Spekulatius

Sold the remainder ( except one share) of my few PDER shares.

The max “safe” leverage depends on the predictability of the cash. Pipeline companies typically have 10 year contracts spore or less guaranteeing stable or slowly growing cash flows during that time, so a 4-5x EBITDA coverage is considered “safe”, E&P’s have very volatile cashflows, so everything higher than 2.5x EBITDA can be dangerous (depend on asset life of course ), high quality real estate can be leveraged 6x or even a bit higher and is considered safe. 12x leverage is very high and in my opinion unsafe, no matter the underlying asset, imo.

With the largest BAM sub (BIP/BPR) at 12x debt/EBITDA, I wouldn’t call BAM antifragile. It is essentially a bet on having low interests for a long time to come, IMO.

The last two recessions (2001 and 2008) caused 50% corrections in the stock market. The 2001/2002 was just a garden variety Recession by the numbers, yet it caused a severe correction because it was preceded by bubble valuations. I guess one way to frame the question by OP is to ask yourself how likely is another 50% correction in the next 10 years? If we get such a correction, results overall may still be positive, but most likely they won’t be great. Also, I have mentioned this before, I think the next stock market rout may well be caused by political events. We have populist movements in almost any country now, so it will be harder to predict what the political environment will look like. For example, we have now almost 40 years of tax reductions for corporations in most countries, starting in the 80‘s basically, which helped valuations tremendously - what happens if voters decided that it didn’t work for them and decide let’s try the another way around? That’s just one example of political risk, another one is trade wars, elimination of trade blocks and free trade. All of the above are common themes with politicians.

One thing to point out is that buying funds with a 2% + expense ration are a suckers bet, almost regardless who runs it. It certainly creates a very high hurdle to outperform after fees.

Yes, that is exactly my opinion as well. +1

cherzeca, In short, I agree on the first emphasized part of your post above, ref. my earlier original post. I'm reluctant at elaborating further here - because of fear of participating in or triggering to derail this topic about the Brexit. This also applies for the second part of your last post emphasized by me above, ... but just even more. I believe the vote for Brexit is more rooted in political disagreement than economic causes. Personally, I would prefer if this thread would be more focused on the economic and especially investment angle, as this is the focus of this message board. For one thing, I believe that the fact that the UK kept it’s own currency and hence independent central bank ist the reason why British banks earn a higher NIM and are hence more profitable. exit should perpetuate this structure, which means that British banks should be more profitable going forward too. If correct, that would be an important consideration in terms of investments.

Thanks, much appreciated. The table from the Guardian seems to indicate very slow GNP growth in Britain in 2018 and the near term future, but no crisis. Projections always need to be taken with a grain of salt and were based on soft Brexit: https://www.theguardian.com/business/2018/nov/08/uk-economic-growth-slowest-europe-next-year-european-commission-forecasts-brexit

EU has been great. You can travel to a lot of countries without showing your passport, stupid border controls. You can move ,work in France , Italy, Germany as you please. A lot of countries like Spain, Portugal, Poland, Czechoslovakia have benefited tremendously. No expensive currency exchanges. The Greeks screwed up, so what. They had the choice to leave. The U.K. will leave, but at the end of the day, they will still be closely connected to the EU by trade.

I think the UK will be fine in the long run, but the short term might be ugly and probably means a lower standard of living via higher inflation. Corporate taxes aren’t really the problem in Europe, they have been substantially lowered over time, it’s the individual taxes they are too high. Germany at least could easily reduce the tax burden, there is 60B Euro Budget Surplus and interest rates are negative for short term Bund notes, what are they waiting for? The issue of blame aside, any idea what happens to the U.K. economy if we get a hard exit at default conditions? i thought it might be similar to the impact of the GFP for Britain and maybe a weak recession for the EU. The stock market especially in the U.K. doesn’t seem to think so or it would be 30% lower, or are investor there just putting their head into the sand? I am guessing they I must be wrong, I wouldn’t touch U.K. stocks (in general) with long pole right now, but clearly many think differently.

Knowing something and applying it are two different things anyways. I used to know some accountants at work that seemed constantly broke and had credit scores in the 600’s. They certainly can run the numbers and budget, they just couldn’t apply it for whatever reason. It seems like discipline and temperament are more important than knowledge and intelligence for success with investing.

Yes it’s significant. However looking at this in another way , 40% of all U.K. exports go to other EU countries, but the fraction of EU exports going to the UK is only 8%. So for the UK, trading with the EU is 4x more important than the other way around. The EU can clearly live without the UK, but the UK has a really hard time with out the EU. Anways, trading between the UK and the DU would hardly stop with a hard Brexit, the EU could simply assume standard WTO conditions and be done with it.

I don’t think it is even an option for the EU to let the UK vote for the EU parliament, when they clearly want out. This would not even remotely make sense.

I honestly think most investors are better off ignoring these macro biased reports. I think it’s correct to think about the economic cycle in broad terms (Dalio, Howard Marks early vs late cycle), possibly take this into account but don’t get obsessed with it or conclude that any of this really is going to tell us what is going to happen and perhaps even more importantly when. Again, this is just the circle for competence with stocks. If macro is your circle of competence than by all means used it for investing. I don’t think a lot of investors are good at it though, so they better stock with what they know rather than gamble with the unknown.

The Brits have the right to determine their own destiny and leave the EU, if they so desire. However, it appears to me that the political system in the UK is not able to make a positive decision on how to do it. It is also noticeable that all the pro- Brexiter (Boris Johnson) are all gone and let May deal with how to get the job done. It looks to me like the EU has done their part, but the politicians and in the UK haven’t done theirs. I think the EU should should not let it default into a hard exit make the rules as far as it pertains to EU sovereignty as they please and let the U.K. figure out things as they go. EU is much larger than UK, so the fallout will hit the UK much much harder than the EU. Sorry lads, but bad things can happen when you let idiots run your country.

