Spekulatius

I own NOC, LHX, LMT and GD (in that order). I was initially overweight GD (actually bought some as low as $100 and change) but reduced in favor over the others. The risk that is Common with all of them is cuts in defense spending. air is possibility, but with MMT now making the rounds and threats from China and to a lesser extend Russia increasing in their sophistication it seems like a bad idea right now. If cuts in defense spending were going to happen, I expect another round of rationalization and consolidation and massive share buybacks just like what happened from 2010-2013. Consolidation will perhaps not amongst the prime contractors but all those secondary ones underneath. Those mostly are not pure play defense, they will just move resources to other areas. I work for what is one of the secondary ones (supplying the big ones with components so to speak) and I know for sure that if the business gets subscale, the effort is just going to be moved into commercial activities.

The F-35 is imo wrongly accused of being a failure but it is commissioned and works despite some deficiencies. It also can’t really fail because it is the only fighter platform there is and those platforms are almost like SAAS, they live for ~40 years (the F-35‘s projected life is until 2055). The F-15 is still around and still getting Development contracts for upgrades for situation where stealth doesn’t matter as much. It was developed in the 1970‘s. LHX is a Great Outfit. They don’t own large programs, but they are involved in every one of them. I love their Proxy Statement 40% EBIT, 40% FCF and 20% Revenue growth. Plain and simple and shareholder friendly.

At some point it is inevitable that China‘s Yuan becomes a reserve currency. The Chinese don’t want this yet and that’s why they essentially have pegged their currency to the USD. about think about this, if the their Economy become larger and larger and exceeds the US economy, it really can’t be avoided due to sheer amount of economic activity in Yuan and trade. The reason the Chinese government doesn’t want it is yet is that it will cause dislocations in their economy and probably a higher exchange rate and loss of control. As far as inflation is concerned it seems that the price action in gold indicates that it is going to be short lived. Gold is weak on days when interest rates go up for example. There is no speculative run towards gold as this money goes into crypto etc it seems. As far as QE and reserves are concerned, I don’t think any of this matters really. What matters however is spending and that spending is going up financed by federal deficits. At some point we will see the limits of what can be done without penalties, but it does not seem we are there yet. As for now, you got to dance as long as the music is playing.

^KJP, yes I put in the wrong link - here is the correct one: https://www.barrons.com/articles/how-boeings-problems-play-out-and-five-stocks-for-an-aerospace-recovery-51615589491

Pretty good article in Barron’s about aerospace and defense: https://www.barrons.com/articles/these-8-value-stocks-will-benefit-from-an-economic-recovery-51614337206 Touches upon BA, LMT, NOC, RTX

Agreed. However, there are some years when Fairfax will grow BV by 15%. There are 2 key drivers to Fairfax being able to hit 15%: 1.) insurance underwriting 2.) investment results - especially equities Given the hard market in insurance and how they are positioned today with their equity holdings i think they can hit BV growth of 15% in 2021 :-) I'll add a third key 3.) They will not blow a billion on some risky venture That is the main key for me. They showed us that they are able to do this. Sanjeev answer vigorously to my post but he says the same thing than me. I bought at 465 in january and waited the annual report to decide if it was a short term investment or for the longterm. Reading the report where everything positive where explain in great detail but the negative was hard to come by convince me to be a short term holder for this time just like Sanjeev position. By the way I have a very long story with Fairfax. It is probably responsible for half of my net worth. First buy in 1993 and sold at 3x BV for a ten bagger. I was one of the first to discuss about FFH with Sanjeev on MSN. Was lucky enough to buy back in 2003 in the exact day of the bottom at 70 and sold at about 8x that price. I run a concentrate portfolio of 8 to 10 stocks. I had a couple of in and out since that for a wash. Now i'm in for the ride back to BV. Awesome! That's the way to do it. #SellattheRightTime beats #neversell at least in this case.

hyper elitist education for the win. Palm Beach Day just ain't gonna cut it. Dalton or Bust!* https://www.bloomberg.com/news/articles/2021-03-10/wall-street-a-listers-fled-to-florida-many-are-eyeing-a-return *for the record, pupil went to a poseur south florida prep school, not in NYC/Northeast Arn't public schools in Florida total crap? That's what my wife heard from folks that moved there from Long Island. LI school were excellent when we lived there.

how you buying Shinoken ? This is not listed in US Through Interactive Brokers with trading permission for Japan. I've heard it's also available through Fidelity as ADR but have not confirmed. I am on H1B work visa. I am eligible do open account with IBKR to buy other countries stock ? , it was asking lot many questions was confused what to fill. I opened brokerage accounts when I was on H1B, no problem. I can’t speak for IB specifically, but why should it make any difference?

LOL: https://www.cnbc.com/2021/03/05/detroit-mayor-rejects-initial-jj-vaccine-shipment-saying-pfizer-and-moderna-are-the-best.html

Can someone explain how Chamath getting rich with SPAC vehicles has anything to do with climate change? I don’t even see a remote connection between the two issues.

^ Yes, I think This makes sense. We had excess death last year which lowered the life expectancy but only last year, going forward this should revert to its LT trend. I do agree that on the long run, the drug related death are more important. In 2019 we had about 70k and about half of those were from opioids. Those 70k are mostly younger folks, so the impact is much larger than the COVID-19 death hitting mostly older folks. Anyways, the epidemic will turn into an endemic by early summer in the US, so we are almost done here. On the drug abuse issue, I wondering legalization of marijuana might have a positive impact on mortality. My thinking is that people will use one drugs or another and marijuana is less likely lethal than opioids and alcohol, so crowding out these drugs with a healthier one could have a positive impact on mortality. I recall seeing stats that the introduction of marijuana in a state has reduced alcohol consumption for example (I forgot about the source). There is now a natural experiment going on with some states in the US legalizing marijuana and others not yet. Do it should be possible to get some interesting data from consumption trends of various drugs upon introduction marijuana. Longer term, I think alcoholic beverages may suffer from increased competition.

