nafregnum

Here are the last few paragraphs from the piece Bordoff co-authored for The Economist. It seems reasonable that they suggest low interest loans or some other mechanism for government to encourage the building of new fossil fuel energy assets which may not reach ROI before they're decommissioned (like refineries, terminals) ...

This scared the pants off me, so I went to twitter to see if anyone else said/heard this. Bordoff offers clarification here, saying he's never called for nationalization of the companies. I'm off to read the Economist article he refers to ...

(Fun fact I learned yesterday) Greed springs eternal! There was no crypto back then, but they did have the original Charles Ponzi. "Under the heading of his company, Securities Exchange Company, he promised returns of 50% in 45 days or 100% in 90 days." https://www.investopedia.com/terms/p/ponzischeme.asp#:~:text=Origins of the Ponzi Scheme,Howe in the United States. (Learned it from a great book called "One Summer" about all the amazing things that happened in the summer of 1927. Ponzi was mentioned, even though his scheme happened in 1919 and 1920. Bill Bryson is a fantastic author, for anyone who hasn't heard of him.)

Everything in this space is up 30%+ today on news of a Federal pardon of all simple possession convictions.

Thanks for the link. Good read. In 2015 I went to the 50 year shareholder meeting in Omaha and made the short drive up to his modest house to take a picture there with my wife. The humility of acknowledging that he won the ovarian lottery, rather than diminishing his achievements, only makes him a greater human in my eyes. I learned from him to approach my own successes in a similar way, attributing much to good fortune. When I was a teen, I memorized a bunch of old proverbs, like, "A man all wrapped up in himself makes a small package" and "A pig with a golden collar is still a pig" ... if I could wish for an investing superpower, it would be the ability to measure the humility and honesty of executive teams. I've lost too much money buying shares of companies that were cheap but turned out to be run by Gucci little piggies.

+1 to Shane Parrish and his "Knowledge Project" podcast, as well as his "The Great Mental Models" books. A real classic, something I consider to be a class in "defense against the dark arts" for decision making, is "Influence, the Psychology of Persuasion" by Robert Cialdini. https://smile.amazon.com/Influence-Psychology-Persuasion-New-Expanded/dp/0063138808 One more book I really enjoyed is "How We Decide" by Jonah Lehrer. It apparently went out of print and is expensive now, but you can probably find it at libraries. Each chapter started with a very memorable story to introduce the concept. https://smile.amazon.com/How-We-Decide-Jonah-Lehrer/dp/0618620117

I'm interested in what you're saying, @changegonnacome, so for curiosity sake, I made a watchlist out of the last five or six pages of "Investment Ideas" and then sorted the list for "Best FCF Yield" and "Worst FCF Yield" in the screenshots attached. Also attached, the csv file which can easily be imported into a Google Sheet if anyone wanted to examine the whole list or sort on a variety of different rows... I'm not familiar with all of the threads, but Do the "best" and "worst" seem like the most and least likely to see price improvement in the next 36 months? Watchlist CoBF FCF Yield List 46 rows with 1 active filter - Valuation.csv

I really laughed when I read this. Then I said to myself "I wonder if Gregmal made other funny jokes this morning, so I clicked on the profile pic, and noticed it said "10,004 posts" ... so I want to just say "Happy 10,000th yesterday!" I appreciate all the thoughts and ideas, the serious and the silly. Your contributions and contrarian takes are valuable and keep the conversation rolling along and lively. Here's to your health, Gregmal, and to many more investing successes and funny hot takes.

The headline thumbnail is terrible -- I just found it fun to listen to him talking big picture for a few minutes there. Especially liked the bit about how Envy has made all of us humans unhappy even though we're about 600% more well off than 100 or 200 years ago... Don't know of any other 98 year old with this much clarity remaining. Sure will be fun if he makes it past 100.

Title: "EU seeks windfall tax for electricity groups well below market rate" https://www.ft.com/content/ab469e2d-8e87-44ee-855b-f46b5b2dd17e "Wholesale electricity prices have rocketed because they are pegged to the price of gas, whether or not the power is produced from gas or other sources. Gas prices are roughly 10 times higher than they have been compared with averages over the past decade as a result of Russia’s supply cuts in response to western support for Ukraine." What I found interesting is this: They're talking about charging windfall tax on power sources like wind and solar since their "input costs" have not gone up like gas, yet it is being priced as if gas was one of their inputs. When you consider that there were likely big government handouts to get those renewables projects up and running, I personally think this seems like a reasonable temporary tax on the electricity being generated by the non-gas non-coal power sources. Previously, I worried a windfall tax in the EU would punish my investments like Vermillion (VET) but the current discussion seems to be different over there than when "windfall tax" was thrown about in the US and Canada recently.

