Spekulatius

^ Same here. It’s polite to leave some money on the table for the guy buying the stock you just sold. Igor more than 20% out of my purchase and rolled the proceeds into VNO

Same here. That went well.

What will happen with profits, if we go Japan and Europe with interest rates? It is my belief, that most of the outperformance of US banks vs Europe is not due to better management, but just structurally higher NIM’s. US banks quite frequently generate 3.5% NIM’s but in Europe, the margins are typically <2%, with the exception of Britain. Britain never adopted the Euro and kept their own monetary policy and has only few large banks competing and that’s why the NIM’s in the UK are more like the US rather than the rest of Europe. However, if we go down the same rabbit hole then Europe does in terms of interest rates, my belief that US banking NIM’s will follow and lead to a structurally lower profitability. There are other differences between the US and European banking, but the NIM is the main one.

+1 One more thumbs up for this one.

CTVA

I am not so sure. yahoo’s peak market cap exceeded $100B and it was later sold for just a few billion. JDSU’s peak market cap was $125B and it lost 99% of it. Cisco was $550B and it went to a bit more than $100B. Then there are endless companies who needed 10+ years to exceed their peak before like a couple of semi companies, Dell, Sun, Compaq and MSFT even etc. If you now adjust this for expected market r turns, or just inflation over almost 18 years, the value in today’s dollars will probably not exceeded in the next downturn, but who knows?

Actually, increasing government debt is not a problem when negative interest rates persist. I believe the QE in the next downturn will include unprecedented purchases of corporate debt and probably equity purchases as well. It’s the only thing left to do when the risk free interest rate approaches zero. That’s already the case in Japan where their treasury buys selected equites like Reits. In a way, is a smart thing to do, when the cost of capital approaches zero or becomes negative. Strange new world.

I don’t see any deflationary economics in Europe, the ECB is run by an Italian right now anyways. The negative interest rates should be deeply inflationary, they just don’t seem to work, except creating elevated valuations for assets like real estate. Same seems to be the case in Japan, partly due to shrinking population. It’s difficult to create a boom in real estate prices, when the population is shrinking and there is a surplus in houses in many areas except selected population centers. Same with other things where demand is waning. If we want to create inflation, we need to bump up immigration in a great way. immigration alone is probably responsible for a 1% better GNP growth rate in the US vs Europe.

Is there a reason you are purposely ignoring the bitcoin = gold thesis? Yes, there is. I don’t like gold. I don't either. I do like gold at a 95% discount though. To be fair, the fact that I don’t like gold isn’t negating the thesis that crypto = gold. I am sure for some people it is and that may be good enough. I don’t know where the 95% discount is coming from - the market cap of gold vs crypto?

I suggest a thread to consolidate spinoff stock discussions in the strategy section. I believe that any thread for a single ticker won’t get critical mass.

Is there a reason you are purposely ignoring the bitcoin = gold thesis? Yes, there is. I don’t like gold.

In the past 9 months we've had a 20% correction and a 6% correction (with some sub-sectors moving a lot more than that), bond yield curve is inverting and everybody is talking about a recession... Agreed, not 1999 euphoria at all. Actually increased volatile and sideways movements re often signs of a very late stage bull market. Overall, this does not feel like 1999 however. 1999 had many bubbles they went parallel and were feeding on each other (IT hardware/software for the Y2000 bug, commercial real estate, high end housing, Internet stocks, telecom stocks, semiconductors etc). We have a bubble in tech stocks perhaps, but I don’t see much other bubbles yet. In any case, while boom/bust cycles tend to have some similarities, I don’t think any of them are exactly alike. So 2019 may be a bubble, but I don’t think it will work out exactly like 1999, not like 2008 or 1987.

Market cap to GDP strikes me as one of the poorest metrics I can think of. The reason is simple, in some countries a lot of companies tend to stay private, in others they are owned by the government. The market cap to GDP would be lower, just because these companies don’t trade on the stock market. i would ja it stick with simple valuation metrics, EV/EBIT, EV/ Revenue etc, but market cap to GDP strikes me as a very poor metric.

