scorpioncapital
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Posts posted by scorpioncapital
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My view is you have to accumulate sufficient unrealized gains that if it turns flat for a while you can just wait it out and/or get some dividends too. While buybacks are theoretically similar, dividends seem better to me in a flat period. Also there are now new taxes on buybacks which I am not sure if the equation tilts in favor of dividends.
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humans love their big brother protective cocoon? Without fail, they will deliver?
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how can the Fed - or for that matter how did Japan control interest rates if inflation was higher than the rate? If the government is buying the bonds is the idea that there is a long time before they own 100% of the market, after which it is no market at all? Any effect on the currency?
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isn't this what financial repression is? The rate of interest below the rate of inflation. Negative real rates. Some very smart analysts like Russell Napier, Justin Trennert and Larry MacDonald all think this is inevitable. Arguably Japan did not even scratch the surface, with real rates perhaps 0 to -1% is very mild for a very indebted society. Add capital outflows or lack of investment and it seems we need negative rates that are far lower than even -1%? So how does gov achieve this without 'scaring the horses' to run as Napier says. One way is to fake the CPI stats and create a deception so that inflation is higher and rates are lower than that actual number. Another way is populism. Restrict economic activity or who is forced to hold government debt.
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57 minutes ago, Sweet said:
Illumina was pretty much a monopoly for a while, and in hindsight it was right to block Pacbio, but that monopoly is gone. Pacbio is a genuine a competitor and their product is better than Illumina’s - although much more expensive right now. Oxford Nanopore too but their execution is terrible.
pacbio is 3.80. The offer was at 8. It also seems to be failing after the anti-trust diss. What I see happening is that governments deny mergers on businesses which have such bad management? or other issues (perhaps they were in a competitive market all along!) that they do badly themselves even if the government tried to save them or the public from some big giant. Now, I'm not sure what this means when the government gives them a handicap benefit but they turn around and possibly go bankrupt!
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The FTC is even going after money losing or precarious companies. Look at irobot merger fail. Stock from 50 to 8. Or grail by illumina the company doesn't even have a product yet. Meanwhile some drug companies are allowed. It's scary as it seems almost random?
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anybody know on what date the mystery non 13-f disclosed investment(s) brk has made is coming out?
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Float is more useful when inflation is low I'd imagine. Consider the example of the airline. Perhaps they can get 4% for a few months until your flight, but if interest rate is 4%, then inflation is also higher and their costs may be higher 4 months down the road. So it seems to me neutral at best.
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22 hours ago, Saluki said:
Well, there is a strategy that Buffett used to recommend in the early days, to borrow against the stock. He assumed correctly that the stock would compound at a faster rate than the interest on the borrowing,
Apparently that strategy is being used again by the ultra wealthy to spend their wealth and not be taxed on the sale. You just borrow against the assets and when you die, the estate is based on the net value, including the debt, which reduces the inheritance as much as selling, but there is no tax to the decedent on sale.
Isn't this a prepayment of the tax on death? The loan withdrawals = the tax owed eventually?
I have heard about this strategy. It is used by wealthy in rich countries with high marginal tax rates. The caveat is that the loan rate is < the tax rate (usually) and that you don't get a margin call! I would imagine you have to take a view on overvaluation and reduce debt when market is bubbly and increase it during/after every regular catastrophe or bust. You have to do it prudently. I think there may be some benefits also on deducting interest expense. I know the Davis family used this strategy. The son on this podcast mentions how his dad and granddad who made a vast fortune as investors in insurance companies took great risks on margin. He told the truth - to create vast wealth you need leverage. To preserve it, you do not. So question is what phase we all are in right? this is the podcast - https://youtu.be/o6rgXYt7BnE?si=17PykIM6QV1VtEHr
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20 hours ago, ValueArb said:
Let me also say I loved this post. This is how most should live their lives, instead of obsessing over reading 10Ks and relentlessly searching for better stocks, make great long term investments so you can spend your time with on your family, your business and your hobbies while time works its magic on your investments.