Economist's podcast -- Money Talks: Running on empty https://overcast.fm/+JXrTojdeI High electricity bills (4x, 5x or more!) can only get people to cut back usage so far, so the opinion expressed in the episode is that government intervention of some kind will be necessary to deal with this. Scottish Power president: "A price freeze and a price intervention is not an end solution. The purpose of it is to help people directly, absolutely, but what you need to do is have a whole other series of measures for the medium to long term that resolve the issue... Disaggregating the cost of gas and electricity, so that you get cheap renewable power through. Price intervention is not an end solution, it's a short term mechanism to buy you time to fix the problem." One conclusion quote from somebody: "The combination of having retail prices reflect the scarcity, and being very generous, particularly at the bottom of the income distribution with a cash handout, I think is the best solution." It does seem like the entirety of electricity generation should not be priced according to the highest marginal producer. If 80% of Scottish electricity comes from renewables + nuclear, then there ought to be a way to reflect that in consumer bills, like charging the first 600 kWh used at the previous power rates. 4x or 5x higher energy bills might be a problem big enough that they'll need to think differently to solve this, because it seems like Putin is exploiting a built-in weakness in the way the electricity market is currently configured.

The expectations are way off, partly because of a side effect of social media. This is my favorite online essay about that. https://waitbutwhy.com/2013/09/why-generation-y-yuppies-are-unhappy.html I love the formula given: Happiness = Reality - Expectations

I had to check Google to see, and found this link that says if the big battery really fails then the whole car is dead in the water: https://carbrain.com/blog/what-can-i-do-if-my-hybrid-battery-dies

https://www.reddit.com/r/rav4prime/comments/so3t6h/in_case_anyone_was_curious_as_to_how_much_the/ I remember looking it up and thinking about it some - it looks like the battery costs $10k at present, but it does come with a 10 yr 150k mile warranty for the battery specifically ... https://www.toyota.com/electrified/warranty/ I think I'd most likely swap to a newer PHEV model before 10 years are up.

I was curious yesterday, so I ran some basic calculations on how much wind or solar capacity it would take if all of the miles driven in California were EV miles instead of gasoline miles. https://www.energy.ca.gov/data-reports/energy-almanac/california-electricity-data/2021-total-system-electric-generation In 2021: 340 billion miles driven 13.8 billion gallons of gasoline sold. (implying 24.6 mpg average fuel efficiency) If at the current $5.25/gallon that'd be $72 billion in gasoline sales. 260 Terawatt hours of electric power consumed in the year (33 Terawatt hours came from in-state solar) (15 Twh from in-state wind) Electricity costs $0.26 per Kwh in California (expensive compared to my state!) RAV4 Prime car has 18.1 Kwh battery times 0.26 = $4.706 is cost to charge about 40 miles of range If all the cars there were RAV4 Primes, and could get 40 miles on a charge of 18.1 kwh then in order to drive 340 billion miles it would take 8.5 billion charges, times 4.706 which would cost 40 billion dollars (less than 72.45 billion spent on gas) ... 8.5 billion charges times 18.1 kwh per charge would require 8,500,000,000 * 18.1 * 1,000 or 153,850,000,000,000wh which is 153 Twh I used the RAV4 Prime as the hypothetical every-car, it gets 2.8 miles per Kwh of battery charge (0.36 Kwh per mile) -- not super efficient - the best are doing 0.25 Kwh per mile or 4 miles per Kilowatt hour, so these numbers are probably a little on the high side. So it would take 153 Terawatt hours of power to charge EV cars to drive 340 billion miles in a year. California currently uses 260 Twh in a year (of course, some of that is for battery charging of whatever EVs and PHEVs are already in state) SOLAR In California in 2021, the installed 15.2 Gw of solar capacity made 33.26 Twh in the year. So, you can take the Gigawatt capacity of the solar farms and just about double it and change Giga to Terawatt hours (2,188x) This means that if we want to make 153 Twh we divide 153 by 2.188 and get 69.9 Gw of needed capacity. Call it 70. [ land space requirements ] 70 gigawatts is 70,000 megawatts of capacity. Each megawatt of installed solar takes about 2.5 acres. 175,000 acres is just 273 square miles. The Mojave desert has 47,877 mi² in it, and about half of it is in California, so 273 might fit in there somewhere without too many objections. Using an estimated cost of 890k per megawatt of solar capacity buildout... The state would need to pay 70 * 0.89 billion dollars = $62.3b to build 70 Gw of solar capacity. WIND https://weatherguardwind.com/how-much-does-wind-turbine-cost-worth-it/ Looks like it costs 1.3 million per megawatt of capacity, so to make a gigawatt of capacity it'd cost 1.3 billion in investment... California has 5.7 Gw of built-out wind capacity, which generated 15.1 Twh in 2021. At that ratio, the state would need to build 58.5 gigawatts of wind capacity to generate 153 terawatt hours in a year. Building that much would cost around $76 billion (58.5 * 1.3) https://www.aeraenergy.com/8-facts-you-might-not-know-about-oil-and-gas-in-californias-economy/ California produces about 400k barrels of oil per day, and uses 1.8m barrels. So if you said that the locally produced 400k per day would still be needed for jets and other uses, you might be able to free up 1.4m barrels of demand on the ~99m barrels of global oil demand. Soapbox moment: What my estimation game made me think about is this... (1) Unfortunately for the global emissions problem, the barrels of oil that are not demanded by California would likely flow to many other places where emissions standards and fuel efficiency standards are crap, meaning that those 1.4m barrels/day would cause even more emissions. (2) Since we don't have unlimited yearly production of lithium for batteries, the transition to EV cars is a little like the trolley problem where 1 full EV car is on the tracks and 3 or 4 plug-in hybrid cars are on the other path. If we want to maximize EV miles driven and minimize gasoline miles driven, we'd have to sacrifice the full EVs for now so that WAY MORE plug-in hybrids can be produced. But so many of us are so individualistic, we put cheesy virtue signaling vanity plates like "NOPLANETB" or "LOL OIL" on our full EVs and think "I'm saving the planet!" while doing slightly less than we imagine. https://www.notateslaapp.com/tesla-reference/774/tesla-vanity-license-plates-clever-ideas-for-a-custom-plate (3) Building enough solar and/or wind capacity to power all cars in California is a lot cheaper than I guessed it would be. It's about the same as all the gasoline sold in a year. (4) California is likely to be unusually blessed with Solar and Wind capacity compared to other regions (coastal is good for wind, plus a lot of desert for solar) so what works there likely wouldn't work as well for other states.

