1/ Ray Dalio to Tyler Cowen who cites random walk macro literature:

"The market is like a poker game. I’ve played for over 50 years. It’s a zero-sum game relative to what’s priced in, and the smart people take money away from those who are less smart.” conversationswithtyler.com/episodes/ray-d…
2/ Dalio: “That’s the way it works. I wouldn’t be in the business — I wouldn’t be on your podcast,  unless that was true. There are many people who write finance papers, and there are people who make money in the markets. I can’t speak for those who are writing finance papers.”
3/ Ray Dalio argues that three big phenomena happening now are particularly important:
a. Zero interest rates with actions to finance debt;
b. The internal conflict between left and right, rich and poor a political polarization; and,
c. The rise of China.
4/ The danger is people reading Dalio's book will shut down and refuse to consider all arguments if their issue isn’t discussed first. "When you have a large gap of people at each other's throats, you create a risk of an internal conflict, the risk of some kind of civil war.”
5/ I am will produce tweet storm report below on Ray Dalio’s ideas and new book. If you disagree with Ray’s ideas, take it up with him. I don’t agree with Dalio on some issues related to China and otherwise. There will be links to the sources at the end of the tweetstorm.
6/ "Central bankers, especially the Fed, are between a rock and a hard place. They need to tighten quite a lot to restrain inflation, yet if they do they will hurt the economy."
7/ "Imagine what would happen if there was a tightening of monetary policy in the classic way of first causing asset prices to go down and then the economy to contract.”
7/ "People are at each other’s throats and they’ve been given a lot of money. I’m afraid of another economic downturn. We can’t even get along on whether we can wear masks or not.”
8/ "You can’t allow another economic downturn. You can’t raise interest rates enough to bite. Interest rates have to be significantly below both the inflation rate and the nominal GDP growth rate.”
8/ / “Producing money doesn’t take money away from anyone so it’s politically easier because it’s a hidden tax. Nobody’s complaining about where the money came from. If you get it through taxes, everybody squawks." Ray Dalio
9/ "One has to grow the pie well, be productive and divide the pie well so productivity and benefits of it are for the majority of people. Central banks want to stretch the money and credit cycle to make it last for as long as it can because it is better than the alternative.”
10/ "Today it doesn’t cost anything to borrow. Right now if you take out debt, you have practically no interest rate and principal payments can be deferred, so money is essentially free. The cost of money negative and below the nominal growth rate."
Ray Dalio
11/"It's very profitable to borrow and invest in anything that can grow at the inflation rate or more. That’s what’s priced into the markets now. If they raise interest rates to be higher than is priced in,asset prices will go down and there will be more of an economic problem."
12/ "There's a tradeoff: You can't raise living standards by just creating money and credit, if you don't raise productivity more than that because that’s just more money chasing the same amount of goods. It will affect financial markets and the inflation rate.” Ray Dalio
13/ "We are spending more than we are earning by a lot— individuals and the country as a whole. That won’t raise living standards in an important way. As inflation then begins to bite, it has political consequences." Ray Dalio
14/ Real short-term interest rates are significantly negative. Even real bond yields  are negative. Some people make the mistake of thinking that they are getting richer because they are seeing their assets go up in price without seeing how their buying power is being eroded."
15/ "Debt is both a good and bad thing. Being able to create debt gives you buying power. Being able to print the world’s currency — such as when we were in the COVID crisis — and being able to print the currency that, around the world, will be accepted." Ray Dalio
16/ "The buyer of debt is owns your promise to deliver currency. When you have the world’s reserve currency, it allows you to get into more debt. Now, getting into more debt has historically, if not done correctly or not done sustainably  creates [problems]." Ray Dalio
17/ "Those obligations to deliver currency and pay back can produce different types of problems in the future. Debt is very short-term stimulative, and it’s longer-term depressing, and the ability to do that and have others take on our liability [isn't unlimited].” Ray Dalio
18/ "Most likely you’re going to see disagreements between the federal government and state governments on what is states’ rights that probably won’t be all settled legally, so they will be settled through tests of power."
Ray Dalio
19/ "There will be places that people won’t want to be because it’ll be threatening. People will want to be with their own kind.” The United States has not yet crossed the line into the sixth phase, but internal conflict is high and rising." Ray Dalio
20/ "The rise of a great power, China, to challenge the existing leading power and the existing world order is being reflected in market prices, but will be reflected more as those circumstances change.” 
"There are five kinds of war, and they’re not all shooting wars." Dalio
21/ "There’s a trade war, there’s a technology war, there’s a geopolitical war, there’s a capital war and there could be a military war. We are certainly, in varying degrees, in the first four of those types of wars. There's a good reason to worry about the fifth type of war.”
22/ "View cash as not the safest asset, but a very bad asset, because it has a very significantly negative yield relative to inflation. You will lose buying power. Pay attention to inflation and have a liquid and diversified portfolio of assets.”  Ray Dalio
23/ "The times ahead will be radically different from those we’ve experienced in our lifetimes, though similar to many times in history. We’re accelerating the rate at which they are occurring." Ray Dalio

