Spekulatius

FWIW, very few companies in the auto business have FCF = net earnings. For many, it was about half that number, which makes even a 5-6x PE less enticing. Some of the auto suppliers don’t have debt disruption risk, like for example seat manufacturer LEA. LEA is one of the companies that deserve a second look, because they do actually generate a lot of FCF and are well managed with a solid balance sheet, unlike ADNT. The problem with suppliers is generally low margin and fixed cost, as well as dependency on fee customers which could go bankrupt and pulling their suppliers down with them. Another angle is to invest in EXO.MI, You get a double discount, as they hold discounted FCAU as well as a steep conglomerate discount, despite being a good capital allocator.

I am guessing that was the bank where the CEO felt he needed to dance as long as the music keeps playing. One real lesson from 2009 is that you never want to be in a situation where you needn’t dilute at the bottom. This is what killed many Bank stocks, even those those that survived. It’s sometimes that little extra buffer on the balance sheet that doesn’t matter in good times that can make all the difference in bad times. I never worked in banks, but have been with companies where management destroyed a lot of value (99% from top to bottom in one case and 70% in another) and they still made out very well. Quite amazing how incentives are stacked.

i bet Warren weighs the price declines for his holdings vs the price declines for BRK, and BRK until today has actually outperformed. My guess is that he put much more funds into adding to his holding than buying back BRK shares. This may changes, when the relative value proposition changes.

Bought some TRUP (starter position) after the discussion with OG Investor. I am not totally comfortable with it, but I feel that I can’t let a potential very long term compounder slip away. It also helped that the stock was down a decent amount today. Added a bit of FDX. I have some high priced shares that I am probably going to sell in a month to harvest some tax losses.

I agree it looks attractive. I am not crazy about NYC commercial real estate at 4.5% cap rates, based on public market comps, but these guys are quite good at what they are doing, plus it should trade at a discount to fair value that is larger than 25%, if not higher at current prices around$60/share. Their development around Penn station should at a lot of value, this area is very lively and really needs it. I think it’s a good compounder. I am a bit sceptical on RE as an asset class right now, but I th8nk even with some headwinds, this should work out.

Things can always get worse. I share your concerns regarding macro. I do think that a lot concerns are baked in current valuations.

Brkb still significantly outperformed the SPY over 1,3,6,12 month periods. I bought it cheaper in May last year. The stock was a safe haven until Dec 2018 when it started to crater with the market.

Disclaimer: I don't follow Apple, don't even like the products. Regarding China, you mentioned revenues, what about revenue growth in China as a percentage of total Growth? That is, how much of the growth expectations due to China is already built in into the price and what happens if it stops? Also, what happens if a switch is flicked and it goes down by nearly 100% and not 40%? Thanks. Revenue growth for China has been 16% in 3017, but actually was subpar a couple of years before. Fact is that Apple has been struggling in China for a while now. I have no idea about the projections for revenue growth in China, but they better be modest in the near term.

Looks like I am down 5-6% overall. It did feel much worse than that.

Greater China was about 20% or AAPL’s revenues in 2017, so unless sales in China collapsed by 40%, an 8% revenue cut cannot be caused by China alone. Note also, that this warning occurred after the holiday season in the western world, which is not that relevant in China. Sales overall must have been pretty weak for the holiday season and China, while a contributing factor, is a scapegoat for the huge miss, imo.

Interesting list. I own 5965.T (Fujimak) and 9142.T ( Railroad/ real estate). The performance and moves of Japanese stock made very little sense to me, but there are a lot of cheap stocks out there. Overall I have done well over the years on contrarian buys of decent to good business.

FB May be one of the best “obvious” or plain sight opportunities out there for 2019. I bought a bit more on the last trading day. It will be interesting how they navigate the choppy waters this year. I feel like the reputational damage is fixable. I also think they could surprise on the cost side, relative to their projections in Q3. GOOG is essentially flat in 2018, while the business has grown 20%+, so its significantly cheaper than early last year.

The Redfin chart shows some seasonal cyclicity for real estate prices, but no proof of a downturn yet. It is normal for RE to rise in early in the year and and recede a bit in fall. It‘s clear that RE has slowed, but I don’t think this is visible from the charts yet. Besides that, the Fed supposedly doesn’t care about asset prices, also I think it should at least to take into account housing prices, because they translate into cost of living for the majority of people ( 2/3 of the people in the US own rather than rent). The only central bank that actively looks at RE prices (to my knowledge) is the central bank of Hongkong, probably, because RE is such an important part of their economy.

^ Yes, one could simply regard this as a subscription type business or more precisely, a hybrid between an insurance and a subscription type business. The reason why it resembles a subscription type business is because TRUP really does not take much of a tail risk (which required a lot of capital to hold to remain solvent for the worst case scenario), but it’s more like a prepaid service, with some I insurance attributes. TRUP can adjust the prices as it sees fit if cost would spin out of control fairly quickly and I don’t think there are there long tail exposure either from delayed claims. So certainly, one should not value this like a plain vanilla health insurance company. Health insurance companies (for humans ) like UNH are probably closer in terms of capital, but are more regulated, there is more risk in terms or pricing (adjustment can be done yearly) more competition and foremost less growth potential.

