compoundinglife

It was a good letter. Most of what Warren is going to write or say he has already said. There are little nuggets in between the lines, everyone once in a while they surprise us. But I don't read the letter as soon as it prints anymore. I don't read it expecting to get any earth shattering insights. But I read it and enjoy reading it. After reading the letter or going to the meeting the few years I went, I always feel re-affirmed about owning Berkshire. It is a check point and a reminder for me. One thing I noticed which I had not noticed before, is Warren stating in plain English that some of his equity positions are parking lots for cash until he has better ideas. I remember Charlie being asked about XOM once and he said Warren considered it a cash substitute. But don't remember Warren coming out and saying it. I also got the impression the PCP explanation was possibly trying to provide more color around selling the airline positions. Maybe he felt the combination of Airlines (what was it, 4B total?) + ownership of PCP was too much risk for Berkshire given the uncertainty at the time? Additionally they have their finger on the pulse of PCP's order backlog, maybe that was enough to convince them. I didn't expect it but would like to have read his thoughts on CVX and oil/gas in general. Outside of Petro China has he had any other wins in the oil patch? He bought COP and sold it at a loss in the GFC. He got in an out XOM fairly quickly and dodged a bullet there. Occidental was a mistake. Clearly must be somewhat bullish on Oil consumption and prices to plow 4B into CVX. Maybe just parking some cash.

I have been working on a slack bot/app for market data. I have a few slack instances that I frequent with friends where we discuss investing and trading. All of existing bots/apps had some issues with them. Many of them don't have good breadth of symbols. I have not put into the slack app directory yet but will submit it in the next week or two. I am posting here in case anyone is interested in trying out the beta, providing feedback or feature suggestions. You can install it from this URL: https://d2rooeqvk8.execute-api.us-east-1.amazonaws.com/api/slack/oauth_redirect I am hosting on AWS Lambda and don't have the vanity domain setup yet for the install page. It requires basic permissions: ability to receive commands, ability to post in channels (invited only) and ability to see messages where it is mentioned. But it does not have the ability to monitor any channels or history. This will be clearly outlined in the installation when slack shows you which permissions are being granted. Basic functionality/commands it currently supports: Has a pretty good list of symbols around 32K, includes US stocks, some international (for example 1211.HK or SAP.TO works), has most cryptos, some commodities and forex. price $symbol - provides a real time price and % change quote $symbol - provides a more detailed quote, Volume, 52wH/L, market cap, open/close, Volume, PE, 1 year candlestick chart with MA200, MA50, MA20, link to larger chart. news $symbol - latest articles in the news feed I have. This is not great currently, the news service I have sucks. You get what you pay for. I have been filtering out some of the noise from Zacks, SA and friends but still not good. holders $symbol - 10 largest institutional holders, share count and recent change symbol $string - Search for a symbol, for example "symbol Apple" or "symbol Berkshire" indexes - basic index report. A couple of things I am thinking about adding in the near future: Earnings Calendar, CF, Balance sheet. The next big thing is supporting user input for things like price alerts or other alerts. I can easily add some screens as well but it I know I don't use them much anymore, not sure if others do. If you have any feature feedback (even if you don't try it out). Let me know. Comment here or send me a DM.

I have played around with options on LedgerX. Bid/Ask are pretty wide. All the BTC options I have seen are European style.

On the ORCL front, I doubt it. Hard to imagine Safra being on board with a substantial purchase of BTC. Company culture is very focused on managing the stock price and earnings. On the macro front I do wonder how many BTC holders truly believe the macro thesis for BTC in their heart of hearts vs just findingexcuses to jump on the gainz train.

Last night I updated my spreadsheet that tracks net worth across all accounts and assets. I do follow the market regularly but looking at the numbers in the spread sheet Q over Q was sobering. Hard to see how this continues at current pace and imagine what will happen when it stops. Oh well, back to daily life.

Actually I guess the start of this thread was basically that claim, whoops.

One of the guests on Grant William's podcast about GME and short selling claimed that RenTech returns are all about employed leverage and they are not doing anything unique. I don't believe he cited any data to back this up but it was the first time I had heard that claim.

