September 17, 2020

On Snowflake, Apple and on Berkshire Hathaway


The Berkshire Hathaway thesis  I just heard on CNBC makes very little sense based upon the empirical evidence. As such, it is a silly narrative and an ill advised reason for suggesting a valuation reset. Snowflake is a minimal investment for Berkshire relative to its asset base. The promoter of the thesis suggests Warren's $AAPL (Apple) investment is further evidence that the company is no longer investing in traditional, non technology investments.

Memo to Berkshire Bull: the Apple investment was made three years ago - when some envisioned Apple as a value play (at less than 15x PE).  As to why he is not likely selling Apple now - though it is a large portion of the company's investment portfolio - probably has more to do with not wanting to pay taxes on $60 billion of unrealized gains than a desire to be invested in even greater amounts in technology. (If so, Buffett would probably have added to tech stocks in March 2020 when stocks were beaten down). He did not. 

Furthermore, Todd and Tedd have been given alot more money to manage at Berkshire in the last few years - yet there have been few individual new technology investments. Will Berkshire expand tech holdings in the future? Maybe, maybe not - but neither Apple nor Snowflake is evidence of such a future or fundamental change in Berkshire's investment strategy.


via twitter

August 20, 2020

Should monetary policies be changed ?

1. Trickle down economics has failed.

2. Monetary authorities largesse/rate supression has expanded the wealth inequality and gap.

3, The wealthy have benefited from a steady reduction in the marginal tax rate from 90% to where it is today.

4. The wealthy have benefited from carried interest, preferred real estate exchanges as well as other substantive tax loopholes that the Average Joe has not been the recipient.


April 27, 2020

A summary of my near term (three months) expectations

It has often been said that a good forecaster is not smarter than everyone else, he merely has his ignorance better organized.

Here are my expectations for the S&P Index over the next several months:

* S&P cash currently stands at 2810.

* My "fair market value" calculation is 2800 on the S&P Inde - 18x 2022 S&P EPSe of $155/share. (Don't think precision!)

* I don't expect anything near a retest of the March lows.
(In short form, my reasons are: the level of interest rate levels, a likely flattening in the curve, the size of the Fed's bazooka, generally bearish market positioning and my confidence in the scientific and health communities). 

* However, I do have growing concerns about the Administration's ability to successfully manage (and "get to work") the aforementioned fiscal bazooka ("helicopter money") as well as providing a consistent and efficacious policy towards a national "reopening" that has the potential of pushing us back into the spread of Covid-19. On the latter point, it is my strong view that our nation's response to coronavirus has been a deadly mix of arrogance and incompetence. These factors have the potential to be the next market "stories" -- pushing stocks toward the lower end of my expected range. 

* My expected three-month S&P range is 2550 (9% below intrinsic value and current S&P cash) - 2950 (5% above intrinsic value and current S&P cash).

* I believe the downside of my three-month S&P range (2550) is above consensus.

* I believe the upside of my three-month S&P range  (2950) is also above the consensus.

I offer the above for the purposes of transparency and in order for you all to better understand my positioning (and move this afternoon). I remain optimistic about the intermediate term (one year or more out!). 


via twitter

April 25, 2020

Doug Kass talks at the 2020 CFA markets forecast event


Click here if the above video does not play

Minute mark
@34:07 Questions begin

@34:53  Has the market structure changed so that some of the things we look at are not as valid as they used to be?

@38:44 Noise factors impacting technical analysis / validity of pattern recognition?

@42:43 Pattern Recognition

@44:08 Assault on Neoliberalism and the election year?

@52:17 Surveillance Capitalism and Apple

@59:34 Interest rates - where they're at, where we're going?

@1:06:02 Gold

@1:09:49 Generational Lows and Highs 

@1:11:32 Political Polarizations

@1:15:27 Is the US the best house in a bad neighborhood? 

@1:20:58 Real Estate 

@1:28:00 Digital Transformation

@1:30:58 Bloomberg and the 2020 election

@1:32:53 Emerging Markets?

@1:34:49 Doug's Predictions

@1:37:15 Closing Comments

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