perulv

A small status update from Norway. I have no strong opinions right now on how good/bad this is handled. Life goes on as normal with a bit more hand-washing for most people, and it actually seems like the "fear mongering" in the papers are less now than a week ago. It seems pretty certain that the Norwegian tourism-industry is facing a horrible year though. 72 confirmed cases (20 in my city, population 250k ish) , 64 of those got the virus traveling abroad. 56 of those 64 in northern Italy (main reason probably being winter holiday last couple of weeks). Earlier today they said 1400 people in Norway (population 5 million) was tested in total so far, probably a bit more now. As I understand it they only test people that both show some symptoms _and_ either have been in one of the areas abroad with outbreaks, or have been in contact with people that have. "They" are the institute of public health (https://www.fhi.no/en/). It seems one reason for not testing more widely is the fear (probably fact) of running out of testing-equipment. As mentioned elsewhere in this thread, one of the main goals are to spread the infections out in time, to try to not overwhelm hospitals (and everything else). That said, colleagues who have spouses that work in health-care say that they have to work double shifts because their colleagues are in home isolation (perhaps only precautionary, until tested and found to not be infected).

Just som anecdotal facts/numbers from my country, Norway: There are currently 25 confirmed cases, 7 of them in second largest city (where I live. Around 250k citizens or so. 71 persons tested). The first one was a week or so ago. None critical il or dead. Today in a press conference they said both that they know how the virus transferred to these 7 persons, and that "this is probably the start of an epidemic, and it is unlikely that we will be able to stop it". My personal experience/impression is that people talk about this, it is on top of the news all the time, but most people are not very concerned or "panicky". Schools are open as usual, but the kids are told to be extra careful with hand hygiene, touching their face, etc. Which imho makes sense, as the virus seem to have very little effect on children. Many companies seem to have a "if you feel slightly ill, work from home!" policy. I tried to buy hand-sanitizer today, but they were sold out everywhere. At the biggest hospital in the country a doctor was confirmed with corona _after_ having been at work a couple of days after returning from Italy and feeling ill. This is of course a complete fck-up. I addition to all the patiens that might have been exposed to this, a lot of employees in the hospital is now in home-isolation (this is the default thing here. If you are not very ill, you stay at home to avoid spreading it). For most of us, (healthy people below 60 or something like that), this might be the biggest consequence: Not that you get seriously ill by the virus itself, but that so many of societies functions (doctors, bus-driver, person-that-drives-the-food-to-the-store, person-that-fixes-that-power-line-when-a-storm-makes-a-tree-fall-over-it, person-that-fixes-that-atm, and so on) might be severely disrupted by people being in isolation due to the virus. My feeling, and one should probably not make investment decisions based on feelings, are that this must have devastating consequences for the economy. Who would go on holiday to another country right now, when quarantines and virus-threats can "pop up" at any time? And how many things are disrupted in some way or another, either by the factory in Asia being shut down, or someone in the supply chain, store, or the customer themself being stuck at home? Either because they have the virus, or simply to avoid crowds. As I said, this is just my current thinking, probably not rational. But on the other side, if a city with 250k people, no subway and plenty of space (but closer to Italy though) has 7 infections, how many are really in the US?

Even if this is contained, and the impact in other countries is limited (which might be likely, I have no reason to think I can predict this better than the official (International) numbers /experts), I would imagine the impact on a lot of businesses to be huge? Shutting down factories in china for some weeks surely must impact a lot of supply chains. I know this is obvious, but I am wondering if that is priced into the lasts days sellof, or if the impact is even bigger? Sorry to drag this into macro(?) -prediction, and I have no numbers to back this up. Interested to hear other thoughts or facts on this, though. In a streamlined modern supply-line, I am guessing the ripple-effects could be large, and perhaps unpredictable...

