SharperDingaan

We've had the benefit of investing through many bubbles, both in NA and the UK .... Most will have no idea if they are in a bubble, until they have been in it for some time. You make money when you realize that, ahead of the crowd; the bubble itself really doesn't matter, ability to think 'independently' - does. Bubbles are sector specific, (RE, BTC, o/g, etc), the sector rises relative to the broader market. O/G rises as demand/supply issues push it, the broader market declines as interest rates rise to deter inflation (lower P/E multiple). You do well because you know your sector very well - riding the cycle up and exiting before it turns. But it means exposing yourself to risk. To STAY rich - you must keep taking $ off the table (risk management). If you know your industry, you already have a pretty good as to when - you do not need to be perfect. The real issue is what do you then do with the gains. Good luck! SD

The emperical sciences are physics, chemistry, math, etc. The iron rule of 1 + 1 ALWAYS equals 2. An AI model is just a probability driven decision tree. We are enamoured with AI because for given probabilities and inputs, we will always get a unique result - hence it's emperical! Sadly ....... no. As soon as you have more than one variable determining result, they influence each other. In the portfolio world, this is the covar matrix used ti create a portfolio sitting on the efficient frontier. You also learn very quickly that the covariences are NOT static - they change as the market price of the stocks in the porfolio change. Hence, when prices are rapidly changing (up or down), the portfolio must be periodically rebalanced. Point? A 'range' of portfolio combinations, as the covar changes. When thare are too many variables, or stocks - all you can do is simulate, and assess the distribution of predicted results. Thereafter, the value add is in using distribution skewness to your advantage. AI calls that 'learning', humans call it 'opportunity to manipulate!' Different POV SD

Human behaviour is not empirical science. Repeat the same experiment 100x and humans will generate a ‘range of answers’, empirical science will generate one. That ‘range of answers’ is 'noise' - and bias. Engineers routinely correct for ‘signal’ noise, by applying an electronically opposing background noise. Amplitudes cancel each other out, leaving the signal. Run the signal through an ‘optimizer’ to get an actionable result. We do the same thing in ‘real life’ - when we get our news from opposing media organisations. Each media stream viewed as propaganda, opposing propagandas cancelling each other out – mostly leaving just the facts. Apply ‘common sense’ to the stream of facts, to produce an actionable result. The very good (Taleb) recognize that the process is fragile. They ALSO apply an overlay by which to make the result anti-fragile, should the process fail. In ‘real life’ we call it risk management, ideally obtained via the school of hard knocks. For most people, simply keep a circle of friends from as wide a range of different cultures, life experiences, occupations, etc. as possible. Common sense stays grounded, and you get to enjoy the best of life. You will also learn a thing or two! SD

The long-term tar-sands solution is to burn hydrogen, vs natural gas. The burn still produces CO2, but you can produce hydrogen from o/g, and get X+ cubic meter of hydrogen for X cubic meter of gas used. Essentially, TWO pipelines - one for CO2, one for hydrogen. At this stage they are just selling the concept; carbon sequesture will be first, hydrogen production second. The existing blockchain based CO2 exchanges work, but are really proofs of concept. Most would expect the granting authority to create its own similar blockchain based exchange, and speculators to use exchange (CME) traded carbon credit futures/options. The key to C02 sequesture, is that it requires TWO critical technologies. Physical collection and disposal of the C02 itself (well understood). Trusted, and public, digital tracking of collection and disposal of CO2 (blockchain). The trusted blockchain facilitating C02 trading, much as todays API and EIA reports drive US oil trading. Evolution wise, this is just the NEXT technological step after horizontal drilling and fracking. All kinds of new opportunities, but it almost permanently strands high-cost offshore assets - hence the majors writing down assets. Extracting more from an existing field, vs drilling in the arctic, is not a bad thing. Even the environmentalists would agree. It is very new, and evolving - so expect bumps in the road. Nice thing with WCP is that you also get paid a rising dividend while the industry is developing. Becoming an ESG 'star' will not hurt the share price either. Requires a different 'mindset', and easier to 'proof up' in a Canada than it would be in the US. It also keeps US egress open, as Canada is now exporting low-carbon oil. Smart, and at multiple levels. SD

