TwoCitiesCapital
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Why humans follow leaders who have no character?
TwoCitiesCapital replied to LongHaul's topic in General Discussion
My guess is because people want to win. They've done polls that show the majority of Democrats do not believe that Clinton is trustworthy, but the majority have said they'd vote for her anyways. I've got an intelligent friend from NYC that thinks the same way. His reasoning is because he thinks she was one of the few level-headed, reasonable people with decent policies at the table with the highest likelihood of winning. There might be other reasonably level-headed candidates with good polices, but he doesn't view their chances of winning as being material and would be wasting his vote. If enough people wasted their votes, Trump could win over Clinton! Anyhow, this negates the role that the electoral college plays, but we're keeping things high level. It's always bothered me that we have to play politics with how we vote. We'll take a less worth candidate, instead of voting for the best one, just to ensure someone else loses. Obviously, from a realistic perspective that's the smart way to play it. From an idealistic perspective, that's bullshit and there has to be a better way. I can't imagine voting for a leader that I didn't feel was trustworthy. I don't agree with Bernie Sanders on much of anything, but he has my respect and trust. Clinton on the other hand has so much smoke that there has to be raging, Californian wildfire somewhere... -
It's him, though I guess he is a really bad actor cos he was told not to move a muscle...... According to IMDB, it must be Selena Gomez or Margot Robbie :) Joking aside, he did visit the set a few times during filming so it's not surprising he made it in as an extra. Also, did any else get a twinge of recognition at the book he was reading? I read the entire series probably about 10-15 years ago. One of my favorite fantasy series.
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Purchased Jan 2017 SPY puts @ 170 for $6.84. Now straight short about 7% of my portfolio and synthetically short with puts another 17% for ~25% total notional exposure. Fairfax is also about an 8-9% position for me to and I include that with my "bearish" bets even though it's much more than that and could decline in a market sell-off. At this point, I have sufficient downside-profiting exposure to go back to increasing my holdings in ATUSF, PDER, SAN, SBRCY, and WFM with each incremental dollar.
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Totally looks like him at 0:07.
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Negative Interest Rate Policy (NIRP) risks/benefits?
TwoCitiesCapital replied to permabear's topic in General Discussion
Technology driven deflation has never really produced deflation on a mass scale that I'm aware of. Obviously, technological innovations have the ability to drive costs down in a single sector, but it's quite hard to move the CPI without having some relevant impact to housing/shelter given it's large weight. Further, technology has been getting cheaper for decades. Go look at what a computer would cost you in the 1980s and then consider the $600 piece of equipment in your pocket is 1000x more powerful. That didn't lead to massive deflation in anything other than personal computing.... I'm still willing to bet that deflation comes from the oversupply in the system. Demand was artificially elevated for a period of decades due to excessively easy credit. We tried to maintain that elevation with 7 years of 0 rates because if rates were too low for too long before, keeping that at 0 for 7 years makes complete sense! The difference is that this time around consumers have been changed. Pre-2008 they would spend their windfall from a 50% correction in gas prices. Now they save it. Pre-2008 they would overextend themselves to buy new cars. Now, despite a multi-year upward cycle in auto sales and the cash for clunkers program, the average age of cars on the road is still elevated relative to the past. Pre-2008 consumers would use their equity in their house as a piggy bank. Post-2008 that kind of behavior is much, much less likely. The capacity that was built for an American consumer who was saving -2% a year is far, far too much for an American consumer saving 3-5% a year and that's not even considering the impact that recessions would have since we haven't seen once since 2008. I'm willing to bet that this overcapacity is what drives an extended period of deflation as that capacity gets worked off OR until the American consumer grows back into it. Either way, it will takes YEARS. Then we can consider that Europe hasn't even deleveraged yet (consumers or banks) and that China seems to be dealing with the same credit hangover/oversupply issue that the U.S. had and you get a pretty large picture that makes global deflation seem like a relatively likely outcome. People say don't fight the Fed/ECB/BoC etc. I'd say the Fed/ECB/BoC are fighting hundreds of millions of consumers and that the consumers are likely to win out. -
There's already an AXP thread where people are discussing this. http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/why-american-express-brand-is-valuable http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/axp-american-express/
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Jeffrey Gundlach: "This Time It's Different" Webcast
TwoCitiesCapital replied to ni-co's topic in General Discussion
Hmm, I see a number of ways this could blow up. Disclaimer: I don't short. His pair trades have worked out pretty well in the past....but yes, there are risks with shorting. Disclosure: Short SPY -
What is the extent of the 'opportunity' in the oil market?