Open office layouts have been popular here (Norway) for some years as well, and anecdotally "everybody hates it". "Everybody" being people who do some sort of deep-ish thinking for a living, it might be different for e.g. a call-center. However: a big office with a handfull of people, working on the same team/product/project, can work pretty well in my opinion. This can actually help communication/cooperation. This is pretty common in for software development teams. In my office now I have two developers, a designer and the "product person". More or less. This works fine when we remember to take discussions outside the office whenever they take more than a few minutes, keep our voice down, etc. It did not work well when we were 8 people on the team. Half of the time I wish I had a single office, but at least with a "pizza-sized team" there can be some real positive effects. I have never heard positive things from people who are in an open plan office with 30 other people. I get that it looks cheaper on paper (less square meters to pay rent for) to cram 30 developers (or other people who get paid to think) into a big rom. But both the people who work there, and numerous studies, say that your ability to think (in lack of a better word) is reduced. If the reduction in rent is worth the "lost cognitive output", I'd say you're hiring the wrong people.

https://www.tomsguide.com/news/wuhan-virus-will-affect-iphone-and-other-electronics-production "The area is not only one of the biggest producers of iron and steel, it’s considered a ”crucial hub in the middle of China”, with the Yangtze river going across it, three railway stations and an airport. It’s also considered a major automobile industry, electronics, optics and fiberoptics production site. In fact, 230 of the Fortune 500 companies have investment in this area." Not much details in the article, though... ¯\_(ツ)_/¯

There has been different variations of market crashes that has been caused by, or at least affected by, different forms of algorithmic trading ("flash crash", Long Time Capital Management, portfolio insurance). Today index-funds are more popular than ever, and I guess one could argue that an index fund does algorithmic "trading", just that the algorithm is simple (and known to the outside). Could this combination of "dumb" index-funds, and the highly sophisticated algorithmic funds, impact/cause crashes in a new way? I can't come up with a good answer myself. Perhaps less human judgement will make the crashes smaller? After all, we are not a rational bunch. Or could it make it worse, if e.g index-funds started dumping stocks blindly, adding to the selling? Not sure how though, are there scenarios where a change in "the market" would force an index-fund to trade large volumes? My knowledge of "quant funds" is limited to reading about it in books, and I have no idea how often an index fund (have to) trade. But software-systems in general are complex, and tends to fail (or act) in ways that are only obvious after the fact. Combined with a complex and chaotic stock-market, it is not hard to image it can "go wrong" in some way. But will the higher percentage of stocks in index-funds affect this, in some way? I ask out of curiosity, not as part of some investment scheme :)

BorgWarner perhaps? Doesn't seem too expensive, but tied pretty closely to the auto market. Thanks, I will check it out. I agree that it looks reasonably priced, and the debt-level doesn't look frightening either.

I agree with A gentleman in Moscow. Can't really explain why, but it was different from most books I've read, and I wish there were more like it. Another favorite in fiction: Machines like me non-fiction: The Gene: An Intimate History

A stock that I have not found yet, but will continue to look for: A company that is well-positioned to benefit from the move to renewables in electrical energy production, but not so obvious that it is already over/fully priced. I think this means that it is not a pure solar/wind production company, not electrical cars, not one of the big battery-producers. But someone who is selling the proverbial shovel in the gold rush (I might be stretching that expression). "Smart-grid", storage, something in that area. SEDG, but at a lower price ;) ABB, in lack of more specialized companies...

I tend to write down some unstructured thoughts around what I really enjoy, what I should try to avoid, etc, around this time of year. E.g. what is really the purpose of my investing / savings? Stuff like "nobody on their death bed wished they spent more time at the office", the-banker-and-the-fisherman story (https://bemorewithless.com/the-story-of-the-mexican-fisherman/) often pops up. On the flip-side, not having economical worries, f-u-money, etc, is a goal. (I also try to write down my reasoning, including both thoughts and numbers, when buying or selling a stock, and revisit these every now and then to try to learn something) I try to back these thoughts up with some concrete actions, and I'm stealing the first two-tree points from your list, @DooDiligence ;) I could definitely be better at structuring this a bit more, and make sure I actually try to follow (or at least remember) my own advice throughout the year. edit: Point 1-3 from the 2019-list, about listening etc.

