Spooky
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Posts posted by Spooky
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3 hours ago, thowed said:
Nice one. S&P 600 is an underrated index - I've never understood why the Russell 2000 is so much better known - by my understanding the 600 has stricter criteria on profitability.
Incidentally one of the best US small-cap fund houses I know moved into large-caps in about 2010, and is just moving back more into small & mid-caps on valuation grounds.
Ya I read a bunch of performance documentation that the S&P 600 has significantly outperformed the Russell 2000 and I think it is because the profitability requirement cuts out a lot of companies. (credit to @Spekulatius for pointing me in this direction)
1 hour ago, Jaygo said:What one did you choose?. I'm looking for one as well. I thought about VTI but would prefer less holdings overall
I went with the Vanguard one, VIOO
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1 hour ago, Munger_Disciple said:
As you correctly pointed out, Warren's interests are narrower than Munger's. So Warren's business & investing skills are unmatched. On the other hand Munger's knowledge and wisdom are so broad that they really helped Buffett (and by extension Berkshire) make the right high level decisions at very critical points in the company's evolution. They really complement each other and Berkshire shareholders are fortunate to have these two running the show for so long.
I agree, Buffett went extremely deep on finance / investment and Munger extremely broad on all the big ideas in the different disciplines. Together they cover everything!
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3 hours ago, Libs said:
I'm seeing RSP, the S & P equal weight, at 16X. Below that, mid and small cap value ETF's are around 12X.
I bought an S&P 600 ETF at a p/e of 12x. Think this will significantly outperform the magnificent 7 over the long run.
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7 minutes ago, Saluki said:
Yes, and people keep talking about China/Yuan being a reserve currency. That won't happen without a huge change in China going from a net exporter to a net importer. The reason people use the dollar is that, besides being the largest economy, we are a net importer. Since we have a trade deficit, we've bought more than we sold so there are lots of excess dollars floating around that people can use for international trade. If it was the Yuan, and they are selling more then they are buying, there would be a shortage of Yuan and what would people use? China could transition to a consumer economy, but they are still trying to grow enough to bring the last one or two hundred million people out of poverty. So it will be a while before that shift is possible.
What other viable alternative exists now? The Euro? Dollars and Yuan are gift certificates at Walmart and Costco. They are valuable because you can cash them in for something at the store. Europe doesn't make enough things like Oil, Agricultural crops, software, or electronics, for people to want to have their gift certificates. When people steal your credit card, they buy gift cards at Walmart to resell it. I'm sure they could use it to buy gift cards at Whole Foods, but you have fewer people that you could sell it to.
The people arguing that China and the Yuan will become the reserve currency don't have a clue. The US dollar has decreased as a share of global reserves (60% now) but the decrease hasn't lined up with an increase for the Yuan but rather other smaller countries like Canada, Australia, South Korea and Sweden. The Yuan has a similar share of reserves as Canada at under 3%!
How can you have a reserve currency for a country that doesn't have rule of law, doesn't allow its currency to trade freely and has capital controls in place on capital leaving the country? If they allowed capital to move freely into and out of the country my guess is that Chinese citizens would pour even more money overseas.
Pretty good eye on the market for this: https://am.jpmorgan.com/content/dam/jpm-am-aem/global/en/insights/eye-on-the-market/oh-the-places-we-could-go-amv.pdf
Looking around the world the US economy still seems the most robust and dynamic...
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6 hours ago, bizaro86 said:
But there are political hijinks around the debt ceiling pretty often now, and if you play chicken enough times eventually both drivers don't turn and everyone dies
Isn't this the main reason of the downgrade? The potentially for a default due to political brinkmanship?
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On 7/31/2023 at 11:47 AM, HubbadaPow said:
I did the in-person version of this course several years ago when Bruce Greenwald was still teaching it. It was a week long and covered all the material he does in his semester long course for MBAs. I liked it. These types of things are very expensive and it's difficult to tell whether they are worth the money, but I've done a few of them at Columbia, HBS, NYU for continuing education stuff and to bring a few people on my team up to speed on specific subjects. For me it's better to dedicate a few days to take the course seriously rather than peruse it at my leisure. Going through the exercises during and between lectures and then getting interrogated by Bruce crystalized the principles in place better than reading his books did for me. It was also really helpful to meet ~100 value-oriented investors in my cohort for networking etc.
I think live lectures would be more engaging. Also heard great things about Bruce (his books are also really good, the value investing one and competition demystified).
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I’m in NYC for work and it is bumping here, lots of energy and people. Also, I just ran into I just Stanley Druckenmiller at a restaurant in Midtown (the restaurant was packed).
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2 hours ago, Jaygo said:
Its was predictable but also pretty tough to act on. My macro feels have been damn good the last few years, My equity picks not so much.
Ya, definitely a few lessons to take away. I think the key is to gauge market psychology / sentiment and see if it lines up with reality. At one point sentiment reached lows that had not been seen since the financial crisis based just on fears of a potential recession happening with the WSJ running scary headlines each day although the conditions were nowhere near as dire as the crisis. This is the time when you have to be determined and brave and buy. Luckily I was able to allocate a lot of my salary to equities over the period.
2 hours ago, Jaygo said:Time will tell, id say the fall will bring back the vol and scary headlines.
I agree with this, a lot of economic data is starting to deteriorate but the market is just gaining momentum. Saw an article that IPOs might be in the cards soon which is always a good indicator to be more cautious. Definitely feels like there will be some more volatility in the near future. Who knows, I'm just going to patient, build up some more spare capital and see if I can find some good opportunities.
