ValueArb

Also any retiree who kept their bond durations short is a huge beneficiary. They are rolling over into far higher yielding bonds and will continue to for the next few years and their interest earned will skyrocket.

This is very interesting, thanks. They clearly have a great skill at stock picking in biotech, but we know outperformance tends to degrade over time, typically because of portfolio size increasing limiting a SuperInvestor's highest return opportunities. The writer recommends a strategy of only focusing on Baker Brother's small cap picks to theoretically get their highest return ideas, which might work. The problems are, 1) its not always small caps that are their best ideas 2) With their far larger portfolio they may not have as much time to spend on their small caps, reducing their edge in picking the best. For example if they have fourteen $1B positions in mid/large caps and ten $100M positions in small caps, how much focus are they really going to give small caps? 3) What if their previous highest return stocks were clustered in the small end of small caps, and they can't even play in that pool anymore? Looking backwards can give you confidence that someone has great skills, but it can't give you confidence that they will be as successful going forward, especially when burdened with a larger portfolio forcing them into more efficiently priced parts of the market.

Unless you are in retirement this has been a huge net benefit. No longer do savers have to overpay for stocks or bonds. Every new dollar going into their retirement funds is getting a much higher yield and over time that will make them significantly better off.

This is the kind of BS that is why Ray is viewed as a joke.

Agree with this. He made his bones calling a crisis, and convinced a massive amount of pension and other managers they needed Pure Alpha as a hedge in their portfolios.

What is this measuring? Because its not correct for the US, as federal debt alone was 130% of GDP in 2022, and I don't believe that is counting state and local debt.

In the 1920s US debt to GDP was in the 20-30% range. Today it's 130%.

Bridgewater has had mediocre returns overall, it trails the market until a crisis then catches up a little. That's the problem with believing Ray is an investing genius, he comes off as a chicken little stopped clock that's right twice a decade.

We've been eliminating work for ten thousand years and somehow there is more work to do than ever. Robots are just another in a long line of automation machinery that increases our productivity and output. And there are infinite amounts of available real estate, in space. And in some ways vastly superior real estate, with nearly infinite solar power, flexible gravity levels, controlled environments, etc. At the $100M/ton payload costs of the Shuttle that's just a fantasy, at the $3M/ton payload costs of SpaceX it's intriguing, once we reach the $300K/ton cost level that a fully reusable vehicle like Starship is capable of it will start the gold rush.

I've been toying with buying this but haven't pulled the trigger and probably won't. STHO is a spinout from SAFE, it trades at $11 despite every share of STHO owning one share of SAFE which is trading at $16.75, and having roughly $6.50 in tangible book value on its own. The obvious play is to short one share of SAFE for every share of STHO to lock in a (momentary) profit of 100%. And SAFE at $16.75 has fallen a lot (probably in part to others shorting it to hedge this deal) to the point where it's probably fairly valued so maybe you don't need to short at all. But thats as far as the good news goe The bad news is that STHO is a slow motion real estate liquidation that has very high expenses and manager fees. I can't figure out how they can actually turn any of that $6.50 into a shareholder distribution, they are burning cash at a rapid pace. It wouldn't matter if they would dividend SAFE shares out to shareholders, but I can't see them doing it. If they end up in bankruptcy it might look like fraudulent conveyance and It looks to me like they may sell the SAFE shares over time to fund the liquidation, and can't figure out how to model exactly how large the losses will be. I have an email into investor relations but no response, so I thought I'd throw it out here in case anyone has a different/better perspective on the opportunity here.

I've pretty much struck out getting access to the expert market. I was able to get to the point of filling out an application for an account with Robotti but I'm only ready to fund it with $120k to start, and it seems like a combination of my tiny size and the amount of work I would add for their trader because I'd like to leave out some standing limit orders is making them reluctant to proceed with me. I understand their reluctance, but don't know what else I can do.

Yes, Graham knew that value is based on a DCF of future cash flows but was wisely skeptical of using DCFs to make valuation decisions. He preferred focusing on finding value in the balance sheet because it could be liquidated in emergencies, which is an understandable mind-set after working five years in near poverty to return his clients holdings to their high water mark after the great crash. There is even a famous (apocryphal?) story that his partner had to physically drag Ben to the signing meeting for Geico (by far their most successful investment), because he was so averse to buying a business on cash flow instead of assets. He gritted his teeth and paid a sky high price of 90% of book value. A year later Geico earned more in profit than he had paid for his 50% share. The problem with DCFs is that tweaking a few assumptions can yield a wide range of values. Cathie Woods can value Tesla for trillions just by adding millions of robotaxis or her forecast (always perpetually two years away). That's why Buffett doesn't do DCFs for individual investments, but he does make valuation decisions on his estimates of their future earnings growth. But only when the business has a strong moat that makes its earnings relatively predictable over time. It was the concept of moats that brought Buffett out of the Ben Graham assets are the only safe valuation mentality.

