Spekulatius

DCA works if you are starting out. It does not work well, if you have a lot of money in your account and new annual contributions are <5% of the total to put it in a plain number. In the latter case, the performance of your portfolio starts to matter much more than the new contributions. If you are concerned about index funds not performing well, I think you need to find ways to diversify out - maybe international funds, small caps, bonds - pretty much everything that does not hug the SP500 index. I don't think there is another choice really. You could also consider to start Roth IRA's instead of contributing to 401K (if your money is tight, if not you can do both). Or even consider changing the employer to be able to roll over your funds in a self directed IRA, if nothing else works.

The vast majority of employers don't have such a self directed option. I have asked my former employer about this and the HR person responsible plain out told me that they wont do it, because of concerns about liability. They are afraid of employees blowing up their accounts etc. If index funds perform terrible that not their problem - they can't get sued for that.

I think people starting out really need to consider where they should start their career. Maybe the job in area where you can get the highest salary, but also incur the highest cost of living and likely highest taxes is not really such a great choice. If you like the city life then maybe it's worth doing, or you do it for a few years and then move into a cheaper area. I never liked living in cities that much so I always chose my job where I could live in smaller cities / more suburban, which tend to have lower cost of living as well. Not being able to afford a home is more of a lifestyle choice than an affordability issue, especially with WFH gaining more traction.

The area Santa Barbara simply won't have many first time home buyers. That does not mean that the area dies out. It just means that likely other buyers will move to this very desirable area - think retired people, rich emigrants, tech employees etc. The problem existed forever in CA - there are more people moving out (especially in Uhaul trucks!) than moving in the state, yet CA did not die out. The balance is made up with with emigrants.

The next generation will eventually own what the current has, so they can't be poorer in aggregate. it may be more difficult to accumulate wealth from scratch though, if you aren't born in a family with some money. FWIW, the same arguments were made 20 years ago. I think every generation will have opportunities to create wealth but it may not be as easy in some time periods than in others and you may have to pounce on them. For example, if you invested in housing in 2009/2010 in the lost decade, you could have made out like a bandit (I didn't). No stock market knowledge necessary. Generally speaking, a lost decade will occurs when we have a few crisis during this time period and you are starting from a high base. That was the case in the 70's (two oil shocks) and 2000-2010 (dot.com bust and GFC). Every crisis is a huge opportunity to make a lot of money, if you are set up correctly and act accordingly. The current generation also has a strongest labor market since the 1960's going for it. It wasn't as pretty when I started working. Having no risk to stay unemployed is a nice implicit fallback that can be utilized to take more risk, for example. Just a few thoughts and that's how I explain "creating wealth" to my son.

The classical example of index distortion due to a bubble is the Canadian stock market index in 2000, which had a heavy dose of Nortel (which went bankrupt) and JDSU (which went so close to being a zero that it doesn't matter). I think the two together were over 60% of the index at some point. We could see a mild version of this in the US, if Fangs and tech fails to deliver returns. that's the problem with market cap weighing 0 it tends to exaggerate money flows and at some point , you can end up with a bubble because all the bubble stocks dominate the large cap index (think Tesla, SAAS, AMZN, META, GOOGL etc). I don't think GOOGL and META are bubble stocks, but it is possible that they as a group perform miserably. The average Joe will have trouble avoiding carnage in these circumstances. I guess investing in Foreign markets or small caps is a potential way out. As for @Libs statement that it does not matter, I don't agree with this statement. It may not matter for him as an active investor but a lot of us have a portion of their capital in 401K's where you can only chose index funds and maybe some actively matched funds. Many hug the SP500. Also one needs to keep in mind, that for every outperformer, there has to be an equally underperformer, because obviously not everyone can outperform in aggregate.

Lost decades are nothing new - we had already one from 1/1/2000 (SP500= 1469) to 1/1/2010 (SP500-1127). That's a whopping -23% return in a decade for Joe Sixpack investing in index funds. The 70's were worse, after accounting for inflation. I think every couple decades, one get's lost in terms of stock market returns.

Nope, that's not how it works: LNG is up everywhere, because European buyers are crowding out others by bidden more. LNG is a worldwide market, just like oil (with more infrastructure constraints). it's going to be tight for years and probably a better area to invest in than oil. Shell is the biggest integrated player on a world wide scale.

I don’t think the NG will flow from Russia for a long time, regardless of how the war plays out, @lnofeisoneRegarding the weather , what makes you think that next winter will be cold?