Wells Advisors has an article for income stockideas for 2019. EPD and DWDP and PKG look interesting to me. Link is for customer only: https://www.wellsfargo.wallst.com/EBrokerageDesktop/Report/2303-f93fdf5576c8400faf98347ebadd353e-40

Book value hasn’t grown much over the years, but post the financial crisis, GS has become a cannibal. Their share count maxed out in 2010 at 526M shares and now sits at 371M shares. Their ROE has been a bit over 10% over the years, but net earnings yields were lower due to fines, similar to what other banks experienced. one can argue, if these fines are a cost of doing business or not. The tax reduction alone should improve the ROE by 10-15%, I think, again similar to other banks. If you by a company with a ROE of 11-12% at <0.9x tangible book and this company is a rational capital allocator (which I think GS is) then one should do OK over time. If they can do even better than that in terms of ROE, this could become quite a home run. (Edited for typos)

I get the tax loss selling in December, but who would have waited until Dec 20 or later to do it ... Just my guess, but the stock market slump late this December messed up tax planning for many investors.

Investment banking is a crappy business nowadays, but GS has other business like asset/wealth management and forays into consumer banking that should be worth more than book value. Also, when you own JPM, BAC or C you are also holding a buainsss with substantial investment banking operations as well, yet at least with BAC and JPM you are paying a substantial premium to book.

Which issuers/CUSIPs fit your description? ETP PRC ( a floating preferred) is one that fits my bill and which I own in small quantities. Yielding close to 9% when I bought it. BB+ rated and metrics are improving. The bonds are BBB- rated, I think and also due to for an upgrade. Does ETP PRC generate a K-1? If so, does it have any UBTI - just checking for the IRA. Thx. I believe it does generate a K-1. It should not really create UBTI, so should be Ok to hold in an IRA on reasonable amounts.

Which issuers/CUSIPs fit your description? ETP PRC ( a floating preferred) is one that fits my bill and which I own in small quantities. Yielding close to 9% when I bought it. BB+ rated and metrics are improving. The bonds are BBB- rated, I think and also due to for an upgrade.

The growth comparison during the period and 1913 until today is irrelevant. All 1st world countries show lower growth as they come of a higher base and also be sure population growth has slowed. We simply don’t habe the growth today that we had 100 years ago in any 1st world country.

My best value ideas (risk adjusted) are preferred and selected bonds. You can buy lower grade investment quality or high grade junk with good coverage and pot. forcredit upgrades with around 9% yield. Upside potential is about 20% plus whatever you earn in interest until they recover.

I think Trump needs to own his mistakes. The Fed can own theirs, if it comes to that. Also, where the the conspiracy if a Fed chair elected by Trump raises the interest rates? He could have just kept Janet Yellen, if he likes the low interest rate policy? Anyways, I see this correction more like the one in 1987. back then, we had rising interest rates, a fairly strong economy, the Regan tax cuts buffing the economy and a considerable stock market rout they in the end meant very little for the real economy.

True, a country with a 4% inflation and a 10% growth rate and 14% interest rate would never occur as the data with each other. But such an economy could handle risk free interest rates higher than 4% for sure. a 4% risk free interest rate with a 4% inflation is still free money basically. same with a 2.5% interest rate and 2.0% Inflation, yielding a 0.5% net cost for a borrower. Generally speaking a risk free rate at about the rate of inflation seems to be OK. Any interest rate below the The argument remains whether the rate of change for interest rates is too fast. Now, that we are about level with inflation, further increases need to be more carefully considered. There is also the “risk” that inflation falls with a slowdown, pushing the net interest rate (interest rate minus rate of inflation) up. Then, as I understand it, the Fed doesn’t look at overall inflation, it looks at core inflation, which takes out volatile components like energy. Energy was up huge in October, but has fallen significantly since. Seems like quite and interest set of challenges for the Fed to look at, and getting it right isn’t easy.

I believe that slump is caused by Trump more so than the Fed. For one thing, the “Trump slump” started before the Fed raised the interest rates, which shouldn’t have come as a surprise for the market, as it was well telegraphed. What comes as a surprise is the lack of predictability from the current government and the infighting. That’s the issue that should be addressed and has nothing to do with the Fed. The market has shrugged of the political muppet show for a long time, but not any more apparently. It’s a little bit like the situation in Britain, where politicians continue to shoot themselves in the foot. As far as interest rates are concerned a 2.5% interest rate seems on the low side, if we get 2.5% growth ne t year and 2% inflation. That’s still basically free money I agree with Druckenmillet R that the rate of change could be important , but then again, we are at such low levels in terms of interest rates, that the rate of change starting from zero has to be somewhat significant to actually accomplish something. I am pretty sure that the Fed will change their plan for hikes next year, when the data warrants it. I am not so sure that our president stops digging when he finds himself in the hole deeper and deeper.