Saluki

Added a little FRFHF, and picked up a few shares of NTDOY to start a position. Bargain hunters, get ready for the 20% drop that happens after I buy.

Yes, and people keep talking about China/Yuan being a reserve currency. That won't happen without a huge change in China going from a net exporter to a net importer. The reason people use the dollar is that, besides being the largest economy, we are a net importer. Since we have a trade deficit, we've bought more than we sold so there are lots of excess dollars floating around that people can use for international trade. If it was the Yuan, and they are selling more then they are buying, there would be a shortage of Yuan and what would people use? China could transition to a consumer economy, but they are still trying to grow enough to bring the last one or two hundred million people out of poverty. So it will be a while before that shift is possible. What other viable alternative exists now? The Euro? Dollars and Yuan are gift certificates at Walmart and Costco. They are valuable because you can cash them in for something at the store. Europe doesn't make enough things like Oil, Agricultural crops, software, or electronics, for people to want to have their gift certificates. When people steal your credit card, they buy gift cards at Walmart to resell it. I'm sure they could use it to buy gift cards at Whole Foods, but you have fewer people that you could sell it to.

That's my take on it. The reason that Treasuries were always viewed as the "risk free" rate is that dollar denominated debts by the US government won't default because you can always pay it back by printing more money. It may not be a great idea to keep printing money, but if you are owed $1mm, you will get $1mm in nominal dollars. What the political brinksmanship has introduced is a scenario where the possibility exists that they won't pay it back as agreed. "It's not that I can't pay you, it's just that I don't want to." So if that scenario is now possible, then is it risk free? I think the downgrade is a nothing burger because that game of chicken ended, so to downgrade months later when an agreement has already been reached is kind of silly. Not to mention damaging to people seeking a mortgage.

I don't have much choice in my employer provided retirement plan, so I'm exposed to the Magnificient 7 at any valuation. I try to think of it like a ballast (or a barbell approach), where the bigger stocks are in my 401k account via the index, and (other than BRK and GOOG) the majority of my discretionary portfolio is in small-mid caps (JOE, FRFHF, VTS, FFXDF, STNG, TV, SWBI etc.) If we get a "correction" in the magnificent 7 the smaller stuff might do okay because a lot of it is already cheap. If you can buy British Tobacco today at less than 9x earnings, how much lower could it correct to?

I sold the STNG in my retirement account that I bought a couple of months ago, for quick a 10% pop and bought some FRFHF and FFXDF. I hate selling something that I think is underpriced, and I hate buying something at $800 that I didn't want to pay for at $700, but the price to book on both of these looks good and the pie is growing.

Yes, you're right. My mistake.

I own a small basket of Tobacco stocks (Mostly BTI and a little JAPAY, PM an IMBBY). My broker doesn't allow me to directly buy Indian shares (only ADRs), so when IMBBY spins it out, I assume it will just get sold and there will be a small amount cash distributed. Might be interesting to someone with an Indian brokerage account.

@hasilp89 https://www.reuters.com/world/india/indias-itc-demerge-hotel-business-2023-07-24/ Here you go. Probably didn't come up in search because they call it a "demerger" instead of a spinoff.

Rather than wait for an SEC Filing, maybe it's a good idea to have a post where people can list upcoming spinoffs so we can start our research early and have an easy place to find upcoming spinoffs. Here's a few that I heard about: Danaher (DHR) is spinning off a company called Veralto: "Veralto is DHR’s Environmental & Applied Solutions unit and post-spinoff, it will be the global leader in Water Quality (59% of 2022 revenue) and Product Identification (41% of 2022 revenue)" https://finance.yahoo.com/news/dhr-target-industrial-healthcare-firm-095800056.html?.tsrc=fin-srch I've also mentioned on another post that Vista Outdoor (VSTO) is splitting itself into two companies this year. One focused on outdoor (hiking, biking, fishing, camping) and another focused on ammunition. A days ago Imperial Tobacco (IMBBY) announced it was spinning off 60% of their hotel business to shareholders. If you know of any other upcoming spinoffs that look promising, post them here.

Great new interview with Gio. In addition to the Warren & Charlie little rubber duckies on my computer, I have a post it with a quote from him "Deploy capital proportionate to the the opportunity that presents itself in the moment" on my screen. He makes some interesting points. If you're not smarter and can't outwork the pros who do this all day every day, then you're best bet is to have a different perception (Buffett seeing Apple as a consumer brand, or Washington Post as a SOTP, not a company whose broadcast licenses were going to revoked by Nixon, or Geico as a company with a better business model and long runway, not a bankrupt insurer), hire someone to do what you can't (hedge fund?), or have a better process. I think the process part is where people go wrong. Tyson said everyone has a plan until they get punched in the mouth. People can value things quantitively when the markets are calm, but they succumb to FOMO when a stock is ripping upwards, or sell in a panic when they see losses. They improvise instead of following a process, because most of them don't even have a process.

