Spekulatius

@thepupil thx, i don't have a clue either. However the fact that "risk free" rates are blowing up means that perhaps they are not considered risk free any more. Perhaps the Quantitative tightening is the reason as you stated. I would agree it is an indication that something somewhere is blowing up. Perhaps we are seeing a repeat of the pension fund disaster in the UK.

Anyone knows why the ^TYX (30 year treasury) is going parabolic? This is an insane movement since August.

Title says it all. i don't think it's in the cards, but apparently some people do: https://www.telegraph.co.uk/world-news/2022/10/20/china-could-invade-taiwan-end-year-us-warns/

I mentioned before (in the China thread) the fact that autocracies tend to have lower stock market returns than democracies as I seeing a paper cited by @Packer16 on twitter. Anyways, here is the abstract with a link to download. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3198561 It's a pretty dry paper with a lot of statistical analysis, but the gist of it seems to be that if you invest in a stock market governed by an autocracy, you are taking a risk that you don't get paid for generally. That does not mean that you can't get good results in some cases. Might be worth discussing, but in any case, I felt it worth putting out here. I also think it's worthwhile following Keith / packer16 on twitter: https://twitter.com/Bonhoeffer_KDS Democracy and stock market returns.pdf

This behind the curtain thing is just disgusting. I think they need to call an election. I do not know the UK constitution that well, but it seems from a democratic POV, anything else is just unacceptable.

New trailer is out: Looks very promising: On my visit to Germany, i learned that my Great grandfather served on the western front in the German army. When hew was conscripted, he signed up on a hunch as cook (he could not cook at all) and got accepted. He never really had to fight much and barely fired a shot. Not something were you can earn a lot of medals with, but he got home whole. That's one of the "Artillery" pieces he probably worked with (Gulasch kanone). No army can operate with this sort of machinery.

I think the Fed decided that the risk to overshoot on the rates and impact the economy in a real negative way (meaning significant increase in unemployment) is worth taking, compared to the risk not doing enough and then playing inflation ping pong for a decade. I would tend to agree with them. The one caveat is that the financial system blows a gasket somewhere. It won't happen in the US, but it could happen elsewhere - the weak currencies (yen, Euro, GBP, virtually any EM currencies) are an indication of strain. My guess is that we could see defaults with EM's or maybe even within China, because they ride with the Fed due to their currency PEG.

I think this North Ireland issue was a leftover from BJ. I guess they changed the talking heads but not really the agenda. Since you like they grey Tori suits, you have to ask yourself who put Truss in charge just 6 weeks ago/ The same grey suits of course.

That’s a question I try to answer myself. If I had to guess, about 2% less in EBIT than currently (10% EBIT to 8% EBIT). The 2 % EBIT reduction resulting from a 1% reduction in gross margin and 1% increase in SG&A basically going back to pre COVID-19 numbers.

I can speak to Harvard directly as my son is trying to get in (long shot). According to our college advisor (yes these exist) our son needs a mid 1500 AP score and write a couple of essays. They also have an extensive background questionnaire for parents (have yet to see that one). I guess a kind way to describe it is to say that they are looking at intangibles but it’s probably also to balance their admission goals to whatever target they have based on made up fu-fu criteria. I have to say that I like the German system- once you get your Abitur, you can study almost everything and everywhere. Study Physics in Heidelberg - admitted. Free too. But then comes the brutal part - sink or swim. Test are designed to weed out the weak- after 2 Semesters 50% are gone, after 4 (mid term tests) more than 60%. Somewhat wasteful in terms of time lost, but fair, imo.

The schools in the US ( I have lived in 3 states and my son went to school in all of them) are not necessarily bad, but the dispersion is huge. You can find crappy schools and quite good schools in the same town, sometimes even just a few miles from each other. It’s not the funding either. In the town in CA where I lived , i looked at the funding of schools and it often turned out that the schools with lousy stats had more funding than the schools with good stats. Most of the differences is just due to demographics of the students that go there. In California at least, the schools with a high percentage of Hispanic students have low overall grades. It‘s not due to funding either since schools in the same town with less funding often get better overall scores. Besides CA, I have lived in Long Island, where schools have excellent funding and well paid teachers and it shows. There were issues with drugs and bullying however. We are currently living in suburban MA and the schools are funded well, but not as well as LI, However, I prefer the demographics here and the drugs and bullying are much less an issue. Anyways my son has to work quite hard. Plenty of homework too. He is doing some college grade studies in math for example in his honor class in math. It also was mentioned here, that you don’t need to take AP and other tests to get into college. While that is technically true, you can’t really get into a good college that way. Maybe if you excel in some sport that the college is looking for. Otherwise it means probably community college.

FERG (a UK company but virtually all their business is in the US) is another one I am following. It's a distributor, somewhat similar to WSO. Recent podcast discusses it: https://podcasts.apple.com/us/podcast/value-hive-podcast/id1492171651 I think it's overearning right now, but it's an interesting stock to look at.