For a new investor, putting money in index funds is really hard to be. I also think that putting a small percentage into BRK is a good idea. First of all, the generally consensus is that it’s relatively cheap, it’s well run very diversified and very solid. Owning this also will be a strong incentive to read up on Warren Buffet, follow what he says in the financial news and read his shareholder letters and over time understand the business side better. You can do this without owning it, but from my experience, it is much more likely that you will follow what you own. I also think that putting a small amount into a stock of your choice is a good idea, but ask yourself, what your circle of competence is. It could be a stock in and industry OP works in or local company. i strongly recommend to stay away from here say recommendation from friends etc. and trendy investments like blockchain and cannabis etc.

Looks like the British government is incapable to get anything done or decided. It’s looked more and more like a hard Brexit to me. Dragging it out won’t nexessarily help either . I am surprised that Britain’s economy is holding up as well as it does, but my guess is that at least a garden variety recession in Britain is very likely. https://www.bbc.com/news/business-47753125

I personally can’t tell what is a symptom and what is the disease, but I tend to think of inverting interest rate as a symptom. Just my opinion, but every time, investors put their hope into Fed, they tend to get disappointed. I suspect the market will take a real dump, if indeed the Fed starts to lower rates. I think it can be be both right? At first it's a symptom - it's markets being concerned about future growth/inflation and predicting a rate cut; however, it can also become self-fulfilling and contribute to the slowdown because the inversion strangles credit supply further slowing the economy Reflexivity. In this case, there are definitely fundamental issues regardless of expectations. Rising rates would have a serious impact, no matter how they do it, the only question is how bad. The method the Fed uses makes things worse, because, well, they are clueless as the past few months have shown. The big unknown here is not the Fed, it's Trump. He called an emergency on the wall. He just nominated someone to the Fed that no doubt he believes will support his views. What else is he willing to do for us to get a happy dead cat bounce? That's my bet, it's not going straight down from here. We will have fun first. Agreed. It's never straight down. There are always bounces along the way until the buy-the-dip mentality is sufficiently beaten to death. It's why I didn't sell/short on the way down in December, but was selling/shorting/buying bonds after the incredible bounce in January. This was an opportunity to reduce risk after markets have confirmed the bear market. Not an opportunity to buy the dip. Late stage bull markets can be a lot of fun:

http://www.defenseworld.net/uploads//news/big/mirage-v__1476787129.jpg Note that the pilot (= Banker in our weird world) successfully ejects and presumably lands safely using his golden parachute. As for the innocent bystanders, we do not know. I may be pushing this analogy too far now.

Another small add to WBA.

I personally can’t tell what is a symptom and what is the disease, but I tend to think of inverting interest rate as a symptom. Just my opinion, but every time, investors put their hope into Fed, they tend to get disappointed. I suspect the market will take a real dump, if indeed the Fed starts to lower rates. I think it can be be both right? At first it's a symptom - it's markets being concerned about future growth/inflation and predicting a rate cut; however, it can also become self-fulfilling and contribute to the slowdown because the inversion strangles credit supply further slowing the economy Reflexivity. In this case, there are definitely fundamental issues regardless of expectations. Rising rates would have a serious impact, no matter how they do it, the only question is how bad. The method the Fed uses makes things worse, because, well, they are clueless as the past few months have shown. The big unknown here is not the Fed, it's Trump. He called an emergency on the wall. He just nominated someone to the Fed that no doubt he believes will support his views. What else is he willing to do for us to get a happy dead cat bounce? That's my bet, it's not going straight down from here. We will have fun first. Trump regards the stock market as an important scorecard. We have heard this in the news occasionally and Kohn explicitly confirmed this in the Freakonomics podcast that I posted. While none knows the future, I think there is a high probability that the next economic crisis will be caused by a political crisis, as a fallout from the populist movements prevalent in many countries, not just the US. We might see a case of this with Brexit in the UK. As for the Fed, I think people have an exaggerated sense of its impact on the economy and it’s power to control its path. As an investor for quite some time, I can only say that when the pundits put their hope into the feds bailing out the market, we were typically in for a rough time. As for the yield curve, I think we might have imported this basically from Europe. Europe has no negative interest rates almost as far as the eye can see in some countries, so a 2.5% interest for a 10 year treasury may actually look pretty juicy as strange as that may sound. I am not sure what he Fed can do about this either.

I personally can’t tell what is a symptom and what is the disease, but I tend to think of inverting interest rate as a symptom. Just my opinion, but every time, investors put their hope into Fed, they tend to get disappointed. I suspect the market will take a real dump, if indeed the Fed starts to lower rates.

Yes, most of their investments seem to have a complex thesis (Greek banks, BlackBerry), or are just based on cheapness (Stelco, RFP), while Buffet is jumping 1 foot hurdles like US banks, Apple etc. Note that even when WEB is wrong like he was with IBM, he came out with minor scratches so to speak and didn’t really lose much money. FFH has great companies in their backdoor like Enbridge (which i own) or Canadian banks, or even well managed energy companies like Suncor or CNQ. I feel somehow, they got lost in the search for complexity when it really doesn’t seem necessary.

Thanks for thoughts on CMG.TO. I think the only odd thing I found is the dividend bing higher than the earnings, while at the same time, they have a lot of cash on their balance sheet and the SharePoint creeps up due to dilution from stock based compensation. It’s a pretty interesting way to play a recovery in the E&P sector wth way less risk than owning an E&P outright. Thanks for posting.

Exactly. It’s a rubber cell in the asylum that prevents the inmates from running over the rest of this place. I kind of regret my occasional visits there. ::)