Well, I was a kid in the 70‘s, but I sometimes think the 70‘s now get a worse reputation than they deserve. I grew up in Germany where the inflation was significant, but not as bad as in the US, so that may be a factor. Yes, there were oil price shocks, but those lasted maybe 12 month. In this decade we have an epidemic, which are comparable. The real economic growth was higher than it was today. Interest rates and inflation were higher and asset prices were lower. If you owned a house back than that was worth $100k (adjusted for inflations since then) and now a similar house is worth 500k - are we really 5x richer?

The letter is a joke. When you read it, you would think that FFH is crushing it, yet book value went down and the earnings are a black zero. Leverage on a Holding level is up. They have underperformed virtually any other insurance company follow in terms business performance. Unless they perform better, I don’t see why this would rerate higher.

Because printing money doesn’t do anything. The Fed can print all the money they want, it doesn’t do anything if it is put in a locker. Only spending money does and that’s why 2020/21 is different as the Treasury sent out stimulus checks for example to almost everyone (=helicopter money). In 2008, we printed money but effectively put it into a locker. Later there was a a lot of talk about QE, but QE didn’t really give you or me an extra dollar to spent so I don’t think it has done much. Today we are printing money and the treasury is sending checks out within the $1.9T stimulus package which is 9.1% of GDP. We have some slack in the economy to absorb some stimulus , but not 9.1% our economy. So, I think we will see inflation, but it likely will be a short term spike.

Well, the $1.9T stimulus bill has passed so that will keep the supply of USD going. Total US GDP is 20.9T, so this spending is 9.1% of the GDP. I don’t know when the stimulus bill kicks in and the duration, but it sure looks like it will have an inflationary to me. Those are USD hitting the economy and most of it goes into spending and as we have seen in the past, part of this gets invested in stocks as well.

My buys were BABA, AMZN, COST and FROG.

This is the golden age of stock promoters. Chamath is one of the best, but nobody beats Elon Musk.

I would try to find something your child is interested in, e.g., sports --> Nike, cosmetics --> L'Oreal, TV --> Netflix. If the first company "analysis" goes well, then try another more generic company in the same or a related industry. Someone learn a lot just by trying to understand the differences in gross margins between, say, Nike and Jerash Holdings. (Of course, this is stolen from Buffett's lessons about See's Candies, etc.) Perhaps the Motley Fool website? They do a good job summarizing what the companies do in an easy to understand format.

This aspect is interesting because it may explain (IMO) some of the cash build-up at holdco. When Mr. Buffett made the PCP acquisition, he paid a normalized PE of 18 (earnings yield of about 5.5%). The idea then was that the rest of the return would come from growth (organic and acquisitions). From 2003 to 2015, operating earnings had grown at a CAGR of 15-16%. When announced, many people suggested that the switch in investment mindset (pay more for growth) was the right one and many suggested that he had under-paid for the acquisition (i just checked for fun what people here said at the time). So, for this specific transaction, the outcome is likely to be satisfactory over time but the price paid was too high as a result of assumptions that were initially too optimistic. Of course, it's easy to say in retrospect. PCP is unlike Heico as was asked before. PCP is basically in the precision metal forming business while Heiko makes parts. PCP was first hit by the energy , while it was acquired in 2016 after the crash, t(r lingering effects also caused energy generation (turbines etc) which was one of PCP’s end markets, Then came COVID-19 which affected aerospace where PCP had redirected some of their capacity in the mean time. I also think that PCP was over optimized to show earnings when Buffet bought it. At least recall reading about this issue at the time of the acquisition. I think it was a so- spur chase when he bought it already and that was totally exposed with COVID-19. Lubrizol actually is another not so great purchase, but better than PCP. I believe Berkshire had to write off some goodwill on the Lubrizol acquisition as well.

FWIW, just bought some more COST shares yesterday AH after they missed earnings. Anecdotally, I also just ordered a washer dryer set from them to stop endless complaints from my wife about the washer 'eating' her laundry. COST e-commerce is a massive opportunity and they have not been good at it traditionally (the website is still so so), but they are getting much better. I love them for big ticket items because of their better return policies.

Why not? If you sit at home and don’t drive much, why not shop for a cheaper insurance? I generally agree on PGR being fairly reasonably priced, but I do think that the advent of self driving cars will keep a lid on the exit multiple. At some point, they have to pivot into other kind of insurance and it is unclear if they have much of an advantage in anything but car insurance, plus the tails are longer, which drives different economics.

Hear hear! And most importantly welcome back, Gregmal.

COST, AMZN and a small add to VNT

https://app.tikr.com/register?ref=o94y6y

It will be interesting to hear Wabuffo‘s opinion, but UBI alone won’t cause all that much inflation. It will increase spending and deficits but that alone won’t really cause inflation, in particular as they likely will go hand in hand with a stronger USD. I do think that increases in minimum wage could increase inflation as they affect services and goods that part of the basket goods and services that is used to calculate inflation. Min wage has been stagnant for a long time before that, which I think was deflationary. I think the bigger question for investors and in particular growth investors is that if longer term interest rates stay relatively high (steeper yield curve), some of the weird justification for the high growth stocks multiples is harder and harder to justify. After all, from a monetary perspective, we might look more like 2018 or 2016 and multiples at those points in time weren’t really that extended for growth stocks than they are right now.