The financial system is absolutely drowning in debt which suppresses interest rates, meanwhile we have real inflationary pressure both through the real economy and federal deficits. (Thread)
Back of the envelope math shows deep problems in capital heavy industries if nominal rates keep rising even if real rates are negative.
$AVB recently sold non CBD apartment buildings for 4.7% cap rate. Rising rates will obliterate the new buyers.
Aug 14, 2018 • 13 tweets • 2 min read
My investing philosophy is built around nothing.
Nearly every bad investor that I've ever met has started with an investing thesis that somehow relates back to a theoretical investment process. While I have mental processes, they're incoherent.
I look at momentum sometimes and sometimes I ignore it.
If I'm bottom fishing a cyclical stock then I want to see it up 50% from its low before I take a bite.
When I'm buying into a wonderful business I ignore it.
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Eurozone countries don't have monetary autonomy or even absolute control over their banks. Canada does.
Japan's population is demographically very old and thus intolerant of inflation. Canada's isn't.
Nov 13, 2017 • 7 tweets • 1 min read
Capitalism really only works one way. Companies with revenue declines over almost always have terrible returns.
(Thread)
Fixed costs are... fixed or sticky.
Interest expense can't be lowered without paying down debt or restructuring. Leases and locations can't be abandoned without significant costs.
Pension expense can't be lowered without bankruptcy.
Oct 6, 2017 • 13 tweets • 2 min read
Companies to short and why.
Long thread coming.
The overvalued company:
If a company is merely overvalued it should appreciate more slowly than the market over time. Over a long time horizon the returns will still be positive if there is no other problem. These shorts must be matched against longs.