TwoCitiesCapital replied to bmichaud's topic in General Discussion
Just to offer the inverse to that, I had a non-financial high school friend that I have talked to in 8+ years call me about investing in the Facebook IPO. I told him I wasn't touching it with a 10 ft pole and he seemed unconvinced. Only one of us made money on that even if it was out of ignorance... -
I think another question that we need to start discussing is what happens if there are losses and FNMA and FHLMC have to take on more loans from the gov't to support themselves? What if GAAP losses, instead of cash losses, force the gov't to infuse an even greater amount of money that subsequently can't be repaid? I can understand that if the takings moves in our favor that there will be some sort of calculation as to what is owed and there are some that believe that the profits currently swept will be considered repayment of the senior preferred shares and their dividend, but what happens if we have to start drawing again. It's not immediately clear to me how that would be handled and considered by the court - because it would be the inevitable result of government action, but I don't think the court is in the business if saying "if not for the sweep, the firms would have been sufficiently capitalized" after saying that the sweep was used to repay the preferred. Is anyone considering how that may change the calculation of the residual economic value or have any thoughts on that?
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Sold all of my SBLK and IBM this week. SBLK is because with China slowing down and the Fed hiking rates, I'm concerned to be involved with leveraged entities in an oversupplied, unprofitable industry when demand may start collapsing. IBM was sold to reduce leverage in the portfolio so I could use the margin to increase my short to the SPY. I just have a hard time of making sense of anything bullish about raising rates as profits fall. And it's not just that profits are falling, margins have begun to contract too. If the $ continues to rise and we actually see wage pressures that everyone was talking about this year, then it will only get worse. Removing liquidity from a system on elevated multiples with declining profits/margins seems like it's a disaster scenario. God forbid you get deflationary CPI prints on top of it. Bearishness aside - I sold some bond funds in my passive low P/B portfolio that were there for liquidity purposes. Proceeds were dumped into various energy and commodity companies now that prices have cratered again.
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Definitely strange that his thesis is to buy it and hold it when he only owns the preferred himself, but is that any worse than other authors who espouse buy/sell recommendations without putting their money where their mouth is? Is having a position better than having no position at all and an "unbiased" view? I rarely pay attention to anything that motley fool puts out. Not because of these disclosures and issues with them, but just because most of the garbage they put out is pretty surface level stuff like that article.
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What is the extent of the 'opportunity' in the oil market?
TwoCitiesCapital replied to bmichaud's topic in General Discussion
+1 Thanks for the heads up. Tripling down today. -
Negative Interest Rate Policy (NIRP) risks/benefits?
TwoCitiesCapital replied to permabear's topic in General Discussion
I think they'll raise rates - probably bump two or three times over the course of the next 12 months so they can save credibility. At that point, they'll probably have to do what every other central bank has done trying to get off the zero-bound. Revert and cut rates again. Gundlach is right - if economic data didn't justify a hike previously, there is no way that the data coming out right now supports monetary tightening... -
SIPC insures brokerage accounts for up to $500k of which a maximum of $250k can be cash. So if they have more than $500k in an account at a brokerage, there is the possibility that they could lose if the brokerage went under. Of course, SIPC protection is at the account level which means they could just open another account and transfer the excess balance over $500k, but maybe taking physical certificates appealed to them for some reason. SPIC is not a government agency, but is funded by member firms. I seem to recall SPIC has less than $2 billion in assets. I recall this was also part of their concerns. Unless it were systemic, I'd imagine it's in the brokers' best interest to make sure SIPCs claims are made. If a single major broker went under and SIPC didn't make good on their promise, I imagine a lot of high net-worth individuals and retirees would be making changes like this. That being said, I can understand why that's not a gamble one would be willing to make.
