Spekulatius

We will know by August. The Spek family spends less too, mainly because there isn’t much to spent on for us and Mrs. Spek can’t get vacation currently and is working more than we’d like.

How did the main topic of this thread become the confederate flag and how did a Jewish person (Gregmal) accused of anti semitism? I know that sometimes creep sets in, but one also need to look at the current situation and decide if this makes any sense. As far as I know, the virus does not afflict the brain. I am guilty of causing topic creep as well but that’s just too much. There is quite a bit of useful info here, but it’s gets drowned out by more and more garbage posts. Those should go into the politics boards.

For those interested, here is a distilled list of best-evidence that has built up over the last few weeks versus prevention of transmission. https://academic.oup.com/jid/advance-article/doi/10.1093/infdis/jiaa189/5820886 https://www.ecdc.europa.eu/en/publications-data/using-face-masks-community-reducing-covid-19-transmission https://www.thelancet.com/journals/lancet/article/PIIS0140-6736(20)31142-9/fulltext From a humble perspective, a detached and rational approach tends to avoid running into sterile debates and tribal drift but i often feel like an idiot. It's fascinating that this virus, which is somewhat benign from an evolutionary standpoint, stirs so much reptilian instincts and one has to wonder about the host (and its institutions). Maybe i focus too much on governance issues. Here is another one : https://wwwnc.cdc.gov/eid/article/26/9/20-2272_article Runs a bit against my hypothesis that truly asymptomatic (And those that never show symptoms) younger people aren’t likely superspreaders. Well, it seem they can be. Whether one is truly asymptomatic or get some mild symptoms later is not that important. Its been clear for a while that there is asymptomatic transmission, which happens while talking. To some extent masks help but not eliminate small tiny droplets floating in air and its difficult to wear masks continuously. That is why Japanese say "ventilation is key". That makes everyone life easier. And now we know it works. I think we should copy what works. That is not to say not to use masks or stop washing hands or stop safe distance. But no need for enforced lockdowns. I agree on ventilation. in retrospect, closing down parks and beaches was probably a mistake, since with a bit of precaution, outdoors activities are pretty low risk. Also anecdotal, a significant outbreak In a nursing home in Montreal was at least partly linked to bad ventilation: https://www.cbc.ca/news/canada/montreal/vigi-long-term-care-home-all-residents-infected-1.5569178 As far as asymptomatic vs presymptomatic, I would think that the latter probably has a much higher viral load and becomes more likely a superspreader than the former. The problem for an individual of course is that one has no way of knowing in which group you are going to go beforehand. However, it might be of value when you look at populations. I guess more evidence is needed. It’s seems at least that kids don’t spread as much as thought, but there are probably socioeconomic and behavioral aspect as well that I am not sure about.

For those interested, here is a distilled list of best-evidence that has built up over the last few weeks versus prevention of transmission. https://academic.oup.com/jid/advance-article/doi/10.1093/infdis/jiaa189/5820886 https://www.ecdc.europa.eu/en/publications-data/using-face-masks-community-reducing-covid-19-transmission https://www.thelancet.com/journals/lancet/article/PIIS0140-6736(20)31142-9/fulltext From a humble perspective, a detached and rational approach tends to avoid running into sterile debates and tribal drift but i often feel like an idiot. It's fascinating that this virus, which is somewhat benign from an evolutionary standpoint, stirs so much reptilian instincts and one has to wonder about the host (and its institutions). Maybe i focus too much on governance issues. Here is another one : https://wwwnc.cdc.gov/eid/article/26/9/20-2272_article Runs a bit against my hypothesis that truly asymptomatic (And those that never show symptoms) younger people aren’t likely superspreaders. Well, it seem they can be.

Motley Fool tries to do that , but they have a bunch of momentum in their picks to, be it by choice or as a byproduct of their method. You can sort of get their thinking without paying when you listen to the MF industry focus podcasts, which are pretty good. I personally subscribed to their Stockadvisor service. Best of breed is a crowded bet and you pay dearly because everyone seems to do this nowadays or tries to, valuation be damned.

The economy is sort of open already here in MA and in Southern NH. Our son meets with friends outside every once in a while. I think we are going to do some local trips here in summer. , perhaps to the Berkshire’s or to Vermont (assuming they will have us). My wife currently can’t get vacation, but I think she ought to be able to get some this summer before the second wave comes in. Lots of restaurants here have converted to outdoor seating, which I actually think it is a great idea and I hope it stays even when this thing is over, of course this is weather permitting. Somehow we should try to make lemonade out of lemons.

