JRM

Not a bad one day return.

Probably quite a bit less than when you fill your car with gas or pay sales tax to the state you live in, or federal taxes, or pretty much anything else you spend money on. Tip your waitress? Many do drugs. Your $20 ends up paying for dope. This is a stupid way to look at something. It seems like subversion is the primary utility function of Bitcoin, whereas normal banking transactions are at least traceable. The market cap of Bitcoin is in the billions, the market cap of the USD (or even gold) is in the trillions. I would take the bar bet that you're wrong, but I can't back it up.

If I invest $1 in Bitcoin (theoretically) how much of that dollar goes to support criminal activity or subversion?

You wrote naked calls? Before the hype event next week?

I think there are two levels of potential interest rate sensitivity. The first is the CAPM based effect where higher yields of bonds will make utilities less desireable. I'm guessing that since most pension funds are still promising high rates of return (7%) most bonds don't yield enough yet to compete with utility stocks. This is completely a guess. The second source of interest rate risk is the regulatory lag associated with regulated utilities. Unregulated utilities will generally outperform regulated utilities in a rising rate environment. Other factors are still important such as how quickly interest rates rise and how frequently the particular utility is allowed to file for rate cases. I don't have a good answer for why utility stocks have traded so strongly up to this point.

Seems like mostly a bet on interest rates to me. Pension funds have been piling into utilities since 2012 to replace low yielding bonds. I was smart enough to buy a basket of utilities in 2012, but not smart enough to stick around this long.

I'm curious what attracts you to utilities which, as a sector, are trading near all time highs. The P/E ratios are ridiculous compared to historical averages. This at time when energy demand is declining and long term trends are towards decentralized power generation. Back to your question. I'm not an accounting expert, but here is how your average regulated utility operates: Utilities operate on margin because the amount of capital required to build an asset base (power plants, transmission lines, etc) would be extremely inefficient from a capital management standpoint. One of the side effects of regulated utilities operating on margin is the sensitivity to interest rates. Many times it can take multiple years to complete a large scale project and the projects are funded, at least in part or in whole, by floating rate debt. If interest rates increase the operating profits will be negatively impacted, and vice versa with falling interest rates. This effect is termed "regulatory lag". You can probably find a better definition on Google. Something else unique to utilities is they pay very little in taxes. They maximize depreciation expenses by capitalizing as much operating expense as possible. This isn't necessarily a bad thing because in general taxes are just passed onto the consumer. Typically return on equity will be in the high single digit range for a well run regulated utility. They can be higher for an unregulated utility in a decreasing rate environment. I think shares of utility companies have been bid up by pensions funds seeking yield. If interest rates rise it will be a double whammy for utility company stocks due to the regulatory lag issue and competing yield from lower risk investment options.

The problem is if the threshold is set too low for the estate tax then family farms and small family businesses cannot be passed on to the next generation. The kids cannot afford to keep the farm/business, and it must be sold. The threshold for the estate tax should be correspondingly high not to include most small business and wage earners (who were already taxed on those earnings), but rather capture the billionaires who accumulated wealth through businesses and other tax favorable ventures.

https://seekingalpha.com/article/4234920-pg-and-e-bankruptcy-impact-investors Pretty comprehensive article. My guess is PG&E gets split up. I wouldn't be surprised if the gas business gets sold. I'm not sure what that means for equity holders.

We shall see, I think its one to follow. The problem is instead of investing additional money in line clearing and maintaining equipment they have these distractions to deal with and likely won't be able to get ahead of the curve for maintaining reliable equipment. This is not another BP situation. Hopefully the first question asked is: how do we prevent this from happening again?

