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I was taking to Mr. Market this morning about the economic fallout of COVID-19 and out of the blue he yelled as loud as he could to no one in particular:

"What could go right?"

berkshirehathaway.com/letters/1987.h…
My friend Joe called me tonight asking me what my predictions were in the sort term.

I replied "Well in five years..."

Joe cut me off and said: "I want to know if tomorrow Mr Market will yell: 'What could go wrong?'"

Joe is often disappointed in life since he's a speculator.
Joe then asked me what investing topics I had been thinking about.

I said I was rubbing my nose in a old investing mistake.

Joe asked: "Which mistake?"

I said: "That time I sold Nike shares after holding them for only 25 years."
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Tren Griffin
@trengriffin
If you have a friend that would benefit from a simple to understand explanation about what comes next with COVID-19, you might want to suggest that they watch Ellen DeGeneres interview Bil Gates:
"We had epidemics like the Ebola epidemic in Africa that should have gotten us ready. Then we had Zika. But a respiratory pandemic that's very widespread, we haven't seen anything like this for 100 years. I thought that the anniversary of 1918 would galvanize people as well."
"things] won't be back to normal until we have that phenomenal vaccine or therapeutics that are over 95 percent effective." He added that "we have to assume that's going to be almost 18 months from now." google.com/amp/s/www.holl…
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Tren Griffin
@trengriffin
1/ "Suddenly, margins matter. Richer margins lengthen runway. How many more months of burn could the company yield with this alchemy? Let’s illustrate.." tomtunguz.com/why-margin-mat…
2/ You might hear someone say:

"Tren is old shool in his love for high gross margins."

If a business has low gross margins it doesn't have a lot of elbow room for below GM line expenses. I've been to low gross margins, and I don't want to go back.

google.com/amp/s/25iq.com…
3/ Sometimes when I'm sitting at a campfire someone will ask me to tell a scary story. I will occasionally tell the frightening tale of Pets.com which reported negative gross margins of $277,000 in the third quarter of 2000. Some otherwise smart friends owned it.
Read 3 tweets
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Tren Griffin
@trengriffin
1/In the real world people running a business and wise investors are focused on cash flow. Despite this Goldman writes: "The path to earnings normalization is everyone's focus." Every sheep maybe but not "everyone." Sheep like earnings because they're lazy and cash requires work.
2/ As you know: "Expected long-term cash flows, discounted by the cost of capital—not reported earnings—determine stock prices" because you've read "The Trouble with Earnings and P/E Multiples"csinvesting.org/wp-content/upl… by Rappaport and Mauboussin. Please don't tell me you haven't.
3/ "It’s the absolute dollar free cash flow per share that you want to maximize....Investors can’t spend percentage margins. What matters always is dollar margins: the actual dollar amount." Jeff Bezos

You can't pay a supplier or employee with "earnings." Cash is King and Queen!
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