Is there a value rotation going on today?

[tytthus]

Back to the value stock rotation...here’s a brief take on the rotation happening during the tech bubble:

 

https://www.albertbridgecapital.com/post/if-growth-stocks-sell-off-will-they-bring-value-stocks-down-with-them

 

[Spekulatius]

1 hour ago, tytthus said:

Back to the value stock rotation...here’s a brief take on the rotation happening during the tech bubble:

 

https://www.albertbridgecapital.com/post/if-growth-stocks-sell-off-will-they-bring-value-stocks-down-with-them

 

Value stocks were later hit in 2001 because the economy was hit. There were multiple things going on resulting in quite a few bankruptcies. the telecom boom ended and took several telecom companies down into bankruptcy - Global Crossing, Williams communications, Montana telecom, Worldcom etc. then independent power producers started to collapse - Enron, Mirant, El Paso (they didn't collapse but were seriously impaired) and many others.

 

This all happened in 2001 before 9/11 and then 9/11 delivered a considerable blow to the economy and confidence but with credit getting tighter due to risking spreads, the impact of the Fed was limited.

 

The accounting issues lead to credit spreads going up which tend to hurt many indebted companies but also smaller caps with less access to credit.

 

In other words, I think the analogy to the dotcom bubble  shouldn't be overplayed. There were multiple causes for the stock market decline from 2000-2002. Some of them may also be a factor now, others likely not. History rhymes but it will never repeat itself.

 

 

 

[Gregmal]

I was reading some notes and previous dialogue from years back recently. One thing I found really amusing is that during the many panic periods during 2018 over.....drum rolls.....rates rising a few %......NVR declined from ~$3000 to like low 2000s on these fears. Today its pulled back to mid $5500s. So just a reminder to always sell your stocks on rate fears and that housing has to get slaughtered when the Fed talks about raising rates. Duh. 

Edited January 11, 2022 by Gregmal

[Dinar]

On 1/10/2022 at 4:17 PM, Blugolds11 said:

Correct, area specific as I said. In my area the studio on the low end $1300 and on the high end, over $1600. Even if you found a “cheap” studio and save a couple hundred a month, maybe an extra $2k/year in your pocket, does that go that far? 

 

I honestly don’t know anywhere that $15/hr is a fantastic wage, and I’m not being argumentative, an extra value meal at McDonalds is $12. 

 

It all comes down to viewpoint, there are those that game the system on both ends of the spectrum, isn’t much of this human nature? If someone quits a job to stay under the poverty threshold for assistance, is that much different than someone playing the game to lower their tax burden? Carried Interest loophole anyone? Both are technically legal, one is considered “smart use of the tax code” and the other a moral/ethical question? I guess I consider both to be different ways to play the same game. To be clear I don’t like either, but I think its easier to focus on the single mother with multiple kids by different fathers, smoking her menthols and sitting at home watching tick took all day on her new phone for $100k/year than the upper echelon on Wall Street playing the game with much larger numbers that is actually costing the avg joe more by them paying less. 

 

Some people work, some people play the game. There will always be those who are deadbeats and figure what’s the point, you cant change that. I pay more in taxes in a year than the majority of those I know personally gross on their W2. Sure those gaming the system sitting at home rub me the wrong way, but my point is that it should EQUALLY rub you the wrong way that there are also those doing IMO the same thing on the top end. Warren Buffett has acknowledged this. Does this article make you more or less perturbed than the single mother with 2 kids on gov benefits that could work:

 

https://www.nytimes.com/2021/12/28/business/tax-break-qualified-small-business-stock.html

 

 

So, it makes me very perturbed, but much less than the single mother for two main reasons: the single mother lives off me while these guys do not.  The more important reason is that the single mother propogates the cycle of poverty and underclass, she will not raise future Thomas Sowell or Chaim Grade, at best her kids will be unskilled workers, at worst future convicts and teenage mothers on welfare.

[ERICOPOLY]

1 hour ago, Dinar said:

The more important reason is that the single mother propogates the cycle of poverty and underclass, she will not raise future Thomas Sowell or Chaim Grade, at best her kids will be unskilled workers, at worst future convicts and teenage mothers on welfare.

 

Well, there's always an exception, so I'll throw out Alexander Hamilton.