Yea - at this point, it's probably not worthwhile to send small amounts like $10 anywhere. I've made a handful of BTC transactions over the last 18 months - sending to BlockFi, hardware wallet, and to Coinbase. Typically pay $5-$10 each time. That being said, the amounts I'm moving are regularly 5-15k so the $5 fee is hardly noticable compared to what a traditional wire fee would be. And it's near instantaneous which has spoiled me. Moving cash from my AmEx high yield savings account back to my checking account takes 3-5 business days. I'm so spoiled with BTC. Back in 2014 I arbed the cost of AWS GPUs and the price of DOGE when the price first spiked. Traded majority of it for (sans AWS costs) for BTC (which I still hold), but stashed a decent chunk of DOGE for kicks. Got about 10k for it this week! I had to scramble to figure out where the DOGE was and where I could sell before the hype wore off. All of the crypto exchanges I have used except for Coinbase are a PITA to get USD out of. I ended up trading it for BTC and sending it to Coinbase because I didn't want money tied in one of the other exchanges. Point being, moving BTC around between accounts and having land in minutes it is very nice. Schwab doesn't charge me for wire fees and they have most of my assets so I don't worry about the fees. But I always hate how wires are basically sending money into the ether and hoping it arrives on the other end with no transparency. Being able to the see the transaction hit the blockchain and see consensus happen in near real time is quite nice. I recently tried to wire money out of an old etrade account into IB. I spent the 5-10 minutes filling out the wire form and double checking it. They debited my account, the money never landed. Eventually (days later) they rejected the transaction and gave me my money back. Decided to just by the stock I wanted in my etrade account and leave it there. Yea. I started buying BTC speculatively about 18-20 months ago. Was a long term skeptic having watched it since 2012. I finally appreciated it had staying power and use cases and was glad to buying it after everyone lost interest in the 2018 bust. It's pretty incredible to see what is going on in the DeFi space now and how quickly my expectations for how money should move have changed given my limited involvement. I can't tell you that these tokens are going to "moon" or "rocket", but this innovation will be the future of finance for mang IMO. Yes the advancement in the DeFi space is amazing. It will be interesting to see how this plays out. I can see reasons to be skeptical about a decentralized and open payment network, but I can also see how it can be live changing for parts of the world. Lending seems to be the big deal right now. I am not attracted to loan BTC at the current rates. At a cursory glance I don't think it compensates for the risk that the counterparty is unable to meet collateral requirements in a market meltdown. Borrows are required to stake a much larger amount vs their loan but still seems sketchy to me.

Yea - at this point, it's probably not worthwhile to send small amounts like $10 anywhere. I've made a handful of BTC transactions over the last 18 months - sending to BlockFi, hardware wallet, and to Coinbase. Typically pay $5-$10 each time. That being said, the amounts I'm moving are regularly 5-15k so the $5 fee is hardly noticable compared to what a traditional wire fee would be. And it's near instantaneous which has spoiled me. Moving cash from my AmEx high yield savings account back to my checking account takes 3-5 business days. I'm so spoiled with BTC. Back in 2014 I arbed the cost of AWS GPUs and the price of DOGE when the price first spiked. Traded majority of it for (sans AWS costs) for BTC (which I still hold), but stashed a decent chunk of DOGE for kicks. Got about 10k for it this week! I had to scramble to figure out where the DOGE was and where I could sell before the hype wore off. All of the crypto exchanges I have used except for Coinbase are a PITA to get USD out of. I ended up trading it for BTC and sending it to Coinbase because I didn't want money tied in one of the other exchanges. Point being, moving BTC around between accounts and having land in minutes it is very nice. Schwab doesn't charge me for wire fees and they have most of my assets so I don't worry about the fees. But I always hate how wires are basically sending money into the ether and hoping it arrives on the other end with no transparency. Being able to the see the transaction hit the blockchain and see consensus happen in near real time is quite nice. I recently tried to wire money out of an old etrade account into IB. I spent the 5-10 minutes filling out the wire form and double checking it. They debited my account, the money never landed. Eventually (days later) they rejected the transaction and gave me my money back. Decided to just by the stock I wanted in my etrade account and leave it there.

