Amazon is buying Whole Foods

BTW @TigerVols. I didn't respond yesterday. ... The demand for what Google, Facebook, Amazon, etc. offers is not inelastic. They have their price. To the extent that two of those make their money on advertising, their revenue could be quite fragile if they get supplanted by something else that advertisers perceive as offering better bang for the buck.

But the reason someone would invest in those companies at these valuations is pretty much what you are saying. If you anticipate that they will be growing their earnings at a crazy pace (because you believe the stock market is a discounting mechanism for future earnings and those companies are going to grow, grow, grow), yeah, then you may not be paying too much. All you care about is the growth you are anticipating. I focus a lot on value, particularly in an environment like this, because I think there is enough of a mania right now that people are factoring in unrealistic growth to justify how much asset prices (not just in stocks and not just those stocks) have run up.

Interest rates are so artificially low due to central bank manipulation and it is strangling the world. Most investment isn't meant to be speculative. It is entities looking for the risk-free rate of return (determined by a free market). That has been destroyed over the last decade by some very powerful entities putting their thumbs on the scales of finance.

It leaves everyone reaching to make up the yield they are being robbed of. I know I make people's eyes glaze over on this, but history is going to look back on where we are and say, "What the hell were they thinking?"

This is how bad. ... It has only been about a year since Argentina's latest default on its debt (twice in 13 years). ... and the country was able to issue a 100-year bond earlier this week. Not only issued it, but demand was through the roof. 3X oversubscribed. They were able to borrow $2.75 billion.

You look at Argentina's history of defaulting on its debt (7 times in its history, including twice since 2000), and you'd say, how can they access the debt markets right now, so soon after their last default? And who would lend money to them for 100 years. ... at any rate of interest, let alone a yield of only 7.9 percent?

This is the insidiousness of how some very idiotic central planners have screwed up our credit markets and added a ton of reckless risk to the global financial system, for decades, but particularly through the 1990s, leading up to the crisis in 2008 and then doing even more of it rather than allowing a cleansing deleveraging to happen.

Risk gets miscalibrated when you manipulate the debt markets. When your risk-free rate of return gets robbed from you by very powerful entities that are price-fixing markets to encourage more and more debt. ... you end up with desperate behavior. You need to do more and more speculative things to earn the income you would have gotten with little risk in an unmanipulated environment. The speculation drives up asset price. And valuations of things (equities, high-yield debt, etc.) get divorced from their fundamentals.

Either you think that kind of environment is sustainable, or you think that there is going to be another inevitable credit-related bust (because of what I think has been stupidity and was entirely predictable), and a lot of way overvalued asset prices are going to crash. Amazon, Google, Facebook are great companies. But even their valuations are divorced from any reality now. I believe their valuations are stretched way beyond reasonable because of the artificial environment we are in.

 

We have one car that we bought in 2013. It had SiriusXM enabled with a 3-month trial. The trial never expired, for some reason. We had it for more than 2 years, before one day it just didn't work. I can totally live without it, but we reactivated a few times on the 6-months for $25 trial. I did the same as DQ each time. ... I told them NOT to auto renew. I'd call at the end of the trial, if I was interested. We got rid of it for good at some point. We barely listened, even when we were in the car. One cool thing I use in the car now is an app called "simple radio." It gives you thousands of radio stations from all over the world. We have had times when we were driving in New York or New Jersey and were listening to a radio station live from Reims or Nancy, France. It's pretty wild.

 

Shoot, I've been paying the $24 or whatever for Sirius for a couple years now. So I should call and renegotiate?