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Everything posted by moore_capital54

  1. Nope but I did end up finding it! https://www.amazon.com/Only-Yesterday-Informal-History-1920s/dp/0060956658/ref=sr_1_2?ie=UTF8&qid=1465668361&sr=8-2&keywords=since+yesterday Only Yesterday and Since Yesterday. I recall reading these online and they were great accounts of the period from non-financial perspective. Thank You for trying to assist.
  2. Greetings old friends, Years ago, I remember reading about a book (I believe it was an online pdf version) that was a remarkable accounting of the years leading up to the 1929 crash. The name escapes me and I have been unable to unearth via search or memory. I think it may have been ericopoly or another member that brought it up. This would be much appreciated for a project I am working on internally. Best, Moore
  3. Hi Cardboard. I appreciate the kind words. Actually, we did not escape this recent volatility unscathed even if we were preparing for it. It's very difficult to know exactly when the shoe will drop and as we have seen the past 6-7 days, things can also quickly snap back. Overall, I still maintain decent long exposure and as such (like everyone else) have seen some negative surprises in the portfolio over the last few weeks. That said, the most important factor in our portfolio's performance over the last 2 years was our allocation in gold and USD denominated fixed income securities. Being in Canada, we outperformed our peers on the FX component which has been a great boost.
  4. Why's that? Well, the only way to slow inflation in the supply chain of commodities as I describe is by increasing the cost of capital (raising interest rates) or implementing price controls. I assume they will try the latter first (bringing us ever closer to the socialism/communism we all despised) but that won't be enough, they will need to stop the capital from capitalizing on the steep contango in the markets (at that point) and the only way to do that is raising rates aggressively. But they cannot raise rates because of the $19T in gov owed debt. Each 1% interest rate hike widens the deficits and brings the US closer to notional insolvency. It's going to be very interesting to see how they deal with this.
  5. An insightful post from Dalio who has been both prescient and correct in most of his predictions post 2008. A period I distinctively recall from this board was the summer through fall of 2011. There were several EU related headwinds (PIIGS, Cyprus, Greece) and this was before the announcement of the EURO-TARP (Draghi "whatever it takes" speech). Equity valuations in the US were dropping and the board collectively sought and identified several incredible long ideas. The most obvious was BAC but there were also others. Since then, much has changed in macroeconomics, central Bank experimentation ("policy"), and even geopolitical/social momentum. We are seeing upheaval in virtually every key pillar of our investment methodology as value investors. The risk-free interest rate is gone, we are on the precipice of an asinine concept known as negative interest rates, the balance of economic causality appears to have shifted to the other side of the planet (lets not forget that China started this global selloff in commodities and now equities), and socially there is an increasing reliance on centrally planned top down stratified policies in economics, politics, and even academia. The point I am making is, we have to be realistic about our goals in such a changed environment. The margin of safety as calculated by our traditional methodology appears to be wider than at any time since 2011, we should probably spend more time trying to identify and flush out some great ideas (I am buying ESV, CG, POT, and GLRE here). However, we should also come to terms and plan for what seems like a 1970's era hyperinflation/stagflation which I believe is inevitable at this stage. The majority of academics (Larry Summers and his cabal) and thought leaders are so focused on deflation and stimulating aggregate demand. The majority of market participants are fearing a systemic event such as 2008 and sell everything at any sign of stress. I am highly confident now 8 years since 2008, we won't see either of those events materialize. The academics and central planners at the helm of the global financial system have shown to be relentless in their willingness to devalue their fiat currencies for the purpose of saving the system. Any worthless loans will be reversed repo'd ad infinitum while a simultaneous QE or its simulacra stabilizes the system. So an end of the world systemic event emanating from the financial system won't happen again. Remember, the reason 2008 happened was none of us believed the Fed had the authority or moral gumption to devalue 20-30% of the monetary base for the purpose of bailing out the AIG swaps. I, and most market participants thought the sensible thing to do was allow the equity holders of the SIFY's to lose 100% of their equity while protecting the depositors, government sponsored securities, and senior or Triple AAA rated debt obligations of those SIFY's. That was why any intelligent investor was selling or shorting (before