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About TwoCitiesCapital

  • Birthday 04/04/1989

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  1. I'm pleasantly surprised. One of the first times, in a long time, it's outperformed so dramatically. Recently sold some shares to buy other names I had trimmed on the way up now that Fairfax's relative performance is like +40%.
  2. I'm guessing that we may have seen the top in yields for the intermediate term. I expect CPI and PMIs to start slowing down over the next few months and for yields to reflect a readjustment in rate hike expectations.
  3. While I understand the argument for it as an inflation hedge due to it's fixed supply, it always was fairly obvious that this would be dominated by other price action inputs. Do we really expect the inflation hedge properties to dominate a 50-100% growth rate in adoption? Do we expect the inflation hedge narrative to trump 2 countries adopting it as legal tender over the last 12 months? Do we expect inflation hedge narrative to trump the fact that retail investors fled the scene in the Summer of 2021 and haven't yet returned? The inflation hedge piece seems so SMALL in comparison when we're talking about hedging a slight decline in the dollar (or other currency). BTC can only serve as an inflation hedge once it largely has reached full adoption and as a global asset class, which currencies' inflation is it hedging? Secondly, I'm not even certain that happens then. My prior views have been that volatility in crypto would decline as the asset class became sufficiently big and liquid. And maybe that does happen. But crypto is nearly perfectly inelastic in it's supply and becomes more so with each halving event. Inelasticity breeds volatility as the price is the only input that can change to reflect changes in marginal supply/demand.
  4. So were you buying in 2018 the last time it considered by ~90% or nah? Because it's easy to say that, but typically people find excuses to NOT buy once something is down 90%.
  5. I dont mind the macro bets - but would prefer they do them smaller OR lock in profits on them more quickly. They successfully called interest rates in 2016-2018, but missed them in 2018 - 2020 and there was basically no net benefit to shareholders (maybe even a net cost after considering 4 years of substantially reduced income). Now they've nailed them again in 2021, but if they don't start locking it in, we risk losing it all again. If they're gonna bet the entire bond portfolio on the call, I want them to start systematically taking steps to lock it in. Like move 10-15% into 5-10 year bonds when rates hit 2.5%. Move another 10-15% when they hit 3.00%. So on so forth. Still very well positioned for rising rates, but you're steadily locking in higher rates and duration for when the cycle turns.
  6. Since GDP is simply a measure of aggregate incomes - isn't it bad in general? Whether those be corporate incomes, individual incomes, or a mix - they're pie is getting smaller. And sure, within that there will be some winners and some losers, but that doesn't even mean the winners' stock goes up. A receding tide lowers most boats. Google had record revenues earnings basically throughout the entire 2007-2009 period and still lost 2/3 of it's market cap. The sky isn't falling. Don't sell everything. But might be prudent to be trimming gains, selling rallies, and adding some duration here.
  7. People seem awfully sanguine about the contraction in GDP for Q1. Consensus estimates mostly hovered around +1-1.5% from what I'd seen. Coming in at -1.4% seems kind of major - particularly since the Fed only just started hiking rates and is expected to accelerate that next month, no?
  8. Not sure if those are the reasons for the discount since those were true back when it traded at a premium too. The discount is solely based on sentiment. Can't tell you why it's negative after performance like they've put up, but it just is. I do agree the Dutch auction wouldn't be a catalyst for a higher price now, but probably one of the best uses of funds since the improvement to book value is attractive and guaranteed.
  9. Meh. It's a calculation of a fixed basket of assets - it doesn't do a great job at calculating actual changes to cost of living. Like, we'd all agree that a large portion of the inflation index right now is elevated due to energy costs. And oil going from $20/barrel to $100/barrel was a large part of that. But oil was also $150/barrel 14 years ago...so what inflation? Inflation calculations don't factor in the ability to select a cheaper alternative, or that mortgages remain a fixed cost for the duration of ownership, or consumer behavior changes to drive to a local vacation destination instead of fly, etc. Does fiat currency lose value every year? Most likely. Does it lose value by more, or less, than official calculations? Depends on who you are and how flexible you are in swapping to alternatives. My cost of living isn't up 8% this year. I'm sure others are. But you hold the ability to manage that better than any central banker tinkering with interest rates IMO.
  10. I think I mentioned it earlier in the thread, but the fact that PPI keeps outpacing CPI by a significant margin should concern anyone buying equities as that signals margin contraction. High inflation tends to lead to low P/Es and here we're seeing that those earnings may not even safe if margins do contract. A receding tide is going to lower most boats.
  11. Best type of fixed income exposure there is at the moment. Too bad you can't do more than 10k per year.
  12. Seeing as prices are set at the margin - any incremental increase/decrease in flows is important. Particularly in times of euphoria or panic when liquidity is nil.
  13. That's the primary problem in the US though. For 20+ years, trades were villified and everyone was told they NEEDED to go to college and get a degree to be successful. So they tried. But they found when everyone has a degree, the degree itself doesn't do anything for you in being competitive in the workforce and the work they were best suited doing like auto mechanic, or HVAC repair, or customer service, etc. don't require degrees nor the 20k in debt and the 3-4 years it took you to realize it. It's not a total disaster, but a waste of time measured in years and debt used to finance it. I'm someone who has been very successful with a degree. I had several very intelligent friends in college who would've been far better served by trade schools and not wasting the time/money on university
  14. A negative real rates implies negative real growth. Will there be SOME opportunities that provide positive returns? Sure - but collectively asset returns will be negative. Particularly for financial assets. In reality, negative real rates stifles lending (who lends for long term capital projects at a guaranteed loss?) and stunts the borrowing capacity of a country (who buys incremental new issuance of bonds for a guaranteed loss?) while encouraging the hoarding of real asset inventories which is unproductive money. I'm sure there are other perverse side effects, but I dont think guaranteeing a negative return on trillions of financial assets is a positive for any country.
  15. It's always a little stunning to me that people believe negative real interest rates that imply the erosion/destruction of the capital and savings of a country is a bullish metric...
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