Corner of Berkshire & Fairfax Message Board

General Category => Fairfax Financial => Topic started by: Partner24 on June 05, 2009, 06:55:50 AM

Title: Fairfax return over the next 10 years
Post by: Partner24 on June 05, 2009, 06:55:50 AM
Please don't try to be overconservative, just the most likely range of return that you truly think. Also, keep in mind that this poll is anonymous. The results will be shown in 5 days. Cheers!
Title: Re: Fairfax return over the next 10 years
Post by: alertmeipp on June 05, 2009, 07:10:23 AM
how come there is no negative #? :)

FFH is going down no matter what the market does.
Title: Re: Fairfax return over the next 10 years
Post by: UhuruPeak on June 05, 2009, 07:28:03 AM
how come there is no negative #? :)

FFH is going down no matter what the market does.


FFH is uncorrelated to the market.  It goes down when Sanjeev diets, and goes up when he lunches :)
Title: Re: Fairfax return over the next 10 years
Post by: Partner24 on June 05, 2009, 07:57:16 AM
how come there is no negative?

Oopss. I tought that I had only 5 options available. :-[

But if someone think that it would be less than zero, please email me to "post" your vote and I will keep your name confidential. I will adjust the final results with these votes.

Cheers!
Title: Re: Fairfax return over the next 10 years
Post by: Partner24 on June 11, 2009, 04:51:24 AM
Here are the results.

- 54 voters (none have sent me email to vote for less than zero).

- Highest votes for a given range: 16-20%

- Mean: 17,3%

Thank you for voting!

Cheers!
Title: Re: Fairfax return over the next 10 years
Post by: Uccmal on June 11, 2009, 07:08:15 AM
At some point closer to the ten year mark than now I expect that their returns will start to drop below 15%. 

and

Are we collectively overly optimistic? 
Title: Re: Fairfax return over the next 10 years
Post by: calonego on June 11, 2009, 08:03:57 AM
FFH is at 260 now - it will be at almost 1300 in a decade if the 17.3% is correct - that may not be too far off, up or down, although my guesstimate would be a lower return. If you take a point in exactly 120 months - who knows where it's at (very dependent on the state of the economy at that exact time, etc). But there is a likelihood that in the interim a number like that is attainable (and a higher "now-to-peak" return).
At 26%/annum, it would be trading at over $2,600...
Title: Re: Fairfax return over the next 10 years
Post by: oldye on June 11, 2009, 11:27:29 AM
Its simply a function of whether or not they can keep investing capital at 15+%, without knowing the future its impossible to tell if that will happen.  Heck if the shares stay this cheap for the next 10 years, they'd have no problem earning 25% a year.
Title: Re: Fairfax return over the next 10 years
Post by: ERICOPOLY on June 11, 2009, 04:49:35 PM
I think that you get roughly $1 of equities for every $1 invested in FFH at today's price.

It seems like a 12% return on their equity portfolio over the next 10 years will get you 17% return on the stock if you assume:
1)  a modest expansion of B/V multiple (say 1.2x) to offset taxes paid/due on the equity gains
2)  5% per annum boost from the float (pretty easy this year with the tax-free muni bonds)

So is a 12% return possible? 
Title: Re: Fairfax return over the next 10 years
Post by: ubuy2wron on June 12, 2009, 11:58:25 AM
Its simply a function of whether or not they can keep investing capital at 15+%, without knowing the future its impossible to tell if that will happen.  Heck if the shares stay this cheap for the next 10 years, they'd have no problem earning 25% a year.

Oldeye you do not have to know the future only Prem has to know the future, given his investment calls in the last three years I suspect that he has made a pact with the devil to get a copy of the WSJ delivered every morning 3 years in advance. LOL
Title: Re: Fairfax return over the next 10 years
Post by: Partner24 on June 10, 2019, 07:15:30 AM
We're 10 years later now and it's  time to use your calculator! ;-)

Cheers!
Title: Re: Fairfax return over the next 10 years
Post by: petec on June 10, 2019, 08:32:13 AM
Sadly I don't need to use a calculator ;)
Title: Re: Fairfax return over the next 10 years
Post by: tooskinneejs on June 10, 2019, 09:15:16 AM
7.9%?  So nobody guessed correctly?
Title: Re: Fairfax return over the next 10 years
Post by: Jurgis on June 10, 2019, 11:14:12 AM
Sad.
Title: Re: Fairfax return over the next 10 years
Post by: Partner24 on June 10, 2019, 01:50:45 PM
Sad indeed. Lesson learned about how we can sometimes be over-optimistic about value investors. And how FFH team was too scared about macro stuff for too long.
Title: Re: Fairfax return over the next 10 years
Post by: investmd on June 11, 2019, 08:03:22 PM
Interesting. Thanks for following up on this Partner24. Wisdom of the crowd was wrong in 2009. If the same poll was conducted today, probably everyone would say either <10% or 11-15%. Wonder if we would all the wrong again....hopefully.
Title: Re: Fairfax return over the next 10 years
Post by: petec on June 12, 2019, 04:59:07 AM
Interesting. Thanks for following up on this Partner24. Wisdom of the crowd was wrong in 2009. If the same poll was conducted today, probably everyone would say either <10% or 11-15%. Wonder if we would all the wrong again....hopefully.

