Spekulatius

I am not sure you are talking about the past future but recently, the USD has been very weak relative to the EUR, GBP and Yen and the US interest rates have been moving up (Euro and Uk interest rates not so much). I do think the USD will strengthen - I don’t know what is chicken or egg, but the interest rate differential relative to the EUR and the GBP suggests the USD is now attractive: Maybe it is just an indication that the economic recovery in the US will be stronger than in the Euro Zone or the UK. I do think the inflation scare could end up just like 2010/11 inflation scare - a short flare that ended up meaning very little in the long run.

Also ironic - the market (SP500) goes up today ~2.7% because the JNJ vaccine gets approved and JNJ stock goes up 0.8%.

Seems like the only thing that matters at this point is vaccination. UK is currently ~31% US is currently at ~21% Europe around 7% and Canada ~5% of the population. I don’t follow Canada, but Germany is a total disaster. Supply of vaccine is lacking and it looks now that Germany won’t approve the Asta Zeneca vaccine for people above 64 years old (lack off efficacy), but at the same time, they don’t give shots to people below 64 either because of priority for older people. You can’t really make this up. BioNtec now build a production facility in Marburg for more vaccine, but it isn’t ready yet (EU failed to order enough and they ordered too late) but I hear now that the supply from Marburg may not even get sent to Germany first. We have done a lot of critique on Trump’s “ Warp Speed” but since the current vaccine supply situation is the consequence of decisions made ~6 month ago (mostly) he has done a better job than Europe throwing money at everything basically. Given the cost of maybe wasting $10B vs spending trillions of stimulus that was an easy choice to make (imo) but it appears that nickel and dime-ing in the EU and wasting time seemed like good idea for some at that time, but now really backfires. https://ourworldindata.org/covid-vaccinations

That portfolio has probably the lowest price/ book ratio that has been listed so far. A long time ago, I took a look at 5161.T (Nishikawa Rubber). What interested me a while ago was that they made speciality parts like Earthquake dampeners for buildings etc. i never drilled much beyond that but it looked indeed incredible cheap.

Yes, the letter itself was disappointing. One thing they did do was participate in the Snowflake IPO. I realize it wasn’t him most likely but it should still be mentioned? What did they learn from this. BRK due to their size and diversity is a huge user of technology, can they lever the insight gained from this for investing? I would have liked to hear something about this. 2020 was such an eventful year, but this shareholder letter seems lame. It’s a missed opportunity.

^ Yes, the tax angle makes this even better. When I read the annual letter, it sounded to me that Buffet wanted to go even bigger with BHE, most likely with an large acquisition of an utility. I can see the rationale for covering the entire amount of float (minus the $20B+ in spare change) with regulated investments in Railroads and Utilities. The Utilities yield about ~10% ROE and if that’s mostly tax free, it is a great deal compared to bonds yielding ~2-3%. He needs the insurance co to be overcapitalized because since is still equity, but very low risk. I think his last act may be just to do this and find a large acquisition to supplement BHE. it would be almost Malone like in terms of taxes. Then his successor can run is on autopilot and just worry about the other holdings and the unregulated business within the BRK umbrella.

It seems like he really likes to put more funds into BHE. Come to think about it, an regulated utility is an ideal bond substitute to invest insurance float in - low risk and volatility, secure and growing cash flow for decades and reinvestment potential - ROE around 10% give or take.

Always liked the idea of owning SRE given the TX utility and exposure to LNG / Mexico growth stories, but never did more than a superficial look due to the CA wildfire noise. Has that been addressed at this point in the wake of PG&E? How do you get comfortable? SRE never had an issue that caused a wildfire. EIX had some smaller issues but never to the scale of PCG. SRE is the best run of the three (by far) then EIX and last PCG. Adding a few more SRE shares. Results came out and headline numbers look good. 10-k size is 77MB :o

Sold the remainder of my CBOE.

Growth stocks: A bit of AMZN (which I sold previously at lower levels ) and a bit of FROG.

Yes, that's a real risk but manageable, at this point, IMO, for the reasons below. You may like the book that wabuffo referred to: When Money Dies (if you haven't already). Even if the macro stuff is felt to be irrelevant, the book describes several interesting social phenomena that occurred then, for example when people started to look for an alternative (any) for the fiat currency (stocks for a while, cigars, apples and even rutabagas?). The author also describes well the non-linear changes that can occur when trust is lost (ties in well with the velocity concept if you believe in this) with people buying their food in the morning before the food gets more expensive during the day. Something that the book helps with is to differentiate from the 70s or today and the essential ingredients necessary for runaway inflation. There has to be an alternative. The Weimar hyperinflation story is a currency exchange story. For the USD, what is the alternative: the euro, the yen, the renminbi, bitcoin?, asteroid mining? In the 70s, when the tie to gold was definitely severed, there was a time-limited crisis of confidence until it was realized that the USD had become the indispensable global reserve currency. I haven’t read the book, but We had studied this period in history courses in Grammar school and I actually heard Forst hand accounts from my grandparents. Germany actually had two hyperinflation periods one after WW1 and another one during and after WW2. In both cases, the economy evolved into a barter economy, Those poor souls that lived from a salary and got paid In cash would run to the sore when they got their pay and buy good right away, so money velocity would go way up. For many (including some workers who would get paid in goods) the economy evolved into a barter economy where instead of cash, good were used as a medium of exchange and store of value. After We2 those were famously cigarettes, but anything food or boozy would work almost as well. So there is always and alternative, it is just a matter how convenient and efficient it will be. I think now it may be gold, Bitcoin or foreign currencies like Euro or Swiss Franc if the USD fails. The other thing if note is the reflexivity of hyperinflation. If most people loose the trust in the currency then the currency is toast. a it was one of Hjilmar Schacht masterstroke to reverse this and issue a Rentenmark which really was nothing else than the former Reichsmarks with 9 zeros scratched out. However he could convince the populace that the way forward would be different and that was enough to break the reflexivity patterns (in addition, the printing presses would go way slower) which is really remarkable considering how far things were gone. FWIW,I think Powell made a mistake stating they he would run inflation hot for a while. I think Greenspan’s “Oracle” talk would be better as everyone interpreted what he stated it the way they like and he could do as he pleased without contradicting himself and losing credibility.

