rb

Yep it's a horrible idea. The reason for it is bullshit too.... it forces companies to focus on short term performance. No it doesn't they focus on short term performance because they want to focus on short term performance. Because it help with the stock price and consequently their stock options. There are companies that don't focus on the short term. They still report quarterly and they're doing just fine.

I think that Blackberry/Palm is a horrible analogy. Those companies were in low capital/high margin business. Auto makers are in a high capital/low margin business. And it's a really complicated business to boot. Let's assume that Waymo nails the self driving technology. Who's gonna make the cars? Is Google gonna spend tens of billions to develop cars and build car factories to put them all together? Furthermore, the way that designing tech may not be in the car companies' DNA. Designing cars is not in the tech companies' DNA. Ask yourself, is a Silicon Valley engineer the right person to make a car for a redneck? I think it makes a lot more sense for Waymo to license out the tech to the car companies and let the car companies do the car stuff. Sort of like Microsoft did with Windows. Taking all of this in, I'd say that car companies are far from zeros 15 years out. And as pondside said, these are some probabilistic scenarios. So thinking about them, what's the risk at 5x PE? If these companies were trading at 15x I'd say that we wouldn't be having this conversation. But at 5x you get compensated for a lot of this risk.

In Canada and the US every car is built to the California standard. A few years ago in Ontario we gave up emission testing on cars younger than 7 years because basically none would fail the test. Even past that age not many fail. The few ones that do is mainly because the 1st O2 sensor failed because it cooked off at the exhaust manifold. That's a $200 fix. Not really a reason to take a car out of commission.

There are mandatory vehicle inspections in some states in the US as well. NY and MA have mandatory vehicle inspections and in fact, cars tend to be in a better shape than in CA for example where there are none. I am fairly certain that the average car age is higher when vehicle inspections are absent. The fleet age in Europe tends to be younger than America, this has been going on for a while so I think that it's a more of a structural thing rather than a market event. I don't know the reason or what the delta should naturally be. Vehicle inspections probably play a part, but I think it's pretty minor. With some exceptions there are none in North America. But that's not really that much of an issue. Simply vehicles are good enough these days that few would fail them. I think a big part is the fleet composition. That is to say that in Europe you have a lot fewer Toyotas and a lot more Fiats. That's not good for raising the fleet age. Another thing is that the urban vehicle owner in Europe is richer than the urban vehicle owner in America. This owner will prefer a newer car. Along that there's a big market for EU used cars in EU adjacent countries that easily absorbs the used cars. Overall I wouldn't say it's a defining characteristic but it helps to shave a year off the fleet age.

Thanks for the replies. I see a lot of you have focused on the North American car makers. But really almost every one trades at a low multiple: Toyota, Honda, Nissan, Daimler, BMW. I also understand that this is a cyclical, but a lot of industries are cyclical and don't trade at 5. Regarding the cycle, if we look at the US vehicle fleet, it's what? 268 million vehicles and a median age of 9. Last year I think US vehicle sales were 17.25 million. That implies a average vehicle replacement age of 15.5 years. That quite a long time. These numbers seem very reasonable to me. So even if the industry is cyclical at 17 million vehicles per year, it doesn't seem like we're in a crazy part of the cycle. Those are just numbers fro the US. I'd look at the numbers for Europe as well, it's just i don't know where to find them. But from memory I think the European fleet is younger the the US one.

Just wondering if anyone has a fix on what's going on with auto makers. These companies are trading at mid single digits PEs in a crazy bull market. Yes, I know that their capex well exceeds their depreciation so the real PEs are somewhat higher. But still, we're talking mid single digits here. Am I missing something here? Or is this possibly the most undervalued sector right now?

They can and they did.

Not a good sign

Valuation?

Thanks for this info Sanjeev. It is going to be a used one because it's against my religion to buy new cars. But it won't be anything crazy old. Something like 3 years used.

EXACTLY! That's why I think it would be brilliant if my mom had one. :)

It's for a luxury ride. I was thinking Mercedes but Jags are NICE! So I'm thinking it would be really cool if she could have one of those :). But I also don't want to get her the car from hell. That would defeat the whole purpose. She drives a Lexus now. So of course either way it'll be a downgrade in reliability. But I don't want to go down too far.

