scorpioncapital

"Same amount of land + more people = soft landing for real estate. " How does immigration create more wealth per capita to increase the ability to service higher debts? Wouldn't it even be deflationary for wages?

without hesitation foreign RE. In canada you cannot get a 20-30 year mortgage easily (as far as I know). Yet in many countries a foreigner can get a fixed 20-30 year mortgage and that is a bargain. Especially in Europe for example.

what is considered too long duration for an insurance company's bonds? I am not entirely sure something like 4-5 years is so long but neither is it 0-2 years. presumably they will miss some delta between <= 5 years higher bond yields but on the other hand they are owning these bonds on a leveraged basis. So the loss, short of unexpected massive rate rises that are not expected, the loss should not be so huge.

for leftist communists everything is a bad thing, even your walking may crush a lowly ant.

For me the higher and higher ownership of stock by the middle class either direct or via pension funds somewhat ensures a desire not to tank the market. What's the right balance and will an accident happen are the questions I am not sure about.

There is a huge living arbitrage with work from home. Imagine someone being paid in USD by a US company for work done from their living space in say Thailand where their cost of living is 1/3 and they get 3x the luxury apartment. I think this is the lure of digital nomadism but also even expatriation abroad.

would you say Buffett is a pretty patient guy knowing volatility will whipsaw stocks down or remain flat for long stretches? maybe timing and patience are strategic advantages.

this will make labor lite companies all the more valuable.

Main street can do well while capital markets go nowhere for a generation. It happened before. That's what pulling forward demand means. If you didn't make a killing since the Great Recession you will need to go to Main Street to make some money, not Wall Street, in the years ahead ) Btw, a very good article explaining why Munger's BABA bet is very good one - https://themarket.ch/interview/louis-gave-a-hawkish-fed-could-provoke-an-equity-crash-ld.5727?mc_cid=429e1f79a0&mc_eid=93647a64ab

sometimes I think YOLO markets accelerate financial instability and lead to much bigger crashes. Maybe that argues for holding more cash equivalents.

Thank you. That is really inside intelligence! I guess in the USA and some European countries there are 20-30 year mortgages. I know in Canada they don't have it. Smart..because in a way the bank is a major loser if they have to fix by law 20-30 year mortgages. I do not know in the USA if a bank can do the same 'you do not qualify' gimmick..but then you have no loan volume growth and as I understand it banks in inflationary environment are somehow eager to lend? not sure why since they will get clobbered if they fix in a 20-30 year rate not knowing where things are heading.

This is too extreme. Neither VC nor cigar butts are desirable for me. What's wrong with being balanced and doing GARP? Garp has been very successful for me with low risk. But my question was more about estimating IV and how wide a range it can be to trigger a purchase today. If I do a range analysis and it comes back $2000 to $4000, and the stock is at $2700, I should not expect a great return no matter how Sexy a business it is. I would have to be massively wrong.

Insensitivity to price may not be a disaster on a quality name but it surely risks disappointing returns. I remember Buffett said you should be in the same neighborhood for IV, the same order of magnitude even if you are off by 50% its fine, as long as you are not off by 1000%.

I am very confused about one point. Say you calculate the fair value (intrinsic value) of a stock to be $100. This incudes a discounted guess of future cash flows. Does it mean that I MUST buy the stock BELOW $100 if I want to receive *any* return at all? Or does it mean if I buy it at $100 I get only the growth from the profits based on ROIC? In other words, do I have to buy the stock at $50 to get a 20% return over 3.4 years (assuming it re-rates to IV in 3.5 years) or I can buy it at $100 and get say the 10% rate of return that is implied in the IV calculation?

is it true that insurance companies have less regulatory restrictions to price premiums for inflation than banks can add a lending premium to customers because it's based off of fed rate ?

They say commodities do well in inflation because the commodity sale price goes up. Thinking oil. However I never see a discussion of the capex to get it out of the ground. Is the cost of the commodity going up so much higher than production costs? If not, all the claims that commodities do well in inflation seem misguided. I wonder if this is the case for all high capex businesses. It does seem to be true that commodities , metals, etc.. did well in the 70s-80s high inflation but did low capex stocks in fact do even better? Perhaps the issue is the price paid. Commodity stocks always seem to be cheap, so the risk is small to buy them even if they are bad businesses almost always. low capex stocks while superior might have been so expensive that no amount of buying them at a high p/e when p/e was compressing would give you a return? I see such a risk today. Great businesses but can't get into them so as to ensure a return. So maybe cheap high capex stocks are the next best thing?

Perhaps it differs with the insurer strategy? I know for example AIG has some equity and real estate and non government bonds in their portfolio. The majority is however government bonds which are leveraged say 2-3:1. I imagine this means that to pay their claims the net levered investment income must be equal to the inflation rate but considering also the leverage and cost of float.

I've read some articles that suggest it is sudden, unexpected inflation that is the problem for insurers. If the inflation is gradual, then the companies can price properly. A fast inflation increase can even bankrupt an insurer. But I do not know how rapid...for example is the current increase very rapid? Also it depends I suppose how long you've fixed your investment assets (duration of bond portfolio) and how much inflation you factored into your underwriting as a potential surprise.

Ok, so why he owns such huge amount of high capex investments if inflation will clobber those businesses? Also is insurance considered high capex? For example, take something like Intel, a high capex business too but without government guarantees of profits. In the order of things I suppose utilities are better, or even telecom but just wondering why he owns these businesses at all if what he says about capex and inflation is true. Is it a case of he has set it up to win as exceptions to the rule due to some special ways he has figured out to go around this idea? I read he said inflation is a tapeworm that consumes capital just to maintain flat earning power. Doesn't sound like its something he would want to own.

do you mean his high capex investments are exceptions to the general rule?

Watch this video around 6min 30 seconds he says best inflation protection is your own earning power and a great business. He says NOT business with huge capital investment as you will get killed in inflation! Yet berkshire owns HUGE capital intensive railroads and utilities! Isn't he afraid he will get killed if inflation hits? He said it himself. you will get killed with high capex businesses!!

will it increase GDP per capita?

would love to see a more in depth exploration of 'change in non-working capital' section. This is a poorly understood area of cash flow statements and can give clues to the quality of earnings . It often can cause substantial differences between the reality or fiction of some measures of free cash flow.

Good points. A company that sells itself for 'better paper' has to depend on a somewhat less competent buyer. I presume AOL shareholders did very well getting the Warner paper but did they do well over time going forward because the entire entity of Time Warner would have been decimated by the bad decision? I guess even if AOL was a zero, getting anything was great even if it lagged or stayed flat since flat is better than zero!

i know Buffett don't use stock much in deals but why is that? for example, if your stock is super overvalued and you buy something - anything - you will exchange something not worth it for something potentially much more valuable. then, the new company, which was overvalued can become undervalued so the new incoming shareholders and the existing ones who should have been scared before of the overvaluation might now justify the high priced stock. is the risk that finding such a new good deal, or shareholders to accept your overpriced stock is hard?