Cigarbutt

When you sell a share short in the market (uptick rule allowing), the intermediate participant borrows one from another investor. You’ve added selling pressure on the market. Covering goes in the opposite direction. When you ask the intermediate participant to ‘create and lend’ an ETF share (if the short selling demand or “hedging” demand (unit creation) is higher than otherwise net general redemption demand from others) with the goal of short selling, the intermediate participant buys the underlying securities in the market and lends you the share for a (create-to-lend) higher fee. Selling the ETF share short puts selling pressure in the ETF market segment (without the resistance of the uptick rule) which is constantly held in balance by the intermediate participant. When you ultimately cover, the ETF share is sent back to the intermediate participant who then sells the underlying securities into the market, adding selling pressure. At least, that’s my understanding. If correct, this is the type of situation where “they” will eventually put somebody who made a bundle in charge of a commission in order to figure out what happened and make sure it never happens again. But eventually happen, it will, in a way, very correlated.

-I think they (UK relevant leaders) have looked at this and they will. The situation is dynamic. -On a personal level (people close to me), the measures taken for the frail and elderly has a net negative effect on the short term and a questionable value long term. Second-order consequences (especially long term) are hard to assess. -On a personal level, most young members of the household are back to the household and I've started to see the consequences of keeping productive individuals idle. It's not all positive. -Flattening the curve is a good idea but there are costs, some of which are long term and the same way humans are not naturally wired to assess long term consequences, humans are not wired to appreciate long term costs of dealing with those consequences. -Flattening the curve assumes a long term commitment and I wonder if this thread will become inactive when it perhaps shouldn't. -Last night, i was asked to review stuff i learned in the 80's and I will try to do my part.

I wouldn’t get your hopes up. He was in big and/or illiquid cyclicals and won’t have been able to reduce much. The best that happens now is they do a great job picking up corporate bonds and don’t have to raise equity in the meantime. With this market disruption, let's just hope that they don't find themselves in violation of some covenant in that goddamned revolver. SJ Isn't "now" a bit early in the game for corporate bonds? https://fred.stlouisfed.org/series/BAA10Y Related to SJ's concern, last February (before the R2000 went down by 37.5%), Moody's made some comments and listed the following risks: high common stock investments, general investment strategy, earnings volatility and added: "A material expansion of the group's investments in stressed or turnaround assets as a proportion of shareholder's equity could also lead to downward pressure on the rating". https://www.moodys.com/research/Moodys-assigns-provisional-ratings-to-Fairfax-Financial-shelf--PR_1000002128 I just want to politely mention that, even if nobody knows the future, the posture comparison, at this point in time, between BRK and FFH, is simply mind boggling.. Too early to go all in? Absolutely. Too early to begin accumulating selectively? Probably a good time to get started. Spreads are at roughly prior peaks outside of 2008/2009. You don't wanna blow the whole load in the event things get worse, but picking IG selectively @ 3-3.5% pick up or HY @ and an 8% pickup isn't a terrible place to start. Certainly a better outcome 3-4 years from now than waiting in 2-year Treasuries for the Fed to hike rates. I agree with you on the concept but... For FFH, fixed income portfolio management has a been a large driver of returns over the years. Given that a significant amount of float has to be invested in fixed income, only small relative outperformance can result in a huge difference because of the embedded leverage. It's interesting to think of their fixed income float management from the perspective of an individual investor whose objective is to remain always fully invested. Dynamic (fellow Board member) explains this very well for equities and the following quote from Keynes is complementary: "In the main, therefore, slumps are experiences to be lived through and survived with as much equanimity and patience as possible. Advantage can be taken of them more because individual securities fall out of their reasonable parity with other securities on such occasions, than by attempts at wholesale shifts into and out of equities as a whole. One must not allow one’s attitude to securities which have a daily market quotation to be disturbed by this fact." Quoting others doesn't result in good returns but, from a humble perspective, this juncture appears to be one of the trickiest, by far, and I would tread very carefully along the fixed income parity curves. The wild card remains what public agents will do (or come up with).

