Gregmal

Yup. And then you look at the alternative suggestion which is to own bonds which over the same time period either got smoked, or if shorter duration, “didn’t have a real return” either after all the hatchet job adjustments and modifications to the gross returns based on false CPI data. But then you step back and say ok this is the result you get for stocks when you go super duper out of your way to try to make them look bad, they could easily perform better, which generally they do. Whereas fixed income? You get nothing. At best over the same time period you got the coupon, remember the starting point for stocks was “the top” when fixed income got you 1%, and at worst you got what you ended up with anyway by owning them. Or then we pivot to some super active, day trading type hindsite strategy where we guess the short term fluctuations, and that too, has proven to be both a suckers bet, and way less efficient tax wise, to….just owning stocks. I don’t get the point of this game.

Think we ve had this subject come up before, but using one flimsy, kind of subjectively picked argument based on a timeline of “in 2022” doesn’t even remotely cover “how stocks do with inflation”. Inflation started summer/fall 2020(hence how we starting printing it on the CPI in Q2 2021) and there’s still modest albeit abating inflation. Saying “in 2022 they couldn’t raise prices fast enough to counter inflation” completely ignores the multi year runway they get for raising prices following it. Or the huge demand and profit boost most got from the wave of inflation producing demand. Especially when most inputs were supply chain. Fritos aren’t 150% more expensive to produce than they were in 2019. But the price hikes stay. And then also “the returns aren’t positive in real terms”…why cherry pick the absolute peak? It should be very obvious stocks are dynamic, flexible to environment because they have actual operators managing them, and have more than held their own through the 2020-2024 inflation period. They’re also tax efficient. Flipping through CDs and short term crap isn’t. The obviousness of the advantage is even more evident by the fact that we have to contain the counter argument to “if we take the date the index hit its exact top and then stop counting at the bottom, it’s clear stocks do poorly with inflation”…frankly I don’t think it’s really productive to force oneself to draw conclusions based on just 12 months, but nevertheless nowadays we seeing people doing it for mere days, weeks and months. That’s not “in an inflationary environment” and it’s not “evidence” really of anything other than a bunch of monkeys playing hot potato based on headlines.

Curious as Ive noticed and been perplexed by this for a long time, and it again seemed forefront and center after the META earnings(just as a prime recent example). We see it all the time when folks talk "macro" and "the market"....ticker ABC goes on multi year run, then regresses. The regression needs to be analyzed and theres often talk of whether or not "its warranted". Index pulls back 5-10% and "its been bad" for investors. Or "thats why its dangerous to be in stocks". COST falls 10% from ATHs and now its obviously because it was priced to perfection(rather than the entire two decades prior when it was also expensive)...Seems stupid and Im failing to understand why most investors arent agnostic to this sort of pointless fixation/type of analysis. Or if Im missing something and there is a huge benefit to this sort of stuff? If an instrument goes from $50 to $75 from January to September and then in Q4 from $75 to $60....my observation is that many investors, on December 31, would feel like they lost $15.

Funny thing with Disney is after bleeding for years, the only reason people started giving a shit again is Peltz. He started making noise again in October around $80/81. And then what do they do? Vote for the status quo LOL. Think the stock is already off about $10-12 since the elections. Would imagine this continues until...next proxy season.

Yea I grabbed a bit more Nintendo too. Really puzzling trader this one is. Fundamentals inflecting and stock drives to $15, and then sells off after a couple dumb hit pieces relating the the timing on new console, IE we are talking a few quarters, and now off $3+ from the highs.

Everyones gotta find their own process. And then the work begins refining it and evolving as an investors. In a world of "this is what youre taught"...everyone runs to the income statements. Personally, the first place I go when looking at an investment is the balance sheet. Why? Because Im not interested in crappy balance sheets. It only means...bad things. Poorly managed, declining profits, interest rate/refi risk...and many more derivative negatives. Whereas Ive made an absolute fortune, finding companies with pristine balance sheets, and "nothing really going on"....playing inflections or event driven stuff. CKX a good recent example. Nintendo falls into this bucket as well. When the balance sheet is a fortress, you have time to sit around and wait to see the cards turned. You can also employ your own leverage to put on the investment. Whereas some crapco with a huge debt burden, you sweat more and more with every tick of the clock.

Well why not base it on your own work?

Both are a waste of time. If Im concerned with the earnings power of something, I typically try to figure out what the next three years of earnings will look like. One year is such a small sample size; anything can happen in a year.

Bet the teachers are still getting paid though.

