Druckenmiller and Trump were right

[John Hjorth]

My own view: Jerome Powell is a fucking imbecile!

 

I hope that no one here will ever talk again about income equality!

 

Cardboard

 

I couldn't help but think of the hilarity that was ensuing all but a month ago and the panic that took place. Yes even here, where you'd think people had better temperament and ability to ignore the noise, chaos ensued.

 

An entire year's worth of returns were there for the taking; to be had in a couple weeks, if one just read the situation properly.

 

Yes Greg, - Easy to say, hard to do [<- back then, about three weeks ago] ... Till "next time" .. - where Cardboard may end up being right - ... "Next time" may start tomorrow next week, perhaps not.

[SHDL]

I couldn't help but think of the hilarity that was ensuing all but a month ago and the panic that took place. Yes even here, where you'd think people had better temperament and ability to ignore the noise, chaos ensued.

 

An entire year's worth of returns were there for the taking; to be had in a couple weeks, if one just read the situation properly.

 

Yup.  As far as negative sentiment indicators go, chaos on CoBF is a pretty powerful one.  Way more informative than any amount of "panic" on CNBC.

[Gregmal]

IDK, I say it with the same common sense conviction I had a month ago; the sky doesn't fall for no reason. So when something like that looks like its occurring you just go to the information available and in that case nothing changed. Easy as that.

[Spekulatius]

I couldn't help but think of the hilarity that was ensuing all but a month ago and the panic that took place. Yes even here, where you'd think people had better temperament and ability to ignore the noise, chaos ensued.

 

An entire year's worth of returns were there for the taking; to be had in a couple weeks, if one just read the situation properly.

 

I felt like most people here kept a cool head. There were certainly great opportunities to make money. I unfortunately ran out of cash too early. I sort of expect the volatility to stay so I am cashing in most of the stocks that bounced hard and hope for a repeat of some sorts. Most of the issues that caused the crash are still there.

[John Hjorth]

Thanks for elaborating here, Greg,

 

Your last post here puts more perspective on your line of thinking, at least to me. Thank you. The point here historically also being that what Cardboard has posted earlier many times is, that no FED boss has got a situation, similar to what we're in right now, right - based on visible judgements & decisions executed. [<- You may disagree with me on that assessment, though.]

 

- - - o 0 o - - -

 

Easy to say, that the sentiment has changed at the voting machine [for now].

[Gregmal]

I think it all just comes back to focusing on quality stuff. Spekulatius if I remember, was positive on FDX. I don't own it but had the same views. Not too long ago its trading at what? 14x? Nothing really changes, sentiment shifts, fed hikes 25bp. Uhm, now its a 9x??? Sign me up! Either I get it at a depressed multiple and keep buying more. Or, something statistically extraordinary has to happen, IE earnings need to contract like 35%, to justify the current price... These sort of things to me should be common sense for people buying individual names. Myself, I'm not even a huge BRK fanboy, but banks fell like 30%+(BRK is a very safe way to play high quality financials), BRK is a smart capital allocator, insider buying below $200 plus BRK buyback, low PE/P/B in historical context. Do I need to know anything else to pull the trigger at $195???

[Cardboard]

Do you think that I stop looking for value, sell everything, because I believe that the Fed is making a mistake?

 

They basically admitted as such and changed their tune already which is a very big reason why the market has rebounded. These two forecasted rate hikes in 2019 will now be highly dependent on how economic data shakes-up. They are no longer clear either as to what is a neutral rate...

 

Regarding the market, I would not quite claim victory yet, nor for the economy. Many companies have warned in various sectors. Economic data from most countries seems weak. A slowdown or less growth seems like a given.

 

We now have a celebration due to China trade and relaxation of interest rate hikes. Brexit is still unresolved, lots of debt out there, government shutdown is getting long here. So is this just a deadcat bounce? Sell now to repeat again?

 

So what do you recommend here genius?

 

Cardboard

[Gregmal]

Same thing as before...

 

When stocks are cheap, ignore the noise.

[Gregmal]

I personally find this whole thing to be hilarious. It's gotten so out of hand, and it's turned a lot of otherwise sensible people into clueless idiots. The stories and headlines, the emotional crap, the complete reversals in sentiment. Oh goodness. It's like everyone sits around bitching about valuations and begging for a pullbacks and then they get the most no brainer one possible and they don't know what to do with themselves...and these are just the people who call themselves investors!

 

-Nothing changes but a .25% rate hike. So what?

-The economy is still strong, but indeed shows potential signs of slowing a bit, so what?

-The Fed has ALREADY basically said they fucked up and will cater to the market, if you read between the lines. These guys were out giving interviews and trying to say the right things A DAY AFTER they raised rates and saw the reaction!

-The market turns the screws on Trump, I guarantee you we get a China deal next year; he needs good news.

-The biggest farce I see is people saying "one time boost from tax cuts". WTF do people come up with this stuff? The tax rates don't go back up next year! How in the world is it a "one time boost" when in perpetuity companies will be keeping 40% more of their profits? And oh yea, the "boost" we saw this year? Where, S&P has responded to this increase in corporate profitability by posting -10%!

