1/ Since "liquidity" has been the buzzword these days, here's an anecdote and a powerful lesson from history about printing unlimited amounts of money. Story time. #fintwit

1/ There are a ton of books about Financial & Fundamental Analysis, Scuttlebutt and Technical Analysis. But there aren't many books 'taking risk'.

Among the few that exist, 'Zurich Axioms', written in 1985, is the best. Here are my key takeaways from the book.

2/ A bit about Max Gunther's (The Author) background. He was an Anglo-American journalist and writer, who wrote 26 Books.

His father, Franz Heinrich, was the New York Head of Schweizerischer Bankverein, which later merged into the famous Union Bank of Switzerland (UBS).

3/ The 'Zurich Axioms' were a set of unwritten rules followed by a informal group of Swiss Bankers and Traders who used to socialize around Wall Street after World War II. Mr. Heinrich was one of the founding members.

Max Gunter formalied these 'Axioms' by writing about them.

4/ There are 12 'Major Axioms' and 16 'Minor Axioms' (Corollary to the Major Axioms) in the book.

But remember, this is MY key takeaways from the book and not an exact summary. So you might find quotes, phrases and links inserted here and there by me (Not from the Author).

5/ Axiom #1: In order to earn returns, you must take risk. Risk will make you worry.

Risk-taking and worrying go hand-in-hand. If you're not worried about an investment, you're not taking risk.

Spend half your energy towards earning an income and the rest towards speculation.

1/ Howard Marks once said that before buying an asset, above anything, he wants to know “the amount of optimism that’s in the price.”

All investors can do this with a handy tool: The Reverse DCF.

I'll also leave a download link to my compact DCF Model at the end of this thread.

2/ We all know a regular DCF. But's what a "Reverse DCF"?

If we consider that a DCF is a Linear Equation, we could say the 'X' (The unknown variable) is the Intrinsic Value.

In a Reverse DCF, we start with the Market Price and try to find some other variable, say Sales Growth.

3/ Let's start by taking an example: VST Industries, a Cigarette-maker based in India.

I valued them on my blog a while ago. I'll be retaining the old assumptions, but using the latest financials.

So please note that the Valuation isn't accurate

4/ This is a "Regular DCF" of VST Industries. The Assumptions I've made indicate an Overvaluation.

The Intrinsic Value is Rs. 3,012, but the Market Price is Rs. 3,492.

Let's not dwell on whether this is correct, since we discussed earlier that this isn't an accurate Valuation.

5/ If we want to do a "Reverse DCF" instead, we need to pick a different variable to 'find'. Say, I will pick the Sales Growth numbers.

I will now remove the Sales Growth numbers from the Model and assume that Sales Growth is the same across the years for ease of calculation.

1/ I've Valued 150+ companies using the Discounted Cashflow (DCF) Model. Far be it for me to say I am an expert. But if you've done this as much as I have, you start noticing certain patterns.

Here are 10 lessons I've learned from using the Discounted Cashflow Model.

2/ Every investment decision you make follows a Discounted Cashflow calculation.

You let go of X today to earn Y in the future. You wouldn't do that if you didn't expect to earn an expected amount of returns (r).

Nobody wants to let go of X and get back X years down the line.

3/ When you invest in a company, you hold claim over the Assets and the Profits of a Company. Without diluting your ownership, Assets and future Profits are generated out of one thing and one thing alone: Free Cash Flow to Firm.

FCFF is the treasure at the end of the rainbow!

4/ Combining the above two observations, a company may not always make Profits in the present. In fact, if it's a young company or in a new market, losses are a given.

Eventually though, future profits should be large enough to offset or overtake all the past losses in PV terms.

5/ For most companies, generating Returns falls in a spectrum: Have high Margins and generate lower Sales in relation to Capital Employed Vs. Turn Assets faster but have low Margins (Or somewhere in between).

For Indian context, compare the Business Models of D-Mart Vs. NESCO.

