TwoCitiesCapital

Never mind. FML

I'd say moving to slightly negative on a YTD basis does nothing for how expensive the U.S. market is When earnings are growing, balance sheets are in good order, and you have a stab at top notch companies it surely does. It's not like you can go to Turkey and find yourself HHC. If you're talking about just plain "cheap" investments... sure, look elsewhere. If you want high quality businesses/brands, the US is quite reasonable now compared to prior years... Earnings grow until they don't. I'm looking ahead. The tax cuts gave the U.S and extra boost, but we're likely at peak levels of profitability here. The next 2-3 years will be significantly harder for the U.S. companies to continue profit growth - especially if the USD keeps rising. Add to that the rising interest costs as record amounts of debt are rolled at higher rates, and less of actually being qualified to deduct against profits and forward profit growth becomes difficult. Then again, we went through and incredibly long earnings recession back in 2015 and no one cared so....maybe they won't this time either.

I'd say moving to slightly negative on a YTD basis does nothing for how expensive the U.S. market is Will also add that I get markets are bifurcated at the moment, but still think the U.S. has a ways to go for good value to be readily found

I'd say moving to slightly negative on a YTD basis does nothing for how expensive the U.S. market is

Betting with my money that's it's FCAU.

a big if, but if something materially good is coming after the elections or new year via administrative action, it's likely to be leaked often in advance to limit the actual price move on the day of official announcement when most of the news stories are written, given the HF and berkowitz narrative. so far there's 1. would need multiple more to have credibility imo. I don't disagree with you, but hoping that a judge will agree with you is a higher burden and one that I don't think is going to get met.

Do we know how accurate this is, or how credible the source is? Unless Mnuchin has said this very recently, I missed it. Or is it just being extrapolated from the privatization comments? not very credible imo unless the story appears in multiple outlets. (or hardincap is impressed). seems to me the only outlets that care about this are Bloomberg and specialized housing finance and securitization rags. and WSJ...after it happens a big if, but if something materially good is coming after the elections or new year via administrative action, it's likely to be leaked often in advance to limit the actual price move on the day of official announcement when most of the news stories are written, given the HF and berkowitz narrative. so far there's 1. would need multiple more to have credibility imo. Both the marginal investor and the marginal journalist are not impressed yet... it's tough to know. the demand pool is somewhat limited and there's likely a lot of forced supply from fairholme and other liquidating hedge funds like highfields. but I do believe we'll see multiple more stories coming out if the asset backed alert story has any validity. Speaking of stories of dubious validity - care to share the sources you have on all these hedge funds liquidating their holdings? Also I never heard back from my prior response! :( I generally try to limit posts about 2008 and subjective views such as loan loss reserve sufficiency. it doesn't seem too relevant at this point, and it's hard or impossible to prove. regarding highfields (a plaintiff), they publicly announced that the fund is closing. and educated guessing on fairholme -- they had large redemptions before, their relative performance has worsened, and so generally in this industry redemptions continue. It's entirely relevant because this mess would never have existed if they didn't come in manipulating the loss amounts and the accounting. The upshot is that the entire thing was a lie from day 0. The problem is that hindsight is 20/20. Was the Treasury/FHA overly conservative with their write down? Absolutely. But that only became clear AFTER the Fed and government took unprecedented actions to arrest a declining economy and a few years of a recovery after that. Is any judge going to fault them for that conservativeness? Unlikely. The crux of the problem is that AFTER the writedowns, it became apparent they were overly conservative and that shareholders were going to get paid on the reversal. The government then unilaterally altered it's contractual agreement to steal all of those profits and all future profits. The economic environment doesn't give them cover for the latter decision. Nor does it require the benefits of hindsight to have known the companies were in the brink of massive profitability giving them the ability to float the 10% dividend. It's entirely unjustifiable and an easier case to make than are the original accounting assumptions.

I too am looking to add here. Unfortunately, most things in my portfolio are in a similar spot. I'll either need to get a good bid on some of my more illiquid holdings OR need something to pop so I can take profits and roll them back into Fairfax. Anything sub-$500 USD seems like a great deal given the increasing earnings power with every rate hike.

Yes this COULD happen, but seeing as that is never how we've gotten to low decade returns in the past suggests that it's unlikely going forward. It just doesn't jive with the human psyche - we are either overly optimistic or overly pessimistic. Very rarely are we "just-right" or "just easing back" for a decade to get the require environment to support consistent 2-3% annual returns. More likely you get a big top and then a big bust. January looked like a blow-off top to me - 10% in a single month for U.S. and International stocks?!?!? The only thing that has had me questioning that was the fact we made new highs after that. I'm not all that well versed in the rules of technical analysis, but I wouldn't have expected us to slowly grind higher to new highs like we did if January was peak-euphoria. Not saying we haven't already seen the top - just that I'm inclined to believe January was "really" it while trying to remain somewhat skeptical of that since markets don't see to agree with me.

