TwoCitiesCapital

Einhorn literally wrote a book about a fraud he identified where regulators failed to act. I think it's a bit if a shallow interpretation to say that he's counting on the regulators to make his shorts work.

+1 This is basically just true of big cities. I moved to NYC after graduating in 2011 and this was true. Tons of people my age with 6-figure student loans and 6 figure jobs. Now that I've moved back to the Midwest, seems to me that most AREN'T in the situation of 6-figure loans or 6-figure jobs and are probably more like ~50k type jobs w/ 20k type student loans. Maybe there is something to this "millennials" are buying all of the houses trend, but I'm not yet seeing it. Most people my age (32) and younger are still renting. That's here AND in NYC btw. Even me - the only reason I purchased here was because I couldn't find a rental I wanted, but there were several nice properties for sale. Had the properties been for rent instead, I would have happily rented.

You're right. I think I was taking the book value in CAD in adding to it the +$30 USD from the $875 million gain - so just sloppy work on my part.

My high level read is book value will be up by the $875+ million figure plus profits from insurance. The other gains are real gains, but won't be gains captured in book value, just like the prior deficit wasn't captured in book value. Still, with that gain, Fairfax is still at like 0.7x boon and even cheaper considering they now have $200-300 million of gains not captured there. Despite recent gains that have been very strong, Fairfax is still dirt cheap

So anyone have any update or thoughts on timing for SCOTUS now that early April has come and gone?

I was listening to a podcast recently that was simply focused on the QE portion of the equation, but was arguing that we are currently in a liquidity trap. Basically the guy was saying 1) QE is limited in its scale by bank deposits because those bank deposits are what banks use to buy the treasuries to flip to the Fed 2) This is why we need fiscal spending - so more cash is injected into the system to be deposited into banks to grow those deposits to allow QE to continue And 3) once that treasury bond is flipped to the Fed, the cash is trapped. Cash goes to the dealer bank to be used at the next auction to buy more treasuries. The buying bank who flipped to the Fed only receives a reserve that can't be loaned or withdrawn and the principal/interest payments on the Treasury are paid to the Fed and don't enter circulation. Basically his argument is QE is deflationary as it sops and locks trillions of dollars OUT of the real economy and that number grows every day resulting in a dramatically lower velocity to the dollar, a shortage of dollars that drives the value of the dollar higher, and lower interest rates. All of which are disinflationary/deflationary. Would you say this is what we're seeing now with the explosion of excess reserves?

Common is up 40% from its lows in February. Preferreds have been making small moves in the past few days. What does the market know about upcoming information?

I don't think sovereign cryptos threaten crypto anymore than credit cards threaten crypto. Part of the benefit of crypto is precisely that it is decentralized - a currency that can truly be accepted anywhere in any country by any business. Also, for those who view it as digital gold, its guaranteed scarcity will be hard to replicate by profligate governments who want to print more digital currencies. A digital currency will erode SOME of the advantages cryptos have over the current financial system (like instantaneous settlement), but ultimately there is enough of an ecosystem, network, and development around these currencies that I imagine they'll continue to have advantages of sovereign currencies for years to come. The digital USD hasn't even launched yet, let alone redeveloping the financial system around it. We're already getting there on ethereum and they just need to crack scalability and lowering fees (which is a BIG challenge, but i'm optimistic). TL;DR - a digital dollar probably won't be much different for day-to-day users that already use Apple wallet/PayPal/credit cards for every purchase other than they'll see their money and payment settlement move much more quickly.

I've owned puts on it twice - first in early 2020 and again in early 2021. Lost money both times despite damn near catching the tops just because the erosion of time value happened faster than the decline in each instance. Might have broken even on my 2020 puts had I held them into March, but closed them before I even knew covid was going to be a threat. I keep wanting to do it again, but at some point I have to cut my losses no matter how ridiculous the valuation appears

For Lampert, sure. He basically went all in. Bruce has always run concentrated positions in his fund and always been just a handful of names. I don't recall what % of his MF it was, but would you say it ran considerably larger than his bets on BofA, AIG, or Fannie/Freddie? Too many years back now for me to recall the specifics, but I never got the impression Bruce had a significantly larger position in Sears than his other holdings.

