scorpioncapital

I'd be more worried about a top then a bottom. bottoms are higher returns, tops are lower returns.

something seems to have fundamentally changed. we just can't go back..if anything, maybe the currency is sacrificed. Inflation works by eroding purchasing power. Notice what every governmenet is doing. They are closing all the gates. Even in arb they sew uncertainity from certain profits. they want everyone to have their purchasng power cut by inflation. If their is an outlet they will kill it. I think they go to some soft capital controls. Once all this is done, the pain is shared by financial repression where rates rise but not enough to counter inflation. Governments have only one thing they can steal - your time. Everything is time arbitrage. it's infuriating for us short-lived ants )

would be interesting to buy the basket in exhibit 6 and see if it outperforms sp500 over next decade )

Was Lynch talking about 20-25% cagr on revenues or profits? I can find a dime a dozen of money losing fast growers. I don't think any really big company will meet this expectation. As for smaller ones, how do you know it will grow 20% cagr? easier said than done. also I think the search of fast growth and low price may be a bad screen. We all know growth is gonna cost more. If you see a low p/e I am highly skeptical something isn't wrong with the growth rate.

How long do they have to see this? What if it turns around say 10 years later and earnings double or triple, do they write back the goodwill?

Didn't work for the aggressor US which invaded Iraq illegaly. UN called it a violation of international law too. https://en.wikipedia.org/wiki/United_States_war_crimes Don't think US has the moral high ground to tell Russia is 'wrong' or anything.

finallly we see the reality. not even 'great' saas businesses are really worth more than 15x-20x earnings in a high rate environment. since I still see lots of over 20x stocks, much less earning nothing stocks, I can see potentially a long way to bottom. but hard value should be ok. another scenario is that earnings do grow, slowly, to grow into a currently 'frozen' valuation for a few years. trader's market if that's the case.

selling to zero should have a high bar assuming your buying also had a high bar of thoughtfulness. but trimming or even large selling if you see some weakness or issues (but not enough to get out, after all you could be wrong)

the 10 bagger that goes up more, I would not worry about it. Just don't eliminte it completely. I also had 10 baggers go back BELOW the buying price! as for missing out, that cant be helped. get in when you have the ah-ha moment , better late than never. Most of all, read and study like crazy if you're full time. If part time, well ask someone who does it full time and you trust )

Buffet eats horribly. I am now 100% believer in genes over any environmental actions. George Burns smoked like a chimney and died over 100.

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.

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?

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.

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.

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%+..

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?

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.

my base case is a decade+ of stock multiples compressing and best case flat by 2030, base case a little lower than today.

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.

Does it matter if the variable debt is still yielding less than inflation?

I see no difference in this than what Nietzsche wrote about the 2 types of societies - https://en.wikipedia.org/wiki/Master–slave_morality

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.

It's like Gypsy in Europe...

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.

Aren't stocks, but bonds especially, merely paper that can be created out of thin air to increase supply to sell?