At present, assume carbon credit details are only being collected, and third party verified. When Canada signs on to the agreed upon global standard, WCP makes a claim for the resultant carbon credits, and sells them. Thereafter WCP claims and sells credits monthly, as they sequesture C02. Mechanically, a nations major C02 producers would 'register' with the granting body, and receive a 'level set'. If you produce more C02 than the 'level set', you need to buy X carbon credits until you are at the 'level set'. If you produce less C02 than the 'level set', you can sell X carbon credits until you rise to the 'level set'. Different industries, different 'level sets', depending upon the 'negotiated' national solution. Politicing. The credit is granted 'forever', recorded on a publicly visible blockchain, and cancelled 'forever' when it is claimed. Ultimately, the CME trading the standardized CO2 credit as just another class of crypto options and futures. WCP will essentially be the same as a utility, primarily paid a fee to dispose of other peoples CO2. They just have the ability to ALSO use that gas as a C02 flood - to both drive more oil out of their formation, and create a new business. Smart. https://www.theglobeandmail.com/business/commentary/article-canadas-accounting-sector-seeking-better-consistency-in-esg-reporting/ https://www.sasb.org/about/sasb-and-other-esg-frameworks/ SD

Talking our book here, but look at WCP-T. They will be using C02 injection to drive additional oil out of an existing reservoir, and getting paid in carbon credits for C02 extracted from the atmosphere. Albertas tarsands and cement producers (plus refineries) are combining to create a CO2 pipeline they can all jointly feed into; one outlet of which would be the WCP CO2 injection facility. All parties get C02 reductions, WCP gets additional oil, and the reservoir chemically locks up the C02. ESG as your friend. SD

Useful to keep in mind the 'end-of-life' differences between big tobacco and big oil. Smokers die, and their ongoing healthcare costs permanently die with them. Old oil wells have to be permanently sealed in, and the lands restored to previous state - a huge new business opportunity. Spent oil fields are CO2 sinks, the infrastructure is mostly already in place, and you get paid to extract and pump CO2 into them. Carbon credits, and ESG are your friends. Not what the industry would like you to believe ... SD

Last yeat Facebook was trying to bring 'Libra' to the world - a digital token that could be used for payment between any two Facebook accounts, at near zero cost. Technically not s big reach, it was 'pressured' out of existence by central monetary autorities - 'cause it both bypassed 'jurisdictions', bypassed existing rails, and facilitated money laundering. To someone protecting themselves against raging domestic inflation (Argentina, etc), Libra would have worked just as well as BTC (or better), and Wells Fargo would have lost a good chunk of its more profitable business. Remittances are huge business, and Libra would have been a prefered choice for ALL migrant labour ALL OVER the world. Migrant labour within North and South America, the Middle East, much of Europe, and some of Asia. There were very good reasons for the clamp down, but it's a temporary solution at best. The solution is the joint CB equivalent of a FANG, offering its own token for payment between any two wallets. Coming to you soon ... SD

There is little doubt that BTC is under co-ordinated assult, by significant CB's. El Salvador threatened the Chinese monetary regime, and the globes 'failed state' citizenry, had to be taught a lesson - don't use BTC as an inflation hedge, 'cause the volatiity could wipe you out. Sure it can ..... just like monthly currency devaluation in the teens! Yet despite best efforts, it has not been possible to drive BTC < USD 29K/BTC? Worse still. it has pretty much established USD 29K/BTC as the 'real' value - which was NOT the plan! Sh1te!! El Salvador was a problem for 'everyone', because BTC gave the citizenry an alternative beyond 'dollarization'. Now you just need enough USD to buy food - ONLY when you need to (bank account = BTC walllet). Less transactional demand for USD, less wealth to steal (cans of food), and harder to steal, period!. Hacking the wallet doesn't help, if you don't ALSO know the private key. Something must be done! China maintains two currencies for a reason - and that requires bullet proof capital controls. Before BTC, smugglers routinely swam with the fishes as a warning to others, and 'leakage' was 'containable' to a select few. BTC screws up the gig - and is as much appreciated as a pig in a synagogue. Something must be done! Yin/Yang remain alive and well - the CME thanks you for your hedging business And the more corrupt the environment, the better BTC works. SD

Hate to tell you this, but there is nowhere near the overhang that you might think. Lot of existing DUCs will not get into production, as there has been too much ingress, and no majors are going to front the cash to restart a written down oil field. The oil is there, but it is 'shut-in' - and wil remain so for a very long time. New money is going into EV's, national grids, and charging stations. Transport fleets are switching over from gasoline to electric, at an accelerating rate, as mass production further lowers prices. The majors have maybe 10 years to extract as much wealth as possible, with production coming from the cheapest wells first. Producers, and producing nations, will be trying to asset strip as much as practicable, and at as high an average oil price as possible. A price kept there by NOT 'reinvesting' in new production, and running down existing production as rapidly as profitably possible. Blowdown mode, at profit maximization. Big oil, like big tobacco, doesn't go away - it just gets smaller, and looks different. SD

