Dalal.Holdings

Despicable, but I imagine given the lax attitude shown on this forum to you, you will be allowed to post as usual. I wish no ill will to you or your family, but to each their own.

Exponential growth continues. As I asked a day ago--what happens to $4000 $6000 that compounds at 20% per day? That last dot represents 2/29 cases outside China (2/29 has not even begun in many places yet). Sauce: https://systems.jhu.edu/research/public-health/ncov/

The graph you should be looking at: cases outside China. Numbers you can actually trust. Note within China, there are some provinces where the case # has not budged for over a week (Zhejiang). It seems like there may be some obfuscation going on, esp outside Hubei. For those saying not to worry about the "2%" that will be affected, the economic implications of people staying indoors are massive enough, esp in a consumption oriented economy with anemic growth such as ours. Trump the reality TV star is finally being put to the test. As is his MO, he's setting up a fall guy (Pence) because the buck never stops with him, but with the people he hires (they're always "the best"--until they're not: See Tillerson, Flynn, Bolton, Kelly, etc etc). He's terrified of being honest to the American people because it will cause panic (crisis of confidence) and trigger a recession in an election yr as people will cut off travel/shopping/home buying/etc. And of course, God forbid stocks come down bc then he can't use his clever "how is your 401k doing" campaign line. And Powell won't be able to help him with a cutback in consumption that comes from virus induced fears, not only do we have rock bottom interest rates, but lowering them will not get people to go outside. Reality will likely catch up to his obfuscation anyway and he can't cover up a crisis like this one for long...this ain't no reality show or Trump University where it's all about the marketing. After all it is exponential growth in cases (about 20% a day--what happens to $4000 that grows 20% a day?). The truth will overwhelm his massaging of the message in due time with a crisis like this one and it will not be pretty.

The original conversation referred to depth of recessions and magnitude of bubbles (peaks and valleys) being worsened by Fed. There was no discussion on stock returns or even GDP growth over long periods. My only argument is that the Fed made cycles less intense on the ups and downs, not more. If you want to argue about Fed and gdp or stock market impact, you’ll have to find someone else to discuss this with because I don’t have a strong opinion on that.

I actually realized that I made a mistake when I posted before. The US stock market did 7% from 1871 to 1913, including all of your panics that you are panicking about. There was actually price deflation this entire period. Investors did very well. From 1913 to today, the US stock market did about 6.6%. I will call that a rounding error and say it was about the same. I don't think anyone needs to prove the fed made things worse. Prove they made things better. If you can't why don't we just revert back to a more natural state. Why do we keep rolling the dice with central planning? Lol.. the U.S. “stock market” was in its infancy during that time. Stock return comparison not exactly apples to apples. What really matters and what real PANIC is: when you are lining up at your bank not sure if your checking/savings account money will be there when you get to the teller. You can thank the Fed that you don’t know what real panic is. The reason you think “Panic = 20% decline in stocks” is thanks to the Fed.

The chronic meme of "the economic (boom/recession) would have been much shallower if only the Fed had (raised/lowered) rates by x months by Monday morning quarterbacks (usually "macro" traders like Druck or CNBC commentators like Cramer) is amusing. Just sum it down to: "everything bad in the economic cycle is the Fed's fault". If you want "real data", look at the United States before the Fed existed on Wikipedia (they used to call them Panics for a reason): Panic of 1907 Panic of 1901 Panic of 1896 Panic of 1893 Panic of 1884 The list goes on (and on)... So if you want to argue that the Fed makes things worse, please provide data of similar caliber. Can't wait until historians write about the Fed induced great economic crash of 2018 where the S&P sold off (almost) 20% from all-time-highs and nearly everyone who wanted a job had one...

It’s obvious—the S&P500 (Mr. Market) as Druckenmiller states is the Best indicator. So what if algos drive a large number of movements. There must be hidden signals in there. And of course, as value investors who follow in the path of Berkshire here, we fear volatility and must lash out at the FED whenever we see volatility (as many have in these pages). Who was the great investor who said that “volatility is an investor’s worst enemy”? Certainly many on here fear volatility, that’s for sure. I guess we realize who was swimming naked now that the tide has gone out...

