Blake Hampton

No those are good examples. I just feel like the way that I see things, these current yields on long term bonds are not sufficient enough to account for the risk I would take buying them.

I very much disagree with your opinion towards climate change. Average global temperatures have increased at an unprecedented rate starting about 200 years ago or so. This directly correlates with humanity’s large usage of fossil fuels for energy. I’m not a fanatic who stands in front of cars and demands for oil executives to be hung, I think fossil fuels have done an unbelievably great service for humans. However, I do think people need to consider how we are going to transition from our current energy situation. The future of the world depends on it.

I feel like focus should be more-so on long term interest rates. Long bonds yielding 4.5% is crazy to me when you can get 5.25% on cash. This is before you consider a FED that is currently in the process of shrinking its balance sheet, effectively adding more pressure. I’ve heard talks about the possibility of a future debt crisis concerning lack of demand in treasury auctions. Looking at TreasuryDirect, auctions seem to be relatively strong right now, but I still can’t come to understand why people are buying at current yields. I’ll agree with Buffett though. I’m thinking our current situation is more of a fiscal problem than a monetary one.

I’m starting to think more-so fixed income

Is this illegal?

You know the funny thing to me is that if you go and talk to any financial advisor, they will be very quick to tell you that equites have historically returned about 10%. This can also be “confirmed” with a simple google search. As you probably already assumed, I don’t believe equities will return anything close to that at current prices. Maybe then people are going into this with false assumptions.

This is from Seth Klarman in June of 2023. The market has appreciated approximately 20% since this interview was aired. Legendary investor Seth Klarman on investing challenges: We've been in an 'everything bubble'

I would like to do some math so that I can make my thought process seem a bit clearer. Equities and fixed income: Short-term interest rates are currently sitting at about 5.25%, which is also the yield that you can get from owning a treasury bill right now. If you look back at past data, the average spread between short-term and long-term rates (20-year bond yields), you find an average spread of approximately 1.5-2%. So through this whole QE mess, I'm using a "real" long-term rate of about 7%. This alone implies to me that the market for fixed income seems quite off. But what about the discount rate for stocks? I do know that a 7% yield is a good long-running average for long-term governments. I also know that stocks have been known to yield about 10% over time. Discount rates seem to me a bit wishy-washy but I think discounting earnings at 10% during a time of 7% long-term rates makes sense. Now think about current stock valuations when discounting at 10%. Also what about the fact that corporate taxes are currently sitting at 21% during a time of huge fiscal deficits? To me, it seems like many companies are selling at huge multiples of earnings that have additionally benefited from a meager tax rate. Real estate: The median home sales price is currently at about 5.64x the median household income. This seems unsustainable. Assuming the median household income is $75,000, I believe the median sales price for a home shouldn’t be anything north of 300-325 thousand, it is currently 420. Sources: Median Sales Price of Houses Sold for the United States Median Household Income in the United States United States Federal Corporate Tax Rate

I am curious as to your thoughts surrounding the subject of an everything bubble. It seems everywhere I look, equities, fixed-income, real estate, the prices seem absolutely disconnected from reality.

I’m 22 so this kind of stuff is invaluable to me. “If I have seen further it is by standing on the shoulders of Giants.” — Isaac Newton

I can do all of those listed activities for cheap/free. The only one that I couldn’t is the crazy trips but flying sucks anyways. A backyard fire with friends and some beer is where it’s at.

For context, I come from a generally poorer area. A lot of the things I see, alongside the ones you already listed, are actions such as multiple divorces, having children with multiple people, gambling, drugs, and mostly just other stupid decisions involving common sense. These are things that people can avoid, even if they’re not from money. I do understand that sometimes relationships could not work out because of abuse etc, but I also believe there’s a certain point where it does become about you.

The thing that I don't understand is how an "urge" gets passed on. I can wrap my head around health and looks, but feelings toward certain actions seems odd to me. I'm not disagreeing, I'm just curious.

Interesting piece. It’s crazy because 500 years itself could almost be sort of a stretch. For most people at least, immediate returns were probably still important as close as 100-200 years ago. Is it really possible that this is somehow hardwired into us as humans?

Also that Starbucks story seems crazy romanticized. I know that you’re paying those Rwandans 5 cents a hour Howard.

- The Intelligent Investor - How to Make Friends and Influence People - Onward (Starbucks backstory) I know it’s basic and I’ve already read the first two books a couple times. When I was reading them again though, I had the thought that maybe we don’t need to read a large amount of books to understand the important stuff. These first two books are simply incredible in my opinion.

I feel like this describes things perfectly

This is a good point. If so many people were to stop spending, where would all the profits come from?

Seen this on Forbes and found it sort of absurd. Is it really true that almost 8 out of every 10 Americans are struggling this bad? The personal savings rate is currently 3.2%. Assuming $64,240 being the median household income after-tax, that's only $2,056 a year in savings. It seems to me that people are living really tight right now. Some links: Forbes CNBC Personal Savings Rate

Fairfax bought a big chunk of ORLA last quarter

Too bad Biden is too focused on taxing unrealized capital gains instead of the more straightforward option. Dude has literally zero understanding of how business works. Trump does, but he's the kind of character who'll forcefully take over the FED and then lower interest rates to zero.

Brittle, bitches

Buffett's point on corporate taxes is spot-on. A historically low rate during a time of record fiscal deficits is simply crazy.

I know this is a stupid question but if I’m using the long term treasury rate to discount future cash flows at, wouldn’t average nominal GDP growth be the best terminal growth rate? I see all these videos on DCF models that use WACC as their discount rate so I can’t confirm.

^ or maybe it just increases volatility in earnings?