Red Lion

On this subject I just read an opinion piece somewhere (maybe WSJ or Bloomberg?) which was saying small caps and emerging markets may be the best way to play the AI wave as there is the most room for margin expansion, and these tools are being made available to everyone (not just Fortune 500 companies). I found it to be an interesting thesis, this article was suggesting indexes rather than actual companies, but I'm sure there may be lots of smaller less efficient companies that can really improve their productivity and margins with AI tools.

added to FFH, BRO, RYAN, Nintendo trimmed GOOG, sold AMZN

Wow that’s incredible. Would love to try it. I used to dabble in brewing, but this is perhaps better described as alchemy!

How is this possible? Wouldn’t it need to be distilled?

This is my #1 gripe with the MAGA movement. Where is the legislative push to massively streamline immigration for people all over the world who want to do whatever it takes to come make this country great again? I’m all for deporting violent criminals, reducing handouts for illegals (and others), and legislating and enforcing immigration law that actually makes the country stronger. Maybe it’s just that I live in California, but I like the immigrants way the hell better than 90% of the state’s other residents.

I can imagine that future, but two scenarios I think might be more likely. 1) Adoption of AI provides a headwind to employment numbers and Inflation, increased corporate productivity and profit margins, and interest rates stay relatively low by historical standards. The commodity noise from the Iran debacle either diminishes or gets baked into a new normal commodity pricing regime. 2) Financial repression / negative real rates like we had post ww2. I definitely think this is a good time to be a (good) stock picker though. Isn’t it always?

I think we 100% agree philosophically, but I just have a little bit of a different approach. I think education is the best investment in our children, and that the cost is secondary too. But I think the University industrial complex doesn't have a stranglehold on education itself. I think that most education is achieved through reading, asking questions, experimentation and experience. Obviously, for most profession paths you need to play the college game. The winners of the college game often seem to be the ones that play the state schools to keep their cash costs lower. I read somewhere recently that dentists have some insane average student loan load. Obviously it's a great profession, and one that lends itself to entrepreneurship. If I had a kid that wanted to be a dentist, I feel like focusing on getting the credentials at the lowest debt load while saving that money to use towards buying or starting a dental practice would be a great move. Same idea for most of the other professional schools. Alternatively, if I had a kid who was well read, inquisitive, and possessing an innate curiosity, and they decided they wanted to become a plumber, I'm 100% ok with that. If they play their cards right they could well outperform the hypothetical dentist in every possible way (education included).

I agree that these numbers are so individualized that it's hard to even discuss. But I think a lot of parents end up in this rabbit hole where they need to send their kids to the best prep school, to get into the best undergrad school, so they can get into the best grad school or professional school. I work in a profession where I've seen a LOT of those "rich kids" where the parents spent enough money to buy a house on their educations. Out of the most successful people I see, it's very seldom the rich kid who went to the IVY league. The more common thread is rich kid who went to an IVY league, then went to a lower tier grad/professional school, then falls right at the middle of the pack in terms of career performance. One of the most successful people I know went from community college to state college to state medical school to Harvard and Yale for residencies/internships. I know this is all anecdotal, and I'm certain there are anecdotal experiences to the contrary of what I'm saying here. But this is what informs my decision. If a kid wants to become an engineer/doctor/lawyer/teacher/researcher/computer scientist, I don't even think there's a real world benefit to going to Harvard or Stanford or one of the similarly applauded schools. I told my kids that if they get into MIT I'll pay for it, because not going to MIT after somehow getting in would be a tragedy. But in reality, if a hypothetical kid gets into MIT, but mom and dad won't pay, they can't get financial aid, and they decide to go to a state school instead to avoid borrowing hundreds of thousands of dollars, I suspect this hypothetical kid is probably going to be wildly successful since they're already wicked smart, and financially minded. If you want your kid to be an investment banker or hedge fund manager, maybe it would be worth the IVY league money, I don't really know since I don't have any connection to that world.

I know this wasn't directed to me, but your response certainly resonates on a number of areas. I do own my primary home free and clear, and I tend to think that most of these expenses can toggle down dramatically. For example, if you're just living off of investments, wtf would you need a nanny. If you're busy working full time and didn't have a layoff, presumably you could still wait until markets recover with no need to dip into principal. Private school I kinda get depending on the situation, but it's got to be a pretty insane expected value from private school to drop $20-$40k a year for 12 years. I haven't ever personally seen that level of value. My (public school educated) daughter's college roommate went to one of these private schools, which kind of proves (in my mind) that it's a huge waste of money in the first place. This same rationale applies to lots of expenses. If you had a 50% drawdown and are laid off, maybe you go to the ChatGPT extension of culinary school, and start makes great meals with affordable ingredients (just look at French food, it's mostly cheap to make and considered the poshest stuff to stuff your face with). Postpone the Fiji trip until your portfolio recovers; etc. etc. If you're laid off, and also having a 50% drawdown, seems like the kids could take student loans for grad school, and parents could help pay those loans off after portfolio recovers. Personally I want my kids to pay their own way for college (or take loans), and I will be giving them comparable amounts of money to use as downpayments for first homes or possibly to start/buy a business if applicable. I think it's good for kids to have skin in the game, so they don't dick around studying women's studies (is it trans studies now?) or something of the sort. If you operate under the assumption that your kids are helpless and need to be taken care of for the rest of their lives, presumably the same things applies for your grandchildren as well, and on it goes. Really the big exception I would see to these points would be if you had a severely disabled child or spouse that requires in home care that's not covered by insurance.

Winston Churchill sounded like a pretty serious alcoholic. Not that I’m singing the praises of Patel or Hegseth, but don’t paint all the alchies with the same brush

+100

Congratulations, welcome to the most fulfilling and challenging time of your life! I've run the gamut and had a kid when I was quite young and one in middle age. While I had more overall energy at 20, I find parenting easier as a middle aged parent for a variety of reasons relating to personal temperament, financial stability, etc. The best piece of advice is to make as much time with your child as possible before they hit their teenage years. Put the career on the back burner (didn't you just retire?? perfect situation) as much as possible!

Added a little bit of FFH.

If this was a book, I'd read it. Sounds like a fascinating individual!

No I'm in the US, although we do have family in Canada. I should have been more clear.. Beef prices skyrocketed here in California starting around 2025. But from around 2020-2024 (right during our 9% CPI) I was buying top quality cuts of beef for lower prices than in 2019 (at the same time as previously economical cuts of beef like Chuck Roast and trip-tip were going through the stratosphere). These days I'm back to eating lots of pork, pacific rockfish, and eggs and needing to schedule a fishing trip. This year I'm seeing great deals on fruits and vegetables (although I try not to buy them at the grocery store), avocados, pork. Terrible deals on big name wild caught fish and beef. The last 12 months or so I've been eating a lot more pacific rockfish (which hasn't changed for several years now), pork, and eggs. So at least where I live, you can definitely eat a healthy diet, but you might need to ask ChatGPT for some recipes (this may be ChatGPTs highest function, I've developed my cooking skills substantially since I began experimenting).