I wouldn’t get your hopes up. He was in big and/or illiquid cyclicals and won’t have been able to reduce much. The best that happens now is they do a great job picking up corporate bonds and don’t have to raise equity in the meantime. With this market disruption, let's just hope that they don't find themselves in violation of some covenant in that goddamned revolver. SJ Isn't "now" a bit early in the game for corporate bonds? https://fred.stlouisfed.org/series/BAA10Y Related to SJ's concern, last February (before the R2000 went down by 37.5%), Moody's made some comments and listed the following risks: high common stock investments, general investment strategy, earnings volatility and added: "A material expansion of the group's investments in stressed or turnaround assets as a proportion of shareholder's equity could also lead to downward pressure on the rating". https://www.moodys.com/research/Moodys-assigns-provisional-ratings-to-Fairfax-Financial-shelf--PR_1000002128 I just want to politely mention that, even if nobody knows the future, the posture comparison, at this point in time, between BRK and FFH, is simply mind boggling..

For 1), statutory surplus is determined by state regulators who typically use a risk-based capital framework (similar to banks) to reduce the value of certain elements (and increase the margin of safety for the policyholder) of the balance sheet, as reported. The discounts vary and depend on the perceived level of risk. FWIW, I've been looking at a few insurers who carry a heavy load of BBB rated corporate bonds (not the case for FFH). An interesting feature is that, in the event of a recession, on top of the decrease in market value for the bonds, surplus capital gets a double whammy because the discount factor is higher for downgraded securities. For 2), your statistical appreciation of forward returns is interesting and is in line with the idea of reversion to the mean, which has been a significant long-term feature at Fairfax (investment strategy, seven lean years analogy etc) but I wonder if such an approach is satisfactory on a forward basis as the investing environment has changed and the Fairfax investment recipe has been changing (some aspects dramatically so) so the future may not be correlated to the past. I think I read you're an MD and the following statistical "joke" came to mind when reading your post. There's this surgeon who comes to the patient waiting to be rolled in and explains that the death risk with the procedure is 1 in 2 but that the patient should not worry because the previous patient did not make it. Thanks For the detailed response. You are absolutely right if the underlying people, processes, and investing environmental context change then the underlying distribution will change and the mean reversion effect may not happen. I love the joke, as most physicians have no or little statistical training/understanding despite three decades of evidence based medicine. I guess the meta question is “has hamblin watsa adapted to the environment and learned from its mistakes. Is their devil’S advocacy before investment commitment as a effective as they think it is?” That the distribution of investment outcomes is something other than 60-40 for 7%? With so many interacting variables involving a biological system, I guess this question may be impossible to estimate with any precision. We know their value principles but how about their learning and leadership principles. Certainly it appears there are a number of individuals that no longer think they have the adaptability moving forward to make decent investment returns. But everything has its price in the market and there is an argument that the past is a sunk cost and all that matters is future behaviour. Ps You might enjoy this randomized control trial from the British journal of medicine https://www.bmj.com/content/363/bmj.k5094 I don't think they have and whether it's a good thing or a bar thing is up to you to decide. They have decades of making macro calls and decades where it served them well. To expect that they'll stop just because 2011-2016 didn't work out for them seems naive. I also made the point in 2016 that them dumping all duration following Trump's presidency was just another macro call. I believe macro calls will continue to be made in the future and shareholder results dependent largely on the success of those calls. My opinion (FWIW) is that, somehow, they have decided to try to move away from "macro calls" and it's ironic to note that, in the event that they could have built and maintained the ark, today's rain would look like pouring gold. @jfan I enjoyed immensely the research that you shared. However, I reject the validity of the conclusion because they did not control the two groups for fasting curcuma blood concentration levels. :)

I find the following to be a helpful guide for practical individual down-to-earth applications and as an input to understand better the difficult decisions that policymakers have to make: https://www.thinkglobalhealth.org/article/could-coronavirus-kill-million-americans They need to channel a diverse source of expert and non-expert info that is often contradictory. It must be hard to lead in times of uncertainty.

