Xerxes Posted June 27, 2022 Posted June 27, 2022 10 hours ago, changegonnacome said: Mark’s/Oaktree,as you know, play in the credit markets…..there are different risk reward dynamics at play here vs. equities…..especially in this part of the cycle with clear impending IMO dangers to earnings. Creditors will still get paid if Apple’s earnings drop 20%, equity holders will have a different result. Goldman Says Signs Are Here of Belt-Tightening Impact to Profits https://www.bloomberg.com/news/articles/2022-06-26/goldman-says-signs-are-here-of-belt-tightening-impact-to-profits Howards is a debt investor. But his audience mostly consists of equity investor and I think he speaks mostly to the equity side when he gives interviews, unless when he is being explicit that he talking debt.
Xerxes Posted June 27, 2022 Posted June 27, 2022 9 hours ago, Gregmal said: Mr Marks, what do you think of the current 2+2 issue? Well, borat pause, it could be something centering on something in the area of 3-5, but if it breaks the other way, all bets are off. that is hilarious
CorpRaider Posted June 27, 2022 Posted June 27, 2022 (edited) 5 hours ago, modiva said: Obviously, it is hard to predict the bottom. However, let's look at the math of where the bottom might be. Assume S&P PE of 16 and earnings of 210 (estimates are lowered by 5%), S&P trades at 3360. It's ~14% drop from here. That's the likely bottom. If we argue that the interest rates will be low by historical standards by the time the FED is done raising rates, we can assume S&P PE of 18. So, S&P trades at 3780. Generally, things swing before normalizing, so the market might not bottom until S&P reaches 3500-3600 range. Assuming a 20x CAPE (trailing 10 year average S&P of 134.06), you're looking at about 2,681. Of course the CAPE (PE10) was more like 10x during the mid 70's to mid 80's (i.e., the last "inflationary regime"). Edited June 27, 2022 by CorpRaider
changegonnacome Posted June 27, 2022 Posted June 27, 2022 4 hours ago, Xerxes said: Howards is a debt investor. But his audience mostly consists of equity investor and I think he speaks mostly to the equity side when he gives interviews, unless when he is being explicit that he talking debt. From the article - “Today I am starting to behave aggressively,” the founder and co-chair of Oaktree Capital Management, said in an interview. In this particular instance I think he's talking about debt & what Oaktree is doing.....but maybe thats my bearish bias coming through. I saw something a couple of weeks ago from him and he referred to equities and was unusually clear on his bearish stance there. Regardless I dont let anyone else think for me
Dinar Posted June 27, 2022 Posted June 27, 2022 2 hours ago, CorpRaider said: Assuming a 20x CAPE (trailing 10 year average S&P of 134.06), you're looking at about 2,681. Of course the CAPE (PE10) was more like 10x during the mid 70's to mid 80's (i.e., the last "inflationary regime"). Why is the past a good guide to the future? You cannot consider CAPE on a historical basis without taking into account interest rates. Why should Class A real estate trade at 4% cap rate or 25x cash flow, (a forward measure) and equities at 20x average of the past decade?
Dinar Posted June 27, 2022 Posted June 27, 2022 7 hours ago, CorpRaider said: Yeah, ain't nobody got time for that. I finally un-subbed. It's fine, he sold out and retired a few years ago. I vote probably no on the bottom thing BTW. Time series price momentum is negative in all equity and bond markets AFAIK and CAPE (30) and Q are still high while inflation and rates are rising. Why is Tobin's Q a good measure of anything? If I spend a billion dollars to build a hotel in Sahara that will never have any customers, is it cheap at 0.1x Q? If you can buy a monopoly, like an airport, at Q =3, yet a 10% free cash flow yield, is it expensive? Tobin's q implies that there is a perfectly competitive market for any and every business, and economy as a whole. What makes you think that it is actually correct?
