Brian Riedl on Social Security and Medicare deficits

Over the next three decades, the Social Security system is scheduled to pay benefits $21 trillion greater than its trust fund will collect in payroll taxes and related revenues.  The Medicare system is projected to run a $48 trillion shortfall.  These deficits are projected to, in turn, produce $47 trillion in interest payments to the national debt.  That is a combined shortfall of $116 trillion, according to data from the Congressional Budget Office. (To inflation-adjust these figures, trim by roughly one-third.)

~ Brian Riedl, Manhattan Institute, "Biden's Promises on Social Security Have No Basis in Reality," The New York Times, February 21, 2023

(As quoted by James Freeman, "'No Basis in Mathematical Reality'," The Wall Street Journal, February 23, 2023.)

Intel's Pat Gelsinger makes a bold prediction

We will be the world's largest integrated design and manufacturer of silicon for the long-term.

~ Pat Gelsinger, Intel CEO, "Inside Intel’s Bold $26 Billion U.S. Plan To Regain Chip Dominance," 19:10 mark, CNBC, November 6, 2021

Ana Bozovic on history

I always talk about how everything moves in cycles.  Why does it do that?  I have this theory harkening back to our concept of human nature, that history is the cyclical aggregate of human herding behavior... being pushed on by innovation.

~ Ana Bozovic, tweet, 5:30 mark, February 16, 2023

Ana Bozovic on the American empire

The phase of the American empire that we're in right now is one that is very far removed for most people from survival.  And it has been for so long.  And thus it's allowing belief systems and behaviors to that are not necessarily conducive to survival in challenging times to flourish.

~ Ana Bozovic, tweet, 3:10 mark, February 16, 2023

Joel Tillinghast on focus

Successful people simplify their lives by focusing on the facts and actions that matter most.  If you don't, you will find yourself either on a hamster wheel or bogged down in trivia.  The trickiest part is staying open to new and contradictory information that affects your goals, while cutting out the clutter.  One test for noise is to ask whether a piece of information will still be useful in a year or two, leaving out plenty of fussy details about quarterly results.

~ Joel Tillinghast, Big Money Thinks Small, p. 61

Joel Tillinghast: avoid investing in the single largest stock in the S&P 500

Familiarity can work against investors.  If you continuously invested in the single largest S&P 500 stock by market value between 1972 and 2016, your compound returns would have been less than 4 percent, while the index earned over 10 percent.  A smiliar but smaller effect was seen with the ten largest S&P 500 stocks.

~ Joel Tillinghast, Big Money Thinks Small, p. 60

John Kenneth Galbraith on economic forecasting

The function of economic forecasting is to make astrology look respectable.

~ John Kenneth Galbraith

Charlie Munger on Xi Jinping

I have more optimism about the leader of the Chinese Party than most people do.  He's done a lot right, too.  He led a big anti-corruption drive.  He's done a lot of things right...  Where is there a place where the government is perfect in the world of sin and sorrow?  Democracies aren't that brilliantly run either.  

So it's natural to have some decisions made by government that don't work well.  It's natural to have decisions in each individual life that don't work very well.  We live in a world of sin, sorrow and mis-decision.  That's what human beings get to cope with in their days of life.  So I don't expect the world to be free of folly and mistakes and so forth.  I just hope I'm invested with people who have more good judgment than bad judgment.  I don't know anybody who's right all the time.

~ Charlie Munger, CNBC interview, 4:10 mark, February 16, 2023

Charlie Munger on investing in China

You can buy better, stronger companies at a cheaper valuation in China than you can in the United States.  So the extra risk can be worth running given the extra value you can get.  That's why we're in China.  It isn't like we prefer being in some foreign country.

~ Charlie Munger, CNBC interview, 3:10 mark, February 16, 2023

Tim Chen on the state of the consumer: "feels like a tale of two cities"

The state of the consumer feels like a tale of two cities.  We're seeing continued strength relative to historical norms in the prime and super-prime segments and definitely some credit deterioration in the near-prime and subprime space.  Credit card balances increased by $61 billion to reach $986 billion, surpassing the pre-pandemic high of $927 billion; mortgage balances rose to $11.92 trillion, auto loan balances to $1.55 trillion, and student loan balances to $1.60 trillion," The New York Federal Reserve Bank stated in its quarterly report on household debt and credit. "

~ Tim Chen, NerdWallet CEO, "NerdWallet CEO: US consumer health 'feels like a tale of two cities'," Yahoo Finance Live, February 17, 2023

("Credit card balances increased by $61 billion to reach $986 billion, surpassing the pre-pandemic high of $927 billion; mortgage balances rose to $11.92 trillion, auto loan balances to $1.55 trillion, and student loan balances to $1.60 trillion," The New York Federal Reserve Bank stated in its quarterly report on household debt and credit.)

Joel Tillinghast on independent thinking

On the whole, students with high grade point averages achieve them through curiosity and diligence, but it's also possible to get high marks by gaming the system, sucking up to professors, and regurgitating whatever they want to hear.  In investing, where doing nothing often prevents blunders, a certain style of laziness is adaptive, but mental laziness isn't, and not thinking independently is absolutely toxic.  The entire game is about figuring out what others have missed.  The largest prizes go to those who think differently and correctly.  Some investing ideas will look stupid or crazy, and a few will be, but the alternative is mediocrity.  Depending on the results, you will be called courageous, or arrogant and foolhardy.  Don't be ashamed of error, only of failing to correct it.

~ Joel Tillinghast, Big Money Thinks Small, p. 41

Joel Tillinghast: "Every skilled investor I've met has been a curious and a lifelong learner"

Every skilled investor I've met has been a curious and a lifelong learner.  They read broadly and constantly.  For anticipating the future, it's more important to understand why things happen than what happened...  Curiosity needs to be balanced with skepticism.  Everyone needs a spam filter and a crap detector - some way of classifying and throwing away redundant or wrong information.  Things are often not as they seem in finance.  Be skeptical and willing to challenge ideas others take for granted.

