james22

Dean Alfange said it best 70 years ago: I do not choose to be a common man. It is my right to be uncommon. I seek to develop whatever talents God gave me—not security. I do not wish to be a kept citizen, humbled and dulled by having the state look after me. I want to take the calculated risk; to dream and to build, to fail and to succeed. I refuse to barter incentive for a dole. I prefer the challenges of life to the guaranteed existence; the thrill of fulfillment to the stale calm of utopia. I will not trade freedom for beneficence nor my dignity for a handout. I will never cower before any earthly master nor bend to any threat. It is my heritage to stand erect, proud and unafraid; to think and act myself, enjoy the benefit of my creations and to face the world boldly and say – 'This, with God's help, I have done.' All this is what it means to be an American.

To paraphrase SowelI: because it isn't greedy to want to keep the money you have earned, but it is to want to take somebody else's money.

Was a good year for Energy (XLE +46%).

audiosciencereview.com

Mauldin's Smart Money Monday note: Now I see the buy signal I’ve been waiting for with Fairfax… For starters, the stock is the cheapest it’s been since the financial crisis. Then there’s the business in India… See, Fairfax recently released its second-quarter earnings. And I found a critical piece of information buried in the press release. One of Fairfax’s holdings, and Indian insurance company called Digit, just became a lot more valuable. Digit recently raised a ton of money from a handful of venture capitalists. This pushed its implied total value over $2 billion. But Fairfax still has Digit on the books at $540 million. The change won’t show in Fairfax’s financials until it releases its third-quarter results. When that happens, it should increase the company’s book value by $61 per share. That’s an 11% increase. This might seem like a minor detail. But it’s a major buy signal for an insurance company like Fairfax. CEO Prem Watsa bought $150 million worth of Fairfax stock not too long ago… Watsa has built his career on shrewd stock picking. It’s a big reason Fairfax has done so well over the past 35 years. And last year, he made a massive wager on the company he knows best—his own. Insiders buy for one reason: They think the stock will go up. It’s fairly common to see insider purchases worth a few million dollars. But $150 million? That’s extremely rare. It’s also a great sign. Shares of Fairfax have already climbed about 40% since the purchase. But my research indicates they still have a lot more room to run. Remember, this stock is still extraordinarily cheap. Today, Fairfax trades at around 0.75X price-to-book. That is just too cheap for a high-quality insurance company. As a reference point, Berkshire Hathaway trades at a substantial premium to its book value—around 1.4X. Were Fairfax to even approach a more reasonable 1.2X price-to-book, the stock would have nearly 60% upside from current prices. I like the setup here. Fairfax Financial is a solid, well-established company with a formidable CEO. But its stock is still undiscovered by most investors. I just saw the buy signal I’ve been waiting for. Consider picking up shares now while they’re still ultra-cheap. https://www.mauldineconomics.com/smart-money-monday/meet-the-oracle-of...-toronto

Sure, but I'm newly retired and dealing with sequence of return risk. Hoping my small value, emerging markets, financials, infrastructure, and energy won't fall as much as growth in any correction/crash, but they'll still likely fall. I've a cash bucket of several year's expenses, but it can take up to ten years for markets to recover. I don't see any "durrrr" options to derisk today. Might add long-term treasuries as a diversifier, but dunno.

MAY 6 2019: “I think stocks are ridiculously cheap if you believe ... that 3% on the 30-year bonds makes sense,” Buffett says. AUG 9, 2021: 30-year bonds <2%

WRT overvaluation, no one is more pessimistic than GMO. Yet: While our glass-is-half-empty view on Growth is sobering, there is a very different way to look at today’s environment. Indeed, relative to traditional equity benchmarks, we think it is one of the best opportunity sets in over 20 years, as in one of the best times to look different and take active risk. https://www.gmo.com/americas/research-library/2021-mid-year-letter-equity-allocation-strategies/

My guess? Financial repression juicing equity returns for several years before stagflation. https://themarket.ch/interview/russell-napier-we-are-entering-a-time-of-financial-repression-ld.4628

Why not buy after good news? Give up the immediate jump, but hopefully capture some of the move to par. Without risk of loss or opportunity cost.