-I've spoken to probably  a half dozen CEO's and CFO's over the past two weeks, and maybe it's just particular to the companies Im invested in, but NONE have seen any reason to be have a different outlook or expectation that you had 6 months ago.

 

Overall I think we just had a convergence of kind of one off events that tripped people out and caused contagious panic. First real year of widespread tax loss selling, no Santa rally on WS, massive fund liquidations and wind downs, minor softness in numbers plus super duper scary headlines and fear mongering. Fear that the Fed is going to crush the economy. People are just running with the crowds right now and have convinced themselves of something that doesn't exist. A stupid but true reality is once people started seeing turbulence, many likely just dumped shit and figured they'll pick back up after the holidays-on the institutional side there is definitely a lot of this type of stuff.

 

I will be buying next week because I believe once the big boys get back from holiday in January things should get back on track. This downturn if anything has just given well run companies the opportunity to suck up A TON of their own shares and spring load next years numbers. Which in any case shouldn't be bad, especially at these new valuations.

 

For example. I will be adding to MSG. If you can get to $5B on the Knicks, and add back the cash, you currently have a NEGATIVE EV! And then still have billions in other assets. There's plenty of others like this now. How does any of the shit all the pundits are "concerned" about all of a sudden effect my investments? It doesn't.... As such, I'm a buyer all the way down, screw the naysayers. There were people calling another 20% downside in the S&P when it hit 675 during the crisis. We are no where near a crisis, despite all the crazy things people are now saying that seem to be 100% reactionary to the market decline, and 0% based in what's really going on in the US.

 

"I skate to where the puck is going to be, not where it has been."

 

-Wayne Gretzky

[Spekulatius]

I think it all just comes back to focusing on quality stuff. Spekulatius if I remember, was positive on FDX. I don't own it but had the same views. Not too long ago its trading at what? 14x? Nothing really changes, sentiment shifts, fed hikes 25bp. Uhm, now its a 9x??? Sign me up! Either I get it at a depressed multiple and keep buying more. Or, something statistically extraordinary has to happen, IE earnings need to contract like 35%, to justify the current price... These sort of things to me should be common sense for people buying individual names. Myself, I'm not even a huge BRK fanboy, but banks fell like 30%+(BRK is a very safe way to play high quality financials), BRK is a smart capital allocator, insider buying below $200 plus BRK buyback, low PE/P/B in historical context. Do I need to know anything else to pull the trigger at $195???

 

I consider FDX a mistake. I did not really react to the indications (reorg, noise about trade etc) that there might be an earnings revision. So my cost based ended up too high, since I also ran out of funds when it got really cheap. I bought more,  it not enough, my cost based is still a bit underwater. I agree some downgrades were downward silly, I saw one report where the analyst reduced the target price from $240 to $160 or so, with the rational  that he now slapped an 11x multiple rather than a 14x multiple, due to a “murky near term outlook” or something like this, I like it at current prices and most likely will add in a correction.

 

GS went better and I sold my shares recently. I don’t really like the business all that much, but below tangible book value, it was just too cheap.

[SHDL]

When stocks are cheap, ignore the noise.

 

+1.

 

It’s also probably not a bad time to put (back) on some macro hedges (SPX puts and the like) if you’re so inclined. 

 

But generally speaking, the US is set up in a way that ensures that almost all bad macro events end up being temporary, so if you’re invested in high quality companies and your investment horizon is long enough it’s probably perfectly fine to ignore them.  Even if the trade negotiations with China go wrong and end up causing a huge recession, no big deal, it just means Trump will lost the election in 2020 and the tariffs will be taken down by his successor. 

[Gregmal]

When stocks are cheap, ignore the noise.

 

+1.

 

It’s also probably not a bad time to put (back) on some macro hedges (SPX puts and the like) if you’re so inclined. 

But generally speaking, the US is set up in a way that ensures that almost all bad macro events end up being temporary, so if you’re invested in high quality companies and your investment horizon is long enough it’s probably perfectly fine to ignore them.  Even if the trade negotiations with China go wrong and end up causing a huge recession, no big deal, it just means Trump will lost the election in 2020 and the tariffs will be taken down by his successor.

 

Agree with everything including the bold. Also like Spekulatius said above with GS. For a split second, you had things that were absurdly cheap. That typically corrects quickly. When it does, you rebalance. You basically got 10-20% moves in anything you could throw a dart at. The next 10% I don't think will be that quick or easy. But it will come.

[clutch]

Gregmal, for a guy who thinks posting investment returns online is like comparing a dick size, you sure like to boast about your past comments.  ;D

[Gregmal]

Gregmal, for a guy who thinks posting investment returns online is like comparing a dick size, you sure like to boast about your past comments.  ;D

 

Unless we're all going to present audited trading reports, then boasting of returns is useless. Comments can be verified though. So yea...

[DooDiligence]

We're all human.

 

Occasional collisions are unavoidable.