I try to never reference current price when I'm estimating a value, to the point that I won't look at a stock's price until I've finished reading all their financial filings. When I did it for BTC, I came up with a value of $100B to $200B seemed like a reasonable amount of liquidity for the world wide market, at a time it's total value was around $9B. You can criticize my methodology, and even more easily my decision not to follow through and load up on BTC. But market price had nothing to do with my analysis.

Even if this is true, again greater utility doesn't translate directly into a higher value or price. Usage, network size (ie collective utility) can be just as large at $10,000 as $35,000.

Assets on the balance sheet aren't utility, if they are tangible assets they are future cash flows. If something is "underpriced" it has an intrinsic value, and that value needs to be determined by future cash flows, discounted for time. Bitcoin has a great deal of utility for transactions. But that utility doesn't give the holder any call on any future cash flows and can't be valued. When I used to own Bitcoin I did try to value its utility by estimating how big the market for a non-fiat cross border currency was, and my estimate was that it was reasonable that the world maybe a couple hundred billion dollars worth. Unfortunately that seemed absurd when BTC had just hit a high of $450, and I couldn't bite the bullet on making a large commitment. So I missed out on selling a bunch of $450 BTC in the $5k-$10k range, oh well;)

I try never to speculate, but that doesn't mean it's wrong for you to do it. But it is intellectually important to be able to know when you are investing and when you are speculating. In the case of Uranium you are speculating on a shortage. I would be wrong to say you shouldn't. Whether its a good gamble or not depends upon the quality of your reasoning and research, not that its a speculation. If I saw a house for sale that would yield a good cap rate as a rental, i'd be more likely to invest in it if a Whole Foods was opening since it would give me more confidence rents will improve. But I wouldn't buy it unless it made sense on the cap rate it can yield now. I would never buy land as its locking up too much capital for potentially a long time without any yield, instead I'd try to buy an option on it;) I'd certainly speculate on baseball cards and things like that at yard sales, but I wouldn't hold it long term and call it "investing". And hey, I understand the appeal of Bitcoin, I owned some at $400. But given my world view I could never make a lot on it because I feel compelled to assign a value to it and not hold it when it reaches value. So I have missed out on potentially massive speculative gains. But that's okay, because in full time investing I've never had a year where I didn't beat the market, and have averaged well over market returns. Making a 10-20% return on an investment can translate a lot higher if you can do it multiple times a year. I don't know how many ways there are to skin a cat but there are many ways to make money, and the best ones offer high returns for low risk.

Because I'm a value investor and that's how value investing defines the intrinsic value of an investment, the stream of cash flows it is likely to produce over time, discounted for time. Everything else is a speculation because you are betting solely on price movements. Gold, commodities, and crypto are all different types of speculations, they all have different forms of utility but no cash flows.

Von Moltke should have never kept strengthening the left, cost Germany the war.

Utility only provides an investor value if it translates into a stream of cash flows. BTC's utility is the ability to do financial transactions without relying on government fiat, but the utility is the same whether BTC's price is $35,000 or $1,000.

0% because this year I apparently reserve my capital only for things that go down.

Cool, I believe you but tell him, not me. I actually don't have a dog in this particular hunt, I just thought it was funny to read two diametrically opposed claims within 5 minutes of my morning Twitter/COBF scan. The first respondent to him said "what about Ether" and his reply to that was something about it still being inefficient due to it's massive transaction duplication. Last I looked no one had brought up Lightning yet.

What "value"? Again, value has been traditionally defined by Graham/John Burr Williams is the future stream of payments that you are entitled to by owning an asset. Owning crypto doesn't entitle you to any future stream of payments, just the price as determined by the market. Bitcoin has utility as a medium of exchange and pretty clearly that utility has increased over time. But utility doesn't fit within the value definition since it doesn't come with that stream of payments. So while it has inarguably become a better fiat replacement over time, that still doesn't give it characteristics of value.

The multi-trillion dollar question for crypto is will anyone be able to connect it to the physical world in a trustworthy and efficient way. If they do the possibilities are endless, but there are many impediments. Things like oracles aren't necessarily trustworthy, they can crash, get hacked, be fed false data, be mis-programmed, return data thats inconsistent with the expectations of the contracts/people relying on them, etc. More specifically, think about real estate titles being stored on the block-chain. The vision is that instead of paying 5% to a couple of agents and paying a title agent to insure that the title is clear a smart contract can instantly assign your property's title to the buyer as their funds clear into your wallet. But the problems that need to be solved are many. First, you still need inspections, you still need punch lists of things to address before the deal can close. The buyer still needs financing, and you might have to provide it. You still need agents to show and advertise the property for you unless you want to take on a lot of work, and a central registry of for sale properties. So probably at most, the block-chain eliminates title insurance, and that's still hard. How does the block-chain to a title search to ensure there are no outstanding claims so that you don't end up buying property with disputed ownership? How does it prevent bad actors from adding fake titles to it? What if someone gets your private key and transfers your title to themselves? How hard would it be to undo these things? The current system has a ton of protections and works very well, block-chain can't replace it unless it addresses these problems just as well, and at a lower cost.

NYT opinion piece today from Molly White. https://www.nytimes.com/2023/11/08/opinion/fraud-crypto-ftx-trial.html