tede02

Strongly agree. 20,000-60,000 die in the US every flu season. 61 deaths so far from covid-19 (25 from a single life care facility in wash). and we are shutting down the nation. ignorance is bliss. The problem with this is the consensus is the disease is many multiples more deadly than the seasonal flu. If you're a healthy adult under 50, perhaps your risk of death is very low. But if you catch the disease and spread it, others are put at risk. If this thing infects nursing homes around the country, the toll could be terrible. I keep hearing people make comments to the effect of, "This is nothing more than the common cold so who cares." I'm worried that the situation is going to be way worse in the western world because people aren't taking it seriously. In Asia, they had the SARS situation which apparently was quite bad from a human and economic perspective. Countries like Taiwan and Singapore learned those lessons and, from what read, have aggressively moved to mitigate this thing and it's working.

On the fiscal side, it seems like they need to figure out how to put cash directly into people's pockets. An infrastructure deal isn't going to do anything in this situation. If people can't go to work and pay their bills, that is going to cause a financial crisis. I looked up how many people in the US are 18+. The number is 210 million. Thought experiment, give every American adult $1,000 per month for 3-months to offset fixed expenses. Price-tag, $210 billion per month, or $630 billion total. Given the circumstances, that dollar figure seems very reasonable. The stimulus package passed in 2009 was around $800 billion. P.S. No, I'm not advocating Andrew Yang's UBI.

Probability of recession has to be near 100% right now. Severity of it is probably the real question. One area of weakness I'll be watching for is the highly indebted companies that need to refi debt. Maybe this is the shock that starts the unwind of the huge corporate debt buildup that so many have been warning about for several years.

Home with one of my kids today because daycare lady is on vacation. Decided to go shopping to stock on some things after listing to Joe Rogan podcast with Michael Osterholm. I didn't go crazy but just bought some extra stuff that we'll use up either way. You could feel a mild sense of fear in the two stores I stopped at. Some shelves were in-fact empty (toilet paper and pasta to name a few). The cashier I spoke with said it has been crazy for a few days. Sales have spiked up to holiday levels. All these grocery stores and discounters will probably pay a price within 6-12 months after people have hoarded and there becomes a huge glut of inventory sitting in people's homes. Pretty amazing times.

On the consumer side, my observation is mortgage lending is no where close to being excessive. But I've read a lot about auto lending getting shaky. The credit card issuers have also been more aggressive in recent years. I distinctly remember, post financial crisis, I got literally zero credit card offers in the mail for a number of years. Now they show up every week.

Looks like they are down again. Of-course, on a day of high volatility.

Thanks. Been sitting on hold trying to figure out what was going on. The minute I want to go all in shorting Tesla, the website crashes...LOL.

I was just looking at a company that has usecured bonds, maturing in 2021, trading at $0.55. Although I know hardly anything about energy, the deep discount and the fact that an investor I highly respect holds the bonds made me look into it. The company is generating free cash flow and has been gradually paying down its highly leverage balance sheet the last few years. Upon closer look, as much as 60% of the long-term debt comes due in 2021. Obviously the company will have to refinance a huge amount of debt for the bonds, which only represent 2% of the debt, to be paid at par. I don't think I'll touch this because I just don't really understand all the dynamics. But I may follow it to conclusion out of curiosity. At the end of the day, it seems like the question is how likely is it the company is able to refinance. The energy patch in general confuses me. I'm generalizing, but most of the companies generate no profit or cash-flow for shareholders. All the capital is just plowed back into the ground. From a stockholder's perspective, it's like, what's the point in expending all this energy (no pun intended), on companies that make no money. Is Fed policy (low rates) the driving reason why banks and the bond market continue to lend?

