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Tuesday, December 29, 2020

Dave Collum: 2020 Year In Review

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Imagine, if you will, a man wakes up from a year-long induced coma—a long hauler of a higher order—to a world gone mad. During his slumber, the President of the United States was impeached for colluding with the Russians using a dossier prepared by his political opponents, themselves colluding with the FBI, intelligence agencies, and the Russians. 

A pandemic that may have emanated from a Chinese virology laboratory swept the globe killing millions and is still on the loose. A controlled demolition of the global economy forced hundreds of millions into unemployment in a matter of weeks. Metropolitan hotels plummeted to 10% occupancy. The 10% of the global economy corresponding to hospitality and tourism had been smashed on the shoals and was foundering. 

The Federal Reserve has been buying junk corporate bonds in total desperation. A social movement of monumental proportions swept the US and the world, triggering months of rioting and looting while mayors, frozen in the headlights, were unable to fathom an appropriate response. The rise of neo-Marxism on college campuses and beyond had become palpable. 

The most contentious election in US history pitted the undeniably polarizing and irascible Donald Trump against the DNC A-Team including a 76-year-old showing early signs of dementia paired with a sassy neo-Marxist grifter with an undetectable moral compass. 

Many have lost faith in the fairness of the election as challenges hit the courts. Peering through the virus-induced brain fog the man sees CNBC playing on the TV with the scrolling Chiron stating, “S&P up 12% year to date. Nasdaq soars 36%.” 

The man has entered The Twilight Zone.

Taylor Collins: Commodities And Market Rotation

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Commodity prices and performance of many resource-related stocks have been picking up recently. In addition to this, many of the wildly popular, most-talked about tech/growth stocks now seem to be going sideways and/or sputtering altogether. If we go back just a few months to July of this year, NASDAQ was up almost 20% YTD, and we've all probably heard about the record IPO filings and insane valuations on many of those stocks (something we've discussed previously). 

It appears that we are witnessing a market rotation out of tech/growth and into value, and I believe this is just getting started.

There is a great saying from the historian James Grant, "Progress is cumulative in science and engineering,  but cyclical in finance." We will revisit this idea later, but for now let's take a look at a few indicators of commodity prices since the COVID correction back in March.


Sunday, December 27, 2020

Chris Mayer: A Tale of Bubbles Past

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Winter invites reflection. As I look back on the year, I am sure I am not alone in thinking 2020 has been unlike anything I’ve ever experienced. But in the stock market, at least, I do have a certain feeling of déjà vu.

In the course of cleaning out a section of my office -- something I have to do every once in a while or risk burial by books and paper -- I came across a stack of old magazines that make my point.

This magazine was called Technology Investor and it debuted -- I am not making this up -- in March of 2000. As you may know, that was the peak of the great tech bubble. The magazine had an eye-catching cover, as you can see.

The NASDAQ peaked on March 10, 2000. It was a Friday. And the close was 5,048.62. Then the party ended. The NASDAQ didn’t bottom until October 2002, after it lost 78% of its value.

Saturday, December 26, 2020

Charlie Munger: How to Identify a Resilient Economic Moat

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When considering a company's investment potential, according to Warren Buffett (Trades, Portfolio), it is critical to determine whether it has "a moat around it with a very valuable castle in the middle." While such a moat can take different forms, its function is the same: protecting the company from competitive threats.

"Moats have been breached time after time. Imagine the Eastman Chemical Company going broke. Imagine all these great department stores being on the edge of extinction. Imagine all those monopoly newspapers going down. Look at the strength of the American auto industry compared to what it was, say in 1950. I think the moats are disappearing rapidly. I mean the old classical moats. I think it's probably a natural part of the modern economic system, as in old moats stop working."

"Berkshire owns the Burlington Northern railroad. You can hardly think of a more old-fashioned business than a railroad business. It's an excellent asset. Who is going to create another trunk railroad? We made that a success, not by conquering change but by avoiding it. It helps to have a position that almost can't be taken away by technology. How else will you haul goods across the land, from Los Angeles to Chicago?"

Friday, December 25, 2020

Sam Zell: The Single Greatest Risk' Facing Americans Could Hit Within Decade

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“The single greatest risk that we are dealing with today is the loss of the U.S. dollar as the reserve currency,” Sam Zell, the founder and chairman of Equity Group Investments said in recent RealVision interview.

“If we keep doing what we are doing right now, I think it is 10 or 15 years away,” he was quoted by MarketWatch as saying.

“A 25% reduction in our standard of living” could take place if the dollar loses its reserve status, which he says is a very real possibility, he said.

“Unlimited debt and irresponsible activity don’t lead to positive outcomes,” the billionaire real-estate mogul added. “That’s a disastrous kind of scenario.”




Wednesday, December 23, 2020

Charlie Munger: CalTech interview 14. December 2020



 
Charlie Munger appeared for the first time since January on a public interview with Caltech faculty.


Crescat Capital: December Research Letter The End Game

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Markets are cyclical. Today, stocks trade at record high valuations while commodities are historically undervalued in relation. The setup is in place for a macro pivot in the relative performance of these two asset classes. Comparable conditions were present with the 1972 Nifty Fifty and 2000 Dotcom bubbles as we show in the chart below.

As capital seeks to redeploy towards the highest growth and lowest valuation opportunities, we expect analytically minded investors will soon be rotating, if not stampeding, out of expensive deflation-era growth equities and fixed income securities and into cheap hard assets, creating a reversal in the 30-year declining trend of money velocity.

Today’s Modern Monetary Theory world with its double barreled fiscal and monetary stimulus is crashing head on with an accumulation of years of declining investment in the basic industries such as materials, energy, and agriculture. In our analysis, the “end game” for the Fed’s twin asset bubbles in stocks and bonds is inflation. We can already see it developing on the commodity front.

Monday, December 21, 2020

Taylor Collins: Mind Blowing Valuations – Tesla, AirBnB, DoorDash

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The stock market, and in particular, stocks popular among millennial “Robinhood traders” (who have never had the privilege of experiencing a deflating bubble) have been all the rage lately.

It’s fascinating to see companies like Tesla being added to the S & P 500, when it took 16 years for the company to even turn an annual profit. What’s even more astonishing is the enormous market capitalization of Tesla (and similar companies we’ll look at), when compared with their senior and more established competitors.

Tesla’s market cap currently stands at $658 billion ($659 billion if rounding up), beating out Warren Buffett’s Berkshire Hathaway by roughly $133 billion. This is incredible considering Tesla only has a global market share of 1% for passenger vehicles. The chart below illustrates how Tesla’s market cap exceeds the combined market cap of the world’s biggest auto makers – keep in mind Tesla has added 80 billion to their market cap since this chart:

Sunday, December 20, 2020

Frank Holmes: Bitcoin Cracks Record High Due To Institutional Buying

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This week the Federal Reserve left interest rates near zero and committed to continue its bond-buying program until “substantial progress” has been made regarding employment and inflation. Initial jobless claims increased for the second straight week, hitting 885,000 in the week ended December 12—the most since early September.

I was floored to see just how much the Fed is buying—and will continue to buy—each month. The central bank is gobbling up as much $120 billion of debt, split between $80 billion of Treasuries and $40 billion of mortgage-backed securities (MBS).

