mattee2264

The thing that worries me is the S&P 500 does not actually look that expensive at around 25x pre-COVID earnings. And post-COVID earnings could be a lot higher because more of those earnings are coming from Big Tech who are having blockbuster years and if there is a V shaped recovery non-growth stocks may be able to recover a good amount of their earnings power. And with interest rates a lot lower and the quality of the tech component a lot higher doesn't seem unreasonable to exceed the 1999 P/E multiples especially if high savings rates persist and the government continues with all the handouts. So you could imagine the S&P 500 going 50% higher perhaps over the next year or two unless the Fed starts tapering or the economic weakness starts to affect the results of the tech companies and unwinds the recovery trades.

I found Stephen Penman a difficult read and I am an accountant! https://www.amazon.co.uk/Financial-Statement-Analysis-Practitioners-Finance/dp/0470635606 Above book by Fridson and Alvarez is a classic and quite discursive

What do you guys think about the key man risk? Most conglomerates tend to sell below book value. So there is still something of a Buffett/Munger premium. If you think book value can compound at 7-10% a year but book value falls from 1.3x book value to 1x book value (or lower) the returns become a lot less attractive. Obviously buybacks will help to some extent and most conglomerates do not really bother with this as a way of eliminating any discounts.

I don't think it is a very strong market call. All it is really saying is that segments of the market are speculative and to an extent speculation in some names has forced unreflective buying by the indexes. Both are difficult to argue with and are warning signs but nothing more and certainly not grounds to get out of the market completely.

Interesting to see what following the science means in practice. I don't think scientists would allow the kind of hospitalization and death rate that America has tolerated over the last 10 months. And with mutant strains coming and vaccinations likely to take a while to kick in I don't see how the USA can avoid the same restrictions being applied in Europe.

The Fed is clearly going to continue supplying the helium so it is difficult to foresee any end to this until we get a strong economy and inflation becomes a worry. But that could be years away. And that would probably still require money printing to control yield curves so that the debt overhang doesn't hamper the recovery. And then the Fed will start worrying whether bursting the bubble could derail the economy and still probably take no action. In fact what the Fed is probably hoping is that day traders take the place of all the displaced jobs and start spending some of their stock gains to reignite the economy. Maybe that will be the thing that bursts the bubble. When people start trying to spend their monopoly money gains and inflation spills into the real economy. So probably financials and commodities and real estate aren't bad ways to play it even though their stock prices are pretty much back to pre-COVID levels. If the economy tanks again the liquidity in the system will probably limit your losses. And if the economy recovers then there is still some further upside and the liquidity adds a kicker. And if inflation is the end game and yield curve control fails then you will do pretty well. And if yield curve control works then probably gold isn't a bad place to be.

Does there need to be a specific catalyst or does it simply take a critical mass of people to start believing we are in a bubble and worrying about general market valuations to create a self-fulfilling prophecy?

Perhaps the reason the UK is managing vaccinations at a decent speed is because we have a national health service so everything can be coordinated a lot more easily and politics has not been allowed to interfere with the allocations. Of course population density and a smaller population size probably help as well. And also we have the Oxford vaccine which USA passed on which is a lot easier to distribute.

Annoying thing about China is their official data makes it impossible to tell whether this is just an extreme pre-emptive measure to a handful of cases and it will be contained in a matter of weeks or whether despite their propoganda they are going to suffer the same third wave as everywhere else and face months of restrictions until vaccines kick in.

I figure most people won't want to lose their houses and will cut spending elsewhere to make the payments. What I really don't get is this belief there is going to be a post-COVID economic boom as a lot of income and profits is going to get diverted into paying off debt which is going to mean less money to spend on consumption and investment especially if higher government spending leads to higher interest rates which will crowd out private sector spending.

I gather lots of consumers and businesses are benefiting from payment holidays on their rent and mortgages and various other loans. And for the most part moratoriums are imposed by law making it difficult for landlords to evict tenants or for banks to foreclose on loans and mortgages. Meanwhile these same consumers and businesses are getting enhanced unemployment benefits and stimulus checks and various other loans which I doubt they are necessarily putting towards making good back payments. So what happens? Will there be government funded debt forgiveness? Will we eventually see a wave of defaults and evictions? As we know the vast majority of Americans live paycheck to paycheck so even a lenient payment plan would be unlikely to give creditors/landlords much of a chance of getting whole. And if banks have all these mortgages and loans that are behind are they really going to be in a hurry to make new loans? And as the consumer economy relies on credit surely that will start to bite at some point. I'd be more worried if Republicans still have the senate. But surely there will be a limit to how long Democrats can continue handouts and enhanced benefits?

KKR and BAM invested in Great Portland Estates and British Land respectively in the autumn. I cannot remember the metrics off hand but they are around 70% NAV.

