Spekulatius

I highly recommend Guns, Germs and Steel. A great book with many novel (at least for me) ideas about why history went the way it did. the anecdotes about Papua are particularly interesting. I think it's also relevant if you transplant the ideas in economic and societal development.

Yes, we need to increase energy production and save energy at the same time. As for Russia, they still sell their oil and it doesnt really matter to whom. If they sell oil to India or China, then those consumers need to buy less from the Saudi‘s etc. The NG is a bigger problem than oil because some of the Russian NG will be stranded come next year and Europe will buy up LNG everywhere they can get their hands on. Shell is the biggest player in integrated NG by far. This business should mint money, but while they have a nice asset, their Management is lousy.

Thanks - makes sense. Soros is funding a lot of things and some probably shouldn't be funded. Good to see Chesa Boudin getting canned for example. We visited my wife's family in the Bay area this spring and never went to SF, because of the prevalent crime. It's shameful to let things slide that far.

Europe - Germany (visiting family), France (Paris), Belgium and Holland then back to Frankfurt in a triangle. Plan on getting a nice variety of beers on the way - my wife calls our trips beercation.

As I mentioned before, these bonds are an artifact. The rules for the ibond interest rates were implemented in 1998 when inflation was low and other bond yield with fixed interest were competitive. Then fixed interest rates dropped over time and the interest rate rules for the ibonds stayed the same, making them attractive with the high inflation we have currently. You are overthinking this , imo. Just buy them if you like the setup and it works for you and don’t if you don’t. https://en.wikipedia.org/wiki/United_States_Savings_Bonds#Series_I

Neither of the above is true. The rich don't bother with putting 10k in an account, it doesn’t move the needle. I think these ibonds are more or less and artifact that sort of exists. Very few people bothered about them for decades.

LBRDA (at a small loss). Selling anything with a high debt load. BERY was another one in that bucket I sold a while ago.

I agree on the coffee and the fries and the consistency. Now do Starbucks - I mostly drink Cappuccino and they are all over the place in terms of what you get with airport franchisees being the worst. I sort of have given up on Starbucks, as the experience during the pandemic got worse. I usually went there for breaks on long drives but they sort of closed the stores and those that reopened had a lot of issues. It's not a surprise to me that Schultz cam back to salvage his baby - the relatively strong financial numbers withstanding.

I don’t think that war is over this winter. The sanctions for the most part will stay anyways. Europe does not matter in terms of the outcome all that much, its more the US is supplying the weapons. The EU helps quite a bit to keep the Ukraine’s afloat though with monetary aid. I don't understand the animosity toward Soros.

Despite Ukraine, the defense contractors earnings are nothing to write home about: https://finance.yahoo.com/news/lockheed-lowers-2022-revenue-outlook-113815217.html LHX is in the same boat. Ukraine turns out to be classic sell the news story (which i luckily did for the most part) for the defense stocks. FWEIW, my biggest winner in the defense basked was Rheinmetall (RHM.DE) but I sold it as well (~ 3 bagger).

I don’t think Russia is bluffing. I put a high likely hood on them turning of the NG to Europe. Once they have done so and Europe is past the winter, they have played their card and I think its unlikely that Russian gas will flow to Europe again. Russian Ng in that scenario will remain stranded for years until they can build infrastructure to move it elsewhere. Europe will go into a recession and I expect some of the basic industries like Steel and Chemical to be hit hard. The rest has to replace the gas with oil in the short term. The power grid will be fine. I have heard expectations of a recession (-1.5% real GDP) but might look worse when compressed in a small time frame. Edit - found and article that looks at the economic impact of NG from Russia going to zero. Italy, Slovakia, Hungria will be hard hit: https://www.welt.de/wirtschaft/article239995319/Gas-Lieferstopp-Diese-Laender-trifft-er-am-haertesten.html

This couple was traveling to Music festivals far away and spending like $3k a pop. Resources are finite and you have to make choices. Stick with music festivals closer to home by where you can go by car or spent a night at a Bestwestern and you are closer to $500 for the same thing. Or they can decide to be renter for life and then they can do all these things. For me, the choice would be easy, but its up to them.

Actually oil went to $140 in 2008, but only for a New York’s minute. In the past every oil price spike has been followed by a recession : 1990, 2001, 2008 and now likely 2022 which resolved the issue. The US only produces about 10% of the crude (and consumes about the same amount) so it wont solve the issue, at least not in a fee month, but likely not at all. Even if the US increases production by 10%, its just one percent of the total, which matters, but hardly looks like the solution. The solution is demand destruction which is likely happening right now in third and second world countries. These countries have for the most part seen their currencies devalued by 20% or more against the USD, they are seeing a magnified impact of the energy cost surge and can much less afford it. China right now looks like they effectively are already in a recession right now and their construction industry certainly is (a huge energy consumer) so I am guessing that demand is going to be reduced and we know that the price elasticity curve in crude is very steep, with obvious consequences for the clearing price. I actually think another spike in crude prices to the $140/ brl range would accelerate what I think might happen as I expect some third wold countries blow a gasket so to speak like Sri Lanka.

I think you can determine that oil prices are high relative to historical prices as well as production costs. So yes, I consider them high.

Reduced $CNC as it reached my target valuation.