they implemented rules disallowing us to do so) those SIFY's. But that's not what was concocted by Kashkari/Paulson. They decided to have the central bank bail the equity of the SIFY's under a solipsistic view that this was the only way to save the system. That model has since been replicated by every central bank. So again, the point here is stop worrying about systemic, it won't happen. Even in China, that won't happen. Deflation - The world is short on aggregate demand and the reasons have not been fully understood. My opinion is that a lot of this cause/effect has to do with cultural/non economic reasons relating to the deferral of household formation and overall decline in fertility rates among the GenX and Millenial generations. Nevertheless, the academics and central planners continue to fear deflation and do all that they can to stimulate notional fiat currency denominated growth. This brings us back to MP3 as Dalio puts it, It will eventually succeed. There will not be a deflation, not if denominated in fiat currency. What we will however have is a 1970's style commodity cycle where we get inflation in the things we need and deflation in the things we already own. Not all equities will fare well in such a cycle. More importantly, I am unsure how the central planners will end such a cycle as they do not have the flexibility that Volcker had in the late 1970's.
  6. Own it and really love it down here.. Ripe for a buyout. Good eye.
  7. BTW one of our new favourite blogs is www.cliffkule.com - it is maintained by an employee at Al Friedberg (something most people don't know).
  8. Hi Gents, I wasn't worried about BAC being unprofitable in a rising interest rate environment. In fact BAC and other banks should be more profitable as the cost of funds increase so does the delta on their loan books. What worries me about rising interest rates is how they will impact the valuations of various asset classes on a market to market basis. The artificially low rate environment means that everything we are currently investing in has an artificial bid. If that bid disappears there will be a rerating of risk and sometype of a multiple contraction. I highly recommend reading about Stock vs. Flow. and how people within the fed (Keynesians) are beginning to worry that they have discovered the flaw in the money printing theory. Best.
  9. This is a good idea. Except instead of providing a list of securities you should supply 4-5 empty fields and let us enter the securities. That way we are not limited by the ones you pre-selected.
  10. Agreed on both. Don't see any reason why gold fundamentals have changed. On the contrary we see Soros, Societe, Goldman inducing speculative shorts in gold while hot money exits to chase equities. The biggest story right now in my humble opinion is that central banks will soon have to come clean that there is no exit strategy. QE will be integral to the economy from here on out. The problem market participants have yet to factor that in. Again - in our view there is no exit strategy.
  11. The question is then, why is Russia protecting it's tax evaders? The answer might be, the tax evaders are powerful. The tax evaders are the russian government, even putin has money in Cyprus. Please watch this documentary: $230 million stolen from central bank - note where they all traveled: Dubai + Cyprus. Cyprus is where russians wire their stolen money.
  12. It also begs the question...if things are so good and improving in Europe, why would a Euro country resort to such drastic measures? Are they simply playing the North Korea of Europe and bluffing for an easier to implement plan? If so, at what point to other Euro nations get tired of the bluffs from Greece, Cyprus, Spain et al, and say go fu*k yourself! I'm still of the mindset that a monetarily united Europe, is not possible without a fiscally and politically united Europe...we're in the 3rd inning of a 9-inning game over there! Cheers! Parsad, the decision was simple for Cyrpus. As they are reliant on the ECB to issue their fiat they could have either defaulted and essentially be castrated by the Euro system (going back about 20 years in economic progress and maybe more when considering their sizeable offshore banking industry) or take a 10% hit to their deposit base and stay an ECB member. This won't happen with Italy or France or even a Portugal because those economies are too large. Cyprus was small enough and unimportant enough for the ECB troika to place a tough stance. It also doesn't help that Cyrpus has been a haven for a significant amount of tax evasion from countries like France/Germany/Spain.. and of course Russia. This was a chance to hit all those offshore tax evaders with a nice lump sum. But again I have to stress to keep your eye on the price. Not the nominal wealth confiscation in Cyprus but the logic that in the end ALL DEBTS MUST BE PAID either via a default or a monetization. The majority of the developed world is choosing monetization - which will lead to an uncontrollable inflation. Between 75 and 84 the yield went up almost 400%. This was what was required to combat uncontrollable inflation. This time around I suspect the 10 year can reach 10% from its current 2%.
