valueinvestor

Let’s hope they fly ;D Haha - that’s my hope too. However so far, they’ve been floating on infested waters. ;D

It's not necessarily to squeeze suppliers, but as others touched, it helps companies grow faster. When they can take payment upfront, reinvest the funds to acquire growth, and pay-off their suppliers at the end of it - it makes total sense. With near-zero interest rates, a supplier cost of capital is close is not huge. What others may have not touched is that some suppliers love this, especially when the delivery cost of product/service is very low versus the prices they charge. Hence they can acquire customers very fast, as customers do not need to pay until X amount of days later, but since their product is valuable, it is almost certain their customers will generate revenues. Worked for a company where they were the lowest cost producer, 90%+ gross margins, low-tech industry, and basically LTV/CAC of like 10, of course, you do not need these metrics to still be under this pool. However, the short answer is the flexibility and opportunities to reinvest funds before paying off suppliers are a lot higher than the cost of that capital.

PK, TDG, AER

Any chance you can start a thread? I've been invested but got out when things matured - would like to pick your brain - as I like the CEO.

AER, GSY, TDG, PK

I'll check it out - thanks Mike!

+1

I'm currently going through the same thing, although I'm not nearly in the same financial situation - I'm in my mid-twenties. Most of the questions I've got is "did you finish your degree?" and "what do you do for a living?" If I want to be polite - I just say "no/self-employed - but did you need insight - it's why most people ask?" If strangers are asking, I would ask "why would you want to know" in the most sincere way possible. For the most part, people want to know my takes on things. Typically people who know me believe I'm pretty smart, being a scholar student, accepted to med school, etc. Sometimes they are just curious about the person who had his whole future set-up and dropped out of school or in your case a good job, because they cannot imagine doing that themselves, and want to genuinely understand. Other people for some reason find joy to keep score on who's doing what and how well are they doing, and this "retort" sometimes catches them off guard, although that is not my intention. At the end of the day, my obligations to my family and myself are taken care of with the caveat of any major devastation. Most importantly, I believe I'm living my twenties in a way that would make my 80-year-old self proud. Being a person who was wealthier than most, lost it all, and building it back up to do my part for society (not to get back my wealth necessarily) - I know firsthand that money is does not bring happiness or fulfillment. Not to say just because money is useless, and one should not aim to generate wealth, but again I believe it should be used as a tool to push your "agenda." I went on a tangent, and hopefully, it's a useful tangent. In my eyes, you hit the jackpot and should be proud. For anyone else trying to besmirch your win - f*ck em. :P

https://fs.blog/knowledge-project/bill-ackman/

Apparently Gilead treatment works with early cases.

Same. Maybe it's because I have not seen anything, especially with Google's earnings to dictate another 2.5% increase in the SP500?

As many of you know - I've started a data-driven marketing business, and although it's affected by this pandemic - I was fortunate to have resilient customers in my space. EDIT: If you haven't - here's a link to my previous post - https://www.cornerofberkshireandfairfax.ca/forum/personal-finance/my-business'-profits-cut-in-half-looking-for-new-industries-to-pivot-and-grow/ However, my space (event hospitality, specifically venues, banquets, conference centers, etc.) is heavily impaired and although I'm focusing my sales effort here too, I want to branch out to other verticals. I've started cold-calling mid-market firms, but it seems I do not understand their business enough for them to feel comfortable talking to me. I think the primary reason why I was successful in my prior niche is that I have 15 years of experience, from dishwasher to VP, where cold leads feel comfortable as I'm part of their world. I'm not looking to be considered as an insider, but someone who understands his customers. If any Investment Bankers or M&A advisors can provide 30 minutes of your time, it would be appreciated! I can even provide a 30-minute consult on how you can revamp your marketing efforts, so you can book more business, like my customers are doing now. Generally, I charge $5-10K/month management fees per customer and have spent millions in marketing on behalf of my clients, just to provide some background. Any insight would be appreciated!

Anyone squeamish yet?

GoEasy GoEasy Debentures

I think that's the hallmark of a great investor - if people have not changed your mind for the last three to four weeks in varying degrees, I would be surprised because more new information is coming to light. Secondly, Mark did not turn his tune about the market, that's the media's fault for misinterpreting what he said. He finds that it is sensible to purchase at this point if the equity in question is cheap, other than that - wait.

At this very moment, it's almost certain at this will be worst than the Great Recession, as the GDP loss will be greater than 4-5%. However, I'm not sure if the stock market will decline because of that. It may be a scenario where the market rises, while the economy gets worst. Stock markets were never really a true reflection of the economy anyway. The stock market was at it's highest during the peak of the damage caused by 2008 if I remember correctly. It may be the case here unless we have a second pandemic because we never developed a "herd immunity" We are again going to a restructuring, not due to liquidity but a force reducing consumption. Just thought I would post what I think will be my final thoughts on the matter, unless new information comes to light, as a result, will act accordingly.

