rb

Probably not directed at me but I would say that hell yeah value investing is an ideology. I also disagree to some extent that ideology turns your brain into cabbage. I think a lot of what's talked about ideology these days has to do with politics and its messy discourse. But ideology is really a base of ideas and that can be very good. In my opinion it's the theory built on top of the ideology that boils the boils the cabbage. For example: Ideology: freedom is good. That is a very good ideology. But the theories on top of that, i.e. how do you achieve freedom can go very wrong and can very well boil the cabbage. To the original question. Value investing ideology: buy something for less than what its worth. That is an ideology, it is a very good one, and it is self evident. However if the theory built on that is that value investing is practiced by picking cigar butts that can lead to bad outcomes and boil the cabbage as you loose your mind looking for those butts. You have to be able to critically analyze the theories on top of the ideology. That's where Munger has been very successful. He's clinged to the ideology buy rationally switched from theory to theory when it was warranted. Hell he probably invented them. Finally since Longhaul brought up communism. Communism is certainly an ideology and it had some theories on top. When communism was actually implemented it was implemented with a different set of theories than initially designed but kept the ideology. Now the ideology is certainly flawed - it lacks free markets and competition which leads to inefficiency. But then it wasn't even those flaws that were the big problem that did it in. There are certainly in this world countries that are more efficient than others and they both do ok. What did it in was developing a theory of nationalism and starting a bunch of trade wars. This theory had absolutely nothing to do with the communist ideology. But this was the one that boiled the cabbage and let to its demise. In the end I guess there's nothing inherently wrong with ideology. Like everything in life is the implementation that bites you in the ass. Commitment bias, unwillingness to think critically and shift gears when warranted, and ultimately and mostly ego that's what boils the cabbage.

While I agree with most of you just said. I think you picked the wrong example at the end with communism. While communism is certainly an ideology, there were very few communist ideologues during communism.

If I recall correctly for the 08/09 cycle Buenos Aires had that particular distinction. Too bad you didn't buy a boutique hotel there. But I see you're learning. You are the pupil after all :D.

I would think that the real estate would be tricky. Depends on how you handled the depreciation. Triggering a whole bunch of recapture may not be such a good thing.

I would say that household income and gdp per capita are equally flawed (for lack of a better word) variables. They're both affected/distorted by demographics. Household income by the makeup of the household and GDP per capita by the makeup of the population.

Let me help you guys out with a little thing about emigration. Cause you don't seem to understand it. You generally do it because of economic reasons and you generally do it because your life sucks. That's because emigrating sucks as well. If you're doing well somewhere you're unlikely to emigrate. The offer has to be really, really extra good. Of course there are always the exceptions to the rule and you can point out the person who moved for a 10% raise. But it generally doesn't happen. Since at this point you're probably thinking I'm full of shit and we're generally dealing in anecdotes let me offer this one. Ed Clark was one of the all time great banking CEOs. He's a hall of famer up there with Jamie. At TD he at the end he was paid about 7 million a year (less before that). A shit big bank CEO in the US gets at least 20 mil. So why didn't this guy make the move? Moreover, why do any non-us companies have talented CEOs? Most of them basically work for free compared to the salaries they would get in the US. Now let me tell another anecdote. There is a city in this world called Iasi. This is a city of about 200-250k people. Amazon has 4,000 employees in this place. About half of them do standard BPO work - catalog stuff etc. The other half do security for the US site. Those guys make about 4k euro per month net. Now these guys are top shelf professionals. The kind of "talent" that Silicon valley would trip over to hire. If you think any of them are thinking of moving to the US you are fucking insane. At 4k a month these guys and girls (it's pretty evenly split) make more money that they would in SV. Did I mention they only work 8 hours a day? It's illegal to make them work more. In that city there are 10 office towers under construction. Amazon contracted 2 of them as they want to double their workforce in the city. It is rumored that google and facebook each have one. Now you may say that you won't match the financing in the US. Well it's true that US has financial markets like no other. But countries have moved to neutralize that. For example the country this city is in has a program called start-up nation. Under that if you have a half decent business plan you will get financing under that plan. That's 40k euro. They do about 100k investments per year. As an angel round that's not bad and you don't give up equity. It's a grant. Then if you actually have a business you can access further rounds increasing up to 5 million euro (no equity give). Then there's a pretty vibrant local VC scene. With all of that in place do you think there's a lineup of talented people cramming to cross the rio grande in order to go on shark tank or slave away in a SV sweatshop?

