Posts

Long-term real estate prices

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Hard to find long term real estate charts and I found the following that is useful for future reference. Data and chart is from the 2018 Credit Suisse Global Investment Returns Yearbook (summary version free.) Found it from the following Finalytiq blog post. This chart is real prices (so add say 3% inflation) and doesn't include rent or imputed rent (so add another 4% (say $1500/month rent x 12 months on a $500k home.) For USA, annual price return was 0.3% so that's like 7.3% annual return if you go with my assumption for inflation and rent above. Overall world figure was better at 1.3% for the price return. Like all other assets, home prices were basically flat until the mid-1900s (partly due to deflation/gold-backed money supply and partly due to deflationary destruction from world war 2.)  Australia has had the best price return at 2.2%, most of it from the last 30 years.

Ten classic investing myths from Peter Lynch

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Advice from Peter Lynch. I agree with all of them but depending on the type of investor you are, some of them may not apply. Video is kind of humourous so do check it out. Ten investing myths by Peter Lynch 1. It can't go any lower  2. How High Can it Go?  3. They Always Come Back  4. How much can I lose  5. Darkest before Dawn  6. I will sell after rebound  7. I own conservative stocks  7. Money Lost bc not Buying  9. I must be right or I am wrong  10. Avoid Long Shot Video source: Business Basics on YouTube (original seems to be CSPAN-2 video from 1997,)  https://youtu.be/c-2uuIz_sAQ

Oil stocks look interesting

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One of the most interesting sectors for contrarian investors is oil. Oil stocks have crashed and oil price itself has not recovered in the last few weeks (although oil stocks are up 50% from bottom so some positive economic recovery is priced in). Current WTIC oil price is around $21. It should be noted that oil price is even lower than it was a few weeks ago even though OPEC, Russia, USA and others have agreed to reduce production. This goes to show how political oil is--hence unpredictable. But if you think oil is low, the unpredictability is not a big risk since upside near a bottom is higher than downside (in fact, there is probably higher chance of it going up due to political events; this is obviously not true if oil price was high or during normal price). Shown below is the WTIC futures curve from 1 month to 80 months: Source: ERCE, https://www.erce.energy/graph/ wti-futures-curve Futures are forecasting above us$35/bbl (WTIC) beyond 2 years. You can't bli

Thoughts on the stock market - March 2020

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Right now, DJIA has a P/E of 16.8 and forwand P/E of 15.1, whereas S&P 500 is at 20.1 with forward P/E of 15.8. Source: WSJ market Data If you ignore interest rates and inflation expectations--both of these influence valuations but depends on your macro call-- the market is not cheap. Long-term P/E is around 15. Trailing P/E is around 20% (Dow) to 40% (S&P500) higher than average. Forward P/E is in line with long term average but that assumes a strong V recovery. Consensus forecast is for profits to drop 1.2% in 2020. In 2008, it dropped 25.4% so current forecast is a very mild recession. Covid-19 coronavirus is not going to last more than a few months but these forecasts are still too rosy in my opinion. So I wouldn't rely on forward P/E. The richly valued (mostly tech or high quality) have not fallen much but the distressed ones have. So if you want to outperform in the long run, I think one’s choice right now is to: • Wait for market to fall another, say

I'm tweeting more now... Check my twitter feed also

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Now that we have entered a bear market, I'm following it more. I'm tweeting more nowadays. I'll still post long articles or investment evaluations here. For quick thoughts and articles I reference, follow my tweets at username @sivaram_v . QR code below.

Good interview with Louis Vincent Gave - 2019

Have always been a big fan of Louis Vincent  and ran across this good interview with theMarket.Ch (thanks to Jesse Felder for bringing this to my attention). Below are some responses I found worth quoting. There is a lot more discussed and I recommend that you read the whole interview. Q: What's ailing the automotive sector?   Louis Vincent Gave: There are a number of structural issues, but the most significant development has been the realization that the Chinese car market is done growing. For years, the Chinese market has been growing by two to three million cars per year. Financial markets have just extrapolated this kind of growth into the future. But that turned out to be wrong. The Chinese car market has probably hit its limit at 25 to 30 million units per year. In most parts of the world, the auto sector has stopped growing. It’s no surprise then that Germany has seen such a collapse lately.  ... You mentioned that in every bubble there is the belief that there

Purchase: Ming Fai International Holdings (HK: 3828)

I will try to write up my evaluation when I get time but here are intial thoughts: cheap stock in highly competitive market micro cap insiders and prominent investor ( David Webb) owns huge stake no moat vulnerable somewhat to US-China trade war (20% sales and 25% profit from USA, China slowdown) good long term growth from China tourism growth strong balance sheet high dividend  Purchase price (HK:3828): HK$0.81