The government will always win when the Supreme Court imputes to Congress a definition of a conservator never adopted in the history of the world, by broadly reading a narrow exception for incidental powers to let a conservator gobble up all the money for itself—an action that could never be challenged in court as an abuse of power. A unanimous travesty. https://www.forbes.com/sites/richardepstein/2021/07/13/the-supreme-court-throws-fannie-and-freddies-private-investors-to-the-wolves/?sh=4740ad6c15e3

Investment firms really can’t lose. If the Biden administration is successful, or if cities like Atlanta voluntarily adopt these rules, as Minneapolis and the entire state of Oregon already have, it is a win. Investment firms can carve up single-family properties and add additional units of varying sizes and shapes to them. Depending on local rules, the new housing will be sold or rented. In cases where an entire development is purchased, as it was outside Houston, investment firms can knock them down, build high-density apartment buildings, and create an endless income stream. If the Biden plan fails, they still have long-term investment rental properties. https://pjmedia.com/news-and-politics/stacey-lennox/2021/07/01/atlanta-is-a-preview-of-what-joe-bidens-prefered-housing-policies-intend-for-the-suburbs-n1458831

Crypto makes pretty meaningless the historical relationship between Gold and anything, I believe.

Thanks.

Got it. Just believed a rational outcome was more reliable than fundamentals. But that was obviously naive. Skol!

Nice summary: I had been highly confident that plaintiffs would prevail on the APA claim. I did not, though, count on all of the justices agreeing on a strained reading of the statute, nor on their giving no weight to the background facts on the case presented by plaintiffs (and me, in my amicus curiae brief). Yet that is what occurred. Thanks.

Really? Didn't think rationality was to much to ask.

Yeah, how could you? Grouch: The Court points to not a single precedent in 230 years of history for the distinction it would have us draw. Nor could it. The course it pursues today defies our precedents. ... Instead of applying our traditional remedy for constitutional violations like these, the Court supplies a novel and feeble substitute. ... Not only is this “relief ” unlike anything this Court has ever before authorized in cases like ours; it is materially identical to a remedial approach this Court previously rejected.

Consider the guidance the Court offers. It says lower courts should examine clues such as whether the President made a “public statement expressing displeasure” about something the Director did, or whether the President “attempted” to remove the Director but was stymied by lower courts. Ibid. But what if the President never considered the possibility of removing the Director because he was never advised of that possibility? What if his advisers themselves never contemplated the option given statutory law? And even putting all that aside, what evidence should courts and parties consult when inquiring into the President’s “displeasure”? Are they restricted to publicly available materials, even though the most probative evidence may be the most sensitive? To ascertain with any degree of confidence the President’s state of mind regarding the Director, don’t we need testimony from him or his closest staff? The Court declines to tangle with any of these questions. It’s hard not to wonder whether that’s because it intends for this speculative enterprise to go nowhere. Rather than intrude on often-privileged executive deliberations, the Court may calculate that the lower courts on remand in this suit will simply refuse retroactive relief. See, e.g., ante, at 6 8 COLLINS v. YELLEN GORSUCH, J., concurring in part (KAGAN, J., concurring in part and concurring in judgment in part). But if this is what the Court intends, why not just admit it and put these parties out of their misery? https://www.supremecourt.gov/opinions/20pdf/19-422_k537.pdf

This has hurt: ~8% of portfolio and significant opportunity cost. But still unsure what my takeaway should be. I tend to believe it was a good bet, based on precedent. But we have had recent examples of SCOTUS shying away from difficult decisions. As a value investor, I've been trying to remember John Templeton's When people say things are different, 20 percent of the time they are right. I'd assumed stare decisis was more reliable than mean reversion, but I guess the Rule of Law is something I have to now question. Maybe I can recoup my losses by looting? Or shoplifting?

