Gregmal

ZM another predictable one goes down. And yes, there were people buying these last year because they were going to change the world.

Yea but then the question on the commercial and capital markets side is do you really need these dopes making mid 6 and 7 figures doing what is essentially advanced paper pushing? I’m currently working with a management company to secure a 7 figure loan for some needed projects at a planned community. Looking at 15-20 year loans. Spoke with a half dozen different banks and at each one I could write down on paper what their “commercial lending” guru looks and acts like. Not even the lame suits and purposely showy watches and whatnot, but just the predictable nature of what they’re all about. The “oh here comes the pitch in why this product is better LOL” stuff. And then thinking, this guy should be embarrassed to wear that watch. And OMG he makes what? And goes on 3-4 vacations a year? To do this? And the absurdity that 98% of people have zero shot at ever being considered for a job like his even though most would be able to do it just as well??? It’s one of the last remaining clubs out there but with all other margins getting squeezed I think it comes under pressure over the next decade. IBKR I also think does a good job highlighting how you can cut much of the fat on the capital markets side. Sooo much money gets wasted on fat and I think the reason so many of these places are so diametrically opposed to crypto and AI is simply because it Amazon’s their business and exposes how redundant most of them are.

Like take analysts for example, do you really need a high level education or a stupid CFA/MBA to wait for something to make a big move AND THEN use some elementary DCF based model to "Adjust" a price target to basically +/-20% of where the shares now trade? Does doing this really need to pay $150-200k? to do this? https://seekingalpha.com/news/3773445-hedge-funds-walk-away-from-peloton-amid-post-covid-decline-and-52-week-lows Short low, cover high, buy higher, sell low.... This shit is the biggest scam secret out there and its largely been hidden because its how friends/family in the gold old boys club keep wealth circulating. Like most family offices are basically wealth transfer schemes. Desk jobs at local banks are basically where the local RIA guys family friends work. Once the veil gets removed your aspiring college kids realize a 4 year education to ultimately do paper shuffling and deal with complaints about $35 overdrafts fees for $55k-65k is a joke. They are going to have to either start letting the burger flipper types do it or theres not going to be anyone left to do these jobs. To make up for it they're going to cut the absurdly paying boy's club jobs. Same is true with insurance agencies.

Thats probably more than enough for a lot of finance jobs in general LOL. I have never really gotten along with the finance professional types. Mainly because they are egomaniacs(or also lifelong dorks who now seek revenge on the world for not recognizing their master of the universe status until they started making big $$) who think that because they make a lot of money they are more important than everyone else. Take themselves too seriously and have a sense of entitlement through the roof. And for me, one of the first things I learned is not to respect someone just cuz they have money(or make a lot of money). Realistically, if you opened the doors to people without the "elitist" qualifications, you'd solve a lot of problems. I am not even kidding when I say this but I would wager big money that even the dudes who pump gas, many 20-30% of them, with some modest training, could do most of the financial industry jobs. They'd do it for less than 6 figures for sure. Or you could pay them what the Ivy Leaguers get if you desire. But theres a certain floodgate you open by doing it. I believe its coming. The lower rung jobs are a waste for qualified people. You dont need a 4 year degree to do half the finance jobs out there, let alone work at a bank and open accounts. The higher rung jobs are guarded like a secret society. Big tech now is more appealing if you're going to get screwed with long hours. Financial industry is going to be forced to change.

Then again a proliferation of ads like the one featuring this piker everywhere..... https://investingoutlook.co/wall-street-legend-strange-day-coming/?cid=MKT579436&eid=MKT582603

Yea it’s all quite strange and a huge and ongoing exercise in mental flexibility. It’s one thing when I buy stuff with the PYPL example(or Z) where it’s like “ok I’m ready for it to go down” but with stuff like GOOG or MSFT or BRK for instance you expect stability. It really feels like I am in the Matrix and Morpheus is offering me the red or blue pill and I’m trying to take 3/8 of the red pill along with 5/8 of the blue but still torn and uncertain but apprehensive LOL. I do think this time is “somewhat different” so relying on historical evidence is dangerous, but there is also just a common sense element here as well indicating it’s not “ALL” sustainable.

Yea....Im becoming very convinced this is happening soon. The average or worse tech stuff is straight up withering. I still fear letting go of my MSFT and GOOG but anything below that type of quality seems downright dangerous right now.

