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Christopher Bloomstran Profile picture
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25 May, 4 tweets, 1 min read
I’ve read this Brainard speech three times. Some takeaways:

Private money/crypto? We will kill you.

Stablecoins? We will kill you.

Cash? It will be digital and our liability. All of it. Kiss paper fiat goodbye.

The unbanked? You will be banked. We will be the bank. 1/
Payments, clearing, and settlement providers? We will help you (Read: We will disintermediate you and your profits).

Currency and bank accounts? We will complement you (Read: We and our international colleagues will disintermediate you and your profits). 2/
Privacy? Kiss it goodbye in the name of eliminating illicit activities.

Who knows where CBDCs wind up, but the Fed doesn’t float trial balloons for grins. The ability to print and send money directly to citizens in times of crisis circumvents the Federal Reserve Act. 3/
The parallel setting of deposit interest rates below zero on cash, (not contemplated in the Brainard speech) combines as the trigger for debt monetization and hyperinflation.

Surely there will be private sector pushback. None of the above is certain. Buckle up however.

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More from @ChrisBloomstran

Christopher Bloomstran Profile picture
25 May
This is not a comparison I'd make, Gary. Completely different businesses, completely different capital requirements and structural profitability. At the end of 2017 $AMZN earned a net margin of 1.3%, but anybody who understood the company knew the margin was headed way higher. 1/
It took no fanciful dreaming to understand $AMZN's net margin would likely grow to perhaps 10% over the next decade, a 10x increase. Investors knew they weren't paying anywhere near the 250x-300x multiple to earnings you suggest, but far less to a realistic achievable margin. 2/
The net margin has already grown to 6.4% over the last year and 7.5% in the most recent quarter. Importantly, Amazon's enormous capital requirement to grow was clearly scalable. Capex will now match depreciation & returns on equity net of the enormous cash balance are mid 20s. 3/
Read 9 tweets
Christopher Bloomstran Profile picture
20 May
Investments are occasionally priced dangerously far in excess of value. Commodities and speculations as well. When prices rise to where only a fool would buy from you at a higher price, that’s the Greater Fool Theory. Here’s a proven method for knowing you own such an asset...1/
2/
3/
Read 4 tweets
Christopher Bloomstran Profile picture
15 May
Interesting thoughts on the vagaries of deflation. Curious @CathieDWood what your research team learned when you had them study market cap to GDP, famously now the Buffett Indicator? Perhaps by now you have discussed and published your findings? I haven’t seen anything. 1/
Recall you had written on April 11 that you believed the measure was 2 to 3 times today’s level in the late 1800s and early 1900s. I’d replied but you probably missed it. At today’s level of 200% your premise suggests the stock market was 4 to 6 times the size of GDP. 2/
Of course the peak then was 90% in 1929, followed by an 89% stock market decline and 45% plunge in GDP. Earlier, despite the industrial revolution, the economy was very agrarian & very private (not publicly traded). The market largely consisted of utilities, railroads & banks. 3/
Read 11 tweets
Christopher Bloomstran Profile picture
14 May
Just realized Berkshire at $437,000 is precisely a 10-bagger from my initial $43,700 purchase in February 2000. With no dividends that’s 11.5% per year. For those that believe Berkshire & Mr.Buffett are “underperforming,” the S&P 500 total return over the same period is 6.7%. 1/
A critic can choose any arbitrary endpoints to bracket a return series. The outlay of cash is not arbitrary and sets the initial bracket. Little media mention of $BRKA up 25% YTD, more than double the index. It’s easy to find short intervals where x lags y and vice versa. 2/
Of course, the change in book value per share and harder to measure intrinsic value per share are better proxies for value accretion and the elements under control of management. By those measures Berkshire has likewise crushed the market over the same period. 3/
Read 5 tweets
Christopher Bloomstran Profile picture
1 May
A few quick observations from the $BRKA 10-Q.
The cash balance rose from $138.3B at yearend to $141.6B at 3/31. The media reports cash at $145.4B neglecting a $4.1B payable for T-Bill purchases that appears on the right side of the balance sheet. There was no payable at 12/31. 1/
Berkshire purchased $2.6B in common stocks and sold $6.5B for a net sale of $3.9B. The stock portfolio gained about 2% for the quarter and is up nearly 9% ytd. $GM was the best performing stock, up 37% to 3/31. I'd guess it was sold or materially trimmed. 2/
$BYD had grown to a top 7 portfolio holding from a cost of $232 million to $5.9B at yearend and $7.9B on 1/25. BYD is now down 21.5% for the year. I'd guess (and hope) the position was trimmed during the quarter. 3/
Read 11 tweets
Christopher Bloomstran Profile picture
28 Apr
In the absence of FASB directive, not sure which planet (guess) the AICPA was on when defaulting to treating #Bitcoin and crypto as indefinite-lived intangible assets. Cash? Clearly not. Not legal tender. Just bizarre to book realized gains as an offset to OPERATING expense. 1/
Declines below cost will be tested for "impairment" and when written down will no doubt be explained away as "one time." The room for abuse here is ripe. Why not treat crypto as a trading security, compelling marking realized and unrealized gains and losses through BOTH 2/
the income statement & the balance sheet? Take note of the way Berkshire Hathaway accounts for realized and unrealized gains and losses and makes clear they DO NOT consider them as operating. Lonely crowd. To the extent crypto rises in price, we now have the classic cookie jar.3/
Read 5 tweets

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