Elective surgeries will be affected but it's hard to see to what extent. Under the worst-cases scenarios, both Canada (socialized medicine) and the US (hybrid system) will follow a similar scarcity curve. Transforming operating rooms into ICU beds is unlikely for a long time. A more likely scenario is that elective surgeries that require ICU beds after (heart and other major operations) will be selectively postponed. Cancer surgeries that don't require ICU stays are the last elective cases to be cancelled. Good luck

... https://www.macrotrends.net/stocks/stock-comparison?s=roe&axis=single&comp=WRB:TRV:CB Is FFH better positioned at this point compared to peers? Is the answer in the risk management section? I don’t think that FFH is position better than its peers. It has improved its underwriting to the point where it probably is 8n the better 50% bucket of the industry, but it’s not in the top 10% either. It’s the investment side where they have been lacking. They make very contrarian investments as detailed by Stubblejumper. It seems that they want to jump 10 foot hurdles, where a one or two foot hurdle would suffice as an insurance company. Stelco, BlackBerry, RFP etc are all deep underwater. Part of the reason is they their aspirational goal of a 15% ROE is just too high. TRV is an example that have a bit above underwriting and just takes whatever they can get in terms of investment returns in bond markets without taking much risk (equity and real estate seems ~5% of their float) and they can get ~12-13% ROA. Excessive capital is burned off via stock repurchases and some dividends, It’s a model that works and boring in a good sense. FFH Model has too much risk (as evident by the wings in book valued) for the returns it is generating. An interesting feature in the past was that FFH used to outperform (in terms of ROE and market value) over time, despite lumpy results which tends to put a discount on market valuation. More recently, the results have remained lumpy but also inferior. ROE simple calculation from presenting page of annual report: net earnings over avg total common SE (%, unaudited) 2005 (17.6) 2006 8.9 2007 32.6 2008 33.0 2009 14.0 2010 4.5 2011 0.6 2012 7.0 2013 (7.7) 2014 21.0 2015 6.6 2016 (5.9) 2017 16.6 2018 3.1 2019 16.2 estimated avg yearly ROE since end 2009: 6.5% I don't mind lumpy results (and I guess one could take advantage of short term spikes?) but my guess is that they will continue to underperform as a function of relatively inferior investment results. TRV is a model of stability. In this case slow and steady will win the race IMO if you have a choice between FFH and TRV. You likely know this already but TRV has done a good job at dissecting the drivers of ROE (they do deduct interest on holding company debt from fixed income which is interesting) and it makes it much easier to chart a potential future path of profitability. Here's a recent example (page 7 of the presentation): http://investor.travelers.com/Cache/IRCache/e2ba8c90-722e-e143-27a2-3309585b8cb2.PDF?O=PDF&T=&Y=&D=&FID=e2ba8c90-722e-e143-27a2-3309585b8cb2&iid=4055530

This is an old and potentially irrelevant topic (for the investing side, I plan to focus on Vail Resorts valuation in the next few days) but I just read an article (see below) that reminded me of 1-a recent thread (this one), 2-a small file I had prepared with references a few years ago and how 3-I am stupid and how hard it is to predict the future. The potentially relevant conclusion and that sometimes precautionary principles fail to revert to evolutionary principles and that can eventually be costly. https://finance.yahoo.com/news/jpmorgan-analysts-call-large-scale-015012371.html The fascinating aspect (and one I never thought even remotely possible in 2008-9) is that the governments (US and most significant others) are not able (now entering another decade) to supply enough government securities in the ever-changing era of "scarcity". Even if they're trying really hard. So, it is suggested now that the US should refinance by issuing a larger amount of securities with lower coupons. Maybe that will make sense when the government gets paid to issue debt to itself. Anyways, in December 2008, the germ and dissemination of this disease was well underway. https://www.bis.org/publ/qtrpdf/r_qt0812e.pdf "...leading central banks have become more active in these markets, expanding the eligible collateral in lending operations, and providing more of a market intermediary role. The extent to which these new operating procedures become permanent or are phased out remains an important question for the future." My huge failure was the inability to project the capacity of central banks to inflate their balance sheets and their potential to compromise the collateral held in their books. I guess we ain't seen nothing yet.