The outcome doesn't speak to the ethics or the appropriateness of the approach. Buy for the clients first. Sell for the clients first. Do your PA later. In some instances clients will do better. In some instances clients will do worse. The goal isn't to make sure clients are guaranteed the best outcome in every case - the goal is to make sure the conflict is eliminated which is done IF the fund's buys/sells are executed first.

Debt is inflationary at the start and deflationary at the end. What we've witnessed is the inflationary part as the education system absorbed tons of debt. Same as with housing in 2004-2006. It's not technically "debt" in the health system, but insurance works the same way. Provides monetary inflow into the system at a greater rate than would otherwise exist at that point in time. Inflationary at the front end, deflationary at the back end when society has to pay off the burden that has accumulated.

I've decided to dip my toes in here. It diversifies my major EM exposure and it has a clear track record. Still not ecstatic about the fee structure, but one does deserve to get paid for their talent... Small holding at the moment - ~0.5% but will likely be rolling other profits into it if it stays near current levels as other things run.

A car salesman makes his living selling cars. Is he really supposed to tell you that you can't afford it? That the car is inferior to a competing product? Why are mortgage brokers, real estate agents, etc different. I've spent a lot of time around these types of people. If these are the folks we are relying on the responsibly guide the country, we're screwed... To the point made prior, there are way too many kids that go to college simply to have a social life and avoid starting a career. This I believe is the crux of many of the liberal arts majors. I mean it is known, at least I certainly did, if you want to make decent money, don't be an x,y, or z major. Its part of the stupidity and selfishness that people choose to do so anyway. And spare me the do what makes you happy/ what you are passionate about nonsense. I am passionate about hockey cards. If I decided at 19 to open a sports card and memorabilia business I'd be a moron... +1 I was in college during 2008/2009. Had a ton of friends there on full-ride scholarships with me who chose to give them up because they just didn't want to put in the work or didn't think the classes they were forced to take for the scholarship were necessary for their major. Out of the 6 of us who lived together Freshman year, all had academic full rides but only two of us graduated with them. The others gave them up because they didn't want to do the work and one of us never graduated at all. Any debt they have today is a product of their decision to drop the scholarship. When living in NYC, I encountered people who had taken on six-figure student loans to major in education! Everyone knows education doesn't pay. This is the fault of the student - I can guarantee there were plenty of cheaper options available, but they just HAD to go to that small, private university that they'd dreamed of since their childhood. The debt they have today is a product of their decision. I now know a social worker in the mid-West who borrowed ~75k to graduate with a degree in social work - another profession that doesn't pay. At least she can have the loan forgiven after 10 years - oh wait, she just quit that job for another where loan forgiveness is not an option and the new job pays less. This was her decision - not an evil banker or some predatory student loan lender. The options for these people is to either 1) get realistic about how much you want to make and change your major OR 2) get realistic about price comparing educational options so you don't spend a fortune to get a low paying job OR 3) stop b*tching about not being able to afford things when you chose your major, your career, and the price of your school. It's time for people to own up to their decisions and accept responsibility for them. And I think we all know at this point that it wasn't just the bankers/ratings companies/mortgage insurers who were making terrible decisions in the mortage crisis. It was also the consumers who took mortgages they could barely afford knowing the prices could rise with interest rates. It was the people who quit their day jobs to speculate in home-flipping because it was easy money. It was the Federal Reserve who allowed interest rates to stay low enough, for long enough, to draw in the suckers on both sides to make it work. It was the government who pressured banks into making loans to unqualified borrowers so more people could achieve the dream of home-ownership. It was the financial markets for levering that whole mess up many times over. There was A LOT of responsibility to be shared in the 2008 crisis - not just one group of people.

I'm no expert on the crisis, but I'd also add that in the last EM "crisis" that we saw, 2015/2016, countries were less inclined to use reserves and allowed currencies to free-float and used policy tools like interest rates to address inflation. Having free floating currencies and using policy tools like interest rates seem like it opens up the number of possible "positive" outcomes that avoids a crisis. Free floating currencies are counter cyclical. Sure it makes dollar denominated debt of some companies/governments harder to repay, but it also makes export based companies more competitive on price and many EM economies are exports based. The net-effect, inclusive of second and third order consequences is hard to predict, but I'm generally in the camp that EM is better positioned to handle this kind of crisis now and free floating currencies ease a lot of the pressures encountered by trying to defend fixed exchange pegs.

Sberbank Gazprom Fiat/Chrysler Fannie/Freddie preferreds

The date on the Moelis comment is August 1. If MBA was going to speak out against it, we would have heard it by now. That further drives the point home that MBA isn't balking at the Moelis plan. Thank you. I'm not saying the two scenarios similar enough to bet on the outcome, but when the two sides stopped being at each other's throats publicly was the tell that a few days later a settlement had been reached in the MBIA case and the equity spiked.

