Gregmal

The bolded is probably the part I did a poor job communicating but yea, that's the key. Have the ability to remain flexible.

I kind of interpret it more in the context of stepping back and determining back of the envelope probability of events. If it is going to take a multiple standard deviation type of event to justify a current multiple, I just kind of think it's silly to let that get in the way of something that looks compelling. What if the cycle turns to me is the same as "what if the S&P drops 50%"... I mean, if it does, so be it. But as we've seen not just over the past decade, but really throughout history, is that those are poor reasons not to invest. Case in point...Auto's have been getting the "peak cycle" crap from pundits since what? 2014? And the pundits have been 100% wrong. A good company with solid leadership will reward you over the long haul by stacking all that "peak cycle" cash, year, after year, after year. Without opening the can of worms relating to good and bad management(especially with autos), that's kind of what I see the risk being here. The "cycle" screamers will put a bit of a lid on the multiples for a while, but I like what NXP's management has outlined in terms of their plans for the cash..

I added as recently as yesterday. My thoughts are that if the cycle doesn't turn, and turn down BADLY. This is a steal. In other words, I win if things get better, stay the same, or marginally deteriorate. It's funny, because there's always a ton of consensus on the whole market timing thing. Not saying some cant do it, but it's kind of a given that the smartest guys generally believe you can't "time" the market. So while this is a consensus amongst sophisticated investors, you still get all these boneheads who regularly talk about "peak cycle" or whatever when in reality it's the same thing and historically it's been shown that the "cycle" people are no different than the people always calling market tops. Just buy good businesses at attractive prices. Easy enough.

Yeah, super odd--must be "fake news". Elon always somehow finds a way to do the impossible like making rockets land upright ;D Wonder why if he could "fake" this earnings release, he didn't go ahead and fake weekly sales (which people have been "obsessing over" for over a year now and are much smaller than he had forecast)...Fact is, they don't really need 10k Model 3's a week to make decent cash flow. Guess everyone fixated on how bad Elon "missed" his unrealistic estimates (anchoring bias) without realizing that TSLA could do very well financially even falling significantly short of them. (If people haven't noticed, Musk tends to set "unrealistic", impossible reality-distortion-field like expectations which don't necessarily need to be met in order to succeed). Demand for the Model 3 seems insatiable. And this is a small sedan in an SUV/crossover market. When the Model Y is ready, Tesla will crush it even more so. What a time to be alive... Why so defensive? Especially if you don't even have a position? It's not exactly breaking news that Tesla can get creative with it's reporting. Just ask all the employees that keep leaving. I'm not even saying they are doing anything illegal but being oblivious to obvious red flags(or even worse making up justifications for them) is a recipe for disaster.

I'd say moving to slightly negative on a YTD basis does nothing for how expensive the U.S. market is When earnings are growing, balance sheets are in good order, and you have a stab at top notch companies it surely does. It's not like you can go to Turkey and find yourself HHC. If you're talking about just plain "cheap" investments... sure, look elsewhere. If you want high quality businesses/brands, the US is quite reasonable now compared to prior years... Earnings grow until they don't. I'm looking ahead. The tax cuts gave the U.S and extra boost, but we're likely at peak levels of profitability here. The next 2-3 years will be significantly harder for the U.S. companies to continue profit growth - especially if the USD keeps rising. Add to that the rising interest costs as record amounts of debt are rolled at higher rates, and less of actually being qualified to deduct against profits and forward profit growth becomes difficult. Then again, we went through and incredibly long earnings recession back in 2015 and no one cared so....maybe they won't this time either. I guess part of my point is that even if growth stops, buying some of these businesses at 8-10x is pretty damn reasonable. Like you said, earnings went down in 2015... as long as they don't fall off a cliff, many appear to be bargains IMO. I don't see the fed boosting rates much further from here.

Tesla has never been a numbers story. I wish the business well but find it odd that now all of a sudden when everyone begins obsessing over the numbers, that the numbers are great...Elon always seems to find one way or another to tell the story that people want to hear.

I'd say moving to slightly negative on a YTD basis does nothing for how expensive the U.S. market is When earnings are growing, balance sheets are in good order, and you have a stab at top notch companies it surely does. It's not like you can go to Turkey and find yourself HHC. If you're talking about just plain "cheap" investments... sure, look elsewhere. If you want high quality businesses/brands, the US is quite reasonable now compared to prior years...

