Save a drowning victim...

Berkshire's philosophy for financial metrics.

CM: One metric catches people. We prefer businesses that drown in cash. An example of a different business is construction equipment. You work hard all year and there is your profit sitting in the yard. We avoid businesses like that.

Reflections on Value Investing: 2008 Berkshire Hathaway Shareholder Meeting: Detailed Notes

Some publicly listed companies that are "drowning in cash" at the moment.

Heidrick & Struggles International Inc. (HSII) - down 40% Y/Y

Cryo-Cell International Inc. (CCEL.OB) - down 68% Y/Y

Apparently swimming in cash is a bit different than drowning in it, as these 0 debt companies seem to indicate.  It's not 0 debt, it's Cash Flow that's King.

Microsoft Corporation (MSFT) - down 3.6% Y/Y

Berkshire Hathaway Inc. (BRK-A) - up 13.5% Y/Y

Reflections on Value Investing: 2008 Berkshire Hathaway Shareholder Meeting: Detailed Notes

Financial investment advice for small amounts of money.

For someone with $50+ billion dollars in the bank, I wonder what a small amount really is?

Q23: With small sums of money, what strategies would you pursue?
WB: If I were working with small sums of money, it would open up thousands of possibilities. We found very mispriced bonds. We found them in Korea a few years ago. You made big returns but had to be small size. I wouldn’t be in currencies with small amount of money. I had a friend who used to buy tax liens. I’d look in small stocks or specialized bonds. Wouldn’t you say that Charlie?
CM: Sure.

Reflections on Value Investing: 2008 Berkshire Hathaway Shareholder Meeting: Detailed Notes

More on tax lien certificates.

This really only applies to the U.S. though.  Nothing to add.

The system in Canada for dealing with delinquent taxes is much different than in the U.S. This is a non-technical, non-official, very much abbreviated summary of how it works in Canada: The local government does not take action on delinquent property taxes until they haven’t been paid for three years. Then any entity with an interest in the property (such as the mortgage holder) gets a chance to pay the taxes and foreclose on the property. If no such entity takes action, then the opportunity becomes available to the public, and the entire process can take four years. In Toronto, for example, they see just one or two of these a year open up to an investor.

If you want to find out more about how tax liens work and how common they are in a particular area, the best thing to do is to contact the real estate section of your municipality.

Charlie Don't Surf - Reflections on Value Investing: 2008 Berkshire Hathaway Shareholder Meeting: Detailed Notes

Charlie Munger is one of my mentors.  Here's a good tidbit from the latest AGM for Berkshire that pretty much sums up the subprime crisis, and the "risk management" field when it comes to complex investments like CDOs and SIVs.

CM: You can see how risk averse Berkshire is. We try to behave in a way so that no rational person will worry about our credit. We also try to behave in a way that if people don’t like our credit we wouldn’t notice for months. That double layering of protection against risk is like breathing. The alternative culture is you call a man a Chief Risk Officer, but often he is man who makes you feel good while you do dumb things. Like the Delphic oracle, a dumb soothsayer, and how can he do dumb things if he has a PHD and can do all the advanced math! You crave a system such that you torture reality to fit a structure that doesn’t match with extreme situations in reality, you feel confident because you compute the risks, but you haven’t -- you have just clobbered up your own head.

Reflections on Value Investing: 2008 Berkshire Hathaway Shareholder Meeting: Detailed Notes

Boo-yah

I always enjoy a good conspiracy story.  This one takes the cake.  Put on your tinfoil hat... cause there's lots of it in this one.

But Cramer don’t know nothin’ about nothin’. And Herb thinks the SEC investigation is an outrage. So Herb and Cramer have commandeered CNBC. They are live on CNBC. Herb has jabbered something about a conspiracy - a conspiracy to get Herb. And now Cramer is going to show us something.

Deep Capture Blog

And the moral of the story?  There's no morals on Wall Street.