spartansaver

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.

Ectm is a similar idea although it was much more interesting at 30 cents. Should distribute around 12 cents this year using the futures natural gas strip and a 50 cent hub discount. If natural gas prices go to 4 or more, it gets very levered to the upside. It’s my largest position, partly because of the run, and partly because at 30 cents I felt my downside was pretty limited. I would have posted sooner about this idea, but I was trying to buy as many shares as possible and it’s reasonably illiquid.

https://www.theinvestorspodcast.com/episodes/common-sense-investing-w-joel-greenblatt/ Does anyone know the company that Greenblatt is referring to at the 35:03 mark?

I'm not sure 50 years is a long enough time period on a macroeconomic level to draw too many conclusions about a single piece of the macro framework. Fiscal policy does not exist in a vacuum. An infinite number of macroeconomic combinations have played out over the past 50 years that contributed to our current situation. I'm a poor historian, so perhaps there are some cases in history where this lasted for several hundred years instead of 50, then touche.

I would say that bond investors are using close to the 10-year in computing intrinsic value.

Looks like it earned close to around 40% ROTIC for the few years leading up to it getting acquired. Earnings could get cut in half and it'd still be generation solid returns on net tangible assets.

"In 1999 and 2000, Buffett spoke of the market environment and the minimal returns investors could expect going forward." That was my exact takeaway from this year's letter. He was pretty clear on bond's being insanely overpriced, and you can deduce what you would like from that in relation to the level of the stock market. My issue was that we have a pandemic going on and I expected some commentary around that. The only commentary around that was that NFM was closed for six weeks.

Likewise, couldn't disagree more with the notion that Warren should focus his communications on excogitations about the future. Those who want discussions of Snowflake and explorations of the future development of Berkshire are in the wrong place. Read through the 50-plus letters and it is apparent what Warren tries to do/likes to do with these letters and with his Berkshire-specific communications in general. There are people who would like him to do quarterly conference calls, to discuss current investments with more depth (why did you investor in this?). I mean the most glaring omission would be the dearth of Apple discussion right? They have $120 billion in the company but he did not even review basic thoughts of the business, its moat, its value, etc. Essentially the only substantive discussion of Apple was an empirical description of its buybacks. So it may be reasonable to expect a discussion, at least a minimal one, of this $120 billion investment....BUT that is not the kind of thing he generally does. That is as a part of Berkshire as much as GEICO. Also the nature of annual report documents and letters is to review the past. That is their essential function - they are concerned with what has happened to get to this point. I do believe Warren is addressing the future though by addressing the past. These letters and Warren's Berkshire-specific communications shape and cement the culture and character that he intends to endure at Berkshire into the future. Reading through 50-plus years of Berkshire letters and the way he discusses the companies they've purchased, how those companies were built, the way the Buffett Partnership became Berkshire - and how that indelibly shaped the present, and he hopes future-Berkshire, is a powerful message to Greg, Ted, Todd and their successors. The communication has been so clear and the transmission of values through these communications so powerful, for instance, that if Greg immediately started quarterly conference calls after he takes over - then every single long-time Berkshire shareholder that I know of would revolt. That is because of Warren's clear communication in these letters. In 1999 and 2000, Buffett spoke of the market environment and the minimal returns investors could expect going forward. In 2008, Buffett discussed the financial crisis in the midst of it. Today we are in a pandemic and not a word is mentioned. I had expectations that Buffett would to some degree talk about the past year and his thoughts around it. I don't think it was that crazy of an expectation and I was let down. Perhaps I should have listened to Charlie and gone in with no expectations. I was disappointed and thought it was one of the most generic letters he's written.