I lived for a year in the former Soviet Union. Everywhere you looked, you could see the relics of a fallen empire - the military statues, the palatial government buildings, the vast yet decrepit parks.

This society had achieved so much, yet in the end, disintegrated. Why?
After the 1917 Bolshevik revolution, the Marxists were intent on destroying money.

They shut down the stock exchange and they turned on the printing press. Eventually money became useless. Currency was denoted in the hundreds of millions. There were shortages and rationing.
Between 1917 and 1920, the Russian money supply increased 25 fold. All industry became state owned. Currency was replaced by moneyless credits between state-owned firms. Hyper inflation set in.

The first famine came in 1921. In a few years, 5 millions Russians starved to death.
Still, the Russians stuck to Marxism, despite the fact that it wasn't working. In the 1932, another famine struck.

The land owning peasants, the Kulaks, were blamed, rather than the forced collectivization of agriculture.

Another 4 million perished and birth rates plummetted.
World War 2 offered Stalin an opportunity. It gave the Soviets cover to seize more territory and pursue political opponents. As many as 27 million Soviet citizens died fighting for Mother Russia.

The Soviets emerged on the winning side and continued promoting their ideology.
They built a wall to keep people in. They silenced political opponents with bullets. They adopted client states all over the world and put missiles in Cuba. They sent a man to space. They dammed the Aral sea to divert fresh water for growing grain.

By the 1980s, all the Soviets had was their ideology. 70 percent of industrial output was going to maintain their military. The birth rate began to plummet and the death rate surged. An adviser to Gorbachev said, "The system is not working because the workers are not working."
In November of 1989, the Berlin wall, a wall built by Khrushchev to keep fell. Millions fled the FSU. Soldiers left their posts. Generals sold off weapons to African dictators and breakaway republics. The system was collapsing.

One year later, Gorbachev opened a stock market.
The system collapsed on itself in the end. You could go to the store, but find nothing on the shelves. You could stay in a hotel, but have no sheets or toilet paper. A man's standing became his politics rather than his production.

"We pretend to work, they pretend to pay us"
Some photos I took 13 years ago. A Soviet rally. An underground bunker that had the steel and copper pilfered. Me in the Crimean mountains. A woman feeding pigeons in Volodymyrska park.

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More from @calvinfroedge

10 Jun
Housing. These are the points they give for the bullishness and why it will continue:

- Millennials buying houses
- Boomers aging in place
- Work from home trend
- House building slowed after GFC
- Hedge funds buying houses
- Lower interest rates
- 2/3 of sales sight unseen
More reasons for housing bullishness...

- Personal savings rate up
- Months of housing supply still below pre-pandemic levels
- Housing starts / permits lower after GFC and never reached previous highs
Here are some demographic factors I see excluded from the analysis:

- Lower fertility rates
- Birth crash
- 500-600k excess deaths
- No decrease in persons per household
Read 5 tweets
3 Jun
$ASPS is a risky name. There have been years of losses. Potential of dilutive capital raise on the horizon. I get it.

But it's a cyclical stock, and $ASPS has a smaller share count today than it did in the glory years making a $5-6 EPS trading at a $3.5B valuation. Image
This is like buying miners in 2016. Years of brutal returns. $ASPS main source of revenue was literally taken away from them by the government for FIVE QUARTERS.

But now there are 1.4 million ZOMBIE foreclosures (i.e. abandoned properties) and foreclosures already starting.
$ASPS valuation today is only 100M. They are already priced for bankruptcy. They are already trading under their quarterly revenue pre-covid. They cut expenses by 50% and grew a new revenue stream out of nothing to offset the loss of their main source of revenue.
Read 6 tweets
29 May
When I said I'm bearishish on miners, I don't mean every untapped reserve, junior miner, and 10M mcap explorer on the planet.

I'm talking about the bigger companies that look cheap (like shipping companies do after a good run) but have to continue to invest and roll with prices.
The commodity boom could run for years, and miner prices could go a lot higher, but I think the shares of the average mining stock at this moment are several multiples higher than whatever the next cyclical trough is.

You may still be on the right side of the curve, who knows!
Usually the best time to buy cyclicals is when the underlying commodity prices are bad and everyone is arguing about which companies will go bankrupt.

The time to sell is when commodity prices are sky high and companies are looking at capital raises for new mines.
Read 4 tweets
28 May
$AE was able to buy a 56 mile pipeline system for ten cents on the dollar ($20M vs $220M paid by EnLink) incorporate into its existing crude oil marketing business.

$AE ended Q1 with $35 p/s in book equity, $16 p/s in cash and $5.69 p/s in net debt. $115M market cap.
This pipeline system and terminals cost hundreds of millions of dollars to build originally.

Pretty amazing that this one asset has a potential total replacement cost of double $AE's market cap, and they acquired it for 1/3 of their current cash on hand.
This pipeline system and terminal is just part of the total assets of the company:

- 566 tractors
- 1103 crude trailers
- 450k barrels of oil storage
- 3 docks in the Port of Victoria
- Truck terminals across the southeast (dozens of acres)
- 26.5 acres near downtown Houston
Read 5 tweets
22 May
Was talking with a friend yesterday (prolific bitcoin developer) on ETH transaction costs (GAS).

I knew that GAS was the cost to write data to the ethereum blockchain (i.e. execute/append to a smart contract).
What I didn't know was that the cost of GAS has exploded and is now hovering above $100 per transaction.

It's no wonder blockchain fan bois are now pushing NFTs as the future - it's because their chains lack scale so much that the only possible use case is for ownership chains.
If the cost of writing to the distributed database is this high, you have to ask, what's the point?

Other than vanity and novelty, there is no point. One could still argue for NFTs, but why do they need a slow, shitty, expensive chain to implement NFTs?
Read 4 tweets
22 May
$SNOW is the most overvalued enterprise vaporware crap I've ever seen. Yes, they have achieved rapid revenue growth, but THEIR SG&A ALONE IS HIGHER THAN THEIR REVENUE ALMOST EVERY QUARTER.

In the last quarter, operating loss was higher than gross sales!
What does $SNOW do? They provide "data warehousing" software. I worked in this field. They are not doing anything innovative. This is basically some APIs on top of old school data storage layers and some marketplace AMIs.

It is not innovative in any way.
What really ticks me off is how dishonest the investor presentations are. They claim a 69% "non GAAP gross margin".

Sure, if you exclude the sales and marketing, customer support, and development cost! All of which they will NEVER be rid of.
Read 11 tweets

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