elliott
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Posts posted by elliott
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during the webcast of today Wilkerson admitted that they learned some lessons from Atlas Mara and CIG
specifically, he said they were up against too many challenges there, and he summarized the idea quoting Buffett
I don't look to jump over 7-foot bars: I look around for 1-foot bars that I can step over.at least, thats something
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Be very clear on your risk appetite, and your ability to risk mitigate, before you look at commodities.
Pick a few majors, in different industries, and use the SML to determine what you need to earn for the UNLEVERED risk that you are taking.
Chinese money isn't dumb money, it's multi-cycle, long-term money, aimed at assured future supply for the lowest possible cost. Their optimal solution is a large enough stake to put an industry into permanent oversupply, keeping price low, and biasing it downward. They just play a different game, and they play it extremely well.
SD
thank you for your answer
commodities would be a small part of my portfolio. will neither make it, nor break it. even considering that I rebalance the portfolio.
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If you don't know much about commodities, just do a PASS. You don't need diversification or hedging to do well. Do your own research.
I have no position but if you study 5000 years of copper, you can short copper.
maybe I should have added that I am not a trader
I have a hopefully balanced portfolio, but I am sure it can be improved, and precisely as part of my research I wrote the above post in this great forum, where you can find very good answers. some times!
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I am considering adding to my portfolio exposure to a broad basket of commodities through an ETF (tracks the Blooomberg commodity index)
the goal is:
1) to diversify the portfolio, and I am not interested in commodity stocks as those have their own risks (debt, costs above budgets, damage to the environment, etc, etc)
2) to hold an asset class that may do well if we get inflation, currency devaluation/currency wars, etc
I could go for just gold, loved to actually, but I feel the price of gold is a little bit too high for me at this stage (and, luckily, I already hold gold!)
on the other hand, commodities are down and hated (returns have been negative for the last 10Y and pretty consistently so during that time - YTD -20%)
Anyway, anyone has an opinion as to whether commodities may good for reason 2) mentioned above? Thanks!
Bloomber commodity index target composition for 2020
https://www.bloomberg.com/company/press/bloomberg-commodity-index-2020-target-weights-announced/
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what would coronavirus lead to insourcing of supply chains?
I am not questioning the trend here, just wondering why do we say the trend is due to the virus.
the fact that a country needs to import something from abroad makes it dependent on the exporters, with, and without, virus
and in countries where the virus is causing damage, products that are made totally "in-house" also experience supply chain issues
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FAH seems to be trading quite below reasonable cash and cash equivalent values with no fund level debt.
At this stage, what are the risks associated with investing at this point in time? Here is a short list that I can see:
a) Sudden increasing inflation in the countries they are in
b) Default risk of their underlying loans and bonds especially with CIL
c) Poor future capital allocation of cash and cash equivalents
d) For us Canadians, US-Canadian exchange rates
e) Falling interest rates causing it to not be able to cover fund expenses
Anything else?
several of the companies they hold are not making money, at least in a significant amount. I think what they need is for the businesses to become profitable, or at least for investors to believe that will happen. I exited some months ago because I simply could not see that moment coming. And I like the way they do things, the common sense they bring into the companies they invest in...
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Taleb might be a little over himself, but he has nothing to do with Peter Schiff (and I listen to Schiff occasionally). I started listening to Schiff in 2015 actually. Back then, he was saying the US was probably already in a recession (january it was, I think), because inventories were going up, because people didnt have any money left to spend, credit cards were already maxxed... I am not sure there has been any period since when he has not been saying a recession (more like the end of times, actually) is right on the corner. Taleb is about risk, not making predictions, not the economy.
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Given that Trump's business interests have been directly excluded from the bailout/stimulus, does that make him more or less likely to undermine social distancing?
More likely. The optimal outcome for the economy is to get everyone sick over the next 2-3 months, let all the old people die (they don't contribute much to the economy anyway), and then have life revert to normal when everyone has herd immunity.
Richard, what do you make of the points Taleb (and others) make against the case for herd immunity? some body posted an article Taleb co-authored for the guardian a couple of pages back. anyway, one of the several points is, herd immunity relies on, well, immunity, but at this point that has not been proven, ie, you get sick once, you may still get sick again (and transmit the virus).
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There's reason for optimism. Spanish flu killed 100 million people in the midst of WWI and yet society did not collapse, the world goes on. Plus we have better science and technology today, so things should be better 5 to 10 years from now. Unless this is truly the beginning of the end and we all die.. then all bets are off.
Which country are you in and why do think it has a bleak future?
Look at it with a wider perspective maybe you are right. Maybe I just listened too much doomsaying :-)
I am in Spain. 13 million people working in the private sector vs 14 million people comprising retirees receiving a rent from the government + unemployed receiving some type of subsidy + public administration employees (data as of december 2018, but its been like that for a few years). For how long can that situation be sustained?
(in spanish)
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will/can any of those strategies work?
I mentioned this in another thread, but everybody wants to buy quality names now, saying buy them now that they are on sale. but if enough of us are doing that, will we get the cheap prices we are looking for? (sure, prices have dropped a lot vs just a couple of months ago, but are business fundamentals and prospects the same?)
the same goes for, for example, airlines and hospitality stocks. just here, how many of us are following those stocks guns ready?
maybe pessimism is weighing on on me these days (I fear my country is going to have to face a very bleak future, after CV is gone), but I see all kinds of people, from friends who bro-invest to people who know what they are doing (such as all of you guys!), thinking they are going to make good money out of this. but who does even know when markets will recover?