If they never sell it, how is it different than 'fondling Gold'? How do you derive an economic or personal lifestyle benefit from it?
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Some money market etfs you could in theory redeem them from the fund company - like redeeming a bond. But one mm etf I own closed redemptions 1 or 2 years ago and now the secondary market is your only liquidity. I guess MM funds can do this. Maybe something to look at the terms of if you can sell it back to the company or only sell on secondary market?
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is anyone worried money market etfs might have liquidity issues in a panic?
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17 minutes ago, LC said:
The railroads are a good asset but you know, when your “moat” is the political and regulatory minefield that makes it impossible to create competitors, it makes it hard to complain about those same politicians and regulators taking their pound of flesh. You make the bed, you need to sleep in it…
Very astute observation. It is why I limit the capital I deploy to monopolies that are no doubt going to be heavily regulated in various ways. Even V/MA I am weary about.
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Ai improves efficiency in services and maybe factories? How does it improve efficiency in resource extraction or even political redistribution issues (which reduce productivity)? Do we know that the redistribution regime which is quite strong these days and likely to continue can be offset by productivity gains from AI? Human nature being what it is might also be a drag on productivity. So the question is if there is a substantial net gain after deducting the usual tailwinds.
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4 hours ago, Eldad said:
Hahaha that was so weird. 1 a day but at least not as bad as Europe.
I thought he sounded a little depressed/nihilistic too. All varnished with the usual charm. BRK basically a super safe 8%er. I not sure he is just being humble old WB. I think he might be saying get out if you want to get rich like Bertie (or marry one of her pretty daughters).
I mean if BHE isn’t there to suck up capital and you have Greg instead of WB and Charlie, I’m not sure I don’t take his advice at some point.
He said Munger was the architect that taught him to buy great businesses at fair price rather than cheap (or cyclical) at a good price. The bnsf and bhe issues (and even the oil investments) suggest that due to size he chose to go into businesses that have *some* advantages but not nearly as good as truly great businesses. Large capex utilities with high regulatory risk are obviously one or two levels lower on the quality ladder. In other words, it was the next best thing to do with large amount of capital in the absence of finding the super great businesses. On the other hand, should he have specialized in technology, given tech firms are the largest market cap assets in the world today, he might have been able to do better. But do we really know if the FANGS themselves won't have big problems in the next generation too? He also talked about if Americans want to go the public utility model. I believe in countries like Canada it is such a model with a sole, highly subsidized Crown corporation providing all the power. Should this happen, he will have made a wrong bet on changing situation. It isn't even clear he could divest them or the gov would pay a fair price. Most likely they'd be profit restrained going forward.
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7 hours ago, Xerxes said:
The boosters for years were saying BHE is where you could just park that excess surplus get that 10% regulated return. Amazing etc. look at that negative tax rate. At the end of nothing is guaranteed with government and regulatory environment. I am not even sure I understand the full picture.
I guess Greg did do the right thing to liquidate his BHE and redeploy into the greater Berkshire.
in any case, I trust the management to continue navigating the headwinds.
Read Viktor Shvets of Macquire and Russell Napier. Interest rates zero or negative, technological deflation, demographic challenges , all lead to governments in desperate mode to control and regulate more and more, financial repression, etc.. Basically 'you will own nothing and be happy'. Viktor especially talks about the death of capitalism under this new model, but almost out of necessity, even if it was bungled up over many decades. The global economy is no match for a self-contained system. China flooding global markets, rules at home that give them advantages at the expense of citizenry, etc..all this requires massive government regulation, even expropriation to prevent civil war imho.
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Seems very likely they go over 5% right? I mean, they are so big it has to get to 5% soon enough. So that means immediate disclosure between 13f and quarterlies I imagine.
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3 hours ago, michitche95 said:
what about buffet secret stock being PayPal? thoughts on that?
Do we know the date it HAS to be disclosed?
I was guessing maybe AIG but we just don't know until its disclosed.