Somebody call the Wahmbulance! Omg Trump has more rate increases than Obama, the odds are totally stacked against him!! Obama had it so easy walking into the oval office in January 2009 at the depths of the largest recession since the Great Depression with double digit unemployment. Donald J Trump; however, is a beacon of a man who has gone through real hardships like 25bp Powell rate increases from record low rates during record low unemployment (low unemployment not at all due to Obama though). Since He was a child, He had to learn to lift his silver spoon by Himself. Let us not forget His crippling bone spurs which prevented His service in Vietnam but did not stop Him against a valiant fight against HIV in the 90s. This man knows honor, knows sacrifice. The FED (I capitalize it to show my tinfoil hat) is to blame for all market declines. Trade war? Crazy tweets? Unhinged speeches? The FED needs to learn to bring rates DOWN after Trump acts to accommodate him and his volatility. Everyone Trump has hired were the best people when he picked them (Powell included), but somehow always lose their way. These people are to blame for all of the Executive branch's mistakes. The mistakes do not emanate from the top--only the positive success stories do. Nothing on the downside is Trump’s fault. Everything on the upside is due to him though. Am I doing it right? This thread belongs in the politics section.

Amusing that everyone points to the Fed "screwing up" as cause for recessions. In 2000, when tech stocks were trading at absurdly high multiples and the Nasdaq was stratospheric, could the Fed have done anything really to stop a recession? Could the Fed have stopped the slowdown after an unpredictable event like Sept 11 2001 and get people to fly again??? Druck in his latest video claims that if Bernanke cut a little earlier, the 2008-09 crisis wouldn't have been that bad. Please. Would a little cut have prevented the failure of Lehman and AIG which had hundreds of billions in shady derivatives with counter-parties across the financial system bearing fallout? Would a little cut from the Fed really have prevented a crisis? AIG built up its hedge fund with terrible risk management over many years--it had nothing to do with the Fed, but the actions of bozos at the top of those firms. Go read "The Big Short" and tell me how Bernanke could have stopped that economic tsunami. The Fed is not the cause of recessions nor able to single-handedly prevent them. Cycles are normal. The bad businesses need to fail. Bank balance sheets were a mess and needed to be cleansed. That takes time.

Really? I guess it's subjective and hard to prove but I tend to think American prosperity had much to do with free market capitalism. Certainly the us economy grew strongly and the market made people rich before the fed was introduced. Maybe the US succeeded in spite of the fed. If you look at the massive amount of debt that was introduced over the last 30 years I have to blame that largely on the fed and their slow hand on interest rate increases. I don't think trump should be trying to influence the fed, I think he should be trying to abolish the fed. You blame the fed for debt levels? Does the Fed create the budget or enact massive tax cuts without reducing spending? Does the Fed control gov't spending at all? The Fed is "slow" with interest rate increases? I guess you then support Powell because you support high interest rates? Oh, and on the Fed being "slow", Paul Volcker's term contradicts you. Of course free markets played a role--the U.S. grew in the 19th century with free market capitalism. Since the Fed was created (1913) however, the U.S. has done much better (fewer panics, boom/bust magnitude reduced) and has become the world's largest economy. The U.S. economy of the 20th century >> 19th century U.S. economy. Oh, you're an "abolish the Fed" kind of person. No point in engaging further.

:D Funny that both Jim Cramer and Stanley Druckenmiller jumped in at the peak of the tech bubble in 99-2000 (Stan likes to exclude his results at Quantum when he quotes how he earned "30% over 30 years"). Guess they believe in those hidden signals the market whispers to them a little too much. I keep in my records a speech of Cramer's in 2000 to remind myself of who he is (must explain why his day job is now working for CNBC and not managing money): https://equitymates.com/lets-review-jim-cramers-2000-stock-picks/ https://www.fool.com/investing/general/2008/08/27/jim-cramers-regrettable-investment-advice.aspx I wonder how Berkshire Hathaway fared with its investments through the tech bubble and its bursting...Is that old crank Buffett still managing money or did he get a job at CNBC too?

The only thing one should be sure of is that Mr. Market is not to be trusted. It worked for Graham and it worked for Buffett (who is a lot more successful than Druck or Cramer for some reason). The other thing to be sure of is that it’s worth preserving something that helped create the greatest prosperity the world has seen over 100 years (Fed dual mandate and Fed independence). No one can be trusted to “maximize the S&P”, but managing inflation and employment with independence from politics has a great track record.

