IceCreamMan
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Posts posted by IceCreamMan
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On 1/9/2023 at 9:14 AM, Gregmal said:
If you ever wanna venture down the rabbit hole of “short term trading”, at least in any manner that would be successful, most of it is simply about capturing those sort of feelings, realizing that they are what “everyone is feeling/acting off of/doing”, and then find the most appropriate way to bet against that consensus.
@Gregmal What is the consensus feeling right now?
The bear market is over?
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7 hours ago, StevieV said:
That's a single backward-looking data point and the 15 threshold picked with the benefit of hindsight. Even if you use the whole history, there are just very, very few data points.
2009 was very close to not hitting 15 and triggering the "buy". There is no guarantee that the next low will hit the 15 threshold. We could go another 20, 30, 40 years without hitting 15 again. That's just way, way, way too long of a timeframe to be of any use. I can't imagine someone deciding they were going to wait to invest in stocks until a Shiller PE 15 signal hits when it could be literally decades.
Investing at that price is probably great. Waiting for it to happen is tremendously risky IMHO.
Hussman attempted to use valuations systematically as an input for equity allocations-- for anyone that's interested in that sort of thing:
https://www.hussmanfunds.com/research/strategic-allocation-white-paper/
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On 1/7/2023 at 10:00 PM, Dinar said:
These figures are NOT accurate. Ben Graham/Shiller's P/E has earnings adjusted for inflation. Take a look at S&P 500 EPS over the last decade, adjust for inflation and do the calculation. You do not get 28.48.
Shiller's data is here:
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THRY
Management is targeting 35% annual revenue growth for the SaaS business over the next 10 years.
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31 minutes ago, Simba said:
IMO the best outcome is a long played out bottom - which is exactly what's happening.
We've been in a downtrend for almost 10 months now.The GFC was ~1.5 years in downtrend, while the dot-com bubble was ~2.0 years
Hard to think this lasts more than dot-com bubble (IMO), unless some unknown macro factors throws a wrench into the mix.
Is it possible that the length and depth of the stock market's drawdown is more closely related to the extremity of the preceding bubble than to the severity of the crisis?
How many years did it take for U.S. stocks to surpass their 1929 peak?
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5 hours ago, ERICOPOLY said:
Same with scanning and bagging our own groceries. The cpi does not impute the wage for doing your own work.
Good point. I guess any time there's a significant technological innovation that saves somebody money, it depresses the CPI? For example, if all of a sudden people started having video chats instead of in person meetings, the official inflation figures would look lower than otherwise... and then if people went back to in person, inflation figures would spike?
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On 9/23/2022 at 2:48 PM, MCR said:
discerning between "different services integrated for different customer segments" versus competing in multiple markets/verticals at one time with multiple sets of competitors
This makes me think of Microsoft vs. Constellation Software.
On 9/23/2022 at 3:13 PM, LearningMachine said:No wonder FCF growth of AAPL, GOOGL, MSFT and META has been off the charts, way more than BRK's, MKL's or any other company I can find so far. Can anyone please help find any other companies with FCF growth over long periods of time off the charts like theirs?
Constellation Software, Home Depot ?
More ideas here, including Amgen, Nike, UnitedHealth:
https://graphics.wsj.com/table/INVESTOR_0129
(The 30 best-performing U.S. stocks of the past 30 years, as of 2016)
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23 hours ago, LearningMachine said:
that have the leverage to create new income streams from > 1 billion people with low marginal cost?
I'm not sure we need to limit ourselves with this 1 billion threshold. It seems like there are probably companies with negligible variable costs that can achieve the similar effective leverage, relative to their enterprise value, with smaller customer counts-- 10 million, 1 million, etc.
A tiny software company with a large addressable market has just as much of this magic modern leverage, right? Assuming it has a moat, of course.
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Not sure whether or not this will be helpful for you, but the most important concept to get comfortable with is implied volatility, which is basically a shorthand way of comparing the option market's expectation for the size of the range of future outcomes for stock prices. Once you have a basic understanding of what it means, you can start comparing implied volatilities among different options the same way folks compare stocks on their favorite valuation ratios.