  13. Yes - exactly. When inflation spikes up rapidly it is everything else that declines including securities and real assets. You always want to be buying into a rising interest rate environment and selling into a declining interest rate environment. Ask any real estate baron and hell tell you that. It's just nice to see all you intelligent keynsians for the first time realizing how flawed a fiat money system is. There could be no plausible scenario in a gold standard (and there was none for 600 years) where a wealth confiscation of this sort (forced, rapid, and introduced by surprise) occurred. Most people in Argentina will view the Cyrpus event as something familiar. The thing that gets me is how the ECB specifically stopped shipping physical currency in anticipation so that nobody could withdraw funds (ECB Directive from Thursday) while they also closed the banks til Thursday. Just think about that. If you have no credit card and no cash, you are basically unable to tap into your life savings. If you are an honest citizen that followed the rules paid your tax and did the sensible thing (keeping your excess savings in a federally insured banking institution) knowing it could be tapped via an ATM machine or a short visit to your local branch during business hours you are F*CKED. We keep a nice amount of cash and gold in our home safe in this household and many people think it is excessive and primitive. Primitive is trusting somebody else with the value of your hard earned money.
  14. The only way to beat inflation is to avoid having it in the first place. Intelligent investors must come to terms with the severe flaws in the current system and make their voices heard to the elected officials. A prudent fiscal + central banking regime needs to be implemented after the massive inflation.
  15. It's truly funny to see all you smart guys try and figure out how to game the inflation. You don't get it you can't evade the inflation when it comes. Physical gold may rise substantially but in that case some type of a windfall tax will be implemented. Owning gold in the ground in the form of a mine or deposit may help as well but that too would be subject to a windfall tax. The crux of the matter is to comprehend and understand that as an investor what you want in such a scenario is to be largely in near cash assets so that you can be ready to deploy the cash at attractive valuations. Inflation is not an event to profited on rather the reconciliation of years worth of folly. It is the moment when the roosters come home. The best thing you can do is crystalize your net worth's today as I have done for myself and my investors. If I am wrong I may miss out on 5-10% percentage points, if I am right I will make 50-100% again over the next 3 years.
  16. The CYPRUS event is one of the most important of the last 25 years and ranks in line with the Greenspan post 9/11 reduction of rates to 1%, the bernanke AIG bailout and QE, and the Argentina default. The Cyprus event confirms that all this debt will have to be paid. For a country that is not able to print its own currency the debt is paid in the form of a wealth confiscation (the savers prudent capital is unfairly used to pay for fiscal irresponsibility) but as I continue to say, for a country like the US the result will be far worst. But not a nominal confiscation of wealth (the keynsians will never let that occur) but a disgusting inflationary confiscation of the kind that will make the 1970's look like a walk in the park.
