There can be little doubts left that we are at the very minimum a domestic-based recession, and quite possibly global as well. What, however, do you think is the investment outlook coming out of this? I think one secular change will be the tightening of lending standards. The ceiling of credit to bad borrowers will be lowered. This could quite possibly extend to even good borrowers as well. Another would be an inflationary environment. I believe during the recession we will be going through a DEFLATIONARY period (due mostly to lower credit and raw materials prices), and this will reverse itself coming out of recession. Coupled this with the lax monetary policies and the likely monetization of debts all points towards inflation. As for potential good investments themes, I’m leaning most towards the discretionaries. Number of reasons: 1) jobs recovery 2) consumers putting off their big purchases during recession 3) inflation makes it more “expensive” to buy big purchases tomorrow. Another sector could be Energy. The sector will be hit pretty hard during the recession from slowing global demand, making it cheap. With recovery comes higher thirst, and the sector should prove attractive. Thoughts and comments?
im perma bull on health care segments, like PBMs…margins there are ready for widening also playing some oversold discretionaries. Chipotle/CMG actually could be a steal here. Other than that, sticking it out with staples like KO (16% FCF/sales yield)
I agree with you on the perma bull on health care. I’m just thinking relative attractivness post-recession specifics here.
daj224 Wrote: ------------------------------------------------------- > im perma bull on health care segments, like > PBMs…margins there are ready for widening > > also playing some oversold discretionaries. > Chipotle/CMG actually could be a steal here. Other > than that, sticking it out with staples like KO > (16% FCF/sales yield) CMG is STILL trading rich. 21 x earnings?
Picco Wrote: ------------------------------------------------------- > There can be little doubts left that we are at the > very minimum a domestic-based recession, and quite > possibly global as well. What, however, do you > think is the investment outlook coming out of > this? > > I think one secular change will be the tightening > of lending standards. The ceiling of credit to bad > borrowers will be lowered. This could quite > possibly extend to even good borrowers as well. > > Another would be an inflationary environment. I > believe during the recession we will be going > through a DEFLATIONARY period (due mostly to lower > credit and raw materials prices), and this will > reverse itself coming out of recession. Coupled > this with the lax monetary policies and the likely > monetization of debts all points towards > inflation. > > As for potential good investments themes, I’m > leaning most towards the discretionaries. Number > of reasons: > 1) jobs recovery > 2) consumers putting off their big purchases > during recession > 3) inflation makes it more “expensive” to buy big > purchases tomorrow. > > Another sector could be Energy. The sector will be > hit pretty hard during the recession from slowing > global demand, making it cheap. With recovery > comes higher thirst, and the sector should prove > attractive. > > Thoughts and comments? Yeah, like is this interesting? Like if you can correctly time global growth you can make money by investing in energy? My Mom knows that. a) I think it’s really, really early to be talking about coming out of a recession. The world has decided that we need to nationalize banks and this is a good thing? Seems to me that stock markets are like those people cheering invading armies as liberators. b) The credit thing has already happened but it’s temporary. This credit problem was caused by the govt dumping money into the economy and then lax intermediation and securitization caused a problem. The gov’t now has this huge hammer to swing at banks and they will try to enforce responsible lending practices, yada, yada. That means in the short run we throw out tons of economically efficient lending and all the good stuff about securitization. Long run is that money lending has always routed around govt’s (e.g., the Kinights Templar). That means that we get to turn around money lending and banking from the big banks that messed up to smaller banks free from govt interference and other sources of funding. Big banks get crushed long-term until the govt exits. c) CMG continues to serve mediocre burritos and Mai Tais. d) Health care spending is a stable part of GDP. GDP goes down, so does health care spending. I think that stock market revisits its lows of Friday before Thanksgiving. That means that we have disproportionately hurt older folks who were going to spend their now depleted 401-K’s and IRA’s on health care. The volatility amounts to a shift in power and spending from older folks to younger ones. That means that helath care spending also shifts from elder care to things like peri-natal care. Sell discretionary older person healthcare (face lifts) for younger person care (breast implants). e) The deflation in the recession/inflation coming out of the recession thing is standard issue. If 1973-74 is the model, then we had terrible inflation afterwards. We seem to like to wipe out savings of older folks every 35 years or so and inflation is a nice way of getting rid of the rest of their savings. As power shifts to younger folks, there is decent incentive to do that. f) I think the issue in energy is about hoarding. Hoarding energy is a personally good thing and collectively a bad thing. The energy hoarders seem to have run away from futures markets for the time-being, but they will be back. It’s looking like equities are not less dangerous than energy-hoarding after all.
