Dinar
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10 minutes ago, dealraker said:
In the southern half of my county in NC 18% of the working age men are on disability. I can assure you they aren't liberals, they DO NOT vote democratic, and they are not black or Hispanic...so start somewhere the grievance thinking other than that.
But working skills, either physical or mental or even emotional are very limited. What do we do? I certainly do not know. I know many of these men and some do work for cash off-and-on or in some cases quite a bit of part time seasonal work when needed.
But that is not out of the ordinary. Up in the top half of the county, particularly the local city, the Hispanic population of 11% has a disability rate of working age men of less than 1% and the city rate overall is far lower than the rural areas in the southern more rural parts.
I am sorry, but I do not understand your point. I did not mention race or ethnic origins, so why are you implying that I am saying that this is a black or hispanic problem?
In NYC, I know for a fact that this is a very big problem among immigrants from the former USSR. Am I allowed to say this or will you brand me anti-Russian/Ukranian/Armenian/etc zealot? Does the fact that I am from the former USSR absolve me of this "terrible" sin?
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1 hour ago, Blugolds11 said:
Honestly I think thats a pretty simplistic view of the "problem/challenge".
Now to be clear, I dont have an answer or fix for the problem, just that I know enough to know that its not that simple. I think its easy to assume that there are a significant number of people that leach off the system/safety net and if that net is gone they would be forced to work and be productive to support themselves. I think that is looking at the problem through your own lens, because that is what you think a logical/reasonable person would done, who has the tools in their toolbox to do so.
I have a cabin in a neighboring state that is located in the poorest county in the state. Over half the county is on assistance. It doesnt take anything more than a trip into town, away from the tourist/resort/recreational areas to see the real "locals" and its plain to see that if I had a simple business (lawn mowing, shoe store, farm) I would not hire them to do anything that was important, they simply are incapable. Alot of these folks in the rural areas make "people of Walmart" seem like GQ magazine.
Remove these programs and what happens to these people? When you are unable to work in the changing economy, with increasing technology and you have no skillsets...what do you do? Does crime increase? Jail/prison populations increase? The taxpayer will pay for these "folks" one way or another, correct?
There is a significant portion of the population that simply cannot compete in todays workforce IMO. Everyone likes to point to the college grad who doesnt want to get a job and lives in the parents basement or has the liberal arts degree working at a coffee shop collecting assistance and demanding college loan repayment...but I think those are the minority, I think there are many who are just not able to market themselves due to lack of skill/intelligence etc.
Like I said I dont have an answer to the problem, some would say that a UBI is the answer, and I dont know that I agree with that either, but the fact of the matter is that the problem is real, I dont think its what right would have us believe, a bunch of lazy deadbeat free-loaders...and I dont think its exactly what the left says either, hard working folks who cant make ends meet, I think its somewhere in the middle and perhaps a significant portion is something that neither side is touching on. Its not going away and if I had to guess I would say its getting worse and will continue to get worse and I dont know how you address that, economically, and ethically. The gap widens and widens.
Some will say, anybody can go be a walmart greeter, or mcdonalds is paying $20/hr now! True, but there are only so many of those jobs also...and they might not even be able to hold down one of those jobs due to a variety of mental issues. Compounding the problem is that many of these folks have children and the cycle continues.
The above example assumes that everyone is capable of working at the widget factory...and Im just saying I think there is a larger number than people think that are not capable of working at the widget factory...even if that is sweeping the factory floors...
We are told that there is a shortage of people to work at Dunkin Donuts, there is a shortage of people to work in childcare and in old age homes, these people cannot do these jobs?
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10 hours ago, changegonnacome said:
Below is exceptionally simple for illustrative purposes and to move any further you have to agree with the idea and I’m not too sure how you can disagree that the US is at FULL FULL employment. Full productive capacity. Staff shortages still everywhere. For hire signs everywhere. Businesses running reduced hours everywhere cause they cant get people. 2X number of job openings for everyone looking for a job.
There are no statistically significant pools of labor on the sidelines in this economy, save immigrants outside the USA who would come here but the political system can’t get out of its own way. If we can agree that then we can move on to my illustrative simplistic example of the problem.
Year 1:
The USA is soup to nuts a widget economy. Every man/woman/child works in the widget economy and consumes only widgets. It’s a 100% widget economy. Every man/woman and child now works in widgets factories. There is no one left to add to the widget factory. Every inch of which has been filled with automated production lines. There is no obvious easy way to increase capacity. Widget factory USA now has ann absolute max productive capacity of 100 widgets per year. Total nominal monetary spending/income in the economy is $100, all people spend their money on is widgets! - therefore a widget costs $1 to buy. No inflation.
