spartansaver

Best of luck in all your other games this season.

I've been wondering why I have any cash relative to holding gold. For those of you that have a meaningful cash holding, why hold any USD relative to gold?

Should be a good one, you guys have beaten some good teams this year.

Nothing related to investing. Just happy to see my Spartans pull through. Go green!

I don't have a dime in crypto and no plans to. But I have wondered if this is a risk to currencies as we know them. With the printing presses running at full steam is the foolish person the one who still believes in a dollar/euro/etc.? When the tech bubble happened, it didn't mean that all the tech was bad. Same could hold that we are in a bubble, but not everything within the bubble is wrong.

Larry Summers recommended this. Essentially provides a different way of measuring slack in the labor market. Part of the analysis demonstrates that labor market tightness is similar to the 60s. I've been wondering what incentive Summers has stick his neck out about inflation. He's going against his party, and making bold statements which if you're wrong can make you look like an idiot. https://www.frbsf.org/economic-research/publications/economic-letter/2021/october/is-american-rescue-plan-taking-us-back-to-1960s/

The psychology of it all is scary. Doesn't fit well into a model. One day people may wake up and think a lot harder about how all of their bills are going up. Then reflexivity takes hold. Maybe it doesn't take hold, but in current times it seems like there is little upside to defending against deflation (and a lot of downside), and a lot up upside to defending against inflation (and not a lot of downside).

If this is the case, shouldn't the labor population's average age be dropping? No idea if this is the case or not, just a way you might be able to test this.

How long is your investing life?

Him and nearly every other investment manager. These people don't get rich by being good investors. They get rich by being salesman attached to a product that is able to scale rapidly with barely any incremental costs. You get one pitch right and sell how smart you are, you can make way more in sales than you'll ever make through compounding good investments.

I thought it was a great letter, but I thought the conclusion was very odd. Marks laid out the two sides, one with little reward and the other will possibly large consequences. He then said staying fully invested or along those lines was reasonable, which to me was odd (I think he's been spending too much time with his Growth At Any Price son). If I was making a market bet which I'm not (although I do hold a fair amount of cash - I know I know cash is trash), I'd wager on conservatism. My reason for holding cash is that I don't have many good ideas. I tried buying puts a few times and am done with that game (I got lucky in March of last year and thought I was good at buying puts).

Interview I haven't seen

I think my conclusion is similar to yours. Graham and Marks did a nice job of summarizing it with Mr. Market and the pendulum. Emotions swing from pessimistic to optimistic, occasionally reaching extremes. Everything in between is justified by a story (low interest rates, revolutionary technologies, enormous growth, etc.). The story might have some truth to it, but there's some truth to every story.

Funny you post this, I started rereading MoS the other day. When you're inside a system it's hard to get a view from the outside. Rereading MoS is allowing me to see current times from an outside perspective. (hard to explain) He's such a great thinker and a very modest investor. It's a rare combination.

This reminded me of that old quote. https://seekingalpha.com/news/3709939-kyle-bass-asset-price-inflation-is-here-to-stay

I'm only in my early 30s so I'm hoping to hear from some of the people that were investing amidst the Dotcom Bubble. How different do current times feel from Dotcom? How does it feel the same?

Imagine a world with 10% inflation of the worlds largest economy for a meaningful amount of time when rates are at 0. Does the world just easily accept that this is happening? Do bondholders happily refinance at low rates or do they start demanding a return? What happens to companies that can't afford higher interest burdens? How easy will it be for customers of goods to purchase items that are increasing faster than their wages? Imagine the pushback from employees as they continue to see corporations profits grow faster than their income. I have no clue if 10% inflation surprisingly happens, but if it were to persist, I doubt the world looks pretty for a while.

Thank you for explaining. It will take time to digest. Whenever I read your posts it's a good reminder of how little I know, and how far outside my circle the macro world is.

Thanks for giving us an economics lesson Wabuffo. Could you explain why you think higher taxes are inflationary?

Are increasing marginal production costs causing gold to go up or is the higher price of gold causing higher cost production to come online? I would speculate that it is the latter.

That's a similar conclusion to Damadoran. When rates are high, inflation expectations are high. Rates are low, inflation expectations are low. Inflation goes higher than rates, real negative rates happen (inflation upside surprise - good for gold). Inflation ends up lower than rates, positive rates happen (inflation downside surprise - bad for gold).

Could you point towards data around it being a poor hedge? I don’t usually watch much Damadoran as he’s a bit too theoretical for me, but I thought this was a decent study on asset classes relative to inflation.

Buy gold (or gold options), then you aren't subject to the Fed distorting your price. Even if you're right about a bunch of stuff, bonds can still get manipulated.

You've decided that you think a company, options, real estate, etc. are worth investing in. What are some heuristics that you use in different situations to figure out how to go about making your purchase (i.e. all at once, average in, etc.)?

Yes, it was a fun and brisk read. Good stories on Nick Sleep and Greenblatt made the book worth it. Not much of a time investment and gets the investment juices going.