Ha - exactly.
Title: Re: Fairfax return over the next 10 years
Post by: Jurgis on June 12, 2019, 08:25:57 AM
Feel free to start a new 10 year return poll and we can see the results in 10 years.

I would be willing to bet real money that Fairfax return will be below 15% annual for next 10 years.
Title: Re: Fairfax return over the next 10 years
Post by: jfan on June 12, 2019, 09:41:01 AM
Feel free to start a new 10 year return poll and we can see the results in 10 years.

I would be willing to bet real money that Fairfax return will be below 15% annual for next 10 years.

What are the odds you are offering?
Title: Re: Fairfax return over the next 10 years
Post by: Partner24 on June 12, 2019, 10:07:57 AM
Regarding FFH, I do not keep myself informed about it anymore, so I will not start a new poll. But feel free to do so.

Cheers! 
Title: Re: Fairfax return over the next 10 years
Post by: Viking on June 12, 2019, 10:19:00 AM
I was likely one of the people who voted back in 2009 :-)

The lesson for me is as follows:
- you make decisions (and projections) based on the facts you have on hand at the time
- when the facts change you may need to change your mind

After 2009 FFH made some very big bets with the investment portfolio that proved to be flat out wrong. These bets were plain for all investors to see.

The lesson for me is not that projections often do not work out as expected (this is kind of obvious). The lesson for me is the important over time of processing new information and acting on it (if it is important). The opposite of thumb sucking.
Title: Re: Fairfax return over the next 10 years
Post by: Jurgis on June 12, 2019, 10:38:41 PM
Feel free to start a new 10 year return poll and we can see the results in 10 years.

I would be willing to bet real money that Fairfax return will be below 15% annual for next 10 years.

What are the odds you are offering?

70-30.

But I won't make a real bet since (a) there's no platform that I'd trust (b) if bet amount would have to be pre-deposited, it's a negative return even if I win.
Title: Re: Fairfax return over the next 10 years
Post by: bizaro86 on June 13, 2019, 07:24:19 AM
Feel free to start a new 10 year return poll and we can see the results in 10 years.

I would be willing to bet real money that Fairfax return will be below 15% annual for next 10 years.

What are the odds you are offering?

70-30.

But I won't make a real bet since (a) there's no platform that I'd trust (b) if bet amount would have to be pre-deposited, it's a negative return even if I win.

B isn't true if the two people betting can agree on a suitable investment to keep the funds that they would otherwise both hold.

When Buffett made his hedge fund vs S&P bet, they put the money in zero coupon treasuries, and then switched to BRK after treasuries rocketed, and did very well.

Surely there would be some compounder the two parties could agree on...

Title: Re: Fairfax return over the next 10 years
Post by: Jurgis on June 13, 2019, 07:50:38 AM
Feel free to start a new 10 year return poll and we can see the results in 10 years.

I would be willing to bet real money that Fairfax return will be below 15% annual for next 10 years.

What are the odds you are offering?

70-30.

But I won't make a real bet since (a) there's no platform that I'd trust (b) if bet amount would have to be pre-deposited, it's a negative return even if I win.

B isn't true if the two people betting can agree on a suitable investment to keep the funds that they would otherwise both hold.

When Buffett made his hedge fund vs S&P bet, they put the money in zero coupon treasuries, and then switched to BRK after treasuries rocketed, and did very well.

Surely there would be some compounder the two parties could agree on...

Fair enough. We could deposit money into Fairfax... ... ...  ::)  8)
Title: Re: Fairfax return over the next 10 years
Post by: StevieV on June 13, 2019, 07:57:09 AM
As long as we are speculating, I would certainly take the under on 15% compounded over the next 10 years.  If you gave me 7% I would take the over.  It gets murkier from there.  I would not bet real money on this, but I guess that is where I see the likely range of returns.
Title: Re: Fairfax return over the next 10 years
Post by: longinvestor on June 13, 2019, 12:24:09 PM
More than anonymous  posters with aliases on a public forum getting it wrong, I wish the CEO would refrain from making public statements about specific future returns. I was a Fairfax shareholder in 2009 and was a happy one based on the turn of events of 2005-09 and still had mixed feelings about Prem making such projections. It just is not good practice. Those words do tend to haunt. Keeping your head down and running your business well is better. Surely Fairfax has done some really good things with their business since 2009. I just see this as another “macro” call which they got wrong. It’s akin to an unforced error.
Title: Re: Fairfax return over the next 10 years
Post by: Cardboard on June 14, 2019, 05:46:10 AM
LOL!

Then you never end praising Buffett for saying that Berkshire will keep beating the S&P.  ::)

Seriously, any worthwhile organization needs to set targets. It is an essential part of good management. In this case they badly missed so either the target is wrong and/or the execution.

Cardboard