TwoCitiesCapital

https://finance.yahoo.com/news/trump-says-us-set-tariff-091900283.html Tarriffs were never about getting others to lower their tarriffs as Trump is now admitting by announcing that they're here to stay

Is wild to me that people think that 1) erecting statues to traitors and those who lost their war is ok 2) and that their removal is erasing "history and culture" I don't know if I can think of another example of the losers of a war being so venerated -especially when they were so clearly on the wrong side of history with their stance.

Agreed it's small for them. Still not yet bigger than BB with BBs 80-90% losses. But, is a good sign and may hold for further accumulation. They know the assets/industry it seems and may know LG at this point. I rolled all of my stock position to dec 2026 LEAPS to increase notional, take cash off the table, and give myself a timeline for being right or wrong on this one.

My figures are YTD at the time of each posting.

I only take observations every ~2-weeks when flows come into my 401k that I account for in my performance calcs. There may have been a day or two that were lower than this, but ultimately this was pretty close to the low water mark for me as the accounts were ~2% higher at the next observation period in mid-April when the next paycheck came in. Now at +9%. Trimming the equity positions I bought on the dip to move back into short- and intermediate bond funds while we wait for prices to catch down to profits.

We gonna start talking about Arizona and Delaware being shit-hole states now? Or nah?

I don't really have an opinion on them individually. Just their historical approach/results have given the vibe that they're not looking for quality compounders - they're looking for cheap companies with management Fairfax likes. They buy them and then flip them. I'm ok with this approach.

Even Buffett acknowledged the move the quality was likely to lower returns AND increase risk. It was done for scalability - not because it was a better system of investment. For a company of Berkshires size to constantly flip Graham-like cigar butts, they'd have to 1) hire a hole team of analysts to turn over every stone to find these tiny-ass companies to invest this capital into AND 2) be open to investing internationally which would also require a team of analysts AND 3) be willing to take the tax but from constantly flipping those investments to the next batch of cheap decile integrate AND 4) have the willingness, ability, and shareholder base to accept the massive drawdowns such strategies being a long the way. Berkshire didn't have the team of analysts, didn't have the willingness to do much abroad, and didn't want to pay the taxes or have the drawdowns. But Fairfax is better suited in all those regards. They already have a team that is very involved overseas, already have a team willing to pay some small tax to move to new opportunities, and have a demonstrated ability at being willing to tolerate/survive large drawdowns (Blackberry, CDX initially, TRS, equity shorts, etc). Fairfax are better suited for a global, diversified, Graham-like value investment system. And I expect, over time, the returns from that system to provide greater returns than any system that has a quality bias.....which is basically supported by the research in the field. Quality screens DETRACT from the performance of outright cheap. Perhaps Fairfax outgrows that system like Berkshire has. But, markets are larger today, Fairfax has a smaller % of its portfolio in public equities, and taking these companies private comes with certain advantages/scale as well - so I think the runway is quite a bit larger for Fairfax before they're forced to take a "quality for scale" approach.

Just like he bailed out SolarCity shareholders at the expense of Tesla shareholders. His companies have always had some level of incestuous relationships without arms-length negotiations between them. Between that, the lack of governance, and the prices they've always traded at - I could never get comfortable owning them.

I believe Pershing Square's vehicle is too IIRC As an aside, this status doesn't matter inside a tax deferred account like an IRA. Is only taxable accounts in the US that can become problematic.

You don't have to define it in gold - people just do so because gold tends to be more stable than dollars, rubles, euros, yuan, pesos, etc etc etc The problem with your 'when does $1 not buy $1 dollar" is that it doesn't actually measure anything in terms of value delivered. It's an impossible narrative to prove they did or didn't default because "dollar" is simply a word and using two different "dollars" isn't equivalent even if it's the same word. Is like asking "when is 1-year not 1-year" and then ignoring that some years have 365 days while others have 366. Or when is 1-month not 1-month even though some have 28 days, 30 days, or 31 days. The word is the same...the values are NOT equivalent. $1 in 1980 is the same word as $1 today. But they are NOT equivalent. Same with $1 in the 90s, and $1 on 2000s, and $1 as recently as 2020. That is the default. Because the government issues bonds, promising to pay a certain $ representing a certain value, and then intentionally devalues the currency to pay you back less. Is NO different than if they simply kept the value for eh currency stable and gave you fewer $ in return.