I'm not saying there won't be an impact if oil prices/gas prices rise enough; however, trucks and SUVs in general get much better mileage than they did 10-15 years ago. The last time SUVs were popular they were mostly built on truck frames and had poor drivability. Today many SUVs are on unibody frames similar to a sedan and drive more like a car. The experience of everyone I know who owns a truck (which is quite extensive); they all say "once you own a truck you can't NOT own a truck". They might switch brands, but I still see a lot of brand loyalty among the truck crowd. It's a totally different dynamic than the rest of the auto market. I think folks who live in big cities might be blind to this social dynamic in the rest of the rural US. For people in rural areas a truck is a status symbol and a way to signal ones "manliness", whereas driving a nice BMW or Tesla says, "I have money, but I'm not a real man". FWIW I don't own a truck yet, but I probably will in the future.

If you look at the number of miles driven in the US, the chart is up and to the right: https://afdc.energy.gov/data/10315 If you factor in China and India it is likely more parabolic. I think miles driven per year is important to think about as well as average life of a car/age of fleet. Services like Uber and Lyft help to accelerate this replacement cycle because: 1) they put more miles on a new car, and 2) these companies require the drivers have new cars. The last important factor is product mix; SUVs and trucks are much higher margin than sedans and small cars. I could go on for a while about Americans and their trucks, but I don't have time this morning. I think investors are still fighting the last war with regards to the auto makers regardless of where we might be in the cycle.

Most people report their total return, so its only fair to compare to the total return of an index (if that's how one chooses to measure performance). 2016: 9.3% 2017: 32.06% 2018: -3.12% Its surprising to me how closely I tracked the S&P given how much of my portfolio was in special situations this year. Oh well.

Berkshire Hathaway

The interstate pipeline companies that operate in the U.S will likely face some higher O&M costs due to new regulations expected by the dn of Q1 2019 for transmission pipelines. Not a reason to avoid the space, just something I don't see anyone talking about. With that said I'm extremely bullish on natural gas pipelines. I have a hard time seeing a decline in usage in the next 50 years or so.

As long as you're picking up pennies in front of the steam roller, why not just sell $190 strike puts against RHT (2020 expiration)? Surely the deal won't fall apart. Seems like less work.

There are some simple solutions, but the current system won't stand for it. Government funded student loans should be limited to schools and degree programs where it is shown that the student can pay back the loan in a reasonable time (10 years?). Half of most degree programs are a total waste, but are necessary to sell credit hours to retain tenured professors. It seems like the "get off my yard" crowd is a little bit out of touch with reality here. I came out on the right side, but I never underestimate the degree that luck plays in success. Most successful people attribute their success to hard work and grit and grossly undervalue the luck factor.

I'm 33 (full disclosure) and have been gainfully employed since graduation in 2008 (very fortunate). I've noticed that many people have delayed retirement because 2008 is fresh in their mind, interest rates are low, and they likely more afraid from the negative media bias. I hear from people who are delaying retirement complain that "millennials" need to quit complaining and get a job. It would certainly help if more people would retire first.

I wonder if a short call spread could be timed around the expiration of the lockup period for Tilray (1/15/2019)? For some reason I'm not able to see bid/ask spreads for March 2019 or January 2020 expiration.

Those are some unreal profit margins.

So what is the trade? Sell a naked call, or buy a grossly overvalued stock and sell a covered call? Is selling a call spread more appropriate here?

A few counterpoints: -If nobody owned a vehicle and everyone used an Uber-like service with AV technology, then automobile utilization would increase substantially. Maintenance intervals would shrink drastically, and useful life would shorten. -In liu of the shortened vehicle life due to increase utilization, ride sharing services require a newer vehicle. They could relax this standard, but this is a built in replacement interval. -I don't think its reasonable to expect car ownership to go away completely. I think there will still be a need for auto manufacturers. People will still like to virtue signal through the type of car they drive.

In my unprofessional opinion investors have been calling for peak auto since 2014 and expect a repeat of 2008. Any hint of recession and the auto stocks get hammered.

Haven't read it, but there may be some good info: https://www.amazon.com/Authoritas-Students-Admissions-Founding-Facebook-ebook/dp/B0017S4UOQ/ref=sr_1_1?ie=UTF8&qid=1533213635&sr=8-1&keywords=aaron+greenspan

Collapse is a fascinating book. Has some good insights into human nature.