[Blugolds11]

1 hour ago, Dinar said:

So, it makes me very perturbed, but much less than the single mother for two main reasons: the single mother lives off me while these guys do not.  The more important reason is that the single mother propogates the cycle of poverty and underclass, she will not raise future Thomas Sowell or Chaim Grade, at best her kids will be unskilled workers, at worst future convicts and teenage mothers on welfare.

 

With all due respect, I think this is a very narrow minded answer. I think its easy to target the single mother because that is what you are able to see regularly, in the aisle at the store, on the streets.."THEY" are the problem. And its easy to generalize, "they" are all the same! Lazy, uneducated, on drugs, deadbeats...have deadbeat kids right? You dont see the meetings with the legal teams and army of accountants finding loopholes etc.

 

If someone "takes" $5 out of your wallet ...or you enter a store and the cashier knowingly "owes" you $100 change but only gives you $50 back ...is it really much different? Are both not immoral? Lets say there is even a law that says the cashier can shortchange you? (And not every store, not the mom and pop's, just those doing over $XMM or $XB a year in sales).

 

I guess I dont differentiate. 

 

I am the product of a single mother, low income, college educated, she worked 3 jobs for low pay and a combined 14hrs a day between all three positions, one of which was as a librarian. I remember the subsidized housing full of other single mothers/kids, cops there often, the shitty silver cans of baked beans with a pig silhouette on the can, the block of garbage processed cheese food (Velveeta knock off). I can still see her pulling out the stamp book and tearing out the sheets at the cashier (back before the cards) I remember being at a gov office as a kid and they had a bin in the entry way full of food, walking over to it and back to my mom excitedly saying, "hey! there's free food over there!" and her telling me "No, honey that is for people worse than us". That blew my mind at that age, there were people worse than us?  I remember when we did not qualify for those programs any more, and although our standard of living didnt change much, she was proud to be on our own and was finally able to find a job decent enough to only need 1. To say reading was encouraged is an understatement. Many days as a kid were spent in a library while my mother was working "go pick out some books and read them in the corner" to save childcare costs. That fostered a love for reading and learning, eventually later in life, my interests led me to the writings of Warren Buffett, Lynch, Bogle, Fisher and it made all the difference. You are correct, I am no Thomas Sowell or Chaim Grade, but I've managed to stay out of prison (so far) and have done all right. 

 

I dated a girl who was a HS social worker, no kids, full time, graduate degree, awards for the work she did, school district paid her insultingly low, she lived very simply because she loved the work and felt she had found her calling, but qualified for programs if she would have applied. 

 

Not all those beneficiaries of the "system" are lazy or on drugs, to be fair perhaps I am an outlier, the statistics are clear, I probably should have ended up closer to the description you provided. Sometimes people just get dealt shitty cards, and not everyone has the same tools in their toolbox. To some extent everyone is a product of their environment, for some that leads to prison, for some that leads to C-suite positions with stock options. The majority of us are somewhere in between. 

 

To complete the analogy above, I would be mad if someone took $5 from my wallet, lets say the majority first ask me and I give it to them because they really do need it, its only $5 after all...but the cashier of the billion dollar company, not giving me $50 back because their lobbyists have influenced the tax code and they're legally allowed to F* me by a different set of rules...somehow rubs me a little more. Especially when I have to give back exact change or face prison time. 

 

. 

 

 

[Dinar]

1 hour ago, ERICOPOLY said:

 

Well, there's always an exception, so I'll throw out Alexander Hamilton.

You missed the reference, if memory serves me properly both Chaim Grade and Tomas Sowell were raised by widow and grandparents respectively.

 

[Dinar]

15 minutes ago, Blugolds11 said:

 

With all due respect, I think this is a very narrow minded answer. I think its easy to target the single mother because that is what you are able to see regularly, in the aisle at the store, on the streets.."THEY" are the problem. And its easy to generalize, "they" are all the same! Lazy, uneducated, on drugs, deadbeats...have deadbeat kids right? You dont see the meetings with the legal teams and army of accountants finding loopholes etc.

 

If someone "takes" $5 out of your wallet ...or you enter a store and the cashier knowingly "owes" you $100 change but only gives you $50 back ...is it really much different? Are both not immoral? Lets say there is even a law that says the cashier can shortchange you? (And not every store, not the mom and pop's, just those doing over $XMM or $XB a year in sales).

 

I guess I dont differentiate. 

