Cardboard

It trades at a 30% discount to its NAV according to their math and you call that bad or not sufficient? If you compare to other gold stocks, that is a pretty noticeable discount and similar to other very cheap juniors such as LMC, AR and a few others. The group trades at a 10% premium to NAV by the way. Moreover, free cash flow yield is anywhere from 20 to 30% as I mentioned before. So in around 5 years, the entire EV is in cash and the mines still have life left. And if you have followed at all gold miners, they always find ways to extend mine life with exploration leading to additional reserves. Personally, I have never seen gold miners being this cheap. These things never had P/E's or they were sky high, rarely if ever traded below NAV. Goldbugs always paid a premium for gold shares due to high leverage on results on any improvement in the gold price. I think that it is a result of gold having been in a bear market for almost 8 years now and interest being extremely low. Cardboard

Ah... the guy woke-up! https://www.cnbc.com/2019/01/04/powell-says-fed-will-be-patient-with-monetary-policy-as-they-watch-how-economy-does.html Cardboard

Yup, December 21 Druckenmiller thread: "Glad that the Fed is staying the course. Time to take the pain. Get those rates up there and normalize yields. Back in the late 90's, you could get Treasuries for 7% yields. I remember my savings account had 5% yields. Not everything revolves around equities. In fact, if you bought bonds in the late 70's and rolled over duration yoy, you would have returned something like 15000% to 2009. Anyways, I'm all in cash / cash eq. Going long bonds soon. My thesis is when we get another recession and corporate bonds start blowing up, the Fed will revisit ZIRP. T-bills will go ballistic again." At least I have one, a head... Cardboard

"I believe that slump is caused by Trump more so than the Fed. For one thing, the “Trump slump” started before the Fed raised the interest rates, which shouldn’t have come as a surprise for the market, as it was well telegraphed. What comes as a surprise is the lack of predictability from the current government and the infighting. That’s the issue that should be addressed and has nothing to do with the Fed. The market has shrugged of the political muppet show for a long time, but not any more apparently. It’s a little bit like the situation in Britain, where politicians continue to shoot themselves in the foot." If the FED believes that Trump is now doing crazy things which hurt economic growth, reduce inflation and lower employment then their mandate calls for no rate increase or even to lower them. That is what a data dependent and independent FED should do. If things have changed for the worst, then they need to adapt and act based on new reality. Not stick with some pre-determined schedule based on old, now irrelevant data. I have a hard time understanding why people mix political partisanship with a FED decision who should be independent, honest and smart people. Well, I guess I should not be surprised with a bunch of anti-Trump. It is sad because this attitude only reinforces the conspiration theory as to why there has been 8 rate increases since Trump has been elected and zero under Obama. Cardboard

You said you were looking to go long treasuries with your 100% cash. Now long oil??? You sound like a troll to me. Cardboard

Just make your bet and short it. Too much of a wussy? Cardboard

LOL! If that is the true reason then you prove my claim that Powell is an idiot. Data is what should count, not making some assertion. Too many people depend on proper decision making. My assumption is that their model is way too static and fails to take into consideration global impact on the economy or things like a very strong USD. Cardboard

I believe that the best deals right now, for say a 6 month trade, are preferreds from low risk, little to no issue businesses. They have come down really hard in price with no change to the business. BCE.PR.H comes to mind. It has dropped around 25% in 2 months. Can't be a change from higher interest rates. Nor from a seriously challenged business. Fairfax preferreds also fit that category IMO. So you get decent income while waiting for a price rebound once the VIX normalizes. These things get into a downtrend, liquidity is low, then selling becomes a vicious circle or well beyond any reasonable assessment of what caused the decline in the first place. Cardboard