Watt is really pushing the limits of that 4617(f) clause... :P ON THE POWERS OF THE AGENCY Section 1.2 Special (super)Powers 1.2.1 "A Conservator or Receiver may not engage in acts of sexual abuse". Watt's reading: I may not. But I can! Couldn't have happened to a nicer guy.... Lol

I worked at Bridgewater at the start of my career. Was placed there be a recruiter.

Not all of the businesses there are run by fascist dictators nor does Putin have a sphere of influence in every company. Furher, as bad as I think Putin is, has he really done anything that America hasn't? He annexed Crimea. The U.S. invaded the Middle East, supposedly, for weapons of mass destruction that were never found and destabilized an entire region in the name of "freedom" while killing more innocent civilians in their invasions and the ensuing wars than those evil dictators ever did. Further, we do unsanctioned air strikes in sovereign airspace, often times without the permission of the country we're operating in, which would be seen as a declaration of war if any other nation tried it. He meddled in the U.S. elections. The U.S. has meddled in dozens of elections globally and forcibly removes dictators it doesn't like, at will, while supporting other families/governments that are just as terrible but give us oil. Further, tapes revealed that the U.S. was meddling in the Ukranian election that resulted in the pro-NATO candidate winning which prompted Russia to act since "enemies" were now on it's border. I don't support Putin, but it would be hypocritical of me to say I won't invest in Russia b/c of Putin if I'm willing to invest in the U.S. despite it's "foreign policy". That's a false equivalence. Not to turn this into a political debate, so I'll only respond once to check each point and leave it there. The stated reason for war in Iraq: "To remove a regime that developed and used weapons of mass destruction, that harbored and supported terrorists, committed outrageous human rights abuses, and defied the just demands of the United Nations and the world" It has since been shown the "evidence" of WMDs was flimsy - supported by the fact that we never found them despite having troops on the ground for years. Did Iraq harbor and support terrorists? Probably. So have many allies of the U.S. in the middle east (Saudi Arabia for instance). What makes Iraq any different? As far as human rights abuses, it's estimated that there were 155,923 – 174,355 CIVILIAN casualties from the Iraq conflict. Obvioulsy, this doesn't include deaths of soldiers on either side. It also doesn't include the figures from the power vacuum we left in our wake that has led to strengthening influence of groups like ISIS are a direct result from the destabilization of the area. Was Saddam bad? Absolutely. Was it worth have 175k+ civilian casualties, hundreds of billions of dollars in wasted resources in an endless war, and destabilizing the entire region to get him out of office? I would probably argue that it was not. Is the world safer? I think the evidence has suggested otherwise. Russia attacked Crimea to secure an important military asset - Russia's only warm-water naval base. It invaded Ukraine in response to U.S. representatives meddling in the Ukranian election in an attempt to tip the scales in favor of a pro-NATO candidate - likely in a bid to further support the construction of the . The pro-NATO candidate won and the likelihood of a NATO/U.S. controlled missile "defense" system and NATO deployments being installed in a neighboring country was a clear and present danger to Russia. So they did what they could - invaded Ukraine. It does not appear to me that Putin is acting out some colonial wet dream. It seems to me he is responding to provocation. How would we feel if China and/or Russia started deploying armed soldiers and missiles and defense systems in Canada/Mexico? Something like this happened once - The Cuban Missile crisis. How come we have an entire section in history dedicated to Russia stockpiling missiles in Cuba, and the war that almost erupted because of it, but have no appreciation for the U.S. doing something similar in Ukraine and pretend its simply because Russia is evil that they invaded... The U.S. supports whatever forms of government that best suits it at the time. For instance, we are fine with the government in Saudi Arabia at the moment. I'd almost argue the main reason we prefer democracies in other countries is because it makes it easier to influence the ensuing elections to our needs - but maybe that's just me being overly cynical. As for chemical weapons, it's hard for me to say whether or not I believe Assad or the rebels set them off. Keep in mind that several of the rebel groups we've armed, trained, and fought alongside in Syria are sympathetic to ISIS and are the same people/groups we're fighting and killing in other countries like Iraq. Both the rebels and Assad have the capacity to harm civilians for gain, but only one of them stood to gain from the U.S. involvement following the chemical attacks -- the rebels. Who actually used the weapons? I can't say, but I don't think its as simple as blaming Assad because he's a terrible person or because that's what the U.S. government told us. The U.S. DOES do that. We've assassinated and removed WORLD LEADERS who were a threat to us - see the war in Iraq discussion above. We've even gone so far to assassinate U.S. citizens suspected of terrorist ties without a trial - in direct conflict with the constitution the President is sworn to uphold. Maybe it's not as bad as arresting and killing domestic political opponents yet, but we are not innocent of fighting wars over the a person we don't like sitting in a seat of power or killing U.S. citizens that were deemed to be a potential threats. I addressed the assassinations above, but keep in mind that we invaded a sovereign nations airspace to do it. Not a big deal? Let's see if we'd allow Pakistan to deploy military helicopters filled with elite soldiers in the U.S. under the cover of night or if we'd feel that was an act of war. As for journalists, they are not currently be actively killed by the U.S. gov't, but we do have a President who has labeled the media the "enemy" and has much to say about the "fake news." They don't have to be the equally culpable to be similar enough to draw comparison. If people have moral reasons for not investing in Russia, I'm surprised they're able to overlook them to invest in the U.S. who similarly meddles in global elections, invades sovereign countries, supports evil dictators, and assassinates political threats. We may not be equally as bad, but we do a lot of the same terrible things that people cite as reasons for hating Russia while holding us up to be the good guys. I'll also concede it gives us a huge military advantage over most, if not all, other nations and may not be done for altruistic means. What about the leverage the militaristic advantage gives us? I'd actually argue that globalization is likely the reason we've not had a global war. Historically, people don't fight with major trading partners. Globalization has allowed for countries to have unprecedented economic impact on each other which, IMO, is more likely to prevent wars. Anyways, I'm happy that people will overlook their morals to invest in the U.S. instead of Russia. This faux moralism is what is allowing me to profit from the opportunity in relative values between the two. I'll agree with this to some extent. Russia will never be able to get the multiples other European nations get until it cleans up it's governance, but corporate governance in the U.S. is far from perfect. See the FNMA thread in General Discussion for a refresher in the U.S. being able to steal tens of billions with impunity while courts simply say "yes, the gov't can do what it wants". Hardly the "checks and balances" that "protect shareholders rights" that people seem to believe exist here.