I didn't get it new, and I didn't get the $7,500 rebate - it's a 2021 that was manufactured in November and delivered to a dealership in Alabama, purchased by a guy in Dallas who already had one RAV4 Prime -- he had gotten himself on three or four different waiting lists with refundable $500 deposits at whatever nearby dealerships he could find which weren't charging above MSRP. When I was trying at first, I called all kinds of dealerships in California, Oregon, Washington and Colorado and all of them either (1) charged a dealer markup of 5-10k over MSRP with short-ish waiting lists, or (2) charged normal MSRP and had huge 12+ month waiting lists or (3) some dealerships said they only sell their Primes to locals (one in Oregon said within 25 miles of their address) ... I was too proud to put myself on any of the (1) lists and all of the (2) lists were so long they weren't accepting. One dealership in San Diego told me they had one on the lot that their waiting list people had passed up, but then revealed that they charge a 10k dealer markup on top of MSRP. Reddit has a r/rav4prime subreddit and I was reading posts for tips and tricks and just saw a guy there who posted that he had an XSE fully loaded that he'd be willing to sell for what he owed on it. I messaged him and he still had it -- he could've sold it for $5k over if he had put it in local classified ads, in fact a guy he met at the grocery parking lot offered to buy it off him a few days before the day of the sale. He sent some pictures of it and of the dealer paperwork to show how much they had charged him for it, right around $55k (this included his taxes and a few non-negotiable dealer add-ons that the dealership said they always put on, which amounted to like $2k more -- so technically I did pay over MSRP for it -- it had 3,800 miles on it ... I did a bunch of online reading to make sure I knew exactly how the process would work for buying a car from a guy out of state... then got a cheap Southwest flight out to Dallas and we met up. The guy had LOTS of solar capacity on his back roof and in his back yard. He said you can get 2 of the $7,500 tax credits per year -- this year he's still on waiting lists at a couple of Texas dealerships but he told me that Toyota had only delivered like 2 RAV4 Primes to all of Texas for the month of May, and they were shifting deliveries to places like Europe where they could still take advantage of tax incentives. That's scuttlebutt I don't know how to confirm for sure. He's on waiting lists to get the new Subaru Solterra, which will have the $7,500 tax credit now that Toyota's tax credits are phasing out due to having hit their 200k vehicles limit (I think it happened this summer, but haven't verified since reading about that in June) ... the Solterra will have plenty of tax credit available -- he mentioned Subaru is 20% owned by Toyota. I really only wanted to get a PHEV since I'd like to not worry about charging during potential road trips. All of the Primes are being manufactured in Japan, and allocations just trickle in slow -- I wish you could just put an order in for exactly what you want and then just make a down payment and wait for it, like you can do with some other car brands. The best advice I found was on that r/rav4prime subreddit ... there might be an updated advice post -- there was someone maintaining a spreadsheet of allocations -- the link to it is in this post: https://www.reddit.com/r/rav4prime/comments/rwhvzg/2022_rav4_prime_allocation_spreadsheet/ I gave up the idea that I'd be able to get the $7,500 tax credit in time, but I might have just been too impatient - there might still be a half credit of $3,750 or so for another 6 months, so getting on a few different waiting lists might still work. Good luck!