I haven't seen him for a minute, but oddballstocks on this forum is an expert on financial institutions (particularly small ones). Hopefully he still frequents and can opine. My general thoughts are: 1) Less onerous regulation and capital requirements since they're not SIFIs means they can earn more with less capital and fewer compliance costs 2) Less competition in smaller markets means higher margins available for the handful of participants in those markets 3) As mentioned above - they know the market and can be more opportunistic with pricing and risk

Betting on the rising prices would be very speculative and risky - particularly for an asset class that has a history of busting 80-90% after major booms (what we're seeing now). Also, we have NO evidence that Bitcoin would perform well as an inflation hedge. We have a theory based solely on its scarcity, but that doesn't mean it would play out in reality or that there wouldn't be other/better inflation hedges. I myself think BTC's rise in value is less to do with it being a store of value/inflation hedge and more to do with simply reflecting the growing value of the network of payments/participants. All of that being said, I myself have taken on a small loan @ ~3-4% (non-compounded) and am arbitraging that against stable coins earning 8-10% (compounded continuously) in DeFi. There are risks like your counterparty failing (if you're using BlockFi) or of your smart contract being hacked (if you're using Aave, or Curve, or someother app), but it could be a worthwhile arbitrage to make to funnel more capital into a growing sector as long as it won't kill you to lose it all in the event something happens. Would definitely NOT be doing this with anything close to an amount approximating my mortgage.

In the long run, this is very positive. As someone who hates the current high gas fees on the ethereum network while waiting for rollups and Eth 2.0 to work their magic, I'm concerned this will make it worse :/

There was a blog post on “what happened to Bruce Berkowitz about a month ago. Success leads to overconfidence in abilities that maybe weren’t all that in the first place. Bruce Berkowitz: From Morningstar Manager of the Decade to 15 Years of Underperformance https://canuck-analyst.blogspot.com/2021/02/bruce-berkowitz-from-morningstar.html Lots of nice stuff in there. I think Munger has said the best way to learn is from other’s mistakes. I dunno Bruce seems like he had multiple good ideas - it seems the problem was that his specialty was in financials as all of his best bets seems to have been in those names (Wells Fargo, BofA, AIG, Fannie/Freddie). Financials haven't been in favor much in a 0% rate environment so after the initial panics of 2008/2009 and again in 2011, there probably wasn't much juice left to squeeze even in an improving economy. For example, BofA hit $16 back in 2011. It wasn't until 2017 that it sustainably rose above that number - that's tough for performance to have a major holding do 0% for 6 years. Fannie/Freddie have gone back and forth between stellar and flat over the last 6 or so years. And St. Joe's didn't do anything for years until 2021 where it doubled which makes up for years of flat performance. Just seems like until 2021, all of his bets were basically flattish. But financials are performing well, St. Joe's is now performing well, and there's a catalyst for Fannie/Freddie to be extraordinary this year. I just think hd had a few rough years staying within his circle of competence because financials as a whole were mediocre. I don't think that makes him a bad investor - his long term track record will likely still be stellar. It just means you have to know that he's not going to perform in all environments.

And as if that was signaling a top, BTC crashes. Eh, for an asset that regularly moves by 20-30%, this hardly qualifies as a crash. Especially considering it's still up 500% over the last 6 months or so. Healthy corrections happen. There were multiple 20-30% pullbacks in 2017 and two 50+% pullbacks on the way to 20x returns. We haven't even seen the latter yet, let alone a "crash". That'll be the 80-90% drawdown that comes AFTER the bull run.

