scorpioncapital

That's why I think you should invest in defense cos with top technology and teams. And Space. I'm not sure if there is a rule saying they can't do commercial work. E.g. BA is mostly commercial but some government %. The military contractors are mostly government with some %, more or less, commercial. Also I am not sure exactly how they benefit from their work. Are they like Universities where they license , spin off or sell their technology? Or is it one time contracting gains? Maybe they spin-off their young entrepreneurial businesses? Although not sure if these companies can ever be said to be young and entrepreneurial.

There is great inequality in EU too. Depending where you are. Some countries have decided to tax labour 90% and capital 10%, actually 10% is generous, some have no capital gains tax and sub 15% flat passive income taxes.

One should distinguish between the assets and liabilities side (including capex) during inflation and also the starting phase versus the end phase of the process, as well as the rate of increase (gradual or surprise elements ).. insurance companies do ok if it's gradual but poorly if it's sudden as they can't dispose of long term bonds fast enough and lose out several years of maintaining the purchasing power. Capex intensive business that didn't pre invest in pre inflationary dollars will have higher costs to just maintain their existing business, much less growth. Even those that did pre invest may only have a few years of runway. Hard assets are priced in depreciated dollars so are higher but not necessarily getting ahead. Also probably there is a difference between owning a gold mine and actual physical metal. The miner can be high or low cost producer but either way the cost is higher than gold storage cost .

I'm surprised uk has enough sun light for solar. I thought it was a sunny area kind of energy generation. Nuclear in theory is much more efficient and powerful than any renewable we know of , only runner up is hydro and that's like 39 percent peak capacity vs 93 percent for nuclear. Nuclear is not unclean energy and it is not renewable in theory but it sure has a long runway with it's efficiency. And if we ever figure out nuclear fusion , I don't know if solar will not be a very diluted energy source. As for valuations many of these stocks trade at almost tech and biotech valuations. Seems a bit mad.

Space, the next public mental health initiative)

What one should compare is the intangible moat quality of Google vs mandatory defense spending. Even Libertarians would agree national defense is a primary function of the state. But which is the stronger moat? Google may have anti-trust issues. Government military spending may be cut.

depends which one.. LMT for example is about 550k per employee. But you cannot compare a capital intensive business with an asset lite cloud stock like Google. Boeing also has very large pension liabilities. They are on the balance sheet. I think the return expectations on the pensions are like 7-8% depending which company you look at. You can judge if this is crazy or not. Also many have gone to no more pensions but a kind of self directed retirement plan with some matching funds. Otherwise they'd go bankrupt like the US car manufacturers.

I think it's environment dependent. When I look at companies today i see capex less than d&a. Buffett wrote an interesting article about Inflation swindling the equity Investor by causing businesses to require ever increasing amount of capex to simply maintain their earning power (ie just maintain even 0 percent real growth). So if the environment will change , you may sniff it out in a change in the capex to d&a ratio.

They will go until they lose control. Then they will cancel debt/loans/finance the government. The hyperinflation will have already caused great poverty so they can go in reverse then and claim things are getting better. The history of the world and human nature often repeats and people have short memories. How many zeroes did they cut off currencies in former communist Eastern European countries and Russia? People lost all their money. Then they start again. But trust in government gets worse and worse and then , well..chances are you've already lived your lifetime before even a part of this cycle plays out for you )

Reminds me of the saying that in a contest between a good industry and a good management, the good industry wins.

esgr is pretty cheap. like 1/2 book and they don't really do active underwriting , just runoff. they have made somewhat of a mess of the investment portfolio. not much focus but seems cheap.

Is it known yet if it's better to get your solar power from your utility using their high volume arrays or to build your own solar solution on your house , buy the hardware and never pay a monthly recurring utility bill again ? Which way is it going to go ?

People don't get a respiratory Infection everyday. And after you get it you're immune for a while. And furthermore some will recover naturally, like the young. Therefore I see an antibody as a perfect treatment when and if you get covid , and also without any of the risks of vaccination. Vaccination is good for extremely dangerous viruses. But covid is something like Flu+.

I don't see this conclusion at all. He is selling airlines and banks. both businesses are impaired in this environment of low rates and travel.

