Spooky

Looks like GDP growth in the US has been revised up from the last quarter from 2.6% to 2.9% annualized. Not too shabby. So far it also looks like all the tech layoffs in the headlines have either not made it into the labour data yet or they aren't that significant in the grand scheme of things. An interesting data point that is outside the common narrative is that trade between the US and Europe has become larger now than trade between US and China. Everyone wants to talk about deglobalization but I don't find it persuasive - trade benefits both parties so the countries that continue to engage internationally will leave those that don't behind. https://www.wsj.com/articles/u-s-europe-trade-booms-as-old-allies-draw-closer-11668914679 I think Bridgewater's view about the possible risk of a second round of tightening makes sense to me - the economy still seems quite strong.

The contrarian in me is saying no recession since everyone and their dog is saying it is going to happen with such certainty.

Time to close this thread? Lol

Average price for a detached home in the Greater Toronto Area is $1,372,438 now after an 11% decrease!

Glad to see you included the opportunity cost of capital, most people I've talked to ignore it when looking at housing. Your conclusion is where I've ended up as well - I'm just renting so my rent increases are capped below inflation and my landlord has the tail risk of interest rates rising sharply. Worst case scenario if things go to hell I just give back the keys. I'm also putting the savings differential vs a mortgage into the stock market and have been swinging decently hard on that front given that sentiment has been extremely pessimistic and prices have dropped. Where things go from here who knows but I'm glad I didn't end up buying a house in the last year or two.

Bit of a different story up here in Canada - home prices are down fairly significantly and some people are forecasting more pain to come since most people are on either 5 year fixed or variable rate mortgages. I was looking at a few listings around Toronto and the prices are notably better (and no bidding wars anymore). Problem is affordability has still taken a hit due to the increase in mortgage rates. If you aren't reliant on mortgage financing though...

I wouldn't point to this as evidence. Adoption by the population for everyday use is not that great in El Salvador: https://bitcoinist.com/el-salvadors-bitcoin-adoption/ Seems like the experiment in El Salvador has been a disaster.

Few years of under performance ... could be time to buy. Looks like Burry has dipped his toes into some of the Malone complex.

I would say it is idealistic not unsophisticated. He is definitely right - it would be in both countries' interest to find a way to co-exist and succeed. The alternative is not good. The rest of the world is not going to easily accept the CCP's worldview that individuals do not have universal basic rights. The CCP will need to bend in some fashion to co-exist in the world and, potentially, with its own citizens. The first episode of the economist's new podcast series on China was interesting: https://play.acast.com/s/633ebf6dfc7f5a0012acdc97/636d16a557167f001234ed9e

Explain this to me like I'm 5. There is a limited supply of gold in the world, how is Bitcoin any different in that regard (just some of it is underground)? If they never printed additional USD, holding it still wouldn't get you a real return. What is the source of the demand for Bitcoin? It is not a commodity which is used for industrial applications. Demand for payments? From what I've seen over the last 10 years Bitcoin adoption for payments hasn't gone very far. What is the case why Bitcoin would outperform the S&P over the long term? With the S&P you own a slice of the 500 largest / most profitable companies in the US which are compounding in value and increasing their earning power over time (regardless if they receive payment in Bitcoin or USD).

We can all argue about if Bitcoin has value indefinitely. Does it matter? Is it the best use of our limited capital? If it is either a currency (i.e. a replacement to the dollar) or a store of value (i.e. gold), then the historical comparison is not very flattering from a return perspective. See the chart below from Li Lu's value investing in China paper (or stocks for the long run). Why buy Bitcoin over the S&P 500 or the Vanguard Total World Stock Index Fund ETF?

It's true what they say that losses feel worse than gains. I'm still up 10% on Goog since the point I bought in the pandemic but at one point is was up over 100%. I've taken a few lumps (especially on BABA) but am trying to ignore the short term and think long term. Deployed more into BRK, GOOG, VOO, and BAM. I've also been consistently buying CSU and VCN each paycheck as well as some broad equity ETFs through my spouse's Wealthsimple.

The podcast discussion was pretty interesting. Started reading the new version.

I own both BRK and BAM and think of them as somewhat similar but opposite sides of a coin - BRK should do well in an environment like today whereas BAM will do well in the low interest rate environment we experienced in the last decade (and BAM is my proxy for alternative investments such as PE, infrastructure, private credit, etc.). BAM really benefited from pension funds / LPs searching for yield in a low interest rate world. However, they have set themselves up in an anti-fragile way so that they can be counter-cyclical and take advantage of market dislocations. They seem to be pretty good at this and were selling / realizing a lot of their PE backed businesses during the frothy market at the tail end of 2021. If interest rates on government debt climb too high it also might be good for them since nations will need to sell infrastructure type assets to raise funds to cover higher interest expense. They have recently raised and closed some very sizable infrastructure funds.