At least some of thee recent surge might have been caused by Memorial Day activities . Timing would be about right - you get an infection and it multiplies though a family and you get a surge. If that’s the root cause I should mot likely ebb pretty soon. No surge in states that had high numbers before perhaps because people were more careful there? Hard to tell. Anecdotally, I have seen no evidence of Memorial Day parties with several families in my neighborhood.

I agree on LAACZ. Owning nice productive assets with little leverage run by a good operator should beat non-productive assets like Gold or Bitcoin over the long run, or at least offers a better risk adjusted return. For a large cap investor PSA may offer a similar purpose (same asset class, low leverage and well managed) but it is not as cheap.

This is just anecdotal, but may add a little more color to anyone wanting to understand the industry. I've been to VicenzaOro many times & if you want quality, Italy is a great place to go (bring a very large wallet with you though). Hong Kong manufacturers (and Thai jewelers to a lesser extent) will copy just about anything & do a very good job of it, but will frequently use inferior quality gemstones (in particular, diamond melee). TBF they offer significantly lower prices, and something has to give, but even if you offer to pay a bit more for better melee, you'll be hard pressed to get the reliability of an Italian manufacturer. That plus the established haute couture names, make for an interesting segment of the market. Basically, there are 2 types of jewelers, those who sell branded (haute couture) merchandise with higher margins & slightly lower turns, and those who sell lesser brands & commoditized products at slightly lower margins & higher turns. Branded jewelers tend to have higher spend on required coop adds in order to promote brands. Commoditized jewelers will have more optionality with regards to participating in coop ads which become more requisite if they are members of buying groups and depending on the stroke of the brands they carry. --- Disclaimer: My hiatus from the offshore industry, into wholsale jewelery, was an abysmal failure. I'd have difficulty selling air conditioners on the equator. I think in this case, brand name, status attached to country of origin matter just as much a the quality of the merchandise. Northern Italy is well known for fine jewelers and Fope is a niche business with a global reach (85% of their revenues are foreign) that can exploit this, I think. Based on the price I paid 7 Euro and change), it trades at 7x EBIT. It’s too small for LVMH, but the new 59% owners have an investment banking background and saw value here. I hope they do t screw it up. I see a good chance they they follow up with a buyout when this COVID thing is over. I know this is a very different business than Fope & it's not intended as a comparison but Swatch bought Harry Winston around 2013. They don't break out the results in reports but they do say "Harry Winston will continue its dynamic growth trend in 2019". In recent reports they attribute slightly higher inventories to gold & gemstone purchases related to Harry Winston. They own the swinging luxury watch brands Breguet, Blancpain, Glashutte, Jaquet Droz & the more pedestrian Omega. Their lesser brands include Tissot, Longines, Hamilton, Rado & of course, Swatch. If you believe that the watch industry won't be decimated over time ;) (I've never been able to get comfortable with this possibility) these guys product the vast majority of the worlds mechanical movements & escarpments. If you claim to be a luxury timepiece manufacturer & you don't produce everything down to the tiniest little spring & screw, you're not as cherished by aficionados. Very clean balance sheet, possibly offset by high insider ownership which may or may not be aligned with the little people. The father built this company & the children could fritter it away. Annual reports are front loaded with society page fluff & the actual numbers are buried in the back. Some background on the FOPE deal: https://gioiellis.com/en/why-fope-was-sold-to-costamagna-and-morante/ I am familiar with Swatch. It a well run company, but I am a bit concerned that watches will have much less mindshare with future generations that grow up without using them or go straight to a smart watch (similar to what happened with stamps) I could imagine that there will be a market to build jewelers cases for smart watches, but Swatch wouldn’t have much of an edge here.

The Medallion fund doesn't do equities I believe and has been deliberately kept small to keep the high returns going. Their marketed funds have not been as successful due to size and different asset classes that they're involved in. Not true, Medallion does whatever Medallion wants to do. I'm sure most of it is equities. And "small" is $5b+ year in the fund returning 40-50% year after year, if not greater. Yes, they return all the excess capital annually, but that's still a lot of capital for those kind of returns. Amazing. I recall from reading the new book written on Jim Simon that Medallion's bread and butter was not equities; in fact, they had historically struggled to build profitable models on equities. A reason why Medallion pays out so much is that they've found it comparably difficult to reliably generate returns by trading new asset classes. According the book, they struggled in equities for a long time and then achieved a breakthrough, which allowed them to scale up to their current size of $10B. I m sure in the current mayhem in the stock markets, they make out like bandits this year.

