TwoCitiesCapital

Sure. I get that, but those weren't the options presented. I'd also prefer they stop buybacks somewhere between 1-1.25x BV to internally reinvest. But between issuing at 3x and buying back below 1x, I prefer the latter because I'll be there to benefit from it. I wouldn't be in the former.

More accretive? Yes. But I'm not sticking around to benefit it trades at 3x BV because it's probably way more accretive for me to sell and put the cash elsewhere as demonstrated by history. Would much rather they buy back below 1 BV so I can be there to benefit from it than gambling to hold on past 3X BV that any issuance will put a floor under my shares.

So cryptocurrencies which provide NO legal basis for ownership of an underlying project, or profits/returns, outside of expressly taking action within a project (like staking) ARE securities.... But leveraged loans that people buy passively which DOES provide legal entitlement to some form of return/collateral/repayment of principal/etc are not. What kind of upside down world is this....

+1

I think it's possible the earnings may be more sticky than otherwise assumed. Other companies MAY see it, but may NOT be able to capitalize on it due to capital constraints after they're fixed income portfolios went down ~10+% last year. If interest rates do NOT go down, other companies would have to either issue new equity to raise capital OR organically wait for current earnings and amortization of bond discounts to refill capital holes over the course of the next 2-3 years just to get back to where they were at YE 2021. And that assumes no major catastrophes during that 2-3 year period so CRs can remain positive and not contribute to loss of capital. A large catastrophe year could further extend the timeline. I don't think insurance CRs and earnings can continue at this level of growth and profitability into perpetuity, but Fairfax did itself a large favor on the fixed income side by protecting capital. When Prem mentioned in the past the ability to 2-3x premiums written in a hard market, who here thought it'd happen in an environment where nobody else could? I definitely underestimated that potential and the lucrative profitability that results from it.

I don't like long corporates at these levels. Sure, you're getting attractive rates because treasuries are high, but then just buy treasuries. IG corporate spreads are still pretty tight and not terribly attractive. I'm primarily only buying spread products at the short end of the curve to boost returns by 1-2% without taking long-term corporate spread risk. Yea - transaction costs are problematic - particularly for lot sizes below 50-100k. I primarily use funds/ETFs for my fixed income exposure for that exact reason. As long as rates drop at some point in the next 1-3 years, you'll absolutely get equity like returns from these. I'm expecting double digit like returns from mortgages for the next 2-3 years (perhaps front loaded). Agency mortgages are the only spread product I'm taking any duration on AND I'm buying mortgage REITS to lever up the portfolio on my behalf.

I dunno. This seems to ignore the negatives of government policy being a large factor in the malinvestment/leveraged talking that requires govt bailouts in the first place Perhaps Covid is one example of a positive while the Tech Bubble, 2008, and the double-dip inside of the Great Depression are examples of the negatives. I think I'd be open to LESS government intervention...

Plenty of observations in history of private currencies, but they were generally minted by private banks and not individuals.

+1 Technological advancement and increasing productivity have helped keep a lid on inflation - but those aren't steady trends that go up all of the time while money printing basically does. There is also some truth to the underinvestment in CapEx as demonstrated by a number of commodities that are in shortage or going to be (like energy, copper, clean steel, etc). Some of those are actual shortages based on today's demand, some will be shortages based on political decisions (like clean steel), and some of those will be shortages based on the multi-decade trend of electrifying our lives. I still think the risks are deflationary recessions - but I am betting the money spigot gets bigger every slow down, shortages will feed through to prices, and you'll get boom/busts in inflation that still lead to higher average inflation than the low-and-stable inflation of the last decade.

It's all taxable as income in the quarter it is earned if I'm not mistaken. Been a minute since I've been involved with TRS, and wasn't involved in the taxes, but I think it's considered income.

Repurchased prior sales of Altius, SBSW, and Porsche Holdings. All trading near the bottom of their 9-12 month trendlines after this morning. Sold some puts and covered calls against a number of other positions and cash.

I'm closer to 15% following the drawdown and subsequent adds (and a markdown of a portion of the assets held at Celsius until recovery rates are known). Hoping to get back to 20-ish before the next bull run which is where I topped out at on the last one.

