cameronfen
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Posts posted by cameronfen
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"However there is little question that hurricanes are getting stronger, doughts more frequent and fires harder to fight."
More statements with zero proof in reality nor in historical facts.
By the way, if that is such an immediate danger why has Obama just bought a large mansion by the water? Or Al Gore in 2010 in California after warning the world that California would be submerged in 2020?
https://www.apartmenttherapy.com/barack-michelle-obama-vacation-house-photos-36641142
I can't believe that people are still falling for this bs. Sherlock Holmes was right: follow the money!
https://en.m.wikipedia.org/wiki/List_of_Category_5_Atlantic_hurricanes
I'll follow up with droughts.
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Experts have been predicting climate catastrophes for decades and I'm still waiting for one to come true. See this link for some fascinating examples...
https://threadreaderapp.com/thread/1109923374568890368.html
If we can't predict the weather next week with a high degree of accuracy, I have a hard time believing we can predict the weather 100 years from now.
It's ridiculous that everything is now being blamed on global warming climate change: hot spell - climate change, cold spell - climate change, dry season - climate change, wet season - climate change.
I remember after hurricane Katrina, experts predicted that due to 'global warming' we were going to start seeing major hurricanes regularly. And then we had no major storms for many years. It doesn't matter how inaccurate their predictions are, the experts just keep right along forecasting doom and becoming ever more fervent each year.
We now have young people pledging not to reproduce because they don't want them to suffer through end times that are just around the corner. It's really a sad state of affairs that so many otherwise rational people have joined the doomsday cult that is 'climate change.'
I'll make a prediction on this topic though. 11 years from now, when the world doesn't end as AOC has predicted, she'll have a new and improved forecast that says the world is still going to end but that it will just be another 12 years out. Gotta keep the fear mongering strong!
So this is a problem with the scientific community and the media. Basically only the most dire forecasts were reported on because that drew attention. Then of course scientists responded to those incentives in their research. Thus I think conservatives were expecting global warming to be this day after tomorrow event, which never happened. However there is little question that hurricanes are getting stronger, doughts more frequent and fires harder to fight. Is that mean billions are becoming climate refugees, no. But current costs are calculable and reasonable measures to pick the low hanging fruit that passes cost benefit analysis should be undertaken.
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The fact that there is a risk of catastrophic disaster is enough to pay attention. Even scientists dont know exactly how melting of the ice caps could increase tempretures or how tempreture increase will effect the gulf stream. Considering a catastrophic effect which will drastically alter our lives (or future generations) has a small but non-zero chance of happening, taking small relatively costless policy changes seems like a prudent decision to make.
Am I missing something? Relatively costless policy changes???? Aren't the proposals massively costly? In the trillions in terms of the US economy.
There is no enforcement mechanism for the paris climate agreement. But the US joining would encourage other more interested parties to cut emissions. Very definition of costless.
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The fact that there is a risk of catastrophic disaster is enough to pay attention. Even scientists dont know exactly how melting of the ice caps could increase tempretures or how tempreture increase will effect the gulf stream. Considering a catastrophic effect which will drastically alter our lives (or future generations) has a small but non-zero chance of happening, taking small relatively costless policy changes seems like a prudent decision to make.
Fair point on the really bad effects and unknowns. I agree also, if it doesn't cost anything we should do it. Climate change primary,secondary effects seem very hard to estimate and predict 100 years out. It would likely be gradual - not a sudden tsunami or anything though. There could also be very large benefits that are not talked about much. Warmer temps in much of the colder climates and ability to grow more food there, perhaps less net deaths from warmer weather in the winter, net actually much better for the environment if plants can have more CO2 and grow faster, etc.
Sure the effects are gradual, but we also might not know the effect of the marginal ton of carbon we put in the atmosphere today until 20 years out. That's the other side of the risk.
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The fact that there is a risk of catastrophic disaster is enough to pay attention. Even scientists dont know exactly how melting of the ice caps could increase tempretures or how tempreture increase will effect the gulf stream. Considering a catastrophic effect which will drastically alter our lives (or future generations) has a small but non-zero chance of happening, taking small relatively costless policy changes seems like a prudent decision to make.