Yea at a certain point though you can either get raped by the politicians or you can play ball by paying people more in wages while looking good for doing it, AKA the Costco approach. If Wells or MacDonalds tries to automate everything, they will be destroyed via taxation and reputational damage. So it cant happen too quickly. Separately, my own Wells story. Have one right in town. Went there to open a tenant saving account for one of my properties. Got there at 1 or so. Was told that the person who opens those accounts was over at her desk. After 5 minutes of watching her yap on the phone I am told that she is going on her lunch break and that I could come back in an hour. I asked if anyone else could help and was told the only other person who could do this was not in. Went next door to Chase and the private client lady did everything for me in under 10 minutes.

To me, the most interesting part of the NVDA story is that it, like a number of other companies, basically hid behind what was largely a false narrative about overvalued bubble tech stocks. For sure this is true for some, but for others, myself included, this sort of lazy fallback underpinning to some of my assumptions allowed me to completely miss something that with a little work would have been pretty obvious.

Rule number 1 when buying crap is to never forget that it is crap. A close second is to have a well defined exit strategy and stick to it. When it comes to stuff like Resolute or BB I think he’s forgotten both those things. Or is willfully bypassing them and in that case you just scratch your head and hope for the best.

At the least, I think we complete the whole array of coverage. Perhaps a little too optimistic on the micro and a little too pessimistic on the macro but a complete picture I think nonetheless. As long as everyone makes money who cares!

Getting a drunk to put the bottle down is the biggest challenge. From there, people are still going to be skeptical until trust is earned back and long term sobriety displayed. And if you are serious about staying away from the bottle, and care about convincing others you are too, not hanging out in the same bars/clubs will earn trust faster than continuing to do that kind of shit.

People can agree or disagree with the following statement but it’s certainly relevant. Prem Watsa has spent the most glorious decade in investing history destroying his reputation as an astute allocator and steward of shareholder capital. He s viewed now as a kingdom builder. The status quo won’t improve anything and even if he changes via subtle operational modifications, what does that matter? What? Over the course of the next 10 years people will slowly start seeing that he s not doing dumb things anymore? No, the quickest way to show you’ve changed is to do the opposite of what you’ve been doing. Let the kingdom builder show he’s unbundling his kingdom. Sell assets and buyback stock because it’s the best use of capital. I highlight the equity portfolio because my preference would be to sell the lowest quality shit first. But this is so cheap that any kind of asset sales and subsequent buybacks will do.

I mean ever outside of the quality issues with the portfolio, its constructed in a terribly suboptimal way. You even look at Buffett who has WAYYYY more constraints tied to his, IE owning big portions of banks and regulated companies....and the guy finds ways to be nimble. Then you have Prem, who has tied his hands sooooo badly that he cant even take advantage of his mid cap companies going up multiples of their value because some kids on the internet like to trade options; on MULTIPLE OCCASIONS! The guy refuses to learn and do things any other way than his.

I mean you are clearly convinced that the portfolio is now all of a sudden Ackman/Buffett quality so its a waste of time to argue. Its a common phenomenon, when stocks go up people think theyre great and when they go down they get less love. The key is not to fall for it and start believing that just because something has now gone up that its high quality or some great future business(or vice versa), especially when the demonstrated track record indicates quite the opposite. But you are free to continue doing so. A lot of you guys have spent years talking this til you're blue in the face and to no avail. Missing glorious opportunity basically everywhere else. Ive laid out several times what actions need to occur, and wouldn't you know it, they announce a real buyback coupled with an asset monetization and the market likes it...but what do I know? My two main points are the Prem has stubbornly refused to monetize these. And that FFH would be better off monetizing and suring up the balance sheet and buying back stock. Get back to basics and keep it simple. Enough with the garbage, gimmicks, and complex stuff.

Exactly. But now the pendulum swings and people fall in love and think theyre great. Thats the siren song of Mr. Market. If you love FFH shares because they are cheap....how in the world do you favor owning poo poo like that over selling those names into a generous bid and then buying more FFH shares?

While I can appreciate your enthusiasm, its this exact mentality that creates cycles/in favor and out of favor opportunities. A lot of things have happened over the past 12-24 months. Some are temporary and some are not. However I can find a way to mentally do what you're falling victim to here with other stuff that is clearly crap too. I mean Gamestop? What a turnaround! And gaming is a massive future opportunity. They have paid off all debt and now have a massive net cash position and stand to benefit big time from future trends in the space! Like WTF...you see how silly that sounds even though that same enthusiasm would be just as true for yours in regards to Prems stock portfolio? Resolute is a piece of junk. The guy has owned it forever. I remember in 2013 hearing how Prem leadership and direction there was a bull case and the stock was at $16...The only exception I'd make here is Atlas but I dont want to get into arguing individual names one by one because that misses the point. Your garbage has caught a bid. Even if its something you like, your stock trades at 65 cents on the dollar, sell that shit now, and make that gap disappear. You've had 5-10 years and in some cases more to be right about your stocks, maybe they've worked. and maybe they haven't, but if you believe you are a semi reasonably capable allocator, then there is ZERO way around the fact that selling them to repurchase your own shares and sure up your liquidity position is FAR better risk/reward. And FWIW, TRS are not an equity position. He can sell those or add to them all he wants but he's only doing that because he cant afford to do a real buyback. If anything else the fact the TRS is so big now is more reason to get out of the other stuff.