I suspect he's been underperforming for so long he threw in the towel. But of course the towel is likely to slip and buying these Giants now is anything but certain not to continue the underperformance. Since June 2013, 7 years he has been negative 31 percent as of today. He has underperformed sp500 by a wide margin and is ranked 160 out of 200 on tipranks.

"For others who do not have 100% of net worth in BRK, does this seem like an issue?" No because even at 1/3 of my portfolio it counteracts my defects of temperament. I know he has better temperament than me so for me it is insurance against modest failure in the other 2/3 of my portfolio.

Don't know if it's Markowitz who studied this but I notice we have had a cataclysm every decade since maybe 1980. It is very interesting to think about. Also seems each disaster is bigger than the next one. Whether man made or natural, I think big sudden disasters are more common then slow moving flat or declining periods.

If somewhat runaway inflation is the next outlier scenario , tail hedging will not be the same. Tail hedging works for out of the blue cataclysms. Even if the stock market drops say 50% but in a slow drip drip fashion then 2 month rolling deep out of the money puts are all gonna pack a much smaller bunch. You might not make any money. I am not sure how an inflationary environment works exactly. Maybe some from the early 80s now but unless it's a HUGE readjustment in TTT, or HYG, or the SP500 these puts won't activate a huge tail hedge. That's why I actually think tail hedges only protect sudden collapse in equities or bonds. Not slow movements.

Actually if you look at their presentations they are long Sp500 with like 97% or so and 3% to Universa. That 3% dynamite does so well that the total return exceeds SP500 , and more importantly with much lower drawdown since in a crash it tends to skyrocket.

Mark's main thesis is you need massive leveraged upside in rare events. Doesn't even matter anything else. So anything that doesn't go up a whole lot isn't going to work. I was looking at say TTT, 3x leveraged short 20 year bond etf. But it just isn't going to work as even that is not enough leverage. Maybe the options on such an etf would be better.

Sure...although ideally I would like the bright future to happen under Buffett too. He's 90. He could be around another 5? years. I really don't want to wait another 5 years of just being a trustee added onto 10 years of somewhat tracking SP500. I'm actually happy to hold Berkshire with slight underperformance to SP500 because I own other securities that complement the circles of competence he's deficient in. However, I'm not sure what the underperformance to SP500 is, but any meaningful divergence , say over 2-3%/yr could be huge over time.

I'm just worried he isn't expanding his circle of competence. Nothing wrong to be focused but when do you decide it's time to move on from horses to cars? Or an entire new field with better future? Sure the old businesses can pump out profits for decades but if growth is slowing or negative, it can trade like IBM or a value trap. There are a few cutting edge businesses inside Berkshire (or investment portfolio), but not many. Inaction is also problematic as it has the price of deferring future growth to the next Berkshire CEO at the expense of current shareholders. Underperformance has occurred for perhaps 10-15 years. That seems somewhat long period when one could have been riding the SP500 horse.

I found this quote from 1995 kinda funny given the pandemic of 2020 "So, to sit there and hope that you buy them in the throes of some panic, you know, that you sort of take the attitude of a mortician, you know, waiting for a flu epidemic or something, I mean — (laughter) — it — I’m not sure that will be a great technique" Guess he was thinking of epidemics even 20 years before Gates lecture of 2015!

Not sure I understand the short put portion of your strategy. Does that somehow work to boost the payout in a cataclysm? I looked at pricing on Vanguard sp500 etf (lower management fees) but the prices are still too elevated. I mean you want pennies on the dollar like maybe 10 or 20 cents but I think it's still very elevated, which suggests fear in the market has not yet dissipated. Also there is a real risk in future periods you have inflationary depression which means sp500 may go up but not fast enough relative to costs. But all those options would always be worthless for a very long time.

Industrials and military defense did tank, and that is within his circle of competence. Philips 66 hit 40 and it had a huge dividend is not directly exposed to oil and he didn't touch it. Instead he touched the OXY junk. I really can't reconcile some of his behaviour with what was available in mid March and within his circle of competence. What was wrong with Lockheed martin with a PE of like 10-11? And this is only a few of the stuff I have in my portfolio that seem quite decent back in March and big megacaps.