Spekulatius

As @TwoCitiesCapital said, the cruise line stock prices are deceiving because these cruise lines diluted shareholders so much and raised debt. I would rather invest in something like LUV or even BKNG or EXPE if I feel like investing in travel.

Love this anecdotes. I believe patience and common sense beats trying to outsmart the market at every turn over time. Just look how badly these hedge funds are performing as whole to prove this. Says the guy who went all in with his 401K in late September 2008...

FWIW, I am in the same age bracket than your father in law. 20% downturns occur about every 3 years on average. The last ones were in 2018, 2020 and now 2022. What we are seeing here is nothing out of the ordinary. https://www.fool.com/investing/general/2013/08/19/what-i-plan-to-do-when-the-market-crashes.aspx

Not so good news for defense contractors potentially: I think LMT and BAESY has relatively significant business with Saudi Arabia. (sold mine a while ago) The foreign affair committee is bi-partisan: https://foreignaffairs.house.gov/members Peter Zeihan must be running victory laps recently.

I am curious, how do you lose a decade worth of savings in a 21% decline? Assuming, he had his money in index funds, he would be back to where his account was in November 2020, which does not seem like a big deal to me. Checking back to a decade ago (2012), he would still have 3x his money.

First victim - chips are down for Yangtse Semi: https://www.wsj.com/articles/u-s-suppliers-halt-operations-at-top-chinese-memory-chip-maker-11665573761?mod=hp_lead_pos7 RIP.

Found this on twitter:

Buying a bit more CMCSA here. Painful.

This is correct, I just wanted to point out the magnitude of risk here. Semi equipment sales to China won’t entirely go to zero. For example, the equipment to produce trailing edge nodes for analog semis won’t be affected as I understand it. I think the beneficiaries are MU and even TSM in the long run , because any competition from China is going to get kneecapped. TSM also sells into China (~10%) but I think that entails some re-exports as well, so likely impact is lower. In the long run, their strategic position has become more significant, I think.

ALT investment have been a way to get returns in a ZIRP environment. If you can get real returns with bonds again, then ALT investment would become less attractive and the big institutions would probably shift some allocation to bonds rather than ALT investments. I think the most likely thesis breaker are sustained higher bond yields.

Javier is incorrect- the Saudi we’re all in on the oil embargo in 1974. I don’t think we get a deal with Iran though, except maybe a narrow nuclear proliferation deal. Optics are terrible with the protests and Iran delivering weapons to Russia. I think we see something with Venezuela- much less hostile and dangerous and it’s right at out doorstep.

Yes, LNG tankers are shifted. China for example needs way less LNG. That said, I do not know the supply chain situation that well.

How do you explain that the USD is so high if they are selling treasuries. Do you think they keep it in cash? They sure aren’t buying stocks or real estate.

No, they would not write back the goodwill if PCP as a business improves.

Your logic makes no sense. The USD is at record highs, so it's not that foreign entities are selling it. If anything , there seems to be a shortage of USD and the EM's are going to feel the pain.

Checks to the Ukraine are a great investment. Keeps this particular problem out of our way for decades to come. Energy is tied to this and needs to take into account the shortfall that is mostly NG not crude. The Russians keep selling crude just like they used to, because they have to.

All these foibles around crude and oil are annoying when NG is really the energy source that matters, both in Europe and in the US. Biden should do all he can to encourage NG production in the US to allow exports to Europe and to make sure there is no problem in the US. having high NG prices in the US will cause all sorts of negative externalities, much more so than high prices at the pump.

PAOHY, USB, LEVI, TSM are my latest adds.

@lnofeisone and @ValueHippie you could well be right. I do feel that a lot of pessimism is build in valuations for Euorpean manufacturing stocks. As someone who works in the US in manufacturing it is really hard to compete against Europeans now with the USD- Euro exchange rate as it is. This matters more for France and Germany etc who actually have manufacturing, rather than the UK which has financialized their economy and doesn't really make anything any more and exited the European Union. The UK is in way worse shape than the EU countries in my opinion.

It used to be the case that you could write down goodwill, but that’s not true any more. Goodwill now only gets written off when it does not pass the impairment test. Other intangibles (like customer lists) still can be written off. The ghist or your post is still true. If you buy a high ROIC business, most of your Purchase price is goodwill. if this business keeps growing, Goodwill still will remains the same, only the smallish tangible part of invested capital will grow. Simple example - you bug a business for $5B and it earns $250M, You pay $4B for intangibles and $1B for tangible assets. Business growths and doubles in size over a couple of years. If everything remains the same, then your tangibles will have doubled too, to $2B but intangibles remains the same at $4B So now you own a business that is valued on your balance sheet for $6B and that makes $500M in earnings (assume that earnings have doubled as the business size did). The key of course is that the business keeps growing after you buy it. PCP for example didn’t do this and that’s why goodwill was written down as it didn’t pass the impairment test one year.

I liked Rings of Power so far. Solid and it’s nice to see the storylines converging. I am currently at HOD E7. E7 was solid too. E6 was a bit boring to me and I thought already that HID may become Downton Abbey but with Dragon (and worse actors). I do think E7 is better hope it continues. On nother note, I like the new Pennyworth series in HBO. Love the style, production and the acting. I am only 2 Episodes on so far and hope it continues.

Checked out the Blockwork Macro channel and found the episode with Aswath Damodaran pretty good: Aswath is really a clear thinker and explain how to think about inflation , the impact on equity prices etc. Highly recommended. Some of his points~ stable high inflation is not a problem for business. Companies could easily deal with let say 7% constant inflation. However, high inflation is almost never stable. When inflation is 7% it could be that next year inflation is at 5%, 2% or 10%. That’s what happened in the 70‘s. Needless to say, this uncertainty is toxic for most business. Thats why the 70‘s were all over the place.

LOL. Virtually any train line in Europe is electrified. This is really nothing new.

The FT article seems a bit contrarian but that’s the way I see it too. The elevated NG prices in Europe are about to collapse. They are already down ~50% from this super spike in July when Putin turned off the NG. Spoiler could be an extremely cold winter. https://www.ft.com/content/be331b8e-3a24-4941-b6d0-aa3041f789cf?ftcamp=traffic/partner/feed_headline/us_yahoo/auddev The progress in Germany is summarized here: https://www.bmwk.de/Redaktion/EN/Pressemitteilungen/2022/09/20220901-bmwk-charters-fifth-floating-lng-terminal-while-infrastructure.html

Railroads are not going away. For bulk goods, it is really hard to beat railroads. However I can see the relative competitiveness of trucking improving for if self driving trucks becomes possible, even if it’s on highways only. I have been loosely following the big truck companies in this area and I think we might get self driving trucking way before self driving cars. When speed and door to door handling matters, then trucking is much better than rails. Now self driving trains is possible too, but the relative benefit of a self driving train would be much smaller than for a self driving truck as far as unit costs are concerned. These are all long term trends so I would not sell rail stocks over this, if I owned any. However, it would be a trend that I would start to watch. I am mainly interested in this because I think the truck manufacturers like Paccar, Daimler Truck etc could add enormous value to their customers, if self driving trucking is solved.