ValueArb

What does Palantir do?

The obvious candidate is Elon Musk. He clearly is a visionary, and clearly created massive value at SpaceX and Tesla. The question is whether he continues to add value. At Tesla it's mostly a production problem now. Musk's overpromises don't appear to be doing anything other than pumping the stock price, Semi, Cybertruck, FSD, etc are all years away. And he's creating regulatory risk, from SEC violations ($420 assured, Hertz contract, fake FSD video) to safety issues with full self driving beta with random customers on public streets. Tesla's struggling to reach it's production goals, factories are delayed, etc and it's EV market share continues to fall (below 14% now). It's only moat is the Supercharger network. At SpaceX his recent contributions appear to be far more valuable, but he's also leading them down super risky paths. Starlink is going to require a huge amount of capital to build and operate, and a large customer base to reach positive free cash flow. Starship was already designed to be the largest launch system in history and he just made it significantly larger in the last week. It makes sense given the efficiencies gained with larger mass launchers, but what's the market for a 150 tons to orbit system, even if it's priced at under $50M a launch? Starship has to solve some tough problems including re-entry, in-orbit refueling for deep space missions, and it's got to be cheaply refurbishable between missions. If they have to inspect and replace tiles like the Shuttle did, it's not going to be cheap. So maybe the go for broke risk taking that made Musk the wealthiest man on earth might not be the type of leadership these companies need now they've achieved critical mass.

I don't do DCFs on potential investments. I've done DCFs to get a feel for how various growth rates work out into long term valuations, but there are so many moving parts that I wouldn't rely on them. i've heard Damodaran does a great job at DCFs, and have been meaning to watch one of his youtube videos to get a better understanding of modern DCF thought process.

I read it but thought it pretty meh. Too much detail, got mind numbing after a while. Barbarians at the Gate had far more interesting characters, or at least went into better detail on the participants so you knew and cared about them more.

It's been said that a business model shift is sometimes a great opportunity. But I can't imagine how this will be a good example.

Her future is so bright that she's going back the future, and by that I mean the 80s.

I don't understand the question. He owns some businesses that will do well in inflationary times, and some that won't do quite as well. Do we expect him to build an inflation safe portfolio in 2010 and just wait for it? Or do we expect him to have dumped BNSF and Berkshire Energy earlier in the year when it became evident inflation was on the rise? Buffett is the captain of a mighty battleship sailing in a tiny lake. Any decisions he makes he's frequently stuck with for very long periods without the liquidity to suddenly reverse.

But there still has to be a price he'd sell AAPL at, right? He was kicking himself for selling in the low $120s IIRC, now it's $179 barely over a year later. If his IV was $130 or so last year it can't be much more than $150 this year.

I've always had a soft spot for Knicks since the Van Gundy days, loved John Starks and Patrick Ewing. But I must admit I also love busting Knicks fan's balls.

Agreed, he should be as AAPL really appears to be more than fully valued right now. But if he was selling Apple wouldn't be making new highs every day.

I bought them when I thought they hosted a professional basketball team, but sold when I found out they didn't, just the Knicks.

One of my biggest regrets is not buying rental properties, especially in 2009. A friend bought a townhome that was insanely cheap (I think he paid $45k and was renting for $900/month) and we actually started to work out a partnership to buy more but ended up I didn't want to pay the penalty to take money out of my IRA. I think it would have worked out. Right now I'm just focused on finding stocks that should do well both if inflation picks up permanently and if it turns out to be transitory, so I can avoid relying on my non existent macro forecasting skills.

But how long can the government keep those rates below inflation rates? No one is entitled to any kind of return but the government isn't entitled to sell bonds to them at any price either. Why would most buy 10 year bonds yielding less than inflation rather than wait it out for higher long term yields in 1-3 year bonds? I'm not saying inflation is guaranteed to stay or that rates are guaranteed to rise, my macro prediction record is about as good as Cathie Wood's bubble prediction skills. But right now they seem to be really substantial risks, which leads me to want to stay out of making leveraged long bets dependent upon low rates.

If people are happily borrowing $1M to buy homes because it's only going to cost $2,500 a month in interest, and then rates spike to 5% and now interest payments are going to be $4,150 a month, you don't think that a significant number of buyers are going to reduce how much they'll pay for homes?

Not sure I understand. If inflation remains in the 4-6% range, how would mortgage rates remain lower than that?

In the 70s mortgage rates peaked at 12%. 7-8 years ago average mortgage rates were 4.5%. This year rates were in the 2.5-3% range. https://fred.stlouisfed.org/series/MORTGAGE30US Do you expect mortgage rates to be lower or higher in the future? And if the answer is higher, how will that affect real estate prices?

Why do you think RE prices will be far higher in 3-5 years? If mortgage rates go up to 5% or so, won't that lead to flat or lower RE prices?

I'm glad I sold my home during this bubble and happy paying the extra rent until things return to normalcy.

Now you can buy crypto on IB, and TWS will remind you of it twice a day if you have it open.