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I still welcome our new robot overlords:
(Perhaps Masa should replace Neumann with Atlas ::) )
Interesting fact: I think most of Boston Dynamic robots are trained with a model-based system (i.e. this is how the world works and therefore do this) and not deep learning which is interesting. See here: https://www.alexirpan.com/2018/02/14/rl-hard.html
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I picked "Other". Democrats never care about the budget deficit and Republicans only pretend to care about it when there is a Democrat in the Whitehouse. So the answer to "When will someone care?" is: As soon as there is a Democrat elected President.
100%
I'm concerned with it, but at the same time both Europe and Japan are worse than the U.S. in that regard and nothing bad has happened yet which emboldens policy makers to continue making unsustainable decisions.
When will it stop? When it can't continue.
Europe are not worse in terms of deficits. Germany actually runs a surplus and even Italy’s deficit is 2.1% if GDP vs US at roughly 4.5%.
Sure, in recent history deficits have been better, but historically they were not which is why overall debt levels are higher. The debt level is what I was referencing - I apologize that it wasn't clear.
Overall, I think the existing stock of debt, once large enough, is likely more important than incremental growth/reduction in that stock of debt.
Also, I was generalizing across the monetary union - obviously you'll always be able to find individual exceptions just like you can find states/counties/cities in the U.S. that are exceptions regarding deficits and debts.
The most important thing is the deficit not the debt. If your deficit is lower than growth rate of nominal GDP over the cycle you are generally fine. Total government debt to GDP will never go above some upper bound. The reasoning behind this is akin to a DCF. The deficit is the growth rate of your debt, and the nominal gdp growth rate is you discount rate. As low as your rate of growth is slower than your discount rate overall debt to GDP will stay bounded. If your debt is above that bounded level, as long as you commit to the same deficit amount, your debt to gdp will actually go down even if are running a (low) deficit.
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100% with Google. The greatest investment might have been Youtube which at the time some thought would destroy the company. Waymo has been great and specular in its own right in that it isn't really something that has relied on the existing user base. Although Waze does help with it. Thats been a project that to me, has validated their ability to go outside the core business and put something real together.
Entire sectors dinged when AMZN announces its looking into a new business venture, so I argue this is priced into AMZN.
Netflix I guess I just fail to appreciate, but outside of first mover status, I fail to see what keeps others from taking that space eventually. Content is king. Disney and ATT have made HUGE moves in the past few years. They're playing the long game.
Microsoft is just a beast. I've never appreciated it for how diverse it's businesses are until it went bonkers. I remember looking at this in maybe 2013 at $35 or so and thinking it would outperform an index but not by much. Totally wrong. They've got nearly a dozen billion dollar businesses and the scale to do whatever they want. Interestingly enough they also seem to escape any anti trust talk.
FB to me is a ticking timebomb. They have the users but growth just shifts from one(FB) to another(Instagram/Whatsapp) business and eventually needs to be more than just an ad company who does sketchy shit with your info. To me they resemble Google when all they had was search.
Yeah, I have no idea how the market values Amazon. And I don't see Netflix getting into adjacent verticals. But IMO the rest have that optionality (even if FB is a ticking time bomb regarding other aspects, their whole copy everything that Snapchat does and then bully the first mover out of their own market screams this same ability)
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It occurred to me that one reason the FAANG stocks (- Netflix, + Microsoft) seem to outperform, is that people always value them based on the market value of their current businesses. But because these companies encompass so many important verticals in tech, and that they have the best talent, and because there is so much business in tech that is up for grabs, they can much more easily start a new business in some promising vertical. That businesses never has to worry about funding and already has a natural user base of the parent's company. People don't really take into account this option value because it is hard to quantify, I think. It's easiest to see in Google, where people just add back moonshot expenses. But the investment in moonshots has already been paid back just by Deepmind's improvement in Google's search algorithms, not to mention Waymo is also probably a 10-100 bagger in terms of capital put in. You basically have a lot of Knightian uncertainty that is working in your favor. I don't know what to add to that, but those were my thoughts.
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This guy just doesn't learn...