The size of the Fed’s balance sheet now stands at a staggering $7.36 trillion, or 34% of gross domestic product (GDP).

Saturday, December 19, 2020

MacroVoices #250 Kyle Bass: Commodity Bull Market, Inflation & Singapore

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All-time highs despite the pandemic – are we shifting into a new paradigm?

Impending inflation and how to trade it 

Is gold still the best hedge against fiat debasement?

Is the bond bull market finally done and are we headed toward negative yield?

Negative yields in Europe – will this recover as inflation begins?

How will Biden administration change the macro outlook?

Implications of electrification of the economy

Will Singapore be replacing Hong Kong as the financial center in Asia?

Perspectives on crypto currencies

Thursday, December 17, 2020

Jesse Felder: Find The Courage To Act

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A few months ago I wrote Master The Art Of Doing Nothing, in which I argued that, while it may be the most difficult thing for an investor to do, the vast majority of the time an investor should simply do nothing at all. Truly wonderful opportunities don’t come around very often but having the patience to wait for them is what separates the best investors on the planet from the rest.

However, it’s not only the waiting that is critical to success; it is also the courage to act when the time arises. Aside from being too active, another major mistake investors make is simply being too timid, or becoming too comfortable with doing nothing at all and this can be just as costly if not even more so. As Warren Buffett has said, mistakes of omission, or failing to act, have cost him far more than mistakes of commission, or acting when he shouldn’t have.

Tuesday, December 15, 2020

Crescat Capital November Performance Update

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Surrounded by speculative excess everywhere, our short positions in select hyper-overvalued US equities remain key tactical holdings in Crescat’s Global Macro and Long/Short funds. November’s market move appears to be a last gasp for stocks, which are suspiciously out of sync, with the downturn in the business cycle already in progress. In our view, investor positioning is historically imbalanced based on a composite of indicators:

-The put to call ratio for US stocks just hit its lowest level since 2000

-Options volume has surged to its highest on record

-21.6% of all call options were bought by small traders, the largest level since the tech bubble

-Median short interest for the S&P 500 has plunged to 17-year lows

-We now have the largest percent of S&P 500 members above their 200-day moving average in 7 years

-Market sentiment, measured by the Investor’s Intelligence, is at its highest level since just prior to the Volmageddon shock in 2018.

-According to SentimenTrader, for the 1st time in 15 years, 60% of their indicators are showing an excessive amount of optimism, the highest reading yet.

Monday, December 14, 2020

Mohnish Pabrai Shares Insights on Identifying 10 to 100-Baggers - Part 1

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Renowned value investor Mohnish Pabrai (Trades, Portfolio) recently gave a lecture for the Fall 2020 Value Investing Course at Peking University's Guanghua School of Management. During the lecture, Pabrai shared his insights on how to spot 10 to 100-baggers, which he calls the holy grail of investing. Pabrai also held a question-and-answer session after the lecture in which he answered questions from students and sit-in audience. 

Sunday, December 13, 2020

Jim Rogers: Market crash coming? Jim Rogers says not yet; invest in these 'hated' assets


There’s simply too much money injected into the monetary system by central banks to allow a sizeable bear market to take place soon, said Jim Rogers, investor and chairman of Rogers Holdings.

“Many stocks in the U.S. are down in 2020. There are a few stocks that are going through the roof every day. Some parts of the U.S. market are developing a beginning of a bubble, but many parts of the markets are not, that’s why I suspect [this rally] is going to go on for a while,” Rogers said.


Friday, December 11, 2020

Frank Holmes: Still Plenty of Gas in the Base Metal Rally Tank

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Industrial metals are well on their way to being among the top performers of 2020, supported by red hot demand from China and global supply concerns.

As of today, the MSCI Industrial Metals Index—which tracks the price of copper, nickel, aluminum and more—was up 21.4% year-to-date, just below the index of precious metals, up 21.9%. The broader S&P GSCI, which measures metals as well as agricultural and energy-related commodities, was underwater by nearly 10%.

I believe the rally is only getting started, and we could see ever higher asset prices in 2021, for a couple of significant reasons.

Number one, President-elect Joe Biden plans to make infrastructure one of his top priorities soon after taking office next month. Proposals have the U.S. spending as much as $2 trillion not only to improve roads, bridges and seaports but also beef up the EV sector, add charging stations, convert school buses to zero emissions and more.

Tuesday, December 8, 2020

Horizon Kinetics: Two Assessments of Energy: ‘The Market’ and Contrarian (fact-based) Investing

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Today we’re talking about energy. Not exclusively, but mostly. Specifically because many of you have been asking about how the fossil fuel divestment movement and green energy initiatives will impact the energy sector – more frequent questions, and more alarmed. Ifwe don’t address this, there might not be the mind space to hear anything else. The fear isthat there will be such a drastic collapse of oil and gas use, or that, as some have suggested, fossil fuel use will be non-existent by the year 2035, that it will create a permanent failure among energystocks; stranded assets, and all of that.

We see the investment reality entirely differently; entirely. The imminent danger is not the collapse of fossil fuel use; the imminent danger is an oil supply shortage and oil price shock. 

Monday, December 7, 2020

Frank Holmes: Dr. Copper Gives the Economy a Clean Bill of Health

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“Dr. Copper,” so named for the metal’s ubiquitous use in many different applications, has been ripping higher since its 52-week low in March, thanks to a number of factors including promising economic data. Copper rose 12.24% in November, its best month in four years. Today it was trading as high as $3.52 per pound, or $7,679 per ton, its highest level since March 2013.

The rally is due in large part to higher demand from manufacturers in the U.S., China and eurozone. For the month of November, the IHS U.S. Manufacturing PMI hit 56.7, up significantly from 53.4 in October. The month-to-month increase was the sharpest since September 2014, according to IHS Markit.

Sunday, December 6, 2020

Howard Marks: Prospective Returns Are Low on Everything.’ Howard Marks Outlines Investment Opportunities, Risks

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Barron’s: What’s the biggest question we’ll face when the Covid-19 pandemic winds down?

Howard Marks: The rate at which we’ll return—and the extent to which we’ll return—to our prior behavior. My guess is we’ll go a good bit of the way back to what used to be business, or life, as usual. For the most part, life won’t be fundamentally changed. The things that you or I now would consider out of the question, like going to the movies, a sporting event, or a party, will become commonplace again once the disease is under control.

You’re not a stock picker, but do parts of the stock market look appealing?

On the other hand, when you look at the nontech companies, there are a lot of areas where business models are severely challenged by the pandemic and other trends. If you can find among those companies some where the reality isn’t going to be as bad as the expectation, then you can make money in those holdings. It is all a matter of looking for situations where the merits are underestimated by investors.

Saturday, December 5, 2020

Smarter Markets - Robert Friedland: Envisioning commodities graded & traded on how responsibly they're produced

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Billionaire Canadian financier Robert Friedland headlines the inaugural episode of Smarter Markets, and shares a vision of commodities being graded based on how responsibly they were produced with regard to ESG priorities, thus allowing free market price discovery to determine a market premium to reward responsible producers of metals and other commodities which have historically had an adverse environmental impact. 

