Gregmal

The largest components lag big time and that’s what they’re waiting on. Yes. They should have just stuck with transitory because thats what it was, but people are antsy and need immediate action and it just doesn’t work that way. It took about 18 months to create the inflation via lockdowns and stimulus checks and it’ll take that long to have it resolve itself, rate hikes or not. I mean how many times have we already seen folks continue to draw conclusions and be amazed at how “sticky” everything is because it’s been a whole month or two and there haven’t been major declines in the metrics lol? Time. That’s it. The way it’s calculated, it’s almost impossible to have it just fall off a cliff overnight. So if they’re reacting to that? Look out. CEOs everywhere are ringing the alarm bells. Even the ones not going crazy still say it’s just ok now but let’s not push it. Guys like Gundlach are already calling for deflation and pretty rapidly which again, if you look at how the CPI crap is measured, it’s almost inevitable starting late spring next year. It would be quite remarkable to see them fully fuck up an economy they spent over a decade rebuilding, just cuz they got some academic theories in their head and couldn’t be patient…

Good stuff, thanks guys.

Ugh my dudes I envy you guys. Maybe it’s my adhd or whatever but I’ve just never been able to lift consistently. Shit my hockey coach always used to threaten to bench me cuz I’d just skip practice on days we did weights. I’d rather swim or skate for hours than lift for 25 minutes. Any recommendations on setups or stuff you can buy/do at home? Gyms are another ugh for me. Once upon a time I wasted like $170 a month on Lifetime Fitness which was an amazing place but ultimately one I got bored with and never went.

I think you are greatly misinterpreting what people are saying. Look at sports betting. If everyone thinks the Yankees will win, your odds/money line reflect that. Same thing with risk/reward when investing.

That’s the biggest thing to me. I’ve never seen people cling to a thesis, so hard, so wrong, for so long, as this whole money printing thesis. Maybe Fannie/Freddie, but that at least had some merits. But they just can’t let go. Every 10% pullback we’ve had this decade is cuz of the money printing bubble bursting. Because of course, sometimes we can’t just have a correction. Stock markets aren’t known to do those sort of things.

So what I see is… bonds were the real bubble but now are going to be even more in demand as the bubble bursts. Because…. We ignore mark to market on bonds and just look at a raw yield. But at the same time, we conclude stocks are a terrible idea because of current market to market while ignoring the real earnings yield. Additionally, bonds would be great in an inflation environment…….(no idea why), but equities are obviously terrible to own in an inflation environment because hey look at what the stock market indexes did the last year and idk….money printing! Very bizarre and of course all of it is so short term centric. Any sort of common sense will lead one to the conclusion that a reasonably priced business with a sound competitive position will do better during a period of inflation than most alternatives.

If there was a bubble in bonds, meaning obviously that they were over owned, why now would it be assumed that even more people would buy them. You didnt have a bubble in Zoom or Peloton because nobody wanted to own them. This is another part of the narrative contradiction. If you genuinely believe in this inflation, bonds are less attractive than they've ever been. Not more simply because of a face value yield.

It is kind of funny how we’ve seen clear cut cases of bubbles and yes, PE ratios pushing triple digits like in Japan or here in 1999….and yet here all dat money printing supposedly created a massive bubble where the index PE topped out at like what? High 20s? Lol. Largely weighted by what? Oh the same FANG stocks that are now cheap? Or is any market, period, that simply declines 20% at any given point in time a “bubble”?

Is it just me or is the day to day sentiment hilarious. Every time the market is down, even on a random, no news Tuesday, folks are like “money printing”, “bubble bursting” as if its deserved for the market to go down every day even though often there’s no real reason. One day of gains and it’s like “wtf, why, this is bullshit!” all angrily.

Investing is just a game. If it’s about money you don’t have an edge.

My kids Family/friends fishing in that order

I know. I’m a fan of hyperbole and sensationalism sometimes…makes life more colorful. On this issue though I think we need to pay attention to the core American. The middle class with respect to lower-middle to upper middle and all in between. Worrying about those on the extreme upper or extreme lower is, simply from a math based angle, kind of pointless. Besides, for the lowest of lower end folks, we have social welfare programs that are more than generous, and yes, those are a result of sinister taxes on everyone else. The average person works 40+ years of their life, makes huge personal sacrifices, and relies on the system, not with their hand out, but simply trusting that if they do the right thing, eventually, if they live that long, they’ll be able to retire and enjoy maybe their final decade or two of useful life. I have way more respect of compassion for those folks then the people who just always seem to be in the same space, often by their own doing.

Nah bro, it’s about the 40 year old french fry operator making $20 an hour who is getting swindled by an extra $75 in monthly gas and grocery costs. It’s not his fault he doesn’t want to commute further to go work at the Howard Hughes food kitchen for $35.

https://nypost.com/2022/10/16/average-american-is-losing-34k-and-everything-else-on-bidens-watch/ Fuck those guys and their 401ks.