"Einhorn: “For those that think the 2000 bubble was the big kahuna, consider Chewy, which went public in June 2019.""
https://seekingalpha.com/news/3481765-einhorn-picks-chemours-dillards-scientific-games-pan-chewy
Not everything is a carbon copy of some other event that occurred in the past couple decades. But I'm sure in 5 years, after his underperformance continues and assets dwindle down even further, we'll here about how he nailed it and see numerous victory laps when the market does finally correct and one of his highly touted 150bps short positions goes to 0...
I get that you think Einhorn is an idiot, a point that has been repeated ad infinitum on this board in recent years.
Do you have any actual thoughts on the point he's trying to make here? I thought the Pets.com-Chewy parallel was an interesting one. Of course Einhorn leaves out alot, like that Pets.com was nearly pre-revenue when it IPO'd. Chewy is an actual business. Pets.com was never much more than an idea.
More broadly, I think the profitability of selling dog food on the internet is still an open question. Zooplus in Europe looks like it operates around break even.
Even more broadly, I agree with Einhorn that many US companies seem priced for something close to perfection.
For what it's worth, when I was at UPS I remember whenever the Chewy's contract came up for bid UPS pursued it hard. Dog food deliveries were (for UPS) high margin. Dense heavy product packed in a box as small as possible that was pretty much a recurring monthly shipment. Pet food deliveries were always increasing yoy. Again, from Chewy's perspective can it be profitable? I don't know. All I can say is, the demand seems to be there for the product and delivery service. Customers had nothing but good things to say about it. Women loved not having to pick up 50lb bags at the grocery store. Cat litter is also another big one.
That's really interesting, thanks.
From Chewy's website FAQ: "Orders over $49 ship free! All other orders ship for a flat rate of $4.95." I wonder how much their average cost to ship a 50lb bag of dog food is?
IDK but Amazon will ship a bag costing $26.74 for free.
https://www.amazon.com/Purina-Chow-Complete-Food-Bonus/dp/B00PFXFH6O
Well if you do a quick shipping quote on UPS website for a 40lb bag (retail $27) 26x16x6 Standard Ground service in state = $28 shipping cost. I used a local Amazon warehouse to my houses address.
Things this doesn't address:
- Manufacturer -> Amazon cost
- 2 Day shipping
- Labor fee for packaging, handling in warehouse
I don't see how Amazon or any company can pay for the shipping costs on this. Dog food (according to the internet :P) is a low margin product from the manufacturer.
- The original manufacturer certainly isn't taking a loss on this
- UPS certainly isn't taking a loss (although they are only making pennies)
- Amazon almost certainly IS taking a loss and subsidizing the costs.
So Zooplus talks about this in their presentations. Basically its cheaper to pay shipping costs on pets products and store them in wharehouses located in the middle of nowhere, than pay for a store in some urban area and pay for employees to sell the product. IIRC, Amazon is losing money maybe even gross margin per sale, but, at scale, both Chewy and Amazon have a structural advantage over pet food stores as they are cheaper and more convinient. The million dollar question is how much money will they make when they are at scale and no longer undercutting competitors.
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Adding to MEGACPO.MX (Megacable)
Is there any plan to use more debt with the company? It looks cheap on an EV basis, but if they don't use any more debt, I don't see how that changes.
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https://www.nature.com/articles/d41586-019-02156-9 - AI Poker Bot Is First to Beat Professionals at Multiplayer Game
I fold for AI. 8)
I met the PI of the Carnagie Mellon team at a conference while he was discussing Libratus.
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I think people hoping for regime change have a unrealistic view of the Chinese populace. Many Han Chinese made a lot of money during the hyper growth years and basically few spend lots of time worried about living in a dictatorship. The main point is if everyone is making money, its not a huge deal that we dont get political expression. They do have a point. I mean think about it as a US citizen how much time is the average person spending in the political sphere. The question is if corruption and propaganda causes economic pain to the middle class. Tarrifs could play a role in that, but I'm skeptical how much damage it does to both US and China.
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We got an email from the CEO of the hospital system I work for, that they are implementing an AI program, to scan all charts and report if anyone is accessing medical records that they shouldn't. Right now they use a random audit system, but supposedly the AI will be monitoring every person on the system in real time.
This sounds like it doesn't need AI, but maybe I don't know. Shouldn't you just write a series of if-then statements to check if someone's account is accessing records they are they don't need? Sounds like they are using fancy words to scare people.
