Sinbius Posted July 9, 2022 Posted July 9, 2022 3 hours ago, james22 said: Better investments than found in 2009? March 2020? If you didn't act then, why believe you'll act now? The Fed can not help like it did in 2020... they can not give liquidity to save the house of cards due to inflation...if you think they can please elaborate...
Sinbius Posted July 9, 2022 Posted July 9, 2022 23 minutes ago, Gregmal said: The problem with this sort of thinking, is that the types that generally do have these hunches, are consistently having them. Over the past half decade just off the top of my head, the same group was worried about....2016/17...Trump. 2018/19..the punch bowl, 2020-21 Covid, 2022 the Fed/rates. Its just always something with them and if I missed my top 5-10 investments over this timespan it would have been hugely to my determinant. As some have stated, theres always something going on, you just need to find it. Shutting off the creativity or adventure seek valve over the fear flavor of the year is counterproductive to this. Every day you should wake up wanting to make investments but also having the discipline to sort them. Some variant of dollar cost average or time disciplined purchases is also so underrated. I just finished up with my APTS stuff and chuckled printing out the transaction log for my accountant. Taxes are a bitch. Over a 12 month period from January 2021-January 2022 there were 178 different purchase transactions between stock and options. Berkshire early 2021 I bought the same dollar amount every day from Jan 1 until end of February. Find something, and then just stick with it and execute. Paying attention to the other side is important but too scrupulously just causes undue hesitation. An investor and friend of mine earlier this week asked what to make of MF REITs selling off like 20-25% this year. And again I asked "why is it, that things that have absolutely ripped face the past few year, pullback, pullback mind you, the same amount as basically everything else in the market, and we need to conclude it s proof of something that should prevent you from investing?", especially when the real market, the private market, didnt move anywhere near there and the only evidence one has to make that case is small timers buying class C assets claiming theyre getting better deals LOL? I dont really like BTC, but the argument and point is best highlighted there. Ignore that its Bitcoin. The negative clowns have been hating on it since $1,000-$5,000. Its now come back from $60,000 to $20,000....THAT?!? is proof they were "right all along"??? You wouldnt know it from how they cheerlead, but again, perspective is everything. If you cant get excited about an investment or sector, just move on to another one til you do. I generally do NOT have these hunches, and I hate having them right now. On the other hand I have to try to be logical. If I am wrong trust I will be happy...because I hate macro and would like to avoid to look at it... Tell me how we can get out of this mess (inflation and high debt) without a big crash please because I don't get it...
Gregmal Posted July 9, 2022 Posted July 9, 2022 1 minute ago, Sinbius said: The Fed can not help like it did in 2020... they can not give liquidity to save the house of cards due to inflation...if you think they can please elaborate... Since I’ve started paying attention to the markets, now over 15 years ago, folks have always been claiming that the Fed is backed into a corner. Except, they never really are. Also don’t forget, what the Fed can’t do, politicians can. I’m all for avoiding obvious bubbles, and being ready to pounce on a big move up or down, but the assumption that everything is a bubble can’t really be true if you believe in the notion that capitalism and global supply/demand exist. I hear everyday how housing is a bubble. Been hearing it for basically the whole decade. Then a good asset goes on the block and there’s 20-30 buyers most are cash buyers and the sale prices sets another record.