Guess we should give the Fed a third mandate like Druck seems to imply (because Druck seems to believe that Mr. Market is the world’s best economist—Ben Graham would disagree): the Fed should maximize the S&P 500. Surely that will lead to great long term economic prosperity.

Jim Cramer touted for wisdom on here? Please. What are we, a banana republic? The central bank head of India recently resigned because the Prime Minister wanted easing next year (an election year for him). Do we want to go down this path??? Whether a sitting President can fire anyone at the Fed is questionable (https://www.google.com/amp/s/www.forbes.com/sites/patrickwwatson/2018/09/06/how-trump-could-fire-powell-and-rebuild-the-fed/amp/). Why the change of heart in here? Anyone recall David Einhorn and his talk of “jelly doughnuts” by the fed many years ago? Suddenly now we want easing? But hey, I guess your portfolio is down a few points now and you can’t take it, so we should destroy the precedent of an Independent Fed that has made this country what it is... Guess we all (Trump included) just want it to be 2017 again with unnatural low volatility across the board and surging asset prices... If volatility like this scares you (after many years of rising asset prices) and you resort to lashing out at the Fed, you have no business actively investing, IMO.

Happy to see Powell tell Trump to gtfo. Independent Fed all the way. Druck sure mooching off publicity these days (loves commenting on macro macro macro).

The gdp growth is real gdp. Inflation already subtracted.

Shouldn’t this thread be in the politics section? Omg a 25 bp move up from already record low interest rates!!! The sky is falling!! Stocks have stopped moving straight up for three whole months!! I can’t take it!!!! What ever happened to “value investing”. I’d expect much more from a place called “corner of berkshire and fairfax”. Love how conservatives cried about “easy money at the fed” for years and now with Trump in office they suddenly want the easy money days to continue...

Lol...supposedly according to this video, Stan has never had a down year and has compounded at over 30% for 120 quarters (30 years)...yet for some reason after such a record he's not richer than Buffett. "Best performance in history". Is this a joke? I distinctly remember this guy jumping in with both feet at the peak of the 2000 tech bubble... I guess they didn't look too closely at Stan's real track record: https://dealbook.nytimes.com/2010/08/18/reviewing-the-druckenmiller-decades/ Oh, I guess he quit working for Soros, so we can just ignore his investment results while at Quantum and just look at his performance via the funds where he performed well (survivorship bias). It'd be like saying "well, I lost everything in my core portfolio last year, but my IRA was up 10%, so I beat the market!". Here's a WSJ article on him from 2000: https://www.wsj.com/articles/SB95894419575853588 More: https://theirrelevantinvestor.com/2018/05/16/druckenmillers-big-mistake/ I prefer Buffett/Munger view on pontificating on the markets vs. Druckenmiller's: don't waste your time trying to play the market over short time periods.

None of the faang stocks were born as of 2001 besides Amazon? Apple has been around for decades (publicly traded). Google was founded in 1998 and Netflix in 1997. So the only one that wasn't "born" was Facebook. Let's assume that interest rates didn't drop in 2000-2002 (from a high of 6.79% to 3.61% in 2002.). It's probably safe to assume the market wouldn't have hit a new high so quickly (the market recovered from a 50% drop in roughly 6 years). If the market didn't recover (and people were still licking their wounds) it's plausible, if not likely that the most of the faangs wouldn't have received the venture capital that they did and wouldn't be around today. How's that not a bailout? This line of thinking is completely wrong! The correct way is clearly stated by Spekulatius: “Bailing out an economy us very different than bailing out specific companies. Investors in overvalued tech companies were never bailed outend neither were employees who lost their job.” FAANG stocks are creating a lot of jobs and innovating in many fronts. If what FAANG offer is not of use or if there’s is something better out there, users will vote stop using their services without the need of governments telling/helping them to do so, but if users like the service then no matter what they will keep using it, and that’s exactly what defines a free market and what makes the US such a strong economy. I don't think my thinking is wrong on this but could be. If interest rates didn't drop (primarly due to the waste of tech companies) would they have survived (especially since the hurdle rate of venture capital firms would have been higher)? If the Fed didn't reduce rates, would houses in SF be worth so much more than most of the country? I'm not saying that tech companies don't add value. In fact, they are add a ton of value for investors (few employees, monopoly power and asset light!) If they work it out, autonomous cars is huge benefit to society. Being addicted (engineered that way, mind you) to be addicted to your phone, instead of spending time with your kids? Not a net benefit to society. https://www.nytimes.com/2018/10/26/style/phones-children-silicon-valley.html Lol... I agree with Mondegreen. As I said “none of the FAANG stocks were big names (or even born) as of 2001”. I didn’t claim all except amazon did not exist. Google and Apple were small potatoes in 2001 (Apple almost went broke in 97-98, Google wasn’t even public and nothing compared to Yahoo). Netflix and FB did not exist. To argue that the gov’t made these successes and “bailed out” tech is ridiculous. Finally, low interest rates would not benefit asset light tech companies as much as capital intensive industries. Anyway, the usefulness here is outlived. Your arguments keep changing and it’s like a pointless game of whack-a-mole...