I am a software developer/architect working in a small company, and we use Slack. I would say that Slack adds value for us, both by being a better channel than email for many things, and by having some good features (integrations with other systems, so we get an alert in a designated "chatroom" when a production-system fails, guest-users from outside the org, the signup-process is pretty streamlined, etc.). That said, I agree with the lack of moat. There is not much stopping us from switching to a different provider/solution. We would lose the chat-history, but that's not a big deal. We could probably set up the new system with users, channels, integrations etc in hours, or at least a day or two.

It makes stuff that convert DC from PV into AC.

Interview/conversation with Daniel Kahneman (Nobel price winner, author of Thinking fast and slow) by Shane Parrish: https://fs.blog/daniel-kahneman/ Not finance/investing directly, and probably familiar stuff if you have read him before. But it is always interesting to listen to Daniel Kahneman. He gives some pretty concrete advice for better decision-making. It is also a good reminder for the rest of us, to hear how humble and realistic (that is: not optimistic) he is about recognizing our own biases and improve our thinking.

Per, How about BOL.PA - Bolloré SE. Still part of something bigger, but at least an interesting stab at it. Bolloré - Electricity storage and systems. Vincent Bolloré has poured several hundred M EUR into it over the years from his cash cow [the logistics business], and he [and now one of his sons, Cyrill] is not going to give up on it. Thanks for the tip. From a quick look it seems to be a bit more heavy on debt than I like (55% of total asserts) and a bit low on roe/roa. But I will add it to my list, and keep digging. My best investment by far was buying SolarEdge around $15 a couple of years ago. Not that one stock-pick proves anything, but nevertheless this is a "renewable energy company" that did 6x on my investment. And a company that fits my / some definition of value / quality investing : little to no debt, good roa/roe, low ebit /ev (at the time anyway). They make inverters, something needed for solar power installations. And probably for battery storage as well, given that batteries are dc and the grid is ac. I guess they almost sell the proverbial showel in the gold rush. I want to find more such companies :) Advanced Energy Industries seems to maybe be in the same category...

Sorry for the sensationalist headline. It is straight from this article: https://www.bloomberg.com/news/articles/2019-09-20/plunging-offshore-wind-costs-could-soon-end-u-k-subsidies “The auction results today show offshore wind is in line with current power prices - it is already competitive with existing fossil fuel plants, let alone new fossil fuels,” said Deepa Venkateswaran, an analyst at Sanford C. Bernstein & Co. in London. “In the next auction in 2021 we will see costs go well below that of existing fossil fuel plants.” There is a lot of discussion in Norway currently about wind-power (mostly that we want it, but not where it ruins our nature, which means offshore, and that is not economically viable yet. There is also a good case to be made for combining wind with our hydro, especially if you convert some of the existing hydro-plants to pumped hydro, acting as a battery for leveling out the supply) . Yes, yes, we are a super-small country who struck oil, and on top of that happens to generate 50% of europe's hydro power, and every other car sold now is an EV. So we are not representative of anything. The Norwegian partly state-owned company Statoil (literally "state-oil") rebranded to Equinor a while ago, and are part of the project mentioned in the article. Hype or not, this project is said to deliver power to 4.5 million people, and beginning to get price-competitive. These windmills will be fastened on the bottom of the ocean, at only 40 meters depth. Much of the north sea requires floating wind-mills which are more expensive. Still, it will be interesting to see if, and how quickly, the price continues do decline. Hopefully big projects like this will help. Not sure what a good investment would be, related to this. Equinor is still very much an oil/gas company. I keep thinking there must be a quality company out there doing something (smart-)grid related, that will benefit from a shift to renewables. One that is not just a part of a giant like e.g. ABB.