From RB: "Btw, I am in the camp that the fed shouldn't tighten. The reason for that, which is the right argument for tightening, is the headline numbers are painting a wrong narrative. If the economy is doing so great then the labour market is banjo tight. At this level we should see wage inflation, but we don't see that. So maybe the economy is not doing so great. One of the worst mistakes in the history of the fed was the recession of 1937. Maybe we should avoid that this time around." Really??? So why so much arguing? I am seriously amazed by the discussion here and the level of amnesia. For example, don't you guys recall that only 4-5 short years ago, a great deal of people on this website were anxiously reviewing every bank Fed review/stress test to figure if Bank of America could pay out something on any given year to its investors? Then there is the other bunch such as Gregmal implying that so many are stupid and panicking because the market is heading down: you should try to profit and buy! By the way, I was up 80% from the start of 2008 to the end of 2009, so I know a thing or two about averaging down and trading value! These large recessions are really bad for the regular folks who don't even have a dime invested in the stock market. Many lose everything: job, family, sometime their homes. And after seeing a few of these cycles, it is obvious to me that the Fed is always too slow on the way up, then over-reacting as we head down. On the other hand so far, I think that they were doing just fine. However, looking at various signs right now such as copper prices, slowdown in EM, housing, inflation, it seems obvious that things are pausing or decelerating. So recent hikes combined with the unwinding of QE and the simple end of a cycle seem to all be playing a part to slow things down. Druckenmiller said a very important thing in this interview or how easy it is to break confidence. Buffett also said in other words that tapping the brakes via higher interest rates always send you in the windshield while tapping on the gas does not always respond. Is it asking too much to try to get a soft landing or a mild recession? Cardboard

Thanks Sculpin for posting the DPM report. It made me take a deeper look at this and I would encourage others to do so as well. This company is really cheap and I figure a FCF figure of $100 - $150 million U.S. in 2019. It has essentially no net debt if you take cash and Sabina shares into account. This means a FCF yield of 20-30% on a company with no net debt, assuming zero bullishness on the gold price. The company is one of the very few in the gold space which considers return of capital (dividends or other) as an option or see their latest presentation. There are other cheap gold companies but, none think about that or all too busy to reinvest in the next project (GCM is an exception but, they are repaying debt instead). So I bought some. I think that precious metals could have a good year in 2019 but, even if nothing happens, this thing is too cheap. Cardboard

Thank you Gregmal! It is funny that Meiroy takes this into a political direction while it is all about economic data and Powell failed miserably. Druckenmiller is no Trump's fan, nor is Cramer I think but, they get it. 0.25% is nothing but, added to hikes already done, $50 billion a month evaporating in liquidity and a robotic approach to future rate hikes add up to a lot of tightening in an environment where doubt is rising quickly. Things change everyday and quickly as new data comes in. Credit spreads exploding isn't important? Copper and all inputs dropping sharply in price? Shouldn't the Fed who is overseeing "gravity" in the financial world be held to a very strong standard? And again where is the inflation? Are they not supposed also to seek maximum employment instead of fearing such good outcome? Why is it always necessary to create a really important buffer or much higher interest rates to then rush to lower them once a crisis comes which they truly help create every time by raising too far? As Druckenmiller said, the stock market may have predicted the last 9 recessions out of 5 real ones but, the Fed got 0 out of 9 and they seem hell bent on continuing down the same stupid path. Cardboard

My own view: Jerome Powell is a fucking imbecile! I hope that no one here will ever talk again about income equality! Cardboard

Feels good to see that Stanley agrees with me. Hiking now is nuts with all the negative signals out there. He is totally right on risk/reward and cost of being wrong. Tightening of monetary conditions via unwinding of QE does matter. Cardboard

Should not raise and I don't think they will if they have any brains. Housing is cooling down or a major part of the economy. Brexit is a big risk and some large countries in the EU are facing major fiscal issues. China vs U.S. trade war. U.S. dollar is already sky high. Inversion of bonds. And where is the inflation really? Minimum wage of $15 in some places? That is what is so scary to Powell or that will cause runaway inflation??? Come on! When I look at commodities or input they are all flat to down. I had a post about this before and I think that the Fed and EU central bank have no clue about the end of QE and its impact. Cardboard

That 18.6% single vote is a major road block to this deal. When you look at these transactions, you often see only 50-70% of votes being cast. Assuming 60% of shares being voted, that is 31% against and they only need 33 1/3% to block the deal. It could be higher this time around since there are 46.1% of shares outstanding between 3 groups that will definitely vote but, even using 70%, you still have a guaranteed 26.6% opposition. Then most retail who vote in these things or are fervent tend to be opposed. So it is not looking good to go through IMO. You could be on to something with a slightly raised bid. Cardboard

