Investing Thread

[MU Fan in Connecticut]

Yep, manufacturing rotation out of China to Africa & S Asia started in earnest during the pandemic (for the companies I was working with).

Ditto for me. 
My customers are telling me they've built and are in-process of building new modern plants in Vietnam and Mexico and only leaving in China what is for the Chinese market.

[JWags85]

That being said, India is going to prove to be a real competitor to China on the manufacturing front over the next few years.

Ive spoken about this in the past, but while this is a very real possiblity, there is A LOT that needs to change culturally and business wise in India for this to happen.

China has its challenges, but India is far more difficult to import/export and its business mindset is far less Western or Western-adjacent then places like China or Vietnam. 

Also, if you're a normal business (aka not super big, 9/10 figure company), importing used machinery is nearly impossible, or EXTREMELY difficult.  India had issues with companies bringing their used machinery/electronics into the country and dumping it...so they just banned all imports of used machines or electronics 

We just imported a unique niche machine, that was very lightly used, into our India office earlier this year.  Its highly specialized and is not manufactured anywhere in India (only made in a handful of places worldwide).  Proving that was the only way to get the import approved.  Even so, the approval process took nearly 3 months and the shipment was still held up for nearly 2-3 weeks before we submitted proper documents...aka paid 3 different people.  Conversely, we sent a different machine to China last year and it was 6 business days between departure from our office and full set up.

[Goose]

Wags


Our business in India is growing like crazy and across many products. Of course, India is not China and not every product category is available. That being said, I have been doing in business in China for over thirty years and not every product was available there back in the day.

I believe India saw the China blueprint for growth and learned from it. I am still bullish on China and believe 90+% of companies will remain in China, but believe India is the future of manufacturing. I am betting an awful lot on this belief and believe the first arrivers to India will do extremely well.

[MU82]

I'm only holding NET right now, but I sold about half of my position earlier this year when it was clear that rates were going to continue rising to lock in a 4x gain.

I wont hold AAPL/MSFT/AMZN because they're already such a huge % of my portfolio by holding indexes. Like, ITOT and its equivalents are like 70% of my holdings and ITOT is 6% AAPL, 5.5% MSFT, 3% AMZN, 2% GOOG. I feel like I'm good on tech heavyweights, most people are if they're holding broad indexes.

https://etfdb.com/etf/ITOT/#holdings

Understood. I'm more of an individual-stock guy than indexer, but that makes a ton of sense. I wish you good fortune.

[MU82]

82

What are your thoughts on Michael Burry's $1.6b short position on the market? It says that 90% of his portfolio is betting against the market. He is a strange dude, but that is one big bet.

Burry's generally been a good investor over the years, and I believe he has beaten SPY quite handily. But like all of us, he's not been perfect.

Just this past January he told his million-plus followers to "Sell." But two months later, he twitted that he was wrong in January and that he was now saying buy.

Buffett/Berkshire did a pretty good amount of buying last quarter and holds some $330 billion in stocks. And he's not short anything. He's not the gospel, either.

I can only go with how I invest. I tried market-timing years ago and the results were spotty at best. I'm not wired to make huge bets on (or against) the market. So I just try to invest in some of the highest-quality businesses out there and let them do their thing. I do not aspire to beat any particular index, just to have "more than more than enough" for my family's needs and wants. So far, so good.

[Goose]

82

I agree on your post, but I thought his short play was interesting news. Betting 93% of a fund on the market tanking is all in, IMO. He was definitely wrong on January and paid dearly if he was all in against the market.

It is interesting times and I do not think the market is for the weak of heart at the moment. As I noted in another post, the China situation is a big deal and we will see how far the ripples go.

China changed the global economy for the past three decades and might be changing it again. They are a wild card and coupled with what I believe to be a very fragile economy, things could get rocky.

[forgetful]

Yep, manufacturing rotation out of China to Africa & S Asia started in earnest during the pandemic (for the companies I was working with).

I thought this was an old and established process at this point. It was seen and positioned for in the past, and was a big reason for the US push to establish the TPP. A major focus of that was to shift trade out of China, reduce Chinese power throughout the global economy, and bring developing nations closer to Western trade norms.

We are now just starting to see it come more full circle, and slightly delayed because of COVID and US withdrawing from the agreement.

