Is The Bottom Almost Here?

[changegonnacome]

50 minutes ago, SharperDingaan said:

However, given the uncertainty around future net income, as an investor - I'm only willing to pay a lower multiple for the grocers stock. Bias towards lower share prices.

 

Right - a grocer has essentially no pricing power........and the opposite of grocer is a monopolist.....you want to hold a monopolist in an inflationary period....you get underlying nominal net income expansion driven by inflation....but the monopolist gets to also imbed real price rises alongside the nominal uplift......one reason why......in the big tech fallout from last year.....the Phoenix from the flames in 2023 in terms of share price performance for sure but underlying results too.....its a certain sub-set of tech.....the ones we all know that have monopoly or duopoly like positions.

[SharperDingaan]

6 minutes ago, changegonnacome said:

 

Right - a grocer has essentially no pricing power........and the opposite of grocer is a monopolist.....you want to hold a monopolist in an inflationary period....you get underlying nominal net income expansion driven by inflation....but the monopolist gets to also imbed real price rises alongside the nominal uplift......one reason why......in the big tech fallout from last year.....the Phoenix from the flames in 2023 in terms of share price performance for sure but underlying results too.....its a certain sub-set of tech.....the ones we all know that have monopoly or duopoly like positions.

 

More like the grocer has pricing power, but the consumer can negate it by substituting with a cheaper product or lesser volume. The weekly $200 grocery spend remains at $200, but the shopping cart now has fewer items in it, and more 'house' brands.

 

SD

[changegonnacome]

9 minutes ago, SharperDingaan said:

More like the grocer has pricing power, but the consumer can negate it by substituting with a cheaper product or lesser volume. The weekly $200 grocery spend remains at $200, but the shopping cart now has fewer items in it, and more 'house' brands.

 

SD

 

Right pricing power to pass thru rising costs.....but underneath & capped by the industry wide 4% net margin problem that bedevils a perfectly competitive industry like the grocery biz......the customer underneath then, as you say, can change his/her unit volume & the product mix hurting the grocer.....leaving them no better off and certainly possibly worse off, in real terms not nominal terms, than when the whole inflationary period began.

[Gregmal]

And the math on a lower middle class family, who got how much in stimulus over the COVID saga?; let’s say making a combined pre tax $65k(so sub $40k a working person); factor in annual pay raises, assume a budget that is 110% of their non stimulus check after tax wage(IE getting by but slightly overspending), and then account for the annual inflation on that after tax budget to determine inflations “toll”….the argument is really that, well, they chose to spend their money? 
 

Like @dealraker and others have mentioned, seems so very much of this is not actually hardship driven by outside circumstance, but rather one’s own decisions. 

[Gregmal]

Shit almost always rhymes and often the same playbooks are carried out until they no longer work. Literally word for word the same bs logic and rationale that was used to defend absolutely asinine things being done during COVID….because “we must protect the most vulnerable and susceptible to hardship because they can’t fend for themselves”….and, as it turns out, drumroll, not unpredictably, if we haven’t already yet learned, that’s bullshit because those people are always going to end up in the same position regardless of what we do for them and at some point interfering with much more important and larger things that effect larger amounts of people who are actually capable is utter nonsense. Give ‘em more money and lock em away in their houses and tell em they don’t have to pay rent…they overspend like crazy. They run out of money and have to go back to work in the best job market they’ve ever seen and they bitch stuff is too expensive. We kill inflation by whacking some of their jobs and they’ll be right back at it asking for assistance. When will we learn?

[Dinar]

7 hours ago, Luca said:

I should have specified, of course we have millionaires that live paycheck to paycheck. What i am talking about is that 

1. 15% of the US population lives in poverty, this number didnt change since 1960 (bottom should see rising of living standards in a working capitalistic system)

2. Capital flows have been hugely distributed upwards since 1975 (https://www.rand.org/pubs/working_papers/WRA516-1.html)

Same counts for my homecountry germany btw, end of the 1980s the average DAX-30 Manager made 14x of the average worker, today it is 50x. 