Little different approach ... We simply download the monthly power points and save them as we would any other other file. Similarly, SEC .pdf docs are downloaded, highlighted as needed, and similarly saved. Word docs for 1 page earnings, peer metrics, risk mangement write-ups, etc. Excel for data extracters, and the heavy lift inclusive of VBA, macro's, etc. All pdf docs are searchable, and write-ups express the view/outlook at the time. Anything we do after that is just analytics. Open what we need, as we need it, with very little 'remembering' required. Lot of 'housekeeping', so it forces portfolio concentration. If we're working too much, we have too many stocks in the portfolio. SD

The scenarios assume CB's can maintain inflation within the scenario range - when we still have a world with negative interest rates that have never happened before. CB's have no precedents to refer to, no playbook, and have to do this by the 'seat of their pants'. Very, very fragile. The advantage with the commodity approach, and ongoing hedge reassessment, is that its ALSO antifragile. Somebody screws up, you make a killing. If they get it right, you still do well - just slower. SD

The only people who want 30 yr bonds are the issuers paying todays interest rate, and speculators trying to short them. The buyers are either insitutions dynamically delta hedging, or life insurers - unable to CF match and avoid inflation hedging altogether. SD

We had a recent discussion with our employees as to their preference around new hires - do we go with maximum hours possible and overtime, or add a new person? Almost universally, the preference is to delay new hires as long as we possibly can - so that staff can put as much in the bank as possible. As soon as we start paying overtime, we will begin feeding cost push inflation. SD

This is the whole reason you buy the maximum house you can afford (even at an inflated price), finance it with a fixed rate long-term mortgage, and simply live in it. The house price rises with inflation, while the mortgage either stays the same or gets smaller. Sell upon the refinancing date, and the inflation difference is monetized into cash. SD

Oil as the inflation hedge makes a great deal of sense over the short-medium term. All else equal, as inflation devalues the USD, the USD denominated oil price rises. You also have the strong likelihood of incremental demand outstripping incremental supply for at least 12-18 months. 18 months out - simply change the hedge instrument to something more appropriate, if inflation is even still a problem. SD

Much more sophisticated burn barrel ... and partly a version of this https://www.wish.com/product/5ddcca1ed691bc1d59935c1f?from_ad=goog_shopping&_display_country_code=CA&_force_currency_code=CAD&pid=googleadwords_int&c={campaignId}&ad_cid=5ddcca1ed691bc1d59935c1f&ad_cc=CA&ad_lang=EN&ad_curr=CAD&ad_price=29.00&campaign_id=6493229759&exclude_install=true&gclid=EAIaIQobChMIlILgosGh8QIVx8DICh3CXgeyEAQYAiABEgLHQPD_BwE&hide_login_modal=true&share=web Thermal difference creates an electric current. Within the tower, constantly blow air over the flame (in the same direction), and you will also get a rotating rising air mass (tornado) that can drive turbines. Recirculate some of the hot exhaust air over the flame, and you get both wind speed acceleration, a much cleaner burn, and high volumes of super hot dry air for downstream use. Build out of concrete, inject the hot exhaust air deep underground, minimal net CO2 production. Very, very usefull for SAGD oil extraction. Burn garbage vs gas for heat, inject super hot air + steam down hole, generate enough electricity to power your complex, lower your carbon footprint, and get paid for safe garbage incineration. Concrete silos are cheap to build, the tech is off the shelf, and 24/7 reliable production. SD

Almost never talked about is the performance of solar panels as it gets hotter (rapid decline). The metric should be cost/Kw versus cost/solar panel - 'cause to double production from an EXISTING facility, it is often merely a matter of periodically misting the panels - to both cool them down and remove the dust. Never mentioned in the wind bucket are the 'tornado's in a silo' which are continuous power generation and more reliable. Contained in a concrete silo, garbage burned at the bottom, hot water produced at the top, and power generation in the middle. Hotter the burn, the better it works, and they can be put in the city itself (dressed up to look like office buldings). Paid for the garbage, paid for the incineration, paid for the hot water, quick to ramp power generation up/down. SD

Re gold miners. Prettty much any one of these https://www.fool.com/investing/the-10-biggest-gold-mining-stocks.aspx Freeport has the advantage of also being a dominant copper producer, and strength on the unsavoury side of the third-world mining business. Our commodity preference is o/g, simply because it is well within our circle of competence. NA deflation very likely is the case - long term, and for many of the reasons posted. But 'transitory' inflation will be high, and for at least 1-3 years. Global (China) trade artifically lowered prices in NA, and environmental costs were never part of the end price paid. Security of supply is now back on the table, and it is going to cost more for just about everything. As we are currently seeing. Todays $100 grocery bill is $200 in 9 months, $250 in 18 months. Sure, the inflation rate is mathamatically declining over time (deflation), but to main street - groceries cost 2.5x more than they used to (inflation). To continue eating, you must charge more for your labor - cost push inflation, and opportunities. SD