Gorsuch: Today, the Court sounds the call to arms and declares a constitutional violation only to head for the hills as soon as it’s faced with a request for meaningful relief. But as we have seen, the Court has in the past consistently vindicated Article II both in reasoning and in remedy. These cases—involving appointment and removal defects alike—remain good law. So what are lower courts faced with future removal defect cases to make of all this? The only lesson I can divine is that the Court’s opinion today is a product of its unique context—a retreat prompted by the prospect that affording a more traditional remedy here could mean unwinding or disgorging hundreds of millions of dollars that have already changed hands. The Court may blanch at authorizing such relief today, but nothing it says undoes our prior guidance authorizing more meaningful relief in other situations. For my part, rather than carve out some suit-specific, removal-only, money-in-the-bank exception to our normal rules for Article II violations, I would take a simpler and more familiar path. Whether unconstitutionally installed or improperly unsupervised, officials cannot wield executive power except as Article II provides. Attempts to do so are void; speculation about alternate universes is neither necessary nor appropriate. In the world we inhabit, where individuals are burdened by unconstitutional executive action, they are “entitled to relief.”

Rule of Law Guy Quick Reaction: I was shocked that SCOTUS did not permit the APA statutory claim to go forward. The constitutional claim portion of the case was presaged by oral argument questioning, so while I do not agree with that outcome either, I cant say that I was totally surprised. On a day on which SCOTUS states that a farmer can exclude from his private property union organizers, SCOTUS also decides that the conservator has the statutory authority to appropriate over $100 billion of shareholder property. Going forward on remand, Collins Ps should argue that all senior preferred distributions from the time Director Watt came on board are subject to invalidation. There is some question whether Ps can only argue that the excess of distributions over the 10% dividend amount should be voided…but I would argue that the POTUS unremovable Director Watt did not have the authority to make any and all distributions on the senior preferred. This remanded portion of the case goes to the Houston federal district court, and however that court decides, it will be appealed to the 5th Circuit, which is already on record as believing that SCOTUS is wrong as to the merits of the APA claim. So while SCOTUS’s decision prevails for pre-2014 distributions, one might think that the 5th Circuit will be solicitous of the Collins Ps argument with regard to the post 2014 distributions. The Lamberth trial goes forward, with Ps arguing that the NWS breached the implied duty of FHFA/Treasury to deal in good faith which was owed to public shareholders. Judge Lamberth has already essentially stated that there was no APA claim, so having SCOTUS agree with him doesnt affect the case moving forward as is. To my mind, Ps should argue that there are exactly zero instances in the history of shareholder capitalism where the terms similar to the NWS have been implemented and upheld…so how could public shareholders have expected the NWS as a possible outcome…and if this is right (and it is), how can the public shareholders have expected that the NWS would comply with this fair dealing duty (understanding that expectations as to what is fair are based in major part on what history and custom informs one to expect). The court of federal claims case survives with added urgency. If congress is permitted to authorize the conservator to appropriate shareholder wealth, then shareholders should receive the fair value of their expropriated wealth as damages. A major issue in this case is whether this claim “runs with the shares”, or whether only 2012 shareholder can assert this claim. TINA (There Is No Alternative to the GSEs) still exists but the public shareholders ownership claims to the GSEs in the future have taken a hit. Dont ask me how the Biden administration can expect to recapitalize the GSEs given this outcome…and therefore one might expect that the GSEs will simply limp along in conservatorship for the next three years, building capital albeit with the Treasury having the right to all of that capital as its senior preferred stock preference increases.

And others are seeing their rights expanded. Maybe I can recoup my losses by looting? Or shoplifting?

Neither Gaby or AGC Analytics have tweeted yet. Sure they're in shock.

LOL