 

These people are not as poor as someone in a Kenia Kibera Slum but the numbers do show that the average workers has been hugely disadvantaged compared to the capital the US generated over the last 50 years. 

 

 

You do realized that these statistics do not reflect reality.

 a) They do not take into account cash income - hundreds of thousands of people in NYC get cash income - doormen, nannies, handymen, hairdressers, waitresses, construction workers, porters, cleaning women, dog walkers, et all.  Friend's nanny gets USD 65K a year in cash, yet her official income is zero.  Millions and probably tens of millions of people in the US have very substantial cash incomes that never get reported, and mostly at the bottom of the official income distribution.

b) They do not take into account income redistribution policies - Medicaid, food stamps, welfare, section 8 housing, and so forth

c) Assuming 50 week a year job, and 40 hours per week, it implies that at 25th percentile, somebody makes $10 an hour.  Where in the US today are unskilled people paid $10 per hour?  There are certainly not 50 million jobs in the US that pay $10 per hour or less. 

 

Are there poor people in the US?  Absolutely.  You want to help them?  Create a good educational system and remove disincentive to work.  

[John Hjorth]

18 hours ago, Gregmal said:

Haha enjoy your weekend. But be forewarned, you are walking into the lions den tomorrow. Be prepared to get hammered by the inflation entrenched menu, which will almost certainly be ground zero for evidence of the wage price spirals crushing the economy. You will probably see hand written price increases on said menu as costs to get stickers or publish new ones have become too prohibitive for such establishments. And hold you hats when the bill comes and your tipping options begin at 18%. Tough times for those daring enough to go out and enjoy the luxury of pay 5-10x the cost of the food you could make yourself at home.

 

 

The really fascinating thing to think about the contents of some of the last posts in this topic from @Gregmal is that if the "the "general" consumer" [Please note the double / two layer "" here] actually changed economic behavior to rationality and frugality all around the world instantly and at the same time, it would  likely trigger a severe global recession and a lot of turmoil, - here, there and everywhere - globally.

Edited April 29, 2023 by John Hjorth

[dealraker]

56 minutes ago, Dinar said:

You do realized that these statistics do not reflect reality.

 a) They do not take into account cash income - hundreds of thousands of people in NYC get cash income - doormen, nannies, handymen, hairdressers, waitresses, construction workers, porters, cleaning women, dog walkers, et all.  Friend's nanny gets USD 65K a year in cash, yet her official income is zero.  Millions and probably tens of millions of people in the US have very substantial cash incomes that never get reported, and mostly at the bottom of the official income distribution.

b) They do not take into account income redistribution policies - Medicaid, food stamps, welfare, section 8 housing, and so forth

c) Assuming 50 week a year job, and 40 hours per week, it implies that at 25th percentile, somebody makes $10 an hour.  Where in the US today are unskilled people paid $10 per hour?  There are certainly not 50 million jobs in the US that pay $10 per hour or less. 

 

Are there poor people in the US?  Absolutely.  You want to help them?  Create a good educational system and remove disincentive to work.  

These type comments as to lack of incentive and that education will solve the problem are the norm but I'm not in the camp of believing them so much.   Human beings are complex and I am absolutely certain that a huge percentage simply can not perceive the longer run, saving for a rainy day is not within their model or culture, and so forth.  To some degree this lack of future focus or thinking has some very rational parts to it, at least through history it did.  The more settled and civilized the setting then there's more reason to live thinking longer term.  But it is a culture and developed model in my view, not some inate human characteristic.

 

I'm not talking about seasonal survival which surely was part of every culture, but years down the road thinking and planning.  I think you could have a conversation with many who are not planning well for the future and that conversation would be logical and you'd think "They get it...so why aren't they...?"   But to me human nature is for many to be impulsive, to want, to be active (and that includes going out or online to spend)...to simply do things.  Those you just had a logical conversation with?  They are likely not going to save money, or if they do they'll go invest for what's hot until it's not--- generally doing very poorly.