It is an interesting post Longterminvestor. I think that you have put two arguments that clearly indicate that Berkshire post-Warren cannot be what it is today: 1- Such frugal mentality (of reimbursing postage for example) will not persist for long. A founder and a manager simply do not behave the same way or never have the same level of ownership. Some will continue for a while then it will drift. 2- "WEB advised on the risk and underwriters didn't price for it. WEB thinks at such a high level it is scary." While Ajit is good, he won't be there forever either. Moreover, WEB's investment brain, business acumen simply cannot be replicated, so it goes much further than insurance. It will remain a very good business for quite a while but, the odds of something dumb or stupid happening will rise exponentially over time. Cardboard

After seeing Patriots vs Dolphins end of game today you can say that almost anything is possible and that it is not finished until it is. This was almost as shocking as this Patriot interception to then win the Super Bowl against the Seahawks. Then multiple easy missed kicks during the game... The whole thing is enough to keep me from betting on sports. Cardboard

I recall that Buffett faced that situation in the 70's and apparently got into copper futures trading. I read that in some book on Buffett. What do you guys suggest? Cardboard

Wow! I have to revise my picks. Super Bowl contender sure but, no where near as strong as I thought. Bears? Tom? KC??? Cardboard

"Ya our politics is fundamentally based on a premise that if we just do so-and-so or if things were just so-and-so, that we would collectively be so much better off. Is there a philosophy that says things are shit because we are just selfish pricks and it isn't getting any better. And we should just be glad we aren't in Rawanda or something? or am I the only one that thinks this way." I am totally in your camp! We are "civilized" because we are rich. Just cut off electricity for 2 weeks and see what happens. People take things for granted and they should not. Nor should they feel entitled to anything. People look at me crazy when I say that it is a jungle out there competing for everything but, it is the truth. There is always somebody looking to wipe you out clean: money, wife, you name it. Cardboard

You guys should do a quick search on Google: natural gas widow maker. This has happened every time that natural gas made a big spike up or down. Always some fund playing the futures. For a long, long time nothing happens, then bang, a "x" standard deviation move. Cardboard

Problem with value investing is that you are hunting for gems in a pile of trash. And even if you find that gem, it is likely unpolished and in need of some love. If done properly, it does work over time but, expect a lot of pain along the way. I think that averaging down is a symptom of that or that we are way too early and/or not demanding enough compensation for the risk that we are taking with that so-so gem. We also focus too much on fundamentals while there are a lot of mechanics that will come into play with an out of favour stock after we buy: tax loss selling, exclusion from some index, becoming non-marginable, below a certain minimum price for some funds to hold, all of which will create additional selling pressure. Then we have technicians who will simply sell because the chart is bad and trend is downward. Short sellers too. Bottom line is that you have to wait for incredible bargains, not just bargains. That takes a lot of patience and discipline because you will miss some winners doing that. However, it will avoid a lot of the pain described in this thread and allow time for company's fundamentals to truly surface. Don't worry, I have not mastered it yet. Cardboard

"The longer the central banks take to normalize interest rates the more bad debt will get issued." I disagree. They already reached the point were skepticism has arisen in all kinds of markets. And the USD is already sky high. They need to take a pause for now and see how things play out. Cardboard

"There is a simple answer. Fairfax is not going to change :-)" No it isn't and it has not changed after its near death experience in 2002/2003. That is when my confidence eroded completely. Ok sure, more cash was then carried at holdco or around $1 billion since then doing squat. I made money with it again in 2006 and with the Odyssey Re take-out in 2009 but, these were trades. I have said for I don't know how long that the structure is wrong: too much recurring costs such as interest while carrying too many investments earning too little. It is easy to see. Look at shareholder equity and true investments/businesses excluding treasuries and cash. Then you have a lot of debt to support all that. Makes it near impossible to earn that 15% return over time. And it has happened yet. Cardboard

You are a sinner Lance: BP, KMI and RDSb. What about our planet? Cardboard