Sure there is. Look at all the spending packages being promoted as immediate and urgent. And all the other stuff they’re jamming in. War is always a great excuse to move money around

The amount of money and power available to the incestuous complex during times of “war” is too attractive to them. The complex includes military industrial but they’re just a piece of it. The powers that be love war. Look at how much freedom some were willing to give away to the government because of a bad flu strain a few years ago! Telling people they are in danger and in need of protection is the easiest snake oil to sell.

We need “wars” to excuse 2013s oil prices and inflation being a little higher than normal going into elections. Always have to have something to point a finger at…remember, Joe Biden told us the buck stops with him. Guess the dementia has taken its toll.

Think its very clearly in the interests of a lot of the establishment to keep this and Ukraine going.

Show of hands…who voted for this?

This really isn’t an issue for most companies. It’s only really related to investment managers and such, and those certainly don’t trade at a market multiple.

Conversely, Ill give you another...I earlier also wanted to hedge and the IWM has been money there the past few years. I wanted duration and there is plenty on the chain. But OTM and duration are tough. So I bought $220 Dec 2025 puts. Figured if we rip its ITM enough where I can take another stab while its still got some time to work out...IE 20% move from $205 Would still mean I can save the trade or size it up with a decent probability of it coming back in. So I could double down. Versus if I went for say $150 puts...its a hero trade kinda and a move to $250 more or less crushes the realistic odds I can ever salvage that strike. So in this case I like things where I can have the market be flat and not lose much, go down and make money, or go against me and trade it again.

Why go a week out? It’s funny you mentioned this because I got bored and saw a trade setup a couple weeks ago and just closed out pretty much this trade. TSLA at 175 looked good for a hedge. I didn’t want near dated stuff because I’d have to time it perfectly. I didn’t want to go too deep in the money because it’s a volatile stock and can quickly go against you…so less capital exposed was my goal. I settled on Sept $150 puts for $10.50 figuring the time value would buy me a few months to be right. But a quick move to about $150 would bet me 50-70%. Closed em out this morning for $16.5-17. So…what is your wager? Tesla gonna tank, fast. A timing call? Hedge you don’t care about not working out? Fundamental short…IE you need time for it to play out and just roll options? Most crucial thing with this stuff is how you structure it. Also keep in mind, VIX 20 vs VIX 14 matters too.

It really just depends on what you’re trying to do.

I just can’t stomach investing with management teams that exhibit zero shame or accountability for such putrid performance. At least not anymore

Nah. Remember how long Fauci kept lingering around and doing his stupid pressers even though everybody but NY and CA moved on from COVID? Jerry’s doing the same thing. Im actually semi hoping for a Trump victory just to see this guy get fired. He’s a clown.

Add to Fairfax

This is what’s so bizarre about this whole inflation saga. The culprits have been super obvious. First go around it was clear as day that stimulus checks and shut down related supply chain disruption was the majority of the “9%” inflation. Now it’s obvious housing and secondarily energy is most of the inflation. Yet people wanna talk about services lmfao….it’s like talking about the attractiveness of a 500 lb chick and being like “yea she’s got a really nice bracelet!”…Who TF cares?

Duh lol.

The problem with small cap stuff is that even with good ones, G&A can be a huge chunk of the overall earnings. So right out of the gate, you are at odds with their management because its almost a survival thing for them to ensure they can pay themselves. In the mid-larger cap space, its really just the product of most management personnel being career whores. Ladder climbers. So even when you get good ones, they have little loyalty and will bounce for a bigger check or better job title elsewhere. While theyre employed they are motivated by maximizing their compensation. So me, I just kind of hunker down in stuff that is the exception to a lot of this, and Ive only really found that exception to occasionally exist with either founder led, or owner operator type C-suites. Folks underestimate how disruptive it is when the C-suite is constantly turning over. Culture at a company is built over many years, and cant evolve in a positive way when every 5 years a new guy comes in asking for stock options.

ASP being $430k isn’t inaccessible because of plumbers. It’s because Fed went mental on a rate crusade and with 20% down you’re now looking at like $4000 a month for a shit box. Even if prices went back to pre COVID levels, because of mortgage rates being where they are, it’s still massively exclusive for the average person. Also embedded in this is that most Americans haven’t actually had any sort of material wage growth since GFC. And now they start to demand it, and have some leverage to get it, and these academic assholes do what? Ooh wage growth bad lol. Like you can’t even make this shit up. It’s so incompetent at the highest levels that one might think it’s not incompetence and that the game is just rigged.