 

I have been interacting online for years and years now and I'll simply say that I have found about 25 people (most here) out of many thousands who actually buy stocks for the long run.  Yep, that's what I've found.  It seems most financial types online not only trade fast they all state they outperform the market which I guess could be true but it seems research says you got about a 5% change of that.  Financial types who save, according to what I've read, underperform the mutual funds they invest in by huge amounts on an annual basis which compounds into something unbelievably awful on a long term basis.  In and out....action!  BEAT THE MARKET the brochure or tv commercial says  -- is the mandate.

 

Not sure, at least to me, that there's alot of difference between the online obsession of beating the market short term (and SURELY posting about it) and what we are discussing here...that people are not planning in a logical manner for the future.  To me it is all human nature, that delayed gratification is simply impossible for many, maybe most of human beings.  Again, back when the average life was 40 year then why delay anything?

 

For me, I'm sort of a right brain global thinking type, the obsession beginning in high school was to build net worth.  I saw that as freedom, not power (I could care less about controlling others- that's the politician mindset), and I wanted a whole damn lot of freedom.  Many if not most of those I know who make big money?  I never hear a word about building net worth.  But to my closest friends and family this is an absolute obsession.

 

Just rambling.  Please don't take me too seriously.  

 

 

Edited April 29, 2023 by dealraker

[dealraker]

By the way, if you think my comments about short term/long term investor percentages are off - let me suggest some easy-to-see facts:

 

Go to Manlobbi's Berkshire forum board, or the old MF one, and see the posts...then the number of "likes" and such, the followup posts for instance.  A 20 person "like" is big time.  Some sound investors there, little action and a few followers.

 

Go to Saul's Investing Discussions and see his fast Eddie hyper-portfolio turnover approach, and I assure you the portfolio turnovers are vast - and I'll also assure that most who are investing in this manner are losing massive amounts of their capital (their own questionaires prove that).  Likes to posts?  Saul will get 20,000 views and 1,200 "likes" for his posts.  Most recent was a large investment in Enphase...then a huge commitment in Cloudflare, which I am certain was followed by his huge cult...a cult that had already gotten slaughtered.

 

A fisherman entered the tackle shop, sees an 8-hook 8-color lure...and asks the clerk, "Does this thing catch fish?"

 

Clerk replied, "Mister, I don't sell to fish."

 

 

 

Edited April 29, 2023 by dealraker

[changegonnacome]

31 minutes ago, John Hjorth said:

The really fascinating thing to think about the contents of some of the last posts in this topic from @Gregmal is that if the "the "general" consumer" [Please note the double / two layer "" here] actually changed economic behavior to rationality and frugality all around the world instantly and at the same time, it would  likely trigger a severe global recession and a lot of turmoil, - here, there and everywhere - globally.

 

Excellent point and well made- and at the end of the day @Gregmal will see his frugality suggestion to folks play out en masse.....the Fed to a certain extent, via interest rate rises, is a kind of frugality alchemist......that is attempting to initiate & create a frugality wave in the USA......first by influencing credit creation demand & supply.....which hits spending....which then hits unemployment......as anyone who lived through the GFC knows.....somebody in your inner social circle losing a job and demonstrably struggling to find another one.....unleashes interesting recession behaviour in the folks around them or as @John Hjorth quite rightly calls it "rationality & frugality" behaviour......which gets my vote for what a recession should actually be called....a spontaneous & widespread breakout of rationality & frugality.

 

Chair Powell......should be renamed Chairman of the 'new' group called the F.E.D.......Frugality Expectation Department 

[dealraker]

4 minutes ago, changegonnacome said:

 

Excellent point and well made- and at the end of the day @Gregmal will see his frugality suggestion to folks play out en masse.....the Fed to a certain extent, via interest rate rises, is a kind of frugality alchemist......that is attempting to initiate & create a frugality wave in the USA......first by influencing credit creation demand & supply.....which hits spending....which then hits unemployment......as anyone who lived through the GFC knows.....somebody in your inner social circle losing a job and demonstrably struggling to find another one.....unleashes interesting recession behaviour in the folks around them or as @John Hjorth quite rightly calls it "rationality & frugality" behaviour......which gets my vote for what a recession should actually be called....a spontaneous & widespread breakout of rationality & frugality.