I dunno - real returns are still negative. Even after returning to bubble-like valuations to pull indices higher on declining earnings, you're still -7 or -8% in real terms for the last 24 months. Hardly a great inflation hedge - especially considering the valuations that had to be reached to accomplish it. Real assets did better. Gold, real estate, oil, etc all out performed equities on a 24 month look back. I expect that will remain the case for the next 2-3 years (perhaps with the exception of real estate) and that broad fixed income may join the list of assets that outperform once we hit the next cutting cycle. Equities haven't done "terribly" as I expected, but they certainly haven't been a good inflation hedge. I also expect that the next few years may look like the last 2-3 years in regards to the instability of inflation. If that's the case, the rough start for equities is probably only going to get worse.

I tell you what - if I had bought $1,000 of BTC in 2010 or 2011 or 2012, I'd also give zero f*cks

I'm massively overweight then And this is massively more than the 1-2% I've seen touted elsewhere. Just imagine 5-10% of the hundred trillion in global wealth moving to 21 million Bitcoin....would equate to 250-500k/coin assuming none are lost.

I mean, I'd never advise anyone to buy Bitcoin as opposed to a house if they had a few hundred thousand sitting around... But also, crypto has by far been the best investment of the two over that time period making this statement a little asinine. In 2010, BTC traded for literal pennies. Every $1,000 put into BTC in 2010 is worth tens of millions, if not hundreds of millions, today. If you bought at the peak in 2013, you still have 30x your money. If you bought in 2016 you'd have achieved a similar 30x-40x. The only time period where you'd have underperformed real estate (maybe) is you bought the 2018 peak that lasted less than a week (and you'd still have done +50% which still beats MANY housing markets over the last 5 years). So in 99% of observations, crypto was better and in that 1% of observations it was still better than much of the R.E. market. And this appreciation didn't require ongoing monthly cash outflows or tons of leverage to accomplish it. Sounds like BTC had the better ROI?

That's bizarre accounting. Generally the way it works is you pay taxes on the receipt of the dividend so the basis shouldn't be zero but rather the price per share at which the reinvestment occurred so you're not taxed twice - But, since it's an IRA and no taxes are paid anyways, perhaps they just don't track it and mark it at $0 to reflect that no taxes were paid on the receipt either?

I mean, this totally if ignores any compounding over those 3-4 decades from any alternative use of the cash... I don't think it's quite as dire as you say. I've owned my condo for the last 6-years. It's built equity which makes me feel good - but most of that is "fake" if I were to try to use it for my benefit. If I were to sell today to unlock that equity, I'd lose a large chunk of it to the sales commissions/closing costs. The remainder would be roughly equivalent to the cash spent on maintenance/improvements over the last 6-years. And I bought well - from a motivated seller in the middle of winter for 10% less then they were asking at the end of 2017. Perhaps it's a different story after the next 6-years, but the math hasn't borne out this being a slam dunk of a choice yet. I don't know too many millennials that are willing to stick with something for 10-years to see if it works. I don't know anybody who has stuck with a job that long. I don't know anyone who stuck with public service to get their student loans forgiven for more than a handful of years. Etc. Maybe that's "their fault". But it does seem like an 8-10 year breakeven for something to get ahead isn't an OBVIOUS win. But maybe that's just my city? Obviously others will have different experiences, but still seems like CoL in the Midwest is reasonable so perhaps renting is less problematic here.

It's only been a slight trim. I still do well of we continue upward, but tryna finesse more shares and "make my own dividend" with these swing trades. In the meantime the cash gets deployed into names that are oversold and often times they get a pop while I'm waiting for the other to drop. Don't keep detailed enough records to know what the alpha is across all trades, but wouldn't be surprised if it added 2-3% per year in portfolio return while increasing my shares in longer term positions.