Thanks, will take a look.

I saw your post on NVR, which I'm looking at now after looking at the single-family building materials companies (BLDR and BMCH) and concluding that they are poor businesses (and in BLDR's case, over-levered). I've also seen you post about FRPH, which I've followed for some time. Any others that you believe are particularly attractive right now? Will open up the book a bit because I've found you to be a high quality contributor to a few ideas I also follow. In no specific order or size; NVR, FRPH (as you've seen) MSG, GM(glutton for punishment), CTO, NXPI, BX, GOOG, XPLT(not really down a lot but GARP IMO), IBKR, AAL(sub in an airline of your choice, I happen to like the shittiest one), CLF(holy f*cking future cash flow machine w/ DTA's)+MSB, and MX... Can get into more detail later but didn't want to write a book write now... Thanks for sharing. I've owned XPLT for years and agree it seems reasonably priced despite the run up over the last year. Given your interest in FRPH and CTO, have you looked at Howard Hughes? It's been written up enough that I'm sure you know the story. I own it for the underlying asset quality (Ward Village and the Seaport in particular, but also the Texas and Las Vegas MPCs, which I believe is a business model that improves over time as the development matures). I don't know whether it's cheap right now, but Old Dominion Freight Lines (ODFL) has long interested me as a high quality, well run business, and it's also down significantly from its highs. HHC is probably front and center on the buy list. I always seem to have an over-concentration in RE stuff and as a result have put off buying it. I have also felt it was a tad overrated(maybe ahead of itself is a better choice of words) the past couple years but do agree; as of right now it's served it's time in the penalty box and should do well from here. More broadly speaking though, it just seems everywhere I look you can find good businesses now trading at low-mid teens multiple and many in the single digits. The tax cuts are a big reason, but even rolling them back, I see many opportunities to own things that years ago traded much higher. Coming back to HHC, 5 years ago it traded around 110... GM ex-Cruise trades at like 2-3x. NXP 8x despite being square in the middle of some major trends. GOOG now looks like AAPL a few years ago. It just seems like the market is saying all these things are going to hell. If things stay the same or even tail off moderately I think there's outsized gains to be had. I could always be wrong though.

I saw your post on NVR, which I'm looking at now after looking at the single-family building materials companies (BLDR and BMCH) and concluding that they are poor businesses (and in BLDR's case, over-levered). I've also seen you post about FRPH, which I've followed for some time. Any others that you believe are particularly attractive right now? Will open up the book a bit because I've found you to be a high quality contributor to a few ideas I also follow. In no specific order or size; NVR, FRPH (as you've seen) MSG, GM(glutton for punishment), CTO, NXPI, BX, GOOG, XPLT(not really down a lot but GARP IMO), IBKR, AAL(sub in an airline of your choice, I happen to like the shittiest one), CLF(holy f*cking future cash flow machine w/ DTA's)+MSB, and MX... Can get into more detail later but didn't want to write a book write now...

At some point Musk will have to decide whether it values having a real business, versus a temporary valuation on it's shares. One is sustainable if managed right, one isn't.

A lot of carnage, but there definitely isn't much IMO for the "stocks are expensive" crowd to whine about anymore. Obviously this is predicated upon the tax cuts staying in place, but there is more high quality stuff for sale right now than I've seen in a LONG time. Valuations probably on par with 2010-2012, if not better in many areas.

Will be interesting to see what gets reported next week. Been adding a bit recently. If you take Cruise out of the picture at the Softbank valuation, this is exceptionally cheap, even if we see annual declines in sales. That's said, I'm expecting another dud from Barra and Co and saving some funds for prices below $30. Can't imagine what Einhorn is thinking right now lol...

I've always thought TSLA would be wise to buy a real automaker if nothing else for the synergies, distribution network, and oh yea, profits. Doing so would all but eliminate most of the major risks Tesla faces. That said, I understand they seem to be allergic to profits, so they continue to choose the path most perilous.