Robert goes on to share his vision for how a distributed ledger (blockchain) could be used to hold commodity producers to account and assure buyers of commodities that they've received the full and true details of how those commodities were produced.

Also discussed is the metals that will be needed for the proposed energy transiton.


Wednesday, December 2, 2020

Ronald Stöferle: Inflation special report

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Our special report on inflation is finally out. Inflation is quickly becoming one of the main topics of due to the events which have especially unfolded this year. A whole arranges of topics and factors play into it, and we took the time to unpack them all. 

Every regime has its paradigm. For the past 40 years it has been a deflationary paradigm. Inflation was to be killed and this can be seen in many articles and publications. The symbol was the defeat of stagflation in the early 80s. All of this has now undoubtedly turned to inflation.

Monday, November 30, 2020

Jonathan Boyar: Spotting Investment Opportunities In Out Of Favor Industries

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Over the long run, stock markets are fairly efficient. In the shorter term, however, valuations can go to extremes both on the low and high sides. Investors usually create these anomalies by piling into whatever is currently in vogue and indiscriminately selling whatever is out of favor.

When industries fall out of favor, Wall Street sometimes drives the market cap of companies within that sector far below what an acquirer would pay for the entire company. That leads to buying opportunities for discerning investors with the patience to wait for the industry to right itself. Of course, it’s anyone’s guess when the tide might turn—investors may need to suffer through years of under-performance before these investments eventually pay off. It’s often well worth the wait, however.

Sunday, November 29, 2020

Peter Sainsbury: Back to backwardation: Why the shape of the futures curve is positive for commodity prices in 2021

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The commodity futures curve has moved sharply over the past few months towards backwardation. This should increase the incentive for long side investors to park their funds in commodities and given numerous macro tailwinds (e.g. a weaker dollar, rising inflation expectations and infrastructure spending), set the market up for a promising 2021.

But first, a little bit of background on the futures curve. When the futures price curve is downward sloping, i.e. the futures price of a commodity in say six months’ time is lower than the current spot price, the market is said to be in backwardation. This is also known as an inverted curve or an inverted market.

Saturday, November 28, 2020

Chris Mayer: 100 Baggers, The Lost Chapter

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For 100 Baggers, I originally had the idea that I would pepper the text with little vignettes on people whose stories shed some light on how to nab a 100 bagger. I love these kinds of stories, especially if not particularly well known. So I had nine of them written and more planned. 

Then it occurred to me that, while I thought they were interesting, these stories were distractions to the main ideas of the book. They sometimes didn’t address the core ideas or were just redundant. And they seemed to interrupt the flow. So, I cut them.

Later, while working at Bonner & Partners, I cobbled these vignettes together in a 12-page report and called it -- to make it sound sexy -- “100-Baggers: The Lost Chapter.” 

The "Lost Chapter" contained the following stories:

Felix Dennis: How to Get Rich (It’s not how you expect)

J.R. Simplot: Be Willing to Try Anything

Georges Doriot: How to Make 70,000%

Trammell Crow: Own Real Estate

Arthur Dewing: Forget the Fancy Math – Stick with Common Sense

John Laporte: Buy Right and Sit Tight

T. Rowe Price: Look for Out-of-favor Growth

Philip Carret: Be Patient

Benoît Mandelbrot: Forget About Average – Markets are Wild

Friday, November 27, 2020

Why Buffett Bought Japanese Stocks

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Warren Buffett recently announced he had invested ~$5bn in five Japanese trade companies, a value investment in a country that trades at a steep discount to the United States. The companies Buffett purchased trade at a 35% discount to the broader Japanese TOPIX index and a whopping 79% discount to the S&P 500 on a price-to-book basis.

Why is Buffett investing in Japan today? We bet it has something to do with the massive valuation disconnect shown above: Japan is one of the few value investments available in today’s global developed markets. Large caps in the United States have gotten dramatically more expensive compared to Japan in the last 10 years.

Thursday, November 26, 2020

Harris Kupperman: Why This Reflexive Ponzi Scheme Will Continue…

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Since many of you are sick of hearing about Bitcoin, I promise this is my last post on the topic for a while. That said, I’d be remiss if I didn’t point out the unusually lucrative arbitrage trade that is largely responsible for sending Bitcoin parabolic. I glossed over it in my last post and given the questions that I’ve received, a full post on the topic was more than necessary—especially as the mechanism is really quite fascinating.

To start with, I believe that Grayscale Bitcoin Trust (GBTC – USA) is unique in the world of finance in that it facilitates an oddly reflexive Ponzi Scheme. Since we all know what a Ponzi Scheme is, I’m going to gloss over the terminology and instead focus on the concept of reflexivity. Before George Soros focused on destroying American society, he was a remarkably successful investor. His theory of reflexivity asserts that prices do in fact influence the fundamentals and that this newly influenced set of fundamentals then proceeds to change expectations, thus influencing prices; the process continues in a self-reinforcing pattern. In the case of Bitcoin, GBTC is the transmission mechanism for this reflexivity and once you understand how this game works, you’ll realize that Bitcoin is going much higher before it collapses.

Wednesday, November 25, 2020

Grant Williams Podcast: The End Game Ep. 11 - Jim Rogers

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After a series of brain-churning conversations, take a breather this week and join us for a fun-filled journey around the investment world with the one and only Jim Rogers.

Hear Jim's candid views on Japan, China, North Korea, the UK and the opportunities available in Venezuela, as well as cryptocurrencies, the impossibility of being short anything right now and the subject on everybody's lips post-the U.S. election - Chinese wine stocks...

Tuesday, November 24, 2020

Goehring & Rozencwajg: Investing in the Uninvestable

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Today’s indisputable un-investable asset class is energy broadly and crude oil specifically. Oil has been (and remains) the most important input to economic growth in the post-World War II world. However, in the span of only a few short years, oil’s importance has gone from being widely accepted to thoroughly rejected. The financial press argues that oil should beavoided at all costs.

Investors are convinced that global oil demand has already peaked and will decline steadily going forward. In such a world, the oil industry’s billions of dollars of upstream capital investments would become economically unviable or “stranded.” Environmentalists meanwhile are beginning to clamor for the oil industry to pay “damages” for the carbon released over the last 50 years, leaving investors to ponder whether energy assets are actually liabilities.


Monday, November 23, 2020

Frank Holmes: Bullish on Dr.Copper and Gold for 2021

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Here at US Global Investors, we're very bullish on commodities, particularly industrial and precious metals. The manufacturing PMI in a number of countries shows that factories are expanding capacity on a greater number of new orders. In August, the US manufacturing PMI registered 56.0, the highest reading since November 2018. The PMI in China – the world's biggest importer of metals and other raw materials – was 51.5 last month, well above the five-year average of 50.6.

 As I've noted before, commodities continue to look remarkably cheap relative to stocks. Below is a chart showing the ratio between the S&P GSCI and S&P 500. At no other time going back to 1972 have commodities been as undervalued as they are today. If Goldman's projections turn out to be accurate, now could be a phenomenal buying opportunity.

