Stagflation - Should Investors Care?

[Gregmal]

31 minutes ago, Parsad said:

Hmmm...there is a Blake on the Trump side here too!  No convincing him of anything either. 

 

Greatest President in history...fuck Washington, Lincoln, Roosevelt and Reagan! 

The difference is my man @cubsfanis invested and enjoying life. 
 

Like cheer up, stop fretting most of the real stuff that’s out of your control, definitely stop fretting all the made up stuff that you go out of your way to look for on the internet, and start getting on with your life. 
 

The best part about being in your 20s is you can take obscene risks because your timeline is huge and you probably aren’t playing with money that matters anyway. It’s like the dudes who boasted about owning those $10k per person Ibonds in 2022 and it’s like….congrats you locked up your money for $700 LOL you coulda bought UBER for $22, but good job!

Edited March 29 by Gregmal

[Parsad]

2 hours ago, Blake Hampton said:

 

I believe our situation today is quite different than the one we've had over the last 50 years.

 

Bonds are a terrible long-term investment. No argument there.

 

Some of them might. Overall though, I think it would be a period of extreme financial turmoil all over the world.

 

We're running $2.1 trillion fiscal deficits alongside the greatest energy shock in history. I wouldn't be so certain.

 

I'm not disagreeing that business is the best place to be over time. Maybe that's where a lot of people get me wrong. There's really only four primary types of productive assets to own that exist outside of speculation: Stocks, bonds, cash, and real estate. I already told you I believe bonds are a wash, so that only leaves three. We all here know which of those three have demonstrated the best performance over time.

 

I just believe it's important to understand the environment in which you're heading into. I think it gives you the proper understanding of what it is to do. For example, different types of businesses DO NOT all perform well during a period of extreme inflation, most don't actually. Another is that there can be quite large consequences politically. Lastly, having a good amount of cash preceding a historic debt crisis may offer you generational opportunities.

 

Greatest energy shock in history?  What is everyone smoking!  It's a shock...crisis...but greatest in history?

 

I'm not against you holding large amounts of cash for opportunity...it's exactly what I do often.  The difference is if I find something cheap...and yes, I'm willing to buy it and hold for the long-term if necessary...I buy it. 

 

I would just be very careful picking and choosing comments by Buffett or anyone else, or using stats in a vacuum, to back up a stance.  

 

All I know is Buffett and Prem are extremely aware of history and valuation, yet both have most of their net worth invested in their own companies and decided to start/invest in them.  Buffett started with $100 of his own money, Prem bet everything he owned...but both were never afraid to invest and build their wealth.  Prem started after the actual greatest energy shock and 18% interest rates!  

 

While their cash position moves up and down, they continue to look for cheap assets till this day...when we are going through the greatest fiscal crisis facing the U.S. and the greatest energy shock in history!  Cheers!

 

 

[Parsad]

5 minutes ago, Gregmal said:

The difference is my man @cubsfanis invested and enjoying life. 
 

Like cheer up, stop fretting most of the real stuff that’s out of your control, definitely stop fretting all the made up stuff that you go out of your way to look for on the internet, and start getting on with your life. 
 

The best part about being in your 20s is you can take obscene risks because your timeline is huge and you probably aren’t playing with money that matters anyway. It’s like the dudes who boasted about owing those $10k per person Ibonds in 2022 and it’s like….congrats you locked up your money for $700 LOL you coulda bought UBER for $22, but good job!

 

Yes, I agree with that...not the Cubs part...the rest!    How can you enjoy life as a Cubs fan?

 

At 21, I was raising my 9 year old brother with my young widowed Mom...paying for a funeral with less than $5,000 to my name and a credit card with a $1,000 limit...probating my Dad's estate/will...attending parent/teacher conferences with my Mom...sleeping in my car at the beach after arguing with my meddling aunt and her husband...while working full-time at a gas station wondering if I will ever go back to University. 