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Bruce Greenwald maybe?
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1 hour ago, LearningMachine said:
Thanks everyone for highlighting most impactful decisions.
Buffett's world:
Now, starting to summarize principles behind those decisions in Buffett's world:-
#1. Low-cost leverage using float/deposits to buy high-quality income-generating assets
- General RE
- National Indemnity
- Geico
- BAC
- AXP
- Illinois National Bank
- Blue chip stamps
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#2. Leverage through fixed-rate low-interest long-term bonds
- Mid American/BHE
- BNSF
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#3. Pricing power through acquiring or building a monopoly in a region or a customer-segment
- BNSF
- Washington Post
- Buffalo news
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#4. Pricing power through conspicuous consumption
- See's Candy
- AAPL
- AXP
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#5. Pricing power of low-priced items through premium branding, story telling & hard-to-change consumer preferences
- See's Candy
- Gillette
- KO
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#6. Guaranteed regulated returns
- Mid American/BHE
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#7. Predicted Growth across the world or nation
- KO
- Geico
Any big principles I missed?
Looks like broadly speaking just two principles meticulously followed can give double-digit returns with high certainty:
- Legacy Principle 1: Use Low-cost leverage that cannot be called or need refinancing
- Legacy Principle 2: Be highly certain that you can raise prices by 5-10% each year without losing customers
Now, to achieve both, other than 30-year mortgages, you need to be inside an insurance company or a bank.
Now, beyond BRK, which insurance company is incorporating Principal #2 in most of its investments?
In Buffett's world, he had to use financial leverage in his world to achieve outsized returns.
Today's world:
In today's world, businesses that can create new income streams from over a billion customers with low marginal cost might be another way that Buffett didn't have available. So, maybe in today's world we could follow these principles:
- Modern Principle 1: Leverage: Ability to reach a billion customers with low marginal cost
- Modern Principle 2: More money from same customers: Be highly certain and have history of creating new income streams from those billion customers and/or raise prices on them without losing customers
Which companies can achieve and have history of achieving both Modern Principle 1 and Modern Principle 2?
Thoughts?
Add:
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Low cost provider of a commoditized product
- Geico
- WFC
On the last question:
GOOG
MSFT
AMZN
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#1. Low-cost leverage using float/deposits to buy high-quality income-generating assets
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1 hour ago, jfan said:
What were the reasons for MySpace's demise?
Facebook?
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Sounds like a situation a lawyer might be able to help with.
And maybe a sleuth who can dig up other illegal actions the members have taken. Then alert various authorities and put pressure on group.
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On 5/14/2022 at 10:58 AM, ratiman said:
Buffett has said that it's hard to grow Sees sales but chocolatiers like Godiva and Lindt sell in supermarkets and also maintain independent shops. I've heard that Buffett wanted to maintain the Sees brand and didn't want Sees sold next to Hershey's or something but it works for Godiva and Lindt, it should work for Sees too.
You provided a good answer in your question: See's wants to protect its brand. Letters from Buffett to See's president to this effect are on the 'net.
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9 hours ago, TwoCitiesCapital said:
It's a brand new industry an unclear if these "tokens" fit the current definition of a security.
The way SEC defines security today basically suggests you have some ownership in, or interest bearing security of, an enterprise.
But the way most of these tokens work is that owning the token doesn't really give you much of anything. It's what you do with it.
For example, there is a decentralized crypto derivative exchange called Kwenta. The exchange backs each trade (as opposed to finding an offsetting counterparty).
Who capitalizes this exchange and ensures that the derivative profits are paid to traders? That's where SNX token holders come in. In exchange for trading fees and new SNX issuance, SNX token holders post their SNX as collateral for the exchange to back/settle all trades.
But buying the SNX and holding it doesn't entitle you to anything. It's only the act of posting the SN as collateral, and risking it's loss, that you achieve any return.
So is the SNX token a security? By buying it and holding it you've accomplished nothing and have no economic interest in any Enterprise or activity other than solely being exposed to price fluctuations.
