ValueStockGeek

We think about the 2010’s as mainly prosperity driven by big tech, but it was really about prosperity driven by cheap oil.

Totally agree. Mediocre movie but a great performance from Keanu. I forgot how funny he can be.

Chart showing job losses from 2025 to present

Gee what happened at the beginning of 2025

Good rule of thumb: don’t change an asset allocation unless you’re at an all time high from a performance perspective.

Otherwise, there is a high probability you’re emotionally reacting to recent performance vs. making a rational decision.

Everyone focused on the fact that the hedge funds in the Buffett bet didn't outperform the S&P 500.

The actual results were far worse than that. They underperformed treasuries. Most didn't even offer much protection in 2008.

The problem with ‘it doesn’t matter if the hedge fund has low returns as long as it is uncorrelated with the market’ is that you can get the same damn thing from treasuries or gold without paying absurd fees.

Imagine telling someone in 2008 that a Middle East war was endangering the Strait of Hormuz and oil is only $74. That would have been a $200/barrel event back then.

Yea. They’re such a huge % of the budget. If you get 2/3 wrong, no amount of cutting lattes and grocery bills is going to do much. They’re the decisions that really move the needle.

About 90% of personal finance comes down to housing, college, and cars. Make good decisions there and good things happen almost effortlessly. Make bad decisions there and it’s going to be near impossible to get ahead.

A proper Berkshire letter should open with "Berkshire’s Performance vs. the S&P 500." It's sad that it hasn't been there for four years. I also miss the column measuring the compounding value of the book value per share which went away in 2019.

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I also don’t believe in holding cash for crashes. It’s market timing and it doesn’t work. I’ve tried this. This is different. It’s mechanical rules based rebalancing. You automatically sell whatever is up and buy whatever is down annually without trying to forecast.

It also hasn’t just worked for 40 years. It worked in the Depression and 1973-74 as well. If the argument is that LT treasuries won’t work in the future because USD won’t be the world’s reserve currency . . . that’s what the gold is for. And if that happens, I wouldn’t want to own US stocks either.

In this sort of portfolio, the goal isn’t something that is flat when the market crashes. It’s something that goes up. Look at the returns of LT treasuries during 2008 or COVID. The asset is long treasuries for as long as USD is the world’s reserve currency. The benefit occurs during rebalancing.

Unexpected Returns: Shannon's Demon & the Rebalancing Bonus – Portfolio Charts A lesser-known phenomenon called Shannon's Demon creates a positive rebalancing bonus in portfolios with multiple assets. Here's how it works.

As for returns . . . it's only 20% of the portfolio and it still delivers in a crisis. Also, in a portfolio, uncorrelated assets enhance returns beyond their actual returns. It's a really weird phenomenon but it's best demonstrated here: portfoliocharts.com/2022/04/12/u...

Getting rid of them improves returns but it also drastically increases the maximum drawdowns.

Agreed that the US is a budgetary mess . . . but USD is still the world's reserve currency and LT treasuries still rally significantly in a major crisis.

Why is that?

Fears of AI-driven mass unemployment seem mostly speculative to me.

We're still below 5% unemployment. This is 2007/1998 levels. It's affecting tech, but there's little evidence it's causing the kind of mass unemployment that people are worried about.

It’s how to win the newsletter business.

The cure to financial stress is getting out of debt and having 6 months of cash sitting in emergency fund.

Once that foundation is in place, all financial decisions can come from a rational place of strength vs. desperate anxiety.

This results in better decisions overall.

Yes screwed up US gun laws are another contributor.

- USA launches war on drugs.

- Doesn’t work.

- There is now a lot of money in selling drugs to Americans. Ruthless criminals (cartels) profit.

- Ruthless Mexican cartels gather enough money & power to operate like their own powerful military force.

I'm not sure if it will stay deep. I think we're doing things that are endangering USD status as the reserve currency or at least seriously weaken it. And, even if we don't do that, we could engineer massive inflation.

I am also worried about that.

Trump will handle it poorly.

On top of that, our fiscal deficit is completely out of hand. The USA dealt with both the GFC & COVID by basically throwing massive amounts money at it. Will we have the capacity to do that in the future? We're testing the limits.

When Bitcoin is up: HAVE FUN STAYING POOR MORON!

When Bitcoin is down: This is just like the Global Financial Crisis, a total meltdown . . .

Then they shouldn’t whine so much when they’re down.

In 2008, I saw structural failure in how many folks I knew organized their financial lives. High fixed costs. Debt obligations. Lifestyles entirely dependent on continuous employment. A job loss meant collapse. I was in a similar spot and I vowed I wasn't going to live that way any more.

The weird portfolio is off to a strong start this year.

Really strong EPS = really compressed multiples

Above-average earnings years saw PE multiple compression 66% of the time since 1900 BofA