 

Chair Powell......should be renamed Chairman of the 'new' group called the F.E.D.......Frugality Expectation Department 

So then, is "spend it all now" a good thing over time for the US of A?  Or more logically, the source of boom and bust!  LOL.  

[changegonnacome]

22 minutes ago, dealraker said:

So then, is "spend it all now" a good thing over time for the US of A?  Or more logically, the source of boom and bust!  LOL.  

 

For sure it is........a consumerist capitalist society/economy/market...... is also a society of people who get up in the morning motivated Monday thru Friday.....to work their tails off making more & better stuff more efficiently...... to get the money they need to buy the things they don't 'need' . 

 

It's the best system human beings have created.........to solve for abject poverty, starvation & destitution......it's a goddamn marvel how good we all have it even the poorest......relative to the quantum of human beings that have ever existed on this planet. Fiddle with it at your peril i say.....especially these lunatics on the left.......the lunatics on the right are bad.......but IMO the lunatics on the left are the most dangerous cause they wanna mess with that market system....& on that pathway lies hell!

 

Reminds me of one of my favourite Friedman clips about the humble pencil and what a god damn marvel it is:

 

 

Edited April 29, 2023 by changegonnacome

[Spooky]

1 hour ago, dealraker said:

Not sure, at least to me, that there's alot of difference between the online obsession of beating the market short term (and SURELY posting about it) and what we are discussing here...that people are not planning in a logical manner for the future.  To me it is all human nature, that delayed gratification is simply impossible for many, maybe most of human beings.  Again, back when the average life was 40 year then why delay anything?

 

For me, I'm sort of a right brain global thinking type, the obsession beginning in high school was to build net worth.  I saw that as freedom, not power (I could care less about controlling others- that's the politician mindset), and I wanted a whole damn lot of freedom.  Many if not most of those I know who make big money?  I never hear a word about building net worth.  But to my closest friends and family this is an absolute obsession.

 

This is interesting and similar to me - I want to build my net worth in order to have total freedom. I'm also trying to get there with the highest probability of success possible (it's a trade off between speed vs certainty). Framing my decisions through this long term goal has been helpful. Instead of focusing on beating the market I have set a goal to compound my wealth at 10% per year. If I can do this over a long period of time then I will be very wealthy. Not having to worry about relative performance to the S&P over a short term period is also extremely advantageous.

 

 

[Gregmal]

This is part of the reason why overtime you just simply want to be an owner of assets. Fools and their money(cash) always part ways. The bigger economic turbulence sucks because it often causes people who aren’t fools hardship. But at the end of the day the accumulation of assets wins because useful assets are fixed in quantity and just become more entrenched over time.
 

The IPhone is lethal because it’s the only status symbol where the poorest man in the hood can have the same product as a billionaire. But Costco, Pepsi, types? Entrenched, powerful, dominant. Wanna cutback spending? Go to Costco and drop $200. Then go home and watch TV on your Amazon device while stuffing your face with potato chips and some beverage.
 

Even if the American dream isn’t totally attainable for everyone, I see no evidence that as a person with means to invest, that you don’t want to be long term levered to the things that represent it. Nice home in a postcard or tv show neighborhood. Kids. Vacations. Fancy toys. Experiences. Stuff people boast to their friends and family about. 

[Spekulatius]

A lot of people can’t pass the marshmallow test and we don’t teach it on school either. If anything, I suspect a lower percentage of people pass the marshmallow test than decades ago, thanks to more social media envy and perhaps other factors.

 

If you don’t pass the marshmallow test, you are unlikely to become wealthy or even stay wealthy they in case you are well off already.

 

Passing the marshmallow test is probably a better indicator of your chance to become well thy than intelligence, education or even be a hard worker.