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So after completing this course I don't think that I would recommend it. Maybe it was just me and my learning style but I didn't find the video lectures to be very helpful. The textbook I referenced above was much better. There is a lot of good material provided in the course (lots of good papers by Michael Mauboussin especially) but the amount of extra material was much too extensive to read and digest properly in the short time frames provided if you are juggling work and other life commitments so it didn't feel like the course was very well designed / focused. I've re-organized the materials and have had them printed and bound to read through them and learn the way I prefer. You do get access to two teaching assistants / recent graduates from the Columbia MBA value investing program which was interesting. Also, there were what felt like hundreds of people taking this course so if you are looking for an edge over the crowd the course is probably just table stakes.
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12 hours ago, UK said:
What once was a posture of skepticism has morphed into something approaching investor euphoria. Cash and hedges are out, replaced by demand for everything from small caps to meme stocks
This was all so predictable. FOMO rules the markets now.
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18 hours ago, crs223 said:
I’m wondering aloud why Buffett purchases BRK instead of FFH. Either 1) Buffett does not purchase businesses similar to BRK 2) Buffett does not understand FFH 3) Buffett does not think FFH is cheap.
One other factor to add to the list is the jurisdiction / exchange of the target. Munger has expressed in the past that they much prefer to hold investments on the US exchanges. I don't think they currently own any Canadian listed companies.
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14 hours ago, Sweet said:
Lol, if it’s Canada you’re just F’dHahaha agreed.
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I just keep thinking about Munger's statements that it is going to be much harder to build wealth going forward with the prices of everything so high now. I assume that he also subscribes in some degree to Dalio's thesis on the changing world order since he is heavily invested in China and has recommended buying Chinese companies over American companies given the price differences. Buffett is also pivoting somewhat to Japan as well as into oil investments. Maybe I'm reading too much into it but it could be a rocky road for US equity markets on the horizon.
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I guess the question we should be asking is really where do things go from here and what is our best use of capital going forward. Can stocks / real estate as asset classes produce the same returns they have historically without the backdrop of 40 years of declining interest rates?
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I'm in the other camp, mainly just due to the reality that home prices where I live in Toronto are out of reach for most people and some differences between the US and Canada (average price in the Greater Toronto Area is $1,182,000). However, I think there are real advantages to renting over owning and investing the difference in the market.
The first is that here my rent increase is capped at 2.5% per year - my landlord is taking all of the interest rate risk (in Canada you can only get a fixed rate mortgage for 5 years).
Also, maintenance expenses are all borne by the landlord and included in my rent. The washer and dryer needed to be replaced and the landlord replaced it.
But the key thing is really flexibility. If I lose my job tomorrow I just need to give 60 days notice and I am out of here. There is also no idiosyncratic risk of having a majority of wealth tied up in a single somewhat illiquid / immovable asset.
Also, in Canada you can't write off your mortgage interest from your taxes on your principal residence but you can if you borrow for investment purposes. I haven't been using any debt but this could be a huge tax benefit.
Lastly, when I back tested the results of the TSX with dividends re-invested versus the growth in the average home value in Toronto, the TSX outperformed by 4X (and this doesn't take into account maintenance costs on a house). So there is the opportunity cost of tying up a good chunk of capital in a house.
My results have been very good and I haven't even used any leverage, building my net worth from negative to over the price of an average home in 7 years. I also think the longer the time horizon the more this strategy will outperform as dividends get reinvested and the higher rate of compounding works its magic (i'm actually generating significantly positive dividend and interest income every month / quarter). The beautiful thing too is that in the long run at the end of the day I will have a portfolio / income stream that is not tied to any specific physical location giving me the flexibility to move or travel anywhere I like.
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On FFH, for me the universe of good opportunities has shrunk considerably since June - October 2022 when I was plowing funds into great companies but I still have excess capital / cash coming in the door that needs to find a home. FFH still seems pretty cheap compared to other options out there. My position sizing is still fairly small all things considered but I'm still learning about the company (thanks to all of the people on this board for their detailed analysis).
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Bought some more Fairfax.
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16 hours ago, Sweet said:
A thread for something interesting which might even produce actionable ideas.
Here is one - I’ve not verified the data:
Some of these companies I’ve never even heard of.
I would love a chart of the worst performing companies in the S&P 500 over the last 3-5 years.
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I also need a car, been waiting for prices to normalize but it looks like the auto producers have collectively slashed production volume to drive up prices.
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1 hour ago, SharperDingaan said:
And if you want our groups brews? Either come to our breweries or brew-pubs yourself, or we can ship it you (Ontario only)
What's your brand SD? I'll give it a try.
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Bought a bunch of shares of Paramount Global.
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Something has to break, either it is the Fed cutting rates or parts of the stock market.... seems to me if the Fed needs to chose between fighting inflation and GDP growth they will choose inflation as the scarier problem.
Also, it seems to me that the real winner from the development of AI tools will be businesses across all industries that can use them to be more productive not just technology stocks. The technology / algorithms for these models are open source for god's sake...
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I love the Financial Times based out of the UK but this is a pretty widely followed newspaper. As a Canadian, I'm sad to say that I don't really like any of the business publications here.
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There has been a lot of articles / chatter lately about China potentially heading for deflation. If true it doesn't bode well for global growth. Pretty good podcast with Richard Koo on the topic:
Have We Hit The Top?
in General Discussion
Posted
Combine this too with China's demographic challenges and it doesn't look pretty long term. I think people are underestimating the impact this will have on the world economy.