https://finance.yahoo.com/news/ammo-inc-issues-letter-shareholders-123000873.html We are also developing and testing a new suite of AI (Artificial Intelligence) tools to enhance the user experience. AI applications include FAQs, real-time instructional/ factual outdoor related inquiries, digital buyer assistance, reviews of inventoried products, and internally by employees for ad hoc data requests to help improve customer service. This company said it will take them about 9 months to add a shopping cart to their website so you can purchase multiple items at once, instead of one at a time. Now they are talking about integrating AI. Did they suddenly get so good at tech, that they are leapfrogging in skills? Or are they trying to ride the AI wave? During the height of the dot-com boom, I remember companies would change their name to "Name.com" and their stock would shoot through the roof the next day. That was shortly before the crash. Once I see companies start to try this AI schtick and the market overreacts, I will think we are close to a top. But the market doesn't seem to be responding to everyone trying to cash in on the hype, so I don't know where we are.

I've been thinking a lot about longterm holdings. Besides the advantage of not paying taxes, if you are still in your working life, there is no reason that you have to sell to invest in something else. You just keep investing paycheck to paycheck in whatever is available at the time. Three examples recently got me thinking about this. Buffett talks about Citi Services preferred, which he sold shortly after he bought it, for a small profit and it went on to be a multibagger. He did fine, but if he held onto it, it would've worked out fine too. Munger's mention last year of the oil royalty that he bought for himself for $1,000 in the 1960s and it still pays him $70k a year even decades later. Joel Tillinghast still has the first stock he bought when he was a child (!), which went through several mergers, but currently pays a dividend that is much higher than his original purchase price. And one of his 1000 baggers was Hansen's Natural, which later became Monster Beverage. At times it got pricey, but he just had the patience to sit on it because the company was getting better. If the company isn't in decline, and you have capital available to buy the other things you see, why sell when the compounders are so few and far between? Some of Peter Lynch's best returns came from things like Dunkin Donuts which he held for years, not ones that he sold after a quick pop. Even Phil Fisher's record wouldn't be worthy of talking about if he didn't hold Motorola until the day he died. I can understand dancing in and out if you're going to invest in a cyclical business like energy or shipping, but I definitely think that there is something to deciding which stocks are Tinder dates and which ones are marriage material. If you are getting a deal in a cheap stock, in an industry with bad economics, then it's a trading sardine. But if you managed to get into something with a long runway and in a business with a higher than average return on invested capital, then as Munger said, over time your return should match the returns on the business. If those businesses are rare, then why sell and pay taxes to look for quick hits when these businesses come up so rarely?

Maybe because I was a M&A lawyer, I'm programmed to look for things that can go wrong, but lately I've had a feeling that we're due for a correction. "The market" which mostly index funds buying the magnificient 7 is doing well, but when I look at my portfolio of individual stocks, which is doing well, I can't think of anything cheap enough to buy more of. I see a lot of okays, but nothing really says "cheap," except for Televisa, but I don't see a catalyst there yet to make it not cheap. Of course, because I didn't buy it, it went up 10% in the last couple of days. But, if I had bought it, it would be down because the ancient curse is relentless and unforgiving. This morning I decided to buy some BTI if it was still under $34 today, so the curse made it $34.08. Damn you, curse! If the index funds are all cap weighted and fund flows are driving the momentum, then a few layoffs (or fear of them), or some inflation could make people contribute less and then the big run up will be a big run down. Last year I saw so many people asking on Facebook (in forums like ChooseFI) whether they should go to cash because "higher interest rates will make the market go down" and buy back cheaper later. These are people who are no where near retirement age. How much did they miss out on? It doesn't take much to cause a stampede. My thought is that if I happen to have cash when a crash hits, great. If not, just stick to the process and the guard rails I set in place for myself : sell only after earnings release (data point vs noise) or price target is reached. If I have a certain % in mind for a stock, but something else I own is better buy, buy the better deal. If I buy, don't sell for 3 years, unless something in your thesis is proven wrong. Do your due diligence for every purchase (10k, investor presentation, CEO interviews, COBF Forum) before buying.

She said she was working on a book on investing, the last time I heard. Snowball took several years to write, so it may be a while before the other book comes out.

NFTs! I had my doubts about crypto, but NFTsseemed like a grift from day one. I just read that the NFT of the first tweet which sold for several million dollars, is now worth less than a cab ride. I don't think you need to find new ways to lose all your money, the old ways to lose all your money still work fine.

Not very familiar with them, but I heard speculation that it might be a bet on commodities, in addition to a bet on Japan. Apparently those "trading houses" in Japan operate like Cargill or Glencore, not like Merril Lynch, and have a lot of exposure to other economies in Asia.

Alice Schroeder talk that I haven't seen before. It's got some Buffett tidbits I hadn't heard before either. Apparently it's from 2018, but I haven't seen this posted anywhere before. It looks like the rumor that she had a falling out and Buffett wasn't speaking to her after the book came out were exaggerated since Buffett still meets with her and approves of her new husband.