Gregmal Posted July 9, 2022 Posted July 9, 2022 (edited) 11 minutes ago, Sinbius said: Tell me how we can get out of this mess (inflation and high debt) without a big crash please because I don't get it... Every inflation input I’ve seen people fussing over has fizzled out, with the exception of housing. Housing should ease with more time as building products create more inevitable. Otherwise, it’s just a time solved problem. Beginning of the year half this board legit thought car prices were staying high forever. Or the commodities wouldn’t come down. Then they did. Then we got the war and war related stuff spiked. Then that would last forever; the poster child being wheat. Then that came down too. I almost feel like if we punished people for being wrong you’d get a much more accurate representation of what reality is. I’ve been a broken record on housing, but we ve been hearing about the coming crash all decade, we heard about the train wreck is progress after COVID, and even the last 3-6 months we ve been told the implosion as happening just as every month a new record for average sales price occurs. If a 10% pullback happens, we’re these folks worth listening to? Nope. Further, the consumer and average household doesn’t really have a lot of debt. I don’t know why that notion is floating around as much as it is. Most if they own homes have tons of equity. Edited July 9, 2022 by Gregmal
Sinbius Posted July 9, 2022 Posted July 9, 2022 9 minutes ago, crs223 said: When you have this macro bearish/pessimist/doom mindset you will never buy. Not in the depths of the GFC. Not in the depths of Covid. It's a mental sickness and zerohedge/Schiff capitalize off it. The problem with this bearish line of thinking: if the market goes down you say "I'm right; market is going down... and it's got a lot further to go". When the market goes up you say "I'm right; we're in a bubble; market is going to go down". You can't win. Actually I don't think directly the market will go down...I think the fundamentals are going down right now (earnings and real earnings power) and so the market will too...and there are no magic tricks any more to get out of this (Central Banks interventions) because inflation prevent that... And I will not buy because the market go down...I will start buying with my cash position as soon I see (looking stock by stock) something really easy to understand and extremely appealing... Having said that if I find today something that I consider extremely worth I invest the rest of my cash right now....I just have higher standard BECAUSE the optional value of cash (and I think everybody can agree on this) just got higher...
Sinbius Posted July 9, 2022 Posted July 9, 2022 (edited) 20 minutes ago, Gregmal said: Every inflation input I’ve seen people fussing over has fizzled out, with the exception of housing. Housing should ease with more time as building products create more inevitable. Otherwise, it’s just a time solved problem. Beginning of the year half this board legit thought car prices were stating high forever. Or the commodities wouldn’t come down. Then they did. Then we got the war and war related stuff spiked. Then that would last forever; the poster child being wheat. Then that came down too. I almost feel like if we punished people for being wrong you’d get a much more accurate representation of what reality is. I’ve been a broken record on housing, but we ve been hearing about the coming crash all decade, we heard about the train wreck is progress after COVID, and even the last 3-6 months we ve been told the implosion as happening just as every month a new record for average sales price occurs. If a 10% pullback happens, we’re these folks worth listening to? Nope. I think some inflation is getting lower because consumer confidence is worsening and people are cutting spending when they can...if inflation start getting lower because of a recession (we are in it right?...should we fake it we are not in it?) that is not a solution without pain...last data I saw margins in businesses are contracting...businesses are freezing hiring or laying off people... Do you really think that this earning season is not bad and will not get worse in the next? Edited July 9, 2022 by Sinbius
Gregmal Posted July 9, 2022 Posted July 9, 2022 (edited) 14 minutes ago, Sinbius said: I think some inflation is getting lower because consumer confidence is worsening and people spend less...if inflation start getting lower because a recession (we are in it right?...should we fake it we are not in it?) that is not a solution without pain...last data I saw margins in business are contracting...business are freezing hiring or laying off people... Do you really think that is earning season is not bad and will not get worse in the next? The above will fix most of the supply chain stuff. In a capitalist world, once the imbalance is solved, it’s very hard to fuck up again. Outside of a 1/100 year event, imagine everything that has to go wrong for folks to be paying double or triple for used cars and 25% premiums to MSRP? I’d even go as far as to say that’s a once in a lifetime event. Labor market cooling off IMO would be bad, but once that occurs then the mouthpieces can stop talking about wage inflation. I’ve probably talked to 5 dozen people in the last few weeks who have expressed concern about Q2 earnings. It’s certainly close to consensus and frankly at -20-30% on the indexes and more on most individual names, I think it’s closer to baked in than not baked in. Edited July 9, 2022 by Gregmal
LC Posted July 9, 2022 Posted July 9, 2022 7 hours ago, stahleyp said: Where are you getting 3% man? It’s been some product my folks had for years that I inherited pre 2012. Essentially an annuity and I keep 50k principal in it and just clear anything above that every December and donate the amount since it’s not much. But I keep it as some pseudo cash position if the US ever goes Russia and everything sells off like crazy 75+% amounts. It’s purely psychological and let’s me stay fully invested with the funds I actually use and manage.
nafregnum Posted July 9, 2022 Posted July 9, 2022 From where we are today, which sectors will benefit most if inflation cools off? Housing because of the return of low mortgage rates? Tech? Which will benefit most if inflation remains higher longer? Oil (think OXY) + financials (banks, due to higher rates)? To use Parsad's metaphor: Which springs are coiled tightest right now?
