Libs

Page 5 of attached- September shows $487 B receipts, $917 B outlays; deficit = $429 B. What am I missing?

As noted upthread- Xi would have to be insane to invade Taiwan. China is not self-sufficient in food and other essentials. The countries exporting to China would stop, IMO. China would be in a world of hurt, quickly. Not to mention the mind-boggling complexities of actually pulling off a successful invasion. Is Xi going to risk everything against these odds? I doubt it. China will choose slow strangulation ( see Hong Kong).

He makes good points. The thought that nags me: Can we really unwind the distortions created by 14 years of interest rate suppression, in less than a year? There's got to be more payback than this.

Bill- Thanks for the earlier reply. July, August and September deficits are quite 'healthy.' Are we at that 6% of GDP level you're looking for? US Deficit.pdf

Playing drums in a band. I decided to form my own cover band in late 2019, because in every prior band, I had no say in the music. Either it was an existing band that had their songs already, or a new band where the singer called the shots. So I laid down the founding principles of the band in a Craig's list ad, and started auditions. The band was set by early 2020. It's worked out better than I could have hoped. We're a true democracy in action. We've got 50 songs everyone likes (or at least can live with) and we've been gigging for two years. Lately I've noticed real improvement in my playing. I'm able to listen and respond to other band members as we play, instead of 100% focusing on what I was doing. Almost an out-of-body experience. That's what good players do, of course, but I'm a mid-level player (in a mid-level band). And of course, half the fun is the camaraderie developed during rehearsals & gigs. And the endless discussions (and arguments) about our favorite bands and songs. Every once in a while, I'll count in a song just right, the mix and the instruments will be perfect, and we'll nail it from start to finish....and if it's a song that ripped my guts out in my youth, I'll almost get high from the emotion of it. We've re-created that feeling from when I first heard it at 17. Magical.

Re Taiwan- interesting point made in a letter to the WSJ today: China ( unlike Russia) imports most of their food. They would be in a world of hurt if sanctions hit. That alone may deter XI.

Pretty sure I stand alone on this - but I love Cramer. (Even though I agree with most of the criticism). He has an impossible job.....daily picks, daily commentary, daily need to be fluent on the basics of hundreds of companies. Imagine of you were asked to do his job! If you can detach yourself from his advice, he's quite likeable, and funny, in my opinion. But then I'm a sentimental fool. I still miss Mark Haynes.

Dealraker is a legend. Glad he's posting.

IPCO at 3 X FCF

Druck's internet bubble story is classic (at about the 40 minute mark). Even old-school fundamental stock pickers can learn from this guy.

Bill, What's your take on gold's slide, given your framework ( gold as a signal of USD scarcity/surplus)?

Kudos on an ethical and successful strategy. You should be proud.

Good topic, and it hits close to home. I run a fairly conventional RIA. Berkshire has been a core holding for everyone for 20 years, and I've used mostly low-cost ETF's and opportunistically bought blue chips along the way to fill things out. I've used Buffett's wisdom to help teach them how to think about investing. Possibly for that reason, my clients have been probably been less difficult / mercurial than Gregmal's were. They've made my life easy, and they've had decent performance as a result ( by not selling at bottoms, chasing fads, etc). I consider myself insanely lucky to have these people as clients. Meanwhile - getting to the subject - in my PA, I've completely trounced my client's results, not because I'm that skilled but because I've been a good cloner and can be a lot more opportunistic and concentrated with my own money. The gap got my attention a few years ago, and it just kept growing. By 2021, it really started to gnaw at me. So, about 18 months ago I picked a dozen or so clients that I thought could handle the conversation - they are really friends by now - and asked if they wanted to partake in some of my personal stock picks. I was very transparent. I warned them it would be volatile. I also told them we would be in this together, meaning I would buy and sell along with them. I got agreement, of course, and so we began with 2% positions in the stuff I hold in size- CASH, HQI, and Constellation Software. Well.... It has not been a blazing success. Constellation has been flat, at least, but HQI and CASH are down ~30-35% from where we bought. No one is complaining, and it's too soon to say this was a mistake, but I'm questioning if I should have done this. If you buy MSFT and it drops, the client blames MSFT. If you buy an unknown Iowa bank and it tanks, that's 100% on me. The last thing I want to do is introduce doubt in their minds. (Well, actually, the last thing I want to do is lose them money). So, I'm at a crossroads. I REALLY want to to add JOE here, for everyone, but I don't have the stomach for it. Now, watch- it will triple, and would have made the whole approach a winning one in the aggregate- and they won't own any of it. Anyway, that's my story. The whole PA VS OPA thing is very complex.

This is sobering. SF is an extreme case, but still- https://sfstandard.com/business/san-francisco-braces-for-epic-commercial-real-estate-crash/

I had just noticed that and was going to post. It's a huge move. I remember illustrating the impact low interest rates had on stocks (pumping them up) by telling people, "Now imagine if you could get 5% sticking your money in the bank, like in the old days. Wouldn't some people - wouldn't YOU - move out of stocks and take that 5%?" While it's true you can't get 5% in the bank, you can get 3% on something as short as a 3- month treasury. No bueno for stocks.

I vividly recall in one of Peter Lynch's books, that Taco Bell went up 15X in the teeth of the 70's bear market. There is always some opportunity, as Greg says.

Maxed out on JOE

I made 20% CAGR in that 'lost decade' and I'm kind of a schmuck. It means nothing.

HQI. Breaking my sizing rule.

I agree with your take. But, it's going to take a while for activity to recover IMO. Meanwhile, I just got a note from my agent in Irvine, CA, noting the following: -19% of homes for sale in May reduced their asking price at least once. Currently, it's 35%. -Inventory is up from a low of 954 homes to 1504. Pre-Covid average: 4,666! -Sales are down 40% from peak and lowest since 2004. Just some local color. My point is, these are numbers indicating a slowdown, not catastrophe.

Fascinating. Thanks.

The flaw is in getting caught up in all this macro stuff. If Buffett doesn't, you don't have to either. Get comfortable finding stocks with moats, that will endure, and just buy them when they are reasonably priced. Berkshire for example.

He looks more like Elvis Costello every year.

OPEN

This was in Barrons a couple of weeks ago. Sounds like a great bar bet. I've tried it out on friends and they guess 50-60%.... The math is - Berkshire stock was $20 in 1965; had it compounded like the S & P - 10.2% CAGR- it would be worth ~$4900. But Berkshire has compounded at 20%; and the A shares when the article came out were $490,000. Voila - it would take a 99% drop to hit $4900. Somewhere I read Buffett had a response to this, something along the lines of "let's not test the math."