Life insurers should do well with rising interest rates. All long tail insurers will benefit from higher rates.

Just because the interest rates "can't go up" doesn't mean they wont go up. 8)

Apparently, Honda is going to launch a level 3 self driving car in March: https://asia.nikkei.com/Spotlight/The-Big-Story/Back-seat-driver-How-Honda-stole-the-lead-in-autonomous-cars That would be the first commercially available, Tesla’s and competitors are Level 2. (Got this from Teddy Okuyama’s newsletter, free and highly recommended).

Defining just exactly what ‘inflation’ is is part of the challenge. One example is real estate in Vancouver. Single family home prices are expected to increase this year 20-30% (maybe as soon as this spring). Crazy. And prices were already at bubble levels. This looks like asset inflation to me. Ever rising prices :-) So i agree rates and ‘inflation’ often don’t move in the same way. Relative to foreigners Vancouver RE has gone down in prices because Canadian currency has devalued significantly. That’s not correct, the CAD has been strong relative to the USD and is close to a 5 year high. https://finance.yahoo.com/quote/CADUSD=X?p=CADUSD=X&.tsrc=fin-srch

The service sector will be interesting since essentially the min wage will be $15 (Walmart raised it to $15 after Target and Amazon did so). I assume that will set essentially the floor for wages going forward. I think this time, inflation will come from wages, not from energy and commodities like in the 70’s. That may not be that great for corporate profit margins, at least in some sectors.

I think the short squeeze could have been a lot worse had Robinhood didn't what i did. Looking back now, listening to some commentaries, it seemed that the wobbling in the S&P500 in January may have at least had some relation to the infinite squeeze that didnt but could happen. Like a vortex that what just slightly pulling the carpet (S&P500), due to the hedge fund leverage. Sure, this is a lot bigger than GameStop, but as El-Elrian said today at Bloomberg, market was smelling and was trying front run hedge fund who wanted to make a dash for liquidity. I'll try to find the stat of the out of wack the position where. I realize it is silly to think that such a irrelevant company (GameStop) could cause the almighty S&P500 to wobble. On DFV, i think due to the unneeded popularity that this caused (and because he is a nice person) he felt obligated toward his Brethren and not just dump his shares. Yes, the wobbling in the broader indices and in particular some hedge fund hotel stocks in January was definitely caused by the WSB crowd. I think the root cause was that long/short funds were getting obliterated by the many short squeezes and they had to reduce gross exposure which means selling longs and covering shorts. And those that weren’t getting obliterated were probably probably getting scared and reduced gross exposure anyways. You see these type of things happening when things get a bit crazy in the market and at times the movement of individual stocks seem to make no sense fundamentally,

So your average holding period is about 18 months? Is that right? So i guess your holding period seems 'forever' as it is more than double the average period now for the average crowd. i've started doing 'this' about 20 years ago and one of the most striking features has been the unrelentling rise in competition. Some days i wish i'd have started in 1957 or something but then again, now is probably one of the greatest times to be alive. I need someone to tell me what my top 1% of my ideas are, because I have no clue myself. The present is almost always the best time to be alive. Exceptions were probably the 14 century (epidemics) in Europe ir if you were born in Germany before 1618 or 1914 (very ugly wars).

Adding to VNT and bought some starter shares in VRTX

Reducing CBOE a bit more.

At this point, I suspect the hearing is about informing the house not trying to accuse Mr Gill of a crime, it would be a tragedy and diversion of they did. I also think the letter is very well written and it’s true. I watched his streams on YouTube and there are very clear disclaimers and I found them informative. I don’t know if he broke any regarding his employment, but that would be inconsequential anyway as regards to what happened with those short squeezes and GameStop. So I hope the house takes this as an opportunity to inform themselves rather than find a scapegoat. whatever happened and went wrong here, there are much bigger fish to fry here - the CEO‘s of Robinhood, Melvin Captital management, Citadel, the fellows running the clearinghouse etc. Anyways, I will watch his testimony offline I suppose and hope all goes well.

I found this fascinating paper in a Reddit link: https://poseidon01.ssrn.com/delivery.php?ID=484029088111001006073096089006124072016089038039060053007117008027101109086070094109010114056102019017037122126017076092001119048032033082076106112103120089107007108007092010066127087083116113078084112013080121119068105018026076012080024093073071113085&EXT=pdf&INDEX=TRUE https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3776421

Roaring Kitty‘s (Gill‘s) letter to the US house: https://docs.house.gov/meetings/BA/BA00/20210218/111207/HHRG-117-BA00-Wstate-GillK-20210218.pdf Wishing him luck and really hope it goes well for him.

Reduced CBOE after the stock jumped due to 8-k disclosure which indicated that management may be concerned about a takeover. While a takeover is a possibility, this stock had disappointed me too many times and the expense guidance for 2021 is atrocious.

Checking in on my lunch break and this thread is gold: https://www.reddit.com/r/wallstreetbets/comments/lkvzj7/someone_help_please/?utm_source=share&utm_medium=web2x&context=3 I have nothing to add.