Sinbius Posted July 9, 2022 Posted July 9, 2022 9 minutes ago, Gregmal said: The above will fix most of the supply chain stuff. In a capitalist world, once the imbalance is solved, it’s very hard to fuck up again. Outside of a 1/100 year event, imagine everything that has to go wrong for folks to be paying double or triple for used cars and 25% premiums to MSRP? I’d even go as far as to say that’s a once in a lifetime event. Labor market cooling off IMO would be bad, but once that occurs then the mouthpieces can stop talking about wage inflation. I’ve probably talked to 5 dozen people in the last few weeks who have expressed concern about Q2 earnings. It’s certainly close to consensus and frankly at -20-30% on the indexes and more on most individual names, I think it’s closer to baked in than not baked in. Well the great news is that we will soon know if it is not baked in or if it is... It is baked in that next one will be even worse? Because if someone is still in doubts...I think they will realize it...( if I am wrong I will happy to be wrong...)...
Gregmal Posted July 9, 2022 Posted July 9, 2022 4 minutes ago, nafregnum said: From where we are today, which sectors will benefit most if inflation cools off? Housing because of the return of low mortgage rates? Tech? Which will benefit most if inflation remains higher longer? Oil (think OXY) + financials (banks, due to higher rates)? To use Parsad's metaphor: Which springs are coiled tightest right now? The answer is simple, find energy/oil companies who are profitable at $60 a barrel trading in the single digits and residential RE related stuff trading at 30%+ discounts to NAV. Fill out with a few financials trading at or around book. You’re setup up to do well in both scenarios.
Gregmal Posted July 9, 2022 Posted July 9, 2022 5 minutes ago, Sinbius said: Well the great news is that we will soon know if it is not baked in or if it is... It is baked in that next one will be even worse? Because if someone is still in doubts...I think they will realize it...( if I am wrong I will happy to be wrong...)... If we are not more done than not, IE Q3 produces a downdraft in excess of say 20-25%, then Kyle Bass may be right for like the 3rd time in his career. I think should this occur, the opportunity set would be once in a lifetime. These are all short term, solvable issues and if it means low teens multiples on the highest of quality stuff money can buy, and 50% discounts to current private market on RE, we should be excited.
james22 Posted July 9, 2022 Posted July 9, 2022 1 hour ago, Sinbius said: The Fed can not help like it did in 2020... they can not give liquidity to save the house of cards due to inflation...if you think they can please elaborate... Why didn't you act in 2020 then (the Fed having liquidity)? Because you found some other reason not to. You've found your reason to not act now. And you'll undoubtedly find reason to not act in the future. What's the point of realizing you're a perma-bear pessimist about markets (and that it is a huge flaw) and then immediately disclaiming it? Climb the wall of worry.
Sinbius Posted July 9, 2022 Posted July 9, 2022 (edited) 45 minutes ago, james22 said: Why didn't you act in 2020 then (the Fed having liquidity)? Because you found some other reason not to. You've found your reason to not act now. And you'll undoubtedly find reason to not act in the future. What's the point of realizing you're a perma-bear pessimist about markets (and that it is a huge flaw) and then immediately disclaiming it? Climb the wall of worry. If your definition of a perma-bear someone that sometimes is "only" 80% invested (I was also 100% invested sometimes) I guess I am guilty If that's the definition Buffett is more perma-bear than me looking at how he managed brk portfolio...^^ Wait Buffett too didn't act in 2020...you know why you didn't say (and you never will) that he too undoubtedly finds reason to not act in the future? I know... Edited July 9, 2022 by Sinbius
Spekulatius Posted July 9, 2022 Posted July 9, 2022 (edited) One of the great articles about Market correction and what to do with them from Morgan Housel: https://www.fool.com/investing/general/2013/08/19/what-i-plan-to-do-when-the-market-crashes.aspx I think one of the most important parts is to have a plan that makes sense and to stick with it. The permabears often suffer from thesis drift. If they correctly predict a market correction of let say 33% - once the market reach the price target they will say “Now look at this or that, fundamentals are worse than zi predicted etc etc” and the new target is 50% down or whatever. Then when the target isn’t reached they blame the central bank, the plunge protection team, QE+money printing or whatever and claim the market is just about to collapse. There is always something, but the above is a clear plan that I think makes sense and is a useful framework. You can modify as needed. Edited July 9, 2022 by Spekulatius
Monsieur_dee Posted July 9, 2022 Posted July 9, 2022 Some great conversations here. I've been meaning to start a topic but I feared it may have already been talked about. What are some great 'go to sleep companies'. I think @Gregmalhas spoken about this before. Companies you dont have to worry about. Berkshire, constellation software are definitely my top two. Markel, pershing square, index funds... any others anyone would like to point out.