 

I am the product of a single mother, low income, college educated, she worked 3 jobs for low pay and a combined 14hrs a day between all three positions, one of which was as a librarian. I remember the subsidized housing full of other single mothers/kids, cops there often, the shitty silver cans of baked beans with a pig silhouette on the can, the block of garbage processed cheese food (Velveeta knock off). I can still see her pulling out the stamp book and tearing out the sheets at the cashier (back before the cards) I remember being at a gov office as a kid and they had a bin in the entry way full of food, walking over to it and back to my mom excitedly saying, "hey! there's free food over there!" and her telling me "No, honey that is for people worse than us". That blew my mind at that age, there were people worse than us?  I remember when we did not qualify for those programs any more, and although our standard of living didnt change much, she was proud to be on our own and was finally able to find a job decent enough to only need 1. To say reading was encouraged is an understatement. Many days as a kid were spent in a library while my mother was working "go pick out some books and read them in the corner" to save childcare costs. That fostered a love for reading and learning, eventually later in life, my interests led me to the writings of Warren Buffett, Lynch, Bogle, Fisher and it made all the difference. You are correct, I am no Thomas Sowell or Chaim Grade, but I've managed to stay out of prison (so far) and have done all right. 

 

I dated a girl who was a HS social worker, no kids, full time, graduate degree, awards for the work she did, school district paid her insultingly low, she lived very simply because she loved the work and felt she had found her calling, but qualified for programs if she would have applied. 

 

Not all those beneficiaries of the "system" are lazy or on drugs, to be fair perhaps I am an outlier, the statistics are clear, I probably should have ended up closer to the description you provided. Sometimes people just get dealt shitty cards, and not everyone has the same tools in their toolbox. To some extent everyone is a product of their environment, for some that leads to prison, for some that leads to C-suite positions with stock options. The majority of us are somewhere in between. 

 

To complete the analogy above, I would be mad if someone took $5 from my wallet, lets say the majority first ask me and I give it to them because they really do need it, its only $5 after all...but the cashier of the billion dollar company, not giving me $50 back because their lobbyists have influenced the tax code and they're legally allowed to F* me by a different set of rules...somehow rubs me a little more. Especially when I have to give back exact change or face prison time. 

 

. 

 

 

I have the utmost respect for you and your mother, and I mean it most sincerely.  Both of my grandfathers were raised by a single parent, one during Russian Civil War, the other during World War II.  The problem is that for everyone like you and your mother, there are sadly dozens of outcomes that I described.  I would be delighted if 95% of people on welfare ended up like you and your mother, I am worried that it is more like 5%.  Look at the growth of underclass in the US, Daniel Patrick Moynahan wrote an essay on the topic 60 years ago - the collapse of the Negro/Black family.  This is my problem with the situation.  As for people exploiting tax loopholes, look, most government spending is wasted, so I understand people's reluctance to pay more than they owe.  

[thowed]

Please can we get back on topic to Value Rotation.

 

Discussion of single mothers not relevant - some do OK, some don't.   Just like some nuclear families do OK, some don't.  Think that's all we need.

[meiroy]

16 hours ago, Gregmal said:

I was reading some notes and previous dialogue from years back recently. One thing I found really amusing is that during the many panic periods during 2018 over.....drum rolls.....rates rising a few %......NVR declined from ~$3000 to like low 2000s on these fears. Today its pulled back to mid $5500s. So just a reminder to always sell your stocks on rate fears and that housing has to get slaughtered when the Fed talks about raising rates. Duh. 

 

2018 was about QT.  QT is sucking liquidity out of the system, the opposite of QE. It's not just about interest rates.

 

The current QE of the past two years has leaked into risky assets resulting in what we are seeing now. If the Fed starts QT we will most likely see liquidity draining from various risky assets.

 

This liquidity is why the market has been going up these past years and why buying the dip is a thing.

 

I'm not justifying any investment calls in 2018, just pointing out it's mostly about liquidity.

[james22]

On 1/10/2022 at 4:39 PM, Viking said:

We villify low income earners who game the system. And celebrate high income earners who game the system.

 

To paraphrase SowelI: because it isn't greedy to want to keep the money you have earned, but it is to want to take somebody else's money.

[DooDiligence]

8 hours ago, james22 said:

 

To paraphrase SowelI: because it isn't greedy to want to keep the money you have earned, but it is to want to take somebody else's money.

 

Conversely, could it not be considered greedy to be unwilling, and in fact hostile, to the idea of sharing wealth that will probably never see the light of day to begin with, while mindlessly grasping for more?