 

I was too busy coaching my brother's soccer team, helping with homework, taking him to movies, the doctor, dentist, family, friends, birthdays, Christmas, holidays, etc...the end of the world was already here for our family...I wasn't worried about portfolio risk or even a portfolio! 

 

Funny what seems important or critical really isn't in the grand scheme of things.  All I know is that eventually opportunity reared its beautiful head and I found a path out for myself, my Mom, my brother and indirectly my niece and nephew!  I can't imagine them living life with fear of what is down the road and not taking risk to make their dreams come true!

 

Again, wasn't the pandemic the end of the world?  My niece and nephew are sitting on account/college funds at 8 and 11 where they won't need any outside funding already...Uncle helped Daddy load up their education funds and all of their other accounts with Fairfax at $480 CAD and META at $150!  Cheers!

[TwoCitiesCapital]

7 hours ago, Paarslaars said:

My macro thesis is rather simple, the new fed chair has been given one clear mandate from Trump and that is to cut rates. Don't think oil rising is going to change that... and when rates go down, risk-on assets go up.

 

Is that what happened in 2007? 

 

8 hours ago, Viking said:

The inflation angle is the one I find the most interesting. Are we really are in a regime change period (higher lows and higher highs) moving forward? Brian Bradstreet talked about this at past AGM's. Gundlach said the exact same thing in the video below. Of course, interest rates are the most important input to valuation. If we are in a regime change with interest rates that has profound implications for investors moving forward (just like what happened when interest rates went from 18% to below zero from 1980 to 2020).

 

I tend to think you're right here. Even after what was experienced in 2021/2022, it basically guaranteed higher average inflation for the decade. And here we are again in another energy shock. 

 

Does it play out the same? Flat GDP with inflation turning back up a la 2022? Or do we actually get a recession and government  spending a la 2020/2021?

 

Either we see the inflation from the energy shock OR we see the inflation from the money printer IMO. Question is how much and whether it's a 2026 or 2027 event. 

 

I think Gundlach might already be right. He has talked for a few years about high yield's ability to refinance in a rising rate environment. Look what's happening to private credit and PIKs and finding buyers banks to fund these ventures now? HY spreads are still quite contained, but I expect the trend upwards may continue. 

 

 

[frommi]

8 hours ago, Parsad said:

I think trying to analyze macro or even implementing it into a long-term investment strategy is probably more harmful than beneficial to your portfolio.  As an investor, I don't give two shits about inflation, deflation or stagflation.  Buy stuff when it's cheap, sell when it's dear, leave the brainiac stuff to those that think they are convinced they are smarter than the markets!  Cheers!

You bought HSY when cocoa prices skyrocketed and HSY price dropped because of that, wasn't that also a macro bet that cocoa prices will come down again?
Or FFH when interest rates were ramping up like crazy in 2021?

If we like it or not, macro has a profound impact on security prices and ignoring it is fine if you know it. But not knowing that you do it and than wondering why the stock price doesnt move your way is not smart? For example a lot of investors think that REIT's or Utils or Dividend stocks in general are cheap right now, but thats only because they compare the prices to when 10y bond yields were 1%. So when you buy them you bet that interest rates go back down. Isn't that a huge macro bet?

[Parsad]

1 hour ago, frommi said:

You bought HSY when cocoa prices skyrocketed and HSY price dropped because of that, wasn't that also a macro bet that cocoa prices will come down again?
Or FFH when interest rates were ramping up like crazy in 2021?

If we like it or not, macro has a profound impact on security prices and ignoring it is fine if you know it. But not knowing that you do it and than wondering why the stock price doesnt move your way is not smart? For example a lot of investors think that REIT's or Utils or Dividend stocks in general are cheap right now, but thats only because they compare the prices to when 10y bond yields were 1%. So when you buy them you bet that interest rates go back down. Isn't that a huge macro bet?