Sunday, November 22, 2020

Harris Kupperman: My Favorite Ponzi Scheme (Part II)

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Let’s go back to what I wrote about Grayscale Bitcoin Trust (GBTC – USA) hoovering coins. At the end of July when I wrote about it, there were 406.6 million shares of GBTC outstanding. As of Friday November 13, that number had grown to 531.6 million, or an increase of 125 million shares. That’s equivalent to about 119,000 additional Bitcoins purchased during a brief period of time. To put this into perspective, the total “free float” is somewhere between 6 and 8 million coins. Hence GBTC purchased somewhere between 1.5% and 2% of the “free float” during this brief period of time.

Now add in the 38,250 coins that Microstrategy (MSTR – USA) purchased and the 17,732 that CEO Michael Saylor personally owns and you have almost another 1% locked up. There are dozens of entities also hoovering up coins, many of which are not likely sellers in the near term. Almost every week, we learn of a new vehicle with big marketing resources behind it. Do you think Fidelity is launching their Bitcoin vehicle without a substantial marketing campaign? In their mind, unless they raise a few billion dollars, their fund has been a failure. Just think about what that sort of inflow would do to such an illiquid market.

Jesse Felder: Extreme Valuations


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Saturday, November 21, 2020

John Hussman: Pushing Extremes

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In calling the current market the third “Real McCoy” bubble of recent decades, Jeremy Grantham described, in his own words, what I call the Iron Law of Valuation: a security is nothing more than a claim on some set of future cash flows that investors expect to be delivered into their hands over time. The higher the price an investor pays today for some amount of cash in the future, the lower the long-term return the investor can expect on that investment.

However, there’s a difference between those long-term return prospects, which are driven by valuations and discounted cash flows, and short-term return prospects, which are driven by the psychology of investors – particularly their inclination toward speculation or risk-aversion. I talk about this in terms of market internals. Grantham describes it as a “psychological node.” We may navigate that aspect of the financial markets in different ways, but both of us recognize that the long-term prospects implied by valuations don’t condense into short-term implications for market direction.

Thursday, November 19, 2020

Meb Faber: Episode #266: Best Idea Show – Kiyan Zandiyeh, Sturgeon Capital, “We Have A Blank Canvas To Potentially Create What The Technology Ecosystem Of That Country Will Look Like Over The Next 5-10 Years”

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In episode 266, we welcome our guest, Kiyan Zandiyeh, Chief Investment Officer for Sturgeon Capital, a leading frontier markets investment boutique focused on technology-enabled businesses that offer a product or service which solves an unserved, acute pain point for a large addressable market.

We’re covering Kiyan’s best idea: frontier markets. With the U.S. markets near all-time highs, investors may want to look around the globe for other opportunities and frontier markets offer a unique risk/reward. Kiyan walks us through the current landscape and what countries he’s most interested in. He covers the most common risks investors need to be aware of, and why he’s focused on private companies utilizing technology in the ecommerce and enterprise SaaS spaces. As we wind down, he walks us through a couple real examples of investments he’s made in countries like Iran and Uzbekistan.

Wednesday, November 18, 2020

Capitalist Exploits: Why You Won’t be Allowed to Participate in the Greatest Bull Market

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The good news is that Communism is coming and the shortages are going to be following close behind.

But really Chris… Communism?

Yes.

Remember, when capital is allocated based on its highest marginal return, individuals… you and I… will invest where there is legitimate value, where we believe our highest risk-adjusted returns will be.

On the other hand, when capital is allocated based on some other set of metrics, such as which company is the most “socially responsible”, this is simply a thinly and poorly masked form of communism.

“The key to understanding the appeal of communism, despite the grim reality on the ground, lay in the fact that it allowed so many followers to believe that they were participants in an historic process of transformation, contributing to something much bigger than themselves, or anything that had come before.”

― Frank Dikötter, The Tragedy of Liberation: A History of the Chinese Revolution 1945-1957

Monday, November 16, 2020

Sunday, November 15, 2020

Lyall Taylor: Unravelling value's decade-long underperformance (and imminent resurgence)

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In a recent (generally excellent) podcast with Inside the Rope with David Clark (#78), John Hempton discussed (amongst other things) value's past decade of underperformance, and opined that the primary driver was the fact that the pace of technological change had accelerated, such that we have seen an unprecedented level of disruption to traditional business models. Value investors have apparently spent a decade naively riding doomed low-multiple companies like the Myers of this world into oblivion. 

This is a very commonly expressed view/belief, and intuitively it feels right. The danger with intuitively-satisfying beliefs though is that they can discourage you from looking for evidence to confirm whether those intuitions are in fact true. It seems true, so it must be true, right? A surprising amount of the time, the answer is no. Just because something is intuitive does not mean it is correct (after all, it was intuitive to pre-modern humans the world was flat, and it's not very intuitive we evolved from primordial sea creatures), and as Mark Twain once noted, "It ain't what you don't know that gets you into trouble, it's what you know that just ain't so". The story of the emergence of the scientific method is a story of humans starting to demand evidence instead of merely relying on our unsubstantiated intuitions.


Friday, November 13, 2020

Charlie Munger: Be Rational, Not Brilliant

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Rationality is a core skill that any value investor should possess. If you are someone who is looking to buy assets when their owners are panic selling because you believe them to be undervalued, then you - by definition - have to be a very rational person. This type of contrarian behavior can only result in success if you are able to really cut through the emotion of the situation and drill down to the core value proposition of an investment.

Munger's advice is to try and avoid confirmation bias. This bias occurs when investors go looking for evidence that supports a belief that they already hold, rather than looking for evidence that challenges that belief.

Thursday, November 12, 2020

Harris Kupperman: Micro Cap Planet Finding Cheap Stuff and Playing it Well with Harris “Kuppy” Kupperman, Founder and CIO of Praetorian Capital

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For this episode of the Planet MicroCap Podcast, I spoke with Harris “Kuppy” Kupperman. He is the Founder and CIO of Praetorian Capital and Chief Adventurer of the Adventures in Capitalism blog. Kuppy, as an investor, has always been looking for cheap stuff, something I think most of us as investors look to accomplish. What we discuss in our interview is how he’s gone about finding the cheap stuff and his game plan on making money on those bets. We cover his background, investing philosophy, event-driven investing, shipping, bitcoin, and more! Please enjoy!


Tuesday, November 10, 2020

Alta Fox Capital: “Makings of a Multibagger” and the Goal for Constant Improvement

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Alta Fox consistently seeks to identify exceptionally high-quality businesses at cheap multiples of normalized earnings over a medium-term time horizon of 3-5 years. Our hunt for quality at a cheap price often leads us to structurally inefficient small and micro-cap equities where there is less competition from institutional investors. However, at Alta Fox, we have always indicated our belief that high-quality, attractively priced companies can be found in many places, regardless of market cap. 

Sunday, November 8, 2020

Charlie Mungers ‘Bag Of Tricks’

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Charlie also revealed how he created near a billion dollars in value for the University of California, Santa Barbara when a friend was struggling to sell her family’s 1,800 acre ocean front ranch. Despite two miles of frontage to the ocean, a perfect climate and great views, draconian planning laws significantly inhibited the use to which the land could be put. Recognising an opportunity to realise value, Charlie donated $70m to the University of California, Santa Barbara to buy the land. Charlie knew the University wasn’t subject to the Santa Barbara zoning laws and could therefore develop needed student accommodation on the site. This outside-the-box thinking effectively created a billion dollars of value for the University and a once unattainable sale price for the friend.