 

Judging the worthiness of recipients based on vague generalities may make it seem not.

 

Value rotation indeed.

[Dinar]

3 hours ago, DooDiligence said:

 

Conversely, could it not be considered greedy to be unwilling, and in fact hostile, to the idea of sharing wealth that will probably never see the light of day to begin with, while mindlessly grasping for more?

 

Judging the worthiness of recipients based on vague generalities may make it seem not.

 

Value rotation indeed.

Sharing implies voluntarily, hardly a fair statement when it comes to taxes.  Sharing implies that you give the money to those who you think deserve it, not those who feel entitled to it.

[Gregmal]

IDK but I give away money all the time. I often just do nice things for people financially because its 1) easy and 2) effective. However if you tell me I HAVE TO, most like I WONT. My money, my choice. At least thats the way it should be. 

[Gregmal]

Its similar to how I engage with my kids. If they show gratitude and genuine happiness, they get more. The second they become entitled and demanding, nothing. 

[rkbabang]

Exactly.  The reason private charity is superior to public assistance is that when people receive charity they are humble, grateful, and will try to get to the point when they no longer need it.  When people get money from government they are greedy, ungrateful, entitled, and will demand more (mostly by voting for people who will give them more).   Elon Musk, in his recent interview on the Lex Fridman Podcast, when asked something like "what advice would you give a young person just starting out?" said "Make it your goal in life to produce more than you consume."   Amen.   I think humans have a responsibility to themselves, their loved ones, and their societies to produce more than they consume over their lifetime.  This surplus is what makes modern society possible, it's what makes the investments in science, technology, and charity possible, it's what makes the growth in wealth, the decrease in poverty and hunger, the increase in living standards possible.  If you aren't at the very least pulling your own weight you should feel humble and a bit humiliated, certainly not entitled.

 

 

[james22]

Dean Alfange said it best 70 years ago:

 

I do not choose to be a common man. It is my right to be uncommon. I seek to develop whatever talents God gave me—not security. I do not wish to be a kept citizen, humbled and dulled by having the state look after me. I want to take the calculated risk; to dream and to build, to fail and to succeed. I refuse to barter incentive for a dole. I prefer the challenges of life to the guaranteed existence; the thrill of fulfillment to the stale calm of utopia. I will not trade freedom for beneficence nor my dignity for a handout. I will never cower before any earthly master nor bend to any threat. It is my heritage to stand erect, proud and unafraid; to think and act myself, enjoy the benefit of my creations and to face the world boldly and say – 'This, with God's help, I have done.' All this is what it means to be an American. 

[Castanza]

1 hour ago, rkbabang said:

Exactly.  The reason private charity is superior to public assistance is that when people receive charity they are humble, grateful, and will try to get to the point when they no longer need it.  When people get money from government they are greedy, ungrateful, entitled, and will demand more (mostly by voting for people who will give them more).   Elon Musk, in his recent interview on the Lex Fridman Podcast, when asked something like "what advice would you give a young person just starting out?" said "Make it your goal in life to produce more than you consume."   Amen.   I think humans have a responsibility to themselves, their loved ones, and their societies to produce more than they consume over their lifetime.  This surplus is what makes modern society possible, it's what makes the investments in science, technology, and charity possible, it's what makes the growth in wealth, the decrease in poverty and hunger, the increase in living standards possible.  If you aren't at the very least pulling your own weight you should feel humble and a bit humiliated, certainly not entitled.

 

 

 

Bingo

 

"The Transformation of charity into legal entitlement has produced donors without love and recipients without gratitude" - Justice Scalia
 

"What exactly is your fair share of something someone else earned?" - Sowell 

 

[DooDiligence]

8 hours ago, Dinar said:

Sharing implies voluntarily, hardly a fair statement when it comes to taxes.  Sharing implies that you give the money to those who you think deserve it, not those who feel entitled to it.

 

Perceptions are subjective. Sharing doesn't imply any such thing to me. You have to force selfish toddlers to share. Toddlers are also poor judges of merit.

 

Being magnanimous is great. Refusing to be generous simply because someone tells you it's required is petty and immature and negates any generosity you think you may possess.

 

Altruism requires no recognition and does not seek it. If you get pissed because someone doesn't bend a knee to your largess, well...

Edited January 13, 2022 by DooDiligence

[Dinar]

26 minutes ago, DooDiligence said:

 

Perceptions are subjective. Sharing doesn't imply any such thing to me. You have to force selfish toddlers to share. Toddlers are also poor judges of merit.

