never gotten the results that made his hedge fund what it is today.

 

I think cash/equity ratio is one of the biggest issues to solve and it can be done using some mathematical tools.

 

[cofabmd]

Here's a link to a 2008 review letter by a concentrated value investor. http://www.tenstocks.com/Reading_Room.html

 

It may be of interest.

[siddharth18]

One question I have about 2004-2005-2006: Was it obvious that a bubble was forming in the financial sector? Was it as easy for a value guy to avoid banks then as easy it is to avoid today, say, facebook/twitter/netflix stocks?

[randomep]

One question I have about 2004-2005-2006: Was it obvious that a bubble was forming in the financial sector? Was it as easy for a value guy to avoid banks then as easy it is to avoid today, say, facebook/twitter/netflix stocks?

 

Noooooooooooo, there was no agreement by investing guru's or us common folk that financials were going to blow. Sure I heard of people like Einhorn and Whitney, but there is always people on the fringe. Buffett didn't see it, Bernenke didn't see it, so how could I?

 

But you know, even Hollywood knows how wall street works. In the movie Margin Call, the head honcho says after the meltdown, "Nobody knows what's going on, we just react".  Buffett got rich from the crisis, because he had a cash cushion, that cash he always had on hand. So he could take advantage. The key is once you have a cash cushion, know to use it. I kept saying to anyone who would listen, this is a once in-a-lifetime opportunity. Because I looked at the DJIA of the last 100 years and I saw that 1932, 1974, 1982 were golden opportunities, I kept thinking man if I could get back to the 80's and bought MSFT. Well I can imagine myself saying the same thing about the market in 2009 if I don't act.

 

 

[siddharth18]

One question I have about 2004-2005-2006: Was it obvious that a bubble was forming in the financial sector? Was it as easy for a value guy to avoid banks then as easy it is to avoid today, say, facebook/twitter/netflix stocks?

 

Noooooooooooo, there was no agreement by investing guru's or us common folk that financials were going to blow. Sure I heard of people like Einhorn and Whitney, but there is always people on the fringe. Buffett didn't see it, Bernenke didn't see it, so how could I?

 

But you know, even Hollywood knows how wall street works. In the movie Margin Call, the head honcho says after the meltdown, "Nobody knows what's going on, we just react".  Buffett got rich from the crisis, because he had a cash cushion, that cash he always had on hand. So he could take advantage. The key is once you have a cash cushion, know to use it. I kept saying to anyone who would listen, this is a once in-a-lifetime opportunity. Because I looked at the DJIA of the last 100 years and I saw that 1932, 1974, 1982 were golden opportunities, I kept thinking man if I could get back to the 80's and bought MSFT. Well I can imagine myself saying the same thing about the market in 2009 if I don't act.

 

 

 

Appreciate that insight - thanks.

 

Were financials, in any case, easy to avoid? Not because they were selling for P/E of 100, but more like dividend stocks today? Yielding a pittance for the risk taken. I think the biggest takeaway (even for those who avoided financials) is the blowback and the spillover effect the financials had on all other sectors of the economy.

 

I suppose the only lesson that can be drawn (especially for those running concentrated portfolios) is to have appropriate level of sector-based diversification.

[stahleyp]

A lot of good investors got burned with financials in 2008. The guys at Dodge and Cox, Nygren at Oakmark, Davis etc.

[randomep]

One question I have about 2004-2005-2006: Was it obvious that a bubble was forming in the financial sector? Was it as easy for a value guy to avoid banks then as easy it is to avoid today, say, facebook/twitter/netflix stocks?

 

Noooooooooooo, there was no agreement by investing guru's or us common folk that financials were going to blow. Sure I heard of people like Einhorn and Whitney, but there is always people on the fringe. Buffett didn't see it, Bernenke didn't see it, so how could I?