Not all of the businesses there are run by fascist dictators nor does Putin have a sphere of influence in every company. Furher, as bad as I think Putin is, has he really done anything that America hasn't? He annexed Crimea. The U.S. invaded the Middle East, supposedly, for weapons of mass destruction that were never found and destabilized an entire region in the name of "freedom" while killing more innocent civilians in their invasions and the ensuing wars than those evil dictators ever did. Further, we do unsanctioned air strikes in sovereign airspace, often times without the permission of the country we're operating in, which would be seen as a declaration of war if any other nation tried it. He meddled in the U.S. elections. The U.S. has meddled in dozens of elections globally and forcibly removes dictators it doesn't like, at will, while supporting other families/governments that are just as terrible but give us oil. Further, tapes revealed that the U.S. was meddling in the Ukranian election that resulted in the pro-NATO candidate winning which prompted Russia to act since "enemies" were now on it's border. I don't support Putin, but it would be hypocritical of me to say I won't invest in Russia b/c of Putin if I'm willing to invest in the U.S. despite it's "foreign policy".

Selling Fairfax to purchase others on weakness: 1) Altius 2) Santander and subs 3) More Brazil exposure

Not only has he been right, more than he's been wrong, he's willing to admit when he's wrong and change his views as markets progress. I've never seen him married to a view which is admirable.

Eh, keep in mind the man saying it missed the last recession even though he was the pre-eminent expert on the Depression and banking crises ::)

Loyal up to a point. I'll probably always have a checking account/insurance through USAA. Their customer experience is unparalleled. This also drives me to check them first for everything I need. That being said, they weren't competitive with my mortgage loan so I took a mortgage elsewhere. But still checked them first and still used their real estate network to locate a broker to assist with the search. Same on the credit card front. I'll always have an AmEx that I is as my "primary" card. Their customer experience is unparalleled. But I do play the credit card game and have 4-5 other cards that I cycle through depending on what's being purchased and when to maximize my points. TL;DR. USAA and AmEx have a competitive advantage over the others while they remain competitive. But if there's better opportunities, I'll goes with the better opportunity in that limited instance. Edit: sorry for typos. On my phone at the moment

Crazy thing is, you'd think they could have built this in house for far less than $1B. When you lose perspective of consumer benefit, and focus on only $ and cents, you can overlook ideas that consumers will jump at in favor of the old-fashioned way of doing things. Or maybe it was just another instance of corporate bureaucracy preventing people below from implementing? Exactly. I guess the lesson is that most "dull" razor blades are actually still pretty structurally sound and just need a little bit of help. I did this for the longest time and can also confirm it works. But eventually I just moved to a single blade safety razor. Maybe not as cheap as re-sharpening my 4-blade "disposable" razor every few days, but certainly less and still incredibly cost effective compares to the disposable razors that even Dollar Shave club offers.