That's another 31k BTC removed from short term supply at today's prices. You get a few companies doing this, a few states doing this, and few countries doing this, and you end up with hundreds of thousands of BTC being removed.

There is no such thing as a 'Trump' put. He has made that clear. There are two types of rate cuts - those that occur out of recessions (markets love) and those that occur heading into recessions (which scares the shit out of markets). Which are these going to be? I'll take a stab - Q1 GDP is quite a bit negative, even after adjusting for gold inflows, and was largely data from before the tariffs shock. Are we really expecting Q2 to be better? Are there any data that are directionally moving in the risk-on path that would offset a leading indicators still being negative, the yield curve still being inverted (and close to uninverting), and GDP being negative? +1 Markets are not yet pricing in the possibility of a recession. Just uncertainty. Once certainty comes along, there will be more hell to pay. We've already seen containership volumes crater at US ports. I'm guessing that it might even be more accelerated than this given there was already signs of weakness pre-Trump and Trump just went and threw all caution to the wind.

Buy the story and add on the news has been what has worked the last 15 years.

You may disagree. But markets are voting with their $. And for most of the last 15-years, BTC is winning those incremental votes of confidence and USD is losing them. I have no reason to expect this dynamic will change - and own BTC as a result. It's the best bet for my incremental capital.

You may be right that investors have no recourse. But they also don't have to buy anymore. Shutting down U.S. capital markets would be disastrous for the U.S. government running the deficits its running even if it defers maturities and lowers interest expenses. At that point, the U.S. isn't the cleanest dirty-shirt. Japan hasn't screwed bondholders like that. Europe hasn't screwed bondholders like that. CHINA hasn't screwed bond holders like that. Incremental flows will find new homes elsewhere and the USD will be trashed. That's exactly how it ends. We're not the reserve currency by default. We're the reserve currency because the rest of the world allows us to be. We no longer have the military might to enforce that the whole globe use our currency for global trade. In the 70s we had the best military and the best balance sheet to handle that sort of thing. Now? We're here by the good graces of others and inertia of wanting to rethink and redesign a global financial system across varying parties with varying objectives. We could try sanctioning folks into compliance - but I expect that just drives them further away from USD/US Banking System integration than make us any new friends. He's a fantastic bond manager. He's been quite wrong with his track record on predictions though - both of economic calamity and recessions. Part of his job though is to think of risks no one else sees or are considering. So I don't blame him for seeing a boogey man around every corner - as long as he can manage around those risks and still have reasonably good results. Probably not. US government doesn't have the authority to arbitrarily renegotiate OTHER people's contracts and default on their behalf. You'd probably see IG corporates and mortgages trade UNDER treasuries as treasuries would likely no longer be the risk-free benchmark - agency mortgages would be. +1 No reason to outright default when you can implicitly default and everyone is ok with it.... Another year or two of 10+% inflation with interest rates at single digits and you've accomplished a huge amount of deleveraging at the Federal level (and created a huge amount of financial pain for everyone else).

It defaulted during the Great Depression when FDR made it a requirement to tender all gold, bullion, and gold certificates to the US for a fixed price of $20 an oz and then immediately devalued the dollar to $40 an oz once the gold had been acquired the following year. It defaulted against its contractual obligation of convertibility into gold in the 70s when it swapped, overnight, from convertibility into a set amount of gold to the "full faith and credit". Since the 70s, it had implicitly defaulted by printing more money each year to pay for its obligations which is why we have generally rising prices each year instead of generally falling prices. Rising productivity is deflationary. Each individual has become insanely more productive than we were 50 years ago. The ONLY reason inflation exists as a default state of affairs is because the US government (and others) can't help themselves when it comes to printing money and defaulting against the value of their liabilities. Each dollar printed is abuse of power and devalues the time/effort/energy you have stored via the currency they force you to use/own/pay taxes in. Inflation is just a form of default - no less sinister than non-payment; just less obvious.

