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TomB16 investing blog

Discussion in 'Investing' started by TomB16, Aug 7, 2019.

  1. TomB16

    TomB16 Well-Known Member

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    I watched an interesting interview with an epidemiologist who said we won't know how many cases we have in North America until early March.
     
  2. Trahn Thompson

    Trahn Thompson New Member

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    I think you found your answer Tom...GENETIC-VIRUS.. The next question should be WHY and HOW.. Happy Hunting!
     
    TomB16 likes this.
  3. TomB16

    TomB16 Well-Known Member

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    Whoa! Hundreds of new cases of the virus are coming into the statistical model. Well over 60,000 recorded cases, now.

    This appears to be a big acceleration but it could easily just be catching up with unaccounted cases.

    Whatever the case, this is scary. I'd like to see a lot more help going to China to deal with this. I suspect a lot of help is being extended and it isn't being reported in my news feed.

    Stay safe, my Asian friends. :(
     
  4. TomB16

    TomB16 Well-Known Member

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  5. TomB16

    TomB16 Well-Known Member

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    Speculation on Reddit is these alarming numbers are mostly clearing up an accounting deficit, rather than new cases. All of the new glut of reported cases are coming from China.
     
  6. T0rm3nted

    T0rm3nted Moderator
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    I think I read somewhere that the US doesn't believe they will have an accurate accounting of cases in the US until sometime in March?
     
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  7. TomB16

    TomB16 Well-Known Member

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    I've been going through our portfolio history the last couple of days and notice current valuations are in uncharted territory.

    Right now, Jeffrey Dahmer could IPO a wilderness survival company and the valuation would go through the roof.

    Even coronavirus doesn't phase the lot of spendthrifts driving this market.

    In this environment, it's difficult to value companies. Valuing a company involves figuring what it would be worth in a "normal" market. It's been a long time since we've had one of those.

    Our response has been to angle toward bonds but bond issues are becoming increasingly rare. It's time to consider alternatives outside the markets.
     
  8. TomB16

    TomB16 Well-Known Member

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    Coronavirus update:

    Chinese healthcare workers are literally going door to door in Wuhan, taking everyone's temperature. I believe this is the source of the large number of new cases and will continue to generate new statistics for some time, until they account for all 11M residents of Wuhan.

    The Chinese government is doing a good job handling this epidemic. I hope, when this ends, their treatment of the sick turns out to be equally as good as their quarantine effort.
     
  9. TomB16

    TomB16 Well-Known Member

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    I've noticed a much lower presence of Warren Buffett in the media, this last year. Now, with the sale of Berkshire Media Group to Lee Enterprises, I suspect Buffett and Munger are planning for the end of times.

    This is a gross speculation and I hope it's wrong but newspapers are a passion of Warren Buffett and the sale feels like an era is coming to an end.
     
  10. TomB16

    TomB16 Well-Known Member

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  11. TomB16

    TomB16 Well-Known Member

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    We have now tracked over 70K infections with 1700 deaths in Hubei province. That's a big infection rate and lot of deaths for a disease we didn't know about 60 days ago.

    Fortunately, the situation appears to be mostly in hand. If containment holds, the economic damage won't be too severe.

    I apologize to anyone who might find my coronavirus tracking based on financial impact a bit cold. It is. My heart goes out to the folks dealing with this reality.
     
    WXYZ likes this.
  12. TomB16

    TomB16 Well-Known Member

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    A quick note about the Buffett indicator.

    With the WBI at record highs, we are in a unique situation. If interest rates stay near zero or even go negative, there is room for the WBI to grow. If interest rates go up, even a little, we will be ripe for a crash.

    I've been expecting interest rates to creep up for a few years, and they did for a while, but it's tough to see the future of interest rates. Japan has had negative rates for decades.

    Place your bets...
     
  13. TomB16

    TomB16 Well-Known Member

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    This is another rant about analysts but it is not without purpose.

    I've been reading a bit about Gordon Johnson. Vertical Group terminated his employment in 2019, at which point he started his own company.
    Gordon Johnson is well acredited with an MBA, etc. He has been a high profile Tesla bear for many years.

    I find myself wondering if Johnson was terminated for being so factually incorrect on basic Tesla matters, frequently misquoting Elon Musk, or for losing so much client money for so many years. I suspect the later. Nobody cares about truth or honesty.

    As well as comically bad analysis, the misquotes and factual errors are a curiosity. I believe this is an artifact of the alt-right feedback loop and I'm growing to count on it as part of my thought process.

    Nobody pays me to analyze anything. I follow companies and the market for the benefit of my wife and I, as well as for my own entertainment.
    How come I know orders of magnitude more about Tesla than Gordon Johnson and probably 80% of the rest of the analyst community? If you were to compare my performance regarding Tesla, from an analysis perspective, I've had a better track record than nearly all analysts. Shame on the analyst community. You're paid a quarter million dollars per year. It isn't that hard to study the company and read the news.

    My theory is that we tend to underestimate the ratio of people who actually do their jobs. In any company of 100 people, there are 1-4 people who are indispensable, 15 people who are strong and would hurt to lose, 60 who are OK if managed properly, and the rest are dead weight. I believe the analyst community is similar with the exception that analysts are not managed from an analysis perspective.

    I've worked in the financial sector and I need to be careful what I share but the analysts that I know are given performance metrics, mandatory training, and have to attend endless meetings. None (not hyperbole... literally none) of the meetings, training, or performance metrics are about the specific work they are doing.