I'm thinking to get a new car for my mom and I was thinking maybe a Jaguar. But I am a bit concerned since they're known to not be the most reliable cars around. I'm hoping if some of you own/have owned Jaguars can share your experience and whether it's worth buying them. I don't wanna just create a problem for my mom. Thanks!

I'd say that's cherry picking some numbers. China's non-financial debt us 256% of GDP. This compares with the US at 251, UK at 283, the euro area at 258 and close to you, Denmark at 264. That's not a small number but it's not apocalyptic either. Does thins mean that China can't run into some financial system problems at some point? Not at all. In fact they probably will. Everybody does. But as I've said previously they are better equipped to deal with a situation like that. So it's more likely that they'll avoid a full blown crisis. Now because of this situation should people line up to invest in Chinese banks? I don't know. But as sure as hell I'm not.

That's fair. I'd add though that a number of the analysts featured in Bloomberg and Reuters today were saying if the emerging markets narrative gets broken, a ton of capital will flow out. As you'd expect. From the opinion piece above: "State Bank of Vietnam may be forced to yield. In just one week in July, it sold more than $2 billion to banks to meet demand for the dollar, the Saigon Times reported. It’s unclear how much the central bank has shelled out since to prop up the dong. At this rate, it will quickly erode the $12 billion of foreign reserves painstakingly built up last year." So I'm wondering if the question isn't whether China can steady itself, because as you mentioned there are reasons to think it can, but if China sneezes do large parts of emerging Asia and elsewhere go on to catch one hell of a cold. As with DocSnowball, this is a curiosity to me more than anything else, but if I remember what I've read previously about 1997, once the foreign reserves of various ASEAN countries were used up is when the real fun began. I guess that's perhaps starting to happen across a few places, so I'm wondering which countries and sectors are the most at risk. Unfortunately this isn't my area, so who gets impacted the most by yuan depreciation or dollar appreciation as things stand, isn't yet obvious. In 97 a lot of Asian countries had their currencies pegged to the dollar and no capital controls. They've exhausted their foreign reserves by foolishly trying to defend their pegs. Right now things are different. The currencies are mostly free flowing and with the exceptions of a few basket cases (looking at you Indonesia) the economies are more robust. Their financial systems look alright as well. In the case of Vietnam. It has capital controls in place. If they choose to really enforce them then they probably won't be doing the dong any favours but it'll stabilize things. I don't think there's much to worry about the yuan loosing some ground. This is what you'd expect the currency to do given this whole tariffs business we have going on. Not some great calamity. I also think it's fair to assume that if China sneezes the ASEAN will catch a cold. But based on how things stand that cold will look more like a regular recession would look rather than a crisis, contagion, or any of the scary words.

The 98 russian crisis was different animal than the 97 Asian crisis. So I'll leave that one alone. In the 97 Asian crisis the currency drops made big headlines but the crisis didn't happen because of the currency drops. The currency drops were more like a symptom of the disease rather than the origin. The crisis itself was pretty textbook. An investment bubble inflated with massive foreign investment and leverage. On top of that you've had a banking crisis due to under-capitalized banks making bad loans. I'd say a good recent comp would be Spain circa GFC. Once the bubble popped everything was made worse by boneheaded austerity policies pushed on by the IMF and massive capital flight out of the countries. Today we don't really have the ingredients for such a crisis in the EMs. The only thing that comes close would be China where there's a lot of leverage and you don't really know how good the banks are. But China has capital controls and massive firepower to stabilize its economy. On top of all that it doesn't have to deal with things like nonsense politics and the US Congress. So it can move quickly and decisively. Now I'm not saying that you can't have a problem in China. But if you do it'll look very deferentially than the 97 crisis.

