Message from Tanner - SC in MacGuyver - Skills & Academics #noncrypto-investing

2017-12-28 23:58:08 UTC  

and where of course

2017-12-28 23:58:16 UTC  

What do you think about the corporate buybacks aspect of the stock market rise?

2017-12-28 23:59:09 UTC  

buybacks have historically been a poor use of capital for firms over time. as an investor i always like seeing it because it shrinks the available supply of stock available which means prices go up in the near term (all else holding equal)

2017-12-29 00:00:28 UTC  

exactly. Do you think that will have negative reprecussions beyond the individual companies though?

2017-12-29 00:01:18 UTC  

i think the only drawback could be if they took out a lot of debt to fund those buybacks and having that heavy debt load gets them into trouble when the economy eventually tanks

2017-12-29 00:01:38 UTC  

itll be something that prolongs the recession rather than drives us to it imo

2017-12-29 00:01:45 UTC  

makes sense

2017-12-29 00:02:29 UTC  

an example being in 2008 what caused the recession was giving loans to anyone who was willing to sign their name. what prolonged the recessions were all the derivatives that went bad that caused banks and other financial institutions to go bankrupt

2017-12-29 00:03:10 UTC  

Yup. And it seems to be this was done on a broader scale during ZIRP

2017-12-29 00:03:22 UTC  

e.g. the subprime auto loans mentioned above

2017-12-29 00:04:14 UTC  

yup although companies are much better managers of money than individuals so my hope is they will be able to handle their maturity schedule and not overleverage themselves especially not after 2008/2009

2017-12-29 00:04:32 UTC  

many companies had issues with having enough cash

2017-12-29 00:05:51 UTC  

right on. thanks for your perspective!

2017-12-29 00:06:20 UTC  

It's hard to find sober opinions on the data

2017-12-29 00:07:20 UTC  

sure thing man

2017-12-29 15:04:19 UTC  

>i think the next recession will probably be more akin to 2009 because the boom will have gone on for ~11 or so years. will it be as bad? i dont think so

I think it'll be worse. The big banks are still insolvent, they still have assets on the books that are recorded at historical value, not marked to market. They do have a lot of cash on hand that hasn't moved in a decade. If they start spending it for some reason, that could really ramp up the velocity of currency and destroy purchasing power.

These historically low interest rates will always result in malinvestments. People are getting loans for things that they don't deserve, low-NPV business ideas are getting funded because investment capital has no stable option for return, they're forced to chase returns in risky areas just to avoid the decay of purchasing power.

Why did the FED, in 2006, stop reporting on the M3 total supply of currency?

2017-12-29 15:05:52 UTC  

These historically low interest rates will always result in malinvestments. People are getting loans for things that they don't deserve, low-NPV business ideas are getting funded because investment capital has no stable option for return, they're forced to chase returns in risky areas just to avoid the decay of purchasing power.

2017-12-29 15:05:56 UTC  

^i deff agree with that

2017-12-29 15:07:46 UTC  

And nobody wants bonds at the current artificially low rate, so the fed is printing money and buying bonds with it. Crazy stuff.

2017-12-29 15:08:10 UTC  

if the fed unwinds their MBS portfolio itll be interesting what it does to long rates

2017-12-29 15:08:12 UTC  

They are stealing purchasing power from savers and forcing that money into bonds.

2017-12-29 15:08:17 UTC  

10-30yr bonds specifically

2017-12-29 15:10:01 UTC  

And there's so much money sloshing around in the stock market because all kinds of cattle are herded into it. Every schmo in corporate america gets like 10% of their pay tied up in government regulations forced into the stock market with the "5% contribution, 5% match" 401k nonsense. The corporations do it because the government taxes them less on payroll if a portion of it is forced into the market. And tax breaks on normal IRAs also forces more people into the market that otherwise would not be in the market.

2017-12-29 15:11:01 UTC  

"I'm gonna steal your money unless you put it in the stock market" is what the government is doing over and over.

2017-12-29 15:11:27 UTC  

They say they need tax breaks to drive saving, but only if it's channeled into the stock market, then they say they need lower interest rates to drive spending. It's nonsense.

2017-12-29 15:36:42 UTC  

In the short term, the US will probably be ok, but in the medium and long term, what would you two say is the “best show in town” for passive investment? Is Europe really in better shape? What about world stocks overall? @Zyzz @Tanner - SC

2017-12-29 15:38:08 UTC  

good question. i lack trust in china although it seems like their economy has the best potential for growth and to become a superpower

2017-12-29 15:38:40 UTC  

i think europe falls tbh. you cannot import low IQ people and expect your human capital to remain as great as it was in previous generations

2017-12-29 15:40:13 UTC  

my mom was on the phone with someone from verizon yesterday. she said it was some haitian woman. needless to say but the lady was as dumb as a box of rocks. my mom was on the phone with her for 2+ hours trying to get something done that should have taken perhaps 30 mins. as soon as she got off the phone with the haitian woman she tells me about it. those are the types of people who are replacing us

2017-12-29 15:42:08 UTC  

perhaps switzerland will do well in the long run. also australia/new zealand maybe

2017-12-29 15:43:47 UTC  

i am waiting for the moment when soverign debt investors start looking at a countries demographics and demographic projections (by race), look at avg IQ by race, and consider those varibles when pricing a country's debt

2017-12-29 16:08:33 UTC  

They probably already are

2017-12-29 16:09:26 UTC  

ok well in 20yrs the risk premium on US treasuries will go way up

2017-12-29 16:13:38 UTC  

So on the question of where to put money for long term investment, will we beat the rest of the world or will the rest of the world as a whole beat us? In your opinion of course, just want to see your perspective as someone on the ground

2017-12-29 16:15:35 UTC  

the US has had tremendous growth since 1980. it will be hard to top that over the next 40 years. and that includes the financial crisis. the US is a mature/developed economy so we have that working against us as well

2017-12-29 16:16:24 UTC  

there are certainly other parts of the world where it'll be far easier to have +4% GDP growth simply if their govts would get out of the way

2017-12-29 16:17:17 UTC  

Argentina used to be one of the world's best economies in the early 20th century (look at demographics and you'll see why). It fell in the 60's due to corruption from the Peron family and hasnt really recovered

2017-12-29 16:18:17 UTC  

if argentina's govt could get out of its own way they most certainly have the human capital to grow at an above avg rate over the next few decades

2017-12-29 16:21:18 UTC  

the question is what will cause these countries to implement the needed reform to have fully functioning economies

2017-12-29 16:23:12 UTC  

Thanks for the analysis 👍🏻

2017-12-29 17:19:36 UTC  

I'm a firm believer in keeping a portion of your assets outside of the banking/equity system.