tede02

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.

Independence as well. In today's dollars, if I could accumulate a $10m personal portfolio, should easily be able to draw $250-500k in annual pre-tax income depending on portfolio composition. With no debt, that is a very comfortable life in the midwest.

Ditto to Stahleyp and greg. Bass is always interesting to listen to (and sounds super smart) but it seems like he was right "once in a row" on the housing downturn. I'm kind of surpised he even has outside money still considering most (maybe all) of his big calls since have not played out.

This guy's background as a professional sports bettor piqued my interest. I'm always intrigued by individuals who are playing the same "game" (both literally and metaphorically) and rise to the top as an extreme outlier. Somehow they see and or think about things differently. When he discusses his Jeopardy and sports betting strategy, I get a strong whiff of much of what I read in Nate Silver's book (The Signal & the Noise) and Ed Thorp's autobiography. In other words, Bayes theorem and Kelly forumla. I doubt this guy literally applies either but I'm always amazed how some people just naturally think and bet in this manner (and do so with great success).

It is amazing how much effort is spent trying to generate a 1-2% above the averages. Armies of reseachers are at work and yet few can do it. It's perplexing in some ways and understandable in others.

I really enjoyed both videos. Watched each multiple times. Over the last two years my mind has really opened up to investment approaches outside of value investing. It started by reading Ed Thorp's autobiography. Druckenmiller's approach is so different from bottoms-up fundamental analysis. It's incredibly intriguing to hear someone, who reportedly delivered 30% for multiple decades without a negative year, discuss their approach. The concerns regarding central bank tightening were striking. I worry that a lot of people who are piling into index strategies are doing so not realizing the surge in asset prices has largely been driven by zero interest rate policy and QE. What is going to happen as those policies reverse? Indexing may be good long term but it wouldn't surprise me in the least as the money flows peak into those strategies, the trend flips.

I'd have to agree. These guys are so rare. But they somehow have a knack for putting the puzzle together despite having the same information as everyone else. It's kind of amazing. In an ironic twist, what seems to mislead people (including myself) is some of these legends make their approach sound so simple. Buffett is the textbook example. His approach is simple, but not necessarily easily executed. It requires a lot of work, superior judgement and mastering all the psychological traps. It's really tough to put it all together. I sense he's been telling everyone to index in recent years because he's observed, despite all the wisdom he's delivered over the decades, few people really have what it takes to out-perform the market over time.

Last year's tax cuts increased corporate profits by about 21.5% (all things equal) with the stroke of a pen. It seems to me this would really distort Shiller's PE10. Stock prices in the US had looked expensive relative to history for quite some time and then over-night, things changed. Am I over-thinking this? The market obviously reprices the new earnings so perhaps it doesn't matter. I just wonder how different something like the PE10 would look if the denominator were replaced with a pre-tax figure or operating income.

This was excellent. It's always interesting hearing from guys like Druckenmiller. The way he's been successful is so different from a traditional value investing approach.

Identifying a handful of world class businesses isn't the problem. Getting them at an attractive price is.

Vinod had a great post. Here's just a few things that have resonated with me over in recent years. I like the way Howard Marks describes value investing, "Figure out what something is worth and buy it for less." Its kind of funny there has to be a debate over whether this kind of philosophy works. Someone asked Marks a question recently about value being dead. He basically said, "Look, when the economy is hot and there is confidence in the markets, that typically creates a favorable environment for stocks who's prices mostly depend on the future. These companies tend to trade for rich premiums. Naturally, this isn't where you find a lot of value investors. But all this stuff cycles through." Bill Nygren of the Oakmark Funds has also made the point that the distinction isn't value vs. growth. Its value vs. momentum. As Buffett and Munger have so effectively proven, high quality businesses are worth a lot more that crappy ones. A company can still be a bargain even if it doesn't trade at a low P/B or P/E ratio. Those are just a few things that have stuck with me.

I'm not loyal but its too big of a pain in the ass to change. I've been with a regional bank for 9 years for the simple reason that my wife convinced me to go with it when we got married. I was with US Bank before and wished I would have stayed there simply for convenience reasons (there are US Banks everywhere in the Minneapolis area). As an aside, I work with retail investors. I've witnessed quite a few that have moved their accounts out of Wells Fargo. That brand has sustained some massive damage from all the scandal.

I thought it was interesting when Buffett noted at the AGM that Ted and Todd have basically matched the S&P500 since inception. I continue to hear more and more managers talk about how much more competitive the investment game has become over recent decades. Munger has talked about it repeatedly. Bill Nygren had some interesting comments at a "Google Talks" event and another very successful fund manager I follow wrote about this in his 2017 annual letter. It really is remarkable how difficult it is to out-perform especially when you consider the virtually unlimited resources that some of these firms employ. It makes me think, what chance do I have? Then again, in a somewhat strange twist, it seems like the little guy probably does have some advantage comparied to the institutional constraints that exist with asset pools particularly above $1 billion. This subject has increasingly been on my mind.

I've been playing around with Bloomberg's free watchlist. Appears better than Google or Yahoo.

Buffett's public comments about stocks being "cheap" certainly contrast with his comments on the lack of attractive acquisition opportunities (because of high prices).

I watched this last night. It's absolutely priceless. A few thoughts come to mind. I just have to believe the investing environment is much tougher today because of competition. John Templeton talks of buying companies at 2, 3, or 4 times earnings. Those opportunities seem much, much more rare today. I presume it's because not only are there many more people looking for these opportunities, but all the damn algorithms. That being said, there is so much more noise in today's world with 24-7 news and the internet. Part of me thinks all the noise is to the advantage of those who can basically ignore it. The noise leads 99% of people astray. If you can focus on what actually matters and try to limit your mistakes, you have an advantage. Buffett has this magical way of cutting straight through the fog. The clarity in which he disccusses investing and what actually matters is simply second to none.

My two speculative oil/gas plays BXE and CHK got crushed 63% & 43% respectively. Expensive learning lesson.

Here's a personal antidote. A few years when I was 30 or 31, I severely injured by low back from intense exercise. I was a healthy guy, worked out regularly, etc. I stopped exercising for a few months trying to heal up. Meanwhile I was starting to develop sciatica in my left leg. I tried a few chiropropracters which helped a little. I also saw a physical therapist perhaps half a dozen times. She gave me some strechting and exercises to try. Finally I started feeling the pain and tension in my back subside. This was after about 6-8 months of nagging low back pain. I've always liked the P90X workouts (and the follow-up programs). For a few months I only did the light workouts that emphasized stretchcing such as Yoga and Dynamics in P90X3. Several months of this basically cured my low back injury. It was all about stretching the muscles and getting rid of the tenision. However, the most important thing I learned is what caused the injury to begin with was me jumping right into an intense workout as I had throughout my twenties. I've learned that it is absolutely a necessity that I warm up at this stage in my life to prevent injury. It has made a world of difference. I'll finish by noting that I've read more and more research suggesting what people natuarally want to do when they have a back injury, rest, is wrong. The best thing is to maintain movement. https://www.wsj.com/articles/new-help-for-back-pain-1448311243