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Megacable MEGACPO.MX ( Mexican cable co.) and DWDP
would you elaborate on MEGACPO? going through CHTR and Liberty complex has me interested in cable cos esperially in emerging markets.
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anyone know any new ways to do this?
it still works occasionally but less often then I hope. I dont know why but on some sites like seeking alpha it works for some posts but not others. Havent found a pattern on those though.
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Boston, MA but in Ann Arbor, Michigan for school.
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I use slack occasionally, I just don't get what the runway is for monitization. Are the chatbots and whatever else is in the ecosystem or whatever you get for paying all that useful? I think Microsoft teams has the large enterprise sown up as they are growing faster than slack in terms of users (I don't know about revenue but users is what matters) as its integrated with Office 365 and every enterprise has that. Also Microsoft cloud is just more secure so effective TAM is much smaller than actual TAM when you take out the slice Microsoft has. Its made even smaller by the fact that Slack's free offering. I think net profit margins would be around 30-50% so somewhere around 10-20x revenue would be fair value. But I have no precise estimate so I wouldn't even consider it if it was above 8x (mostly because I'm not confident about net margins number).
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As has been discussed a million times, I think these things just become excuses for certain "types" of value investors. I know several value investors, just amongst my circle of friends and contacts who are not having these issues. Carl Icahn is a value guy, amongst many of his strategies, and he had the fore site to see Netflix was mispriced. I think Bill Ackman is an example of a value investor who finds a few value traps, but typically employs a value strategy; look at what he is doing this year. Value doesn't work to me is a bullshit excuse/ quasi mea culpa from people who just aren't able to generate alpha. Some self proclaimed value investors I know would rather generate crap returns and keep their "value investor badge" than be flexible and generate respectable returns. It's crazy.
I mean who says just because you buy a low PE name in a troubled industry you are entitled to outsized returns? More often than not, when I find people claiming value doesnt work, it is because they have in their head this mold of what "value investing" is and refuse to deviate from it. As such they continue to find themselves in the same type of investments and plagued by the same type of problems. The biggest value investment payoff I've seen in the past half decade was Straight Path. How many "traditional" value models did that fit into? Successful value investing is often a product of understanding the times. Buying yesterdays textbook "value" investments has never really worked, but this past cycle people seem to think it should be different.
+1
This post redeems you for everything in the politics thread...almost ;)
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in terms of AI used in equity investing, I am thinking that i) it is likely happening successfully now, as it seems Simon must be using some form of AI (or does Simon focus on other markets than equities?), and ii) AI pattern recognition is becoming profitably used in medical diagnostics (now tumor detection by AI is better than by a radiologist using eyes alone).
in a sense, the yes/no tumor detection decision is binary in the same sense as the gain/loss investment decision, but I wonder if the inputs are too multivariate in the investment context. whether with go or chess, there are finite rules, although near infinite permutations. I wonder if there are infinite rules (let alone permutations) in equity investing...
Simon focuses on currency markets I think. Most of his stuff is trend following I think and is definitely uses at least some AI since I know he hires top ML Phds from MIT and the like.
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also if you can't find value I would suggest looking in foreign (English speaking I mainly stick to for maintaining a baseline "edge") markets. South Africa is in a recession and I've seen small caps trade for 2 or 3 times earnings. Most small caps trade for 6-8 and most are still profitable (or should be in a non recession enviroment). Some things in Australia and New Zealand are interesting too.
OT: Happen to know any good South-African tracker? I've just come back from SA and must say I was not impressed much by what has been going on over there. Electricity outages (so called 'load shedding') were a daily occurence and water shortages are becoming more extreme. Not to mention the social issues. Things don't seem anywhere near to turning around imo.
Fido has trading in SA. I use that and dont know of trackers. Also you have to keep in mind SA GDP is like a fifth of developed countries, so turning around is different than your expectations. The recession is only -1% growth so it's actually a quite mild recession.
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also if you can't find value I would suggest looking in foreign (English speaking I mainly stick to for maintaining a baseline "edge") markets. South Africa is in a recession and I've seen small caps trade for 2 or 3 times earnings. Most small caps trade for 6-8 and most are still profitable (or should be in a non recession enviroment). Some things in Australia and New Zealand are interesting too.