Regardless what you believe to be correct, i think it is not a good idea to invest across political fault lines i the future. I think it did not matter as much in the past, but it sure looks like it's going to matter now. If you are located in China, it is probably better to invest in China, or get your money out in safe place. If you are located in a western country, it is not a good idea to invest in China. Besides that, I think Keith Smith aka @Packer16 has shown some evidence (white paper?), that investing in countries with autocracy's delivers subpar returns on average. I mean even the return in Chinese stocks are nothing to write home about, the rapid increase in GDP notwithstanding. That's true even before the Chinese stocks crashed in late 2021. Even if you do a gross sanity check on the situation, why do you believe that investing alongside this neo Maoist is a good idea? Makes no sense to me. There is not way to get rid of him either. https://www.scmp.com/news/china/politics/article/3196532/congress-delegates-embrace-communist-party-slogan-pledging-support-xi-jinping?module=lead_hero_story&pgtype=homepage

Lousy demographics Lousy geostrategic location Lack of resources and no way to protect their trade routes Lousy leadership. I think Zeihan is broadly correct, although he is oversimplifying and he is sensantionalistic.

I am in my mid fifties and doing similar works to yours, but in a different area. I think I easily can do this into the mid sixties, if I have to or feel like it. I agree with @boilermaker75 suggestion to keep fit. When you get into the fifties, health issue usually start to occur in many ways and it is important to keep your body healthy. As for investing, I don't really think anything changes, but you just need to be more aware of risk. You can't really afford wipeouts at this point any more.

Fixed interest rate Bonds are insurance against deflation. Thats how I would see it. TIPS are insurance against inflation.

Maybe it just my bias, but this CCP Congress feels pretty dour. This does not help either: https://www.scmp.com/news/china/military/article/3196157/chinese-military-must-move-faster-become-world-class-fighting Her is what Xi Xinping said about the military: The use of military power needs to be normalised and used in diverse ways,” he said in the report published on Sunday. “We need to be able to stage military operations readily, create a secure environment, deter and control risks and conflicts, and win regional wars.” “Win regional” wars is probably a snipe at Russian attacking Ukraine and losing. “ Normalized” and “Diverse ways” in the context of military power does not sound all that promising either. I think it’s pretty clear at this point that if you play in the Chinese sandbox as a western country investor, you are at the risk of losing your marbles. With the semiconductor sanctions, the Chinese semiconductor companies probably all will become state sponsored enterprises, if they haven’t been already. Quite likely, that applies to suppliers and ancillary sectors as well.

I think the semiconductor sanctions were the right move, done fairly late in the game. They would have been better done 5 years ago. As for college without taking SAT score - yes you can do that, but you won’t get into a good one. My son is at that stage as senior and without taking SAT or ACT test and scoring relatively high, the chances that get into a decent college are small.

The IP theft has definitely going on in semis. They can develop this tech too, but it takes time and they may never be able to catch up if the west keeps innovating. Right now, they are at least 10 years behind. I don't know how long it takes for China to get to the current leading edge, but it is possible that if they get totally cut off from western leading edge tech, that they can never catch up because the western companies keep the innovation edge the same. Also keep in mind that it is much harder to copy tech that you can't buy any more. Something like leading edge equipment won't get into Chinese hands any more. Even blueprints and electronic records (if they can steal them) only go so far. I don't think China is totally screwed, but they totally need to reboot their semiconductor development effort and probably start from basics in many respects.

Bonds can be attractive if you buy junk bonds when there is credit distress. You can get equity like returns in those situations. I actually can see the attractiveness to buy some TIPS at ~8% yield too. 8% is close to the LT track record of the stock market and with much less risk, especially if you have a shorter timeframe.

I am not sure about that. The Tory's in grey suits are just a boys club running the country in the ground, it seems to me. They are more of a problem than the solution. Look at where they come from - half these folks know each other from Cambridge and Eton Colleges. The UK has very little manufacturing and not much high tech. A lower GBP does not help them, but hurts their outsized financial sector. FWIW, I think the UK market looks cheap, because of the composition of the index. Lot's of energy, financials, mining. the same stocks are cheap in US markets as well. https://siblisresearch.com/data/ftse-100-sector-weights/

A lot of mediocre companies were going around 100x earnings in 1990, I guess this was based on their presumed real estate values as well as the inflated value of their cross share holdings. Ironically most now are in way better shape than they were in 1990 operationally and from a balance sheet POV, but trade at a fraction of their former valuations.

https://www.politico.com/news/magazine/2022/10/12/elon-musk-russia-ukraine-00061528

Not just food, but also crude oil, LNG, coal, raw materials etc. Think about how easy it would be to blockade all these things outside the Chinese sea for the US navy with help from the Japanese. The Chinese have no navy ships whatsoever to protect their trade lines outside the Chinese sea. They would be on the ropes in 4 weeks.

That’s because people become macro traders in times like this when stocks movement become correlated and typically very lousy ones. As if people had a clue what the next inflation print is going to look like much less how the market reacts to it.