Yeah it seems pretty obvious you do the healthcare workers first, then the people in managed care facilities (you can just roll up with a ton of vaccines and knock them all out in a day) and then move on to outreach to knock off the age demographics. If you do it by age then you avoid most of the prioritization issues and you can make it first come first served.

Yup too busy putting as much pork to dilute Trump's deal as possible so that he could claim is Covid relief deal was the one that made the difference.

My guess is that Biden does not want to be accused of supporting lockdowns so is telling his Democrat governors to ease up.

Maybe he needs material for his next book?

Great read Liberty. Informative and also quite entertaining.

I think the easiest way to encourage vaccinations is to provide checks to people who get their vaccinations done. At least that will ensure there is an economic benefit to further rounds of handouts in terms of getting us quicker back to normal. Probably not particularly correct. But at least it will allow people to see the "What's in it for me?" and it compensates them partly for any risks they think they are running. Basically the same principle of paying college kids to do experimental drug trials. On a related point. What do people make of all the mutant variants? As well as the UK and South African ones another one has been identified in Japan. And they all seem to be more contagious prompting a tightening of restrictions. And we could be in for a good few months before the vaccinations and warmer weather start to turn the tide.

Very easy to play this. Just buy Alimentation Couche Tard. They already have experience with EV charging stations as they have quite a presence in Scandinavia. And the plus side of waiting to charge your car is that you will end up buying more of their fresh food offerings etc. And with a lot of mom and pop stores under pressure they can continue to consolidate the market which is still relatively fragmented. Also they will benefit once people start driving again.

Congrats you must be so proud she is a very talented young lady. She is lucky to have a father willing to support her dreams.

Around 50%. I got in early with energy and financials so up around 50-100% on those but wasn't aggressive enough and too cheap to pay up after they popped in November. I was hoping for a pullback this quarter to add more but that seems to be off the table. So kicking myself at the moment! Smaller positions in real estate, travel, media, healthcare etc. Zero exposure to US growth stocks. But some exposure to Chinese tech. Feeling rather stupid at the moment. I saw a lot of value in the summer especially in energy and financials but was very bearish on the economy and knew we were in for a very bad winter so found it hard to be too overweight stuff that got decimated in March and wanted to leave lots of room to average down. I failed to discount the possibility of early vaccine results or a stimulus deal getting done last year. Now with a fiscal tsunami coming this year and the Fed in no hurry to tighten it all seems far too obvious.

Interesting to see how it plays out. But I am guessing politically there will be a lot of pressure to provide ongoing support as the pandemic wasn't anyone's fault so forebearance, enhanced unemployment benefits, government subsized loans etc will continue. I think 2022 rather than 2021 might be the year of reckoning. I think the pent up demand argument is probably a bit exaggerated. It is probably going to be limited to certain sectors e.g. travel/entertainment and to some extent will displace spending on consumer goods and speculating on stocks. And because of supply constraints these activities will probably become a lot more expensive so it will contribute towards inflationary pressures. And stock markets have already pretty much priced in a V shaped recovery to pre-COVID levels. If the bubble continues it will be because as Grantham argued there is no moral hazard. Stock prices can seemingly only go up with the Fed swooping in to reverse any sharp market declines. And a whole new generation has discovered the joys of easy money. That dynamic could go on for at least another year or two until the Fed removes the punch bowl or inflation spooks markets and undermines confidence that the Fed can keep interest rates low.

Yeah I think large budget deficits accompanied by a recovery of private sector spending could do the trick with higher commodity prices and supply constraints adding some fuel to the fire.

I think what is different this time is the money supply growth is enabling enormous budget deficits. That has a much more direct impact on aggregate demand and as capacity is still somewhat constrained I'm expecting quite significant inflation later this year (that will ease slightly as encouraged by strong demand businesses are incentivized to ramp up)

Naively I thought vaccines would allow us to vaccinate the most vulnerable reducing hospitalisations and deaths and the stress on the health system and therefore a faster return to normal. And actually re-opening would accelerate herd immunity if it allowed the virus to spread around the young and healthy who are probably the most likely to refuse vaccines. But in many parts of Europe national lockdowns are on the cards with governments seemingly terrified about mutant strains and rising case numbers in spite of existing tight restrictions. The message is "the vaccine is our only hope". If I was being cynical I would wonder whether governments are trying to scare/bully us into submission presenting us with the choice between either getting vaccinated or enduring the hell of national lockdowns for most of the year. No idea what direction USA will go under Biden. But if herd immunity via vaccinations is the aim then it will probably be seen as advantageous to keep things tight until enough people are vaccinated which could delay re-openings until the summer rather than the spring. Of course the virus could just burn out in the spring like last time. But double dip recessions seem far more likely, at least in Europe. Interesting to see if there will be any kind of reaction.