On the flip side of this, I know someone who purchased a 500k home recently because they live in an expensive part of the country for retirees and vacationers. Collectively - his wife and him may take home ~80-90k. They're monthly payment basically eats up their entire discretionary take-home pay. After car notes, mortgage, and groceries there is basically nothing left over for savings, expected maintenance, etc. If one of them gets laid off, it's choosing what to default on immediately since there is so little buffer to save a few months of payments. I advised against the purchase until prices and/or rates had come down, but some bank approved them and they bought basically the top of the market Generally, I agree the credit standards at banks are good and there won't be a repeat of 2008. That doesn't mean there won't be credit pain on defaults if we get ANY additional weakness in the economy

Seasonally it's the rough part for Fairfax/insurance too. Its also fighting some technicals like being overbought for so long on basics like RSI and etc Obviously anything could happen, but I think it's more likely than not we get a pullback. Have been waiting to repurchases some shares I trimmed at $730-750 USD sub-$700.

Barely slowed down is an interesting way to characterize it. There are pockets of strength, but consumers revolving credit balances have soared and lower-end consumer demand has cratered. CRE defaults are startinf to happen right and left in top-tier cities further constraining banks that are already illiquid and potentially insolvent. Home prices are flat to down YoY (real returns are significantly negative), PMIs are sub-50 signalling both local and global contraction, and leading indicators have been falling for like ~16-17 months now. The primary strengths seem to be equities (absurdly high relative to bond yields and their underlying profits), consumer spending (only when ignoring its funded by increasing revolving credit), and GDP (which has been significantly at odds with GDI for months now). It's probably better characterized as stagnating - not "barely slowed". A lot of signs are pointing to continued weakness in addition to what we've already seen. 1-year ago the Fed Funds was 1.5%. 6-months ago Fed Funds was 4.25%. WE know these things act with a lag so perhaps all were seeing now are the effects of rates surpassing 3ish%. Perhaps we do get to 6.5% on the front end, but I think it'll be seen as a policy mistake in hindsight and the bond market is sniffing that out which is why the 10-year has gone nowhere in 9 months despite significant hiking activity at the front end.

Perhaps. I'm not willing to take the bet that 10-year doesn't surpass 4.25%, but am willing to say I'll be buying more of them if they do. Over the next 12-18 months, I expect that'll be a pretty good rate relative to where they'll terminate in the cutting cycle. I agree that rates may not going back to 0 and that we may never see a 1-handle on the 10-year again. I agree that the long term path for rates will be higher on average than the last 10-years, buty belief is that this inflation is inherently unstable. I DO expect lower rates in the next year or two and that's all that I really care about. Inflation has already cratered despite not yet pricing in the declining trend in housing (and the contraction in credit that has yet to course through the economy). I dunno where 10-year rates bottom, but I can see 2-2.5% being a reasonable target if we do get modest deflation which I believe is possible - particularly if rates keep rising. My thesis on a boom/bust cycle for inflation, rather than it being a constant 1-3%, seems to be playing out nicely so far. I'm prepared for the market to price in the current bust and then I'll be positioned for the next boom.

Well, we didn't take out 4.08 yet - topped at 4.06 and now back down to 3.7s Same with the 2-year. Some thought re-approaching the prior high of 5% meant something, but here we are again at 4.8% after tagging 5%. For every hike the market prices in, it prices in another cut (or a faster rate of cuts) in the future - at least that's been the case for the 9-months. The 10-year still hasn't exceeded it's October 22 peak and the 2-year is flat to it.

Trailed the market? Perhaps pending which market you're using. The S&P 500 isn't the default for a lot of their int'l clients. Nor even their institutional clientele that are looking for risk exposure that is uncorrelated to US large cap equities. And from 2010 - 2020, the S&P 500/Nasdaq were probably the best performing mainstream asset class, so diversifying away from them to own anything else would have hurt returns. But that's Bridgewater's whole gig - a diversified set of returns that doesn't rely on equity markets doing well. They didn't have drawdowns as large as the S&P along the way and typically did well precisely when stocks did poorly like 2008 when they crushed it or the first 9-months of 2022 when they were up 20-30% while US stocks were down 10-20% in aggregate. That type of diversification and downside protection is probably very valuable and helpful to some - even if you end up underperforming the top asset class of the decade in hindsight.