 

But you know, even Hollywood knows how wall street works. In the movie Margin Call, the head honcho says after the meltdown, "Nobody knows what's going on, we just react".  Buffett got rich from the crisis, because he had a cash cushion, that cash he always had on hand. So he could take advantage. The key is once you have a cash cushion, know to use it. I kept saying to anyone who would listen, this is a once in-a-lifetime opportunity. Because I looked at the DJIA of the last 100 years and I saw that 1932, 1974, 1982 were golden opportunities, I kept thinking man if I could get back to the 80's and bought MSFT. Well I can imagine myself saying the same thing about the market in 2009 if I don't act.

 

 

 

Appreciate that insight - thanks.

 

Were financials, in any case, easy to avoid? Not because they were selling for P/E of 100, but more like dividend stocks today? Yielding a pittance for the risk taken. I think the biggest takeaway (even for those who avoided financials) is the blowback and the spillover effect the financials had on all other sectors of the economy.

 

I suppose the only lesson that can be drawn (especially for those running concentrated portfolios) is to have appropriate level of sector-based diversification.

 

 

I know you are looking for a warning sign of impending bubble. But there is no obvious indicator. Looking in hindsight I think it was the housing valuations that could most likely tip one off about the financials. People were saying their main source of financial gain is from renovating their house or flipping their house.

 

Financials was the only sector with low P/E's I think. All other sectors were very highly valued based on PE multiple.  I don't sector-based diversification is necessarily best, but you have to be sector aware. In hindsight I didn't know sh**t about financials.  And to this day I am scared to invest in financials because I just don't get it.

 

 

[ERICOPOLY]

A lot of good investors got burned with financials in 2008. The guys at Dodge and Cox, Nygren at Oakmark, Davis etc.

 

Nygren had 16% in Washington Mutual.  Kaput!

 

Back up the truck when the market is .... Greedy?

 

For the record, i was an apologizer -- but out of lack of confidence i hid out with FFH.  And Nygren is a better investor than me, but still gets a little playful ribbing for being bold when braver men were hiding.

[Uccmal]

One question I have about 2004-2005-2006: Was it obvious that a bubble was forming in the financial sector? Was it as easy for a value guy to avoid banks then as easy it is to avoid today, say, facebook/twitter/netflix stocks?

 

Noooooooooooo, there was no agreement by investing guru's or us common folk that financials were going to blow. Sure I heard of people like Einhorn and Whitney, but there is always people on the fringe. Buffett didn't see it, Bernenke didn't see it, so how could I?

 

But you know, even Hollywood knows how wall street works. In the movie Margin Call, the head honcho says after the meltdown, "Nobody knows what's going on, we just react".  Buffett got rich from the crisis, because he had a cash cushion, that cash he always had on hand. So he could take advantage. The key is once you have a cash cushion, know to use it. I kept saying to anyone who would listen, this is a once in-a-lifetime opportunity. Because I looked at the DJIA of the last 100 years and I saw that 1932, 1974, 1982 were golden opportunities, I kept thinking man if I could get back to the 80's and bought MSFT. Well I can imagine myself saying the same thing about the market in 2009 if I don't act.

 

 

 

Appreciate that insight - thanks.

 

Were financials, in any case, easy to avoid? Not because they were selling for P/E of 100, but more like dividend stocks today? Yielding a pittance for the risk taken. I think the biggest takeaway (even for those who avoided financials) is the blowback and the spillover effect the financials had on all other sectors of the economy.

 

I suppose the only lesson that can be drawn (especially for those running concentrated portfolios) is to have appropriate level of sector-based diversification.

 

Diversification would have made a difference but at what point would you have committed money to 10 year bonds or cash when the interest rates were so low. Sitting for 3 years with no income would have been torture.  I do recall a discussion well ahead of the meltdown on the old board about when the crash was going to happen but the magnitude, and the secondary, and worse crash, in March took everyone by surprise.  Hell, I had a small position in Washington Mutual in Sept/2008, thinking the worst had past.  There was literally only a handful of people still working on wall street who had ever experienced anything of this magnitude before (irving Kahn comes to mind).