  17. It's very interesting - I've thought about this subject a lot. There are actually two questions: 1) Are we running out of resources? (Grantham's first assertion) 2) Inclusive of but not limited to #1, where are resource prices going? In regard to #1, I am not sold. I find it an inconvenient piece of information that the commodity price turning point that Grantham illustrates is in the late age of central banking (largely the last ten years, where central banks have gradually waged a greater and greater war on real yield) and with the advent of the financialization of those products (resource ETF's being an obvious example but really just the tip of the iceberg). I think it is more likely that what we have seen is a one-time adjustment in price as these products are accumulated by intermediaries that can now get their hands on them in order to hedge, store value, or speculate (or all three). The alternative - that we are suddenly (and simultaneously) running out of a broad range of basic resources - seems unlikely, although I cannot dismiss the possibility. I have no opinion on #2. 1000% in the Grantham camp. With respect to Prem he knows nothing about resource supply and demand fundamentals and has done no work on trying to understand the various disequillibriums. Grantham is not only well versed but an authority when it comes to such fundamental analysis. Prem could be right about prices should a scarcity of resources require prudent central banking to be implemented creating severe deflation (and reigning in on prices) but to anybody that thinks finite metallic resource production - is not in an asymptotic decline - albeit on a 100 year scale - they have not done the work. Phosphate Potash Copper Zinc Gold Silver Palladium Platinum Niobium Nickel Rare Earth's Lead Tin Tungsten All of the above must rise in real-terms given they have clear supply and demand disequillibriums and cannot be synthetically manufactured by man.
  18. Happy with the news. Congrats to boardmembers. Div would have been preferred (pun intended :) but I am very satisfied with a buyback. Some perspective in order: 14 months ago the majority of this board,investing public, and tv pundits thought BAC was doomed.
  19. Wow! reading this letter felt like reading my own 2012 letter!.. I have known for a while that Baupost was loading up on Gold (having personally met the brilliant Hiro Iwanaga, Baupost's Gold analyst at trade conferences as early as 2010) but its nice to see Klarman's conviction. As I said in the other thread, either this is the first bull market in my 30 year career that I will sit out or the laws of economics will once again prevail and we are going to see a nasty resolution to all of this.
  20. How long am I prepared to wait? I have only started as of mid February. I was very long into this cycle from 2011-end of 2012. I think the inflection point was when stocks FINALLY began to react. At that point they over-reacted and I knew it was time to take chips off the table. Finally a point about inflation. All it takes is hoarding. Once society begins to hoard you will see inflation. We have been bred as a society to visit our super market weekly or daily for our commodities assuming that the following week the product will be there at the same price and with the same quality. That type of consumer behavior has been achieved due to a surplus of commodity production which can only occur in an environment where demand is organic (no pun intended). I assure you that in today's environment where 46 million Americans are handed free food, if only 10% of the population began to hoard (and by hoarding I mean buying two tomatoes instead of one or two whole chickens freezing the other) you would immediately see how inelastic some of these commodities are. Not even getting into the actual finite stuff like Zinc/Palladium/Copper just talking about Agricultural commodities. The bottom line is inflation has not manifested just yet due in part to the consumer behavior of our modern industrialized society relying on daily/weekly deliveries as opposed to seasonal acquisitions of raw materials.
  21. I respectfully disagree. 1% only makes sense if we are dealing with funny money (IE: money that has no value meaning there is a lot of it floating around making 1% of a lot of funny money an ample return) The problem is that when you turn what was real money into funny money in 5 short years, a lot of savers that for 20-50 years have been piling up real money don't really get the memo. They are stuck with what they parted with their labor and services for (and prudently saved) thinking would produce them a few years of salvation prior to parting from the earth. 1% used to be the rate Central Bankers reduced interests to for very brief moments in time. Now we all are debating whether risk free rates will ever appraoch 1 again .. its madness. And BTW when we say risk-free rates we mean a rate that is earned in ONE year. There is a lot of manipulation going on now (well look at the 5 or the 10 year) those long-dated risk-free instruments are not risk free as you all know. The purchaser is betting on i-rates with his principal. **apologize for all the typos. Been a while since I typed my mind off on this board and I have also gotten older lol
  22. Buddy, this is the alternate universe. Risk-Free rates (after tax) are about 0.2% lol So to answer your question yes of course. But does a 1% rate really pass the logic test? What's the point of lending money out if the return is so minimal.
  23. We are selling because we like to make money, and we are up a lot of money. On the AIG's almost 100% on the average purchase price. On BAC we will end up making more than 100% (probably 130% when its all said and done). For a hedge fund these are fabulous annualized numbers why mess with them. A bird in the hand..
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