An obligation that has been defaulted on and inflated away with with each passing year by our own government? And history littered with dozens of other examples of other governments doing the same? Yea....I think you're taking that "contractual obligation" a little too seriously. Good luck enforcing its purchasing power via the courts.

Exactly. Price is one thing. Value is another. Are there some people only in Bitcoin because price goes up? Sure. Are there those same people who will leave when price goes down? Sure. But those aren't value. Long term proponents of BTC have confidence in Bitcoin because it has demonstrated value - not because price goes up. The only way to lose that confidence is if it stops demonstrating that value. The faith is based on value, not value based on faith. It has the most secure, uncensorable network for global wealth storage and transfer. That is valuable. We can debate the measure of the value, but not that it exists. Beauty has value too. Again, we can debate the price you're willing to pay for it, but it has value.

Exactly. Price is one thing. Value is another. Are there some people only in Bitcoin because price goes up? Sure. Are there those same people who will leave when price goes down? Sure. But those aren't value. The fluctuations in price do not necessarily equate with fluctuations in values. Long term proponents of BTC have confidence in Bitcoin because it has demonstrated value - not because price goes up. The only way to lose that confidence is if it stops demonstrating that value. The faith is based on value, not value based on faith. It has the most secure, uncensorable network for global wealth storage and transfer. That is valuable. We can debate the measure of the value, but not that it exists. Beauty has value too. Again, we can debate the price you're willing to pay for it, but it has value.

I'm confused - is this not how PRICE works for everything? Investors lose faith in a stocks growth prospects? It's price goes down as multiples contract. Investors lose faith in a currency? Its price goes down. Investors lose faith in the ability to repay credit? Bond prices go down. Of course BTC is no different when you're judging it by the mechanism of price investors are willing to pay for it...price. But value is what we're discussing: Ownership of Bitcoin gives you access to one of the most secure global networks to transfer money/wealth on WHILE also being a store of value unto itself. You as an an owner of BTC become a part of that network. That is valuable. Just like telephones, or the internet, or social media, or credit card networks - it isn't very valuable if its only a network between 2 people. But as the network expands from 2 people, to 200 people, to 2000 people, to 2 billion people (and/or businesses), and etc. the value proposition also grows. As the value proposition grows, more people are able to get value from being a member of the network meaning more people join it which grows the value proposition further. As the network grows in value, so does the price in which someone is willing to pay to access it/own a portion of it. BTC is no different than any other network in that regarding - it gets more valuable the more people use it. For the first portion of its history - Bitcoin will be a growth investment predicated on the growth of the network/infrastructure that supports it. That growth will dominate its price action until we reach a value of the mature network. At maturity, the fixed-scarcity of Bitcoin, along with the continued value-add of the network participation, will make it a better inflation-hedge/store of value than anything currently in existence.

We use institutional software licenses and a partnership with a third-party execution/trade generator for this. I don't know of the options that may be available to retail/independent RIAs. We have estimated the historic benefits to be somewhere around 0.75 - 1.00% of the equity allocation per annum for someone in the highest federal tax bracket. I.e. a $1 million invested in equities would be expected to generate ~$7.5 - 10k per year in tax alpha that remains invested and remains compounding. This is supported by both actual account data over a 14 year stretch as well as hypothetical back testing. Much of that benefit persists even at an unwind at the end of life for the portfolio (a greater amount persists the longer the time horizon) or you get the full cost basis step-up upon your death (pending registration of the account and current tax laws).

If that is what you've taken from reviewing the last 192 pages, then yes. If you haven't reviewed the last 192 pages and are simply goading me to subsidize your laziness, then also yes. We all get the amount of BTC we deserve - do the work to deserve it.

This point has been belabored to death in the 192 pages of this thread - and others. It's not really my responsibility to rehash it again. The materials are there, discussed, debated, and sources if you're genuinely curious. Not really in the mood to expend more energy having the same conversation

This point has been belabored to death in the 192 pages of this thread - and others. It's not really my responsibility to rehash it again. The materials are there, discussed, debated, and sources if you're genuinely curious. Not really in the mood to expend more energy having the same conversation