These people are nuts and i think their instinct that the festivals and probably other spending issues are a huge part of their problem is correct. The condo purchase may have been a mistake as well, but it's fixable, I think. They are both young (25 years old) so their income will rise (it has already) and if they keep plugging along, the burden from the condo should progressively get smaller over time. I know it did for me - when I purchased my house, the mortgage was a bit less than 4x my income (5x for this couple) but it was fixed expense (actually went lower because I was able to refinance) while the salary kept increasing. Now if this couple want to continue go to music festivals, they just have to budget and probably visit more local ones where they don't have to spent $3k just for travelling. Nobody ask them to totally abandon what seems to be their hobby, but they got to be a bit smart about it. if they sell their condo, they are going to take a lot of friction cost ($50k?), then they have to rent and that rent will keep going up. They probably end up with a budget problem even if they do sell their condo. I think the underlying problem is that this couple does not know how to budget, it's not the condo purchase per say.

I think a housing decline could be a bigger deal than it appears right now. The mortgage payment strike is just symptom and not the root cause of the disease. It have no idea where this goes. I agree that PSBC looks attractive here despite above, I think it’s a way better bet than Alibaba, if yiu feel inclined to invest in China.( I dont have a position).

I think AKZA (paint) looks interesting and I own some shares. Exor has been mentioned before here. Porsche Holding has an interesting even / unlock as thry want to float Porsche ( as a business). DPW (Deutsche Post) is also very cheap and well run. Then there is Poland where there are a bunch of secular growers that look very cheap. If you drill down to smaller and microcaps , there should be way more opportunities.

I dont predict anything other than the European leaders having very little influence on the outcome here. Russian gas is done and could be turned off at any moment, so they need to find alternative means to keep home heated the industry going. Lack of power wont be the issue, there is enough spare generation capacity in the grid to keep the light on.

European stocks are very cheap right now and many have sizable business in the rest of the world. They also benefit from low Euro if they export in the US. I think there are great opportunities investing in Europe right now, similar to the Greek debt crisis back on the day. The risk of recession is real but a lot this is priced in. I would look at exporters and those with world wide business as well as some local champions.

I haven’t listened to this episode (and wont), but if the couple spent on ~28% of their income on housing, thats about what I spent when I bought my first house. I think it is highly likely that purchasing the condo isn’t the problem, they go broke because they spent too much on other stuff. Festivals for example are hideously expensive and over priced nowadays. Thats where I would start cutting back.

Just one mans opinion:

@StevieV I showed the iron ore chart just to show how closely correlated the direction of equity prices is with the underlying commodity. Its not because I think it should trade like this. Same seem is true for energy, to some extend, although I think there are more confounding factors. I agree I have a myoptic view of these sectors. I have invested in energy and commodity stocks longer than many are alive here and have had more misses than hits. In particular l, I have lost money when I was wrong about the price or the underlying commodity almost EVERY SINGLE TIME. I gave up on commodities in 2014 when oil prices started to decline and really haven’t done anything in this sector there since. This has nothing to do with ESG but more that I found it impossible to predict the direction of commodity prices and every time things looked certain it turned out that it wasn’t though. People here thing that we cant add supply but I disagree. If prices stay high I think some stuff will happen that nobody here accounts for. Just to add one possibility, do you guys think that the US is the only location with shale deposits? Why would that be? Europe has shale deposits for sure, but they may wont use then am although I am not sure that countries like Poland etc may get to that point. Argentina has a huge shale deposits (Vaca Muerta) that rivals the largest US deposits and is just about starting to get exploited . There are likely dozens of deposits like this that nobody knows yet about. These bulk of these countries doesn’t care much about ESG either. Then there is Venezuela which is coming back (even with the government morons in place) and if you have s change all of a sudden a fee million barrack of supply will come on in a relatively short period of timeframe. I would go so far to say that one political decision in or about Venezuela could kill your oil bull thesis right there, because think this country alone could lift as much oil than Russia potentially. that would be a disaster for prices most likely because Russia really hasn’t reduced their oil exports yet, just the destination has changed.

@Blugolds11 Great list. My simple rule that every western with Clint Eastwood is good. I disagree on the True Grit remake, I liked that one a lot. Some newer westerns one that I really like are: “ Hell and high water” and I also think that “No country for old men” could count as a contemporary western. Then we got the “ Power of the Dog” (probably not everyone’s taste, but a great movie). I really enjoyed the “ Ballad of Buster Scruggs” novellas, but then again I am huge Coen Brothers fanboy (hence my liking of True Grit).

Why would there be a shift in attitudes? The ESG folks are still growing and if you listen to the younger generation, they are not going to go back to the old days. Some of the other investors like me don’t buy commodity stocks when the commodity is high, they have seen it all. Many don’t buy commodity stocks because they have been burned several times over. I don’t think there that many incremental buyers actually. The only thing you can rely on are capital returns. In that respect, the miners like RIO, BHP seems to be ahead of the oil stocks here. You want to see a clear capital return framework with cash dividends, not buybacks. Buybacks are nonsense, because they only occur at high share prices when the companies are flush. If you dont believe me, look at how many oil companies bought back stock in 2020, there are virtually none. Buybacks are always buy expensive, buy nothing when cheap. If companies would just concentrate on paying dividend per formula on excess cash flow, it would be way better for investors. Thats why I like PBR, despite the political issues. If SU and CNQ starts to do the same thing and just issues double digit yielding dividend per formula from their earnings (lets say 60% of their net earnings), I would be a whole lot more interested and put some in my tax deferred accounts. Right now, there is virtually no oil stocks that provides a better distribution yield than my ORI holding for example.