CorpRaider Posted June 27, 2022 Posted June 27, 2022 (edited) I mean if you are arguing against making big timing guesses based on these indicators, I agree with you. If for no other reason than I can't predict future interest rates. The more discrete answer is that these methods have been quantitatively valid in the past and there are good hypotheses as to why they will continue to be somewhat predictive in the future (backed by at least one Nobel). I just use Q as a confirmation for the CAPE signal. So, you're looking at the aggregate, smoothed, income statement and cross-checking that against the aggregate balance sheet (basically). I believe you can use Bogle's method (or AQR) too and get the same-ish answer. Edited June 27, 2022 by CorpRaider
SharperDingaan Posted June 28, 2022 Posted June 28, 2022 (edited) Ultimately, it is a game of trying to predict a bottom - with a bad set of tools. In almost all cases the tool assumes that the future will resemble the past, so when this this clearly isn't so ..... the tools fail. It is not the tool mechanics breaking down, it is the data that they are using. We have had continuous extraordinary CB involvement since the GR in 2007 - the last 15 years of the time series. So if this is a material portion of your historic recency weighted historic time series .... you are assuming similar extraordinary CB intervention going forward. You are ALSO assuming that the impact of changing technology is minimal. Hard to defend. So ..... now we have to do investment the 'old-fashioned' way, or how things were done before the 'quants' arrived. Sniff tests, focus on business fundamentals vs market, and not just on market comps and multiples, etc. Less 'formula', and more true 'value add'. Obviously, there is opportunity here. Sniff test. How is it that the analytical community STILL doesn't 'get' the changes going on in o/g, vehicle manufacturing (ICE to EV), food production (fertilizer), real estate, etc.? How is that retail increasingly seems to be getting this better than the analytical community? We know that Ukraine isn't producing surplus food anymore, that famines are inevitable, yet the analytical community is NOT talking up the fertilizer stocks? POT, etc. Obviously, something is very wrong ..... Opportunity !!! SD Edited June 28, 2022 by SharperDingaan
Gregmal Posted June 28, 2022 Posted June 28, 2022 20 minutes ago, SharperDingaan said: Ultimately, it is a game of trying to predict a bottom - with a bad set of tools. In almost all cases the tool assumes that the future will resemble the past, so when this this clearly isn't so ..... the tools fail. It is not the tool mechanics breaking down, it is the data that they are using. We have had continuous extraordinary CB involvement since the GR in 2007 - the last 15 years of the time series. So if this is a material portion of your historic recently weighted historic time series .... you are assuming similar extraordinary CB intervention going forward. You are ALSO assuming that the impact of changing technology is minimal. Hard to defend. So ..... now we have to do investment the 'old-fashioned' way, or how things were done before the 'quants' arrived. Sniff tests, focus on business fundamentals vs market just market comps and multiples, etc. Less 'formula', and more true 'value add'. Obviously, there is opportunity here. Sniff test. How is it that the analytical community STILL doesn't 'get' the changes going on in o/g, vehicle manufacturing (ICE to EV), food production (fertilizer), real estate, etc.? How is that retail increasingly seems to getting this better than the analytical community? We know that Ukraine isn't producing surplus food anymore, that famines are inevitable, yet the analytical community is NOT talking up the fertilizer stocks? POT, etc. Obviously, something is very wrong ..... Opportunity !!! SD It’s only perplexing on level 1. If you’ve been in the game long enough it’s just how the dinner table gets set. Same way a new investor hears a buyout rumor and thinks “interesting let’s get in”, whereas an experienced one thinks “somebody wants an exit”. Media and analysts are all minions that serve the real players.
Dinar Posted June 28, 2022 Posted June 28, 2022 2 hours ago, SharperDingaan said: Ultimately, it is a game of trying to predict a bottom - with a bad set of tools. In almost all cases the tool assumes that the future will resemble the past, so when this this clearly isn't so ..... the tools fail. It is not the tool mechanics breaking down, it is the data that they are using. We have had continuous extraordinary CB involvement since the GR in 2007 - the last 15 years of the time series. So if this is a material portion of your historic recency weighted historic time series .... you are assuming similar extraordinary CB intervention going forward. You are ALSO assuming that the impact of changing technology is minimal. Hard to defend. So ..... now we have to do investment the 'old-fashioned' way, or how things were done before the 'quants' arrived. Sniff tests, focus on business fundamentals vs market, and not just on market comps and multiples, etc. Less 'formula', and more true 'value add'. Obviously, there is opportunity here. Sniff test. How is it that the analytical community STILL doesn't 'get' the changes going on in o/g, vehicle manufacturing (ICE to EV), food production (fertilizer), real estate, etc.? How is that retail increasingly seems to be getting this better than the analytical community? We know that Ukraine isn't producing surplus food anymore, that famines are inevitable, yet the analytical community is NOT talking up the fertilizer stocks? POT, etc. Obviously, something is very wrong ..... Opportunity !!! SD SD, if I may ask, what fertilizer names do you find the most attractive or do you own them all? I am a tourist in the space, and I think that UAN seems very cheap. Thank you in advance.
