UK
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Posts posted by UK
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19 minutes ago, Gregmal said:
There’s nothing wrong with raising rates. There’s something wrong with thinking that destroying the economy and the average workers bargaining power is a resolution to prices going up temporarily. Supply and demand capitalism fixes that on its own. Turkey is a third world country compared to the US or Canada or UK. Same with the South American countries that saw hyperinflation.
What the Fed has done SO FAR, imo, is perfectly fine. Going further would be potentially disastrous. You can’t have the country currently in the most robust shape, being the most aggressive on the rate hike game trying to destroy its own economy. It just hurts others globally to magnitudes greater than here. And if you turn a good economy here into shit, it’ll just further deteriorate things.
Way too much academic bullshit being experimented with here when too much of the problem is political and too much else of it is not terribly effective w/ rates regardless.
i agree. At first they overdid it to one side, now, maybe they are overdoing to another:). Maybe summer rally shocked them and they just wanted financial conditions to tighten, so they started to talk about all this pain in order to bring infliation down, just that markets would get a message. Gee, FED pivoted in 2018 end after just 20 market drop. Maybe they wiil stop soon, before something really brokes, or maybe only after. I think nowbody knows. Perhaps better to turn attention to questions such as FB or GOOG is a better buy:)))
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2 hours ago, Gregmal said:
It’s really funny when you thoroughly think about it and this whole situation. Most of the real inflation occurred through 2021 and early 2022. Screw the rigged and backward looking metrics, use your eyes. The $12 2x4s, steel prices, bidding wars on homes, used cars appreciating, toilet paper price gauging, etc…all that shit. And I don’t think there’s many who wouldn’t say 2021 was a great year for the economy and all. Not even talking about the stock market, the real economy.
So the inflation works it’s way through just like with used cars and 2x4s and even the spac and Ponzi scheme stocks and wouldn’t you know it, corrects itself on its own if given enough times. Capitalism works. But then, out of nowhere, the central banks all decide they need to blow up the economy and potentially causes what I guess you and others are saying may be a “multi year economic crisis”…..this is truly one of the most bizarre events I’ve ever witness in my lifetime. More so even than COVID. Everyone gets together and decides they need to destroy any single positive thing about the economy, globally, to fight this ever changing thing called inflation. Pretty remarkable.
Re rates: but the good news is that more and more of good news, which is bad news:), are turning into bad news, which is good news:)
Re self correction: i am not sure if FED or any other CB, at least if they care about not turning country into some banana style economy (and US has worlds reserve currency, some call this exorbitant privilege or something), can choose not to react to situation. Usually by making mistakes to both directions:)
Again, look at Turkey, they kept rates way lower than inflation for quite some time now, and it seems it is not working very well:
Personally I have no idea if infliation is transitory or not and even if somewhat normal rates is such a bad thing. It is easier perhaps to look on relative basis and it seems US is ina quite good position comparing to almost every place in the world:
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The ministry was responding to a comment on Oct. 1 by the Russian Defense Ministry that Russian troops had successfully redeployed to “more favorable lines of defense.”
The Ukrainian armed forces responded with a mocking post on Twitter.
“We thank the ‘Ministry of Defense’ of Russia for successful cooperation in organizing the ‘Izyum 2.0’ exercise,”
“Almost all russian troops deployed to Lyman were successfully redeployed either into body bags or into Ukrainian captivity. We have one question for you: Would you like a repeat?”
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Maybe somebody will renew this with Powell:)
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I understand, that one years earnings is only small part of the value, etc, and this relates only to SNP as a whole, but historically I think it is a good yardstick to look at the total market through this F PE valuation lenses, because it provides, if not perfect, then somewhat normalised basis:
It is interesting, that putting some 4 per cent growth on the SNP500 earnings for 20 years (ant 2 after that) at some 10 per cent discount rate you would also arrive at around 16x fair value for the whole market, so this 16x seems like fair/reasonable multiple for the total market.
We are at it know, but the main problem I think is that those future earning estimates is still anticipated at around 240 for 2023 (and have not changed a lot from spring i believe) and comparing to estimated 210 for this year, it anticipates some 14 per cent earnings growth. I am not sure if this is not to optimistic? Those estimates always too optimistic, but in this case I am afraid they are just terrible lagging (and perhaps already getting adjusted in the markets mind) and if you put more conservative number, like same 200 and a still "not distressed" multiple of say 15x, you would arrive at 3000 for SNP500. If I had to invest only in SNP, below that level, I would be fully invested and perhaps, below some 12x, even add some 20-30 percent leverage, especially if it would be clear at that time, that rates will not rise anymore/are going down.