“We all start out stupid, and we all have a hard time staying sensible. You have to keep working at it. Berkshire would be a wreck today if it were run by the Warren I knew when we started. We kept learning. I don't think we'd have all the billions of stock of Coca-Cola we now have if we hadn't bought See’s. Now, you know how we were smart enough to buy See’s. Barely. The answer is barely.”

“I am continuously invested in American equities. But I've had my Berkshire stock decline by 50% three times. It doesn't bother me that much. That's just a natural consequence of an adult life, properly lived. If you have my attitude, it doesn't really matter. I always liked Kipling's expression in that poem called “If”. He said, success and failure, treat those two imposters just the same. Just roll with it.”

Saturday, November 7, 2020

Giddy-up: What investment icons learnt from punting (gambling)

Link:

And the great lesson in humility that every gambler learns very quickly – that is, that even the smartest people can’t win them all – is also a lesson that should be imprinted on the brain of every investor.

“Investing is a game of skill – meaning inferior players can’t expect to be above-average winners in the long run,” Marks wrote in a seminal piece on the similarities between gambling and investing, appropriately titled "You bet!"

“But it also includes elements of chance – meaning skill won’t win out every time. In the long run, superior skill will overcome the impact of bad luck. But in the short run, luck can overwhelm skill, and the two can be indistinguishable.”

“Success in gambling doesn’t go to those who pick winners but to those with the ability to identify superior propositions," Marks says. "The goal is to find situations where the odds are generous to one side or the other, whether favourite or underdog. In other words, a mispricing.

“It’s exactly the same in investing. People often say to me, 'YZ is a great company with a bright future, so I bought the stock.' They’re picking a favourite but ignoring the proposition. The former alone isn’t enough; they should consider the latter as well.

Friday, November 6, 2020

“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.” Warren Buffett

 Link:

A critical pearl of wisdom from Warren Buffett teaches us that with any potential stock investment we may make, as soon as our buy order is filled we will have a choice: to remain a co-owner of that company for the long haul, or to react to the inevitable short-term ups and downs that the stock market is famous for (sometimes sharp ups and downs).


Frank Holmes: Gold Could "Absolutely" Hit US$2,000 Again This Year




Wednesday, November 4, 2020

The Stoicism Of Ben Graham

 Link:

Graham didn’t propose that a stereotypically stoic – that is, unemotional – temperament is a necessary condition of success as an investor. He did, however, consciously imbibe classical Stoicism. Hence the investor should strive to be “inversely emotional” (the term is Jason Zweig’s rather than Graham’s; see “If You Think the Worst Is Over, Take Benjamin Graham’s Advice,” The Wall Street Journal, 26 May 2009). Neither as a friend nor as a parent, spouse, etc., can or should you stifle all of your emotions. But as an investor, you should reason – that is, neither enthuse nor despair. Through reason perhaps you can – and through emotion you certainly cannot – ascertain sensible prices of securities and levels of markets, and act accordingly when prices don’t reflect values.

"The more you do so, the greater is the degree to which you’ll recognise as vices – and thereby discount – those passions that the crowd perversely regards as “good.” Moreover, you’ll acknowledge and cultivate as virtues those attitudes and behaviours that the crowd typically ignores (or regards as “bad”)."


Tuesday, November 3, 2020

Grant Williams: Super Terrific Happy Hour Ep. 7 - John Hathaway: Being A Doyen Is A Good Thing, Right?

 Link:

Join Stephanie and Grant for a fascinating conversation with a true legend of the precious metals industry, John Hathaway.

The three discuss John's storied career, what the gold market looked like twenty years ago, how John's experience of multiple cycles has helped him deal with the volatility inherent in the precious metals space and what he expects to see going forward.

Gold's role in a portfolio, how to identify potential investments and the importance of managing the psychological component of what can be a tempestuous ride all come under the microscope.

Monday, November 2, 2020

Crescat Capital Investor Letter Q3 2020

 Link:

History does not exactly repeat, but it often rhymes. The art and science of macro investing is comparing past business cycles with the present across a mosaic of different indicators and time frames to determine the most probable path forward for markets. Throughout time, financial markets and the economy have been intimately linked to cycles of expansion and contraction of money and credit. The Federal Reserve was created by bankers and enacted by Congress in 1913 to provide a more flexible and stable monetary and financial system, but by no means did the Fed repeal the business cycle. In fact, the central bank has often played a role in amplifying booms and busts. For example, after introducing large-scale purchases of government securities to stem the recession of 1923, the Fed continued to expand the money supply and suppress interest rates through the remainder of the 1920s. Such monetary policy fanned the flames of historic stock market speculation which culminated in the stock market crash of 1929 to 1932 and the Great Depression. The macro set-up today is eerily similar as we will explain below.

Policy makers have no choice but to continue diluting the value of fiat currencies to enable a levered financial system to withstand such extreme macro imbalances. If past is prologue, large central bank interventionism leads to the appreciation of monetary assets and, in our view, precious metals will be the real beneficiaries of a global synchronized debasement trend that now seems irreversible. Therewith, gold and silver mining companies should be the largest beneficiaries of this environment. They look fundamentally stronger than any other industry in equity markets today. In fact, free cash flow among the top 20 miners have grown by 132% year over year in their latest report. 

Sunday, November 1, 2020

Smead Capital Management: Humility Produces Alpha

 Link:

Joe Kennedy was getting his shoes shined in 1929 and the shoeshine boy was giving him stock tips. Think of how humiliating it might have been to Kennedy, who had dramatically reduced his common stock ownership. This upstart had been making money and couldn’t wait to pass along his wisdom to Mr. Kennedy. Joe quickly surmised that there was nobody left to buy stocks and established a huge short position in the stock market. The fortune he made by betting against stocks was part of the wealth which led his son, John F. Kennedy, to become President of the United States in 1960.

We were at our grandkid’s soccer game recently and we struck up a conversation with one of the parents. They worked for a successful fintech company (which we owned for a long time) and explained to us that they had invested in Shopify (SHOP) at around $140 per share. I looked it up over the weekend and was astounded by what the numbers told me.

Saturday, October 31, 2020

Old West Investment Management Q3 2020 Investor Letter

 Link:

Where does the market go from here? Hard to say, but look at these eye-popping returns of

certain stocks since January 1:

PAYPAL + 77%

TESLA + 422%

NVDIA + 120%

APPLE + 54%

These returns are for the first nine months of 2020. One has to ask: have these businesses improved that much in nine months, or is the market forming a bubble ala 1999? In determining whether the market is in bubble territory, I love a quote from legendary investorSir John Templeton: “Bull markets are born on pessimism, grown on skepticism, mature on optimism, and die on euphoria.”

The returns shown above, in my opinion, smack of euphoria. 


Friday, October 30, 2020

Smead Capital Management: Energy in the Icahn-ic Green Room

 Link:

David Dreman’s book, Contrarian Investment Strategies, was gospel to investors when it was first published in 1979. Investors had been decimated by markets going nowhere over the prior 10 years. Stock investors were ready for something new. Dreman had produced a lot of success as an investor and wanted to share his gospel of contrarian value investing.