^The chart that shows the flattening effect with containment measures has become dogma but it may be helpful to question underlying assumptions. -What if this virus (or others) become part of our global community with recurrent patterns? The virus is benign in most, which significantly raises the possibility. -On all the versions of the graphs, it is assumed that the area under the curve is smaller (much smaller) with the suggested 'efforts' and that's an unsupported assumption to a large extent in this specific case but will the area be smaller with various containment measures? -How successful have we been with influenza? Death rates have come down and various medical measures (medications, vaccines etc) helped but most of the improvement in mortality that came over time (ie compared to the Spanish flu peak) was due to improved living conditions, antibiotics (to deal with deadly bacterial superinfection, especially in compromised hosts) and the politically incorrect concept of "herd immunity". Erring on the side of caution is likely the way to go but that propensity should not close all doors (inputs to decision making). Britain's approach is not irrational. It is a different version of containment that is more anthropological (more "take it on the chin") than epidemiological. Disclosure because the following appears emotionally detached, harsh and mean: I was very close to my parents before they died and we're doing the same and more with her parents. From an evolutionary standpoint, our population contains now a large portion of older and weaker individuals with a high level of co-morbidities, including many reversible environmentally-driven conditions. Nature can be wrong and we've done well with some unwarranted side effects but there is an underlying rationale. And the over-riding long-term feature is the survival of the species. For those above asking for some statistics (% disease severity, level of care needed etc), the following may be useful: https://ourworldindata.org/coronavirus

Disclosure: -Not planning to use sentiment to guide buy or sell decisions -As always, triggers will be pulled if external events help to match quoted values with internal evaluations of intrinsic value On the sentimental: This has most ingredients for excessive sentiment (verbal inflation, irrational behavior, clouded thought process). FWIW, in my socialized medicine area, cancelling elective procedures for flu episodes and related has been a recurrent theme. People adapt in ways that are hard to predict. In my case, last-minute notices of 'free' time resulted in the development of a private business interest to benefit from related (remotely) side effects. On the fundamental: Much is unknown about the developing phenomenon and I would be careful blindly applying ABC principles or similar (which are based on a large body of previous experiences). Specifically, I wonder if the "whatever it takes" approach may not result in undesirable second or third order effects. However, this seems to be an order of magnitude or two above the typical and variable flu episodes. I get the spreading the pain over a longer period aspect but if people approach this from a long term perspective, people should prepare to run a marathon and not a sprint. For instance (with a potentially weak analogy to the Spanish flu episode), it is possible that a second wave comes at a time when ressources (that are relatively limited in economic parlance) become no longer available, at least to the same extent (opportunity cost point of view). With known and developing evidence, it seems that the US is not doing enough. A worrisome aspect is not that the people in charge of the governance want to take a measured, reasoned and rational approach, it's that they seem to hope that the problem will somehow go away. Here are two references for those who want (or have time) to dig deeper, from a policy perspective: https://www.thelancet.com/journals/lancet/article/PIIS0140-6736(20)30567-5/fulltext#back-bib13 https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3037387/ There will be no free lunches.

This is a "macro" thread of limited overall utility but will add a few potentially relevant comments. -I understand Fairfax (I assume Mr. Bradstreet also) were holding them in high esteem and used their work as inputs for decisions related to the fixed income portfolio. In 2016, that changed. Given some reasonable assumptions, one can estimate that, if FFH had maintained their long duration exposure, they would report an additional (compared to what they accomplished with redeployed funds) unrealized gain somewhere around 2B. -An absolutely fascinating aspect is that rates have recently pummelled before any significant actual coincident fundamental deterioration (at least as perceived by market participants). The recent move is all about a flight to perceived safety. One could only imagine what it would be like in the event of a real economic downturn. I think that's why it's possible that Hoisington reports (in their next Q1 letter) that they still hold their long duration "risk-free" portfolio. -In a way, Hoisington is a one-trick pony as their opportunity set is only US government bonds. All they do is deal with duration. They're a one-trick pony who have done relatively very well over a long period but where will they switch funds when 30-yr rates go negative? Edit: The volatility has been unprecedented and remains, perhaps, not appreciated in significance because rates are so low. From Barron's: "U.S. 10-year Treasury yields rose by 31 basis points—nearly a third of a percentage point—to 0.81% on Tuesday. That was the biggest single-day increase since 2009 in the benchmark rate. The 30-year benchmark Treasury yield rose 36 basis points to 1.28%". https://www.macrotrends.net/2521/30-year-treasury-bond-rate-yield-chart

