no_free_lunch
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Posts posted by no_free_lunch
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This is a great discussion and unfortunately politically charged when it shouldn't be so much. I think all parties want enough housing. The consensus I have, is that there is a huge shortage of supply. I tend to read the same set of sources, generally right leaning, so it's good to see others perspective.
Just one link on the structural shortage of homes we are looking at. Not sure that there are enough vacant homes out there to address this.
Canada Mortgage and Housing Corporation estimated in June that an additional 3.5 million housing units needed to be built by 2030 to achieve affordable housing for everyone living in Canada. That’s on top of the 2.3 million units it expected to be built by that time at current rates of construction.
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“Canada’s approach to housing supply needs to be rethought and done differently,” CMHC deputy chief economist Aled ab Iorwerth said in the report. “There must be a drastic transformation of the housing sector, including government policies and processes, and an ‘all-hands-on-deck’ approach to increasing the supply of housing to meet demand.”
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CIBC deputy chief economist Benjamin Tal suggests in a recent report that Canada’s actual increase in housing demand is far higher than official estimates.
Ottawa is aiming to increase the number of new immigrants by 75 per cent over pre-pandemic levels by 2025. But saying 465,000 new immigrants in 2023 does not mean net population growth due to immigration and thus demand for housing will rise by 465,000, he said.
Tal argues that it’s not the number of new immigrants that should be used to calculate housing demand, but the number of new people coming into the country from abroad. And these numbers, he says, have been vastly underestimated
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Altogether, permanent and non-permanent residents arriving from outside the country in 2022 approached 955,000 which represents “an unprecedented swing in housing demand in a single year that is currently not fully reflected in official figures,” said Tal.
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“It’s not a stretch to suggest that the number of new international arrivals in 2023 might reach one million,” said Tal.
“This kind of inflow suggests that existing policy tools could easily fall short of addressing the current and further increase in housing demand.”
https://financialpost.com/executive/executive-summary/housing-demand-stronger-than-expected
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12 minutes ago, Xerxes said:
if I burn down your house and half of your family with it. And offer you safe haven, surely you will …..=> like the progress and security of my houseThere are so many other countries that are relatively stable. People are selecting the west for it's wealth and rule of law. I don't buy what you are saying. The proof is in where people are moving to.
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8 minutes ago, Xerxes said:
West has a fascination about breaking things up, for self-gratifying ideological reasons, which may or may not cause civil wars and then be involved to re-patch it up.
I’ll just leave it at that.
People like to criticize the west but sure like the progress and security of the west.
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34 minutes ago, Dinar said:
When has Ukraine existed for centuries? Your own link shows that it was not an independent country before 1991. In any case, you can argue whatever you want, but the point is there is no support on the American street for helping Ukraine.
I never said as a sovereign. Always under different yokes. Poland and Russia in particular. However, they were always independent culturally and this is what led to the creation of the country, like so many others, post Soviet breakup.
The US will support Ukraine, I believe, not because man on the street wants it to too but because the politicians know there is no real choice. It really comes down to fighting your enemy for a fraction of the cost. The US knows Russia is their enemy, Russia constantly reminds us of this when they threaten nuclear holocaust. So to counteract them for $25B, is really nothing. It's about 3% of the US defense budget. Contain Russia so the US is free to fight China, if needed, that is I think the US thought process.
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Bought a small 1% position in LHX. Will like to add as I learn more. Not without some minor issues but as usual, the issues feel priced in. Trading at 15x analysts estimates for the year. It's a compounder and a cannibal.
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1 hour ago, Dinar said:
@UK, @no_free_lunch, there has not been a poll done in at least a year of US citizens asking whether or not they would be willing to pay $100 per person per year to support the war in Ukraine. You may think $25bn per annum is a small price to pay, but US citizens think otherwise. Also, nobody is talking about handing the region over to Russia. However, it is NOT the job of US taxpayers to support Ukraine. It is the job of Ukrainians.
Yes, we are obligated to defend Poland and the Baltics due to treaty obligations.
Meanwhile, let's not forget, Ukraine has never existed as a country. Western Ukraine was part of Austro-Hungarian empire for centuries, and eastern Ukraine was called Little Russia for centuries, and part of Russian empire, and was Russian speaking. Hell, Kiev was called the mother of Russian cities.
Oh well, actually it has existed for centuries and in fact, it's now a sovereign country. If Russia wants it in it's sphere better ways to do it than at gun point but I know that's how Russia rolls.
Here they even made a wikipedia page to help clear things up for you.
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1 hour ago, Dinar said:
Who is going to pay for all of this? Ukraine needs $50bn per year to fight and probably a trillion for reconstruction. There is not a chance in hell the US will come up with $25bn per year for the next five years.
Probably some combination of Ukraine, US, EU. It's really peanuts compared to alternatives such as handing over the region to RF. Keep in mind the US is spending somewhere around $800B per year on their military and I don't think that includes everything either. Spending on the Iraq wars, I have seen that pegged at over $1T (off top of my head). These are in fact sustainable numbers but of course it would be better to just have some kind of peace agreement.