@Gautam__Baid He laid down very similar principles a decade ago in his 1976 letter (Source: https://t.co/6Z5v0qEaIg)

What's amazing is how consistent he's been in following his philosophy even after nearly 5

Window dressing: : the act or an instance of making something appear deceptively attractive or favorable

Tens of thousands of of businesses shut down, economy in shambles, windows showing abandoned stores and restaurant are staring at you ugly when you are passing by. Now the same leftists responsible for this disaster think they found a solution to fix the ugliness they created.

This is the solution our Dem leaders have chosen to remedy the scars they created and the livelihoods they destroyed: apply some make-up. Make art installations in the windows of the abandoned stores and restaurants. Apply propaganda lipstick on the leftist pig and call it "art"

God forbid our leftist betters who run our cities would have thought of stopping this closure madness and helping people go back to work, re-opening stores and restaurants. That's not what they want. They want you to stay at home, afraid and dependent on their hand-outs.

In Socialist Romania during the years of the Ceausescu regime they did pretty much the same thing, only they didn't call it "art". The grocery stores and butcher shops were always empty, there was no food anywhere other that on the black market.

has anyone covering the Wall Street GME reaping and sowing gone into the fact that a lot of the GameStop and directly associated trades have been largely amplified by social listening powered mega firms doing machine learning automated trades because the “idea” of GME is popular?

like I thought this was a thing investor people & press just knew & instead it’s all just focused on the message of redditors clowning short sellers and not “the computers saw the infinite monkeys on infinite typewriters and decided That Would Be A Cool Thing To Emulate” for $$$

for those new: finance social listening is a marketing “science” that involves advanced web & social network data collectors scraping everything for nuance on companies, purchasing behavior & language, investor & finance sentiment, etc & using it to make billions of trades for $$

Musk & his core investor clique is notorious for doing this as are some other big hedge firms & finance firms - you take the raw off Bloomberg Terminal, Superdata, public social networks and headlines etc etc, machine learning the fuck out of it, collect money. A hype machine.

This has been going on for about 8 years but only got popular & competitive in the past 2, when firms realized the machines could do a better job with these data flows in setting up short term shorts & holds vs people - & they could also “game” media to effect other hype machines

My friend @itsafronomics wanted to know the breakdown of student debt by income, so I pulled data from the SCF.

Student debt is more concentrated amongst high earners, but disproportionately amongst Black borrowers. The plot below plots the average within Income Quartiles.
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But those are the averages. What's the share that's above 10k? (This is the Biden current cutoff for debt forgiveness, so a useful benchmark).

For comparison, 20% of white Americans have student debt, and 31% of Black Americans.

Let's contrast that with say, above 20k. I was surprised at how high the share remains.

When we get to 50k of student debt, or more, we see it's only about 5% of the US, and around 8% of Black Americans. Strikingly, it's a huge share of high income Black Americans (this is a known fact in the education literature, I believe).

So what does this look like put together? Overall, we see a higher share of Americans with debt above 10k, and 20k. We would cover a decent amount with 10k, but miss Black Americans especially.

Would anyone like to admit why he cc'd himself in an email Wei Dai would see at ibiblio's host address? I have a few ideas.

was the .ae ccTLD a nod to Tim Berners-Lee/registries that issue top level country code domains? Is that why Tel Aviv is a place I commonly find OTC/Bitcoin related companies and DAC/dev protocols and operations based? Why UAE/Israel have opened commerce bilaterally in 2020?

Bitcoin is worldwide P2P software and growing into a network of the same ilk, what it can send without interference we can't even grasp yet. Even if you don't like another person, or their religious beliefs, bitcoin doesn't care. I lived through 9/11, my friends died in war.

But even I don't want Bitcoin just for the people I am more likely to have similarities too. And in working with the @_Devcoin guys for a few years now, officially since 2020 - I realized people from all spots on this globe and I share much more in common than everyday Americans.

And I haven't turned my back or spurned Americans either. I'm just saying we need to change our mindset. We want things but we won't admit it takes a whole world to pull off what it is we seek. The media is to blame for this but I also think we're at the point for grownups to act