Owning SNx doesn't pay you interest. It doesn't entitle you to vote. It doesn't entitle you to a proportion of economic gains/losses. It literally does nothing....unless if you stake it as collateral. Is that a security? It might be...but it doesn't fit the current definition or look like anything else that we call a security.
But any further convo on this should probably be taken to the crypto thread so we don't derail this one.
Thanks for the response. I see what you mean, but it still looks to me like finding technical loopholes to evade securities regulation. Agree on continuing in a crypto thread.
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1 minute ago, IceCreamMan said:
Is anyone else surprised that the SEC hasn't enforced the Securities Act?
(You had ONE job...)
Maybe the Securities Act only applies to businesses, not Ponzi schemes. One possible explanation.
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11 hours ago, TwoCitiesCapital said:
"Cryptocurrencies" is used as a catch-all now even though most of these don't purport to be currencies nor do they have the properties to be so. That is reserved for BTC and a handful of others.
The remainder? Largely what would be considered utility tokens. Nearly every dAPP that is made comes with its own token. That token could be used for any sort of function. It could be required for governance votes (i.e. tokenholders vote on future direction like a stockholder might) OR tokenholders could be the ones capitalizing the project and reaping its rewards, or there could be differences in the issuer/trust levels like the variety of stablecoins currently in circulation that all have the intended purpose of tracking the USD in some different way or by a different issuer.
So think of most of these crypto currencies as "tokens" or similar to stocks. How many stocks/companies do you envision to be in existence? There is the possibility for each one to be replaced by a token.
Is anyone else surprised that the SEC hasn't enforced the Securities Act?
(You had ONE job...)
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12 hours ago, Charlie said:
Sold an underperforming fund of my parents and bought Ali Baba.
Mr. Munger, is that you?
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THRY
At 6-15x SaaS revenue, THRY is worth $30-76 today, and SaaS revenue is growing fast. If growth continues and the stock re-rates, $50/sh seems reasonable.
Posted more detail on the THRY thread.
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16 hours ago, Dave86ch said:
Imo the problem is more related to the user base than to the CEO.
What's the problem with the user base?
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23 hours ago, ERICOPOLY said:
I didn't say that.
It can be 100% total exposure. For example, 70% long diversified common stock portfolio in addition to the 30% notional position in the calls, and the 100 name collection of written puts with 0.3% notional exposure each..
Derivatives were made to swap risk. So you can use them for what they were made for.
And your portfolio would still be 30% cash.
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3 hours ago, ERICOPOLY said:
It's why buying ATM calls on 30% notional portfolio value make sense, funded by writing puts on 30% total portfolio notional across 100 other names if your risk tolerance is such that 0.3% position sizing in any one name is as large as you can tolerate.
Sigh...
You mean on top of 100% long portfolio, right? i.e. 100% long + 30% notional long calls funded by 30% notional short puts = 130% effective exposure?
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On 11/26/2021 at 11:53 AM, maplevalue said:
I would say I am fairly skeptical of us being close to a top given how cheap stocks remain to bonds.
With that said today's selloff reiterates to me the potential for a 'doomsday scenario' where we get:
more COVID lockdowns -> more fiscal stimulus from governments -> stimulus exacerbates the high inflation we already have -> monetary policy having to tighten in a low growth environment. Not good for asset prices!
Makes sense, however, what would we have predicted in January 2020 would happen to asset prices had we known about the upcoming lockdowns, etc?
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You might find some closed-end funds doing this. Some of them target a particular distribution yield. If the securities portfolio doesn't yield enough, the excess distribution is a return of capital. You could look at a closed-end fund database and sort by highest yield as a place to look.
Buffett/Berkshire - general news
in Berkshire Hathaway
Posted
Does anyone else wonder if he sort of HAS to do this to prevent even more cloning that pushes prices up prohibitively? If all of his purchases were "forever" buys, then the initial price spikes on the news of him buying would be even higher, preventing him from accumulating as big a position as he might want. So maybe he needs to mix in some low conviction buys that he's likely to sell after a couple of quarters to dilute his overall signaling to the market.