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KFS

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  1. Interesting Evergrande/China Thread: https://twitter.com/INArteCarloDoss/status/1438944431734919175?s=20
  2. Perhaps an even more telling data point is the decrease of available credit in customers' margin accounts, which apparently dropped (plummeted) to $195 billion in July. Are margin brokers becoming more stingy with margin limits/requirements?.... With the S&P slightly higher over this period, it isn't obvious to me why they would be doing this.
  3. The most recent FINRA data through July shows a 4.3% month-over-month decrease of margin debt. After non-stop huge, rapid increases since March 2020, this is the first decline in 15 months. I'm surprised this topic hasn't received more attention, and while I'm not interested in making general market predictions, calling the market top, or alarming for an imminent crash - I do think this data is worth keeping an eye on.... Even if it's not terribly useful, it's at least interesting. The chart below tells a pretty clear story --- It's hard to ignore the link between stock market prices and margin debt--- 2000, 2008, and past episodes have this in common. I have recently been re-reading John Kenneth Galbraith's "The Great Crash 1929," and it is a topic he brings up constantly. Why does it matter? As Galbraith puts it, "when prices stopped rising - when the supply of people who were buying for an increase was exhausted - then ownership on margin would become meaningless and everyone would want to sell. The market wouldn't level out; it would fall precipitately." Per Galbraith, during the bull market of 1926 - 1929, margin debt would often be held at interest of 8%, 10%, or 12%. Margin rates today are a bit lower, but not by much. (The last I checked, Vanguard was offering margin at about 6-8%, depending on loan size.) History has shown that if/when market euphoria begins to subside, future expectations no longer justify these interest payments, and a drop in margin debt can correlate with a very sharp drop in market prices. Volatility should be expected, as people on margin are (for good reason) more likely to rush for the exits as markets level off and/or drop. Curious to hear opinions/thoughts from folks on this board. Is this a huge flashing red warning sign, or nothing to worry about? Source: https://www.advisorperspectives.com/dshort/updates/2021/08/12/margin-debt-and-the-market-down-4-3-in-july-first-decline-in-15-months
  4. I know they were restricted during the first spike (Per Prem's comments during the call following that event), but was it ever really confirmed they were restricted during the second spike?
  5. This may have already been shared elsewhere, so my apologies if this is a duplicate post. The Power of the Fed | Watch S2021 E5 | FRONTLINE | PBS | Official Site
  6. Are you seeing real evidence of the hard market easing up already, or is this more of a speculation based on your past experience with cycles?
  7. BB just rocketed up again - now up 40% on the day to $16. Ok, Prem, let's see those paper hands.
  8. Yeah, fair enough, it's pure speculation. The prices were totally different for only a few days; the bulk of that period was closer to $12, so who knows. Time will tell. It could be wishful thinking on my part.
  9. When Prem said, "If we checked once, we checked 10 times," or something like that on the last call, I interpreted that to mean he very much wanted to sell, but just couldn't. I could be wrong, but that was the way I took it. If that's the case, and he should no longer have any restrictions, it seems very likely he should be selling on this week's mania.
  10. Here's a link to the "preview" BRK meeting if anyone is searching for it. Preview of 2021 Berkshire Hathaway Annual Shareholders Meeting (yahoo.com)
  11. 100% agree. The failures over the past 10 years are well understood and have been beaten to death here 100x. By the time many here are in agreement on what the front-view looks like, we will already be back to 1.3 x book value and this ridiculous opportunity will have passed.
  12. Ben Graham is credited with saying something along the lines of "In the short-run, the market is a voting machine; in the long-run, the market is a weighing machine." Isn't it a little bit ironic that the powerhouse social media platform of the modern day retail investor -- Reddit -- is literally like a voting machine? Think about how Reddit works. It's a platform where users get to "upvote" or "downvote" each others posts if they like it or dislike it. If a post gets a bunch of upvotes it moves up the Reddit rankings and becomes more visible. More people see it, leading to additional upvotes. If a post gets downvotes, it quickly falls and disappears from view. If you asked Graham to imagine a worst-case literal "voting machine" to maximize this effect over people's thoughts and ideas, and over the market, it might have looked something like Reddit. I suppose similar comparisons can be made with other platforms - e.g. twitter, facebook, etc., but Reddit just strikes me as a very ironic "voting machine." Just a random thought of the day. Ok, back to work.
  13. https://www.wsj.com/articles/if-tesla-bubble-bursts-catastrophe-wont-follow-11613221203?mod=searchresults_pos2&page=1 James Mackintosh: If Tesla Bubble Bursts, Catastrophe Won’t Follow Not all bubbles are equal. Britain’s bicycle-stock bubble of the 1890s holds lessons for today’s electric-vehicle mania.
  14. Jason Zweig: How the Stock Market Works Now: Elon Musk Tweets, Millions Buy https://www.wsj.com/articles/how-the-stock-market-works-now-elon-musk-tweets-gamestop-millions-buy-11613147654?mod=hp_featst_pos3
  15. I would give almost anything to have been a fly on the wall during this guy's charity lunch with Buffett. I can only imagine Warren's reaction. ;D ;D We are living through an amazing era. I just have to believe this "meme culture" philosophy will go down in history books and new versions of books like "a short history of financial euphoria" for future generations to study.
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