Thanks for sharing this. Regardless of the success of the company and product, his point "Renewables minus storage is not a solution" must be true. What would like to know more about, out of curiosity if nothing else, is some numbers on the actual storage needed. And I don't mean stuff like "London uses this much electricity in an hour". But some model, simulation, that looks at the whole system: It tends to be more windy in the winter, but much less sun (at least in my part of the world. See https://www.researchgate.net/publication/301214007_Design_of_Future_Pumped_Storage_Hydropower_in_Norway slide 3), so that kinda evens out the seasons somewhat. How much would a "smart grid" be able to compensate, by balancing charging of EVs, water-heaters, incentives via dynamic pricing, etc etc? Would we need storage for 10000 x the <power needed by a city for an hour> or 10? How much can we do with power transfer between regions/countries, and so on. Surely, this must be something that smart people think about and model?

Sure, this makes sense. "I have all this money, I can't very well put it in the madras. So even if I have to pay for someone to store it safely, I'll do it. And btw, I think the rate will get more negative, so I'll lock in this "profit" at this rate". That is just a conservative investment, like a person using a high interest rate instead of a mutual/index-fund for savings. Nothing "bubbly" about that, just lost opportunities. But that reasoning only makes sense as long as the price for the bond is close to the par value, right? If I do the above reasoning, and put my money in a bond priced at $200 with a par value of $100, my downside is (at least) 50%, and I am far into the more speculative area you describe in your second paragraph: The fascinating thing to me is that it seems the first part (conservative placement of money) can sorta drift into the second. The bank that is bound by law to invest its reserves in some types of bonds, or the conservative and dull fund that my mother thinks acts like a savings-account (yielding a small but steady return), is suddenly becoming a speculation with significant downside. (it got a bit tiresome to put in all the "I guess"-es, so even if the above is written as facts, I´m still very much inquiring open for insights :))

First of all: thanks for taking the time to explain this. Intuitively, this made no sense to me. Why should an instrument with half the "payout" be worth twice as much? But I guess I'm confusing the terms yield, coupon rate, and perhaps discount rate. I guess this would be similar to, or is in fact the same, as lowering the discount-rate in a present-value calculation? with a small enough discount-rate, the present value would be arbitrary large. I would probably be foolish to use that number to do any investing, though... But what is the definition of "a bond yielding 1%" here? Is the calculation: a $100 bond with a coupon rate of 1%, priced at $200, is priced to be yielding 0.5%? That kind of sounds like saying "I value this stock at twice <whatever price>, because I believe the p/e multiple should be twice as high". Which I guess is the same, since half the current discount-price means twice the price current price. Still... stocks can grow into their valuation (the e can increase), while the coupon rate cannot. Even if I get the math here (and please correct me on the above ramblings if not), not sure I get the sanity of it.

So.... the bond itself "should" yield close to (actually less than) nothing. But when I (as a random person with no financial skill) look at my pension-savings, I see that this presumably super-safe investment is up 10% in a year. Is that part of the "bubble"-factor here? This is interesting. As a bank I _have_ to put these billions (for capital requirements) somewhere, and there are strict regulations on what instruments. So I have to put them into these "safe" instruments, even if I fully realize that the current price (vs value) of these instruments are way high.... unless there are accounting-rules for how to value these (different from the price), could't that mean that when the price at some point aligns with the value (par?), the bank is suddenly a few billions short of their capital requirement :o

Yes, the question is almost as naive as the subject indicates. This question is related to all the news these days about a "bonds bubble", negative interest rates etc. In my simple world, a bond was something you bought and and collected "interest" on. I do understand that they have a market price, different quality/riskiness have different yields and you can speculate in the price-changes (e.g. buying them on the cheap during the 2008 financial crises, the proverbial 60 cents to a dollar). What I do not get, is stuff like this: The tweet says it all I guess, "Investors bet that they will be able to sell the bonds to the next fool at a higher price.". But if I read this correctly, "the market" pays 180 euro for an instrument that will pay you back 100 euro, and in the meantime yield... nothing? If so, it seems pretty obvious that this has a great chance of falling back to 100 ish... but is it that simple? In general, when I look at something and figure "hah, everyone else are idiots", there is something I'm missing :) The market tends to be relatively rational, at least more often then I would like it to be. There are tons of articles about the "trillion dollar bubble" (https://www.bloomberg.com/news/articles/2019-06-26/trillion-dollar-monster-lurks-as-bonds-price-out-duration-risk). I find it hard to believe that fund managers around the world are buying 100 dollars for 180. What am I missing? And if they were, would it matter if the interest-rate moved in one way or the other (triggering sell-off, as some articles hint at), as the price is so totally detached from the underlying value anyway? Is the fear that investors will wake up and understand that this is crazy, and start selling? What would be the direct and indirect consequences for the equity-investors in (presumably) high quality companies with relatively little debt? Or is the bubble on the other side of the table, the fact that corporations have taken on an enormous level of debt? I would really appreciate your insights.