 

Dont forget the homebuilders collapsing, and Bear Sterns two hedge funds in early 2007 all preceded the financial meltdown.  The mortgage meltdown preceded the liquidity crisis.  Nearly everyone thought it was contained.  The financials were the final chapter.  Everything else had gone to hell by the start of 2008, which incidentally is when the retrospectively dated. The markets kept on going as if very little had happened until rumours of the Lehman liquidity crisis.  Those who predicted it, such as FFH, Michael Burry, and the guys in the Big Short, predicted something but had no timing in place.  FFH and Burry were years early. 

 

Unless one is a permabear, and always in waiting for the next crash then there was no way to be right on that event.  The problem with the permabears is they missed the upturn as well, and the greatest bull run since forever. 

 

I was in Mexico on vacation during the March crash.  I would go to the paid internet service two or three times per day to sell stuff and buy other/better stuff cheaper.  I remember that Canadian idiot Kevin O'Leary on Tv saying that Ge broke $10 it was going to zero.  I bought GE Leaps that day. 

 

 

Addendum:

I will add that bravery would have looked like the ultimate stupidity had things not turned back up so quickly.  To that end I kept buying SPY puts to protect my gains for some time as the market recovered.  These lost money. 

[stahleyp]

A lot of good investors got burned with financials in 2008. The guys at Dodge and Cox, Nygren at Oakmark, Davis etc.

 

Nygren had 16% in Washington Mutual.  Kaput!

 

Back up the truck when the market is .... Greedy?

 

For the record, i was an apologizer -- but out of lack of confidence i hid out with FFH.  And Nygren is a better investor than me, but still gets a little playful ribbing for being bold when braver men were hiding.

 

haha. I know man. Those days were crazy! I remember watching a video with Berkowitz (I think in 2007 or so) talking about how he couldn't understand the banks and stayed away. I owe him for that one!

 

I think the guys at Davis loaded up on AIG and then and sold out near the bottom.

[steph]

I don't see myself as a good market timer at all. I am more the buy and hold good companies type of investor. But I must say that I thought there were many red flags surrounding the financials in 2007 and sold all of them.

The first warning sign was that the financials as a sector had gotten so important in all indexes. Usually from 25% to 40% in just a few years. And when a sector gets this important you know it is very popular/hot. Just look at Japan in 1990 or IT/telecom in 2000.

The second warning was that although most financials looked cheap or reasonable on a pe and dividend yield level, they were not because compared to historical figures everything was way too beautiful: roe, bad debts,...

Was it luck? Probably a little. But For me it was one of the easier calls of the last years.

[steph]

I forgot to add that I didn't buy any banks when they were very cheap! :)

[ZenaidaMacroura]

This is actually particularly concerning - was there any way to tell that financials were on the brink?  Low P/E and a rosy outlook don't seem inherently telling.  Did you really have to dive deep to figure it out?  I was holding some financials in early 2007, and I remember my portfolio rising 40% in some 3-4 months.  I lucked out and liquidated because I felt things were moving too fast -but it was more of a gut call.  I don't think I'd be able to replicate the timing...

 

Course my portfolio then was peanuts so it wasn't life altering either.

[Orange]

One question I have about 2004-2005-2006: Was it obvious that a bubble was forming in the financial sector? Was it as easy for a value guy to avoid banks then as easy it is to avoid today, say, facebook/twitter/netflix stocks?

 

Definitely not.

 

The big problem for many value guys was not owning the financial stocks at their peak, but buying them WAAAAAY too early as they were falling. Even the financials that survived lost over 75% in many cases. There were lots of guys rushing in after the first 30-40% major pullback, not realizing the massive structural problems on hand. In 2007 and early 08, some dudes were still valuing banks based off their 2005/06/07 metrics. The stocks looked cheap based on those numbers, but of course now we know; the numbers and profits were temporary at best, and completely illusory at worst.