I bought a RAV4 Prime back in May and love it! Love the electric acceleration -- I'm calling it my mid-life crisis car. I didn't want a Tesla because in my state there are only 3 places you can get them repaired. We pull out the RAV4 for all our errands, and still haven't gone through a full tank of gas yet (4 months on 1 tank!) Totally agree with @CorpRaider that it'd be more rational to make 3x to 5x more PHEVs than Teslas since it would result in a more effective reduction of emissions without spiking lithium demand so much.

https://www.mystateline.com/news/national/california-asks-residents-not-to-charge-electric-vehicles-days-after-announcing-gas-car-ban/ Makes me wonder if any agencies have done the necessary modeling to figure out how much more green energy a state like California would need if all its cars were electric today. Instead of mandating "All cars EV by 2035" I wish they'd say "All cars Hybrid by 202X" and "All cars plug-in Hybrid with at least 35 miles of EV capacity by 202X+4" ...

Thanks a lot for the extra info! I see what you mean now about how nobody would consider a fall to $100 likely if it already fell to $140 over the course of a number of months. Big sudden swings in price are where the options seem to pay out the best.

It's a compelling thesis -- I ended up buying just 1 put so I can watch it swing around without feeling euphoria/dread and get a handle on it. What I really can't figure out is "If X happens, how will the put options respond" for various values of X. Just trying to understand the expected outcomes and how the option would realistically behave. Example: I bought some OBE Jan'23 12.50 strike calls for 0.60 a few weeks ago, just to watch them. They were up 40% a couple days ago when OBE jumped 10%, and I could've sold them for an 80% overall gain that day. Since then they're back down to $0.95 for an overall gain of around 56% ... seems like something I just need to pick a big up day to sell.

Thanks, so are you saying, "No chance" meaning the price of the put wouldn't swing that much on such a small decline as $169->$140? And by "Especially if it takes two quarters of time" are you saying that the option's value would improve the best if the price decline occurred really fast like a 5% drop in a day kind of thing? I bought myself just 1 put option ($100 strike Mar'23) today just to watch it swing around and try to learn how it behaves over time.

The thesis is interesting. I've never used puts before, does this sound reasonable below? Looking at the March and April '23 puts at the $100 strike which look to be going for about $1 right now. If AAPL disappoints in the next couple quarters and drops from today's $169 down to say $140 by January '23 then it seems like the puts might be going for $4 at that point (about 2-3 months from expiry) ... I honestly don't see it going as low as $100, but am just curious if it would be reasonable to see today's $1 put price be worth $4 if the current price deteriorated from $169 to around $140 with about 3 months remaining before the options expire.

I've kept my eye on MSOS and stuff like Verano and Green Thumb - there's a little breath of life in these the last few days -- I'm curious if anyone knows if something's about to turn around?

Hey, wow, that's some hopeful news! This sentiment from the LA Times editorial quoted in the article: --snip-- There are “better ways to fight climate change,” a Los Angeles Times editorial sniffed. Any hardships imposed by closing the plant should “serve as an impetus for California to accelerate the shift to renewable energy.” --end snip-- That sounds like what my brother said last week after I described why oil prices are high and likely to remain high. "Well, maybe oil should be expensive so we work harder to get away from it." In other words, instead of considering that the green agenda may need to participate with reality in the solution, it's somehow more noble for everyone to suffer through high prices? ... I'm not too sure that kind of "green masochism" will get us far. It's more likely to stoke consumer anger. Maybe Newsom saw that writing on the wall.

Currently my biggest bet is on the energy sector, mostly O&G producers in Canada... It's not really the way I typically invest, which is to buy things I'd be comfortable owning for five to ten years. I find myself watching this thread and reading articles about the oil market on a daily basis. As concentrated as I am right now, and knowing I probably won't be holding these O&G companies for five to ten years, I feel like watching my thesis like a hawk. It's been really helpful to get input from the skeptics as well as the optimists. I'm starting to worry about strange notions -- like trying to guess the incentives of major players like the National Oil Companies. For example, it seems like oil moves up or down just on the hint of fluctuation in supply or demand, so with a high oil price there's an incentive to increase production and capture a little more while it's extra profitable. But there's also the incentive (I imagine) to keep your capacity/production gains a secret in order to keep prices higher for longer. Could Aramco or other NOCs or other players in the market be doing this and keeping mum about it? Are there other strange risks that worry you?