So then why isn't Canada a hellhole with no talent? Not to mention that there's been a lot of talent that leaves the US for Canada because they have a certain feeling that "they're not welcome" there or that they're actually told to leave.

Not really...

If the inclusion rate is increased, I don't consider this the highest probability scenario. To my recollection, when the capital gains rate changed in the past, the rate change typically took effect the day after the budget was released, not the day the budget bill was approved through royal asset. Yeah, but generally those inclusion rate was changed downward. Doesn't hurt anyone. I'm not nearly old enough to remember when the inclusion rate went up. So sorry about that. Even the socialist in me thinks it would be unfair to have an immediate effect. The pro argument would be that it would avoid chaos as ppl scramble to reset their ACB. The really unfair bit is that capital gains are cumulative so you would tax my gain 2015 which had a 50% inclusion at a 75% inclusion. I just don't think that anyone wants that particular brand of shit storm. Not for capital gains inclusion rate.

What part of that is idiotic?

But then why doesn’t everyone just do this with Switzerland. A country with zero capital gains tax ? What you say is not correct. It's not true that Switzerland has a zero capital gains tax. What's true is that Switzerland doesn't have a capital gains tax. The reason why Switzerland doesn't have a capital gains tax is because capital gains have a 100% inclusion rate and are taxed as ordinary income. In addition Switzerland levies a wealth tax on your net assets. Thanks for clarifying I guess not to leave the main point I’m just trying to understand the issue of “flight of capital “. In other words why do we have to keep our capital gains policy similar to US and if capital can easily flee then any other country with low capital gains taxes would just reap the benefits even if US and Canada both raised rates. Just trying to understand these issues from those here that are more knowledgeable Yea I'm with you. I disagree that a divergence in the capital gains inclusion would have much effect of capital or its flight. Generally capital flight is used in reference to primary market capital. Think money to build factories. Not secondary market capital like your Procter and Gamble shares which is what you're referring to. However whenever the discussion starts there will be a lot of rhetoric that will equate the former to the latter.

But then why doesn’t everyone just do this with Switzerland. A country with zero capital gains tax ? What you say is not correct. It's not true that Switzerland has a zero capital gains tax. What's true is that Switzerland doesn't have a capital gains tax. The reason why Switzerland doesn't have a capital gains tax is because capital gains have a 100% inclusion rate and are taxed as ordinary income. In addition Switzerland levies a wealth tax on your net assets.

In the US can the government build a hospital, staff it and offer healthcare to sick people?

I think that there's zero chance that the principal home exemption will go away. I'm also pretty sure that the capital gains inclusion goes to 100%. Maybe it goes to 75%, maybe not. Even if it does it probably won't be implemented overnight so you'll have time to crystalize capital gains at the lower inclusion rate. I think it's dangerous to think in terms of how the op framed the issue. I've seen quite a few people do dumb tax things because they always think that the tax boogeyman is right around the corner when in reality there's no one around the corner. Generally the best tax strategy always is defer, defer, defer.

I would agree that silver is a better proposition on the fundamentals. Not just the demand side but also the current price ratio to gold. There's also less gold nuts speculating in silver so your price won't get whipped as much based on "mood". The downside is that you don't really have good silver mining pure plays out there so you have to go physical. There could also be an interesting long/short trade if you want to go after that silver-gold differential.

Gold stocks have been such a big pile of dogshit over the years that I would just stay the hell away. Treat them like drugs. Just say no. If you are an awesome, big swinging dick, market timer then go for it.

There s a good saying, "if it drives, flies, floats, or fucks, rent it"... That said, I totally agree with rkbabang as a boat owner. Expensive, but totally worth it. Buddy of mine says that BOAT stands for Bust Out Another Thousand!

is the bottleneck of the supply chain safe distribution (chillers etc) or fabrication (actual biochemical work) ? in other words, can many additional biolabs be recruited to increase supply? I am almost thinking of biden using extraordinary measures (which I imagine he would be happy to do) to mobilize production and not just logistics... I'm sure that at this point it is already assumed that other biolabs etc are gonna help with production. But you are going to run into those bottlenecks. If this thing needs to be stored/transported at -80 C there's some really specialized equipment involved and it's not cheap either.