    Performance metrics: keeping annual vacation carry-over within defined limits, responding to email within a given period, etc. HR stuff.

    There are industry analysts I respect but extreme few. Almost all analysts are background noise to me.


    I don't recommend my approach specifically but I will share it.

    There are businesses I want to own. As a life long real estate investor, there are things I'd like to own. I found a hospital REIT that was doing well, providing strong distributions, and a great value. I'd love to own a hospital and lease it back to a state or municipality. I hit that REIT hard, along with a few other companies. I want to own these companies.

    The rest goes into broad market indicies. This money is simply tied to GDP and inflation.

    Lately, I've been playing with growth companies like Tesla. I've also been playing with a couple of other extreme value companies. Our Tesla holdings started out as being insignificant but, between loading up during lows and the market cap explosion, has become a minor, but significant, holding. The value companies are basically a rounding error. None of this is part of my formal strategy.

    The best part of my strategy is that it's simple: Own what you know. Tie yourself to inflation and GDP. Less activity is best. Don't churn.

     
  14. TomB16

    TomB16 Well-Known Member

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    Right now, you could put a morning line price chart on the ground in a cattle feed lot, buy the company with the closest cow paddy, and gain 20% per month.

    Let's not be too quick to declare ourselves better than Warren Buffett based on our prowess the last couple of years.

    This is crazy.
     
    Flexiboy likes this.
  15. WXYZ

    WXYZ Well-Known Member

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    WE ARE ALL investing geniuses. I agree TOTALLY. The past 10+ years have created generations of people that GREATLY OVERINFLATED their investing prowess. Legends in their own minds. The SH#T is going to hit the fan when we have an extended correction or, God forbid, a 1-2 year bear market. The blood will run in the streets. People will be running for the exits as usual. These negative events.....an extended correction and/or bear market....are a given. They are part of the normal market and investing process. What you are describing....I have seen many times in the past and the result is always really nasty. Yes, it is crazy, but it is typical and happens EVERY time there is an extended bull market.

    You are so right:

    " Own what you know. Tie yourself to inflation and GDP. Less activity is best. Don't churn."
     
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  16. TomB16

    TomB16 Well-Known Member

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    The coronavirus has been making a significant expansion. Statistics show the virus on the decline but they are misleading.

    Now that we have 76000 cases, 1000 new cases per day is relatively trivial. In the early days, there were 1200 cases with 200 new cases per day and it was terrifying. At this point, we have far more new cases each day. The ratio of new to existing is lower but it's still a lot more new cases.

    It's clear the Chinese are doing a very good job battling the virus. This is slowing down the spread of the virus so we can scale up our defenses. We owe the Chinese a lot for this effort but it seems a near certainty the virus will consume the globe, before this is over.
     
  17. TomB16

    TomB16 Well-Known Member

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    I'm reading speculation that North Korea must have a decent coronavirus infection going. They aren't reporting but there is undoubtedly an ongoing virus related humanitarian crisis.

    Meanwhile, South Korea is indicating they aren't able to contain it.

    Here is Tom's hot tip of the day: Invest in a box of 3m N95 respirator masks. 20 masks for 20 bucks. It appears to be a cheap virus call option.
     
  18. WXYZ

    WXYZ Well-Known Member

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    Good call in general. I invested in about 10 boxes of 3M, N95 masks about 15 years ago for myself and my family members. Not that we are preppers. I just thought they were a good thing to have as part of our emergency, bug-out, supplies. Other items include 60 days of food, crank/solar radio with short wave, various types of fire starter, knives and tools, first aid kit, water purification device, a number of lanterns, glow sticks, packs of extra batteries, etc, etc.

    We used to live in earthquake country and lived close enough to Mt St Helens to see the necessity to have good supplies and a plan for various types of disasters.
     
  19. TomB16

    TomB16 Well-Known Member

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    The top two performing stocks in 2020 are:

    1) Virgin Galactic
    2) Tesla

    For the record, I did not call the SPCE race. I don't see the future of SPCE all that clearly but I believe in Rutan and Branson. I picked up a tiny bit on a lark and have no plans to buy/sell in the next decade.

    As for SPCE, I think there is more chance of losing money than gaining, long term.

    The reason I bought it is simple. If Rutan and Branson gave me a call and said, "Hey, TomB16. We are starting a company that will provide space tourism on the short and ultra-fast trans-global transport in the future. Would you like to buy in?" I would do it. That's how an investor thinks.


    I will take credit for understanding Tesla to a far greater degree than any analyst prior to Cathy Wood. So much of what has been said about Tesla is what people want to be the case, not what is.
    In the early days, it was frustrating when analysts would talk about demand problems and production problems while Tesla habitually broke production and sales records. As much as it was frustrating, the epic smash down of Tesla's market cap in 2019 has pumped up our retirement more than I thought possible. There was no need to be upset by the ignorance. I am grateful for the folks who beat their chests and pounded the table while they shouted that nothing is going to change in the automotive world. Thanks for the money. My wife and I appreciate it.


    The lesson here, from my perspective, is that what any of us want to happen couldn't matter less, from an investment perspective. I don't expect to ever buy a Tesla, although I look forward to joining their ride share program. That doesn't have anything to do with how I project what the company will accomplish.
     
    #159 TomB16, Feb 21, 2020 at 5:15 PM
    Last edited: Feb 21, 2020 at 5:29 PM

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