I haven’t seen nothing yet either. They typically sent out the annual report either late June or even late July. Only last year they were early in late May.

I agree on HDS being a quality outfit. I have owned it recently for a very short time but regret selling it. They have handled COVID-19 well and the business is more resilient than I thought. They are really getting ahead of their competition too (mostly small outfits). Bought starters in NOC and GMED today. I also added to MRK bit. GMED skews toward the growth side (at least I hope so if their robotics tech works out) and NOC and MRK are quality outfits with a reasonable valuation and resilient business.

^ Moving at least part of the cash into a liquid gold ETF seems like a good idea, especially when interest rates truly go to zero or negative.

Starter in WSBC, a cheap regional bank with a decent track record.

Yes, it is important to keep the hospitals open. The most critical number to look at is hospitalizations, which isn’t really impacted by testing rate. I also look at %positive tested. What you don’t want to see is all these three (including tested positive #) indicators shooting up rapidly, which is the code in AZ, FL and a few other stated right now. Any lockdown will be driven by hospital utilization’s. Color of the state (blue or red) won’t matter. Once hospital space gets tight, I think any state will start various lockdown measures.

Thanks for sharing. He is very optimistic that the dance can be maintained at low cost indefinitely, until vaccines are available. If true, doesn’t this support the general market level now? The economy may function almost ok, barring some mass entertainment events which need >50/100 people together. Do you share such an optimistic view? Let’s say California and North east manage the dance, and the mid west, Texas, Arizona fail and need another hammer lockdown. How big an impact is that to the US economy? I just went thought the article and I think it is pretty good. It matches the info I could gather from various sources. The problem with the herd immunity is that it takes a long time, as the Swedes found out and in the case of the US, the current IFR numbers suggest it would cost a lot of lives. We have had 120k death so far caused by the disease and with herd immunity it could be 10x as much. A lot of European countries have already case numbers so low they they can open up and have schools up and running for example. So essentially, they are already ahead of the US in how the economy can operate. This is due to the more effective and stronger shutdown measures. As far as the impact of several states like Texas, AZ, AL and other having high infection rates for a long time and what it means for the economy it’s really hard to tell. Maybe the population in states themselves ignores this and carries on. However, what about travel into and from these states? It’s free movement generally, but will people from COVID-19 free states will want to travel into these states? It will cause some issues for sure. I think we will have to see how this works. I am sure that real virus containment in the US isn’t really an option any more. https://www.aa.com.tr/en/asia-pacific/no-new-coronavirus-cases-found-in-japan/1870548 No new coronavirus cases found in Japan Japan did not have mandatory lockdowns. Yet they went to zero. The other day Spekulatius was arguing about protests and saying because protestors wear masks so it should be ok. So.....why then stronger shutdown measures are needed? Wear a mask and you can do anything, per Spekulatius logic. I never said the protest are Ok. I did state there are 3 factors that mitigate infections - mask wearing ( mostly) , younger crowd and protest being outdoors. Japan did have shutdowns. The larger cities ( Tokyo) were shutdown fairly early. The did not have a countrywide shutdown however.

Thanks for sharing. He is very optimistic that the dance can be maintained at low cost indefinitely, until vaccines are available. If true, doesn’t this support the general market level now? The economy may function almost ok, barring some mass entertainment events which need >50/100 people together. Do you share such an optimistic view? Let’s say California and North east manage the dance, and the mid west, Texas, Arizona fail and need another hammer lockdown. How big an impact is that to the US economy? I just went thought the article and I think it is pretty good. It matches the info I could gather from various sources. The problem with the herd immunity is that it takes a long time, as the Swedes found out and in the case of the US, the current IFR numbers suggest it would cost a lot of lives. We have had 120k death so far caused by the disease and with herd immunity it could be 10x as much. A lot of European countries have already case numbers so low they they can open up and have schools up and running for example. So essentially, they are already ahead of the US in how the economy can operate. This is due to the more effective and stronger shutdown measures. As far as the impact of several states like Texas, AZ, AL and other having high infection rates for a long time and what it means for the economy it’s really hard to tell. Maybe the population in states themselves ignores this and carries on. However, what about travel into and from these states? It’s free movement generally, but will people from COVID-19 free states will want to travel into these states? It will cause some issues for sure. I think we will have to see how this works. I am sure that real virus containment in the US isn’t really an option any more.

