There’s something timeless about the Toronto skyline — a reminder that while markets rise and fall, true landmarks endure. And just as the skyline stands as a symbol of resilience and permanence, so too does Fairfax. In a city filled with financial institutions, none reflect the values of integrity, prudence, and true shareholder alignment quite like Fairfax.

One of our best performing holdings over the last 5 years has been Fairfax Financial. It isn’t just an insurance holding company—it’s a capital allocation machine built on discipline, patience, and integrity. The most underappreciated aspect of Fairfax is its culture. An admirable culture is so rare in today's world. A strong culture is paramount in managing risk. 

Russell Napier, a respected financial historian and strategist, highlights that approximately 40% of U.S. equities are owned by foreign investors and institutions. This level of foreign ownership introduces a structural vulnerability, particularly as capital begins to repatriate in response to shifting macroeconomic and geopolitical dynamics.

This repatriation is not merely a theoretical risk—it is already being catalyzed by the resurgence of economic nationalism and protectionist policies across major economies. His theory asserts that investment decisions and asset price movements are primarily driven by shifts in the availability and direction of capital, rather than traditional economic indicators like GDP growth or corporate earnings (ie. recessions). 

As a result, the U.S. large-cap equity market, long buoyed by persistent foreign capital inflows, now faces a potential structural headwind.

The primary challenge facing AI investment is the uncertainty surrounding its economic viability. Many AI models, particularly large language models (LLMs), are capital-intensive, requiring massive computational power while generating limited immediate revenue. The current AI expenditure model mirrors an industrial manufacturing approach, where high upfront costs may not yield expected long-term profitability.

Whether AI investment yields substantial ROI or becomes a cautionary tale of over investment remains to be seen.

Speculation has gained an increasing share of markets, as we have glorified the short-term trade. In the 1950s the average holding period of a stock (ie. a business) was 8 years. Today it is closer to 5 months. A businesses performance has become all about the stock price. CEOs are compensated, not on the success of the business, but the gain in the stock price.

Read more about we and Grant Williams thinks about this strategy.

This week I share with you a summary of a talk that famed investor Howard Marks, Chairman of Oaktree Capital Management and a legendary value investor I greatly admire, shared with his clients. Marks has been quite prescient at turning points in financial markets and it is worth listening to his market wisdom.

"When we long for a life without difficulties, remind us that oaks grow strong in contrary winds and diamonds are made under pressure." - Peter Marshall

In the world of investing the concept of volatility as a measure of risk is foolish. The entire investment world has been built around this concept and it’s ridiculous. Instead, the concept of anti-fragility as introduced by Nassim Nicholas Taleb in his seminal work, Antifragile: Things That Gain from Disorder, holds profound importance for investors.

The meeting in general is a masterclass in business, investing and general advice to live a rich, abundant and happy life. Most importantly we get an update from Warren Buffett on how our company is performing. This year felt a little different, Warren Buffett (93 years old) was without his business partner of 60 years, Charlie Munger, who passed away in November at 99.9 years old.

The Pilot’s Log is Back! Prior to covid we thought it important to send out more frequent communication, and well it’s time to reignite that effort. To that end, we are happy to share the first entry of the revived Pilot's Log based on a follow up to our recent Q1 commentary.

To read why Costco shoppers are buying as much as $200 million dollars worth of gold per month....read on.

Ensuring the resilience of our hard-earned savings demands a diversified portfolio that includes commodities, particularly oil or gold. US investors have been woefully unprepared for inflation with a historically significant under allocation to commodities…not us.