KCLarkin
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Posts posted by KCLarkin
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4 hours ago, LearningMachine said:
Buffett said that in May 2019, when S&P 500 was 2932, and S&P 500 P/E was 21.15 (earnings yield of 4.7%), and 10 year treasury yield was 2.39%. In other words, S&P 500 earnings yield was almost double of 10 year treasury yield.
Today S&P 500 is 55% higher at 4536, and S&P 500 P/E is 24% higher at 26.26 (earnings yield of 3.8%), and 10 year treasury yield is 3.84%. In other words, S&P 500 yield is lower than 10 year treasury yield.
Correct. But Earnings Yield < treasury yield is common. The divergence over the last two decades is the anomaly.
So if the market crashes, it won’t be due to interest rates.
Edit to add: assuming rates don’t rise significantly from here.
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2 hours ago, LearningMachine said:
Corollary of #2 is that if government interest rates were to double from 3% to 6%, it would come close to halving the value of common stocks.
Any thoughts on when Mr. Market will realize this for S&P 500?
The question is whether 3% interest rates were ever priced into the S&P 500. Many investors made the assumption those rates were temporary and demanded higher "yields" for stocks.
“I think stocks are ridiculously cheap if you believe ... that 3% on the 30-year bonds makes sense,” Buffett says.
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SD, I thought you were Canadian?
As a Canadian, my impression is that if you are American, you will need to do some estate planning to deal with US Estate Taxes. And it will be stupid complicated. The U.S. tax system is bizarre and designed to reward "grey area" tax evasion. Or regulatory arbitrage, to put it more politely.
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2 minutes ago, Whensthepaintdry? said:
I’m following trend and sold meta in my non taxable and rh in my taxable. Very close to pressing the sell button for meta in my taxable.
All the value guys dumping makes me feel better about holding. Please let me know when you all are done, so I can start trimming…
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41 minutes ago, brobro777 said:
Boy this calling the top business is tough. Thank goodness I've taken enough ass kickings over the years to stay away from shorting!
Just looked at the start and OP was actually pretty good at calling the top. Question is whether he got long again. Calling the top is only half the battle. Getting back in at or near the bottom is even harder.
I have a simple rule: if Keynes couldn't time the market, I am not even going to try...
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12 hours ago, benchmark said:
How is SBC generally treated in the cash flow statement?
https://finance.yahoo.com/quote/MDB/cash-flow?p=MDB
For example, this shows an operating cashflow of $53.7 million, but has a negative net income from operation of -$54.2 million. The only reason that the cash flow is positive is that they took about $103million of SBC and counted that as operating cash flow?
I'm curious on if this is standard, and what other ways companies account for SBC?
This is an accounting flaw. Basically, the company is using the barter system to game FCF. There really should be two transactions. A hit to the OCF to pay employees. And a financing inflow for the share issuance.
A good example of why the "cash is a fact, earnings are fiction" truthers are wrong.
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'Rich' is probably at least $5M of liquid assets. But you aren't really rich until >$20M. The term millionaire from the robber baron days is more akin to billionaires today.
This is easy to see when you translate capital into income. $5M at 5% is 'only' $250k per year. That is a nice, upper middle income. But nothing extravagant. You are dentist rich.
$1M is only $50k per year. That is literally the poverty line, where I live.
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Spooky, the Nick Sleep letters are a must read. The concept of "scale economies shared" is powerful. This framework results in a different set of companies than you would find with Russo or Fundsmith.
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Thanks for the recommendation. I read the sample a few years ago and found it hard to read with numbers in the text ruining the flow.
Will give it another try.
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Nintendo reminds me more of Disney around the time of star wars.
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Change, Vinod is simply pointing out that stocks tend to have a growing "coupon". So comparing a static earnings yield to a bond (or inflation) isn't valid.
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In your simple example.
Earnings(t0) = 100
Cost of Living (t0) = 100
Earnings (t1) = 105
Cost of Living (t1) = 105
The earnings are "real" in that they keep up with inflation (in this example). There are complicated reasons why this isn't the real world experience (for example, inflation causes maintenance capex > depreciation).
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4 hours ago, Saluki said:
Wow, that was a painful read. Roku, Trupanion, Carvana, GoodRx. That portfolio looks like it was all offense and no defense. A lot newer managers have never lived through a bear market.
I follow Joe on Twitter and have a very favourable opinion of him.
But this is a good example of why "diversification" doesn't save you. He owned 7 companies, which is plenty enough to build a diversified portfolio. But they were all highly correlated. You can imagine similar results if he had a 20 or 30 company portfolio. I saw this in plenty of portfolios after Covid. If you have 20 tech stocks or 20 commodity stocks or 20 weed stocks or 20 financials or 20 tokens or or 20 growth stocks or 20 cigar butts, you aren't diversified.
But with a little imagination you can make a diversified portfolio with just 3 or 4 stocks.
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9 minutes ago, Xerxes said:
Good lord !
No one is interested in buying the dip on CharlesSchawb !