I also like these charts:
But perhaps all this does not mean nothing at all if you invest in a particular companies and have somewhat longer horizon than 6-18 month. Also it will be very interesting to see what team BRK will do in this environment, after all those writings about buckets and raining gold, they did not so much in 2020 spring, and later explained, that it was because that situation was really special/unknowable (which I agree it was), this year I think they (Tod?) said, that this time situation is more from their playbook. But maybe they just wait for that phone to finally starting to ring again, another way to time the bottom:), and also something to think about while trying to answer threads subject question.
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13 hours ago, Spekulatius said:
Is there some longevity gene with Berkshire investors? Maybe a hidden benefit. Key to compounding is duration and that's where Buffett is king, doing this for more than 60 years now. Even a mediocre investor will do well if he lasts long enough; at least that's what I keep telling myself.
You are not the only one asking these questions:). From 2020 letter: "When our partnership distributed its Berkshire shares in 1969, all of the doctors kept the stock they received. They may not have known the ins and outs of investing or accounting, but they did know that at Berkshire they would be treated as partners. Two of Stan’s comrades from Emdee are now in their high-90s and continue to hold Berkshire shares. This group’s startling durability – along with the fact that Charlie and I are 97 and 90, respectively – serves up an interesting question: Could it be that Berkshire ownership fosters longevity?"
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For fun: “SPX 666 (GFC low) to 3333 (QE bull high) to 2222 (COVID) to >4444 (QE supernova) to 3333 (bond bear); we nibble 3600, bite 3300, gorge 3000,”
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9 hours ago, Gregmal said:
Awfully rich. He may be right.. But comparing it to 2007 when few people had a more direct role in creating that scenario than Larry himself? Guy was totally corrupted and at best blind in 2005/06/07 and getting paid by hedge funds to tell folks everything was great. Of course like much else on WS, in hindsite Larry knew it was coming and did everything to avoid it. These people…
I have no idea and do not invest based on such things, but after reading about all this "pension margin call" situation, you really start to wonder, that it feels a little bit like 2007, when everyone quickly started getting educated on subprime stuff:). It was zero interest rates and unlimited QE policy for 14 years and 10 years from last major financial/market dislocation (EUR crisis until whatever it takes). At the start of the year, almost all assets where on the expensive side, if not in a bubble and when rates go up by such magnitude after such long time (and before this bond market was in bull market like forever), who knows what interesting things could happen? In 2018, when FED tried to raise rates, markets went down like 20 per cent and it pivoted:) But this time I think it not so easy to do or very hard for them to do in a major way before time. At least not until major dislocation (hopefully/probably not in US at first) or at least more substantial market drop:). However it leads to a much more exiting times in the markets, just look at GOOGL, was at like 30+ PE year ago, now it is <18, on relative basis, on par with SNP!, on absolute basis, taking growth into account, perhaps also well above 10 per cent return at this price in the long term.
More on LDI (new term for me:)): https://www.bloomberg.com/opinion/articles/2022-09-29/uk-pensions-got-margin-calls?srnd=premium-europe&leadSource=uverify wall
UK
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6 hours ago, stockman500 said:
Anyone else following the British Bank of England thing with the rate hikes up?
Anyone think things can start getting crazy very soon.
Kuppy has been tweeting a lot about it
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11 minutes ago, Parsad said:
Other way around. FFH 1% and BRK probably 6%. If a $60B loss, FFH would be hit with $600M or so and BRK would be hit with a $3.6B loss or so. Cheers!
Thanks, yes, but than I compared those possible losses (acctually 0.7 and 5.6 B) to market CAP of FFH and BRK and come to 6 and 1, respectively.
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1 hour ago, Parsad said:
Fairfax is in much better financial position to withstand hurricane losses than it was in previous large scale hurricane catastrophes like Andrew. Fairfax will incur about a 0.75-1% loss, while someone like Berkshire will probably incur a 5-8% loss. Also, as tragic as Ian will be, this will only bode well for a continued hard market in reinsurance. Premium pricing was expected to be strong through 2023, but with Ian and other potential losses this year, the hard market will likely continue into 2024 as well. Cheers!
Thank you. So, if I understand correctly, at upper bands, it would be something like about 6 per cent from CAP for FFH (and 1 per cent to BRK).
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Would FFH felt substantial impact if such predictions come true?
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The UNC analysis comes with caveats. Lacking confidential tax returns that would allow precise calculations, the authors used publicly available financial data. Companies might change behavior to minimize taxes. A one-year snapshot includes unusual situations that cause companies to pay the minimum tax once, generating tax credits that can be used in future years.
Under the new law, companies averaging more than $1 billion in publicly reported annual profits calculate their taxes twice: once under the regular system with a 21% rate and again with a 15% rate and different rules for deductions and credits. They pay whichever is higher. The new system, known as the book minimum tax, starts with income reported on the financial statement, not traditional taxable income. Differences between the two—the treatment of stock-based compensation, for example—could drive a company into paying the new tax. According to the UNC estimates, Berkshire Hathaway would have paid the most in 2021, at $8.3 billion—or about a quarter of the estimated total—followed by Amazon at $2.8 billion and Ford Motor Co. at $1.9 billion.