Why get inoculated for polio or hepatitis? Because the cost/benefit ratio is extraordinary. Cause Polio is actually dangerous and the available vaccines are well tested and in use for a long time (making the chance of unknown long term side effects negligable). I'm innocolated for a number of other dangerous deseases (the ones that I'm likely enough to run into) with tried and true vaccines available. I don't take vaccines for non-dangerous deseases, it' much wiser to let your own imune system handle it. It's not like I get the yearly flu shot (do you?) and influenza viruses are generally much more dangerous than Corona viruses. Furthermore the available deseases are not even out of stage 2 testing.And we didn't even start talking about possible unknown long term side effects. In fact, I would call taking this vaccine reckless if you fall outside the primary risk groups (and unwise otherwise). I consider injecting your children with this failing at your parental duty of care. The politicians are also highly reckless in my opinion. Vaccination 101 is that you don't start vaccinating during an active outbreak as that risks strengthening the virus. Aren't we in one right now? Dangerous game they are playing with all of our futures ... I don't take issue with you being concerned about taking a new and unproven vaccine. I do take issue with underselling the dangers of Covid though. With 550k dead in the US in just a year, and near 3 million worldwide, I would think this has proven far deadlier than polio ever was. And while polio paralyzed just 0.5% of people who caught it (see attached), Covid is estimated to cause long term cardiovascular and/or respiratory issues for up to 1/3 of people who have had it regardless if the severity of symptoms (source is CDC). And we still really don't know how severe that impact will be or HOW long it lasts. So we can stop pretending like Polio was this big bad thing and Covid isn't. Covid, by the numbers, is way worse Finally @TwocitiesCapital I am most definitely NOT underselling Corona (Covid-19). First it is less lethal than many flu outbreaks that occured over recent decades (and before you say: of course individual flu outbreaks tend to be more local, but there's a lot more of them). Second: really, for people outside the risk groups you consider Corona dangerous based on the statistics? Now you are just being dishonest in an attempt to convince others (or you actually haven't analyzed the data in the proper context). 1. More than 50% of the U.S. population is currently living with a co-morbidity. Even outside of that population and the death rate, a significant amount of those who have had Covid are currently suffering from seemingly long-term impacts of the virus regardless of the presence of co-morbidities. So what is the "risk group" if not 1/2 of the population or 1/3 of the people who get Covid? or the whole population because once it's the majority of people the segregation matters less? 2. Would love to see you make the case that Polio was more dangerous for the small percentage of the population it affected versus the "small" percentage of the population covid affects since you think I'm being disingenuous with numbers to demonstrate that Covid is worse than polio. 1. It shows you are disingenuous if you like to put 50% of the population into the risk group. Take all over 70, all with long deficiencies and all with secerely compromised imune systems and you are already overhooting. Also count people not by number but by expected remaining life years to make a more correct comparison. 2. You yourself wrote "polio paralyzed just 0.5%". That's many many orders of magnitude above Covid-19 And dont come with a handul of longer term concequences of those recovered from Covid and generelize it to the population. That is also extremely disingenuous. The estimated death rate of Covid right now is ~0.5% or so when accounting for unidentified cases. Having 0.5% of the population die seems far more impactful than having 0.5% paralyzed - but I don't know how to account for that in "life years" since Polio's would be close to 0 impact with that measure as not many died from it. A "handful" is a funny way to describe upwards of 1/3 of ALL people who have had it per the CDC.

