The US economy right now is running at just about the most perfect economic dynamics you could imagine. When people talk about a "Goldilocks Economy" - "not too hot and not too cold" - what we have right now is what they are talking about.

Consider... 🧵 Core PCE inflation, the inflation rate economists view as most accurate and useful to understanding inflation dynamics, has now been running for 6 months at 2.0%. The 3 month and 1 month rate is also ~2%. Right on target.

1/x Some people were surprised to hear Buffett say yesterday that Apple was a better business than anything else Berkshire owns. But it was back in 2017 that he declared Apple, Microsoft, Amazon, Google and Facebook “ideal businesses.” 2/x The day after the 2017 meeting he went on CNBC and told @BeckyQuick that he felt investors hadn’t paid attention to what he had said.

1/8 Everyone is waiting for a recession. But equity investors need to realize the corporate earnings recession started six months ago. This may help explain the surprising strength of the market. 2/8 4Q22 S&P 500 earnings were -5% and 1Q23 is tracking towards -7%. But inflation in those quarters was +7% and +6%. To make these earnings declines comparable to those in the past, we can adjust them for 2% inflation rate.

12/20 Parking lots didn’t present any challenges, but as the rider I was aware that close maneuvering and people walking around made these areas ripe for small accidents.

https://twitter.com/intrinsicinv/status/1507801087440351233

1/20 My driver on a recent morning spin around the suburbs of Phoenix was none other than Google’s Waymo self driving taxi service, which has been operating for over a year giving paid rides to the public. This is a thread describing my experience. $GOOGL 2/20 Pick up in a parking lot went smoothly with the car stopping in a safe area and waiting for me to get in.

1/25 You can’t predict the economy, but understanding the macro context is critically important for bottom up stock pickers. Whether you like it or not your company specific outlook includes a ton of implicit macro assumptions.

The current macro situation demands your attention. 2/25 A lot of company level forecasts are just a form of trend analysis. Most macro trends are usually long duration and slow moving, so you just need a sense of whether macro drivers are above/below mid cycle and how soon/much they might mean revert.

This is a pattern across many aspects of the US economy. Rather than current levels being high, in many cases the real issue is that the levels post GFC were very low. 1/4

https://twitter.com/conorsen/status/1505136426417070080

This debate isn’t actually new. Whether the New Normal, low growth of the 2010s was a permanent secular trend or a decade long hangover from the Financial Crisis was a live debate prior to COVID. 2/4 intrinsicinvesting.com/2018/08/23/ret…

[New post] Pricing Power and Inflation (1/n) intrinsicinvesting.com/2022/02/16/pri… "Pricing power doesn’t mean raising prices in an inflationary environment. When consumers expect higher prices on their regular purchases, companies with and without durable competitive advantages can raise prices without much concern for losing business." (2/7)

A thread, 1/9: In our just published post, we offer a deep dive into Netflix's recently announced results and guidance. We do not believe that the evidence supports a wholesale reevaluation of the company's growth prospects. intrinsicinvesting.com/2022/01/24/net… 2/9 Q4 results ranked alongside the company's best quarterly subscriber additions, setting aside the massive additions seen in the early days of COVID while the world sheltered in place at home.

We've recently discussed as a team the impact of internal promotions to CEO versus external hires into the role. When is either a positive or negative signal?

Academic research is inconclusive on the subject. (1/n) gsb.stanford.edu/sites/default/… Our general take is that the more unique the corporate culture - and assuming it is virtuous - the more an internal promotion makes sense.

In this case, outside CEOs are less likely to be accepted by the existing culture and more likely to want to do things their way. (2/n)

It's hard to believe we started Intrinsic Investing 5 years ago. Sharing our thoughts on investing has greatly improved our own thinking, forced us to better understand our own ideas and triggered excellent feedback from other investors.

A thread of some of our top posts of 2021 We started the year laying out our portfolio construction/position sizing framework in detail. intrinsicinvesting.com/2021/01/05/pos…

One of the more challenging aspects of investing in consumer businesses, especially ones that make products that you yourself enjoy, is separating your personal feelings from the investment thesis. Not easy to do. To be sure, there's value in having an "inside" view, but it can go too far or be misguided, especially if you are not the incremental customer.

There had to be a few die-hard fans of Kodak photographic film who just didn't understand why people were flocking to digital.

At Ensemble we are obsessed with returns on captial/equity. But it is high and *sustainable* returns we care about. We agree with much of this thread’s point that removing too much slack from corporate business models has led to a less resilient corporate sector.

https://twitter.com/typesfast/status/1453753924960219145

You want management teams to optimize returns on a cross cycle basis, including preparing for unusually negative down cycles, not optimizing for a pro forma world in which disasters never strike.

Here is our five part growth forecasting series. While the series focused on forecasting growth for faster than average growing businesses, the margin for error is often *less* for slow growth companies. See our prior series on slow growth risk at the end of this thread. 1/x Growth is to investors what the song of the Sirens was to Odysseus. Yet investors shouldn't just ignore growth potential as traditional value investing often implied. 2/x intrinsicinvesting.com/2021/10/04/for…

1/x A new paper from @ckaiwu uses natural language processing to score corporate cultures. There are a bunch of interesting takeaways. sparklinecapital.com/post/measuring… 2/x The paper identifies seven cultural traits that correlate with equity market outperformance.

This dynamic of top talent viewing flexible hybrid work environments as a *requirement* is going to really test some top performing, but old school investment firms. wsj.com/articles/if-yo… If an analyst is looking for a job, an investment firm that views remote work as a “perk,” requires permission, or has an arbitrary limit, will likely be seen as a firm that is out of touch, doesn’t trust their staff, or is at minimum a slow to adapt organization. Major red flag.

1/x In April of 2020 a pair of articles were published within 24 hours of each other by @pmarca and @morganhousel, which together laid out the roadmap for the economic path we are now following. The ship has already set sail, the question is just what the journey will be like. 2/x in @pmarca's piece, he laid out how the US has stopped "building" and that the time had arrived where the only path forward was to Build. a16z.com/2020/04/18/its…

1/x One of the great things about blogging is you assemble a record of real time thoughts during periods of stress. This allows for reviews of what went as expected and what didn't. Our 2020 posts focused mostly on how we were assessing unprecedented levels of change. Links below

https://twitter.com/IntrinsicInv/status/1338534176522321920

2/x Prior to COVID, we wrote about how forecasts are a necessary part of investing. Your only choice is whether to make explicit forecasts or implicit ones. intrinsicinvesting.com/2020/01/10/pic…

1/x In 2019, we covered a lot of ground in our posts. We tackled position sizing, introduced a diagram illustrating our investment philosophy, reported on our trip to China, and more. You can explore posts from earlier years in the retweeted threads below.

https://twitter.com/IntrinsicInv/status/1335994807185903618

2/x We started the year talking about "hyperbolic discounting", a "$5 phrase" that explains a lot about investor behavior. intrinsicinvesting.com/2019/01/02/tak…

1/x We recently got a request from new reader @NMPCap to tweet some of our top blog posts from the past. Honestly, nobody was reading our blog back in 2016! So here's some of our early posts you may have missed. 2/x Our first post explained what "intrinsic investing" is all about and drew on a quote from @Jesse_Livermore. intrinsicinvesting.com/2016/01/05/val…

The big inflection in video game end markets is first generation of people who grew up as gamers are now parents. So the whole family games and it is no longer seen as a “vice” for young kids. wsj.com/articles/from-…