I was thinking about this further this evening, specifically the massive US outperformance over the last 10 years. One huge force driving the domestic markets has been the collection of tech/software businesses which have collectively created literally trillions in market value. It's extraordinary to think about. Mark Andreeson famously wrote a piece in the WSJ (2011 I believe) which said something like "software is eating everything." I actually read the article the day it was published in the print edition of the WSJ. Unfortunately I wasn't smart enough to see or understand the future as he was describing it. Would be interesting to see a study on how much impact, say, the 10 or 20 biggest tech names have contributed to the market surge. Obviously the recovery of the big banks has been helpful too. I keep thinking if you don't have these tail winds, and others like falling interest rates & QE, the next 10 years are going to be a much different story.

The story is really a lot worse. The Stoxx 600 index has gone no-where since the year 2000. Peaked around 400 in March of 2000. Currently the index sits around 416. Additionally, the front page of the B section in today's WSJ shows China's Shanghai has gone nowhere in ten years. In-fact, -6.9%. I keep wondering if we're due for a period of stagnation in the US.

Washington: A Life by Ron Chernow. Longest book I've read at 800+ pages of very dense reading, but it was amazing. The book persuaded me that George Washington may be the single most important person in American history.

I worry that a warming planet may very well exacerbate these very problems. The challenge, admittedly, is we just don't know. My personal view is, why would we risk finding out by doing absolutely nothing.

Gundlach's presentations are always very interesting and extremely detailed. Plus, I get a kick out of his demeanor/attitude. Here's a few funny stories I came across: https://www.businessinsider.com/jeff-gundlach-mel-gibson-in-whole-foods-2013-5 https://www.bloomberg.com/opinion/articles/2019-02-26/howard-marks-adds-to-legend-of-jeffrey-gundlach

Yes. Since most of us probably have no clue what we are talking about on this subject, it would seem to have more in common with the Politics section. ;D LOL. Probably spot on. One analogy that always struck me goes as follows. No one can prove that taking steriods resulted in Barry Bonds or Mark McGuire hitting any specific home run. But it's obvious to anyone that steriods greatly contributed to the over all increase in volume. The same concept is true for climate change. It's a trap to single out any one storm or extreme season. But is it really a leap to conclude that putting millions of pounds of heat trapping gas into the atmosphere every hour, 365 days per year, is going to have some meaningful consequences? My dad read a book a few years ago on dark money in the political system. He said one part of the book talked about how a lot of people who worked for the tobacco industry to cast doubt on the addictiveness and health risks before the big 1990s settlements quickly found new work in the energy sector muddying the waters on climate science. It's quite evident that these efforts have been effective. I personally worry about this issue. The risks are totally unknown. In some ways it's shocking to see how dismissive a significant segment of the population is. In other ways it's not surprising at all. I see people cover their ears and hum regularly when facing unpleasant news. All that said, I'm actually rather optimistic that we will solve this challenge. I find innovation in the energy sector very interesting and read about it regularly. I'm no expert, but from what I gather, the technical solutions actually already exist. The problem is the world economy was built around fossil fuels. So you have the challenge of converting existing infrastructure and systems and changing established habits. And of course you have all these entrenched interests, just like in healthcare, that will fight like hell to protect their economic interests.

Am I missing something? Relatively costless policy changes???? Aren't the proposals massively costly? In the trillions in terms of the US economy. The real question is what are the costs of doing nothing? If sea levels were to rise 10-20 feet, CAT 5 hurricanes become the norm, more extreme droughts, etc., what is the price tag of that? Additionally, if you read about mass extinctions throughout world history, it's commonly theorized that sudden climate change (warming and cooling) has been a major factor. https://en.wikipedia.org/wiki/Extinction_event. This isn't a 50-100 year problem (more like 50-100 million yrs), but illustrative of the potential scope.

One REIT that puts out a ton of financial detail and commentary in the 10k is Public Storage (PSA). You can tell the CEO is a Buffett fan. You can learn a lot about real estate just reading the annual letter. Separately, I found a cheat sheet online that is handy for REIT terminology (page two for REITs). Lists the most common key metrics such as FFO and NOI, definition and strengths/weakneses. There is a fair amount of lingo to learn when evaluating REITs. Cash_flow_metric_cheat_sheet.pdf

This is probably spot on. Also, maybe you get another Ross Perot type who brings a megaphone to the issue.