What given2invest said about Tilson is all valid so I won't dive into that again. Also, please don't lump Cohen - the insider trading king - in the same category as Buffett. Regarding Ackman, at first sight he seems like the real deal. But if you follow him for a while you realize that he's just a fantastic salesman and a great bullshit artist. That's why he has the 100+ slide decks. He looks great on CNBC and all that adds up to a lot of AUM. The fact that he probably lucked into some good trades also helps with the cult of personality. On the flip side despite all that's happened I think Einhorn is a great investor but he is being harmed by the hedge fund model. Basically the whole long short thing. The aura around hedge funds being that they have to be long and short at the same time and make money on both. That's what sold and you have to go with it if you wanna make money. It doesn't help Einhorn given that he got notoriety for his shorts. I think he's a great long stock picker, but he's forced to be short by the model. Let me elaborate a bit and get a little academic. If you assume the markets are efficient and you're a long/short fund with equal exposure then you'll make risk free. Now I don't think that the markets are efficient and these guys are not perfectly long/short. But still, given the market inefficiency and you being good, you'll generate some alpha. Maybe you do it on both sides. But alpha is hard, and in a raging bull market there's no way you generate enough alpha to beat the market. So the system is setup to make you fail as a hedgie. But hey, that's what sold AUM! The rest of your post about rich kids and real jobs doesn't make much sense. Buffett was basically a rich kid and he turned into a great investor. Working on the street is not a real job and you don't learn anything about investing by working on the street either (you do learn a lot about Excel though). Plumber, mechanic, doctor, those are real jobs. But I don't see the legions of great plumber-investors. Investing is just like any other craft. You get good through much study and practice. I'd also say that in this discipline, like many others, being a rich kid helps. But I think in investing it helps more. Also, there's a very big difference between being a good investor and being a good fund manager.

Oh yea, the IB API works really well with Excel. The problem with the IB API is very good. In the sense that it lets you do what it was intended and nothing else. A lot of it is restricted by data policies they have. So quotes are good. Creating trading macros with integration is good. But scraping data or creating screeners doesn't work at all. Basically the IB APIs will help you customize your TWS experience some by using Excel, I honestly haven't invested a lot in it because for that sort of stuff in TWS is good enough for me. If you do a lot of multi legged trades or quant strategies the IB APIs will be awesome. But i don't really do that stuff. I just want a good screener that doesn't cost a fortune that I can match to a whatch list and create alerts for. I got pretty close to doing that using Google Finance but then they went ahead and ruined that whole thing.

Yea, I just don't think that the political risk is meaningful for H - but reasonable minds may disagree. For tobacco I own PM and BATS. I picked them because both have strong brands and great international exposure. BATS is also better tax wise to hold in TFSA accounts vs PM.

Tobacco companies have about the same risk reward...maybe even a little better since they tend to be better businesses (lower needs for capex). I have some tobacco companies as well and I'm ok with them. But they're a very different cup of tea. Yea there you're talking lower capex, also pricing power, brand loyalty, etc. Then there may be or may not be a competitive threat from e-cigarettes. With monopoly power cables, brands are meaningless, there's no competition and no distributor not just on the horizon, you can't even see one from the space station. There's no pricing power, but you get guaranteed returns. Capex is much higher but again you earn guaranteed return on it, so you want to do capex.

Dude, the answer is obvious: DON'T ASK. Also if you really want to know, I'll tell you: based on his ribbons he's killed someone. Vietnam was a long time ago. If he would have wanted to talk about it he would have. If he didn't let it be. What does it matter anyway. He did what he did in Vietnam and then he came home and was your father. Focus on the your father thing and leave old scars alone. This is not a hard one.

For Hydro One, their regulated ROE is based on the Canada 5-yr yield. So it's basically variable, as rates rise so will their earnings and ROE.

I intend to do a writeup for it at some point when I get some free time. But sure, here's the short version. Hydro One is a regulated utilitity that does electricity transmission and distribution in Ontario. It owns virtually all the transmission system in Ontario and a huge chunk of the distribution system. Very simple and safe business. Recently there's been a lot of political nonsense around the company which drove down the price a lot. This is not an I'm gonna get rich stock, nor do I think it is a screaming bargain at the current price. I think at current levels it's a safe bet it'll do 8%-10%. Given where market valuations are right now I don't mind making 8-10% on some power wires and deploy some cash I got sloshing around in portfolios.

More Hydro One.

Have you tried adding a time delay between your requests? When I built a google finance scraper that seemed to do the trick of fooling it.