For 1), statutory surplus is determined by state regulators who typically use a risk-based capital framework (similar to banks) to reduce the value of certain elements (and increase the margin of safety for the policyholder) of the balance sheet, as reported. The discounts vary and depend on the perceived level of risk. FWIW, I've been looking at a few insurers who carry a heavy load of BBB rated corporate bonds (not the case for FFH). An interesting feature is that, in the event of a recession, on top of the decrease in market value for the bonds, surplus capital gets a double whammy because the discount factor is higher for downgraded securities. For 2), your statistical appreciation of forward returns is interesting and is in line with the idea of reversion to the mean, which has been a significant long-term feature at Fairfax (investment strategy, seven lean years analogy etc) but I wonder if such an approach is satisfactory on a forward basis as the investing environment has changed and the Fairfax investment recipe has been changing (some aspects dramatically so) so the future may not be correlated to the past. I think I read you're an MD and the following statistical "joke" came to mind when reading your post. There's this surgeon who comes to the patient waiting to be rolled in and explains that the death risk with the procedure is 1 in 2 but that the patient should not worry because the previous patient did not make it.

It's definitely not predicting deflation. I find it useful to use both of charts below when thinking about the bond market. The second one is probably more important. https://fred.stlouisfed.org/series/DGS10 https://fred.stlouisfed.org/series/DFII10 What it is saying though is that the stock market guys were way too enthusiastic especially in 2019. It's also saying that the economy is not that great. It's also saying that things in the labour market are not as they seem. I just didn't figure out what exactly. All of this probably has a lot to do with income inequality and a lot of other stuff like that though, not just a prediction of the next quarter GDP print. Don't you have to factor in the trillions of $ of negative yielding debt which is pushing many Japanese/European investors to US treasuries. https://fred.stlouisfed.org/graph/fredgraph.png?g=qj1l I'm just a noob for this macro stuff and would appreciate if rb elaborates but this may be interesting as I noticed that Fairfax still has some deflation protection obtained under a different regime. If the Coronavirus has an economic effect (extent of which is being defined), it seems that the effect should be more cyclical (if I read Irving Fisher correctly) and should influence more the inflation expectations component. But, it does not appear to be the case (at least up to now). What has recently dived are the real rates but this is really nothing new as this has been a long term secular trend that obviously has no viral origin (not a viral organism type at least). What's new is that real rates are now negative and who knows what that really means? @mcliu I think you have to factor in hedging costs which have gone up over time and which have a tendency to go up during times of volatility. I understand that this has meant often a negative net rate for international investors unless one decides to go "naked". @Castanza The last time I used public transportation in Milan was in June and July of 2009 and I must say that the atmosphere was much more hectic then. The topic of the day was that Micheal Jackson had died. I suspect though that the crowded and rowdy conditions were not related to the news of the day. I guess it was more fundamental.

Thank you for the salient points. Below are some thoughts on reserves. Reviewing the annual report is a reminder of how FFH has built amazing zones of strength while keeping areas of vulnerability. I guess that's why the stock is hard to handicap, especially at this juncture. Insurance and reinsurance remains the backbone of the business. Favourable loss reserve development (2010-2018, without the currency effect) 336.9 432.1 1,136.9 1,383.7 1,429.0 1,549.3 907.0 608.2 166.0 FFH does not disclose that but it’s possible to reconstruct year by year development for each calendar year business. A potential problem is the embedded currency effect which was quite positive in the 2018 annual report (2017 reserves column listed below). The following is unaudited: Reserve development (numbers in ( ) are unfavorable, as reported end of year+1) 2016 2017 2018 2013 74.3 45.0 3.5 2014 175.9 91.4 25.9 2015 40.5 296.0 144.1 2016 (69.8 ) 67.2 18.6 2017 483.2 (37.3) 2018 84.7 -The trend is variable but down. -The 2017 reversal is significant. It’s conceivable that FFH reports net negative adverse development as early as next year.. @ValueMaven With marked-to-market rules and perhaps a transitional new normal for volatility, book value may be a moving target.