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Appreciate the response. I think the Financial Times argued persuasively against some of the SaaS exuberance here - https://ftalphaville.ft.com/2019/03/27/1553662858000/The-cloud-software-kings-are-nuts--when-s-the-crash-/.
In other words, while stocks are rising employees get paid but when the tide turns where do they get the cash they need to run their business?
I'd also ask if profits attracting competition is basic capitalism, how long can we expect these higher margins to stay high? Hearing any sector has reached a constant superior plateau in anything financial makes me a little nervous. Call me a conventional value investing skeptic, I guess.
High-growth companies like paying staff in shares and share options. Not only because it aligns worker and shareholder interests, but also because it means not paying labour in precious cash.
But among the cloud kings, it's gone to pretty extreme levels. And in some cases, it distorts the free cash flow metric beyond all recognition.
Take $2.4bn Cloudera, a software platform for data engineering, as one example. In 2018, stock compensation accounted for 485 per cent of its free cash flow. If it paid workers in dollars, its free cash flow would have plummeted from $24m to -$93m.
It's not alone. Of the 50 businesses, 13 were free cash-flow positive, thanks solely to stock compensation. For a further 11, handing out pieces of paper to workers accounted for upwards of 50 per cent of the metric.
Investors don't seem to care that much, clearly. But it's worth highlighting that stock compensation carries a real cost to shareholders as it dilutes their future claims over the company's cash flow.
Some businesses, such as Microsoft, use share buybacks to offset dilution. But unlike the stock compensation, share repurchases run through the cash from financing statement, so there's no counterbalance in the free cash-flow figure. (A humble suggestion from Alphaville is that buybacks should be split out in the cash flow statement to reflect their purpose, but that's another matter.)
However, the practice also poses an existential risk to a company in the advent of a bear market. Workers, worried about a falling stock, may not be so willing to accept pieces of paper in lieu of hard cash -- exacerbating cash-flow issues during a downturn.
Yet software engineers still seem happy accepting funny money, and the cloud kings are willing to oblige. Indeed, in the past financial year, 32 of the group grew the dollar value of their stock compensation faster than revenues.
Within the cloud software space there are clearly excellent businesses. Adobe, for instance, in 2018 posted free cash flow margins of 41.7 per cent, while increasing revenues 23.7 per cent. Similarly Dell subsidiary VMware, worth just under of $77bn, last year had ebitda margins of 30.9 per cent, and grew its free cash flow 15.9 per cent.
So when the model really works. It really works. The question is, with valuations gazing out to an ever-receding horizon, will it work out for investors?
Yes, I think I saw this article too. I'm not saying SaaS companies are fairly valued, I'm just saying that part of the increase in P/S is due to increase in net margins which have been trending upward for the S&P500 for the last 10 or 20 years. That being said on the monopoly matter, there is evidence that companies are becoming more monopolistic over time. The increasing margins is one piece of evidence. The other is the rise of tech companies which have some upfront cost but most of there moat comes from intangibles like network effects, switching costs, high initial marketing spend, which didn't use to be the case (back in the manufacturing days, actual physical capital was the moat which meant companies were started a lot slower and also that most only earned their cost of capital). That being said I agree that companies are choosing ways to fleece investors like using stock compensation, or the Amazon argument ("we are in a land grab so pay no attention to our bottom line"). However, IMO there are good companies (at good valuations) that are mixed in with the bad in the tech bubble, its just not going to be as simple as P/E < 10.
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Surprisingly I agree, there is a lot of hope trading at ridiculous multiples. That being said, one reason P/S are higher now than ever before is because tech firms figured out the business model. SaaS companies have much higher margins (gross and net) then the traditional perpetual license model. Thus for the same growth rates you should expect higher P/S multiples.
Climate Change - convince me that this is really a big Net negative
in General Discussion
Posted
droughts:
https://www.sciencedirect.com/science/article/pii/S2214581818303136
Note I tried to use sources that were as good as possible but also as far removed from global warming as well so you are just getting the raw data. Obviously doughts are very much tied to increase in temperatures. From a couple minutes of searching best i could come up with.