 

For example, here is a video of Tom Gaynor (Markel) in 2007 talking about buying BAC:  http://youtu.be/YV0ePnoQA0M

 

 

[ERICOPOLY]

In that video, Justin Fuller says that Berkshire Hathaway looks like a call option.  What the hell is he talking about?

 

[ERICOPOLY]

It wasn't the financials of the banks that were important (without context).  The important thing was who they collectively lent to and their ability to repay.  That's my hindsight opinion.

 

[nkp007]

In that video, Justin Fuller says that Berkshire Hathaway looks like a call option.  What the hell is he talking about?

 

What? You never heard of a $100k+ "call option".

 

That whole conversation had so many cringe moments. So much confidence and man with hammer syndrome via Buffett principles.

[BG2008]

Eric, 

 

I'm particularly interested in how you were positioned heading into the storm given that you often use LEAPs.  It would be great if you can share the answers to the following questions and share how concentrated you were between LEAP/Options and outright common stock positions going into 2008/2009. 

 

1. How were you positioned going into 2008/2009, % cash, leverage, what were you holding? 

2. How did you shuffle your portfolio during 2008/2009?  Were there liquidity constraints?  Were you able to swap into better ideas?

3. Any permanent impairments? 

4. How did you emerge from the crisis?

5. Would you do anything different? 

 

Personally, I spent 2 years searching for ways to hedge or partially hedge a 2008/2009 style event.  I've tried shorting and buying OTM puts.  I don't think either works well.  The shorts are just too distracting.  Ultimately, I believe that I have found the best solution in Buffet's early partnership letters.  Buffet allocated about 1/3 of his portfolio into workouts and special situations.  His workout portfolio actually did about 20% CAGR over the life of the fund.  Given that the IRR on merger arbs isn't what it use to be and tenders are more efficient.  I think that workouts and special sits will probably be a 10% CAGR in this low interest rate and more efficient market today after accounting for the fact that you'll never be 100% invested at all times.  You kind of switch between special sits and cash from time to time.  If you allocate 1/3-2/3 in special sits and workouts, it can certainly mitigate a lot of the down turn.  Also, it forces you to focus your capital on your best ideas in the 1/3-2/3 in the "generally undervalued" category. 

 

A lot of good investors got burned with financials in 2008. The guys at Dodge and Cox, Nygren at Oakmark, Davis etc.

 

Nygren had 16% in Washington Mutual.  Kaput!

 

Back up the truck when the market is .... Greedy?

 

For the record, i was an apologizer -- but out of lack of confidence i hid out with FFH.  And Nygren is a better investor than me, but still gets a little playful ribbing for being bold when braver men were hiding.

[original mungerville]

My portfolio was up 70% in 2008 with the market way down that year. (By summer 2007, I was quite sure we were going to see the financial system crumble shortly - ie within the coming months / year.)

 

My only regret is not betting bigger on the downside at that time. I have not participated fully in the upside swing however - only did about 10-12 % a year from 2009 to 2011 (as I stayed hedged or semi-hedged with Russell 2000 puts during the recovery) ... albeit I wasn't coming back from a 40 or 50% loss in 2008/09 (and nor was I able to dedicate much time to investing since 2008).

 

I feel like I am just starting to get the cobwebs out now and am starting to get back into it. This board is a great resource  and much larger now than the old board. A great place to learn about new ideas and discuss. 

 

[ERICOPOLY]

Eric, 

 

I'm particularly interested in how you were positioned heading into the storm given that you often use LEAPs.  It would be great if you can share the answers to the following questions and share how concentrated you were between LEAP/Options and outright common stock positions going into 2008/2009. 

 

1. How were you positioned going into 2008/2009, % cash, leverage, what were you holding? 

2. How did you shuffle your portfolio during 2008/2009?  Were there liquidity constraints?  Were you able to swap into better ideas?