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You think US equities will underperform treasuries over the next 10 years?
Exactly my feeling. But then I wonder...
Did someone in the 90s?
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Something I am not sure markets are pricing in is the possible long lasting effects of this crisis. Much of Europe, for example, was in pretty bad (economic) shape before the virus. This may just precipitate whatever was going to happen eventually. Several of the points Dalio has been mentioning in the last few years come to mind: income inequality and unemployment, the need to live off subsidies and what that does to peoples morale, resulting populisms and nationalist movements vs globalisation trends, social welfare systems arguably broken, the conflict between the US and China (far from just an economic issue), etc, etc
ps Now that I mention Dalio... If you read his books, you will remember that some crisis where markets went down a lot saw periods in between where they also raised a lot. 30%, 40%, and sometimes even with accompanying good macro economic data that supported the rallies fundamentally. So we may think that all is good at some point, and actually be just in the middle of the way down.
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Enrico, are you sure holding a lot of cash is the right thing to do? I do hold cash, to be clear, but I also fear it might lose value - a lot of value. And I dont think we will see it coming.
This ties with a question Castanza made early in the thread. "Are you buying gold?" I have a small % of the portfolio allocated to gold, so no, I am not buying because I already had the gold. It might be a good idea to buy if you do not have, although its considerably more expensive than say a year ago, and gold price rised, but also dropped, during the GFC.
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I might argue the rest of the world is in a similar early stage and is now also taking those costs. In almost every country the fear of this virus is based on how big it might get, not how big it is now. The TOTAL number of corona deaths in the whole world including china is about the number of deaths in an average flu season in my country (a middle sized European country). You read horrific anecdotes on twitter etc, but going by the cold numbers it's still really, really small. Hospitals are getting overwhelmed here and there, as they also tend to get overwhelmed in bad flu years (but without the media coverage and the heartwrenching flu anectdotes, as they don't get a zillion likes so never end up in your timeline).
I agree with you that the "cold numbers" might not reflect the apocalypse reported in social media. I am also in a European country right now, however, and I dont know about the "cold numbers" but I can tell you I have been to a couple of hospitals and the image is ugly. Very ugly. Not to mention that a lot of people who had health issues they needed dealt with are asked to remain at home, and manage however they can. And the health system is not the only one not working properly. Police/security is deficient too. I have been in the need to report some trouble to the police (I apologize for not being more specific), and I didnt even manage to get to file a report at the police station because there were so many people, and due to the risk of infection only one person at a time (one and only one) could enter the police stattion. Even if I had been able to file the report, I am not sure they would be able to do anything to help me.
This may be anecdotal, as you say, and for those healthy, or withou any troubles, virtually invisible, but for the rest...
ps I am going to have a look at the jokes thread. I need my mind to forget about it all even if for a short time.
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funny.
just yesterday, my DD process determined that I should not research Bank of America - one of the reasons being that its equity ratio is lower than what I ask of banks.
by the way, I may now be mixing banks so reader beware, but I think that in the 2019Q4 conference call, Bank of America indicated it felt it was more than adequately capitalized.
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...and the 10Y Greek bond yielding 1.3%
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you can find banks in Europe earning a nice ROE and not being particularly levered
well, at least in nordic countries
in sweden, for example, rates stand at 0%, today - had been negative for several years - and you can definately find some good banks here
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I think this virus will certainly have a noticeable economic impact, although I tend to think it will only be temporal. That said, buy the dip? Me, I am not into that game - for the last 2 years, I have only bought 1 stock per year - but, even if I were, I would think twice in the case of indices and the like. The economic impact may be short lived and minor, but who says hyped stocks will reflate to the same craze multiples?
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despite the drops of the last few days, I still find it difficult to find companies with wide moats and healthy balance sheets at cheap prices.
- will the opportunities arrive?
- are you being more lucky?
- will the opportunities arrive?
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...not to mention that last november Equitys stock went up 50%. meaning, the 6-7% stake that Atlas Mara was to receive is much more valuable now than when the deal was initially disclosed - if my memory doest no fail. I wonder how the parties will deal with this.
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there are many people in Europe who believe they lived better before the euro and all.
people have very bad memory.
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If you happen to have some connection to Australia. I saw that there it is possible to buy korean stocks from at least one broker. I was also looking for a way to invest in the korean market, and happended to see that. Unfortunately, I am not from that country and cannot take advantage of that opportunity.
Good luck
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Reading this book now.
Just finished the first chapter.
It’s a very interesting book about his life stories.
But there is a lot of self promotion. He certainly feels very good about himself.
A World class salesman.
I don’t know if others feel the same after reading this book.
The guy has accomplished more than most of the people from his generation. But, true - even among his class there are many who dont feel so good about themselves, who give more credit for their sucess than Schwarzman does to external factors.
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Its a good book, but do not expect anything very deep.
Fairfax Africa
in Fairfax Financial
Posted
I would be cautious looking at cash.
its certainly possible (they said this yesterday) that some of the businesses need more cash to survive in the next months/years, and that Fairfax will provide it. so, the question comes back again to whether you think those businesses will be profitable one day, thus the extra cash well invested, or whether they will not, and thus Fairfax is just falling into the sink hole phallacy.