Year 2:
Productivity in widget factory USA improves by a measly 2% per year through technological innovation. Widget factory USA in Yr2 can now produce 102 widgets. However nominal spending/income in the economy grew this year by 8% to $108….cause Widget Biden printed $8 extra dollars and sent a bit to everyone - a widget now costs $1.06…..6% inflation. 8% nominal spending growth minus 2% productivity growth = 6% nominal price inflation.
6% inflation, in a full employment economy through wage demands, begets 6% nominal income growth or somewhere close to it as employees bargain for NOMINAL pay increases in-line with inflation….……but that doesn’t solve anything cause your productivity growth is stuck at 2% growth…..its PRODUCTIVITY that matters over the long pull not funny money nominal spending/income. Inflation in the classical sense is defined as too much money chasing too few goods and services. Exactly right.
You have two choices in widget world to restore price stability………you drive productivity WAY way up……which is just not easy………..or you reduce nominal income/spending…such that for a time productivity growth exceeds nominal spending/income growth or in fact nominal spending goes negative/contracts for a time…… and you get disinflation……then you build out from there…..….the Fed cant do anything on productivity (politicians could, write your senator) so the FED first via (1) Money Supply then via (2) Credit conditions they eventually begin to hit (3)spending/income……and widget world gets price stability back. Price stability is like oxygen for productivity growth - it gives predictability…..which allows for capital investment planning, which actually expands productivity…..which is what matters most over time.
There is a third choice - expand the labor force. Cut welfare & similar programs (Section 8, Medicaid, food stamps, subsidies for telephone, utilities, and the list goes on) and watch how labor force magically expands
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8 hours ago, changegonnacome said:
OK understood dont mean to put words in your mouth @Gregmal........3-4% rates normal and not a big deal.........BUT, and its a big but and a big deal......the equity risk premium traditionally has been about 3-4% in the USA.........4% rates + 3% equity risk premium......gets you a 7% FCF yield........thats a big problem for lots of the 'safest' stocks in the market......floating down in 2,3's.
As it pertains to Apple.....because everybody loves talking about it......Tim Apple with each extra toll charge he takes from the Apple ecosystem monopoly is inching ever closer to hardcore DOJ/antitrust action. Tim is the best in the business but its a dangerous game he's playing........and silicon valley will get nasty in the downturn.....META I'm sure has its army of lobbyists slandering Apple behind closed doors in DC as a bully......Google will probably join them if ATT fed into their poor Q.....Apple may be biting the hand that feeds it......they could be shaping up to be a benevolent dictator, once tolerated, that one day turned nasty and needed to be overthrown.
It will be quite ironic that the thing that will actually spur the government into serious anittrust action....will be the tech giants turning on each other. (Sorry bit of tangent but that thought just occurred to me)
There is a logical flaw in your argument, you are implicitly assuming growth = 0%. 1% free cash flow yield is fine if it will 10x in 2 years. At an equity discount rate of 7%, if a company can grow cash flows at 15% per year for a decade, and then in line with inflation = 3% per annum, assuming 100%+ returns on marginal capital like tech companies, gives you a "proper" multiple of free cash flow = 75x
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35 minutes ago, dealraker said:
LC I am not aware of any stock that I own that has a 35+ valuation. I am sucked in to reasonably valued businesses that can sustain sales and profit growth over time and when they get moderately over valued I don't sell them. Some are cyclical to some degree of course. Probably one of the most over valued but never sold entitiy I own is Tootsie Roll, bought in the 1980's and (I think but don't hold me to it because it was a stock cirtificate basis) my $300,000 of stock has a four figure basis. About 30 PE? I just watch and think, "Well, that's not a smart buy" for the price today or for the last 20 years actually.
The investment world, particularly active value and growth investors, are seeking alpha while my little world is one of buy something seeking not to lose. I do know my portfolio, of course very value based, has about a 14.5% annual gain since the year 2000 (of course a very good starting point for such a portfolio) because that's when I began the accounts I use today and the figures are there staring at me). Think insurance brokers, Berkshire, and railroads...that's what developed for me over time. I am not claiming expertise, this was accidental.
And my guess is the returns forward will be mid single digits for a long time. But for me that's excellent if I live into my 80's. This outcome, the journey, in my view will be much like a drunk driver who gets to his destination with no bumper, fenders, outside mirrors and a flat tire...all over the place.
The railroads have gotten their outperformance by cutting cap ex, people, routes. Era over!
Insurance brokers are eventually going to get their 12 percent commissions cut so they are fully priced and maybe eventually in for a jolt. But damn Gallagher is one hell-of-a-business.
