What is going to break the current tech/growth bubble? Demand and supply:
*The Fed is on track to stop printing by mid 2022.
*The supply of stock keeps rising; prices are rising; stock based comp is large; the IPO market is frenetic; and secondary offerings increasing. (1/n).
Prices keep rising because the Fed is manufacturing new liquidity faster than it can be absorbed by financial markets. US$130bn of IPO & secondary issuance is needed every month to absorb it. That's very difficult.
Prices is financial markets are ultimately set by the interaction of demand and supply. The money supply determines the aggregate demand for financial assets; and the supply of listed product the supply. If demand > supply prices will rise, and vice versa.
The supply of investable product is relatively fixed in the short term. However, just like in the late 1990s and other cycles past, in a period of excess liquidity, the financial industry will work night and day to manufacture more investable product to try to sate the demand.
On current trends - rampant cap raisings and reduced Fed printing, it is only a matter of time before the demand/supply balance changes and tips in favour of excess supply. When this happens the bottom will fall out of the spec ends of markets. It ain't gonna be pretty.
Incidentally, it is tiresome to keep reading arguments such stocks are sensitive to inflation/rates because "higher discount rates impact long duration cash flows". Yes, but that's not why they are behaving that way. It's because they will drop 90% if the liquidity rug is pulled.
Even theoretically, the argument is wrong, because it only applies to higher *real* rates, not nominal ones. Real rates have actually become a lot more negative as inflation is rising much faster than rates.

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More from @LT3000Lyall

18 Nov

*Slowing revenue growth/maturing e-com pen; rising competition and falling market share.
*40% decline in core profitability in 3Q21.
*Run-rate core P/E probably about 40x post SBC with further significant declines possible.
*Regulatory risks/headwinds.
*Still over-owned.
I've been arguing for a while now people have been using inappropriately low forward P/E multiples for BABA, often arguing it's on <20x 2021, excluding substantial SBC and failing to account the earnings risks & reasons why the stock has been going down in the first place.
Not saying I'm an uber bear or anything. But I've looked at and passed on the stock many times on the way down, as it still looked fairly expensive and esp too risky to me. Like Seth Klarman once said, we don't buy because it's down; we buy because it's cheap.
Read 8 tweets
10 Nov
Great (and impressive) video by NYT on liberal hypocrisy and how it is contributing to worsening inequality (and other social problems) in blue states.

I mostly agree with it, although I think the way tax rates are presented is misleading/false. I would also argue it's not so much a case of liberals not "living their values" as it is not living their *declared* values. As the old saying goes, actions speak louder than words.
Humans are all fundamentally selfish with respect to themselves and their kin and there is no getting around that. Red states have less of these issues as conservatives are more realistic/honest about human nature & gear their policies accordingly.
Read 8 tweets
8 Nov
This whistleblower report on serious inadequacies in the Pfizer vaccine trials is big news. The allegations are credible. The British Medical Journal has published the paper & given the huge implications, would not have done so w/out serious consideration

The whistleblower has a long and respected career in trial quality control, and the article noted they have provided the BMJ with "dozens of internal company documents, photos, audio recordings, and emails". The amount of such evidence for BMJ to publish must be very substantial.
Pfizer outsourced the trial to contract research organization Ventavia, who are alleged to have engaged in questionable conduct. The typical commercial conflicts apply here (Ventavia has repeat business with Pfizer) - i.e. wanting to give the client the trial outcome they wanted.
Read 8 tweets
5 Nov
We would like to acknowledge a long list of conquering tribes that forcibly dispossessed this land's from its prior inhabitants. Except the original peoples (who dispossessed wildlife) as their descendants are all dead now so who cares.

I'm Lyall and I'm wearing a white t-shirt.
This is possibly the most cringe thing I have ever seen in corporate America. It's like (nay is) a cult - it's creepy.

No one doubts past injustices occur. But feeling the necessity to add this preamble to a corporate presentation is just totally messed up.

And clothing - WTF?
Are we going to get to the point that before you can say anything of substance relevant to the issue at hand, you need to give a 10 minute speech on all the social justice ills of the world & disadvantages minority communities merely to avoid the appearance of being racist?
Read 6 tweets
5 Nov
Been an unusual number of such events recently, as well as reports of unusual surges in hospitalizations and children suffering sudden abnormal fatal cardiac events.

It’s not proven, but reasonably probable that undiagnosed vaccine injuries are the underlying cause.
Zero Hedge recently published an article on usual surge in hospitalizations and child cardiac events. Other countries are reporting similar occurrences.

It is unfortunate no research or systematic analysis of vaccine injuries is being done/reported.

Lot's of doctors/whistleblowers have been raising the alarm but the information has been suppressed/censored for fear it would discourage vaccination.

A whistleblower on clinical trial irregularities was also fired.

Read 6 tweets
3 Nov
Marc Andreessen made an interesting observation in a podcast a while back - covid-induced remote schooling had resulted in parents overhearing what their kids were being taught (ie extremist hard-left CRT ideology), and were shocked. This may be contributing to election outcomes.
CRT is a fundamentally racist doctrine that teaches kids to judge people by their skin colour; feel victimized & resent "oppressor" races. It's exactly the type of thinking/ideology that has lead to recurring & devastating ethnic-based civil wars in Africa over the past century.
It also teaches kids exactly the wrong values they need to succeed in life: to feel powerless/oppressed and a victim; that all their problems in life are other peoples' fault (of a certain skin colour); that personal effort is futile because the system is rigged against them.
Read 10 tweets

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