LOL. That should have been one of my choices.

I think about this a lot because the deficit is expanding so rapidly during a "good" economy. If growth softens, or a recession occurs, the deficit and debt are going to explode just as we're on the door steps of the baby boom putting huge pressures on entitlements. It's amazing that basically no one in Washington is talking about it.

I appreciate the input. I was looking further at the broker-check disclosures. The aggregate settlements paid out on the 25 disputes is around $2 million! How does this person not banned from the financial services industry. I think I'll ultimately bring the issue up with my client genuinely out of concern.

I’ve found myself in an tough spot. Three years ago, one of my clients disclosed to me that he put a material amount of his investable assets into an annuity contract. This came as a surprise to me because I’ve worked with this guy for years, have a good relationship, etc. The transaction didn’t have any impact on my working relationship with the client and it may work out just fine for him as he transitions into retirement in 5-10 years. However, from day one I was concerned that he got pitched something from a salesman that didn’t have his best interests in mind. This week, I decided to broker check the guy who sold him this contact. To my astonishment, the guy has TWENTY FIVE complaints/disputes/misconduct allegations ON RECORD that have resulted in hundreds of thousands of $$$ in refunds and settlements over the last eight years. I feel like I’m in a tough spot because I manage money for the client. Do I say, “Hey, you should probably be aware of this,” or just keep my mouth shut? I’m just concerned that coming from me, the client may feel like I’m just bashing this other guy, and the client’s decision to buy the contract in the first place (and somehow the whole thing backfires). What would you do?

In the US there has been an apartment boom. It looks like it is just going to continue because there is a lack of "affordable" housing being built. I put affordable in quotes because it differs so much across the country. My understanding is margins are much lower in cheaper housing so there isn't as much incentive to be in that space. Lack of supply means upward price pressure. I keep reading that fewer and fewer families can afford housing which is one of the main drivers for the apartment boom. It looks like there is no end in sight for the rental expansion especially when you look at some of the record consumer debt figures (auto, credit card and student loan). It seems like there are always a few people who see these trends coming. In 2011, I read an article in Fortune that struck me. Basically it was about a guy who ran a real estate data firm called Metrostudy. He correctly identified what was to become a national housing shortage eight years ago. The article struck me enough that I saved it in a word doc which I'll attach here. Fortune_Its_Time_to_Buy_Again_04.2011.docx

This really strikes me because it was so off the mark. It's so hard to predict these things. I personally worry about the next 10-years. With interest rates so low already, and the budget deficit in the US exploding, it seems like policy makers will have little ammunition to combat any broad economic weakness.

Anyone else find it interesting to see these mamouth companies, the darlings of the past 10-years, reach the point where public sentiment shifts against them? Just this week, Amazon is in the news as workers protest Prime Day, Google is in the news after Peter Thiel questions the company's involvement with the Chinese government, and Facebook continues to get slammed for privacy and most recently their crypto launch. It's intriguing to watch these companies transition to mature businesses and the challenges associated with it. Will rapid revenue growth continue? Have these companies become the new blue chips? Will they eventually break up? The next decade will surely be quite different from the last. What's your prediction?

I saw that over the weekend. I found the story incredibly interesting. The research cited in the article estimating that the US could reduce carbon emissions by 80% by the year 2030 was shocking. It actually gives me optimism that the technical solutions for addressing the concerns of carbon emissions exist. What doesn't exist is overwhelming public support for making the transition to renewables. The story of the entrenched interests (Arkansas utility) stopping the new transmission lines demonstrates the challenges the US faces in doing anything big. I plan to read more about how Eisenhower was able to get the freeway system built. There must have been a lot of eminment domain instances.