Brooklyn Investor latest

[73 Reds]

5 minutes ago, dealraker said:

Over many years I've found that excellent financial writers and outstanding investing are two circles that don't overlap much.  Brooklyn is one of the few in both circles.

Hmm.. I don't follow.  If hind sight demonstrates excellent financial writing, are you suggesting they don't follow their own advice?

[Gregmal]

If you have a textbook education on anything, you can very easily write about it; and if youre somewhat above average, you can sound eloquent. Hence the NONSTOP experts who chalk post GFC success up to solely "low interest rates, QE, and tech bubbles"...the post mortem covid dip buyers, or most recently, the soaring inflation and bond vigilante stock market bears whom showed up in 2022 which 3000 and below SPY targets and whom are still hanging around 3 years later....all of whom......90% are full of shit, didnt make money(well, unperformed is probably a better way of putting it), and happen to be great writers. 

 

Most good investors are kinda just focused on investing, and there's a reason that many prefer, of all things, AOL Instant messenger for their trader chats and prime brokers....

[Whensthepaintdry?]

I love how rational it is. Aswath takes a similar stance, but in a more technical way. I believe in his last video he said the market is around 12 percent overvalued. Both takes are very different than historic bubble talks. 

[rogermunibond]

Contrast that with Sorkin's rather mid level take on 60 Minutes.

 

Always money to be made on mid-wits.

[Milu]

11 hours ago, MungerWunger said:

he's back with another one: https://brklyninvestor.com/2025/10/20/sanity-check/

I like it and it aligns with a lot of my thinking and posting about things not being as bubbly as many market participants seem to think. With the exception of covid drawdown (about 1-2 months) and 2022 tech bear market, I've been hearing every year since around 2013 that valuations are stretched and we are in a new bubble. All I see is a market perhaps on the slightly overvalued side of things but a fair bit away from anything that could be described as a bubble. I'm not rushing in to buy these days, but not doing any selling either. 

[mattee2264]

I think when he reckons 4-5% interest rates are normal and sustainable he is assuming that inflation returns to target.

 

If the new normal for inflation is 3-4% and GDP growth is 2-3% then you'd think eventually interest rates get up to 6-7% (which is not that high by historical standards) and if that happens then I don't think PE multiples will stay well above 20x.

 

Obviously financial repression is the plan and we've seen in the post WW2 era that central banks and governments are capable of doing so and maybe that will keep interest rates low and support high valuations. 

 

But that only works if it is accompanied by fast economic growth so you can grow out of the debt. If it is associated with low economic growth then you just get stagnation. 

[dealraker]

2 hours ago, 73 Reds said:

Hmm.. I don't follow.  If hind sight demonstrates excellent financial writing, are you suggesting they don't follow their own advice?

Yes that didn't make sense at all.  I'll try to reword it.

[73 Reds]

2 hours ago, dealraker said:

Yes that didn't make sense at all.  I'll try to reword it.

No worries, I was just trying to understand what you meant.  (And it wouldn't be surprising if some financial writers indeed don't follow their own words of wisdom to others).

[charlieruane]

I liked his post, but I wonder what he thinks of the Shiller P/E, which is approaching 2000 levels (and doesn't account for the fact that taxes are much lower today). 

 

I think the "bubble" debate is a bit of a fool's errand. People debate the binary label, but what really matters is the underlying math of equities' expected returns, which fall on a continuum depending on starting valuation, future growth, etc. There isn't some on-off "bubble" switch that flips over at a certain point; whether or not there's a bubble these days, we can say that expected returns from here for large swaths of US equities are low. 

Edited October 21, 2025 by charlieruane

[NnnnotSoSmart]

Echoes of Howard Marks (8/14/25):

 

"An aside regarding the valuation of the S&P 500: A bit over half of its jaw-dropping 58% two-year total return in 2023-24 was attributable to the spectacular performance of just seven stocks, those of the so-called “Magnificent Seven” – Apple, Microsoft, Alphabet (parent company of Google), Amazon, Meta Platforms (parent company of Facebook), Nvidia, and Tesla. These are great companies – some are the best companies ever – and these seven stocks have grown to represent a startling one-third of the total market value of the 500-stock index. (Please bear in mind that I don’t claim to be an expert on stocks in general or tech stocks in particular.)  Because of these companies’ greatness, their stocks are highly valued, and there’s a popular perception that their elevated valuations are responsible for the S&P 500’s unusually high average p/e ratio. The fact is their p/e ratios average out to roughly 33. This is certainly an above average figure, but I don’t find it unreasonable when viewed against what I believe to be the companies’ exceptional products, significant market shares, high incremental profit margins, and strong competitive moats. (A lot of the Nifty-Fifty stocks First National City Bank owned when I got there in 1969 were selling at p/e ratios between 60 and 90. Now that’s high!) Rather, I think it’s the average p/e ratio of 22 on the 493 non-Magnificent companies in the index – well above the mid-teens average historical p/e for the S&P 500 – that renders the index’s overall valuation so high and possibly worrisome."

 

https://www.oaktreecapital.com/insights/memo/the-calculus-of-value

[hardcorevalue]

I guess my concern on this economy is US deficit being out of control with the economy being strong and AI spend not living up to expectations. 

 

All these mag 7 companies doubled the estimated lives to 6 years since 2020 when it was 3 years and the FCF is far lower than the PE. We are at 60-90x on FCF/Market cap.

 

Great companies though so not a disaster like 2001. 

[MungerWunger]

https://brklyninvestor.com/2025/10/25/if-its-a-bubble-so-what/

 

 another post on gold and more about bubbles 

Edited October 26, 2025 by MungerWunger

[brobro777]

1 hour ago, MungerWunger said:

https://brklyninvestor.substack.com/p/if-its-a-bubble-so-what 

 

 another post on gold and more about bubbles 

 

Yea I agree - I sold my gold futures, small piker positions they were

 

 

[Spooky]

Agree on gold. It is behaving like other speculative assets.

[brobro777]

1 hour ago, Spooky said:

Agree on gold. It is behaving like other speculative assets.

 

My guess is there's probably another big rip to the upside maybe $5000 

 

All these guys are still buying gold at Costco, they're still buying

 

 

[MungerWunger]

he's back!

 

https://brklyninvestor.com/2026/02/10/sanity-check-2026/

[dcollon]

Thanks for sharing the link 

[MungerWunger]

Another one: https://brklyninvestor.com/2026/02/13/lets-talk-about-berkshire-new-board/

[indirect]

On 2/17/2025 at 5:51 PM, Spekulatius said:

I don’t think I can know 10 years ahead I think Fuso business will correlate to leading edge wafer starts  since that’s what Fuso materials are used for. So in ten years, Fuso will basically morph from a chemical company with business for food as well as semiconductor supplies to a company that is mainly a semiconductor consumable business.

On the financial side the  semiconductor material supply is way more profitable than their traditional business with 30% operating margins. Everything else being equal this business should grew faster, with cyclical ups and downs and be way more profitable.

 

On the capital allocation issue, all we know that management told us they intend to pay a progressive dividend which is what they have done over the years so far as well.

 

Stock has gone parabolic, selling at 25 times earnings for a semiconductor chemicals plus food chemicals. I sold today at 200% profit thank you Spek.