This Odd Lots podcast was pretty interesting on the topic - if I'm remembering correctly, a lot of Japanese banks / companies needed to rebuild their balance sheets so the bailout funds / increase in the money supply didn't make it into general circulation: https://podcasts.apple.com/us/podcast/richard-koo-explains-why-the-recovery-will-be-so-difficult/id1056200096?i=1000474211676 The concept also helps to explain why the bailouts in 2008 didn't result in widespread inflation but the helicopter money delivered from central banks and fiscal authorities directly to individuals during the pandemic led to the current inflation. I also think that Milton Friedman's theory of monetary inflation has also been shown not to be completely accurate - there is not necessarily a direct relationship between an increase in the money supply and inflation. I read a paper on this once but would have to dig it up.

https://www.ubs.com/global/en/wealth-management/insights/2022/global-real-estate-bubble-index/_jcr_content/mainpar/toplevelgrid/col1/textimage.1255303826.file/dGV4dD0vY29udGVudC9kYW0vYXNzZXRzL3dtL2dsb2JhbC9pbnNpZ2h0cy9kb2MvdWJzLWdsb2JhbC1yZWFsLWVzdGF0ZS1idWJibGUtaW5kZXgtZW4ucGRm/ubs-global-real-estate-bubble-index-en.pdf This is an important part of the story I think - lots of international buyers parking their capital in Toronto housing looking to preserve it. There has also been a pretty big divergence between the prices of homes and rents since rents can generally only go up as much as local incomes can bear.

New condo / housing development in Toronto has not kept up with net migration into the city for years and years. Also, there is a huge zoning problem in Toronto where large parts of the city are only zoned for single family and the NIMBY's are fighting to keep it that way (https://globalnews.ca/news/3707723/margaret-atwood-condo-controversy-in-toronto/).

It's more like they are coming but we ain't building...

Hi Dinar, Thanks for your response. I'm not parroting anyone's talking points - I'm just looking at the data. I just showed the public spending on education of the US as a % of GDP as one data point which fits in with the broader picture (ranked 65th). At the end of the day I agree that it is not about the spending level but the effectiveness of the spending / outcomes being achieved which is why my previous post mentioned measuring the ROI of this investment. The fact remains that the US is lagging behind China (and many other developed countries) in reading, science and math https://www.oecd.org/pisa/PISA 2018 Insights and Interpretations FINAL PDF.pdf. With respect to private / public spending - the data I saw from a quick google search is that only 9%-12% of US students attend private schools. This means roughly 88-91% of students are going through the public system. Given the population disadvantage the US has relative to China, is it in the US' long term interest to stratify education so much? The US also lags behind other developed countries in terms of social mobility (https://en.wikipedia.org/wiki/Global_Social_Mobility_Index). I guess my overall point is that effectively competing on the global stage in the future will require more skilled labour since unskilled labour / tasks will be automated away. The countries that recognize this and are able to train their workforces most effectively will be long term winners.

I'm not American so I don't want to get political about it but the facts are that the US : 1) is lagging behind its developed peers in terms of investments in public education as a percentage of GDP and public spending (and this spending has not kept up with inflation over time); 2) educational outcomes have been sliding relative to its developed peers over the last three decades as shown by rankings in math and science scores; 3) in terms of early childhood education, the United States is one of six countries that does not report any educational spending in the OECD. Given the rise of AI and automation in the future, work forces are going to need to be more skilled and educated. There is a lot of human capital in the US that could be better utilized. https://en.wikipedia.org/wiki/List_of_countries_by_spending_on_education_(%_of_GDP) https://educationdata.org/public-education-spending-statistics Government's should definitely view this through the lens of public investment (as with all government spending ideally) - measuring the ROI of the amount spent against and objective metric / outcomes. My personal view is that we should de-emphasize the content of what is being taught but rather teach people how to learn / think critically / overcome mental biases.

Personally I think the US' biggest challenge is their under investment in public education over the last 40 years.

It is one thing for China to catch up to the West by copying previous advancements and stealing intellectual property but it is another for them to innovate from here to surpass the West. Have we seen that their central / top down planning economy can successfully innovate / compete with the US in terms of innovating new productivity enhancing technologies? Does an open society with free speech result in more innovation? Also, it seems to me like under Xi they are starting to deviate from the reforms and policies first initiated under Deng Xiaopeng that resulted in their spectacular growth and returning more heavily to marxist / isolationist ideology which will not bode well for their economic growth from here, especially given their demographic headwinds. For all their faults, Western democracies and the US seem to be making better decisions than autocracies / closed societies like China and Russia.

Bought some more BAM

VRE seems very cheap ... I've been slowly adding some in my TFSA. P/E of 6.8x and P/B of 1x according to Vanguard.