 

I bought HSY because it had fallen in value...nothing to do with cocoa prices other than markets reacted.  Bought FFH through early and mid-2020.  Also nothing to do with macro...was just dirt cheap at 0.6 times book.  Bought META in 2022...again, nothing to do with macro...people thought Zuckerberg had lost his mind and the stock fell by nearly 70%.  It's always fun to talk about macro, politics, etc...but they should not really play any significant role in your investment portfolio if you are buying individual stocks.  It's as simple as that.  Cheers!  

[frommi]

But what if that value was only value when the macro prices changed? What if Fairfax was only at 0.6x bookvalue because interest rates were very low and if they stayed low it would have been the fair value for Fairfax?

With HSY its even more obvious, because their COGS has gone up a lot that year, if cocoa prices stayed that high maybe HSY was at fair value at 140$?
Meta is a different story, but if they had continued plowing all their money into the Metaverse maybe than even Meta was at fair value?

Edited March 29 by frommi

[Paarslaars]

11 hours ago, Hoodlum said:

Trump can only control short-term rates.  Long bond yields may actually rise in tandem, if the bond market believes the rate cuts would stoke inflation further.  This could actually help increase US government borrowing costs. 

Yes you're right, he will still do it though but faces the consequences. How would he proceed then? Doesn't look like he is planning to increase taxes or impose austerity measures, so the only alternative is to print more money? Also seems bullish for risk-on assets, at least on the short term.

 

I love learning more about macro, I find it quite interesting. Though I agree with the others here that making investment decisions on it is a game where I do not believe the retail investor has an edge... 

[Milu]

For ambitious well-read investors who have consumed everything on Buffett I think the idea we can predict and take advantage of macro is a phase we all go through. For most of my 20’s I was more cautious, held excessive amounts of cash waiting for drawdowns, had a fool proof strategy based on shiller PE, Buffett indicator (market cap to gdp), hussman funds various historical valuation metrics. It’s seems logical smart and prudent. It also gave me a sense of satisfaction holding my nice cash stores (earning about 0%), and looking down with pity at the lemmings buying the dip while I was waiting until this period of exuberance ran its course. Then as you start to hit your 30s you start to questions things, the stocks I held keep charging forward, any downturns are mostly short lived, and you start to see that even when bad things happen they can impact the market in many unpredictable ways. As you hit mid thirties you mostly come to the conclusion that being influenced or investing based on macro is mostly pointless and best strategy it to ignore it and just buy things you believe are fairly priced regardless of where we are in a cycle or what crazy things (wars, inflation, interest rates) are going on in the world. Save the brain power for researching the investments rather than worrying about macro. While I still hold some cash (maybe 10% or so) investing for me became a lot more straightforward and successful when I paid less attention to shiller PE (couldn’t even tell you where it’s at), hussman, Tobin’s Q ratio etc. 

 

Edited March 29 by Milu

[Saluki]

I started my legal career as an M&A Attorney. In that field you have to "look around corners" and anticipate problems because if there are 20 attorneys in a room, all billing at hundreds of dollars an hour and a few bankers ready to wire a few billion dollars and the deal doesn't close because of something that you were responsible for, you'll be fired and probably have to switch to becoming a personal injury lawyer.

 

About 3 years ago, I was already worrying about stagflation so I thought about who did well investing in that area, and how, and I ordered John Neff's book.

 

A lot of value guys have been struggling for the past 15 years. Some former "next Warren Buffetts" like David Einhorn even blamed the market, not themselves, saying that it's broken. 

 

The bad news is that stagflation sucks and people suffer. The silver lining is that Neff seemed to knock the cover off the ball by using traditional Graham and Dodd style value investing which seemed to have stopped working recently. There are many people here who still worship the old gods. 

 

So, I recommend the book if you want to add something to your library. If not, just dust off your copy of Graham and Dodd's Security Analysis (whichever edition you have) and get to work re-reading it. I have 3 editions, and the original 1934 edition is my favorite. The 5th Edition is terrible (over processed like a chicken McNugget vs real chicken). 