3. Any permanent impairments? 

4. How did you emerge from the crisis?

5. Would you do anything different? 

 

Personally, I spent 2 years searching for ways to hedge or partially hedge a 2008/2009 style event.  I've tried shorting and buying OTM puts.  I don't think either works well.  The shorts are just too distracting.  Ultimately, I believe that I have found the best solution in Buffet's early partnership letters.  Buffet allocated about 1/3 of his portfolio into workouts and special situations.  His workout portfolio actually did about 20% CAGR over the life of the fund.  Given that the IRR on merger arbs isn't what it use to be and tenders are more efficient.  I think that workouts and special sits will probably be a 10% CAGR in this low interest rate and more efficient market today after accounting for the fact that you'll never be 100% invested at all times.  You kind of switch between special sits and cash from time to time.  If you allocate 1/3-2/3 in special sits and workouts, it can certainly mitigate a lot of the down turn.  Also, it forces you to focus your capital on your best ideas in the 1/3-2/3 in the "generally undervalued" category. 

 

A lot of good investors got burned with financials in 2008. The guys at Dodge and Cox, Nygren at Oakmark, Davis etc.

 

Nygren had 16% in Washington Mutual.  Kaput!

 

Back up the truck when the market is .... Greedy?

 

For the record, i was an apologizer -- but out of lack of confidence i hid out with FFH.  And Nygren is a better investor than me, but still gets a little playful ribbing for being bold when braver men were hiding.

 

Original Mungerville played it well by having 100% notional Russell 2000 puts, and then having a 100+% long ORH position.  I think that is roughly right.

 

Instead, I had no cash and mostly FFH.  I quit my job in early January, 2008.  So I had nothing better to do than watch the daily events unfold.  FFH dropped from $285 range down to $218 or so around September 2008 -- somewhere near $230 and $220 I was selling common FFH purchasing $120 strike FFH calls.  Then out of the blue on a Friday the short selling ban was announced, FFH pre-announced a gain of roughly $400 million on AIG CDS the following Monday, and my (bruised at this point) net worth doubled by end of day Tuesday.  So that was completely random.  Because of that short selling ban (and due to the leverage I added soon beforehand), I finished 2008 up 20%. 

 

I would rather have been positioned like Original Mungervillle, but wasn't as smart/prepared.

 

I didn't have a very complicated strategy -- just blown by the wind.  It is somewhat amazing it worked out okay.

[BG2008]

Original Mungerville,

 

How did you know that there were impending doom?  I think many of us realize that the US RE market exhibited bubble like characteristics.  But it was hard to time.  Many were too early.  Were there particular signs?  Was it expensive for you to put on your Russell 2000 put strategy?  How much OTM were the puts?  How much did it cost at the time? 

 

From what I hear about China on the ground, I think it's due for some sort of correction.  Overall, there's a prevailing sense of "you can't lose money buying real estate" and the government will save us all.  But, I've felt that way since 2009.  The kind of euphoria in China now is very similar to the euphoria we experience here in the US when the meatheads at the gym talks about flipping houses for $50k profit. 

 

 

[giofranchi]

Not much to say about that experience… In 2008 I was mainly invested in high quality, high free cash generating companies: PG, JNJ, ABT, and KO. Then I also had a stake in BRK and WMT.

Of course, they declined somewhat, but the free cash my businesses generated was very high compared to the net worth of my company. Therefore, I was able to average down aggressively, and just a few months later I was already in the black…

Today, things look much different: if next year my businesses generate a free cash that is 10% of my firm’s net worth, I will be very satisfied. Therefore, to take advantage of any market correction (-20 / -30%), or panic (-40 / -50%), that might come to pass, my strategy simply cannot be the one that worked so well in 2008/2009.

 

Gio

 

[giofranchi]

Original Mungerville played it well by having 100% notional Russell 2000 puts, and then having a 100+% long ORH position.  I think that is roughly right.