Berkshire will plod along but in my view is also now likely have far less loyalty once Greg's in charge, so reluctantly I must believe it is fully valued.
Rambling, the morning coffee spurs it.
Any reason why you do not own Aon? Thank you.
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I bought Remy Cointreau today at E 154 after the negative reaction to H1 FY 2023 sales announcement + disappointing H2 FY 2023 forecast.
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34 minutes ago, Xerxes said:
Molotov-Ribbentrop pact was between two extreme ideologies and not two kins. It was always going to blow up.
Sino-Soviet relation (and now that of Russia) had some sour moment in the 1970s, but their current ideology is clearly a anti-Western one (and that front needs a long game and not a short-game which was the basis of the Ribbentrop-Molotov pact). That central anti-Western front unites them far more than their differences separates them.
I think you guys are reading too much with WW2 analogies IMHO.
If anything, perhaps there is some resemblance between the clandestine French-British alliance with Israel in the 1956 Suez war. Even that is a stretch.
China covets Siberia, which was seized from China by Russia in the 18th and 19th centuries.
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1 hour ago, KJP said:
I sold very close to PM's offer price. So, it seems to me that either PM gets enough to squeeze out at very close to the price I received or it doesn't, in which case I expect an opportunity to buy back in at a better price than today. I'm doing this in a non-taxable account; if it was in a taxable account, I would have held.
I must acknowledge that I have sometimes been wrong about the immediate share price movement in response to a failed takeover/squeeze out, so I can't contend that my reasoning is foolproof.
Thank you. I hold in a taxable account, so I am holding. Yes, in a non-taxable account, I would probably sell too.
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55 minutes ago, KJP said:
Swedish Match
Why did you sell?
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2 hours ago, cubsfan said:
^^If the US can spend $400B to forgive student loans, they could easily help bury the Russians
by flooding Ukraine with weapons. The annual budget for Russian's armed forces is around $65B.
The US budget is almost $800B. Together with the Europeans - the US doesn't need to risk
lives - is $100B in weapons enough to stop an obsolete military?? Should be.
The whole world is best served by destroying the Russian military.
Putin will still have his nukes, but we'll still have ours.
a) Forgiving student loans was a huge mistake that will cost us dearly
b) What makes you think that US interests will be served by destroying Russian military? China is a much bigger threat to the US than Russia, and it would be nice to have a strong Russia as a counterweight to China, since China is very interested in regaining Siberia, and Russia is afraid of China, and hence a natural enemy of China.
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8 minutes ago, lnofeisone said:
Just to put some color on the Stuy application process, rough back of the envelop calculations. There is roughly 90k freshman across NYC high schools. 30k of them applied to Stuy and 800 got in. Because the acceptance criteria include a test, the 30k that do apply will probably have a skewed distribution wrt to the population, i.e., more white and asian applicants will qualify.
There is roughly 10,000,000 college applicants every year. Of these, 60k apply to harvard. Of those 60k, 11% were black. There is bound to be 6k very strong and competitive black students (you are starting with a 10M pool) who think their credentials are strong enough to be viable candidate and apply. So 0.06% (6k/10M) of students are qualified students that are black.
Of the 6k that applied to Harvard roughly (1984 (current size of Harvard accepted class * 0.15) = 298 are black. So the acceptance rate for black students is roughly 298/6000, which is roughly 5%.
Going back to the Stuy analysis, If you start with a population of 90k 8th graders applying to Study and let's assume the same 0.06% of qualified black student applicants, you only have 54 eligible students that would qualify to apply to Stuy. Only 800 total students get in into Stuy, and you said 1% of them are black, that equates to 8 students. The acceptance rate then is 8/54, which is roughly 15% (curious number given the population composition).
So statistically, Stuy is less selective than Harvard when it comes to qualified students who are black. Of course, what I'm ignoring here is the fact that we did this analysis using vastly different populations and sample sizes.
I am sorry, but I do not get your point. My point is that when objective criteria is used, blacks are under-represented by a factor of 40. When unclear criteria is used, they are overrepresented by a large margin (18 or 15.2% is a big deal vs 12-13%. ) That leads to certain conclusions.
By the way, your own data hints at the problem: % of black applicants enrolled in Harvard - 5%, while overall acceptance rate = 3.19%. Also, this data actually understates % of blacks admitted to Harvard, since not 100% of accepted students actually enroll. So according to your own data, a black student has roughly twice the likelihood to be accepted to Harvard than a typical applicant, and more than twice than non-black applicant.