You are expecting Fairfax to suddenly play fair? Don't hold your breath. I'm not a big fan of the short-and-distort crowd that made the short attack on FFH in '03 and '04, but they were actually right about one thing. When FFH holdco was cashflow challenged, Prem engineered an ingenious move whereby FFH bought a slug of ORH shares from an institutional holder by issuing convertible notes to that holder that convertible back into the ORH shares. Effectively, Prem "borrowed" the ORH shares from the institutional holder to enable FFH's holding to pop above 80%. At that point ORH was consolidated into FFH's financial statements for income tax purposes. This allowed FFH to use hundreds of millions of dollars of tax loss carry-forwards from TIG and C&F that would otherwise fall off the table. ORH made the tax payments to FFH, and then FFH offset them against the loss-carryforwards, which gave the holdco an enormous shot of cash. Was it legal? The IRS said it was legal. Was it ethical to pretend that you owned 80% of ORH when the reality was that the shares were borrowed? Well, I'll leave that one for you to decide. The moral of all of these stories is that Prem is very clever and very self-interested. SJ Stubble, thanks for the trip down memory lane... great summary of many things i had long forgotten (although i do still remember the day the ORH deal was announced... it was my biggest one day gain ever :-) I just want to add that, even if this was a grey area, the tax consolidation move was both clever and appropriate. The context included a potential material write-down of tax assets, further credit downgrades and other subsequent reflexive and potentially firm-threatening spiral. One can question the way they obtained the IRS acquiescence but, for this specific 'deal', I came to the conclusion that this was the best and most appropriate course of action. To tax consolidate without the economic interest is controversial but the intent of the transaction was a prelude to full consolidation. For those interested, the IRS continued to show discomfort with this type of transaction or perhaps that specific transaction: https://www.irs.gov/pub/irs-utl/am2012007.pdf ---) Back to the Fairfax India issue

You're likely to have no questions asked, especially if, over time, there is no significant discrepancy between the deduction and income received from securities. Recurrent use of deduction without any material income would probably flash a red light on their algorithms. But rules are rules and when CRA gets into the action, they hold the better hand and then it's all about interpretation (which includes subjective intent). The idea of buying and holding a security that does not pay income but that may eventually is likely to be sufficient but context matters. For reference: https://www.taxtips.ca/personaltax/investing/interestexpense.htm The safe (and easy) thing to do is to match (in your documentation) the margin amount to a specific security(ies) that does(do) pay a dividend.

Let's push this idea further. There has been a financial environment shift since the 2007-9 episode in the P+C world with most companies adapting to the 'cheap' capital environment, settling with lower ROE and gradually increasing P/B ratios. During the same period, FFH reported a very lumpy ROE, with an overall slight underperformance overall based on that metric and the market perception is resulting in a declining P/B ratio. FFH continues to differentiate itself from the pack (float investment side) and the question is how it will perform going forward. An interesting feature is that 'cheap' capital has resulted in resistance to harden the market (ie tolerate higher combined ratios) and has resulted in very low returns on the fixed income side of the portfolio (float). https://www.macrotrends.net/stocks/stock-comparison?s=roe&axis=single&comp=WRB:TRV:CB Is FFH better positioned at this point compared to peers? Is the answer in the risk management section?

›MarkS was the member. I wish i had this talent and try to compensate by watching and listening.

It looks like this has not made it to global news yet and underlying reasons may vary according to interpretation but it seems Mr. Buffett has pulled out (4B CDN) from an infrastructure project on this side of the border. https://theprovince.com/business/saguenay-lng-project-financing-in-doubt-as-buffett-pulls-out/wcm/40d8f36d-83f9-4927-858c-b7c274ed0ac2 This week, I've had my share of vertical volatility (ski week) and have not spent much time on financial news but I just saw the downhill slope of the 10-yr and 30-yr Treasuries. Some slopes can be challenging.