Why get inoculated for polio or hepatitis? Because the cost/benefit ratio is extraordinary. Cause Polio is actually dangerous and the available vaccines are well tested and in use for a long time (making the chance of unknown long term side effects negligable). I'm innocolated for a number of other dangerous deseases (the ones that I'm likely enough to run into) with tried and true vaccines available. I don't take vaccines for non-dangerous deseases, it' much wiser to let your own imune system handle it. It's not like I get the yearly flu shot (do you?) and influenza viruses are generally much more dangerous than Corona viruses. Furthermore the available deseases are not even out of stage 2 testing.And we didn't even start talking about possible unknown long term side effects. In fact, I would call taking this vaccine reckless if you fall outside the primary risk groups (and unwise otherwise). I consider injecting your children with this failing at your parental duty of care. The politicians are also highly reckless in my opinion. Vaccination 101 is that you don't start vaccinating during an active outbreak as that risks strengthening the virus. Aren't we in one right now? Dangerous game they are playing with all of our futures ... I don't take issue with you being concerned about taking a new and unproven vaccine. I do take issue with underselling the dangers of Covid though. With 550k dead in the US in just a year, and near 3 million worldwide, I would think this has proven far deadlier than polio ever was. And while polio paralyzed just 0.5% of people who caught it (see attached), Covid is estimated to cause long term cardiovascular and/or respiratory issues for up to 1/3 of people who have had it regardless if the severity of symptoms (source is CDC). And we still really don't know how severe that impact will be or HOW long it lasts. So we can stop pretending like Polio was this big bad thing and Covid isn't. Covid, by the numbers, is way worse Finally @TwocitiesCapital I am most definitely NOT underselling Corona (Covid-19). First it is less lethal than many flu outbreaks that occured over recent decades (and before you say: of course individual flu outbreaks tend to be more local, but there's a lot more of them). Second: really, for people outside the risk groups you consider Corona dangerous based on the statistics? Now you are just being dishonest in an attempt to convince others (or you actually haven't analyzed the data in the proper context). 1. More than 50% of the U.S. population is currently living with a co-morbidity. Even outside of that population and the death rate, a significant amount of those who have had Covid are currently suffering from seemingly long-term impacts of the virus regardless of the presence of co-morbidities. So what is the "risk group" if not 1/2 of the population or 1/3 of the people who get Covid? or the whole population because once it's the majority of people the segregation matters less? 2. Would love to see you make the case that Polio was more dangerous for the small percentage of the population it affected versus the "small" percentage of the population covid affects since you think I'm being disingenuous with numbers to demonstrate that Covid is worse than polio.

Why get inoculated for polio or hepatitis? Because the cost/benefit ratio is extraordinary. Cause Polio is actually dangerous and the available vaccines are well tested and in use for a long time (making the chance of unknown long term side effects negligable). I'm innocolated for a number of other dangerous deseases (the ones that I'm likely enough to run into) with tried and true vaccines available. I don't take vaccines for non-dangerous deseases, it' much wiser to let your own imune system handle it. It's not like I get the yearly flu shot (do you?) and influenza viruses are generally much more dangerous than Corona viruses. Furthermore the available deseases are not even out of stage 2 testing.And we didn't even start talking about possible unknown long term side effects. In fact, I would call taking this vaccine reckless if you fall outside the primary risk groups (and unwise otherwise). I consider injecting your children with this failing at your parental duty of care. The politicians are also highly reckless in my opinion. Vaccination 101 is that you don't start vaccinating during an active outbreak as that risks strengthening the virus. Aren't we in one right now? Dangerous game they are playing with all of our futures ... I don't take issue with you being concerned about taking a new and unproven vaccine. I do take issue with underselling the dangers of Covid though. With 550k dead in the US in just a year, and near 3 million worldwide, I would think this has proven far deadlier than polio ever was. And while polio paralyzed just 0.5% of people who caught it (see attached), Covid is estimated to cause long term cardiovascular and/or respiratory issues for up to 1/3 of people who have had it regardless if the severity of symptoms (source is CDC). And we still really don't know how severe that impact will be or HOW long it lasts. So we can stop pretending like Polio was this big bad thing and Covid isn't. Covid, by the numbers, is way worse

Unfortunately, it's not as straightforward as this. The book Freakonomics outlined the results when Sweden (I think it Sweden) tried to drum up support for where to build a nuclear energy facility. First pass was that ~60% of the population said they wouldn't mind living near the facility, but the government wanted greater support so offered a monetary incentive to drum up more support. The result? The % of the population that supported living near the facility decreased dramatically. Why? 1) It's hypothesized that more people were motivated by patriotism and doing the right thing for their country which took a back seat when a monetary incentive was introduced. Maybe you're more willing to accept a potentially bad outcome if you know it's for the good of your country versus if you were simply paid $100 to do so. 2) It introduces the potential for trying to "game" the system. Obviously the gov't wanted more support than 60%, so maybe they'll offer MORE money if you withhold your support on the first offer (or first few offers). Either way, it's not as simple as saying "pay the people and you'll get more people to do it". In this example, I'll be getting the vaccine because I feel it is the right thing to do and not because I'm scared of having coronavirus (probably already had it TBH given how many people I know have). Ultimately, that is a stronger incentive for me than if the government offered to pay me $50 or $100 to do so.