After spending most of the last year making fun of BABA holders, I started buying in on Friday. Here is my thought process. Risk Factors) It obviously has a lot of risk factors, PRI, China accounting, the fact the trading stock is a VIE in the caymen islands, pending SEC rule that could force delisting, etc. It's structure is also complex, easy to hide losses among a morass of subsidiaries, etc. Also Jack Ma pulled a hugely shady deal a decade ago to mostly steal Alipay (their Paypal like subsidary) from western investors, and BABA basically has no control over Alipay as a result. Jack is no longer CEO, but still exerts a big influence. Lastly Jack was "disappeared" by the PRI a year ago for a few months because he criticized financial regulators, demonstrating how much control they could exert if they wanted to. Valuation) It's been growing 60% a year for last decade and is trading at only 10-11 times FCF. It's basically the Ebay, Amazon and Paypal of China all rolled into one, and those are three very powerful moats. It's current price would be unprecedented for a 25% growth rate with strong moats, let alone more than double that. If it was a US business it would be fairly valued at around 40x free cash flow. Thesis) The chances of outright massive fraud are fairly small. Clearly those businesses exist and operate with huge mass, there is little reason to believe revenues aren't . What's most likely is that if there is fraud it's overstating earnings. And neither the SEC or PRI want US investors to get screwed, it's likely even if they can't work out their differences on the PCAOB accounting issues, that BABA will continue to trade OTC in the US, albeit at lower volumes. But we are getting a tremendous price to compensate for all that risk. If 20% of the time BABA goes to zero and 80% of the time things work out to where it gets a reasonable valuation for it's free cash flow and growth ($400?), our blended result is over $300 per share. Obviously thats a level of risk that precludes taking a very large position, but it's not enough to preclude taking medium one, say 10-15% of portfolio. And I doubt the risk of going to zero is anywhere close to 20%.

Question asked of Michael Dell at 1997 Gartner Symposium. "What would you do if you were running Apple Computer?" "What would I do? I'd shut it down and give the money back to the shareholders," Michael Dell said before a crowd of several thousand IT executives. Maybe he meant to say: "I'd give myself a ton of new options with a strike price well below liquidation value, and then shut it down and give the money back to myself, er, shareholders". Dell Market Cap is now $73B, Apple $2.5 Trillion. And Dell has an Apple quote that will live forever in the all time greatest Apple haters quotes alongside: Ed Colligan of Palm Computing when asked about the impending announcement of Apple's iPhone. “We’ve learned and struggled for a few years here figuring out how to make a decent phone,” he said. “PC guys are not going to just figure this out. They’re not going to just walk in.” Steve Ballmer's take on the original iPhone: "There's no chance that the iPhone is going to get any significant market share. No chance." Slashdot founder Rob Malda’s day one dismissal of the original iPod — “No wireless. Less space than a nomad. Lame.”

Money market funds are audited. You can be highly confident that the assets are there. One criticism of Tether was that they claimed to own a significant amount of the assets in certain instruments but couldn't be detected doing any transactions in those markets. So maybe there is a suspicion they are now claiming ownership of a wider number of instruments across many larger markets to prevent the fraud from being discovered. Either way, you will only be able to get evidence of fraud post-collapse. Tether could virtually eliminate fraud allegations by undergoing a full audit, the fact they won't do that when a clean audit would be hugely financially beneficial for them makes it highly likely some level of fraud is occurring. My bet is a bunch of related party loans to other crypto companies rather than an outright ponzi.

This was a net benefit for BTC miners. I own MARA calls, so first China shuts down their Chinese competitors and now this, it's just making me more bullish on their near term prospects.

How will Tether collapse without causing substantial drawdowns in BTC and other crypto? What happens to Saylor and other large leveraged holders if BTC drops to $20k or $10k? If he's a billion underwater on his BTC loans, does the the board force liquidate their BTC (Saylor is down close to $500M the last 6 months on BTC)? How many other large holders have substantial margin loans? It seems like a lot of the BTC increase was accompanied by holders margining to buy more. Reading Burry and others I correctly timed the housing bubble. Being unwilling to sell my home, and totally mis-estimating how low housing prices would go, I pulled all my equity out at the peak to invest in the stock market, where I was earning 25%+ returns. Since I planned to stay in my house for decades seemed like a no brainer to sidestep the damage in housing while leveraging cheap money in what had been an easy market for me to make a far higher return. Obviously I didn't understand that the housing collapse would lead to the stock market dropping 50%, and that my portfolio of illiquid micros would do even worse. Owning half as many stocks as I had levered up to buy was painful for a very long time. A collapse in one large instrument or market frequently bleeds over to other markets. If I owned a significant amount of BTC I'd also want to own a significant number of puts at $10k or $20k to protect me from a rapid unrolling of overleveraged holders, and position me to buy in at the bottom and take advantage of the rebound.

For me this is the worst screener I’ve ever used… it induced me to spend hours creating ever more complex screens across different countries, exchanges, styles, etc (60,000 stocks, my lord!) and I don’t think the distraction is over, today I came even more ideas how to use its power to create even more unique screens. this is a disaster for my professional focus!