Just started watching a Norweigan show on Netflix called Occupied. It's set in the near future where Russia invades a neighbor (who saw that coming?). Norway's green government stopped producing fossil fuels prompting an occupation by Russia, supported by the EU to secure production. Lot's of plot twists and great character development.

It still is. With my work 401k +IRA my retirement accounts are almost as big as my taxable account. But with my IRA, where I can buy individual stocks, it's about 10% vs 90% taxable accounts. And I had been owning the same stocks in each, but I'm trying to take advantage of the no-tax consequences of my Roth IRA, so I sold and redeployed. Still have about 90% of my original position in BRK, but it's in my taxable account. If a stock gets ahead of itself in my retirement account, or I have no better ideas, I may park the money in BRK again, even at these prices, since it will do much better than cash. But FFH is less well followed and cheaper by comparison, and is a good place to compound steadily too.

It's talked about in the Televisa thread I think. A breakup (or spinoffs) are the best bet. It would be trading at 2-3x what is now if MegaCable had agreed to merge with them instead of overbuilding in TV's territory and fighting city by city. So that and the capex for upgrading the cable network are probably what is dragging down the stock. Satellite TV is a melting ice cube too, but still profitable. A spinoff of Univision would be great, but that hasn't been talked about. They did announce that they will spinoff the Soccer Team, and the Soccer Stadium ahead of the next world cup. That should help with unlocking value because the pieces are hard to value. How much is a stadium in Mexico city worth? So if they are publicly traded that should provide clarity. Spinning off the stadium will prevent them from incurring capex to upgrade the stadium before the games, and a spinoff of the Soccer Team in Mexico city should help with visibility too. Some teams, like Manchester United trade at incredible values, but how much are the non (Yankees, Red Sox, etc) teams worth? There are some other things that aren't core assets, like publishing or TV and Radio that could be sold, but I haven't heard anything about that. I think cash-wise they are fine. They got $4bln in cash and stock from Univision in exchange for giving them all Televisa's prior content.

Sold the last of my BRK in my retirement account and redeployed to FRFHF, FFXDF, TV and BTI.

Twitter is free and it's a cesspool. I'm glad there is a small fee that cuts out 95% of the trolls and wallstreetbets crowd.

FFH, Fairfax India, and a little BTI and TAYD.

Sold half of my BRK in my retirement account and moved it to FFH, Fairfax India, and a little BTI and TAYD. Still have all my BRK shares in my taxable account and they will probably have to pry them from my cold dead hands one day (far in the future, hopefully).

I have mixed feelings about this book, which I just finished. While it's interesting to get a take on Lehman from someone who was working there at the time, you don't see all the moving pieces from the trading desk. The book by Ace Greenberg on Bear Stearns was much more illuminating. Some things which were not to my liking: The author. He talks like every other overconfident trader I've ever met and doesn't consider that he could be wrong. Just like a car salesman can't tell you what is going on in the auto industry, how much insight does a trader hearing bits and pieces second hand really know about the risk management part of a trading house? He says things that he heard, but are clearly wrong, like blaming the implosion in real estate on that right wing shibboleth of saying that allowing low income borrowers to buy houses that they couldn't afford was the underlying cause of the cracks in the market. 40% of home sales during that era were homes that were purchased for investment, or second vacation homes. But why let facts get in the way of a good bro story? He overstates his role and Lehman's role in the grand scheme of things. He couldn't get into Wall Street out of school, and actually peddled meat to supermarkets to get sales experience. Then he started a blog where they analyzed new bond issues (ONLINE!) and when it was bought out, that got his foot in the door at Wall Street. He got in by the back door. He really lays it on thick about how respected and storied Lehman was and how they admired his trading skill. He is obviously biased and won't admit that he's talking about how hot his girlfriend is, who you've never seen, because the other trading houses weren't falling over themselves to hire the meat salesman with a blog. He talks about Lehman like it was in the same league as Goldman, Morgan Stanley or JP Morgan, and not that many people (including me) looked at Lehman as the second tier and did business with them because they took clients and risks that other more respectable houses could pass on. He has some weird hang up on diversity and kept making snide comments about it. He thinks it contributed to Lehman's demise because managers were encouraged to go to diversity presentations and "shake hands with lesbians". He points to the appointment of Erin Callan at the 11th hour as proof of this thesis. After all the overconfident straight white guys with full heads of hair loaded the company up to 44x leverage, their hedge funds imploded, David Einhorn shorted them, and they wasted the little cash they had left to buy back their stock, he thinks that the Callan was a diversity hire and therefore she's responsible? By the time she was elevated in 2007, you could've put the most overconfident, straightest, whitest guy with the fullest head of hair and most expensive suit there and it wouldn't make a difference. Some of trading stories and characters are interesting, but I feel like this is a Rashomon retelling of the great financial crisis where everyone has a different take on the same facts, but one in which they are the hero and everyone else is the villain.