Just listened to the odd lot's podcast about China. It does a good job of describing the confluence of factors currently impacting the Chinese economy (real estate, zero COVID, stimulus (or lack thereoff), drought etc.) https://www.bloomberg.com/news/articles/2022-09-05/odd-lots-podcast-tom-orlik-on-china-s-economy-covid-zero-and-real-estate?srnd=oddlots-podcast

I am guessing that GS talks their own book here. One way that 22% inflation could happen is if the GBP collapses relative to the Euro. Since the UK pretty much imports everything (they have financialized their economy), this would lead to rapidly rising prices. My guess is that the UK would protect their currency with significant rate increases but I am no expert on this.

I agree on Nintendo. Sony also benefits from currency effects, but I am a but less sure about their valuation. Sony has some great business franchises like Movies (Spiderman franchise) and Music and PS as well as a leading position in Image sensors. They also have a great track record in capital allocation, where Nintendo is lacking a bit.

The UK economy seems to be in worse shape than the rest of Europe, but where did you get 22% inflation? They are at ~10% right now and I don't think it's going much higher. Europe has issues with energy supply right now, but I think in 2023, the worst will be behind them. Russia, on the other hand is likely to go into a an extended decline that is going to last years.

Russia has a LT problem that their economy is going to hell: https://finance.yahoo.com/news/russia-risks-bigger-longer-sanctions-135601014.html Now they stopped selling NG to Europe and then what? It’s not literally a gas station that stopped selling their gas (they do continue to sell crude oil of course).

I do not like the companies that Buffet bought. BASF is at the heart of Europes energy problem and deeply affect by the NG shortage. They can switch inputs to some extend (to oil), but if their allocation of NG is reduced by 50%, they have to curtail production in Ludwigshafen (their largest money maker). Even before that, the higher NG cost hurt quite a bit. This is a problem that does not go away. It may be priced in at this point and BASF has production in other geographies ( US/ Texas and Asia though ). However, why not buy CE or similar stocks? Allianz and Munich Ruck are insurance, that have been traditionally connect to each other. Allianz is pretty mediocre in my opinion. I feel there are better choices out there. You are correct that many German companies operate in sectors that are capital intensive, but so is insurance.

The felt the first episode was so so, but I think this might be turning out to be alright. The production and the acting still does feel a bit artificial to me. My hope is that they can bring this alive like Sméagol in Jackson’s trilogy for example.

I think companies worth owning are Deutsche Post, Porsche Holding (POAHY) and Exor Holding for example. For exposure to the German market, I would get an MDAX ETF , which gives you more exposure to Midcap German companies for example. I don’t know French business all that much, but I think choosing the Midcap route may be the way to go. FWIW, most European Midcaps have an international business focus, so they are not necessarily limited to doing business in Europe only.

Most European companies make only a fraction of their business in Europe. The actually numbers depend, but the multinational companies in Europe are closer to a 1/3 Europe, 1/3 NA and 1/3 Asia/ EM business mix than 100% European. So, I think there are great opportunities out there to get a double whammy from both a lower valuation as well as a currency kicker eventually. Likewise, a lot of US companies have significant revenues in Europe as well as in China (both secularly challenged).

Well the other currencies suffer from inflation as well. Also, the USD is going strong in every crisis and especially now. Since the US in energy independent and Europe, Asia, Japan are not. EM currencies are generally the real canaries in the coal mine.

Mauboussin is definitely into updating priors. He mentions this several times and it is also something that I have heard in several economics books that deal with forecasts. I think the expectation investing is a twist to value investing where you try to reverse engineer the stocks value as well, as embedded expectations in a stock. You can apply this such that it’s not directly value investing and I think quite a few growth investors do this as well, It’s similar to a DCF or reverse DCF method- both can give the same result and it’s fundamentally the same method , but require a bit of a different way of thinking. Mungers “invert, always invert” fits the same framework. FWIW, there is a recent podcast interview from Mauboussin: https://podcasts.apple.com/us/podcast/motley-fool-money/id306106212?i=1000578259992

People do get pulled over, mostly for speeding. The type of car matters much more than the color. If you drive a souped up rice racer with low suspension and dark window tints, expect to get pulled over more than driving a minivan.

I am just belatedly watching “Billions” on Prime video and the one guy at the hedge fund brainstorming session got scolded for proposing Apple, because it has “still room to run”. This was S1 E2 in 2016. So far, I like this show.

This episode in business breakdowns about CRWD was pretty good: https://podcasts.apple.com/us/podcast/business-breakdowns/id1559120677?i=1000578011308 Learned a few things about CRWD but also about the cyber security business.

Bought a starter in IAC. Also added to PYCO and CMCSA just a little.

@LearningMachine thx for the summary - I have nothing to add. Have been tracking ALLY on and off for years and whey they IPO'd they actually were a prime auto lender and over time went lower on the credit scale, because that's where the juicy NIM's are. COF auto has always been subprime, I think. Clearly, few of us would consider a car loan from either lenders - we would use the manufacturers lending arm or go to a credit union like Penfed etc.