Friday, October 9, 2020

Friday Night Links

  • The math here is blindingly obvious. Buying the 25 most expensive firms within the 50 largest market cap firms today is an arithmetically reckless bet. Already more expensive relative to US GDP than any time in history, if these firms generate 10% annual returns while the US grows well above any forecasted rate, they will be larger than the US economy in very short order. [Kailash]
  • The investment landscape has completely flipped in forty years. This is true of inflationary expectations, bond yields, energy prices, commodity stock valuations, and broad equity prices. Four technology companies each sport a market capitalization greater than $1 tr and $14 tr of fixed income securities trade with negative yields. You can certainly argue that both stocks and bonds have never been more popular. Few investors saw the seismic shift about to take place in 1980 and even fewer were positioned accordingly. We have argued for some time now that another unforeseen reversal is imminent. The fundamental events that undid Schlumberger’s meteoric success four decades ago is about to be repeated but this time in reverse. The prevailing wisdom that helped push stocks like Amazon to 20 times book value and 125 times earnings will somehow fail to come to fruition. Similarly, the near-universal bearishness that grips energy names like Schlumberger will end up being false. A massive reversal in investment capital flows is about to take place. Back in 1980 no one could possibly envision that Schlumberger would ever trade below its 1980 price in the years to come—but 40 years later it does. The FANG stocks today are in the same position as Schlumberger in 1980. History is about to repeat itself and few investors are positioned to profit from it. [Goehring]
  • In the much larger U.S. market, overall BEV sales increased modestly in the U.S. from 2018 to 2019, rising from 226,849 to 231,662. However, Tesla’s U.S. sales slightly declined during that period, from 191,627 in 2018 to 189,355 in 2019. Tesla experienced the decline despite introducing the Model 3 SR at a sharply lower price point and despite steep cuts in the pricing of its Model S, Model X, and AWD/Performance Model 3. In other words, Tesla was forced to cut its prices to preserve its market share. Because of the price cuts, Tesla’s ASPs and margins also fell overall, causing its U.S. automotive revenue to drop by a far greater percentage than the decline in vehicle sales. [Montana Skeptic]
  • Less sound, but more revealing, is the writer's first general principle, which recommends (short of serving some vile Balkan plonk) that one always go for quantity over quality in drink. Amis drank in amounts that would stagger -- and stagger the imagination of -- the average early 21st-century American. It sometimes left him the worse for wear: "After half a dozen large Dry Martinis and a proper lunch," Amis writes, "my customary skill with the commas and semicolons becomes a little eroded." Drink as much as he did and you will need to economize; but if your drinking is rather more moderate, you can afford to drink well. [WSJ]
  • In fact, Republic of Venice was the closest thing that ever existed to Curtis Yarvin’s proposal for “neoreactionary” absolutely secure cryptographic based dictatorship. And it was one of most advanced , most prosperous and most powerful states of the time – maybe Moldbug is onto something? [Cochran]
  • In general, less terror is warranted that was felt in March: the news has turned out better than it initially appeared when looking at Northern Italy and NYC at the beginning of spring: The big initial fear -- hospitals being overwhelmed -- has proven avoidable. The fatality rate appears to be perhaps a quarter of what was initially feared. Fatalities are concentrated in people without that much quality-adjusted life expectancy left. This has been largely covered up, but as I've been pointing out for months, when you look at lists of celebrity deaths from covid, very few have been people in their career primes. My guess is that everybody has been covering up how this is mostly a major risk to the elderly due to the immense power of the elderly in modern societies. The germ is seldom transmitted by mail, Amazon deliveries, touching gas station handles, and all the other things we were scared about in March. We now know that many of the policy fetishes of spring, like shutting beaches and golf courses, were very bad ideas. Several new treatments have become available, and Regeneron's polyclonal antibody is on the way. Effective vaccines should arrive in 2021, although probably not until after the winter bad season. [Sailer]
  • What that means is that there is no longer any possibility whatsoever of evading the notice of powerful people who are out to get you. From the perspective of any serious, capable, and determined state (cough, China) this is now a solved problem. There can be no secret meetings or clandestine samizdat printing operations or anything like that. Near the end of the book, Dreher advises, “Christians should educate themselves about the mechanics of running underground cells and networks while they are still free to do so.” As the Uyghurs would tell you, if they could, that ship has already sailed. The old mechanics are obsolete and no longer work, and there are no new mechanics. [Handle's Haus]
  • Civil war would be terrible, it is a race to the bottom, and then you discover there is no bottom. But a left victory would just be civil war with us not shooting back. Tens of millions would die. Perhaps everyone would die, as last leftist murders the second last leftist for insufficient leftism. Leftism is not a journey to a destination. Rather, you are in a car with the accellerator stuck and the engine will not turn off. Leftism just goes on getting lefter, faster, until it is stopped by sufficient violence. Typically it is stopped short of everyone dying by one leftist seizing absolute power, a Stalin or a Cromwell, and that leftist makes it as dangerous to be too far left as it is to be too far right. Which by that time is apt to be very dangerous indeed. [Jim]
  • The name "Chilean seabass" was invented by a fish wholesaler named Lee Lantz in 1977. He was looking for a name that would make it attractive to the American market. He considered "Pacific sea bass" and "South American sea bass" before settling on "Chilean sea bass". In 1994, the U.S. Food and Drug Administration accepted "Chilean seabass" as an "alternative market name" for Patagonian toothfish, and in 2013 for Antarctic toothfish. [Wiki]
  • If they couldn’t fight to preserve the lives and property of their fellow countrymen that breaks something fundamental. Everyone starts thinking defect / defect on the social dilemmas because the society and civilization seem weak. Since those are both shared illusions seeming weakness translates into real weakness and loss of cohesion. [Greg Cochran]

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