I am interested. But you have a two-faced monster. You have an industry heavy weight with enormous (and latent) earning power. You also have a bank with M2M negative tangible equity.
I'd lean towards buying. But you have to consider the risk of a dilutive equity raise or years of low earnings.
For me, the deciding factor is that management made a huge (and obvious!) mistake with their balance sheet. I'd rather invest alongside Thomas Peterffy.
But definitely tempted...
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This reminds me of a painful error. About 7 years ago, I researched on Copart. Didn't buy any, no idea why. Probably because I didn't have spare cash. Or I was waiting for a sell-off.
But during that research, I came across an article titled "The Most Exceptional Company in America -- But Why?"
Had someone read that article and simply purchased the statistically "Most Exceptional Company", they would have >30% CAGR over eight years.
Looking at the Copart chart, there might have been a few opportunities for an astute investor to get higher returns by trading around the position. But also plenty of opportunities to miss out on that compounding (as I did).
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Bottom line: there are plenty of ways to make money in this business. You have to pick the one that best suits your personality, even if sub-optimal.
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you should be able to get a wireless charger cheap. not sure why this isn't your preferred solution?
most likely your charging port needs to be cleaned or replaced and the update is just coincidental. I have a 10xs and the charging port is failing.
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My hitting percentage on trading around core positions is pretty good. But the opportunity cost of the ones that "got away" is so expensive that I can't recommend this strategy. In other words, it takes many, many singles to make up for the home runs you miss.
But as you note, it depends on your investing philosophy and psychology. The stocks you mention seem "tradeable" since they are unlikely to run away from you. And when they do run away (e.g. Disney in 2021), the signal for profit taking is pretty clear.
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In a market correction, High quality large caps are not usually relative bargains. But the value of a wish list is when there are idiosyncratic sell-offs. But then they are hard to buy since they are selling off for a reason.
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2 hours ago, changegonnacome said:
Interesting graph....from a quick eyeball, tell me if my eyeballs are seeing things.....would it be fair to say that drawdowns in the past having reached this -19% point .....materially ALL went on to smash the bear (20% line) by at least another 5% for a total peak to trough of 25%.......with the majority actually exhausting out in the high negative twenties level......but not an insignificant amount of this -19 sample set went on to pass the 30% drawdown mark modestly.....and only three biggies went & smashed 40%.
That about right?
I think your eyes are deceiving you. The barely Bears are smaller and shorter so not as visible on this chart. But very visible in table format. 2018 is a notable example.
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On 5/9/2022 at 3:57 PM, KCLarkin said:
SPY wants to go lower. Bears anchor on the big 50% drops, but they are extremely rare. Probably looking at either a 2018 style "barely bear". Or a more typical -30s drop. So a range of -20 to -35. But the actual bottom will be very brief and most people will miss it. So the buyable bottom is probably -18 to -25.
A few more days like this and it will be buy time. But most likely we rally tomorrow to fake everyone out.
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TLDR: Plenty of good values right now. But not many spectacular ones.
We've got our "barely bear" with a buyable bottom at -18%. Getting a nice relief rally now. Not sure if we'll get another big drop.
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SPY wants to go lower. Bears anchor on the big 50% drops, but they are extremely rare. Probably looking at either a 2018 style "barely bear". Or a more typical -30s drop. So a range of -20 to -35. But the actual bottom will be very brief and most people will miss it. So the buyable bottom is probably -18 to -25.
A few more days like this and it will be buy time. But most likely we rally tomorrow to fake everyone out.
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TLDR: Plenty of good values right now. But not many spectacular ones.
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2 hours ago, ValueArb said:
How much does a 10% increase in wages help when mortgage rates just doubled?
A lot? If rates double from 2.5% to 5%, how much does your mortgage payment increase? 30%?
If you have a 5 year fixed and your wages increase 5% per year, you would be paying less as a percentage of income at renewal. Even though rates doubled.
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On 5/3/2022 at 10:44 AM, Spekulatius said:
So, that means the average homeowner will be fine. The average homeowner in the US was fine too in 2009. The problem is what is the mortgage for those homeowners in Canada that bought in the last 5 years and can they pay their mortgage if it resets to current interest rates or let's say 6% or 7%.
Won't wage inflation offset the impact of higher rates?
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Does QT show a cost basis for these shares? Looks like they are valuing the shares at 0, which would explain the lack of T5. If you are sure the dividend isn't included in the first line, you can self-report without a T5. This will almost certainly NOT trigger an inquiry from the CRA. They often get miscellaneous income reported that is not on slips.
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1. Are you sure it isn't in "all other T5"? My T5 has the BAM regular div and and BAMR special listed together. But there is nothing that distinguishes the special from regular (other than dollar amount).
2. You can also check on CRA My Account to see what tax slips they have.
Haven't used Questrade, but find it hard they would miss this (and only this). More likely this is user error and you will end up reporting it twice.
Strategy Adaption & New Ideas
in General Discussion
Posted
I believe this is where the "coffee can" term originated:
http://csinvesting.org/wp-content/uploads/2016/12/the-coffee-can-portfolio.pdf