Yes, that would be the case. But then, because one dollar is now worth 50 cents, they need to double their earnings to stay even. How do they do that? By doubling their assets, they need a lot of additional capital for that. So, it's economically way more beneficiary to have an asset-light business that needs a lot less capital to double their earnings. Wouldn't operating leverage on rising prices make 2x earnings a low bar when their revenues are also doubling?

Nothing trillions in direct payments can't fix- at least temporarily

F*cking hilarious. The reversal of the ticket in the reverse card, and shaking the 8-ball 4 times to get the answer he wanted, is amazing! I know he's having fun with this, but I also have to wonder if this is what he did with GME

There were winners and losers in the 1970s. I've heard my father commenting many times about how that period of inflation rapidly paid off the house and brought the family a higher standard of living. His pay rose with inflation. Yes, it's great for people with debt, but horrible for people living on fixed incomes or cash savings. Hence the boomer retirement plan of buy the biggest house you can mortgage then downsize when its time to retire. I mean this is the (shitty) retirement plan for the vast majority of Americans and people in many other countries. Home ownership is a cult and the federal government welcomes one into the cult with a massively subsidized fully prepayable 30 year fixed rate mortgage at an (almost) negative and fixed real rate of interest. Sometimes it feels like “everyone” owns a bunch of stocks but when you look at the statistics, vast majority of people who have any wealth at all have huge portion tied up in levered, illiquid, home equity. Outside the extremes, these people want moderate inflation, no? With mid 60’s percent of the US owning a home and the bulk of the country’s decision makers having a good bit of wealth in home equity, who wants deflation other than some Austrians and people who read too much Jim Grant? I don't think most people want deflation - rather, they want stability and it's unclear the government can provide that via central planning the 2010-2019 notwithstanding. Inflation is just a super regressive tax - mildly bothersome to the rich (and potentially a benefit) and massively more problematic for the poor and lower middle class whose wages don't keep up and who don't own investments to appreciate in value. As the inflation rate creeps higher, so too the percentage of the population negatively impacted by it.

Yea. I generally agree. I don't know 100% for certain myself what happened, but there are way simpler explanations that I think make more sense than this one. Robinhood and others had to stop trading in the names because with all of the volume being traded (multiples of the total shares outstanding on some days), the settlements process was getting f'd and there was the real likelihood of cascading settlement failures and shares not being delivered. Not only that, but brokers are often fronting that cash for new deposits so you can trade immediately or fronting you the cash from sales so you can trade immediately. So you have settlement issues with the same shares being bought/sold multiple times a day, but each transaction itself requiring a t+2 settlement and the delivery of the shares for it to work. A single failure to deliver could screw a dozen transactions in the daisy chain that followed AND you have under-capitalized brokers (like RH) who've fronted all this cash from sales proceeds and new deposits on trades that now appear unlikely to settle/receive the shares in exchange for that cash. Add to all of that the fact that someone was going to eat the billions in losses from the options sales and a stock that is moving from $150 to $350 back to $150 in a span of 20 minutes and you have a powder keg begging to explode and take some important pieces of the financial system with it. Definitely seems like it just needed to slow down some for the antiquated system to catch to all the trade activity and delivery of shares. Just my take though - I guess their could be guys actively plotting behind the scenes to do illegal stuff to scalp retail reddit crowd, but I just think there are far more straightforward answers that seem more plausible. TL;DR - reddit is just making up stories to make themselves feel better for ending up as bag holders in a collapse that we all knew was coming

https://en.wikipedia.org/wiki/Straw_man You can't fix stupid. Plenty of people lost cash money to Nigerian princes over email. Doesn't mean cash is bad.