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More from @trengriffin

20 Dec
1/ "There's only one thing we know for sure and that’s the stock price. So then reverse engineer what has to happen for that thing to make sense and then try to judge whether that sensible. ...lay bare the underlying assumptions and then debate them." ritholtz.com/2021/12/transc…
2/ "If you invest in your business and you’re earning exactly your cost of capital, growth doesn’t make any — doesn’t add any value whatsoever. And so earnings growth can be good, it can be bad, it can be indifferent. ...Free cash flow is the number we try to keep our eye on."
3/ Tangible assets are capitalized on the balance sheet showing up in the income statement as depreciation. "By contrast, intangible investments are fully expensed [which means] earnings are a lot lower than they would otherwise be."

This accounting mistake is your opportunity.
Read 4 tweets
19 Dec
1/ What's the best way to determine which business is creating the most value below? Growth is beneficial if cash inputs in early years of a business don't exceed the discounted value of the cash those assets will generate in later years. The more that happens, the better it is.
2/ The numbers in the previous chart are from @jaminball. They provide clues to the amount and timing of cash flows into and from the business, but they aren't the only clues available. My approach is to evaluate the growth on a bottoms up per customer basis via unit economics.
3/ The value of a business is the sum total of the value of present and future customers. The more micro my focus (eg, what is the value of a customer?) the less I am guessing about an uncertain future. What a real world customer is worth right now is the starting baseline value.
Read 11 tweets
19 Dec
1/ Launch insurance "covers complete launch failures as well as the failure of a launch vehicle to place a satellite in the proper orbit."

Circa 2002, launch insurance rates were as depicted in this chart. Not a small cost number as A %. faa.gov/about/office_o…
2/ SpaceX just launched the Turksat 5B mission toward geostationary transfer orbit to aboard a Falcon 9 rocket. Booster has landed already. Stage2 separation happens soon.

As satellite launch becomes more reliable and routine, what happens to launch insurance prices?
3/ This report estimates insurance covers the launch plus one year of satellite operations on Falcon Heavy was priced at a rate in the “mid-teens," likely higher than what Astranis would have got with a Falcon 9. spacenews.com/astranis-unvei…
Read 5 tweets
14 Dec
1/ "A profit pool shows the distribution of an industry’s value creation at a point in time. The horizontal axis measures size, typically invested capital or sales as a percentage of the industry, and the vertical axis measures economic profitability." research-doc.credit-suisse.com/docView?langua…
2/ "The value chain is “the sequence of activities your company performs to design, produce, sell, deliver, and support its products."
3/ "The objective: to assess each activity’s specific contribution to the company’s ability to capture and sustain competitive advantage." Mauboussin
Read 4 tweets
11 Dec
I skied at Crystal Mountain yesterday.
Silver Basin is a backcountry area.

"Everyone in the group was wearing an avalanche beacon, which helped ski patrol find and rescue them."

A witness was able to call for help.

100 mph winds at the summit today.

kiro7.com/news/local/1-d… Image
Silver King,where the deadly avalanche took place, is here. I skied only in bounds yesterday. But I did ski the edges of what was open to get a little fresh Pow. Only two chairs were even open.

To skin up and ski down from 6300 feet (Silver Basin) you must go to the Guest Services ticket booth to sign ski area waivers and obtain Crystal's "Backcounty Card." You leave the resort boundary a few feet from the top of Quicksilver where this photo of me was taken yesterday. Image
Read 5 tweets
11 Dec
1/ Costco: "About 79% of our import containers are late by an average of 51 days. Chip shortage is still impacting many items, some more than others. For Q1 '22 we estimate that overall year-over-year price inflation to be in the 4.5% to 5% range."

seekingalpha.com/amp/article/44… Image
2/ Costco's Richard Galanti: "I can't think of any company that has the buying power per item that we do, because we do roughly $200 billion in sales with 4,000 ish items versus anybody else that's doing it with hundreds of thousands of items, or 50,000 items." Image
3/ My blog post on Costco co-founder Jim Sinegal is here: 25iq.com/2014/05/24/a-d… I met with the other co-founder Jeff Brotman and thought about writing a post on him too. Bill Gates Sr was a board member and Charlie Munger is still at 97. Munger now owns ~$ 100 million of COST.
Read 4 tweets

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