Ben Graham’s advice is soothing at a time where speculation yields short term profits while buying out of favor and generally what I believe to be undervalued ownership stakes in overlooked companies yields short term losses.
nice update. the minor problem with being in the golden-age-of-grift is that anything interesting that ticks that scam warning boxes (microcaps, special sits, etc...) become scary.
i found myself continuously lowering equity exposure, but unsure what is really safe.
(the major problem the scam era seems the collapse of society for those that relied on some degree of trust)
Totally agree with your frustration from your initial crypto/ debt thoughts. Macro is so difficult or impossible though. It’s interesting that UST holders abroad already experienced what you mention. The value of their holdings crashed 40-50% since 2021-2023 period. So we’ve already been there. Now the real interest rate has blown out and is higher than at most points in the past 20-30 years. That’s a direct result of the Fed printing and govt borrowing. However, the USD remains strong now despite massive trade deficits. I truly think the Fed needs to be investigated for its actions during that time. At least they have said that they will never buy mortgage securities again, ha.
Anyway there is a point here, and it’s that oftentimes when heavily indebted countries become even more heavily indebted, we see deflation not inflation. Interest payments squeeze the discretionary spending, or at least put a cap on increases, which is all that matters for inflation— increasing dollars from one year to the next. Japan and Italy come to mind as countries with large govt debt that struggle with deflation. Perhaps China will get there too. So I wouldn’t totally rule out low interest rates and a strong dollar as the final destination here. But it is a scary thought to have a deficit of 7% of gdp. Which roughly means that to balance the budget with an economy growing at 2% would cause a severe recession bc you’d lose a good amount of the 7% by subtracting that deficit spending. In other words roughly -5% with a balanced budget. That’s how much juice the US economy is running on right now. It’s not really an exceptional economy, just an overheated highly juiced economy running of deficit spending. Rambling thoughts. Probably not correct. But it’s wild times here in the US lately.
Good summary of the $AMPY situation. Only add I have is there is some interest burden now with the added debt that we should remove from the $80M of FCF
Very interesting as always. TSVT really jumped out at me--has come up on several of my screens but I assumed that was just an artifact that didn't reflect true/potential economics (lazy of me). Finally went to look at it when I saw you mention it here, then came back to read what you'd written. A chance for shenanigans in any company, especially in biotech (I doubt they'd do a cash-consuming acquisition here given the history, but you never know; some concerns about ex-sublet lease liabilities), but I very much see the appeal.
nice update. the minor problem with being in the golden-age-of-grift is that anything interesting that ticks that scam warning boxes (microcaps, special sits, etc...) become scary.
i found myself continuously lowering equity exposure, but unsure what is really safe.
(the major problem the scam era seems the collapse of society for those that relied on some degree of trust)
Totally agree with your frustration from your initial crypto/ debt thoughts. Macro is so difficult or impossible though. It’s interesting that UST holders abroad already experienced what you mention. The value of their holdings crashed 40-50% since 2021-2023 period. So we’ve already been there. Now the real interest rate has blown out and is higher than at most points in the past 20-30 years. That’s a direct result of the Fed printing and govt borrowing. However, the USD remains strong now despite massive trade deficits. I truly think the Fed needs to be investigated for its actions during that time. At least they have said that they will never buy mortgage securities again, ha.
Anyway there is a point here, and it’s that oftentimes when heavily indebted countries become even more heavily indebted, we see deflation not inflation. Interest payments squeeze the discretionary spending, or at least put a cap on increases, which is all that matters for inflation— increasing dollars from one year to the next. Japan and Italy come to mind as countries with large govt debt that struggle with deflation. Perhaps China will get there too. So I wouldn’t totally rule out low interest rates and a strong dollar as the final destination here. But it is a scary thought to have a deficit of 7% of gdp. Which roughly means that to balance the budget with an economy growing at 2% would cause a severe recession bc you’d lose a good amount of the 7% by subtracting that deficit spending. In other words roughly -5% with a balanced budget. That’s how much juice the US economy is running on right now. It’s not really an exceptional economy, just an overheated highly juiced economy running of deficit spending. Rambling thoughts. Probably not correct. But it’s wild times here in the US lately.
Good summary of the $AMPY situation. Only add I have is there is some interest burden now with the added debt that we should remove from the $80M of FCF
Very interesting as always. TSVT really jumped out at me--has come up on several of my screens but I assumed that was just an artifact that didn't reflect true/potential economics (lazy of me). Finally went to look at it when I saw you mention it here, then came back to read what you'd written. A chance for shenanigans in any company, especially in biotech (I doubt they'd do a cash-consuming acquisition here given the history, but you never know; some concerns about ex-sublet lease liabilities), but I very much see the appeal.