[frommi]

Dont get me wrong, i dont think i can predict macro. But Buffett and Munger often talk about shooting fish in a barrel. Fairfax in 2021 was that fish, because interest rates had already gone up a lot and it was very clear that Fairfax will profit from that and Fairfax was still very cheap. That was also when Prem was betting big on it.
But there were also a lot of people on this board that thought CHTR was good value at 400$ complety ignoring how  high interest rates and higher CAPEX will eat into their FCF.

To survive the stagflation i think you need these components
1) Clean balance sheet with very little debt (or at least fixed interest for a long time, but better there is not a lot)
2) CPI linked revenue or a lot of pricing power
3) High margins or very little commodity linked costs.
4) low price to cashflow (because when discountrates go up, expensive stocks will get hurt the most)

I think software businesses, stock exchanges or Sky Harbor fit very nicely into this scheme and i think these businesses will do fine regardless of the macro environment. But who knows maybe i am wrong on that also.

EDIT: NCAV stocks should also do fine, because when interest rates go up they earn more interest on the cash piles. (at least the ones that have a cash pile)
 

Edited March 29 by frommi

[John Hjorth]

8 hours ago, Parsad said:

Yes, I agree with that...not the Cubs part...the rest!    How can you enjoy life as a Cubs fan?

 

At 21, I was raising my 9 year old brother with my young widowed Mom...paying for a funeral with less than $5,000 to my name and a credit card with a $1,000 limit...probating my Dad's estate/will...attending parent/teacher conferences with my Mom...sleeping in my car at the beach after arguing with my meddling aunt and her husband...while working full-time at a gas station wondering if I will ever go back to University. 

 

I was too busy coaching my brother's soccer team, helping with homework, taking him to movies, the doctor, dentist, family, friends, birthdays, Christmas, holidays, etc...the end of the world was already here for our family...I wasn't worried about portfolio risk or even a portfolio! 

 

Funny what seems important or critical really isn't in the grand scheme of things.  All I know is that eventually opportunity reared its beautiful head and I found a path out for myself, my Mom, my brother and indirectly my niece and nephew!  I can't imagine them living life with fear of what is down the road and not taking risk to make their dreams come true!

 

Again, wasn't the pandemic the end of the world?  My niece and nephew are sitting on account/college funds at 8 and 11 where they won't need any outside funding already...Uncle helped Daddy load up their education funds and all of their other accounts with Fairfax at $480 CAD and META at $150!  Cheers!

 

Thank you for sharing that story, Sanjeev [ @Parsad ],

 

I've read about it from you earlier here on CofB&F, but not so detailed before. You're a blessing for your family.

 

In Danish, we have this proverb : 'Modgang gør stærk' [English : 'Adversity makes strong']. 

 

You've become an adult early in one of the worst scenarios imaginable as background for it.

[Milu]

2 hours ago, frommi said:

To survive the stagflation i think you need these components
1) Clean balance sheet with very little debt (or at least fixed interest for a long time, but better there is not a lot)
2) CPI linked revenue or a lot of pricing power
3) High margins or very little commodity linked costs.
4) low price to cashflow (because when discountrates go up, expensive stocks will get hurt the most)

Would this not be a good list of criteria for an investment regardless of stagflation or any other environment?

[Paarslaars]

2 hours ago, Milu said:

Would this not be a good list of criteria for an investment regardless of stagflation or any other environment?

Yeah kinda the point Greg was making, stop caring about the macro side and just look for quality.

[Gregmal]

The only macro that’s really important to understand is the efficiencies of exploiting psychology. 
 

Lately, as in probably the last 5-7 years or so(coinciding with Trump but IMO not necessarily because of him) is this dire need for the charlatans to present every issue as an existential one. 
 