Sweet Posted June 28, 2022 Posted June 28, 2022 (edited) I don't use technical analysis much, and I don't hold much stock in it's predictive power. But I keep an eye on it, because lots of trading around key areas is often a sign of a move coming. Right now price action looks terrible, there is a lot of action around lows. Buyers are finding ample sellers at these prices and the price is just flat - that's what gives the 'flag' appearance. Edited June 28, 2022 by Sweet
SharperDingaan Posted June 28, 2022 Posted June 28, 2022 4 hours ago, Dinar said: SD, if I may ask, what fertilizer names do you find the most attractive or do you own them all? I am a tourist in the space, and I think that UAN seems very cheap. Thank you in advance. No particular preference. NTR, GSP, WRX, KRN All on the TSX, all mining potash in Saskatchewan, all politically 'safe'. Each a boat on the expected rising tide, offering different takes. However, NTR also has an options market. Obviously, do your own DD. Within Canada, you might also want to include CP and CN. Simply because what Ukraine doesn't produce, the rest of the world will need to make up for. More grain volume than usual moving from silos/storage to ports, and it is already getting hard to find available rail transport (tankers/box cars etc.) for Fall. Good luck, SD
SharperDingaan Posted June 28, 2022 Posted June 28, 2022 (edited) 7 hours ago, Gregmal said: It’s only perplexing on level 1. If you’ve been in the game long enough it’s just how the dinner table gets set. Same way a new investor hears a buyout rumor and thinks “interesting let’s get in”, whereas an experienced one thinks “somebody wants an exit”. Media and analysts are all minions that serve the real players. Quite agree, the whole purpose of setting the table is to rig the game in your favor. So when you increasingly can't get the simple task right .. it speaks volumes to the fragility of your 'infrastructure'. Opportunity SD Edited June 28, 2022 by SharperDingaan
Dinar Posted June 28, 2022 Posted June 28, 2022 1 hour ago, SharperDingaan said: No particular preference. NTR, GSP, WRX, KRN All on the TSX, all mining potash in Saskatchewan, all politically 'safe'. Each a boat on the expected rising tide, offering different takes. However, NTR also has an options market. Obviously, do your own DD. Within Canada, you might also want to include CP and CN. Simply because what Ukraine doesn't produce, the rest of the world will need to make up for. More grain volume than usual moving from silos/storage to ports, and it is already getting hard to find available rail transport (tankers/box cars etc.) for Fall. Good luck, SD Thank you, I already own both CP & CN. So will add potash
KPO Posted June 28, 2022 Posted June 28, 2022 40 minutes ago, Dinar said: Thank you, I already own both CP & CN. So will add potash NTR & MOS are decent options here, but not home runs. I’ve bought a small amount of each as inflation hedges a while back, but more recently a lot of farmers are evidently reducing fertilizer this year rather than taking the unusually high prices the market offers. As a farmer this is a short term fix, which could lead to some pretty terrible humanitarian issues in the less affluent corners of the world in 6-12 months. These are buys if the war drags on another 12+ months, and will generate nice cash flow short term if it doesn’t as the supply constraints will continue for a period of time once the war is resolved.
Dinar Posted June 29, 2022 Posted June 29, 2022 3 hours ago, KPO said: NTR & MOS are decent options here, but not home runs. I’ve bought a small amount of each as inflation hedges a while back, but more recently a lot of farmers are evidently reducing fertilizer this year rather than taking the unusually high prices the market offers. As a farmer this is a short term fix, which could lead to some pretty terrible humanitarian issues in the less affluent corners of the world in 6-12 months. These are buys if the war drags on another 12+ months, and will generate nice cash flow short term if it doesn’t as the supply constraints will continue for a period of time once the war is resolved. What do you think about nitrogen? I had thought that this was very well positioned for long term given that Euro capacity is permanently out of the market.
