SHDL

There should be executive order for all rich people to book a dinner, stay, golf package at Mar-a-Lago or do time. We should not have unpatriotic behavior of hiding in their mansions. Jawohl! I don’t know the current status but there was some chatter recently about making leisure travel expenses tax deductible for the year or something like that. Not kidding. :o

This sounds right. Discretionary spending at the very high end (like private jets and villa rentals) seems to be holding up quite well or even growing though. I think my spending is going to be down 50% YoY or more this year.

I’ve heard good things about https://www.scuttleblurb.com/.

73 / 1469 == 5% Well, that's what I get for trusting the numbers and not doing the math myself. So why does mutpl say "Jan 1, 1999 3.04%?" Or "Jan 1, 2000 3.44%?" Even if I pull their own numbers: Dec 31, 1999 73.38 Dec 1, 1999 1,428.68 So I have no idea why their site says 3.x% instead of what the math actually says. I'm sure I'm making some kind of mistake. Or not understanding something properly. The 73 EPS number is inflation adjusted (April 2020 dollars) while the 1429 index level is not so the ratio isn’t economically meaningful. The 3.x% earnings yield figure is correct as far as I know.

So ... since the previous post, we’ve had a crisis to which the Fed might have overreacted, stocks are up a lot over the last few months, the general public seems very excited not only about the market in general but stocks that are clearly worth zero in particular, Druck capitulated, and folks are once again openly questioning what’s wrong with Warren. Plus, we just got a pretty bad Star Wars film, a Friends reunion is coming, and a new Matrix film is in production. We may be getting close!

There was a nice Twitter thread recently that is somewhat related to this: Ironically one of the points being made in the thread is that value investors, as compared to say traders, have a relatively strong tendency to suffer from this bias. I think this is quite true. This is also a bit interesting from a historical perspective because Graham (I believe) actually had a rule of letting go of losing positions after 5 years or something, which helps avoid this type of mistake. Sometimes good ideas get lost over time for whatever reason...

The market was up when the unemployment numbers were worse than expected and the market was up when the number was much better than expected. I think the market just looks for an excuse to go up! Good news -> higher profits -> stonks go up Bad news -> more stimulus -> stonks go up You literally cannot lose! — Jokes aside, it was also extremely suspicious how some “good” news about certain therapeutics were released like a minute before the really bad jobs numbers came out a month or two ago. I would not be surprised if someone was pulling the strings behind the scenes.

I personally find this all very suspicious and amusing but I don’t think it will have much if any impact on markets. In the short term there is too much optimism amongst bulls and the bears are mostly capitulating from what I can tell. In the long term obviously none of this matters.

Would you care to elaborate on why you think the pandemic will improve profit margins? TIA. jumping in, I believe this. anecdotally I am aware of companies that are reconsidering need levels for office space and travel. Covid was a massive actual thought experiment that showed a lot of companies that they can reduce costs without suffering revenue loss. That was the expected answer, thanks. However here is something to consider: Suppose you own/operate a consulting business of some kind and you notice, thanks to the pandemic, that you can cut your RE/travel costs by having half your staff work from home and Zoom-ing your clients when you need to talk to them face to face. But guess what, you are not the only one who noticed that. Your competitors did too. And so what you are going to end up with is tougher price competition which will bring your operating margins closer to where they were previously. So my guess is that the end result of this will be lower prices for consumers, lower rents for CRE owners, less business for airlines etc, and little change in profit margins for the vast majority of businesses. Probably a net negative for the corporate sector as whole. That said, the situation may be different for the small number of businesses that actually have pricing power. You probably want to focus on those if you want to bet on this type of margin improvement.

Would you care to elaborate on why you think the pandemic will improve profit margins? TIA.

I know, but I think that was mostly because they had a Democrat (and possibly an extreme progressive) in mind as the alternative. My guess is that after last year’s “trade war” and this year’s botched response to the virus, those guys would really love to get a Republican president other than Trump — which might not be a pipe dream given how quickly sentiment seems to be turning against him among Republicans.