The interest rate whining is absurd. Trump is right that it's cooling the economy a bit, but that's the whole point. But there's a lot of stupidity out there otherwise. People sent the real estate market through the roof a decade plus ago buying homes at 6% rates. A decade earlier they were over 8%. So yea, the bozos bidding down homebuilders to 5x earnings because of 5% mortgages? Pure stupidity. Otherwise, this is largely IMO the product of the people at CNBC needing something to talk about. Also, god forbid savers finally get some interest! It's been pretty well documented that the Fed really doesn't have a clue what it's doing, and that people claiming to be calling a top, or "peak cycle" are full of shit.

BX, FRPH

This was epic. Antics aside, Goncalves is the man and the definition of a shareholder friendly CEO. What he's done here is remarkable.

This is a dumpster fire. While I once loved this and did very well with the investment, deciding to sell the day Bob left was a great move. This is just a horribly run company, with a brand that isn't what it once was, and destroying so much value in the process. That and it seems anyone worth a dime at AIG is either poached by Berkshire or leaves for anyway.

You're right, and it's more just personal preference. Although not exactly investment related the backstory behind BLK and BX is quite interesting as well. Probably why one always reminds me of the other.

I agree. This and BX have been on my radar for a long time. I own BX but find the two businesses to be quite attractive and definitely high quality. The main thing for me, just generally speaking, is that BLK is more passive index, management of funds, fee business. Which is great. But that is more susceptible to this "race to the bottom" trend. Oddly enough, BX, despite catering more to smart money than BLK, seems to have real pricing power and gets away with charging whatever they want.

Alot of the income, interest, assets, etc he siphoned off offset his equity losses. He didn't come out as badly as stockholders, but he didn't do well either. Not to mention that ESL went from $15B in assets down to $1.5B...that's alot of fees that he will not be getting. And why do you always have to throw in there "MSM"...is there anything in this world that you won't make partisan? Cheers! I mean have been you seen anything anywhere that touches on the things I mentioned recently? There’s obituaries all over, and pieces rippin Lampert, but none that really hit the nail on the head and call this what it is. A failed vanity project where the culprit still walks away in his $9,000 suite to his private jet.

I also think MSM needs to drop the Lampert failed narrative. I for one, believe Fast Eddy just orchestrated one of the greatest wealth transfer schemes we'll ever see. This guy made money everywhere here, from fees thru his HF, personal loans to SHLD secured by prime real estate, to freakin 50-100%+ annually lending out his shares for over a decade to short sellers. Eddy will be just fine.

I think there's alot to be said for Sears, that hasn't been said lately. Frankly a business surviving 130+ years is worth noting, and in it's hey day, Sears was a beast of a retailer with cash gushing from its coffers. The demise of Sears falls squarely on Lampert's shoulders. Unlike other retailers, he put in as little capital as he could into the departments stores, was turtle slow when it came to selling off underperforming stores, and didn't exploit the redevelopment of sites to unleash commercial/retail potential until it was too late. All the while, plowing cash from sold assets into buying back overpriced stock in a declining, neglected retail business. My family and I used to shop at Sears all the time 20-30-40 years ago...then we completely stopped about 10 years ago when the stores started to look like bare warehouses and you couldn't find a salesperson or cashier. I actually disagree with Warren's quote regarding a good manager and poor business when it comes to Sears...I think the good manager led to an early demise...how else do you explain Macy's, Kohls and Nordstrom's doing perfectly fine while Sears is no more. Cheers! I think the biggest issue with Sears is that it was no longer a desirable option for individual products(specialty, niche, like kitchen/garden stuff) nor was it a good enough option collectively(ala not the best at one but had enough of everything to make it time efficient). I see the same fate for JCP.

Added a small amount under $53 today. I was thinking about this and considered some of the discussion, particular that of BG. What's important I think is that the reasons for selling higher are now reason to buy lower. With the warehouse sale, yes, the NAV can't grow as fast. There is cash drag and other issues that hamper the internal ability to grow/compound. But, in the same context, you also now have a much higher margin of safety at lower prices. If we call this $70, as we have prior, then at $52 you've got 35% upside with some pretty awesome free call options and a first rate management team. When you adjust for risk, and all the dry powder you have here, I have trouble finding things that fit those criteria better.

These are both highly speculative and require the assumption you'll lose every penny, so size accordingly. But, I think MLNT and TDW.a/b warrants fit the title profile.