These actually seem to be relatively out of favor now, which is perfect. I bought a bit of SQM, a lithium mining company http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/sqm-sociedad-quimica-y-minera-de-chile/

Does anyone have suggestions on how to invest in energy storage? It seems to me that all the listed companies, at least in the markets I have access to, are big companies doing 99 other things in addition to energy-store (like the ones mentioned here https://seekingalpha.com/article/4167555-companies-benefit-stationary-energy-storage-boom, Panasonic, Samsung, Tesla, ABB...). It also seems pretty clear that energy-storage, in whatever form it will take, is an essential ingredient in wind/solar-power. No matter how competitive the prices of wind/solar will be, we will need power when the sun is down and the wind is not blowing. If that means tons of batteries, some sort of gravity-storage, or something else, I have no idea. There seems to be many smaller companies like the ones mentioned in another thread . But none of these seem to be publicly traded. And of course, there is a high risk that many (most?) of such "crazy ideas" will lead nowhere. I am not expecting to stumble over a perfect company with cutting edge technology, little debt, high margins and low valuations in this immature industry (although SolarEdge in 2006 was pretty close. Not in energy _storage_ though). But it would be nice to somehow get a bit invested in this somehow. Ideally trough a company that has some aspect of value/quality (I'm pretty allergic to high debt-levels) :)

https://acquirersmultiple.com/2019/04/the-value-decile-of-portfolios-formed-on-p-cf-is-underperforming-the-glamour-decile-by-the-widest-margin-ever-going-back-to-1951-59/ I'm not sure about the method used to generate this results, but as far as I can tell, this is just one of many "value-investing is underperforming" statistics of late. Not sure if this question is more naive or obvious, but isn't this just a natural consequence of valuations/multiples being (too) high? Or rather, that "sexy stocks" gets all the attention, and these get grossly overvalued? The last time this happened, it was leading up to the .com crash etc. If and when multiples get back to normal (for whatever value of "normal"), value investing will again start to "work". Not much higher order thinking on my part here, what am I missing?

Several great minds, including Munger and Musk, talk about the value of having fundamental knowledge in different areas, and "reason from first principles". I've started watching these recorded lectures by Richard Feynman, and find them really fascinating: http://www.cornell.edu/video/playlist/richard-feynman-messenger-lectures I don't really think I will become a better investor by knowing the law of gravity better, but just the fact that I can see the actual lectures from one of the greatest physicists ever, is worth doing it. And he is funny, and explains complicated stuff in an easy way.

No, it is by no means within my circle of competence :) But as you say, there might be value in having some general feel/opinion on where we are in the cycle. A year ago I thought the best way of investing was to ignore macro, "the market", altogether. But after reading Howard Marks, I do try to integrate some opinion on where the market is into my investing. I still don't know if it will make me a better investor though, and the line between trying to time the market and being "aware of it" is not always easy to find. One of the first things someone taught me about "the market", is that it is pretty efficient. Probably no all the time, or we would all be wasting our time. But if "everyone knows" that things are going to downhill, "everyone" would sell now before it goes downhill, and the market would already be down. This actually puzzles me when I stuff like "everybody agrees that the inverted yield curve is bad news", and the market is pretty close to all time high ???