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SIPC insures brokerage accounts for up to $500k of which a maximum of $250k can be cash. So if they have more than $500k in an account at a brokerage, there is the possibility that they could lose if the brokerage went under. Of course, SIPC protection is at the account level which means they could just open another account and transfer the excess balance over $500k, but maybe taking physical certificates appealed to them for some reason.
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I agree it is a good company - as does the market. It isn't cheap by any means even with the e. coli drop. I assume it will get cheaper after a quarter or two orf terrible SSS regardless of the long term prospects. I will wait for that to (possibly) happen. Otherwise it hardly seems like a truck loading opportunity to me. This is what I'm watching hoping/watching for. If Q4 results are miserable and it takes another hit, I might be interested. Also, I haven't eaten at Chipotle since the outbreak, but not because of e-coli. I just have generally found it expensive for what you get - but have eaten there occasionally and do enjoy it. I just live near Spanish Harlem in NYC and can find legit burritos for significantly less than the $8-9 they cost at CMG.
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Bought more HERO today This is a tiny fraction of a position for me in my passive P/B account. This decision wasn't entirely "passive", but if I were to rebalance the account today then it would be an equal weight position so I figured I could reinvest some portfolio dividends to begin rebuidling the position a little early. 3% of post-bankruptcy re-org book value just seems a little ridiculous even if the industry is in shambles and there is no clear road to recovery.
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Doubled my SPY short today. Also sold FCAU 11/20/15 PUTS @12 for $0.60. Sold BBRY 11/20/15 PUTS @ $7 for $0.67. sold WFM 11/20/15 CALLS @ 35 for $0.45 Sold ACI 11/20/15 PUTS @ 2 for $0.30 Last set of puts worked out pretty well. Sold 10/16 puts @ 4 for $1.00 when it was at $6+. Incredible that the stock can fall 50% and you still make 25% in a month by selling puts. Bankruptcy is a real risk here but selling puts is more attractive to outright equity exposure which is what my passive P/B strategy would have me doing. I think the puts are a better option for exposure at this point until the bankruptcy/debt swap issues are worked out and then I'll probably roll the exposure into equity. Sold more FCAU options. 12/18/2015 PUTS @ 15 for $0.85. Also sold CHK 12/18/2015 PUTS @ 5 for $0.21 Purchased more ATUSF on Friday at $7.80. Purchased more FNMAJ today at $3.30.
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5 seconds on google provided the below: http://www.bloomberg.com/news/articles/2015-12-07/lancashire-slumps-on-report-cathedral-capital-ceo-cfo-dismissed
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Nice! I've been thinking about adding but opted for building a position in the Brazilian subsidiary again with the massive repurchase they're going to do and in hopes that SAN just buys the rest of it. Added more Altius today.
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My thought was the interest rate hike will hurt FFH bond portfolio. FED implies there will be a "GO" this time. Meh. A 25 bps rise at the front end will have very little effect on longer duration bonds - also, rate hiking cycles typically compress credits spreads. Widening muni-spreads have largely been what has hurt Fairfax's bond portfolio over the past year so it could actually be beneficial for them. I don't think this is why the market took 4% of the equity value of the company.
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The bet on low inflation has been the saving grace of the past few quarters, along with good underwriting. I will also get real nitpicky here and say that the bet is actually on negative inflation and that the "lowflation" piece has been small and was added only recently. We only saw negative headline inflation briefly and in small increments. Remember, this is an in environment where doubted deflation could ever even happen and that the Fed would do all it could to stop it. Wait and see if it becomes more persistent and larger in magnitude over the next year or two. The low equity beta would have probably have played out well had investments in Eurobank and SD not sucked so badly over the past two quarters. Those are basically non-impactful at this point so wait and see. Too soon to throw in the towel.
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I think they say that because it's abused by companies as opposed to judging its overall usefulness. It's like when analysts say "excluding energy, everything looks good." No shit. It's always the case that everything looks good if you ignore all of the bad. EBITDA allows people to ignore all of the bad and companies abuse that option. GAAP has it's own problems, but at least it generally tries to not mislead people. EBITDA has the potential to ignore the replacement costs of running a business. Pro-forma earnings ignores everything that went bad in the quarter. Adjusted EBITDA ignores both. Etc. etc. etc.