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Everything posted by scorpioncapital

  1. just a thought. i read an article that astronomers live a long time because they have to track or see cosmic phenomena that take decades to develop. Supposedly this gives them a motivation to stick around ) . I suspect investing and compounding is the same. You get curious what the world throws at you next.
  2. How do rental prices adjust downward in a recession or deflation? You seldom see it as prices have always galloped forward but does the landlord just one day say to the tenant your rent is now going DOWN? Or the tenant asks for a lower price cause they don't have enough money and threaten to walk and the landlord either takes it or risks to find someone else which they are not at all sure can pay the same price? What is the protocol? Also do advertisements just start showing lower monthly rental figures over time for new rentals?
  3. I usually trim after buying a little more. But I am skeptical to go too far in either direction of the core position so one could argue once you reach the resting place there is not much to do short of the rare moments of a major crisis where you consolidate the best positions on the upside.
  4. I guess the key is to normalize the earnings, can be noisy sometimes. I don't know what Domino's growth rate or gross margin was that compelled Ackman to sell but I figure if the FCF was 3% and growth rate was say 5% real, you've bought about 11 years too early! I also wonder if the 10-30 year goes to 5% would that cause nominal growth rate to accelerate also, or would in fact slow it down further? If so, I can definitely see the risk of a 5% long yield and a too-slow growth rate. Even if growth rate was 10% you are still buying 5-6 years too early at 3% fcf yield. But the hyper-growers who are growing at 20-30%+ a year but have no earnings, not sure what to make of it. When they do have earnings, the fcf yield on initial purchase price would still be quite high just from the revenue growth alone. But you have to believe that there is a translation to net earnings (e.g. Amazon). There is also the mystery of gross margin/qualitative business factors. It seems that these businesses trade at a lower fcf yield even if growth is in the 5-10% range. But I do not know how much 'quality' is needed to offset the rate headwinds.
  5. How did stocks do when MM was 5-6%? I truly hate to say it but I've seen stocks burst bubbles at high rates, low rates and I've seen stocks do well at high rates and low rates, just not outliers like 10%+..
  6. Could you also find stocks where the growth rate of revenues & earnings >= cpi core rate and with high gross margin, even if the fcf yield begins below the core cpi yield?
  7. Every old world business has no excuse not to use technology to enable their core business model to be more efficient and do better. I don't see this is an issue of being tech adverse but just a bad mistake unfortunately. Also it is probably normal for insurers to have claims cost inflation and that to impact performance. Insurers don't do very well when there is unexpected inflation. Even moreso if you didn't use available technology to do better underwriting.
  8. my base case is a decade+ of stock multiples compressing and best case flat by 2030, base case a little lower than today.
  9. I use the concept of look-through debt. If a company has say 50% debt and I use another 25% debt that is a look through debt which is compounded. I actually think Buffet thinks this way. He uses low cost or zero cost insurance float but tries to ensure his invested companies are not highly indebted further (utilities are an exception as they must operate with debt to get any meaningful return). E.g. look at Oxy paying down debt and becoming investment grade.
  10. Does it matter if the variable debt is still yielding less than inflation?
  11. I see no difference in this than what Nietzsche wrote about the 2 types of societies - https://en.wikipedia.org/wiki/Master–slave_morality
  12. I notice Singapore has no capital gains tax. It seems the policy of US to somewhat penalize tax havens with higher dividend withholding tax. I guess you could just buy stocks that pay no dividends or be happy you don't pay capital gains tax in exchange for higher dividend taxation.
  13. How do you tell if redistribution is demanded due to some wrong factor with the system or a new, unusual generation of laziness/aimlessness? Of course a cynic might say the system is broken unless everything I want can be gotten out of it.
  14. Aren't stocks, but bonds especially, merely paper that can be created out of thin air to increase supply to sell?
  15. in 30 years, brk might buy mkl..
  16. Is that US thing only? I know in other countries even if you are not married but have a relationship over 'x' years (usually 2) you must combine your income for tax.
  17. so if you can earn more on cash there is less incentive to invest or do business - therefore just sit on cash. If you have none, I presume they want to coax more people into the labour force. When spending is reduced I presume this is for non-essentials? I mean, I do understand all the arguments why recessions are bad - after all - how precise can they be? Do you want to reduce the wealth to the point that people can't pay rent or eat, or run out of money? Or do you want to reduce inflation temporarily, hopefully most? people can get by during this period on the essentials. I have always been relatively price conscious, perhaps thrifty but is the idea that most people are not. Most people just spend too much and the Fed is now going to try to take that punchbowl away?
  18. I don't understand how hammering the stock market reduces inflation. Do people actually spend a ton of their capital if the stock goes up a few percent short-term or even medium term? Or do people invest for many years, for retirement? Are the aggregate withdrawals when the market goes up the cause of significant inflation?
  19. I am not sure if the attack on capital such as taxing unrealized gains or a wealth tax is inflationary or deflationary. Either way, it makes those investors living off capital far less well off - an endangered species.
  20. "And if you are a self-employed single person...even tougher. Loans are harder to come by as you don't have any spousal income and are self-employed, pay twice as much on pensions/employment insurance, etc." It seems perverse that self employment and entrepreneurship, the engine of wealth creation is taxed higher than working for someone else.
  21. I don't understand the quote that if the oil price fell and he made a fair offer. Why would he not make a fair offer now? Would the company sell at 80 if the oil price fell and the stock was at 50? But today oil price is high the stock is at 70 and they would not sell at 80? So they are saying in a point of economic weakness they would sell lower than now. Sounds like buy high, sell low! In a cyclical stock why would it matter selling the company at differing prices based on the oil price?
  22. I have read that Fukushima was not such a bad disaster. I mean a few people died just being evacuated. And Wikipedia writes, " 1 confirmed cancer death attributed to radiation exposure by the government for the purpose of compensation" And that was due to a pretty rare tsunami! These new reactors are nothing like the stereotype we have of Chernobyl. It is highly unlikely to have major safety issues so the German position is not rational.
  23. I see this too. Remember that Chevron wanted to buy Anadarko but lost out to Occidental. It woud be an interesting twist of fate that now they get it rolled up in Oxy if that were to happen. Seems like Berkshire becomes like the matchmaker and could own a very nice stable share in a diversified energy conglomerate at no doubt a very lucrative cost basis.
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