[Hards Alumni]

tower

The one child policy has caused issue, but a major slowdown in exports, slow domestic economy, real estate issues and high debt is far more troublesome. They have serious issues to tend to at the moment and I think they are a serious threat to the global economy.

Agree.  Also the 20-25% Unemployment amongst the youth is also a giant red flag.

[Hards Alumni]

82

What are your thoughts on Michael Burry's $1.6b short position on the market? It says that 90% of his portfolio is betting against the market. He is a strange dude, but that is one big bet.

IMO, he sniffs his own farts these days.  If he didn't land pull off the big short, no one would care what he thinks.  He is consistently a doomer, and he hit it real big once.

[Goose]

Hards

Main reason why I mentioned Burry was based off of the size of the bet. You may correct that he is a doom and gloom guy, but that is a very big bet against the market.

[Tortuga94]

Burry probably didn't go all in on a market crash. He is using SPY and QQQ puts to hedge his long positions after a huge run up in stocks to start the year and possibly anticipating a pullback after the big run up this year. The reason I think it may only be a hedge is based on the 13F, he also bought stocks in Q2, adding to some existing positions and buying new stocks too(Expedia and MGM Resorts), don't think he'd buy those 2 stocks in particular if he felt the economy was on the verge of a huge collapse.
And the 1.6 billion number being thrown around is the notional value of the options, he paid a lot less than that so it's not as big a bet as the media outlets have made it out to be.

[SoCalEagle]

Burry's generally been a good investor over the years, and I believe he has beaten SPY quite handily. But like all of us, he's not been perfect.

Just this past January he told his million-plus followers to "Sell." But two months later, he twitted that he was wrong in January and that he was now saying buy.

Buffett/Berkshire did a pretty good amount of buying last quarter and holds some $330 billion in stocks. And he's not short anything. He's not the gospel, either.

I can only go with how I invest. I tried market-timing years ago and the results were spotty at best. I'm not wired to make huge bets on (or against) the market. So I just try to invest in some of the highest-quality businesses out there and let them do their thing. I do not aspire to beat any particular index, just to have "more than more than enough" for my family's needs and wants. So far, so good.

82, Buffett was actually a net seller last quarter to the tune of about $6 Billion.  However, I think he's simply picking his spots and taking some funds off the table after big wins.  He likes value stocks and "proven" winners.  In fact, he kind of follows the philosophy that you seem to utilize (maybe I'm seeing a pattern here).  Anyhow, I predict he will maintain his shares of larger holding likes AAPL and KO while continuing to find value shares that are attractive to him.  He's definitely not afraid of investing in this market. 

[MU82]

82, Buffett was actually a net seller last quarter to the tune of about $6 Billion.  However, I think he's simply picking his spots and taking some funds off the table after big wins.  He likes value stocks and "proven" winners.  In fact, he kind of follows the philosophy that you seem to utilize (maybe I'm seeing a pattern here).  Anyhow, I predict he will maintain his shares of larger holding likes AAPL and KO while continuing to find value shares that are attractive to him.  He's definitely not afraid of investing in this market.

Agree with all of that.

While BRK will never pay a dividend under Buffett (and probably not under his successors), WB definitely likes many of the boring, dividend-growing names I do - including AAPL, CVX, KO, JNJ, MA and PG. He also likes to hold his stocks for a long time.

[MU82]

This today from Yahoo Finance's Brian Sozzi after Walmart reported a much better quarter than Target did, and what it might mean for the overall economy and stock market:

The read from those I talked with: This was another quarter where higher income households traded down from Target and went to Walmart.

But what's unclear is why are they trading down at all given the strength we're seeing in other categories, like fast-casual restaurants?

IPO juggernaut Cava came out with an incredible earnings report this week showing same-store sales up 18.2%. People may be trading down, but they're still spending.

My Cava bowl last weekend on Long Island cost $16. Sure, I got a ton of food. But I used to be able to feed myself for days for $16! So while people are cutting trips to Target and Home Depot, they apparently have a few bucks for a $16 Cava bowl with crazy feta in an urban market.

In my view, the economy is weird right now, and stock prices aren’t priced for weird. Keep that in mind as the calendar turns to September.