Yes, good point. Dry air dries out the sinuses /mucus which is the body’s defense mechanism against respiratory viruses. We know already that workers meat processing planets tend to get COVID -19 partly because standing I cold and dry air for long periods of time makes them more susceptible. So a pickup in virus activity in winter is very likely.

This is just anecdotal, but may add a little more color to anyone wanting to understand the industry. I've been to VicenzaOro many times & if you want quality, Italy is a great place to go (bring a very large wallet with you though). Hong Kong manufacturers (and Thai jewelers to a lesser extent) will copy just about anything & do a very good job of it, but will frequently use inferior quality gemstones (in particular, diamond melee). TBF they offer significantly lower prices, and something has to give, but even if you offer to pay a bit more for better melee, you'll be hard pressed to get the reliability of an Italian manufacturer. That plus the established haute couture names, make for an interesting segment of the market. Basically, there are 2 types of jewelers, those who sell branded (haute couture) merchandise with higher margins & slightly lower turns, and those who sell lesser brands & commoditized products at slightly lower margins & higher turns. Branded jewelers tend to have higher spend on required coop adds in order to promote brands. Commoditized jewelers will have more optionality with regards to participating in coop ads which become more requisite if they are members of buying groups and depending on the stroke of the brands they carry. --- Disclaimer: My hiatus from the offshore industry, into wholsale jewelery, was an abysmal failure. I'd have difficulty selling air conditioners on the equator. I think in this case, brand name, status attached to country of origin matter just as much a the quality of the merchandise. Northern Italy is well known for fine jewelers and Fope is a niche business with a global reach (85% of their revenues are foreign) that can exploit this, I think. Based on the price I paid 7 Euro and change), it trades at 7x EBIT. It’s too small for LVMH, but the new 59% owners have an investment banking background and saw value here. I hope they don‘t screw it up. I see a good chance they they follow up with a buyout when this COVID thing is over.

I wrote this before, but when people see other people doing “risky” things, they intuitively think it is safe (social proof food concept). Ironically it is just the opposite - going to an empty restaurant is way less risky than going to a full one for example. I am not sure how much of a cofactor colder weather is. People are mostly indoors and most infections occur indoors as well. it might increase the susceptibility of the respiratory system but then on the other hand, the epidemic has been raging pretty well in warmer climates as well (Italy, Spain, Brazil etc).

wow. Thank you very much! This is very helpful! I was wondering why their non-GAAP revenue is only 1% higher than GAAP. What's the reason to even bother? Now I understand that it seems to make sense to have this. With that said..... RP's non-GAAP eps is a total shit show. They added back Amortization, interest expense, income tax expense, stock comp and call it non-GAAP eps. Jeeze...... :o Fun fact: Stock based compensation expense for WDAY is ~24% of their revenue. You really can’t make this up.

That’s a great site. Bookmarked. Thanks for posting!

AZ not looking good at all. While the higher number of positive cases can be explained by higher testing numbers either, the higher % positive definitely points into the wrong direction, as does in the increasing number of hospitalizations. The number of death is still small. TX and a few other states in that neck of woods show similar trends. That didn’t take long: https://www.reuters.com/article/us-health-coronavirus-usa-arizona/arizona-calls-for-emergency-plan-as-covid-19-spikes-after-reopening-idUSKBN23H03K

FPE.MI - Italian artisan jewelry manufacturer. Got a buyout offer, but then the new majority owner decided not to go all the way due to COVID-19. The business will take a hit this year, but I think Italy will recover faster than thought. Seems very cheap for this great little business.

Of course the bonds are a crap investment too. by the way, if you compare bond yields to stock yields, you should compare investment grade bond yields (let’s say BBB) and not risk free bond yields to stock yields. The analogy to 1999 is not perfect (it never is) but there are a lot of similarities 1) influx of new market participants - back then via discount brokers like E*TRADE, now via free trades Robin Hood 2) highly speculative trades with a disregard of fundamentals (I don’t think I need to elaborate here) 3) Fed overshooting - in 1999 due to the perceived Y2K problem, now due to epidemic, which unlike the Y2K is very real. That’s where the parallels end unfortunately. The Economy was doing very well back in 1999 and is arguably in worse shape. The Federal budget had a surplus vs record deficits and we had a reasonable political setting back then. Interests were higher back then but were easing as well but then the Fed took the lunch bowl away after Y2K came and passed with not even a whimper. It is less likely now that this is going to happen, but who knows? FWIW, if we get 5% earnings growth from 2019 levels for the next 10 years I think we can consider us very lucky.