The perfect picture of Dreman’s gospel comes from his opening chapter. He refers to the stock market as a casino with a green wing and a red wing. Looking into the green wing, “the atmosphere is unhurried, the blackjack tables are sparsely attended, and every player sits behind a mound of green and black chips.” As he points out, everything is so mundane that “you think you’ve come to the wrong place.” The next thing you notice is the players in the room, “they’re all winning.”


Thursday, October 29, 2020

Bob Farrell: Learn a lesson -- before you get one

 Link:

Ten rules to remember about investing in the stock market

1. Markets tend to return to the mean over time

2. Excesses in one direction will lead to an opposite excess in the other direction

3. There are no new eras -- excesses are never permanent

4. Exponential rapidly rising or falling markets usually go further than you think, but they do not correct by going sideways

5. The public buys the most at the top and the least at the bottom

6. Fear and greed are stronger than long-term resolve

7. Markets are strongest when they are broad and weakest when they narrow to a handful of blue-chip names

8. Bear markets have three stages -- sharp down, reflexive rebound and a drawn-out fundamental downtrend

9. When all the experts and forecasts agree -- something else is going to happen

10. Bull markets are more fun than bear markets



Wednesday, October 28, 2020

Charlie Munger: On the Value of Patience

 Link:

Patience is widely seen as a virtue, and for good reason. But it can also be profitable, according to Munger. Indeed, he has claimed publicly that Berkshire's market-beating success can be attributed in large part to his and Buffett's supremely patient approach.

"If you took our top fifteen decisions out, we'd have a pretty average record. It wasn't hyperactivity, but a hell of a lot of patience. You stuck to your principles and when opportunities came along, you pounced on them with vigor."

In other words, a few key investment decisions – made over the course of several decades –made the difference between an average performer and a titanic success. By remaining patient and keeping a cool head, an investor is able to both avoid making bad decisions and be ready when rare moments of opportunity emerge.

Tuesday, October 27, 2020

Seth Klarman: The Value of Not Being Sure

Link:

A key psychological barrier that prevents most people from seizing the day when prices are low is the fear that the turmoil of today will continue forever. In actuality, bear markets are typically much shorter than bull markets. As the saying goes, markets take the stairs up and the elevator down:

"It is easy for the volatility of one's thinking to match the volatility of prevailing conditions. Time horizons have shortened even more than usual, to the point where the market's 4:00 p.m. close seems to many like a long-term commitment. To maintain a truly long-term view, investors must be willing to experience significant short-term losses; without the possibility of near-term pain, there can be no long-term gain."

Monday, October 26, 2020

Paul Tudor Jones says he likes bitcoin even more now, rally still in the ‘first inning’

 Link:

Billionaire hedge fund manager Paul Tudor Jones has turned more bullish on bitcoin, calling it the best inflation hedge.

“I like bitcoin even more now than I did then. I think we are in the first inning of bitcoin and it’s got a long way to go,” Jones said on CNBC’s “Squawk Box” on Thursday. He first revealed his bitcoin investment in May and he said Thursday he holds a “small single-digit investment” in the cryptocurrency.

Sunday, October 25, 2020

MacroVoices #242 Stephanie Kelton on Modern Monetary Theory

 Link:

Erik Townsend and Patrick Ceresna welcome Stephanie Kelton to MacroVoices. Erik and Stephanie discuss:

Why using taxes to pay for government spending is a myth

If the government can print money, why are taxes still necessary?

What measures does MMT use to overcome inflation risk?

Debunking the myth that the future generation will have to pay for the current national debt

Risk of dilution in value of dollars due to government money printing

Constraints of MMT

Wednesday, October 21, 2020

Chris Mayer: Reflections on 100 Baggers

 Link:

“What is the key ingredient to a 100 bagger?”

Ah well, always the big question. In my view, the key ingredient is return on capital. That’s the gin. And the ability to reinvest is the vermouth. 

Now, return on capital is a vague term. And this is an area I am still refining. But broadly considered, the key ratios to consider include “return on invested capital,” or “return on capital employed” or “return on assets” or “return on equity” or… 

And since the road to 100 baggerdom is a long and twisty road with lots of hills and valleys, you can’t just do it one year. You want a business that can crank out those high returns year after year. That means you have to think about a lot of other things as well, like competition and growth potential and the ability to withstand economic cycles, etc.

Tuesday, October 20, 2020

Grant Williams: The End Game Ep. 9 - Felix Zulauf

Link:

Bill and Grant welcome the incomparable Felix Zulauf to The End Game.

What follows is a true masterclass in macro thinking as Felix joins a complicated series of dots to lay out both a cohesive vision of the present, and an impressive roadmap for the future.

The likely end of a 40-year bull market in bonds, the all-important inflation vs deflation debate as well as gold, the dollar and so much more all come under Felix's acute gaze.

Monday, October 19, 2020

Episode #254: Ken Nguyen, Republic “In The Past Ten Years, The Private Market Has Become Larger Because Companies Are Taking Longer To Go Public”

 Link:

In episode 254 we welcome our guest, Ken Nguyen, co-founder and CEO of Republic. In today’s episode, we’re talking startups, and how to make private investing widespread and available to everyone.

Traditionally, investment minimums have been high, but in grappling with their mission to bring startup investing to the masses, Republic has brought investment minimums down to twenty and even ten dollars in some cases. We get into Republic’s investor friendly model, and some of the advantages companies may gain from fund-raising on the platform.

We cover some background on laws that shaped who can invest in private companies and discuss recent developments that have brought about some welcome change to accredited investor rules. As we wind down, you definitely don’t want to miss the innovative approach Republic has taken to offer yet another iteration on startup investing through the Republic Note.

Sunday, October 18, 2020

"Cover Your Ass": The Guiding Principle Of Our Time

 Link:

What is the dominant guiding principle of western societies today?

At the risk of sounding crass, let me suggest that it is the “cover your ass” or CYA principle. This principle has always been fairly prominent in participative democracies. But now it has gone into hyper-drive - so much so, that the CYA principle is also now an important driving force even in financial markets.

Now that every policy choice is reviewed and debated in real time by millions of people around the world, CYA has become all-important. Politicians have to put policies in place to hedge against the wildest tail risks imaginable. At the same time, the first instinct of policymakers (and of investors—but more on this later) is to avoid doing anything that diverges too far from the pack. Any policymaker anywhere looking at the opprobrium heaped on Sweden will surely agree with John Kenneth Galbraith’s observation that “it is far, far safer to be wrong with the majority than to be right alone”.

MacroVoices #241 Mike Alkin & Guy Keller: Uranium Special

 Link:

Erik Townsend and guest co-host Kevin Muir welcome Mike Alkin & Guy Keller to MacroVoices. Erik, Mike and Guy discuss:

Future of nuclear power industry

How big is the Uranium mining industry post-Fukushima

Collapse of market capitalization of Uranium mining

How Uranium market works

Investment opportunities in Uranium market

Friday, October 16, 2020

Meb Faber: Episode #255: Matt Peterson, Peterson Capital Management “We’re In A Global Pandemic; In A Recession…People Are Scared; That Creates Opportunity”

Link:

In episode 255 we welcome our guest, Matt Peterson, Managing Partner of Peterson Capital Management. In today’s episode, we’re getting into concentrated, deep-value investing. We get into Matt’s long-term value based framework and a truly concentrated portfolio of about 12 names right now.