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11 hours ago, mcliu said:
This is probably not an option, but what happens if Ukraine starts losing the war? Should NATO intervene? Would people in the West support a direct war against Russia?
It's not so black and white. There are options for escalation between current support and some type of direct NATO-RU conflict. That is what we are witnessing in fact. Increased supply and more sophisticated weapons can be delivered to Ukraine. Some type of private military, a parallel to Wagner could be employed, it already is to a very limited extent by virtue of volunteers. Drones play a significant role and can be upscaled by western donors.
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13 minutes ago, Spekulatius said:
$DFS does not do car loans. I think you are referring to $COF.
$DFS is a very simple business - i hope they dump the student loan business as they seem to be contemplating - it has less return and there are a lot of regulatory issues.
What people missing with these cannibals is that for a cannibal to do their work (buying back huge chunks of their own shares), they need to have a low multiple. A 5x PE gives you a 20% earnings yield, which means you can buy back 20% of the outstanding (assuming no re-investment) while with a 20x PE, the company can buy back 5%.
That's why the $JXN, $DFS or $BTU and similar cheap stocks are better cannibals now than $AZO.
No sir, I was referring to AutoNation, mentioned earlier in the thread. I can see how without a reference that would be confusing.
With $DFS, similar story though to AutoNation in that you have to worry about an over leveraged consumer in a high interest rate environment. I guess this is where the cannibal factor really helps out.
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On 7/22/2023 at 5:43 AM, Sweet said:
How is this trading at a PE of 6? What’s the bad news story?I believe there are concerns that car prices peaked and will fall due to higher interest rates. Car loans are now 8-9% and people are already levered up. That said, it seems priced in and the company's record speaks for itself.
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43 minutes ago, blakehampton said:
I have a question for some of you more experienced investors.
Does the current economic situation particularly stand out to you, or is a mass feeling of uncertainty simply inevitable when it comes to markets?
The main points that stick out to me are the wide variance in interest rates (in a short period of time I might add) alongside the high prices of seemingly every asset class. I'm a relatively new investor, having only been doing this for about three years now, so I'm curious as to what you all think.
The current sitiation does not stand out to me. It has been confusing and uncertain from day one. There were maybe a few times during crashes where I saw sufficient margin of safety that I wasn't stressed but otherwise I've never known what would happen next and it always feels I'm paying top dollar.
With interest rates reverting the current period feels actually a lot saner than the past decade. At least there's a bond alternative.
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5 hours ago, dealraker said:
One of the things I've done for years and years is simply buy the defense, rail, insurance broker, or whatever industry laggards, the ones that are discounted for whatever reason. The outcome has been about 14%, maybe 14.5%, or simply way above what I'm shooting for in what was a very low inflation world and now one of somewhat higher. For years I did this in the drug stocks but stopped that a long time ago.
As I mentioned above, it always-always-always to me seems that BOA (where I have accounts as I do Wells) is promoting whatever is blasting ahead in price action. I may be wrong on this though, but it has registered that way to me.
Again, I'm not Parsad and seeking 19% is something I have never done and that sort of performance honestly makes me very uncomfortable. I basically invest where I'm 99% certain over time I'm not going to lose and hope for some upside.
Recently on another forum that I read because it was the only forum 25 plus years ago and I really enjoy forums, the crowd was blowing out of Berkshire to buy Dollar General. The DG type stocks are precisely what I would never buy at any price at any time. I consider whatever advantage or moat-no-competition sustainability they have to be completely temporary. But they guys with DG, although they are down terrifically, are in my view nowhere near Parsad in skill....but they are seeking that big alpha outcome. Ben Graham said, "The worst investor mistake is in late cyles to sell quality to buy lesser quality at chaper prices."
Far-far-far away from my game. Recently LHX at an average now of about $180 and NSC at $197 have my $ and vote. I'd be happy and sleep well with 100% of my money there although LHX is less than 1% and NSC is about 2.5% of my total. I'd not owned LHX but am delighted to be there now. With LHX I'm buying as it descends; with NSC I have had the stock in 1976 and for the first time since then bought at $197.
You could do an awful lot worse than LHX although I think NSC is the real winner here. Some good picks, simple to understand, reasonably safe, moat.
I have tried this industry laggard strategy you mention without as much success but I wonder if you are leaving out some type of qualitative filter. It seems, now that I have a bit of a record to look back on, that it's almost always the high quality names, when bought beaten down, that turn out ok. Neither LHX or NSC are low quality, these are gems you are picking out.
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Cargojet (CJT.TO) - Canadian company, air transport of goods. Likely this is known to Canadian investors on the board so always happy to hear their opinion, good or bad.
They have an excellent track record, around 20% EPS growth over the past decade and yet are not very promotional. Low debt (2.5x EBITDA), good management, near monopoly. I like that management issued a large share block (I think ~20-30% of additional stock) when the share price got to it's peak last year at close to double the current price, looks brilliant in hind-sight. They are in the dog house after increased COVID linked business has started to wind down but I trust the management and they will find new business and/or cut costs to make up for it. Not without risks, it's a fairly shallow moat and so you are really trusting in management but then so far they have consistently delivered.