Do you mind explaining... I'm more of a macrotourist than anything else. I’m curious as well. I took the other side of this and bought very far out of the money puts. When starting to internally manage excess savings 20 years ago, in order to assess publicly traded options, the goal was to assemble a portfolio of about 10 holdings (with most funds in the top three). That’s still the ultimate goal. Apologies for this macro part that contaminates and perhaps corrupts this board but will try to answer the question. 20 years ago, if somebody would have mentioned the possibility to go long on the 30-yr Treasuries with yields at 1.90-1.95%, i would have ignored immediately, something that the reader may do as well now, as the long term fundamental reasoning is irrational and the position is based on how surreal the situation can go. Since the GFC, this has been a recurrent and profitable opportunistic venture (on margin for the first few years) and, during the last phase (2019 to end of February 2020) which i thought was the last puff, i mentioned here: “i hope to never meet again circumstances indicating that investing in long term risk-free bonds would make sense.” There you go. The consensus view now is that the economic recovery is underway with 'reflation' helping. It seems though that there is wide underappreciation (opinion) about how VERY unusual the present monetary and fiscal pictures are (example: the deficit THIS year in the US will be (what is expected now) at least 20 to 25% of GDP). We are going through (at least from a certain perspective) one of the greatest centrally-planned experiments. To make a long story short, think of MV=PY. It appears that the massive debt overhang (absent MMT) will cause interest rates to fall (contrary to popular wisdom), no matter how high M is propped up. During the last profit puff, muscleman asked a similar question and i used a rocket science analogy and he likely thought i was stupid and irrelevant (he was probably right) but now the rocket trademark belongs to a different crowd (see above) who are the embodiment of primitive animal spirits and who have figured out what really counts. So now, I need to use something else. What comes to mind is the Frank-Starling law. It’s well explained by Wikipedia but don’t waste time on this. It’s a theoretical concept that, somehow, can be useful when split-second decisions are necessary to keep someone alive. The idea is that, to increase cardiac (economic) output, one can increase the amount of fluid (money) in the circulation and/or can increase the amount of fluid pumped by the heart per beat (it’s called inotropy and is equivalent to lower interest rates for the economy). However, the law implicitly implies that the longer-term underlying outcome is strongly correlated to the fundamentals. Increasing liquidity and contractions, at some point and non-linearly, results in acute failure. Flat lines don’t point to inflation. The basic question: Is the greatest bull market in ‘risk-free’ bonds over? i bet not quite, especially in this non-linear territory. Today, I’m spending some time, for fun, on an idea recently mentioned on this board; it’s basically a company involved in shredding documents and it’s so much more interesting than the macro stuff.. https://www.macrotrends.net/2521/30-year-treasury-bond-rate-yield-chart i became aware of the potential opportunity in long term US government bonds when i indirectly benefited with Fairfax who, during the GFC, sold their long term Treasury bonds at a time when credit spreads exploded in other fixed income areas and the evolution of long term risk-free yields has been fascinating since then. BTW spartansaver (in the unlikely event that you made it this far in this post), i strongly disagree that we’re on the opposite side of the ‘trade’. So, we’ll have to disagree to agree and all roads (may) lead to Rome. Warning: this thesis is extremely contrarian. Moody’s released yesterday: “Prices Rise Here, There and Everywhere”. These guys are extremely bright although they were somewhat behind the ball before the housing b****e. Thanks for sharing. I agree that you and spartansaver are closer to being on the same side of the trade. I occasionally look at buying OTM calls or doing call spreads on TLT as hedge. Seems like a potentially interesting alternative to puts on something like SPY. Because there are potentially situations where both equities and Ts do well. But in the event of big moves down on equities you should make money. Anecdotally TLT options seemed to often be cheaper but more imperfect hedge. But I definitely get outside of my circle on this topic so I haven’t pulled the trigger in any meaningful way.

Nice, what dates? I sold some Nov $4.50 and July $3 last week. And then some July $.50 for $.05 which I think is a steal. What are your thoughts on valuation? Unless it goes bankrupt I think those $.50 ones are easy money and a 10% return on notional in 6 months. Was also doing this last week. Got .10 for the July $1 strikes.

I disagree. And is also why I didn't buy small caps in March of 2020. In March of 2020, there was a lot of possibilities of how the virus could of panned out, and how governments (And Central Banks) around the world would react. In 2009, it was clear small caps were going to recover as it a was a financial crisis. 2020 was a biological crisis.. if you had a 5-year timeframe in March 2020 sure you could of risked it, but there was a chance the markets would go down another 10-30% from the March lows (considering the market was crashing -10% everyday we were probably only 2-3 days away from this scenario, anyways) edit: I think what you are saying is one needs to do this at the bottom based on historical results. That is a valid point . Actually I misinterpreted your statement. I see what you are saying. But don't agree that the type of crisis matters as much as picking the bottom. In March 2020 same as 08/09, the bottom was knowable only in hindsight. I do agree if you do it too early or too late it seems like it will hurt returns vs the market. The graph I posted was obviously cherry picked. I think an interesting data point would be, at periods where the market is down 30% and small and micros are down 30+X, where maybe X=10, what were the returns over the next 6 and 12 months.

Here is chart SCHB (total), SCHA (small) and IWC (micro) from the lows to now.

Thanks. I did not do exactly that but close. Did some tax loss harvesting around this time and shifted a chunk of funds from SCHB and VTI to the small cap equivalents because of your comments. At first glance I did not do as well as with market cap weighted as I would have with equal weight. But the result is better vs staying in total market. I also took a small position in RMT which is up 126% since March. It might be time to rebalance back into total market index funds and do this again next time around.

I don't think Berkshire wants optics that comes along with bailing out HFs that were pummeled in this even. Even if it was a decent return. IMO LTCM was a different era and arguably a less controversial strategy (except for the level of leverage). And he ultimately passed didn't he? Not quite, at least the way i understand it. A short and relevant summary: https://www.richmondfed.org/-/media/richmondfedorg/publications/research/econ_focus/2009/summer/pdf/economic_history.pdf This was the era when it's nobody's and everybody's fault started to apply with inspiration to come for more and more moral hazard collective rescues. Thanks for the correction. I read "When Genius Failed" a long time ago and had it in my head WEB ultimately passed. I was wrong. Maybe I was confusing it was AIG. With regards to a different era, I mean the headline/reputation risk for Berkshire is much greater these days if they take a side. Also it could impact potential future acquisition relationships if BRK was bailing out short HFs.