[SoCalEagle]

Burry probably didn't go all in on a market crash. He is using SPY and QQQ puts to hedge his long positions after a huge run up in stocks to start the year and possibly anticipating a pullback after the big run up this year. The reason I think it may only be a hedge is based on the 13F, he also bought stocks in Q2, adding to some existing positions and buying new stocks too(Expedia and MGM Resorts), don't think he'd buy those 2 stocks in particular if he felt the economy was on the verge of a huge collapse.
And the 1.6 billion number being thrown around is the notional value of the options, he paid a lot less than that so it's not as big a bet as the media outlets have made it out to be.

Well, so far Burry has missed the mark.  the S&P 500 is up 3.14% since this news came out. 

S&P 08/17/2023 = 4370

S&P 08/31/2023 = 4507

Not a huge sample size yet, but I will be watching.  Let's see where we are at the end of September.

[Skatastrophy]

Burry has called 20+ of the last 2 recessions. Ignore him, he's a perma-bear.

[SoCalEagle]

Yeah, but this time he bet 90% of his portfolio against the market.  Why would anyone do that?  I'm an investor, but I would never put 90% of my money on anything.  Diversify, my man.

[Hards Alumni]

Yeah, but this time he bet 90% of his portfolio against the market.  Why would anyone do that?  I'm an investor, but I would never put 90% of my money on anything.  Diversify, my man.

He loves the smell of his own brand.

[MU82]

Do we have evidence of him betting 90% of his portfolio against the market?

How does he even define his "portfolio"? Maybe most of his wealth is in real estate, bitcoin and gold, but he is betting 90% of the relatively small stock exposure he has against the market.

I don't know that's the case, but has he disclosed everything he owns, or is everybody just supposed to believe him?

[Skatastrophy]

Yeah, but this time he bet 90% of his portfolio against the market.  Why would anyone do that?  I'm an investor, but I would never put 90% of my money on anything.  Diversify, my man.

The number floating around is not how much he paid for the contacts. People, including finance writers, don't have a firm grasp of options

https://www.investopedia.com/ask/answers/050615/what-difference-between-notional-value-and-market-value.asp

[Herman Cain]

Media stocks got hammered Friday ; fallout from Charter Disney EDPN dispute .

These situations usually resolve themselves  .

https://variety.com/2023/tv/news/disney-charter-dispute-media-stocks-fall-1235710954/amp/

[MU82]

Poor baby ...

A disruption to his vegan diet, a dwindling supply of Adderall, scant access to the internet: Sam Bankman-Fried, the FTX founder, has protested his conditions in detention as he awaits trial on fraud charges.

https://www.nytimes.com/2023/09/05/technology/sam-bankman-fried-jail-peanut-butter-vegan.html?campaign_id=190&emc=edit_ufn_20230906&instance_id=102099&nl=from-the-times&regi_id=108420427&segment_id=143923&te=1&user_id=d36dcf821462fdd16ec3636710a855fa

[Hards Alumni]

Poor baby ...

A disruption to his vegan diet, a dwindling supply of Adderall, scant access to the internet: Sam Bankman-Fried, the FTX founder, has protested his conditions in detention as he awaits trial on fraud charges.

https://www.nytimes.com/2023/09/05/technology/sam-bankman-fried-jail-peanut-butter-vegan.html?campaign_id=190&emc=edit_ufn_20230906&instance_id=102099&nl=from-the-times&regi_id=108420427&segment_id=143923&te=1&user_id=d36dcf821462fdd16ec3636710a855fa

Eh, reasonable accommodations should be made.  Diet, medication, and access to information that could better his defense should be readily provided.  Especially since he hasn't been convicted of anything yet.  I'm not suggesting he be given preferential treatment or given unfettered access to the internet, but he is still innocent until proven guilty and should be afforded reasonable conditions.

[MU82]

Eh, reasonable accommodations should be made.  Diet, medication, and access to information that could better his defense should be readily provided.  Especially since he hasn't been convicted of anything yet.  I'm not suggesting he be given preferential treatment or given unfettered access to the internet, but he is still innocent until proven guilty and should be afforded reasonable conditions.

I actually agree with you, Hards. "Poor baby" was kind of the visceral reaction to "rich criminal defendant learns that jail is less than fun."

[MU82]

There are some analysts starting to compare Apple to IBM, which famously grew revenue for years but then infamously stopped doing so about 10 years ago, causing the stock price to retreat significantly.

But there are others who say this is a relative blip for Apple, and they use this chart to point to "It's just a fairly typical September":