 

Being magnanimous is great. Refusing to be generous simply because someone tells you it's required is petty and immature and negates any generosity you think you may possess.

 

Altruism requires no recognition and does not seek it. If you get pissed because someone doesn't bend a knee to your largess, well...

You know nothing about me, yet you lecture me.  You compare adults to toddlers?  Children must be raised and taught how to behave, adults do not need yours or anyone's else instructions as to how to live their lives as long as they comply with the law.  I lived under socialism, and I know the consequences of no incentives to work, which come from high taxes and social spending.  There was literally no food in shops, forget about toilet paper.  Nobody had a car.  Put your money where you mouth is: tell everyone you hire: handyman, waitress at a restaurant who serves you, a barbet, et all, that you will impose a 30% tax on what you will pay them and give it to the poor.  Let's see where that gets you.  Generosity at a point of a gun is not generosity, it is robbery being enforced upon you.  If you disagree, please let know where I can meet you and how I can force you to donate to charities of my choice - since you believe that you can decide how much and to what causes I should donate, I feel I can dictate the same to you.  So until you give 100% of your money to my charity of choice - scholarship to send inner-city kids to Catholic schools, you are just another blow-hard who tells the rest of us how to behave while ignoring your own rules.  

[fareastwarriors]

On 1/8/2022 at 10:52 AM, flesh said:

The 2020's will benefit from the baby boomers, the richest, largest generation to die thus far passing on their wealth. Myself and a half dozen close friends

all stand to inherit 400k-2m this decade. In most cases it will be spent. In others, a greater % of it will be spent than the boomers who hold it now. This is a one time

benefit creating a new delta for successive generations. 

 

I'm waiting for my inheritance...  Oh wait, I still to support my parents.

Darn! 

[DooDiligence]

39 minutes ago, Dinar said:

You know nothing about me, yet you lecture me.  You compare adults to toddlers?  Children must be raised and taught how to behave, adults do not need yours or anyone's else instructions as to how to live their lives as long as they comply with the law.  I lived under socialism, and I know the consequences of no incentives to work, which come from high taxes and social spending.  There was literally no food in shops, forget about toilet paper.  Nobody had a car.  Put your money where you mouth is: tell everyone you hire: handyman, waitress at a restaurant who serves you, a barbet, et all, that you will impose a 30% tax on what you will pay them and give it to the poor.  Let's see where that gets you.  Generosity at a point of a gun is not generosity, it is robbery being enforced upon you.  If you disagree, please let know where I can meet you and how I can force you to donate to charities of my choice - since you believe that you can decide how much and to what causes I should donate, I feel I can dictate the same to you.  So until you give 100% of your money to my charity of choice - scholarship to send inner-city kids to Catholic schools, you are just another blow-hard who tells the rest of us how to behave while ignoring your own rules.  

 

LOLZERS, my mistake.

I'm sure you're a great guy.

A little thin skinned, but a prince nonetheless.

Edited January 14, 2022 by DooDiligence

[cubsfan]

39 minutes ago, Dinar said:

You know nothing about me, yet you lecture me.  You compare adults to toddlers?  Children must be raised and taught how to behave, adults do not need yours or anyone's else instructions as to how to live their lives as long as they comply with the law.  I lived under socialism, and I know the consequences of no incentives to work, which come from high taxes and social spending.  There was literally no food in shops, forget about toilet paper.  Nobody had a car.  Put your money where you mouth is: tell everyone you hire: handyman, waitress at a restaurant who serves you, a barbet, et all, that you will impose a 30% tax on what you will pay them and give it to the poor.  Let's see where that gets you.  Generosity at a point of a gun is not generosity, it is robbery being enforced upon you.  If you disagree, please let know where I can meet you and how I can force you to donate to charities of my choice - since you believe that you can decide how much and to what causes I should donate, I feel I can dictate the same to you.  So until you give 100% of your money to my charity of choice - scholarship to send inner-city kids to Catholic schools, you are just another blow-hard who tells the rest of us how to behave while ignoring your own rules.  

 

^^Dinar - don't waste your time trying to explain to a socialist why socialism is bad. Big Government is always their answer.

[DooDiligence]

8 minutes ago, cubsfan said:

 

^^Dinar - don't waste your time trying to explain to a socialist why socialism is bad. Big Government is always their answer.

 

Says the world class creator of straw men.