Author Topic: 1999 again?  (Read 74976 times)


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Re: 1999 again?
« Reply #370 on: January 23, 2021, 02:55:11 PM »
Just to throw a related POV out.

Almost every treasurer, the world over, will tell you that money is ridiculously cheap - and will continue to be for quite some time.
If you did NOTHING MORE than simply roll notes as they came due, most would save millions/yr in interest. Savings that could be used to 1) greatly lengthen maturity terms on the replacement notes, 2) pay the interest on a NEW (and large) note issue, or 3) simply be allowed to flow to the bottom line.

At a time of significant technological change, newly constructed long term assets are subject to heightened obsolesce risk. It is far smarter to use the capital in industry consolidation, to extract greater production efficiencies and economies of scale - closing old plant along the way, by assigning work to your now most efficient plants, operating at a now higher capacity. But not good for employment.

But if you consolidated in the minerals sectors (o/g, metals, etc.), the outcome is very different. Obsolesce risk is minimal, opex savings from scale are immediate, and write downs on stranded assets ensure little/no tax for some time. Better still, as cheaper mineral deposits exhaust (& technologies improve) over time, the stranded asset becomes viable again, and the write downs reverse.

Point? Once Covid settles down, there will be is a growing and enormous wall of money going into industry consolidation, And it will go to the minerals sectors first, where job-loss is more uncertain.

Skate to where the puck is going .. not where it is right now.



« Last Edit: January 23, 2021, 02:57:08 PM by SharperDingaan »


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Re: 1999 again?
« Reply #371 on: January 23, 2021, 02:59:02 PM »
 Grantham loves the green energy theme so probably has an unconscious bias so is refusing to recognize the froth in that area the market.

 I think the new bull market thing is confusing. I think we are still in the same bull market and it has been extended by the promise of lower interest rates for longer and a reinvigoration of the growth prospects for tech due to much faster adoption and the potential for broadening as cyclicals have a lot of room to run in a strong economic recovery.

 A lot of the speculative mania shows we are in the late inning. But could be another year or two before tapering and withdrawl of fiscal stimulus result in both Big Tech and cyclicals seeing significant price declines. I think so long as there is concern about the real economy the Fed is going to be very accommodating and so long as COVID continues to linger around there will be a lot of remote working and home entertainment and online shopping which will keep growth expectations high.


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Re: 1999 again?
« Reply #372 on: January 23, 2021, 03:00:18 PM »
Agreed on comment on electrification. That is why i found him to be credible and highly refreshing.
I like investors who have specific point of view and dont just say "the world will come to an end, i saw it in 1999, everything sucks". He is actually giving nuggets and i think is 100% on the money on renewables (though doesn't take a genuis to say that). The pandemic in fact accelerated it.

On the comment about BRK and potential in changing tax structure, perhaps, BRK needs a large pivot into being a global player -- outside his comfort zone but cheaper on valuation work with. ala pivot into bonds in the late 1990s.