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1 hour ago, Spekulatius said:
The Harvard freshman‘s are 15.2% black, not 22%. So slightly over represented. I am sort of interested because my son will apply for next year.
https://college.harvard.edu/admissions/admissions-statistics
Spek, https://news.harvard.edu/gazette/story/2021/04/harvard-college-accepts-1968-to-class-of-2025/ it was 18% for class of 2025. You seem to be missing my point: when objective statistic/merit is used (Stuyvesant test), the ratio is 1% when population is 40%. When a "combination of factors" is used, then it is 15-18% versus 12% for the population as a whole. See a problem?
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2 hours ago, changegonnacome said:
Taking opportunity to 'sell' volatility when I can and where it makes sense.......then short via puts US indexes (& some names) while holding disgustingly cheap high FCF yield consumer staple type things that are buying back shares right now or have irreplaceable hard assets enhanced by inflation at their core.... with a strong tilt towards Europe/UK where you know the recession/nuclear war is is already 'priced in'
so sentiment can only kind of get better there & as a USD investor the currency at some point will be a tailwind............then short some consumer discretionary/economically sensitive to recession stocks & then companies where their FCF yield is flirting with the same yield that is going to be available from a humble high yield savings by year end. For example CIT bank is offering a 3% savings account today.....guessing this is gonna be 4% by year end. Folks will wake up soon and wonder what the hell they are doing holding equities with FCF yields in that neighborhood when FDIC alternatives exist.
Then I really like market neutral stuff right now, merger arb, works outs - like the Twitter deal trade I had on. Need to do more work on this type of thing actually.
What names on the long side do you like? Thank you.
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3 hours ago, thepupil said:
the long end is just not that liquid. I remember reading in the early days of QE that at one point the Fed ownd like 70-80% of the 20-30 year coupon interest because they prioritized higher coupon legacy bonds. I don't have an updated statistic on this but conceptually I think of long end as having small "float" to use equity metaphor. which is why i think there's talk of ensuring orderly trading through buybacks despite overall stance of tightening.
I think it's awesome...getting high quality long duration at levels like this means long duration bonds are real diversifiers for first time in a while...buy a bond...goes down 5 points, buy some more goes down 5 points...buy some more goes down 5 points...i mean this is glorious.
the goldman muni bonds i posted yesterdaya t $105 just traded at $98 and are at 9%+ tax equivalent yield...prepare for more pain and some folks to blow up...don't spend it all at once...
pupil, I can't seem to find your post from yesterday. Would you mind posting the cusip or another identifier? Thank you very much
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18 minutes ago, changegonnacome said:
I was more focused, in my mind, on the Northern Ireland Protocol Bill that Truss drafted and was bringing through the commons.....which effectively reneged on the post-Brexit international trade agreement the UK government signed with the EU a few short months ago..........which also effectively would have been the opening shots of a trade war with the EU.....just the UK's largest trading partner, no biggie.
It was this populist/extremist nonsense I was really referring but also cutting tax/increasing spending and blowing up your fiscal deficit at time of inflation wasnt too smart either. There is a time to cut taxes and it aint when the BoE is trying to tighten financial conditions.
Ah, makes sense, I was not paying attention to the Northern Ireland issue.
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1 hour ago, changegonnacome said:
Truss gone! Men in grey suits told her to go & she did.......UK but more correctly the Tory parties flirtation with extremist experimental politics might be over........I would expect a centrist Tory candidate to emerge.....a safe boring pair of hands or maybe not.
What's extremist about cutting taxes? If done properly, it can reduce inflation, boost economic growth and reduce budget deficit. I would not have done what Truss did. I would have not offered energy subsidies, but eliminated income tax on those making under 45,000 per annum if single, 90K per annum if married, and say bigger tax break if one has kids. I would NOT have touched dividend tax or corporate tax. I would have also eliminated the 45% top rate the way she did it. You need to induce people to work, and make it more appealing to work rather than sit on the dole. I would have raised consumption taxes - say on football matches, soft drinks, chips, gambling (keeping in mind that too high of a gambling tax may drive the market off-shore/underground)
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32 minutes ago, Spooky said:
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 agree with your last paragraph. I would not trust wikipedia statistics - as an immigrant who came to the US at the age of 13 and went to public schools with a lot of immigrants who all became doctors, lawyers, financiers, et cetera it is hard for me to buy into the narrative pushed by wikipedia. Sure as hell not true in NYC, anybody who works hard gets ahead. Seriously, social mobility is worse in the US than in Portugal? Why are there so many Portuguese immigrants in the US? Malta? France? Have you seen unemployment in France for young people vs US?
