Spooky

I'm happy things are taking a turn down, I keep just averaging into some high quality companies I like that I plan to hold long term. I've been buying Constellation Software and the Vanguard Total Canada ETF each paycheck and building up a cash pile to make some bigger moves if prices / sentiment drop significantly again which I hope they do. Where the market goes from here who knows. I think we are in for choppy waters / more volatility ahead for a while and can't count out a second round of tightening from the Fed if inflation is stickier than expected.

Fusion energy will still need transmission lines. Bet on BRK

Small starter position in NU to track it.

Thanks for the post Dealraker - I'm also just trying to find and hold great businesses and as Charlie would say sit on my ass. Do you have any candidates for smaller businesses that are wonderful businesses? I've also been thinking that buying the big techs, given their size, doesn't give you as big of a runway in the future... need to find some smaller companies with lots of room to grow.

This has been going on for a while now and is getting pretty boring. Can we move on to the next narrative please?

I don't see the point of holding a medium of exchange (Bitcoin, dollars, etc.) over the long term. As we've seen throughout history the medium of exchange can change over time. People saying that Bitcoin will replace or be an alternative to USD - the same thing can happen to Bitcoin in the future as well. As we've seen, there are no barriers to entry to create a cryptocurrency. What you want to own are real productive assets (companies, real estate, farmland, etc.) that have value to others regardless of what medium of exchange is used. Better if the assets are scarce and increase their value over time.

Same. BRK and Constellation Software - companies with low debt and cash flow to deploy in volatile times.

New Howard marks memo just dropped, talks about the effects of declining interest rates over the last 40 years on investment returns and how there is a sea change happening: https://www.oaktreecapital.com/docs/default-source/memos/sea-change.pdf?sfvrsn=a69a4066_7 Ends on the note that his base case is rates in the 2-4% range and doesn't see them dropping back to 0-2% any time soon and the investment strategies that worked best over the past 13 years may not be the ones that outperform in the years ahead. I think he is correct.

Interestingly enough there has recently been some pretty heavy insider buying of Amerco, Uhaul's parent company, to the tune of ~$48M.

It would be relative depending on what other central banks are doing. If BoC stops raising or starts slashing rates while the Fed is still raising then CAD will suffer.

Agree 100%. Most of the "smart" money is just playing short term zero sum games against each other and trying to see into the future which is basically impossible. Reflexivity has also been prevalent, people believe in outcomes so much they will them into being. This creates opportunities for long-term investors that don't put weight into forecasts and can look objectively at the fundamental data. Have to say BRK has put on another capital allocation masterclass between significant share buybacks, splashing some of their cash pile (which is also now generating decent interest) on energy stocks like Chevron + Oxy as well as borrowing more in Yen at multi-decade lows to the USD to up the stakes in the Japanese trading houses. BABA has also been buying back a lot of stock with their free cash flow up (although it seems like they should have / could have bought more) but the situation in China is pretty difficult. Also, shout out to Constellation Software since this kind of environment plays right into their hands since they have the problem of too much cash flow to deploy while the PE firms will find it harder to use leverage to acquire software companies.

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.