Anyone has an opinion on SLG, the NYC focused office and retail REIT? They are buying back stock aggressively. Implied cap rate according to their last IR presentation is 7.27%, while NYC real estate of comparable quality goes for 5% it less. I am not bullish on NYC real estate, but this discount is quite large. https://slgreen.gcs-web.com/static-files/8e49a27c-5167-43f8-97e3-656c06eef5fb

FRFHF, ENB and DVA. I sold ENB due to Line 3 and now Line 5 troubles. DVA was stub position and was sold due to poor fundamentals are. FRFHF will be converted into BRK.B eventually. I also trimmed WFC a bit as I was way too overweighted and I am getting concerned about earnings power at lower interest rates. I would buy it back if shares fall back a little again.

"Cowboy hat from Gucci, Wrangler on my booty." I need to read that S-1, but I am lazy AF. Yes, KTB’s results were weak, a continuation of trends that have been persistent since at lest 2014. Posted a deep dive on this yesterday: https://lowtideinvestments.com/2019/06/18/kontoor-brands/ Enjoyed reading that. Thanks for sharing. I suppose my similar, sort of opportunity cost for a KTB position might be CPRI or TPR. Thank you for sharing your research. I have been working on KTB as well. I was far from impressed with the Q1 results KTB released today. Not a total surprise that Q1 was weak though, since VF's Q1 earnings still included Kontoor. I have looked quite a bit into this stock too, as it indeed looks cheap. I have decided against investing for a simple qualitative reason: If a very smart management team like VFC can’t fix KTB, what makes us think that standalone company can do better? This was not a business that was badly managed, imo. It is a business that even a very strong management team decided to get rid off. I don’t think I am smart enough to go against their judgement and it is quite likely that this business will continue to struggle. I would be more inclined to invest in KTB, if I consider VFC’s management subpar, but that far from being the case, imo.

I think your take is actually pretty close to the Fed’s baseline forecast, namely the economy does fine and they don’t cut during 2019. The reason they’re slightly more dovish than what you think is appropriate is that they now see some negative economic indicators showing up and inflation is undershooting their target. What I find pretty strange is the extreme confidence with which the bond market is predicting multiple rate cuts this year and how happy Mr (Stock) Market seems to be about all this. The Fed has pretty much indicated that rate cuts are not forthcoming this year unless the economy starts deteriorating. So if the bond market is right and rates are going down big time that means the economy is going to do pretty badly. Will stocks do great under such circumstances? I don’t think so. Either everything is good news or everything is bad news. Right now it’s a former.

Othe then perhaps boosting asset prices, I don’t think the level of interest rates matter much at this point. 2.25%, 2%, 1.5% why would anyone care? What did Europe or Japan get for lowering interest rates to basically zero?

I look at the records from my old message board and it was clear to most of us, that first ENE was overpriced, but also risky. The derivatives and trading shenanigans were sort of known (Pg&E bankruptcy). Proving fraud is very hard, but yellow and red flags were quite possible to detect. Same is true for many other frauds that came up later. Just avoiding stocks with similat traits that show yellow flags will not get you into this mess, but you will miss some opportunities to make money as well of course.

Spekulatius, I've - with great interest - been following your moves for years. [However I do not understand some of your moves, to me basically because your investment universe is much larger than mine, based on that you have multiples of investment experience & stock picking knowledge compared to me.] This move by you is a surprise to me with regard to EXOR.MI & FCAU [i'm unopinionated with regard to FRA.DE.] If you would take the time to elaborate just a bit on your line of thinking here, I would personally appreciate it very much. As far as EXO.MI is concerned, I made the decision to reduce cyclicals, especially automotive in my portfolio. EXO via FCAU and CNHI (the latter may be overvalued actually) is quite exposed. I have not changed my opinion on management. I only sold my position in tax deferred account and keep my position on a taxable account. FRA.DE simply has reached my valuation target. I am surprised it rerated that quickly, because they will have negative FCF due to an investment in Capex for the next few years.

HHC and VNO come to my mind.

EXO.MI, FCAU, FRA.DE

Enron‘s balance sheet almost doubled in size from 1999 to 2000 from ~34B to $65B, while profits were relatively small. they had huge balance sheet items from trade receivables and assets from risk management activities showing up on their balance sheet (~12B and going up more than 5x). Value investors would have never touched this, because it was just to expensive. I do know a few of them got sucked in on the way down though.

Interesting, in CA, I could simply get my tax bill lowered, when I filled out a form, that was backed up by an appraisal that I received when I refinanced my property) and which was lower than my tax appraisal at that time. NY has dedicated companies that fill out grievances for you in exchange for part of the tax savings for one year.

I didn’t think of this angle and sold my few shares recently. Worked out OK. I keep this on my watch list , as I think it’s a secular growth play.