no_free_lunch

A solid idea. Which ones are you invested in?

Bought VZ, mid sized position. It's somewhere around 14x FCF from what I can tell. I view it as a cash alternative/ inflation hedge.

I don't know but if we invert maybe the economies that don't benefit from high fossil fuel prices, Europe and Asia, will do better as that headwind is levelled.

LM, I asked what is the CPI in Europe not the difference in price. The point I am trying to make is these wage increases and their impact on inflation have been one off. Hasnt housing seen a huge surge? In parts of Canada prices are up probably triple over last 15 years and yet we have anemic CPI reported. I think it plays out the same with minimum wage boosts. You didn't really address my point that minimum wage affects a subset of the economy, a subset of the costs where it's relevant, and is partially mitigated by productivity, replacement and imports. If you double minimum wage prices will go up but not by double. The other factor is the fed can simply say Fu and stay pat so long as the dollar doesn't crash. It's happening today with the transitory inflation narrative.

You can set the minimum wage wherever you want but you can't make businesses hire. You can't control the minimum wage in China either. Even for the local businesses that it applies to, that labor expense is only one of their costs, they are a subset of the inflation basket and it should be partially mitigated by productivity measures. Isn't there high minimum wage in a lot of the EU countries and what is CPI there? I speculate it will definitely push up on prices but only by so much.

We technically have 5% inflation today, it's a done deal. So i would make a modification to your equation that you need to have sustained inflation at your given range levels. My hunch is quite different, I would put p1=50%, p2=20%, p3=30% where p3 is below 3% inflation. Don't get me wrong, I actually do hold cash as well. I just do it for different reasons, for these probabilities above and due to the fact that I feel the markets could crash for all sorts of reasons. On inflation, I was looking at commodities and quite a few have stepped back. Lumber is down almost 50%, steel is down, oil pulled back a touch. It seems very predictable that you will get some inflation given pent up demand and low levels of production but I feel that the market will solve this and we will move back to surplus in most commodities. The only one that concerns me is oil, just due to the low levels of drilling , environmental laws, ESG investing, return to growth, etc . I can see SDs point that if there is inflation it's probably oil that will cause it. Outside of some oil spike pushing on inflation, I just find it hard to believe. The way I look at it, the total value of all stocks, real estate and other hard assets in the US has to be somewhere north of $150t right now. If the US government prints $2t a year, isn't that just an extra 1.5% or so relative to the total assets? That doesn't even take into account non hard assets like debt, I just don't know how to factor those in but they must absorb some of the increased spending right? Based on these numbers, i don't see why current deficits lead to huge , and on going surges in price levels.

LM, I think holding cash to prepare for inflation implies too much certainly. You are assuming inflation is imminent, that it will be strong and that stock prices will collapse. What if inflation just hovers in the 3-4% range for years. The fed could take it's time raising rates in that environment. It doesn't seem like many other central banks are in a rush. I would argue inflation in the early 80s started 15 years prior, we could be on the same path. It's a long time to hold cash. It certainly makes sense that prices of equities go down in real terms but i couldn't guarantee they go down nominally. Again there are a lot of factors at work and it depends on the time frame and how high rates go.

LM, Avalon Bay AVB has an avg duration of 10 years and a long history of slowly growing the yield per share. I don't know if you will find 30 year duration on a REIT but let me know if you can. It's not just REITs , any company with physical assets or even just pricing power should make it. Of course I have the perspective that I have no idea what the future holds so I want even my inflation hedges hedged. Hence a focus on assets that don't require inflation to make some gains. I think telecom could do ok as well. They have enough pricing power, lots of debt and physical assets.

It doesn't have to be commodities as an inflation hedge. I think a REIT with long duration debt should hold up ok. You probably get smoked at first but inflation should push through to rents which will drive the ev EBITDA multiple down.

From last post to today it is up 30% to $388. I was in even earlier around $190, went through hell and saw this thing plummet to $100 only to rocket up 4x. It is enough for me, I don't want to be greedy and small caps feel stretched. I am out. Still a great stock and still undervalued. NAV is probably $800, maybe more but the really easy money is made.

Thanks, i found a presenation online in the end. It states 89% online sales in q4, so this truly is an e-commerce used car company. Interesting comparison to kazoo both in the presentation and earlier in this thread. $1b revenue motorpoint vs $150m kazoo, whereas the market caps are flipped $0.25b motorpoint vs $5b kazoo estimate (it's not ipo'd yet). The growth initatives include sites that allows outside companies to list products on their site with a commission model. They expect this to launch over summer and fall of this year. From their presentation: "We currently wholesalec.35k units per annum, <2.5% market share", think about what would it look like if they had 10% market hsare or 140k units per annum. At $300 margin per car (I just made this number up but seems ballpark reasonable), that would be $40m profit just for the online auctions, it's quite a lot relative to their market cap. This is a really interesting play, you can see the potential if the growth starts to deliver. I have invested in them long enough that I have some confidence in management to meet their targets, more or less, so it doesn't feel pie in the sky to me.

Fantastic, thanks for the post kab. I really like this company and feel that their performance through covid was great, all factors considered. I actually liked their slow but steady growth so with the new strategy will hold but will be keeping an eye on the exits. Just went through the annual report. I hadn't realized how strong their online offering had become. 69% of sales were online in the year, iwhich comparing against first half with 40% online, would imply 80%+ in the second half. Obviously covid pushed them into it but perhaps management is now more comfortable with the model and has opened up expansion.

I have no idea how this goes down but I have worried about inflation since the commodity boom in 2006. So far I have been wrong and so I am suspicious that this is THE time it finally happens. I did a little DD and it seems that post world war 1 & 2 in the US there was strong inflation for a few years and then it simmered. During that inflation bout post WW2 they just kept interest rates low right through the inflation. Not sure what the rationale was, I think they were concerned about the great depression returning. All I know is the fed played it cool and I would argue was right in that one case. Today we have inflation and are emerging, hopefully, from total war like spending, so it does seem similar. Meanwhile the deflationary force of production efficiency and globalization is still at play. Debt levels are high but japan has higher and has shown how tough it is to call inflation. I see it as a very mixed bag. We will see but I am trying to setup on stocks that will do ok in either scenario.

I took positions in BASF, BAYER, and Stella Jones. All based on postings on the site. They are all sitting with PEs below 12 and seem to be ignoring the favorable economic conditions. I am still on the fence with the REITs. If you look at $AVB it is trading around 25x ffo for the upcoming year and thry will probably boost ffo by double digits in 22 once covid is removed. Not crazy expensive I suppose. However they are now more at risk from an interest rate boost.

It's even tougher today. I am debating selling my REITs, they are up 30% since January plus dividend. Defense and tobacco is still reasonable. Other than that there is VZ and T, hard to get rich on them but they seem safe and could do 10% perhaps. Looking at industrial sector. BASF seems interesting but not without challenges and perhaps less secure than the other names mentioned in this thread. I am only halfway through my DD on them. If you know anything else that is safe and cheap, please let us know. Bonus points for being boring.