So I just had this crazy thought in the shower after reading this: What if the real reason stocks were going up despite all the seemingly bad news is that they all improve the chances of Trump being replaced by someone better suited for the job? That is a bull case I can actually buy.

Right but this argument is something I’m not as convinced about at the moment. For one thing I’m not certain what distortions he is talking about. It’s true that a lot of money has gone into various startups with questionable prospects with regard to future profitability for example but was that really a net loss for society? I’m not so sure, given that consumers have almost certainly benefited, their workers presumably learned useful skills on the job, at least some of technologies that they developed are sure to remain valuable, etc.

Not that I think you need any reassurance but this is a potentially great critique of recent Fed/ECB/BOJ actions — and one that hasn’t been repeated a million times.

I’d try Yahoo Finance first. IB has an API too but it’s clunky, poorly documented, and likely overkill unless you are trying to build a trading bot. Sites like Koyfin have more data and I’m not sure if they have an API but it should be possible to scrape a few numbers from them using appropriate tools.

I’m in DC and I did a quick search to see how the high end apartment market is doing in my area. Vacancies seem elevated ... to say the least. Nice buildings that I think used to have around 5 vacancies this time of the year now have like 20. Hard to say if this is permanent but if it is the economic impact will be huge.

I agree with what the others said. As to why this can be a decent proxy however, imagine you had a small rental car company that owns a fleet of 1000 cars. Suppose each car lasts for exactly ten years and costs $10,000 to replace. Assume no growth and no car price inflation. Then the book value of the fleet is $10m and annual depreciation is $1m. And your maintenance capex is also (approximately) $1m because each year you need to buy about 100 cars to replace the ones that went out of service.

I think bci23 has his/her own thoughts on this, but I’m hearing quite a few people voice concerns about how quickly money supply has been going up recently: https://fred.stlouisfed.org/graph/?g=r1v3 https://fred.stlouisfed.org/graph/?g=r0TQ Their main concern is that if this trend continues we are going to have a lot of inflation (or worse). (You are right of course that the connection between the size of the Fed’s balance sheet and money supply is much more subtle than one might expect.)

The BOJ’s balance sheet is already above 100% of Japanese GDP and their economy/markets are not blowing up, so I imagine the Fed can keep going for a while if they want to (and Congress supports them). I don’t know how far they can go though. I would certainly keep an eye on Japan for clues if this interests you.

Alternatively the neighbors who saw them were all economists. “No way that’s a real dollar bill, if it was someone would have taken it already.”

I enjoyed your posts too. Best of luck with everything.

Right, there was an interesting story I read somewhere about foxes and hedgehogs and forecasting. Basically the evidence seems to be that when it comes to forecasting, foxes (generalists who piece together information from various sources) tend to do much better hedgehogs (specialists who rely on their superior knowledge about something very specific) for whatever reason. What this means for investing I think is that trying to identify experts on a certain company/industry and blindly following their advice is a very dangerous strategy.

Sounds like you might want to start a competing shop... Now I’m half joking but half serious too. This fund seems like a really great niche business. Clearly differentiated product vs other investment funds, eye popping bear market returns that volatility averse institutions will salivate over, nobody seems to really know what exactly they do, difficult for potential competitors to establish credibility because big crashes don’t come very often, .... I fully expect them to be wildly profitable given these business characteristics.

Yes, you can view it on TWS (their trading software) or through an API. It looks like it got very close to 20 in late March.

Which high yield bond ETF went up 100x? I'm curious It was either HYG or JNK, maybe both. The caveats are: (a) you had to get the strike and expiration just right to get the max return (duh), and (b) trading was pretty thin pre-crash so I am not sure how much you could actually buy at those historical prices. Edit: Randomly pulling out one example ... a few HYG 5/15 70 puts traded < $0.05 in Feb and went > $5.00 in late Mar So you have access to historical options data? Could we PM and work together on some backtest? :) I don’t have any special data subscriptions, I just pulled the numbers above from my broker (IB). The option hasn’t expired yet so the numbers were easy to fetch. Thx for the offer though. :)