Recession Oncoming- Forecasted by the Inverted Yield Curve

Contributed by: The Big Fat Whale

If the financial markets have a crystal ball, it would be everyone's dream to grab hold of it.

Today, we are going to share with you, an indicator that has successfully preceded a recession since 1955 except for once in the mid-1960s. There was an economic slowdown rather than a recession but the forecasting prowess should not be undermined.

Uncannily, the latest inversion was in 2019 that preceded the market crash caused by Covid 19 in March 2020.

Source: JP Morgan Asset Management - For the 2020 recession in April, it took 8 months to recession after the inversion.

On April 1st 2022, the 2 years and 10 years of US Treasuries rate saw an inversion again. It would be foolish to ignore it given their track record of predicting a recession and economic slowdown.

Click Here for the Full Article:

https://thebigfatwhale.com/recession-oncoming-forecasted-by-the-inverted-yield-curve/ 

 

Dollar and Cents- Reliable Handyman Services

Here is another post for the Dollar and Cents series, where we have touched on cost-effective and good recommendations for things like Scrapping a Car, Buying a Piano, Repairing a Car in JB, Renovating a House, and Kid's Golf Lessons previously.

Given the numerous providers of handyman services, I thought it would be great to share a good provider who is able to not only provide quality work, at a reasonable price and gives a professional diagnosis.

The usual route when we have some handyman issues is to google for service providers and get quotes from at least 2 to 3 companies. For those who are not too savvy, you could be fleeced and it is not a good feeling after you discovered it.

I have engaged this company for a number of works and their price is reasonable (could be 30% lesser than those who are trying to carrot me) and quality of work have been satisfactory:

1) Replacing Water Tank (There was a 30% price difference from another vendor but waited 2 weeks for the appointment)

2) Rectifying Leakage from the water pipe (Needed drilling as pipes are hidden while another vendor suggested putting up exposed pipe that will uglify my bathroom lol)

3) Light Switches- Use the Honeywell Brand where the previous vendor use the MK brand that is not durable ( Got a quote of $129 for 2 switches as compared to another vendor that quote $130 for just 1 switch)

The downside is that their appointment slots would at times not be immediate and so for those situations that cannot wait, they might not be suitable.

I am not getting any benefits from doing this recommendation but just want to recommend a good provider and give credit when it is due.

Here is the link to their website:

https://www.everyworks.com/

Anyone who has other good and credible vendors can share in the comments section as sharing is caring. :)

Interview with the Dean of Valuation- Aswath Damodaran

Those who are into value investing would likely have heard of Aswath Damodaran. He is the Professor of Finance at New York University and has generously shared his lectures and valuation spreadsheets online for all to benefit from it.

In this podcast interview by We Study Billionaires- The Investor's Podcast Network on Spotify, he shared many of his thoughts on valuation and going to even philosophy of life.

Some interesting nuggets of knowledge I gathered from this interview will be:

1) To value a company, you just have to split the information gathered into 3 baskets. These are namely growth profile, operating margins and reinvestment needs.

2) In order to come up with a good valuation, you have to curate a story which you can do it better by talking to the stakeholders- tesla owners or Airbnb hosts.

3) His thoughts on Tesla which I would disagree with as his valuation is more towards Tesla just as a merely auto manufacturer.

4) The hype of ESG is overblown and focusing on it would not lead to drastic changes in cash flow and valuation.

5) His thoughts on crypto as an alternative investment and also on Alibaba.

6) Portfolio allocation and When to Sell your Winners?

7) How to keep your serenity under extreme market conditions?

There are many more snippets of sound advice that you could benefit from in this interview.

Here is the link to the full interview:

https://open.spotify.com/episode/2BAxBluC9l0VfytwzyEohQ?si=qahZpMx5S7unR0Nb0gZpfg

These are some old videos with him at the Google Talks that are also very insightful:

https://www.youtube.com/watch?v=Z5chrxMuBoo

https://www.youtube.com/watch?v=uH-ffKIgb38

Buffett’s Analysis of Geico in 1951- Why was it attractive then?

Contributed by: The Big Fat Whale

Here is a look into the mind of Buffett when he was just 21.  He was still a student at the University of Columbia embracing the teachings of Benjamin Graham.

In 1951, as Geico was one of its key holdings of Graham (Graham is also Chairman of the Board), Buffett would want to know more about the company. He took a train down to Washington on a Saturday when the Geico office was closed. He was persistent enough to get the building janitor to lead him to Lorimer Davidson who was the only one working that day. Davidson would eventually be the CEO in 1958.

The encounter gave him a huge head start in the business of insurance that would be one of the key foundations for his future investment framework. Free float in the form of premiums if successfully invested would unleash the power of compounding.

Buffett came up with the thesis of investing in Geico after the meeting and have it published.

Click Here for the Full Article:

https://thebigfatwhale.com/buffets-analysis-of-geico-in-1951-why-was-it-attractive-then/