Spekulatius

Interesting that some of @shhughes1116 predictions are actually happening right now:

India is going to be an important power going forward and perhaps more important than China. That does not mean that Indian stocks are doing well though. For one thing, it seems that India’s entire economy is run by a few family chaebol like organizations. If they can’t democratize economic development, bad things will happen and it’s s question when, not if in my opinion. India also made a mistake tying themselves to Russia. First, China now has an alliance with Russia and they are India biggest enemy (besides Pakistan which really can’t challenge India). Second it’s now abundantly clear that the dependency on Russian weapon is a serious weakness, because most likely the Russians can’t export much any more (they can’t even produce enough for themselves and sanction are crippling their industry) and second the weapons are garbage compared to western and most likely even Chinese weapon systems at this point. So India can pivot toward the west or try to walk a fine line being a neutral state (which I think is more likely) but the cuddly relationship with the Russians really has no future.

It’s not for “free” if you end up missing the opportunity. The winter may already be there, as far as market sentiment is concerned although I think things in real estate take longer to play out. If I were interested, I would certainly start looking. Buy something that uses diesel/Heizöl or something that can be converted at least. Put a solar roof on this thing and you are protected from rising power prices somewhat.

NG is priced around 200 Euro/ MWH. Euro and USD are basically on par, so forget about this. So to convert this in mcf is about 200/3.4~$59/ mcf. That’s almost 8x the price in the US (~$8). I take a lot of this is priced in and will revert. The question is when. Russian gas is 43% of the total that needs to be replaced. Roughly 20% can come from savings and conversion to diesel fairly easily. The industry is in the process of doing this. Beyond that, it’s gets more difficult, especially heating for households. There is no quick fix there, the thermostats are going to get dialed down this month. If one of the LNG stations are coming online in Germany, that’s another 7.5% of the total. I think one can come only possibly as early than December , so that would really help, the next one is early next year. A total of 5 are being build and would be enough to replace the Russian gas. Now there are the issues of securing supplies etc, but there is a path to get there, Winter will be tough but after that, I think the NG prices in Europe will closer hug the worldwide NGL spot prices and that’s way less than the 200 Euro that it’s going for right now. I make a prediction now that European spot prices for NG are going to collapse most likely during winter 2022 and possibly as early than December 2022. Wildcard is the winter weather. Remember the idiots who were calling for $300 crude/brl? It’s now at $85, same than right before the invasion.

Good summary what happened on several frontlines: The large scale breakthrough is definitely confirmed and Russia has been pushed back to the Oskil River. Izium and the critical rail junction in Kupyansk (sp?) have been captured by Ukraine. The Russian front further south also looks brittle and could end up in a huge encirclement, if Ukraine can take advantage.

I agree the E3 of Rings of Power is really good. It’s all about Elves in every storyline. The show seems to comes to its own. For the Fantasy inclined, S2 of Britannica is out and I really love the production and storyline as well.

Yes, he could focus on other things after being confirmed, but why helped Zero COVID-19 helped him grab more power? It seems more likely that he put a stance on this and now can't walk it back easily, since it makes him look wrong and weak. If so, the Zero COVID policy likely will remain there for quite some time. It's interesting that this is also related to China not having a vaccine that works. They got out of the gate early with a vaccine that has proven not to be effective, even sold it to countries like Thailand (which stopped ordering it). I guess they could have made a deal with western companies like Moderna or Pfizer but then they would have to swallow the bitter pill that they couldn't do this themselves. They rather lock up millions from time to time when a new wave blasts through the country. That's the thing with autocracies, stupid things can keep going on for a long time, if they come from the top. For them it makes sense to rather pay a high price than admit you are wrong. They don't have the purge mechanism of a democracy that can get rid of bad governance with elections.

Not sure it matters, but I came back from a visit in Europe (relatives and city travel). People are concerned, but not panicked. My brother things Germany can get one of the two LNG stations in Bremerhaven or Brunsbuettel going this winter, ahead of schedule. https://www.uniper.energy/news/construction-of-wilhelmshaven-lng-terminal-can-start-quickly As for economic collapse, most industrial companies are in the process or have already switched fuel from NG to diesel for the time being. Biggest issue is with the chemical industry. BASF stated that they can keep going to about 50% reduction in NG usage- beyond that they will have to curtail production as switching to crude is not possible if NG is used as an input for chemical processes for example. If you put this together, the situation isn't pretty, but an economic collapse is very unlikely.

https://www.bundesnetzagentur.de/EN/Areas/Energy/Companies/SecurityOfSupply/GasSupply/start.html#:~:text=Gas continues to be injected,remain at very high levels.

And yet, Germany's gas storage is 87% full, ahead of schedule. Track the data, not the stories.

Interesting - there are several reports out that the Ukrainians have broken through the frontline east of Kharkiv. Apparently the Russian have moved forces out of the area to reinforce the Kherson front, where the well publicized offensive in the south has taken place. Now they are apparently getting rolled in the North. Could be an absolute rout, if some sources are to be believed, but needs more confirmation. Buying ammunition from North Korea is not exactly an indication of strength either. Saw a pic on of a spent Russian Artillery shell dated 1964. That's older than I am.

Almost weekend and looking forward to the new episode drop LOS and House of Dragons. I like where both but after watching the first two episodes the HoD series promises to become a masterpiece just like GOT. Love the tournament melee scene where the Squire is puking in the background watching all the violence. Those little details is what make great movies, imo. E2 convinced more with character and story development than visuals, but I felt both were great. Now we need LoS pick up some steam...

I also went from being a moderate bull on Chinese stocks to being bearish. The stuff is all out there, the well researched DW documentary, Document #9, the spy legislation. It's not a surprise that the performance of Chinese equity has been crappy in general. Now, if you chose to invest in China, you first have to make sure you know what you are buying but also how it fits into the political framework and then there are tripwires like fraud, delisting's and pot sanctions as well as the possibility of another iron curtain rolling up once China tries the Taiwan unification. Seems like a lot of risk for what you are getting. There is certainly opportunity there, but at this point investing in China feels like playing in hard mode.

Bought some PAH3 / POAHY. I did buy some Exor a few days ago when it dropped below 60 Euros as well.

I have spent some time at our friends construction site a lake (no work, just fun) last weekend and couldn't help but look at the brand of engines from the boats cruising around: I counted: Mercury: 9 Honda: 1 That's bullish for $BC (don't own it though) , I guess. Back a few years ago, I recall seeing a lot of Yamaha's.

@mcliu thanks for pointing it out. Didn't know that "Eskimo" has become a loaded term.

I do this for little jobs like replacing car headlights (which can be a bit tricky in some newer cars). Saves me a hundred here and there for little work. Engine work can become quite a project though and you actually get dirty in the process. That's where I draw the line. LOL

Russia selling LNG to Canada is like selling ice to eskimos. It makes absolutely no sense whatsoever.

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.