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36 minutes ago, Spekulatius said:
The schools in the US ( I have lived in 3 states and my son went to school in all of them) are not necessarily bad, but the dispersion is huge. You can find crappy schools and quite good schools in the same town, sometimes even just a few miles from each other. It’s not the funding either. In the town in CA where I lived , i looked at the funding of schools and it often turned out that the schools with lousy stats had more funding than the schools with good stats.
Most of the differences is just due to demographics of the students that go there. In California at least, the schools with a high percentage of Hispanic students have low overall grades. It‘s not due to funding either since schools in the same town with less funding often get better overall scores.
Besides CA, I have lived in Long Island, where schools have excellent funding and well paid teachers and it shows. There were issues with drugs and bullying however. We are currently living in suburban MA and the schools are funded well, but not as well as LI, However, I prefer the demographics here and the drugs and bullying are much less an issue.
Anyways my son has to work quite hard. Plenty of homework too. He is doing some college grade studies in math for example in his honor class in math.
It also was mentioned here, that you don’t need to take AP and other tests to get into college. While that is technically true, you can’t really get into a good college that way. Maybe if you excel in some sport that the college is looking for. Otherwise it means probably community college.
Spek, I agree with everything that you are saying except for the last paragraph. There are different standards for regular kids/white&Asian vs black/hispanic/transgender/gay. I for one, cannot understand how Stuyvesant HS (a specialized high school in NYC where you need to take a test to get in) in NYC is 1% black when the city is 40% black, while Harvard freshman class is 22% black when the country is 12% black.
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3 minutes ago, crs223 said:
My fourth grader has never had homework. Had a parent-teacher conference yesterday. teacher gave me a six page handout on doing math with “feelings”.
(wasn’t as bad as i’m making it sound — basically the idea is to estimate to get close then fine-tune — but the message is clear: de-emphasize the rote algorithm)
We’ll see how this works out in 20 years. Wonder if they still do homework over in China.
I’ll spare you all my thoughts on the lack of discipline from parents nowadays.
Anyhow… this is the source of my China angst. I worry we are wussifying the next generation.
You are 100% correct, sadly.
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2 minutes ago, Spooky said:
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.
Spooky, why do you think that this is a good metric? If Zimbabwe has $500 per capital GDP and spends $50 per capita on education and US has $60K GDP and spends $5K per capita on education, we are underspending?
How reliable is your data anyway? Spending does not equal quality, why do you think so? In Newark NJ (USA), spending per pupil was tripled and the outcomes did not change.
A lot of people send their kids to private schools, is parental spending captured in the statistics you have sited? If so, how? Universities in the US are mostly either tuition or privately funded, how do you adjust for that in your statistics?
Bottom line:
a) Statistics you site are very likely to be grossly incorrect
b) Your assumption that if one spends 1% of his income on education and someone with 100x the income spends 0.5%, the latter underspends is hard to justify/understand
c) Your assumption that more money equals better outcomes is questionable, to say the least. I will bet you that one thousand dirt poor Chinese/Indian/Russian immigrants going to a crappy schools with falling plaster will drastically outperform a high income private school in the US.
You do not want to get political but you parrot the talking points of the left and the teachers' unions without thinking. If you do not want to get political, do you research, and use critical thinking that you rightly state schools should teach rather than advocate policies that the left has argued for, implemented and saw fail for decades in the US.
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1 hour ago, Spekulatius said:
FERG (a UK company but virtually all their business is in the US) is another one I am following. It's a distributor, somewhat similar to WSO. Recent podcast discusses it:
https://podcasts.apple.com/us/podcast/value-hive-podcast/id1492171651
I think it's overearning right now, but it's an interesting stock to look at.
Spek, what do you think normalized EBIT margin should be? Thank you.
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39 minutes ago, Spooky said:
Personally I think the US' biggest challenge is their under investment in public education over the last 40 years.
I vehemently disagree. Lousy public education is a huge problem, but that is not due to underspending. In NYC, the per pupil budget is $40K per kid in public schools, (of which only $10K reaches the school), meanwhile Catholic schools charge $6K per pupil.
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VRE April 2023 17.5 calls
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I think that he is correct. Also, keep in mind that until 1954 Crimea was part of Russia, and Khruschev gifted Crimea to Ukraine in 1954 to celebrate 400 year anniversary of the union between Russia and Ukraine
Is The Bottom Almost Here?
in General Discussion
Posted
I think it is definitely culture, and culture often changes over time. Something tells me that the ancestors of the people you refer to were not lazy when they were farmers. Similarly, look at Scots two hundred years ago and compare to today. Look at Mormons in Utah or Germans or Chinese immigrants to the US.