james22 Posted July 9, 2022 Posted July 9, 2022 55 minutes ago, Sinbius said: If your definition of a perma-bear someone that sometimes is "only" 80% invested (I was also 100% invested sometimes) I guess I am guilty Sorry, that was Lazurus'. But like him you know you should you try to be logical, yet still 'have a hunch' and agree with his disclaimer: Will be there another time in my life when I would be so confident that the $hit is about to hit the fan...?..I don't think so... With the possible exception of Buffett, I don't know how anyone can be confident in their market hunches. And the thing is, "ultra great investments" are rare. And they don't look like "really easy to understand, extremely attractive" bets at the time. But if 80/20, you're only talking about investing at the margins (where's your confidence?). That's not what Lazarus (50/50) is struggling with.
Gregmal Posted July 9, 2022 Posted July 9, 2022 (edited) 58 minutes ago, Monsieur_dee said: What are some great 'go to sleep companies'. I think @Gregmalhas spoken about this before. Companies you dont have to worry about. Berkshire, constellation software are definitely my top two. What’s tougher with businesses vs asset based companies is that businesses have a higher risk of impairment for many reasons. That’s why BRK is nice because it’s diversified and has a track record. But largely, share issuance, taking on debt, mergers, or just bad decisions in terms of deciding which ventures to pursue. IE FB and metaverse. Sears is a great example. The business changed and destroyed the assets. FRP or Alico? Try to destroy that? Even if you tried, it’s so slow moving and would occur over time in which case you’d have a period of time to exit without getting hurt. Or the liquidation theory. a company with good assets, says BGs Clipper….dude I’d fully welcome a liquidity crisis in 2027 because it would force asset sales and at 50c on the dollar I win. A business in need of liquidity is fucked on so many levels. Edited July 9, 2022 by Gregmal
Sinbius Posted July 10, 2022 Posted July 10, 2022 (edited) 7 hours ago, james22 said: Sorry, that was Lazurus'. But like him you know you should you try to be logical, yet still 'have a hunch' and agree with his disclaimer: Will be there another time in my life when I would be so confident that the $hit is about to hit the fan...?..I don't think so... With the possible exception of Buffett, I don't know how anyone can be confident in their market hunches. And the thing is, "ultra great investments" are rare. And they don't look like "really easy to understand, extremely attractive" bets at the time. But if 80/20, you're only talking about investing at the margins (where's your confidence?). That's not what Lazarus (50/50) is struggling with. 1: About hunches...Have you ever being confident that the fundamental of a business are good and are improving?...same thing as me...just I'm confident that fundamentals of most business are going bad... 2: about .."And the thing is, "ultra great investments" are rare. And they don't look like "really easy to understand, extremely attractive" bets at the time."...I agree they are rare...I have 3 positions...are you more concentrated? And yes they look easy to understand (after you dig in) and extremely attractive to me...as Peter Lynch said (of course that Peter Lynch said it means $hit...but people use rhetoric using Buffett name so I reserve the right to use rhetoric with Lynch name... ) "you should never invest in any idea that you can't illustrate with a crayon" 3: about "But if 80/20, you're only talking about investing at the margins (where's your confidence?)." I repeat I am just raising the standard of what I invest in BECAUSE it is pretty obvious (to me) that the potential value of cash is increasing...if I find something amazing today I just go all in instantly... Edited July 10, 2022 by Sinbius
Spekulatius Posted July 11, 2022 Posted July 11, 2022 (edited) On 7/9/2022 at 3:07 PM, nafregnum said: From where we are today, which sectors will benefit most if inflation cools off? Housing because of the return of low mortgage rates? Tech? Which will benefit most if inflation remains higher longer? Oil (think OXY) + financials (banks, due to higher rates)? To use Parsad's metaphor: Which springs are coiled tightest right now? Tech will be the beneficiary when interest rates stop rising or even go down again, Imo. Edited July 11, 2022 by Spekulatius