JoeyDVivre Wrote: ------------------------------------------------------- > > c) CMG continues to serve mediocre burritos and > Mai Tais. > > best in class store unit ROI if you comp spread across entire restaurant industry and Qdoba is hidden in JBX so no one can get another mexican food pure play
JoeyDVivre Wrote: ------------------------------------------------------- > Picco Wrote: > -------------------------------------------------- > ----- > > There can be little doubts left that we are at > the > > very minimum a domestic-based recession, and > quite > > possibly global as well. What, however, do you > > think is the investment outlook coming out of > > this? > > > > I think one secular change will be the > tightening > > of lending standards. The ceiling of credit to > bad > > borrowers will be lowered. This could quite > > possibly extend to even good borrowers as well. > > > > > Another would be an inflationary environment. I > > believe during the recession we will be going > > through a DEFLATIONARY period (due mostly to > lower > > credit and raw materials prices), and this will > > reverse itself coming out of recession. Coupled > > this with the lax monetary policies and the > likely > > monetization of debts all points towards > > inflation. > > > > As for potential good investments themes, I’m > > leaning most towards the discretionaries. > Number > > of reasons: > > 1) jobs recovery > > 2) consumers putting off their big purchases > > during recession > > 3) inflation makes it more “expensive” to buy > big > > purchases tomorrow. > > > > Another sector could be Energy. The sector will > be > > hit pretty hard during the recession from > slowing > > global demand, making it cheap. With recovery > > comes higher thirst, and the sector should > prove > > attractive. > > > > Thoughts and comments? > > > Yeah, like is this interesting? Like if you can > correctly time global growth you can make money by > investing in energy? My Mom knows that. > > a) I think it’s really, really early to be talking > about coming out of a recession. The world has > decided that we need to nationalize banks and this > is a good thing? Seems to me that stock markets > are like those people cheering invading armies as > liberators. > > b) The credit thing has already happened but it’s > temporary. This credit problem was caused by the > govt dumping money into the economy and then lax > intermediation and securitization caused a > problem. The gov’t now has this huge hammer to > swing at banks and they will try to enforce > responsible lending practices, yada, yada. That > means in the short run we throw out tons of > economically efficient lending and all the good > stuff about securitization. Long run is that > money lending has always routed around govt’s > (e.g., the Kinights Templar). That means that we > get to turn around money lending and banking from > the big banks that messed up to smaller banks free > from govt interference and other sources of > funding. Big banks get crushed long-term until > the govt exits. > > c) CMG continues to serve mediocre burritos and > Mai Tais. > > d) Health care spending is a stable part of GDP. > GDP goes down, so does health care spending. I > think that stock market revisits its lows of > Friday before Thanksgiving. That means that we > have disproportionately hurt older folks who were > going to spend their now depleted 401-K’s and > IRA’s on health care. The volatility amounts to a > shift in power and spending from older folks to > younger ones. That means that helath care > spending also shifts from elder care to things > like peri-natal care. Sell discretionary older > person healthcare (face lifts) for younger person > care (breast implants). > > e) The deflation in the recession/inflation coming > out of the recession thing is standard issue. If > 1973-74 is the model, then we had terrible > inflation afterwards. We seem to like to wipe out > savings of older folks every 35 years or so and > inflation is a nice way of getting rid of the rest > of their savings. As power shifts to younger > folks, there is decent incentive to do that. > > f) I think the issue in energy is about hoarding. > Hoarding energy is a personally good thing and > collectively a bad thing. The energy hoarders > seem to have run away from futures markets for the > time-being, but they will be back. It’s looking > like equities are not less dangerous than > energy-hoarding after all. Thanks for the well-thought and genteel response