We cover his position entry strategy of writing cash-secured puts, which has helped the fund during periods of heightened volatility like we’ve experienced recently. We explore some interesting insights on Charlie Munger’s Daily Journal Corporation, and jumping on the opportunity to purchase Berkshire class B shares by writing puts as shares came down in price earlier in the year.

We get into some high level thoughts on the economy, the risk of holding cash and bonds, and the need to be prepared for some inflation down the road.

John Hathaway: Gold, The Simple Math

Link:

The very strong investment fundamentals for gold and gold mining shares are based on what has been a slow irreversible drift towards significant U.S. dollar (USD) devaluation.

In simple mathematical terms, the gold market could not clear at current prices if 1% of the $100 trillion4 or so of institutional assets under management were to move into the physical metal. Record year-to-date inflows into gold-backed ETFs have exceeded any previous year. But in dollar terms, this amounts to a paltry $51.2 billion requiring the acquisition of 936.2 metric tonnes of gold (according to Meridian Macro Research). By contrast, a $1 trillion inflow into gold bullion would require 18,000-19,000 tonnes, equal to roughly six years of annual world gold production. A shift of this magnitude by asset allocators would require a bullion price of $5,000-$10,000 an ounce.

Thursday, October 15, 2020

Jesse Felder Podcast: Leigh Goehring On The Generational Opportunity In Energy Stocks Today

 Link:

You could say that natural resources run in Leigh Goering’s blood. The son of two oil and gas engineers, Leigh has spent nearly his entire life studying markets and investments related to commodities. Over the past 30 years, he has become one of the most brilliant and passionate analysts and money managers in the industry. In this conversation, Leigh shares the details of his macro and micro research process and how he applies them to investing in natural resource stocks. He also details the case for a coming energy crisis and why energy stocks present investors with a generational opportunity today. Below are several notes and links related to this episode:

Wednesday, October 14, 2020

Chris Mayer: The Scarcity of Industrial Land

Link:

Here’s an idea I’ve been thinking about this week: the scarcity of industrial land near big markets. It’s getting harder and harder in the US to find land to build things like service centers for trucks, used car lots, warehouses and the like. Ergo, the companies that have consistently invested in land over the years have a massive advantage over those who have not…

I have two examples that show what I mean: Old Dominion Freight Lines (ODFL, which we don’t own - yet) and Copart (CPRT, which we do).

Tuesday, October 13, 2020

Chris Mayer: The Coffee Can Approach

Link:

Chris Mayer, a friend of our firm who authors a well regarded publication titled Capital & Crisis, was kind enough to contribute an article for this edition of The World According to Boyar. 

His article touches on a theme we discussed in our latest quarterly letter: How investors can be their own worst enemies by focusing on short-term performance and selling stocks too early. 

This behavior is in part aided and abetted by the short-term focus of financial news outlets (with notable exceptions) and their desire to sensationalize stories to drive ratings and/or sell newspapers. This “noise” puts pressure on investors to take action each time a company they own temporarily stumbles or when there is geopolitical uncertainty that causes a near-term correction. 

In the vast majority of cases, however, the best course of action would be for an investor to stay the course. In this article, Mayer maintains that investors should focus on finding great investments and buy them with the intention of holding them for the long-term. He discusses a strategy called the “coffee can portfolio” advanced by long-time money manager Robert Kirby as a way investors could avoid the temptation to act.

Monday, October 12, 2020

Charlie Munger: 25 Cognitive Biases that Ruin Your Life, Explained

 Link:

Want to practice better decision making?

Unfortunately, your natural brain’s pretty dumb and easily tricked. To save energy and make faster decisions, it relies on cognitive heuristics to make fast judgments.

In prehistoric days when we had to avoid getting devoured by lions, these fast heuristics worked pretty well. Now that life is more complex, the decisions you need to make are more complex, and your cognitive biases trick you into making bad decisions.

These 25 cognitive biases come from “The Psychology of Human Misjudgment,” a talk by Charlie Munger, Warren Buffett’s partner at Berkshire Hathaway.

By learning these biases, you’ll guard yourself against people trying to exploit you. Even better, you’ll guard against your worst enemy: your own brain.

Sunday, October 11, 2020

Russell Napier: Gold, The Euro, and Capital Controls

 


Russell Napier is the Author of "The Solid Ground", an independently published global Macro investment report. Russell is also a Co-Founder of ERIC (www.eri-c.com) the platform for the sale of individually priced investment research. He was a Consultant Global Macro Strategist with CLSA Asia-Pacific Markets for almost twenty years. In 2013, Russell was elected as a fellow of the CFA Institute of the UK.

Russell Napier: Central Banks Have Become Irrelevant

the market:

The Scottish market strategist Russell Napier warns that investors should prepare for inflation rates of 4% and more by next year. The main reason: Governments have taken control of the money supply.

In the years following the financial crisis, numerous economists and market observers warned of rising inflation in the face of the unorthodox monetary p0licy by central banks. They were wrong time and again.

Russell Napier was never one of them. The Scottish market strategist has for two decades – correctly – seen disinflation as the dominant theme for financial markets. That is why investors should listen to him when he now warns of rising inflation.

"Politicians have gained control of money supply and they will not give up this instrument anymore", Napier says. In his view, we are at the beginning of a new era of financial repression, in which politicians will make sure that inflation rates remain consistently above government bond yields for years. This is the only way to reduce the crushing levels of debt, argues Napier.

Friday, October 9, 2020

Frank Holmes: Some Are Betting on Red, Some on Blue. I'm Betting on Gold

US Global Investors:

Whether you support President Donald Trump or not, you must acknowledge that one of the bedrocks of his governing style is unpredictability. To some critics, Trump’s behavior and decision-making process may seem erratic, but I believe they make a sort of sense when viewed through the lens of game theory.

Take, for example, his hot-and-cold stance on a new coronavirus stimulus bill this week. On Tuesday, Trump unexpectedly tweeted that negotiations with House Speaker Nancy Pelosi would halt until after the election. “After I win, we will pass a major Stimulus Bill that focuses on hardworking Americans and Small Businesses,” he said.

That same day, Trump appeared to change his mind—reportedly after he saw how the stock market, and particularly airline stocks, reacted to the news. (I often say that he’s the first American president who keeps his eye on the stock market and sees it as a gauge of his success.) “The House & Senate should IMMEDIATELY Approve 25 Billion Dollars for Airline Payroll Support,” he tweeted.

Capitalist Exploits: Investing For The Greenwash Bubble

Capitalist Exploits:

Greenwashing, in case you don’t know, is the “disinformation disseminated by an organization so as to present an environmentally responsible public image”.


This is taken from the time of the now infamous Volkswagen emissions cheating scandal. Since then, other large car companies have faced similar controversy — jumping on the green band wagon. It’s because these days, it pays to be “green” (for more information, see Elon Musk).

But here’s the thing that otherwise intelligent people seem to fail to comprehend: Greenwashing extends way beyond false advertising in consumer goods. It’s made its way into politics, investment products, journalism, and now mainstream opinion in “the West”.