Dropping interest rates is a far cry from “not letting the innovators fail”. Please try to find the tech equivalents of AIG and GM to back up your argument because so far, you have no argument. Aside from Amazon, none of the FAANG stocks were big names (or even born) as of 2001. Your bailout of 2001 argument just doesn’t work—last I checked, Pets.com and AOL were total failures and the government did not get “involved” to prevent their failure (among many many other tech names in the graveyard from that era).

They bailed out silicon valley in 2001?? Your premise is wrong...

This mentality is pretty much a great example of why Europe has fallen behind the U.S. in tech innovation. Who's going to oversee and implement these great policies? Let's have some bureaucrat in Brussels tax memes and other "dangerous" activities for our users that cherry-picked studies from our prestigious institutions have shown is "bad for your health". Was broadcast TV also bad for your health? Shouldn't we also ban tabloids as well? Then we can take that tax revenue, cripple our tech companies, and form an elaborate pension scheme. We can all become chain smoking (do studies show cigarettes are bad too?) Parisians who have to fight in the streets against the Fifth Republic to get a pay raise or keep our precious pensions. Meanwhile, we can cry foul at the tech companies from across the Atlantic that seem to, for some reason, be all the rage in our "competitive", "mentally healthy" country as deemed by Brussels. :o Tech companies, like those in FAANG, are now the U.S.'s greatest export across the planet. Its equity holders (with stakes valued in the trillions of dollars or above 15% of GDP) include ordinary state pension funds, index investors (they make the largest portion of the S&P due to market cap), and ordinary, largely U.S. citizens. The U.S. benefits tremendously from having these companies. There are hordes of companies that benefit from the "free" advertising they get on social media platforms, a number of empires started on AAPL's app store. Crippling this would be like killing the goose that lays golden eggs.

One major difference is that it seems that unlike in 2000, Warren Buffett has jumped into tech this time (he largely sat out of it back in 2000). I think that's a significant difference and indicates a real change afoot. The network effects of FB, the moat of Alphabet, and the ecosystem/halo of Apple products is unlikely to disappear overnight like the popularity of tech companies circa 2000. These companies are producing real profits this time--and at high margins and asset light rates. Sure, competition will enter and disrupt, but tech in general is here to stay (and is embraced by mass market consumers now).

Sounds absolutely ridiculous.

Believing the next recession will be "as bad as 2008" is classic recency bias. True financial crises are rare beasts (that's why the Great Recession and Great Depression are so far apart). A true financial crisis involves the failure of banks which leads to systemic fallout throughout the economy (bank runs, credit drying up as no one is willing to lend, foreclosures, etc) which is exacerbated by vicious cycles (negative feedback loops). It takes a long time to emerge from such an event (hence why latest recovery has been slow despite monetary easing), but it also takes a long time for risks to build up in a lead-up to such a crisis (ie. poor risk management at banks). And so, they are rare and occur with long intervals in between. Banks are well capitalized now and such a crisis is extremely unlikely. What's much more likely is a smaller recession of shorter duration (it's easy to forget all the "small" recessions that occurred between the 1930s and 2008, but there were plenty in different shapes and sizes). Corporate debt problems would resemble such a small recession, not a full blown financial crisis.