Thanks for the perspective. I assume you mean Tepper (David, not Jonathan Tepper who also tends to write about (interesting) stuff which may be irrelevant for the stock picker). Mr Grantham has been wrong (commodities price trends, mean reversion and profit margins, at least so far). His inputs (not his conclusions!), out of many, helped to opportunistically invest in the resource sector in 2015-6. However, he is one of the few people who have high testosterone levels (or who perceive themselves as such) who can publicly acknowledge that they have been wrong and he even apologized for previous publications that may have misled people, something rare in the public sphere. ---)Back to crowned virus resistant investments

... https://www.gmo.com/americas/research-library/chemical-toxicity-and-the-baby-bust/ ... from GMO link: "The damaged children, as the back-up data shows, are not just affected in their reduced fertility. The male children are on average less male in almost every way than in the past, and both male and female children are less robust going forward: they are more likely to have heart disease, cancer, and other afflictions, especially autoimmune problems. This damage is carried through their entire lives, ensuring that on average their life expectancies have also been reduced..." this imo is gibberish. at best it is correlation, and I am being very generous. anecdotally, btw, I am not less male in almost every way. edit: I am also not less robust but that might be TMI The conclusions, as phrased, are indeed stretched and likely go beyond the limitations described in the referenced studies. The field of transgenerational effects and epigenetics is still in infancy. But whatever the 'cause' (evolutionary, chemical or whatever) testosterone levels are going down and the trend is strong. Of course, objective individual results will vary but, on a market level and irrespective of viral spreads, demand for artificial assistance is likely to go up over time. What is "TMI"? Too Much Internet? I looked up the acronym for possibilities and many options listed that could be tied to the low testosterone topic are derogatory.

Speaking of under-appreciated tailwinds and resistance to trends, just in case you’re interested: https://www.gmo.com/americas/research-library/chemical-toxicity-and-the-baby-bust/ You likely know Mr. Grantham and may have reserves about his style, ideology or conclusions. My take: He’s often Malthusian and sometimes wrong and he may have reached a stage in his life where his desire to leave a more tangible legacy lets sentimentals take over fundamentals. But his score of being generally in the right direction for complex issues and paradigm shift questions makes it worthwhile to read what he has to say IMO. I’ve found him to be a helpful source of restraint on unbridled optimism. A compromise suggests that there may be long term value in fertility-enhancing devices and solutions then. I may end up removing Bayer from my watchlist too.

I’ve found that on-line discussions can skid (suddenly in the course of a few exchanges or gradually over time) and then it becomes a lose-lose. It appears that artificial intelligence may eventually help by instituting a stupid bot that would “feel” when a specific exchange or a series of exchanges go in the wrong direction and prevent excesses by introducing generic comments whose function would be to indirectly remind members that they are human beings essentially having a face to face conversation. Another effective way implies for respected member to directly intervene. Another effective way implies for ordinary participants to try to steer the discussion in the right direction. So, there’s lots of 'discussion' about the Coronavirus and its potential impact on markets. Here are 2 scenarios (obviously a spectrum for those who tend to drift rapidly in a binary thinking mode). #1 If the fundamentals are strong or at least satisfactory, this virus will come to pass (the virus may persist but the sentiment will adjust) and things will get back to ‘normal’. We may get a recession (even a global one) but 2 years from now, this will mainly be a topic for nostalgic discussions and confirmation for buy-and-hold value strategies. #2 If fundamentals are not so hot (it’s up to the individual to decide that), one may question the possibility of reverse causality here. The markets have become incredibly integrated and the fact that a simple virus originating in a single province in far-away China could have such an impact on global supply chains is food for thought. Many people assume a) that low interest rates justify high valuations and b) that the central put will come to the rescue. These two assumptions have held well in the last 10 to 20 years but these correlations have a poor historical record overall. If the B word applies, the needle may not be the essential element. --- Humans (genetics, evolution religion, whatever) tend to look for explanations and some complex things are hard to explain but it’s important to think about these issues (framework), if possible ahead of time, ‘cause perspective can be lost in the action. I don’t see how the virus, by itself, should force you to take your eyes off the ball.

I sold some safety today, the last portion of TLT. There is still upside (perhaps a lot) but the range of (unconventional) outcomes is just too large. Of course, Mr. Buffett is right and the term premium has been negative for some time which is moronic and stocks in 30 years or something will do better than bonds. But people may suggest that there is no floor and non-linear changes are possible. I had hoped to redeploy funds at such time but this feels like when losing altitude in a specific circumstance. At a certain point, you need to jump and then the handle must be pulled in order to speed decouple, ascertain the perspective and adjust your landing spot. I hope to never meet again circumstances indicating that investing in long term risk-free bonds would make sense. FWIW, it’s not the virus that triggered the final decision, it’s the poor mechanical and fundamental construct of the rocket.