Sure, we d all seen enough movies that in the beginning, it’s at least understandable how people got scared with COVID. But outside of that, rate hikes, recessions, wars, etc…people seem to have lost their god damn minds. And the media focus aspect of it is big. But the issues are also greatly exacerbated by every retail guy and short term fund/trader thinking they’re smarter than the markets. They’ll “get out” ahead of it all….the big, (pause), (gulp), then whisper….decline! is always presented as your 2007 Sopranos Finale style…all goes to black moment. Investors largely have one edge, and you can find the Buffett or Munger quotes on this, but it’s time.
 

One of the great ironies when it comes to these smarty pants know it all investors is that they’ll mock people with the sarcastic “stonks only go up” stuff…but then act like “stonks going down” is totally unacceptable. They’ll misuse the Buffett quote of “don’t lose money”….its greatly ironic, hilarious, and an advantage to people who just understand that this is how things work. I mean, if stonks don’t always go up, that means sometimes they go down too! And if one’s fully aware of why they are investing in, shouldn’t the ups and downs simply be part of the process? Volatility is not a violation of “don’t lose money” lmfao. Unless you’re beholden to playing some financial version of red light, green light, where the media and transient events become your daddy, all this stuff just seems like a wonderfully curated campaign manufactured by the brokerage houses and options folks whom benefit off such irrationality. 

[Spooky]

I'm in the camp of not trying to make macro predictions. It is just not possible to do so with any kind of edge. Even people like Bridgewater / Ray Dalio only have a 50/50 track record. Essentially flipping a coin. The global economy is such a complex adaptive system it is impossible to predict what will happen in the short term.

 

However, it is important to stress test your stocks / portfolio for different economic environments. I like this framework from Bridgewater which sets out four different mutually exclusive scenarios:

 

 

 

I am running a more concentrated portfolio so like to own companies with excellent balance sheets that can weather any economic conditions coming their way. 

 

 

[Sweet]

Does Dalio have a 50/50 record?  I think that’s generous.  Gundlach, Druckenmiller, Burry etc etc, their macro calls have been just terrible.

 

Blake is right the deficit and debt is a problem but it can be fixed too.

 

Edited March 29 by Sweet

[cubsfan]

1 hour ago, Gregmal said:

The only macro that’s really important to understand is the efficiencies of exploiting psychology. 

 

That seems so right these last few years.

[Gregmal]

10 minutes ago, Sweet said:

Does Dalio have a 50/50 record?  I think that’s generous.  Gundlach, Druckenmiller, Burry etc etc, their macro calls have been just terrible.

 

Blake is right the deficit and debt is a problem but it can be fixed too.

 

Yea 50/50 is a joke. The problem is most of these guys are dishonest and more so marketing wizards than market wizards. Klarman is a good example. Burry for instance, has “called” a few things…but only because he’s always “calling” something. His hit rate is pathetic, so who cares? People around here love Howard Marks for some reason; ever read his shit? It’s rambling garbage that one week is bearish the next week is bullish but always wrapped in obscurity and non committal “anything can happen” cop out crap. 

[cubsfan]

13 hours ago, Parsad said:

 

Yes, I agree with that...not the Cubs part...the rest!    How can you enjoy life as a Cubs fan?

 

At 21, I was raising my 9 year old brother with my young widowed Mom...paying for a funeral with less than $5,000 to my name and a credit card with a $1,000 limit...probating my Dad's estate/will...attending parent/teacher conferences with my Mom...sleeping in my car at the beach after arguing with my meddling aunt and her husband...while working full-time at a gas station wondering if I will ever go back to University. 

 

I was too busy coaching my brother's soccer team, helping with homework, taking him to movies, the doctor, dentist, family, friends, birthdays, Christmas, holidays, etc...the end of the world was already here for our family...I wasn't worried about portfolio risk or even a portfolio! 

 

Funny what seems important or critical really isn't in the grand scheme of things.  All I know is that eventually opportunity reared its beautiful head and I found a path out for myself, my Mom, my brother and indirectly my niece and nephew!  I can't imagine them living life with fear of what is down the road and not taking risk to make their dreams come true!