Never really understood why people thought it should trade around 2008 either - it’s almost analogous to the short cut of shorting stocks because they are overvalued. I never found Tesla to be a bargain, but I also never found it to be a great short candidate like Einhorn because Elon (like Bezos) knew how to work the capital markets. Where they deliver above expected results, marketed a strategic plan/vision, issued their “overvalued” stock and plowed it into their business to create dominance. It’s somewhat similar to the economy, where you print new money, fill in the holes, and have asset prices go up (although price of those goods/services produced go down). Ray also made a good point that the stock market is not a true reflection of the economy, hence sometimes there’s lag. Although I was surprised Ray didn’t cover spending, as it’s a crucial step to get asset prices up. Not only that, but to get spending to create a wealth effect. With this pandemic - not sure how that’s going to happen. When earnings multiple go to 25x earnings versus 20x earnings, it’s still not enough to increase asset price when corporate earnings are down 20-30% due to lack of spending. There’s only a handful of stocks that do that such as Amazon, but even then Amazon’s earnings multiple is already higher than that if I remember correctly.

I don’t know if that’s a bad thing without more context, but it could be construed as we generated a 30% cumulative ROI from printing money. We’ll get a pay back in 90 years for the initial investment, but this also excluded possible losses of principal from purchasing bad assets. 30% is generous. It assumes that that no future debt is necessary to generate the subsequent return on/of capital. But cut off all new issuance of debt and watch what happens to GDP growth which is needed to pay back the remaining 70% of that capital with a 0 return assumption. It's what I was trying to say - you can't make a decision unless you have more information.

I don’t know if that’s a bad thing without more context, but it could be construed as we generated a 30% cumulative ROI from printing money. We’ll get a pay back in 90 years for the initial investment, but this also excluded possible losses of principal from purchasing bad assets.

Not that I disagree but infection rates are slowing, which brings a semblance of good news however reopening may bring about new cases, as being experienced in China. However, I do not know how the market will react to this considering that the whole point of the reopening is not to eliminate infection rates, but to slow it down in a dance between either slowing the economy or infection rates. Secondly, if the printing press went too far, the US Government has the ability to QT (quantitative tightening). Just to put it out there to encourage more discussion on the topic, so we can all come to a decision on our own.

It's hard to say - when we had the bust in 2008, QE worked because implementing it would've helped the US in the short-to-mid term. Banks free up capital, they lend that capital and businesses spend. However, if banks lend capital, and business doesn't spend because they don't know what the world will look like in 6-12 months, then what happens? Fed can't pump an unlimited amount of money in the system, otherwise, it will cause hyperinflation or deflation.

Relying on habit is a slippery slope since it only takes 21 days to 1 year to break or rather change a habit into something else. For most people, it's already 30 days since the lockdown. People have been changed imho. And they can't change back? Not the point. I didn't say spending will end, I said it may be a possibility for it to dry up for the mid-to-long term. If that's the case, it will have tangible effects. EDIT: So even if they can change back, it does not invalidate my argument.

Relying on habit is a slippery slope since it only takes 21 days to 1 year to break or rather change a habit into something else. For most people, it's already 30 days since the lockdown. People have been changed imho.

First of all, I hope I'm wrong, however, I do think this will be worst than the Great Recession for one reason - spending. When your country is in lockdown, where individuals can be fined to the tunes of hundreds, if not thousands of dollars for non-essential travel - it's kind of hard to spend. Even without the fines and lockdown, the social distancing that still takes place makes it inconvenient to go to stores where they only allow one adult per family/household. This does not work in a world where 90% of our spending is done in-store since the systems in place are not able to take on that level of spending online right away. If it does, it's not without great consequence/volatility. With that being said, I'm not one for detailed analysis, however, spending was key to get out of all our downturns. If you compare this downturn with many others, this one is reminiscent of the Great Recession and Depression, because it's literally (figuratively) hard to see the light at the end of the tunnel. Other downturns such as the dot-com bust, we were at least able to see how we are going to get out of it. At the end of the day, it's hard to see where this will go, but even if it turns out that the curve flattens this week or the next, it still does not matter. It is not unfathomable to see a 4-5% decline in GDP decline for the year which may not be worst than the Great Recession but still is in line. If this turns out to be true (which I hope it does not), stocks are quite expensive to say the least, even with QE. If anyone can disagree and provide a solace of comfort - it would be much appreciated. Not that I am scared, because I'm fortunate that my parents, immediate family, and most of those I love can weather this storm - hell, I may even profit from this - but it still breaks my heart seeing those affected by this terrible pandemic. However investing-wise, I still think stocks are expensive relative to the economic background despite QE. If this becomes in line with the Great Recession, then valuations should be around what we saw in 2008 - maybe a little better because we still have a functioning credit market. Do I think I should go 100% cash? Personally I'm not because I cannot trade in and out of the market like the big firms while knowing 80% of my returns come from 4-10 days of the year - however, I would invest in a few stocks that are trading inline or less than 2008 levels, or at least cheap on an absolute basis and sell accordingly. Despite knowing that Ray Dalio mentioned that we may be going into a depression not as bad as the Great Depression, but we'll experience multi-year declines in GDP. Either way, I think investing in stocks that cheap on an absolute basis will still work out while waiting for compounders at a bargain.

It's a lateral way of taking some gains - so I welcome the idea. Thank you!