 

[Masterofnone]

For us older folks who have studiously delayed gratification for a lifetime, it can be difficult to realize that later eventually becomes now. Reminds me of when my boys were about 6 and 8 and we shut down their request to spend their life savings on something we didn't deem appropriate. The 6 year old muttered to his older brother: "Whats the use of having all this money if they won't let us spend it?" (We caved as we didn't want to lose our workforce.) I have to whisper those words to myself now and again. It's fun to be able to be generous- to servers, the community and ourselves.

[SharperDingaan]

The reality is that long-term thinking is almost strictly a learned behavior, and somebody had to guide you; sadly for most it means having to derive it yourself, if you ever get it at all. However even if you have a guide, it doesn't mean the horse will take to it. A lot of folks take the view that 'they don't need to'; 'cause you're doing a far better job at it than they ever could, and it's your thing - not theirs. 

 

Ultimately it comes down to what makes you happy; and for most, the time horizon is the here and now. What am I saving it for? is a hard sell, when in the future I could well end up with dementia and beyond caring, if I even live that long (Keith Richards!). The same decision a retiree has to make when he/she has more money than they will ever need over their remaining lifetime; spend it, enjoy yourself and live longer as a result - or just fondle it and be a hermit? 

 

People will make mistakes, and it is their right to do so. Aside from some minimum guard rails (safety net) to mitigate the collective harm, let the market 'clear'. 

 

SD

[Blugolds]

4 hours ago, Spekulatius said:

A lot of people can’t pass the marshmallow test and we don’t teach it on school either. If anything, I suspect a lower percentage of people pass the marshmallow test than decades ago, thanks to more social media envy and perhaps other factors.

 

If you don’t pass the marshmallow test, you are unlikely to become wealthy or even stay wealthy they in case you are well off already.

 

Passing the marshmallow test is probably a better indicator of your chance to become well thy than intelligence, education or even be a hard worker.

 

 

Agree 100%

 

And the attitudes are changing to reward those who take the marshmallow now, there is no consequence for taking it now and it is encouraged. Even if its not your marshmallow. 

 

They want their marshmallow now, they want your marshmallow, and they want the pile..all of it. 

 

There is a happy balance and finding it can be hard, both for spenders and savers. 

[TwoCitiesCapital]

High frequency data is noisier, but the trend over the last 1+ years is apparent. 

 

https://twitter.com/nsquaredcrypto/status/1651783439329157124?s=20

 

Bonds should do well here. 

Edited May 1, 2023 by TwoCitiesCapital

[Spekulatius]

Interesting - the market commentary podcast from Morgan Stanley fellow mentioned that the entire gains in the stock market this year were driven by the 10 largest market cap stocks - Tesla, MSFT, AMZN, GOOG, Apple and META etc. The rest of the market in aggregate has done squat. That's a very narrow stock market.

[Spooky]

The new nifty fifty...

[Spekulatius]

Just now, Spooky said:

The new nifty fifty...

More like the magnificent seven.

[Dinar]

45 minutes ago, Spekulatius said:

More like the magnificent seven.

I prefer the Seven Samurai

[Gregmal]

And yet another example of why I think it’s totally bogus to look at what todays participants largely refer to as “the market”. 

[dealraker]

1 hour ago, Spekulatius said:

Interesting - the market commentary podcast from Morgan Stanley fellow mentioned that the entire gains in the stock market this year were driven by the 10 largest market cap stocks - Tesla, MSFT, AMZN, GOOG, Apple and META etc. The rest of the market in aggregate has done squat. That's a very narrow stock market.

So for years, years, and years over on the Berk Manlobbi (old TMF) board all I hear is the S & P is hyper-incredibly-stupidly over-valued and Berkshire is a screaming burn-down-the-barn bargain.  And the posters...what do they promote as their favorites other than their Berkshire?   Always a randon assortment of APPL, MSFT, AMZN, GOOG, META, TSLA, NVDA...

 

And I'm like, "What the hell?"

Edited May 2, 2023 by dealraker