 

Instead, I had no cash and mostly FFH.  I quit my job in early January, 2008.  So I had nothing better to do than watch the daily events unfold.  FFH dropped from $285 range down to $218 or so around September 2008 -- somewhere near $230 and $220 I was selling common FFH purchasing $120 strike FFH calls.  Then out of the blue on a Friday the short selling ban was announced, FFH pre-announced a gain of roughly $400 million on AIG CDS the following Monday, and my (bruised at this point) net worth doubled by end of day Tuesday.  So that was completely random.  Because of that short selling ban (and due to the leverage I added soon beforehand), I finished 2008 up 20%. 

 

I would rather have been positioned like Original Mungervillle, but wasn't as smart/prepared.

 

I didn't have a very complicated strategy -- just blown by the wind.  It is somewhat amazing it worked out okay.

 

Eric,

Of course I have already said it many times, and you know very well my thought on the subject… But I repeat it once again: the reason to hold FFH today is not that the price of its stock will do fine in a market panic… Sincerely, I have no idea how it will behave… And I don’t see how anyone can predict such a thing… What I do know, instead, is that no other company I am aware of is so well positioned to take advantage of a market panic. This is the only reason I hold such a large investment in FFH today. Because it is a business led by opportunistic people, who are doing something I understand and like. Period. And because I think it is cheap. No idea what the stock price shall do. And don’t care.

You might say: well, I don’t like what they are doing… That’s perfectly fine! It is a business judgment. It is different from mine, but I understand and respect other points of view. And also find them useful. I think that’s what Packer is saying: he thinks this bull market will go on for years, therefore he feels no need to be invested in a business positioned to take advantage of a market panic. Very well! I can accept eventually to be wrong. (And don’t forget my firm’s equity is up 22% this year, the FFH investment notwithstanding! ;))

What I cannot relate to is the following thought: in a market panic FFH will go down with everything else, therefore I will buy it later at more advantageous prices… This is something I really don’t understand, because business is not done that way.

 

Gio

 

[Williams406]

I realized around 2004 that housing was out of whack. The appraised value of  my rental property kept going up, though I couldn't raise rental rates. I sold it summer of 2004. I suggested to several would-be landlords that the then-current environment was not normal. What I missed was how real estate was linked with the financial system through securitization. Having looked at Fannie, Freddie, MBIA, Ambac, and the ratings agencies earlier in the decade, I don't have any good excuse. Intellectual laziness, I suppose. I avoided banks and thought Nygren was nuts for concentrating in WAMU. I owned MBIA around 2001/2002 if memory serves and sold because although I liked their muni insurance business, insuring CDO's and MBS's struck me as a different thing entirely with their risk models lacking real-world stress tests. I knew that subprime mortgage originations had spiked, I just never bothered to really understand what it would mean to the financial system if those loans began to fail. Failure to connect the dots.

 

I viewed subprime as a discrete bubble and thought I had largely avoided it. I wasn't seeking to profit from that bubble blowing up, which clearly was the thing to have done as Fairfax and Burry proved. The broad market didn't appear to be overvalued to me but I also didn't feel like I owned "the market." But my prior bubble experience was the 90's tech/blue chip bubble which I had mostly side-stepped (I was buying Berkie B's around $1500).  I liked the Oakmark Fund when Sanborn was running it. I bought Longleaf Partners in 1998. Not buying Wal-Mart at 50 times earnings  in 1999 seemed obvious.

 

In 2008, I owned a lot of Berkshire Hathaway, a couple of Canadian Oil companies, a bit of Fairfax thanks to this board, and obscene amounts of Contango. And felt pretty smart for doing so. Maybe 15%-20% cash with no portfolio leverage.  In the aftermath, I added to Berkshire and Fairfax positions, and bought Odyssey Re, including ORH common and preferreds A and B.

 

My energy exposure really killed me in 2008/2009, especially Contango. Bought it at $30 in May 2007, rode it to the mid-90's middle 2008 and back into the 30's during the crisis without taking any profits. A resulting rule: if I triple my money in less than a year, sell enough so I'm just playing with house money. Still waiting to exercise that rule...

 

Good idea with this thread.

 

406