Spekulatius Posted June 29, 2022 Posted June 29, 2022 Bottom is not in for $BBBY. -27% SSS. Gheez. https://finance.yahoo.com/news/bed-bath-beyond-ceo-removed-june-2022-122453161.html
changegonnacome Posted July 1, 2022 Posted July 1, 2022 I think he's spot on - earnings up next.....and its gonna get ugly
Parsad Posted July 1, 2022 Author Posted July 1, 2022 6 hours ago, changegonnacome said: I think he's spot on - earnings up next.....and its gonna get ugly Ahhhh! I think we're 2/3rds done already. At -20.6% we're already half way down/up this list: Do we really think things are going to be as bad as the Roosevelt Recession of 1937, the Great Depression or Financial Crisis? We'll probably drop a total of 30-35% (what I said originally) into the 3rd Q as 2nd Q earnings hurt and rates continue to rise, and then rebound through the 4th Q and into the middle of next year as the economy slows somewhat, supply chain issues decrease, inflation stabilizes and the administration starts to pander to voters as they start to make their run to the 2024 elections. Cheers! Cheers!
crs223 Posted July 1, 2022 Posted July 1, 2022 1 hour ago, Parsad said: When this downturn is added to that chart, what will the Reason end up being: A) Everything Bubble Popped B) Fed hiked to 1.75% C) WWIII D) Inflation Returns E) Everything is fine, not sure why you dumbasses are all freaked out F) [your idea here] I added (E) for @Gregmal
Gregmal Posted July 1, 2022 Posted July 1, 2022 (edited) I mean if we need reasons dont we have them? Covid bubble burst first. Then a war that is relevant to us; IE big bad Russia and people that look like us. Then inflation, I mean no one cared until a couple months ago even though the bulk of it already happened last year. Fed hiking a few % isnt gonna do it either but that's also an easy "reason" many cling to. The next 2 quarters I think will tell what the Fed impact is. Up til now though they haven't even really done anything. After that then its E. All the above are normal ebs and flows of the stock market. Except you had years of people doing crazy shit and then we gamified the stock market and sent people stimulus money to play so they had something to do while they were locked in their homes during covid; even the "smart" hedge fund/value investor guys gave in and bought tech just cuz. Just when it was clear the covid blowoff top thesis was playing out to the T. No one is talking about how many funds have blown up or are getting liquidated. But as Ive said before I think most would just be wise to let everyone else worry about "reasons" and just focus on investing. Worrying about what the Fed will "say" isnt investing. Being scared of "what if the stock market goes down!" isnt either. If somebody simply saying something (hedge fund guy, politician, stock promotor, etc) is enough to throw you off the horse you probably arent doing enough of your own work. And if simply being able to handle seeing stock market volatility is enough to scare you off, you definitely shouldn't be in the market. Buffett says this all the time, why is this one area the one where folks choose to ignore his investing advise? Edited July 1, 2022 by Gregmal
Sinbius Posted July 1, 2022 Posted July 1, 2022 (edited) I think, and I could be wrong, that most start getting worried not because of words or hypothesis about the future...but because top lines AND margins are getting squeezed...people are getting fired... It is not market stock volatility the "problem" that's a good thing...it is the fundamentals of several businesses and the fundamentals of the economy that are going south... Edited July 1, 2022 by Sinbius
changegonnacome Posted July 1, 2022 Posted July 1, 2022 3 hours ago, crs223 said: Everything Bubble Popped Yep a decade plus of ZIRP, spineless central bankers & reckless politicians running deficits made it so that every US asset class imaginable was pushed to the edge of reason (& a lot beyond)…….they thought what they were doing was OK…….in the same way a child eating a satchel full of Halloween candy does.
Gregmal Posted July 1, 2022 Posted July 1, 2022 15 minutes ago, Sinbius said: it is the fundamentals of several businesses and the fundamentals of the economy that are going south... Hasn’t this occurred a few times throughout the course of history? A few probably being an understatement. That’s just part of the cycle. Worrying about it after shits already gone back a healthy bit is one of the more counterproductive things I see people do. Last year seemed like such an obvious top, and it was happening in real time, something a few people discussed but most ignored. Same with rates rising. Same with inflation. fundamentals started going south then, like with Amazon and same with Netflix. Not worth even getting into the much shittier tech stuff. It was happening with the big ones too. So the imbedded lesson being that people say they worry about the fundamentals but in reality only seem to react to stock price movements.
Spekulatius Posted July 1, 2022 Posted July 1, 2022 Just a reminder that an interest rate of less than 2% has never caused a recession by itself. Even a raise buy 2-4% onkly causes a recession ~35% of the time. So i think the Fed can raise a bit from here and likely won't cause a recession. Now that does not mean that a recession does not occur for other reasons. technically we could be in one - because the 1 st quarter inflation adjusted GDP was down already - but that was because Q1+Q2 2021 were monster quarters with >6% GDP growth. So I guess it's a tough comps recession that most people won't really notice.
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