 

Again, wasn't the pandemic the end of the world?  My niece and nephew are sitting on account/college funds at 8 and 11 where they won't need any outside funding already...Uncle helped Daddy load up their education funds and all of their other accounts with Fairfax at $480 CAD and META at $150!  Cheers!

 

Now that is a wonderful story of dealing with adversity and never giving up when it looks like all is lost.  Just think, and some of us are upset about a little market volatility or cloudy macro.

 

In many ways, this is what makes you a man.

[SharperDingaan]

We're with Gregmal on this ... 'cause it really is funnier than hell 

 

The issue is not inflation (whatever name), it is the magnitude of the interest rate at the term chosen; real + inflation rate. Everybody and his uncle around the world borrowing for defence, infrastructure build, trade deficits, etc. bidding for funds in a globally competitive market for the savings ... what do you think happens to the real interest rate .

 

We've had cheap money ever since 2000; MBS, GFC I and II, negative interest rates/QE, Covid, yada, yada, yada. One has to look back to the 1980's and 1990's to get any idea as to high 'normal' is; before handicapping it for change in the economy over the last 25-40 years!. Back then ... the more 'normal' 5-yr fixed rate mortgage in Canada was around 7-8%. Another 50% over where we are - just to get back to 'normal'  

 

Most of this 'angst' is mindset. If you're an analyst < 40, your 'norm' for your entire working life to date, has been nothing but a low interest rate environment experience. Tell me what to do !!! Opportunity 

 

You only need a 12% ROE to double in 6 yrs; simply sit on your ass at no risk, and buy a 6 yr+ Treasury/Canada with a YTM of 12%; interest in your spending currency, adjust via the coupon rate, according to income requirements. And should a G7 issue a zero-coupon bond, kiss 'em 

 

So what? Bond funds fall like a brick, housing becomes more affordable (post collapse), indices fall a little less so; all of which are not a bad thing. But terrifying, if you and your network have never experienced this kind of thing before ....

 

Example. Toronto and Vancouver have a great many 'investor' condo's; a one room, bathroom, and maybe a small galley kitchen, impossible for a family to live in. Hard to sell, even at deeply discounted prices; many builders part-way through construction expected to bankrupt. The obvious solution is a asset purchase out of bankruptcy, unit completion, and a re-purpose as a long term homeless shelter. New builds, hundreds of people accommodated, and at an annual cost well below what it costs agencies today.

 

Radical change, is not necessarily a bad thing.

 

SD 

 

 

Edited March 29 by SharperDingaan

[Libs]

Buffett once mused that people are born on either side of this fence, and moving them to the other side is impossible. 

I, for example, can't imagine selling an undervalued holding because I fear the price dropping further in a market break. It would kill me when the inevitable happens (it skyrockets afterwards).

 

This approach is hard-wired into me, by pure luck. It's worked for 35 years. I'm also lucky that Buffett and others I respect heartily endorsed this approach. That makes it easier to stick to.

 

I have a good friend, now 75, with a miserable multi-decade investing record; he's purely a macro guy. Once I was trying to convince him of the merits of just buying something rock-solid like Berkshire for the long term. He said, "analyzing an individual stock is too difficult. Too many moving parts. It's much easier for me to predict interest rates, inflation, etc. etc. "

 

I'll never forget that. He has it exactly backwards. I think he treated stocks like  casino ( got wiped out by Enron) and then decided the whole stock market was just a gamble.

 

There are a LOT of people like that. 

 

 

[TwoCitiesCapital]

8 hours ago, Milu said:

For ambitious well-read investors who have consumed everything on Buffett I think the idea we can predict and take advantage of macro is a phase we all go through. For most of my 20’s I was more cautious, held excessive amounts of cash waiting for drawdowns, had a fool proof strategy based on shiller PE, Buffett indicator (market cap to gdp), hussman funds various historical valuation metrics. It’s seems logical smart and prudent. It also gave me a sense of satisfaction holding my nice cash stores (earning about 0%), and looking down with pity at the lemmings buying the dip while I was waiting until this period of exuberance ran its course. Then as you start to hit your 30s you start to questions things, the stocks I held keep charging forward, any downturns are mostly short lived, and you start to see that even when bad things happen they can impact the market in many unpredictable ways.