So there’s the whole market or index or whatever, but underneath there’s investment opportunities. If the economy is hot enough that the Fed needs to keep raising, a solid, well run company trading at sub 15x is gonna make some serious money both in absolute terms and relative to the market cap and especially relative to the prevailing negative sentiment. I don’t like the big tech because if nothing else, to your point about all the liquidity, there’s been few bigger beneficiaries of the past decades policies and practices than FANG stocks. So I just think they’re way too overowned. But otherwise, ignoring that, they’re great business and what? If the stock market sentiment remains poor or rates temporarily go to 6% they’ll stop making money? Don’t think so.

I think this is a great point. When everybody expects something to happen, it usually doesn’t. Everyone is waiting for two things, the massive washout, and the pivot. Perhaps there’s no pivot and we just see raises to a guided point and then plateau, and maybe rather than a total washout we just see a continued grind lower. It’s all kind of interesting and also somewhat of a distraction. In a good economy that warrants 5% rates Berkshire is going to make a lot of money. That’s just an example but at some point the fundamentals will matter again

Hamilton Thorne should do 10-15% growth. St Joe will be 20%+ for the foreseeable future Nintendo I can see surprising people as they seem to adopt integration of their content into new ventures.

Alphabet is Google. You mean META?

All I know is for the first time in a really long time, I can find companies where I am legitimately excited about owning them on both an asset value and a cash flow basis. If I were a VC or PE fund, I take some of these deals and run. However the stock market investor buys or sells and then let’s tomorrows stock price validate or invalidate their decision. MSGE for instance trades at like 7x normalized EBITDA. Give me that all day for a trophy asset. I also think one of the bull scenarios out there is that apparently the economy is still great.. ok. No opinion there. Should some of the big inputs such as housing and rent decline(as they already have started to) before rate caused destruction, those things are off to the races. LPX is like 5x. What if mortgage rates return to normal spread? 160-180 bps to 10 year… meaning high 5s? Moonshot. Banks I don’t own, but same deal. Who cares what Amazon or Tesla need to justify their valuation?

I bring it up because yes, 2020 was a good example. Particularly June and July. For all the folks who have infinite wisdom about the Fed controlling the stock market, simply because they talk or whatever, I vividly recall that Sunday in March when the Fed cut to 0. And guess what? Market plummeted for the next while. Weird right? Money printing? Nope, market went to hell anyway. And even in June and July the prevailing sentiment was “look at how bad things are! Buffett is super bearish! Great Depression! How TF are we only 10% off all time highs!?!?” And then surely enough, things just kept correcting up and then finally like today everyone is a fuckin expert about how it was money printing. Imagine that? Well yea that happened and all the experts like Drunkenmiller and Marks were wrong as fuck. So I just try to think for myself and keep perspective. One or two years of earnings or interest rates don’t really mean shit.

Can you point me to anything or anyone meaningful who is wildly bullish? I mean even Cramer is now telling people sell on any rally and realistically, here, where we have people who have some experience, the sentiment is at best basically, “I see some long term value and small caps are cheap”. Hardly any craziness.

So largely the underlying basis for investment was what? It seems common theme to be an established business, profitable, little debt? Just guess-working from some of the stuff you mentioned. Any exceptions at time of purchase? IE 50x PE or debt at 90% of EV?

Here’s mine. So in the early 2000s, bankers, hedge funds, and big corporations found ways to make extraordinary amounts of money by gaming the system. This ultimately blew up the financial system and caused normal people to lose their homes, see their retirement savings wiped out, and widespread unemployment. In an attempt to make this right, there was an underlying pledge by many of those same insiders, who never really lost their wealth, to make those people whole again by reinflating the system. The side benefit is that their assets would increase substantially as well. Unforeseen, was that the average person was still too scarred to ever really get back into the game, or too poor to participate, until the back end of the decade and early 2020s. Just in time for the system to fuck them again. Advice: only buy indestructible hard assets and things with a durable and dynamic ability to generate cash flow.

Yea I’ve heard a lot of smart and rational stuff supporting the stop/start thesis. It’s kind of where I think we go as well. Which again bodes well for the Berkshires and Fairfax’s of the world.

I have too much time on my hands now with my kids at school during the day now. But call a few headhunters. Very different market of late as far as white collar jobs in the NY/NJ area go. Got the idea to do so because my wife told me her company was mandating a return to office of 3 days a week and eventually 5. Told anyone not willing to pack their bags. There aren’t jobs everywhere like there were in the spring. Got the same sort of thing from a few contractor friends. Housing has slowed. All that’s left is probably restaurant stuff which should go strong into the holidays.