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4 hours ago, Spekulatius said:
Looks like both ships are completely destroyed.
https://x.com/UKikaski/status/1701890251306762666?s=20
Yes, for the Russians it must feel like the Ukraine uses a cheat code when using western weapons.
The real cheat code would be to ignore Ukraine and focus on problems at home. Build up the economy, education systems, reduce corruption, so much more. With its energy and other resources they could be very wealthy.
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3 hours ago, Dinar said:
Would you mind providing proof for your assertion that there is a defense alliance between UK and Ukraine? I was not aware that one existed.
Defacto. The proof is in the arms delivery and training.
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PLC.to a funeral home business. They are down near 50% from all time highs, and are basically a broken GARP acquirer story. I view the earnings as a bit cyclical and suspect they can bounce back. If you look at their historic results, it's just lumpy from time to time and that is where we are now.
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1 hour ago, Spekulatius said:
Looks like Storm shadows have damaged a newer Submarine and a larger Landing ship in Sebastopol harbor. Crimea is strategically worthless for Russia now;
This is good. It provides additional leverage for negotiations.
Reading the coverage, I feel that when Russia gets attacked it's always spun as though they have been cheated. "The UK is supplying weapons..." Yes, they are. All predictable responses for attacking a country with which defense alliances exist. Russia can stop this immediately by simply removing themselves from Ukrainian territory. I have no sympathy for their position.
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Interesting article. I mean I have no idea but I go back and forth on these arguments. I am still not convinced growth will translate to profits. I mean, what about AMD and Intel, are they just going to sit on their hands? As I understand it, AMD is close and Intel behind but still a lot of smart people there. NVIDIA's profits have to be drawing interest, I know they are. Then you have Apple, are they designing their own chips now? I don't think we can simply take the growth of the industry and apply it to potentially high earnings of a particular company. Desktop computers have been getting more and more powerful for the last 20 years and it hasn't translated to profits for Intel/AMD. For now, NVIDIA is so far ahead and the demand so substantial that they are killing it but I question if that's long term sustainable.
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I have seen some studies that the superiority of spinoffs, in general, is no more. Perhaps over exploited by CEOs and priced in by the market. However, perhaps in Canada and other smaller markets there might be alpha here, I have seen it.
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I thought the delivery was excellent.
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1 hour ago, Luca said:
China is absolutely investible guys, especially with a long, long term horizon of 10+ years and with buying wide moat businesses. China will develop, so will their jurisdiction, they are on a level of a 1985 Germany on a per Capita Basis, reality will slap you in the face over time.
China HAS developed over the past decades. The issue is investors haven't been getting wealthy there, at least not from index funds. Not worth the risk. I have to worry a out corruption plus investment risk.
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1 hour ago, RichardGibbons said:
I don't scoff at it at all. I think it's atrocious. The government has effectively said, "Because you publicly disagree with our policies, we're going to take away your ability to feed your family." This is a huge overreach by the government. So, I think my opinion matches yours on that issue (or maybe I'm actually more extreme than you on the Emergency Act invocation. I'm against it to an extreme degree.)
On the vaccine mandates, I'm on the fence. I think there shouldn't be mandates outside healthcare, but I'm on the fence whether a healthcare worker should have the option of not using proven prophylactic measures. (Like, should they have the option of not washing their hands or not wearing masks during a surgery?) I think I probably settle on exactly how proven the "proven" measures are.
I believe in liberal values, but there's no doubt that the Trudeau government is authoritarian and very far away from liberal values. I think there's a reasonable chance that because of this government, I'll never again vote for the Liberal Party of Canada.
(I really didn't like Harper because of his anti-science stance. But now I wish I could vote for him today.)
Apologies. This is certainly a nuanced and balanced approach. It gives me hope. It is important that the west maintain some sort of moral consistency and the events of the last couple years really shook my belief in that. However, I do see more and more questioning the politicians and their motives and as long as that is the approach I hope things will turn out ok in the end.
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Richard, I recall a police state or martial law being imposed, in Canada, within the past couple years. All to silence some blue collar workers. Not so democratic, not so liberal. You probably scoff at this but then Luca thinks lightly of our opinion on China human rights abuses too. From my perspective, it's similar, just different degrees of authoritarianism. China might kill you, in Canada the most they will do is take your job if you oppose them. For the average joe either option is catastrophic.
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Since we are investors, I just look at things from that perspective. Is there really a history of profits made in China by investors? If I look at something like the ETF FXI, I have to go prior to 2005 to get to a profitable investment. This, in spite of huge growth of the Chinese economy during that period. If economic growth doesn't translate through to shareholders, why bother. Is there a real argument for profitably investing in China? I haven't run the numbers, is it just that the PE is much more compressed?
Bank of Canada: Have we entered a new era of structurally higher interest rates?
in General Discussion
Posted
Banking is too complex and risky for me. There are a lot of variables, interest rates, government involvement, legal issues. I only like US banks. I think the construction industry is the way to play. I have no investments in that area but I am looking.