People can say whatever they want and time will tell who’s right? But a decade, let alone the most prosperous one in history, is not exactly 1/2/3/ even 5 years of a rough stretch. Falling back on how much money one has is a lame argument. It’s not hard to accumulate money especially in the finance biz. Results matter and Prems resemble John Paulson… another billionaire who has sucked a big one. When your process is wrong, change, adapt! If it’s just a short term aberration, like Buffet in the late 90s(he didn’t even do that badly then so I don’t know why people use that as an example) then time will prove him right. When it’s been a decade and even Mickey Mouse has outperformed you….and still you stand pat because you’re already rich and stubborn….and then talk a big game but your personally crafted company is overlevered and lacks liquidity and can’t even buy back stock in a real way without gimmicks…..I mean come the freak on!

Buybacks work if they are done consistently through the cycle and aggressively at troughs; they work wonders if the business underneath is stable, profitable, and managed in a disciplined way. There is zero debate to this and no better example than shitty mall retailer Dillards.

Well that is why I said Buffett just happens to have an obsession with making money. Same can definitely not be said for Prem the last decade, so let’s not act like he done that. He’s blown one of the greatest bull markets in history doing unnecessary stuff, buying shitcos, bailing out “national treasuries”, unable to even execute a real buyback and constantly having to pull gimmicks because liquidity is shot… I mean you would literally have to try to pick losers consistently to do this bad and even then I don’t think one could match his past decade. So I don’t see how it’s unwarranted to criticize and wonder if there aren’t talented underlings at FFH that could and probably should be calling the shots. It’s no slight either to say that there is some excitement warranted for the next in line at Berkshire either? Why is there so much loyalty to Prem Watsa? Just cuz he s a billionaire and self made doesn’t absolve him from being a dumpster fire. You wouldn’t make the case that Larry Ellison is taking/took Oracle seriously would you? This shit happens all the time. People get to a certain point and their priorities change. That’s fine, but then don’t pretend like the throne you gave up is still yours.

Theres definitely a lot to like about this setup. The part I dont is having Mr. Watsa here, in current form, at this stage in his life. He's a self made billionaire, successful by any definition....nothing left to prove and not changing his ways. I still laugh at the commentary in one of the other FFH threads. Where Watsa is quoting Buffett or some 1950s value investor stuff and saying he's now, in 2019 figured shit out and someone was just like "yo, this guys been investing since the 70s but now 50 years later he's saying he's learned" LOL. Same sort of life priority things Ive said about Buffett except Buffett just seems mental and lives for little else than compounding dollars and making acquisitions(as evidenced by basically everyone around him admitted as much) and Berkshire actually owns good businesses and has a great abalone sheet. Bring in the new guard. The younger and hungry who are looking to fill the shoes. Yes, I own both BRK and FFH.

Eh I more so was referring to the qualitative side. They are so poorly constructed/capitalized that they dont have the liquidity to conduct real buybacks of any size. They have an equity portfolio with tons of garbage that now, much like the likes of pretty much everything in the stock market, has gone up..except they've convinced themselves these are great businesses worth holding onto, and on top of this, this sort of thing is so much part of who Fairfax is, that people have come to terms with this and just kind of accept it. As @omagh said, can you imagine these sort of stunts/issues at Berkshire LOL? The flip side is that a small change in a key variable can allow for somewhat of a rerating, especially when the sentiment is as poor as it is. So thats the angle to play IMO.

This is actually a useful reminder, so thank you for stating it so elegantly. Im in for a quick trade but its important not to lose site of what FFH actually is.

Yea I was actually thinking just that when I saw the thread pop up. I would definitely consider NVDA a FANG caliber. I long neglected to look at this because even if I tried I probably wouldnt understand the space and as a result never really appreciated how truly dominant NVDA is. Essentially the core/bones of crypto, gaming, AR....all very big pieces of the future.

Added to the losers. MSGE and Z. Bit more DIS too.