Parsad Posted July 11, 2022 Author Posted July 11, 2022 On 7/9/2022 at 11:21 AM, Sinbius said: The Fed can not help like it did in 2020... they can not give liquidity to save the house of cards due to inflation...if you think they can please elaborate... There are tons of things the Fed can still do if a crisis happened: - Lower rates again. - Stop unwinding and increase quantitative easing. - Reduce corporate tax rates. - Reduce personal income tax rates. - Suspend payroll taxes. - Suspend sales taxes. - Suspend fuel/environmental taxes. - Force price reductions in certain industries...pharmaceutical, agricultural, wholesale, etc. - Removing bad assets from the books of financial institutions and move them onto the Federal Government's books - Inject capital into industries and issue warrants to themselves...these worked extremely well during the banking/brokerage crisis. - Remember, while the Fed's balance sheet isn't as attractive as it was pre-GFC, company balance sheets are better...so you could force mergers in troubled industries. - Force banks, which are very well capitalized, to hold mortgages and assets instead of letting them default, etc. - An inflationary environment, while painful, is a result of demand, growth and a hot economy...better than a dead or cold economy with high unemployment and decreasing incomes. - Consumers have more money from pandemic stimulus than they did pre-pandemic...so as economy slows from higher rates, they will not do as badly as a normal inflationary/recession environment where their balance sheets may have been over indebted and lacked liquidity. Cheers!
Parsad Posted July 11, 2022 Author Posted July 11, 2022 On 7/9/2022 at 11:36 AM, Sinbius said: Actually I don't think directly the market will go down...I think the fundamentals are going down right now (earnings and real earnings power) and so the market will too...and there are no magic tricks any more to get out of this (Central Banks interventions) because inflation prevent that... And I will not buy because the market go down...I will start buying with my cash position as soon I see (looking stock by stock) something really easy to understand and extremely appealing... Having said that if I find today something that I consider extremely worth I invest the rest of my cash right now....I just have higher standard BECAUSE the optional value of cash (and I think everybody can agree on this) just got higher... There is no way to time it perfectly. That's pure luck. If you find stuff that you think is cheap...buy it. If not, hold the cash. But don't try and time a bottom. I had tons of cash, and I started finding things. Naturally, the markets continued downwards and I continued averaging in, my portfolio value has moved very little from year end 2021, yet I've been averaging into quality stocks at lower and lower prices. Eventually, the market will bottom. I might be down a few percent by then. But will rebound anywhere from 40-80% over the ensuing 18-24 months. Well worth the 5-10% of pain I may suffer averaging in. No one can time the bottom. But I know most people get the rebound wrong too! You don't want to get both wrong, and still be sitting with tons and tons of cash. Otherwise, don't invest in the market. And as the market's rebound, don't sit there and hold stuff that gets expensive either. You can always move some to cash again...especially if you are doing this mostly in non-taxable accounts. Cheers!
Sinbius Posted July 11, 2022 Posted July 11, 2022 Not trying to time the bottom...I just think cash have more value...I am just setting the bar higher...
Gregmal Posted July 11, 2022 Posted July 11, 2022 14 minutes ago, Sinbius said: Not trying to time the bottom...I just think cash have more value...I am just setting the bar higher... How can you believe inflation is the big threat to the market and be holding cash?
Sinbius Posted July 11, 2022 Posted July 11, 2022 (edited) 28 minutes ago, Gregmal said: How can you believe inflation is the big threat to the market and be holding cash? From the start of the year can we agree you would have lost more having equity than cash (on average)? ( and of course you have to account for the lose of value due to inflation also on the value of stocks...if a stock lose 20% in real term, accounting for inflation, it has lost 28,6% or whatever it is...) (You probably mean that in the long term equity is a good hedge against inflation and of course it is true...) In theory, theory and practice are the same, in practice they are not. Edited July 11, 2022 by Sinbius
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