 

 

I don't disagree. I was also quite a bit more cautious early one. The first two stocks I ever purchased were Ford and Bank of America in 2006/2007 respectively. Watching them go down by 90% might've influenced something in me. I still place a lot of importance on macro, and still watch things like inflation trends, interest rates, etc. but have moved more towards the center of buying things when cheap (like I'm still buying JACK, and MOH, and Foran Mining, Fairfax Finacial, and Fairfax India today). 

 

But that being said, I don't think this progression you linked above is necessarily natural and the right way. I think it's just a reflection that we have had ~25 years of the Federal Reserve and Federal Government bailing out markets at any point there is trouble. Something that may end sooner rather than later. 

 

Any history pre-2000 shows that macro is, in fact, important. Investing through the 70s was catastrophic. -50% inflation adjusted returns over the course of a decade is a far cry form the 7-9% and positive real returns we were told to expect and count on for retirement.

 

The market has spent the last 20 years loading up on duration that was mispriced for a low rate environment (long high multiple tech). That concentration still exists in the market structure today but the low rate/low inflation environment might be changing. 

 

And I believe it is precisely the WRONG concentration to have if interest rates/inflation are not going to be remain at generational lows and may move to a higher equilibrium. You want energy and materials - probably the sectors that are most underweighted in the indices today.

 

We don't need runaway inflation of the 70s to get terrible returns for the average equity - you just need inflation average 3-4% year to wreck equities trading at 20-30x earnings which make up the majority of the index. It gets even worse if that 3-4% isn't a consistent 3-4% but rather spikes to 9+% and valleys of 0-2%. 

 

8 hours ago, Milu said:

As you hit mid thirties you mostly come to the conclusion that being influenced or investing based on macro is mostly pointless and best strategy it to ignore it and just buy things you believe are fairly priced regardless of where we are in a cycle or what crazy things (wars, inflation, interest rates) are going on in the world. Save the brain power for researching the investments rather than worrying about macro. While I still hold some cash (maybe 10% or so) investing for me became a lot more straightforward and successful when I paid less attention to shiller PE (couldn’t even tell you where it’s at), hussman, Tobin’s Q ratio etc. 

 

 

I think we might be witnessing the regime change that makes something like a Tobin's Q all the more important again. 

 

Hard assets > GPUs for the next 5-10 years IMO. 

 

Edited March 29 by TwoCitiesCapital

[Sweet]

1 hour ago, Gregmal said:

Howard Marks for some reason; ever read his shit?

I subscribed to H. Marks and then unsubscribed a few weeks later.  Dalio, a bit like Burry, the guy who called the 08 housing crisis is often how he is introduced, just terrible to read.  I like Druckenmiller, he calls himself out, and he clearly doesn’t pay much attention to his own calls - the only guy from the above who doesn’t take himself too seriously.

 

Edited March 29 by Sweet

[Gregmal]

15 minutes ago, Libs said:

There are a LOT of people like that. 

Yup. They think volatility = risk, and drawdown = loss of money. 
 

While also believing that market go up = money that’s earned. While market goes up 10%, and declines 5% = I lost 5%! 

One is far better off viewing investments through the lens of seeding and harvesting. You can also have various different and uncorrelated gardens to seed and harvest simultaneously. Rather than piss pouting and pontificating about macro crap. For instance, in 2021/2 I made private investments in Ripple, Emulate Bio, and Cerebras. Oh no how could I? Tech was imploding, you cant fight the Fed, funds were blowing up, cash is king…Ripple has already paid me back in cash and mark to market it’s a 10x. Emulate went bankrupt, 100% loss. Cerebras is looking to IPO soon at likely 5x. Seed, harvest. Always something to do.