The great thing with Inflation are the pair trades. Gold miners print money. Fixed costs remain largely unchanged, whereas contribution margin rockets upwards as the gold price increases. The more 'fear of inflation', the higher the margin goes, and the higher the share price. Whereas the value of financial assets drop like a brick, as the rising yield lowers PV (price of the asset). Long commodities, short long term bonds. Ideally on the SAME company, to net out the credit risk Main street reacts to TODAY's inflation, CB's react to TOMORROW's inflation. Hence, the pair trade is really a play on the horizon differences, and the difference in 'views'. The specific vehicle chosen is largely secondary (it just needs to be a commodity company). Re Joe/Jane investor? sell the bond fund/ETF, buy the commodity fund/EFT. Everyone selling their bond fund/ETF, forces the portfolio to sell, flooding the market with incremental supply. All else equal, price drops and yields rise - pushing the 'inflation' line, pushing the price of the gold miner still higher. Bond losses avoided, commodities gains made, and no day-to-day investment 'upkeep' required! SD

Very smart thing to do ..... A number of companies will be desperate for re-financing, should market interest rates turn up quickly, &/or in a material way. Last time around, even the great GS had to come knocking on BRKs door - offering a very attractive convertible. Electic cars, and US energy infrastructure very much in need of a serious upgrade - where do you think people are hoping that the incremental equity, supporting the incremental debt, is going to come from SD

Amount, time horizon, thesis, effort required. How many $, for 1-2 quarters only?, a company or industry bet?, better done via an ETF? Most solutions are either going to be an industry specific ETF, or a LEAP/long-dated warrant. Which, depends on the effort you're willing to devote to it. Objective. If just to make a buck, largely a non issue. If for something life-changing, more effort required, and a direct holding. You have a life, and live it; this is just something shoved into the sock-drawer, and looked at once/quarter - at best. My 'edge'. Do I have one, what is it, am I using it ? No direct holdings, if you bring nothing to the table. For most people, an ETF will be the better option. SD

One of our nephews is considering the RE game in the UK. We have deep circles of competence on the construction and financial sides, the rest of it … still to be determined. As there are posters on this board with hands on experience flipping real estate - a couple of questions for you … Do you also hold/maintain a real estate licence? and are you always acting on one side of your buy/sell transaction? If not – why are you paying commission to someone else, and how do you keep ‘a finger on the pulse’ of your local market. Do you also hold the trades certifications? Master electrician, plumber, etc.? If not – why not, and how do you keep ‘a finger on the pulse’ of the changing codes in your local market. Do you routinely contract others, rent equipment, and/or contract yourself out to do jobs? How/where did you learn the people skills? Is some equipment rented more often? What software would you recommend? Visualization, project management, accounting, etc. Do you do the sales side yourself, or outsource it to specialists? Is this a projects thing in addition to the day job, or the day job itself? How did you get into it? is there a minimum level of activity that you aim for. Would you have done this again, or even earlier - had the opportunity presented itself? We have in mind using RE as a hedge against extended unemployment, over a working lifetime. School to get the trades papers, software exposure, and RE licence. Industry and projects experience to make some money. Wealth accumulation in your own home, and/or purchase of the equipment rented. Would love to hear your various thoughts. SD

A negative T-Bill rate means the investor pays the fed (negative rate) to issue them a T-Bill. Treasurers would instead, just buy foreign instruments that defease debt denominated in foreign currency. Get paid for your deposit, as well as reduce your FX translation risk. If/when negative rates arrive, it Implies a higher US stock market, USD devaluation, and more domestic employment as supply chains re-balance. Burger flippers becoming factory workers at something > minimum wage. All a political plus, therefore likely to happen. A lot of major o/g 'entities' are itching to demonstrate their point, re recent ESG actions. Many are forecasting USD 70-80 WTI as the global covid recovery picks up speed. However, there is now an opportunity to both push WTI higher (USD devaluation), and ALSO crack the whip in some places. SD

Keep in mind there are 'many' China's, there are lots of unhappy folks, and the birth rate is now falling. The economic talent of both HK and Taiwan also vote with their feet every day, and freedom is just a 'plane ride away. Do the seizure thing and you get crumbs - everybody ELSE gets your talent. SD