They'll let it thaw before the inject you with it.

Where can I get one?

But, to use your example, you're paying for that reliability of the GWB right? Because a lot of others enjoy that reliability right? Brookfield does too. I guess they try to compensate for that with their house of cards in a black box routine. But that introduces risk and thus hurts that reliability wouldn't you say? There are also limitations. Only so many cars can shoot over the GWB and there's nothing you can do about that. You can compensate for that with pricing but there's a limit there too. On the other hand if you take a company like Coke, they can generate an insane amount of value if they smartly manage their intangibles and increase their customer base. The Eastern Europe takeover by Coke was nothing short of genius and it created many, many, many GWBs out of thin air!

I think there is a difference between collectibles and assets or business that generate cash flow. I don’t think accumulating collectibles is really investing. For other things that generate cash flow, it is more about semantics. A business is harder to value than a real estate asset that is rented out and where you have a pretty good idea about future cash flow and comps. The problem with investing in hard assets like real estate assets is that we don’t have direct control of the asset (the cash flow and when it can be liquidated) and there is an layer of G&A expense that is never going away unless an entity is liquidated, which rarely happens. So those Reits etc. in my opinion should trade at a discount to NAV, the question is how much. I know we're taking this in a different direction but I kinda disagree with you on REITS. The G&A is obviously there but it should be a small amount kinda like the G&A at Berkshire HQ. that is unless their crooks but then why would you invest with crooks. There is an offset to the G&A in the form of better financing options as you and I can't go out there and get a syndicated loan and such things for our asset. Then there's the tax aspect of REITS. Depreciation recapture in a progressive tax system is one nasty bitch. But REITS you can hold in tax free accounts. That in a huge advantage for REITS vs physical asset.

I think what LC is talking about is that earnings get generated by assets whether they are listed on the balance sheet or not. Some may be tangible and easier to identify some may be intangible but nonetheless very valuable. But I think what we're talking about here is tangible asset heavy businesses vs tangible asset light businesses. The type of business will dictate whether it's heavy or light. A utility or a REIT will naturally be asset heavy whereas a software company will naturally be asset light. Honestly I don't think there's anything wrong with either. They're just different beasts. The asset heavy business will tend to be safer because there's only so much you can do to screw up the asset but that comes at the expense of growth. You'll get better operators and worse operators but there's a limit to how much you can squeeze out of an asset. On the other side are the "asset light businesses" - really intangible asset heavy companies. The can be much more profitable for the investor because you can really grow and expand those intangible assets which will turn out to be very profitable for the investor. That is balanced larger risk as those intangible assets can drastically loose value if mismanaged. Sure you can say that Apple has some great intangible assets, but it had them once before and theirs' and IBM's too went poof with commoditization. That can happen once again. Blackberry went from a 100B+ market cap to a 4B market cap in just a few years. There's also the version where the value of your intangible assets change because their potential growth profile changes. KHC I think is a great example here. It's clear that it has some great intangibles. You can see it in the ROA. But the growth profile of those intangibles changed drastically and so did their value. Because a lot of this intangibles are a lot more difficult to value. If Greg and I were to sit down an value a rate regulated, monopoly high voltage network I don't think that we'd come out with wildly different values but we probably will if we try to value SAP. Buffett loves intangible asset heavy companies because of the optionality of growth that these bring. But while he's loved Coke's and Gillette's intangibles he didn't love Silicon Valley's intangibles. My guess is that he felt he could value the former's intangibles better than most and he felt that most could value Silicon Valley's intangibles better than he or that they are not valuable. In the end it doesn't really matter. Your overperformance/underperformance will come from valuation error. The reason why people did so well with Google, Apple, Amazon, etc is because their intangibles were either undervalued in the past or over valued now. But then that also happens with boring hard assets too. Remember the high voltage network above above? Why did I do so well on Hydro One?

More of a so-so/above average P&C that's quite richly priced.

This is an area that has been discussed a lot actually