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well if pe is 3 after the 7m payout it seems they still make good money right? It isn't so much different than SBC, although in that case they do get ownership, but the cost basis is 0.00$, or something below fair market value. In all these cases it is a headwind but look at abnb - even after netting out a very high level of sbc, the cash-flow adding back what they ditched out is still quite respectable. Where the danger comes is if the business turns (you said its a commodity). In that case, the numbers will quickly change and the money given out is definitely not coming back. How many managers returned money when the business went south?
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avoid bad businesses at all costs and avoid industries that you don't feel comfortable with. how do you get comfortable? you have to figure it out. see what kinds of industries (that don't suck) you feel compound gains as you like. For example i just can't really get comfortable with watch paint dry insurance, financial, and oil stocks. just not for me. i'm sure they're great for someone. however i do love garp, tech-industrials, consumer franchises, up and coming end markets, saas. be very skeptical all the time. have a high threshold for new action. position size is feel and trying to avoid overlaps. always moving higher position size to increase quality. How do you get comfortable? i'm afraid for me its a bit reflexive. while stock price is not only indicator if a company does badly for a while or the stock doesn't have some gains over time you have to ask what you are missing about the company - usually worse business than you thought or poor management decisions or bad end markets. Sometimes its temporary but usually the market is more right than not. don't fall for the value investing stuff about price is not right. price is very useful information over time. it isn't the only criteria and you should have internal views about company and industry dynamics but use the price action after purchase, or while watching, as some input to "learning" about what markets like and dislike about various companies. Reverse engineer that to understand business better. That wisdom is key to comfort with positions and adding to them or discarding them. Finally I would be diversified. I own about 20-25 positions. Try to spread it so there is not too much overlap. Doesn't mean you shouldn't specialize in some fields but if you have tech, have some brk or something perhaps. All tech or all healthcare , even if the trend now, is too risky. But you can't miss it out either. find a vehicle if you aren't comfortable picking in that area.
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"Olson said he is confident Abel is a match for the CEO job. “He’s no Warren Buffett,” Olson said. “But neither is anyone else.”"
Have you noticed how Nadella at Microsoft looks like a much balder version of Gates? No idea where he found the guy but his mannerisms, grin, and talk its almost like he's some futuristic clone of Gates! )
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ah ok, i was not talking about the US. in other countries you aren't allowed to kick someone out except if you sell the property or do some extensive renovation or for family members to move in. Since that is quite rare rents are capped below or at inflation rate, although there are many landlord scams now where they try to evict for false reasons , re-rent at 100-200% price increase, and the tenant is too scared or unknowledgeable to ever go back and investigate who actually moved in.
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"Firstly, companies/landlords took the piss with price increases during the COVID period taking advantage of the extra spending power consumers had with all the COVID handouts and their excess savings and the strong economy and using the supply chain issues and material cost inflation as an excuse. Those price increases are unlikely to stick."
What landlords? it was and is actually illegal in most developed countries to increase rates even at the rate of inflation nowadays. mandated below inflation rate rises. sure, you can have deflation but only because of totalitarian boot to the head of any economy.
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we need to confiscate 20% of all billionaire wealth off the top.
Canadian Telecom Stocks - Price War Temporary or a Structural Change?
in General Discussion
Posted · Edited by scorpioncapital
Oligopolies may seem like minting gold but live by the sword, die by the sword. Imagine a scenario where the government allows just 1 provider of some social service - like Communism. It then has the power to set any subsidized fake price it wants, usually due to populism or to appease the people to maintain power. So you get a fake or Potemkin like stock market that is really no market and you get low prices that make the investment not work out. Is a duopoly any safer? Maybe a little. Look what happened to the big banks. As soon as the government got desperate enough and wanted to get some money, it did a 'special tax' for the banks. Remember when government owns everything or near everything it becomes their go to piggy bank. To stay in power or have 'stability' they will prioritize businesses over personal income tax imho. In the end game, everyone is taxed more and more, but I think the lack of a free market is the biggest risk.