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In the oher news: https://www.cnbc.com/2022/09/22/turkey-cuts-interest-rates-again-as-country-struggles-under-inflation.html
Erdogan, meanwhile, remains optimistic, predicting that inflation will fall by year-end. “Inflation is not an insurmountable economic threat. I am an economist,” the president said during an interview Tuesday. Erdogan is not an economist by training.
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1 hour ago, nwoodman said:
Sure is creating some interesting opportunities either way. Flushing of weak hands and crappy businesses is a pleasing outcome. Cathie Wood stepping down from a couple of her shittier ETFs should mark the beginning of the end
And TSLA still >CAP 800 B!
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On 9/22/2022 at 4:50 PM, changegonnacome said:
Suspect we’ll touch something in the late 2000’s on SPY….settling somewhere in low 3000’s where the next, hopefully decade long expansion, can build out from.Some type of ‘financial event’ is very likely between now and when price stability is returned. I won’t even guess it’s exact source but changing the most important price in the economy (the price of money) so rapidly and so aggressively after such a prolonged period of ultra low rates has 1st and 2nd order effects way beyond the capacity of anyone to predict.
https://www.wsj.com/articles/the-market-still-isnt-priced-for-a-proper-recession-11663857523
i have no idea, but just for fun, speaking about this whole FCF vs rate question, I think in the 1H and until yesterday most of the stock market drop was driven by rate vs fcf and valuation rerating of more expensive/growth companies, together with long bonds. No idea if and when, but If market starts to price some hard landing, earnings drop and some second order effects (just look at GBP), lower inflation, and then deflation:), then value/high FCF/short duration/leveraged things could lead decline? either way very exiting times possibly is coming again:)
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2 hours ago, Spekulatius said:
Do you think there is a chance that lawmakers understand mathematical algorithms well enough to regulate them?
i imagine job will be done by this or similar agency:
Learning from the best:
"Beijing has looked to European antitrust authorities as a model as it seeks to upgrade its antitrust capabilities, one of the people said. In August, SAMR's antitrust office said on its website that it had invited experts from the EU and United States to hold online courses for Chinese "antitrust talents". "Compared to other major anti-monopoly enforcement authorities in the world, the authorities in China currently have fewer staff, which needs to be changed in the future," Wu Zhenguo, head of SAMR's anti-monopoly bureau, told industrial online journal The Antitrust Source in a July interview"
However:
"The State Administration for Market Regulation will boost staffing at its anti-monopoly bureau, which will be split into three separate divisions focusing on antitrust investigations, market competition and mergers oversight, according to people with knowledge of the matter, asking not to be identified as the information hasn’t been made public. It’s planning to increase the number of antitrust officials from over 40 currently to 100, before reaching 150 within five years, two of the people said. "
Seems like really small number, FTC gave like 1000+ people, but perhaps it is not comparable/different.
Russia-Ukrainian War
in General Discussion
Posted · Edited by UK
https://www.wsj.com/articles/ukraines-new-offensive-is-fueled-by-captured-russian-weapons-11664965264
One Ukrainian battalion, the Carpathian Sich, seized 10 modern T-80 tanks and five 2S5 Giatsint 152-mm self-propelled howitzers after it entered the town of Izyum last month, said its deputy chief of staff, Ruslan Andriyko. “We’ve got so many trophies that we don’t even know what to do with them,” he said. “We started off as an infantry battalion, and now we are sort of becoming a mechanized battalion.” 0The chief of staff of a Ukrainian artillery battalion on the Kharkiv front said his unit now operates four recently captured Russian 2S19 Msta 152-mm self-propelled howitzers, alongside American-made guns, and now has abundant Soviet-caliber ammunition. “The Russians no longer have a firepower advantage. We smashed up all their artillery units before launching the offensive, and then we started to move ahead so fast that they didn’t even have time to fuel up and load their tanks,” said the officer. “They just fled and left everything behind.”
Combined with weapons taken during Russia’s retreat from Kyiv and other parts of northern Ukraine in April, these recent gains have turned Moscow into by far the largest supplier of heavy weapons for Ukraine, well ahead of the U.S. or other allies in sheer numbers, according to open-source intelligence analysts. Western-provided weapons, though, are usually more advanced and precise. Ukraine has captured 460 Russian main battle tanks, 92 self-propelled howitzers, 448 infantry fighting vehicles, 195 armored fighting vehicles and 44 multiple-launch rocket systems, according to visual evidence compiled from social media and news reports from Oryx, an open-source intelligence consulting firm. The real number is likely higher as not every captured piece of equipment gets filmed.