Greenwashing is actually now the norm, which we’re now going to get into after I fire off an early warning trigger alert.

Wednesday, October 7, 2020

Charlie Munger:The Psychology of Human Misjudgement

 


Audio of the often referred to speech by Charlie Munger on the psychology of human misjudgement given to an audience at Harvard University circa Jun 1995. Mr. Munger speaks about the framework for decision making and the factors contributing to misjudgements. c. Jun 1, 1995

Tuesday, October 6, 2020

Kevin Muir: MMT, Inflation, Stock Market Bubble, Japan

 



Howard Marks: Real estate, retail, entertainment and hospitality stocks are the real opportunities for investors now

Market Insider:

Howard Marks has a new message for investors, look at 'out of favour' assets as they have a better chance of getting returns at a time when interest rates are at rock bottom. 

The assets that Marks, who is co-founder and co-chairman of distressed-asset fund Oaktree Capital Management,  considers to be "out of favor" are those that suffered the worst from the lockdowns, including retail, entertainment, hospitality and real estate stocks. 

"Out of favour, we have real estate, especially retail real estate and real-estate in big cities. We have entertainment stocks, cruise stocks and hospitality stocks," he said. 


Sunday, October 4, 2020

In Gold We Trust 2020

In Gold We Trust 2020:

Since 2007, the annual In Gold We Trust report is THE authoritative report on gold investing, and is required reading for anyone interested in the precious metal market. As a team, Ronald-Peter Stöferle and Mark Valek analyze the state of the global financial markets, monetary dynamics and their influence on gold price developments like no other.



Saturday, October 3, 2020

Market Huddle Podcast with Guest Harris Kupperman


https://youtu.be/bMUlybI8smk?t=4086

Kuppy talks about his highest conviction idea.




Adventures In Capitalism: Playing The Housing Recovery

 AIC:

Over the past few months, I’ve been writing a lot about Event-Driven strategies, mainly because I see an unusual amount of opportunity there. That said, Event-Driven remains a small piece of my book. The core of what I do is inflection investing—finding a theme that’s inflecting better and get there before anyone else realizes it.

With that preamble out of the way, today the government announced that seasonally adjusted new home sales for August hit 1.011 million. For those keeping score at home, this is the highest that this figure has been since 2006 and up 43% from last year.




Thursday, October 1, 2020

It’s Time To Get Greedy In The Energy Sector, Part Deux

The Felder Report:

The contrarian case for buying energy stocks just keeps getting stronger and stronger. Exxon, after getting booted from the Dow Jones Industrial Average, just experienced its worst 30-day stretch of stock price performance in at least 40 years, according to SentimenTrader.

 And it’s not just this sector flagship; energy stocks now represent the most hated stock market sector of all time according to the firm. To top it all off, The Economist recently proclaimed the death of oil (once again: see 1999 and 2003).



Smead’s Folly Becomes Newsom’s Folly

Smead Capital Management:

We became extremely bearish on energy in 2011. At the time, we saw interest in Seattle for hybrid and electric cars. This convinced us that 10% of the cars on the road nationwide might be hybrid and electric by 2020. In actuality, only 2% of total unit sales in the U.S. were electric vehicles over the last ten years. We also felt back then that the enthusiasm among investors for emerging markets/China was overblown and would cause oil demand forecasts to fall short of expectations.

It turns out we were wrong, because we were too early in our prediction. It wasn’t until 2016, and then more recently with the COVID-19 lockdowns in 2020, that oil prices declined steeply. From the summer of 2014 to the summer of 2019, we benefited from having no participation in the energy sector.

Monday, September 28, 2020

Crescat Capital: A New Bull Market for Precious Metals

Crescat Capital:

2020 Q2 Investor Letter

Central banks are facing a serious predicament. After decades of ongoing accommodative monetary policy, the world is now sitting at record levels of debt relative to global GDP. In our view, there has never been a bigger gulf between underlying economic fundamentals and security prices. 

We are in a global recession, but equity and credit markets still trading at outrageous valuations. Markets are trading on a perverse combination of Fed life support and rabid speculative mania. Meanwhile, demand for gold and silver, which is fundamentally cheap, is starting to take off as central banks are engaged in new record easy monetary policies. 

Ongoing easy monetary policies in the face of today’s asset bubbles in stocks and fixed income securities has a high probability of leading to a self-reinforcing cycle that drives investors out of these over-valued asset classes and into under-valued precious metals. Here are just some of the reasons Crescat is selling richly valued stocks at large and buying undervalued gold and silver including mining companies today.

Goehring & Rozen: On the Verge Of An Energy Crisis

Goehring & Rozencwajg:

2020 Second Quarter Coomentary

How quickly can oil supply be brought back to meet recovering demand?

That is the critical question investors are asking, and the one we strive to answer in this quarter’s in-depth commentary. While most investors believe the lost production will be easily brought back online, our models tell us something vastly different. While OPEC+ production will likely rebound, non-OPEC+ supply will be extremely challenged. Instead of recovering, our models tell us that non-OPEC+ production is about to decline dramatically from today’s already low levels.    

Jim Rogers: Beware The Stock Market Is A Ticking Time Bomb

 Economic Times:

Legendary investor Jim Rogers believes the next decade is going to be tough for global investors. In an interaction with ETNOW, he said the worst of his lifetime is yet to come, which will take a huge toll on many of the hyped-up stocks.

Commenting on the ongoing trend, where expensive stocks are getting more expensive and cheap ones are getting cheaper, he said this always happens towards the end of a bull market, as people think they are safe, and thereafter, you have a blow-off in the market.

Roger said governments and central banks are printing a huge amount of money. There are chances that people might lose their confidence in governments and can move towards precious metals.



Sunday, September 27, 2020

Ray Dalio "The US Dollar Is At Risk" - What Investors Should Do

 


Ray Dalio is the original founder and as of recently former CEO of Bridgewater Associates, which is currently the largest hedge fund in the world. He's known for his macro economic expertise, and as the pioneer of risky parity investing, an investment strategy that focuses on diversifying according to risk rather than asset class. In a recent Ray Dalio interview, he talks about the current state of the economy and what is to come. Dalio explains that the dollars role as the Global Reserve Currency is at risk. Ray Dalio explains the different types of monetary policy used in the past, present, and what will likely be done in the future. He then shares his opinion on the markets, and provides investors with some ideas for investing in the coming months and years. Ray Dalio speaks about inflation, deflation, and how different economies will react moving forward. If you're worried about inflation, market volatility, or a full on market crash, this is an interview you don't want to miss. Ray Dalio is a true genius inside and outside of the investment world, and his insights on the stock market, equities, bonds, cash, and gold is unlike anyone else in the mainstream financial media.

Howard Marks Says "The Stock Market Is WRONG"

 


If your analysis is correct you buy more when your stock goes down. There is a fine line between hubris and certainity. 

"Buying at the low point has to terrify you."


Howard Marks: The Fed Has Bailed Out The Market From A Depression

 


In this video Howard Marks talks the Fed bailing out the stock market with trillions of dollars. How has this affected the market and can they keep this printing up forever? We'll let Marks do the talking!