~ Joel Tillinghast, Big Money Thinks Small, p. 41

Reuters: "U.S. household debt jumped to a record $16.90 trillion"

U.S. household debt jumped to a record $16.90 trillion from October through December last year, the largest quarterly increase in 20 years, as mortgage and credit card balances surged amid high inflation and rising interest rates, a Federal Reserve report showed on Thursday. 

Household debt, which rose by $394 billion last quarter, is now $2.75 trillion higher than just before the COVID-19 pandemic began while the increase in credit card balances last December from one year prior was the largest since records began in 1999, the New York Fed's quarterly household debt report also said.

~ Reuters, "U.S. household debt jumps to $16.90 trillion," February 16, 2023

Joel Tillinghast on speculation

Speculation, properly done, isn't gambling.  Like sex, speculation has a shady reputation but is universally practiced, often enjoyed and none of us would be here without it.

~ Joel Tillinghast, Big Money Thinks Small, p. 30

Paul Jones on the Beatles debut on the Ed Sullivan Show (1964)

Why [Ed] Sullivan found it necessary to aid in the phony promotion of four rock 'n roll exponents, all of whom represent Moe of the Three Stooges, is beyond comprehension.  Any why he felt it necessary to "load" the theater with screaming teen-age girls when he normally restricts his audience to grownups, is also a mystery.

It was obvious to those who say the Beatles, four fellows from Great Britain, that they have not attained their present notoriety on the basis of their musical talents, for the sounds emanating from their mouths were anything but melodic.

Shorn of their mop-like hairdos they would look and sound like many other inferior rock 'n roll groups which are still attempting to keep alive the fad which died when Elvis Presley joined the armed forces.

~ Paul Jones, "Sullivan Wasted Time with Beatles," February 11, 1964

Brian Tycangco on investing and turning off the news

Everyone needs to not just listen to the news.  I think you have to be able to be willing to step out of your comfort zone.  A lot of us just want to be told what to do.  We have to be able to step out of our comfort zone and look at what's really going on in the world.  Just doing that simple thing is going to help us... make better investment decisions.

~ Brian Tycangco, interview with Dan Ferris and Corey McLaughlin, Stansberry Investor Hour, 1:01:40 mark, February 6, 2023

Brian Tycangco on outlook for China according to business tycoons from the Philippines

Brian Tycangco: When you are here [in Asia], you don't get the same sense of foreboding that you do when you listen to all these crazy headlines in mainstream media.  I must say everything is not rosy, but everything is not as bad as it seems...  Speaking with some of the biggest tycoons in the Philippines who have a lot of businesses in China, they've always had this great outlook for China.  This is the place to be.  And they don't look at it as "Oh, this is a great place to be just as long as blah, blah, blah, blah."  This is really the place to be.

Dan Ferris: Unconditionally.

Tycangco: When you look at how entrepreneurial they are, you put a Chinese guy anywhere on the planet, they're going to find a way to make money.  They're just so entrepreneurial and resourceful, and most of the Asian economies really are dominated by either Chinese families or families with Chinese linkage.  They [Philippino tycoons] see the dynamic going on here and they see how important China will continue to be, not just to business, but to both stability in the region and just the outlook itself.  I'm not at all getting any signs of alarm from our end.

~ Brian Tycangco, interview with Dan Ferris and Corey McLaughlin, Stansberry Investor Hour, February 6, 2023

Brian Tycangco on Chinese companies adapting to new rules

Nobody knew what kind of new regulation was going to come out next, especially with Ant Financial, the Ant IPO being pulled back in 2019, what would've been the worlds largest IPO ever.  That just set the tone for the next couple of years.  What appeared outside of China was, basically, "You can no longer do business here" are the new rules.  And nobody knew if these companies were going to be able to adhere to these new rules.  Which is a big question mark, right?  What is coming to be known now, slowly, is that, yes, one by one these companies are able to adhere to these rules and... finding ways to grow their business within these new parameters.

~ Brian Tycangco, interview with Dan Ferris and Corey McLaughlin, Stansberry Investor Hour, February 6, 2023

Eric Boehm on the Chinese balloon incident

On Saturday, the F-22 [which officially entered military service in 2005] scored its first-ever victory against an airborne adversary when it shot down…a balloon.  There may not be a better metaphor for the costly grandiosity of the American military than the use of a multi-million-dollar fighter jet to dispatch an unarmed, unmaneuverable opponent.  But the fact that the F-22 had never won a dogfight before its decisive victory over what may or may not have been a Chinese spy balloon is a nice illustration of why the United States has the world's most expensive military by a massive margin.

~ Eric Boehm, "By Shooting Down Balloon, the Expensive, Useless F-22 Fighter Finally Won a Dogfight," Reason.com, February 6, 2023

Warren Buffett on business motivation

As a practical matter, we need management with the businesses that we buy.  And 3 times out of 4, or thereabouts, the manager is the owner and is receiving tens of millions, maybe hundreds of millions of dollars.  So they don't have to work.  And we have to decide in that time when we meet them whether they love the business or love money.  We're not making a moral judgment... but it's very important for me to know which of the two is the primary motivator with them.  And we have had extremely good luck in identifying people who love their business.

So all we have to do is avoid anything on our part that diminishes that love of the business or makes other conditions so intolerable that they overcome that love that love of the business.  We have a number of people working for us that have no financial need to work at all and they probably outwork 95% or more of the people in the world, and they do it because they love smacking the ball.

~ Warren Buffett, "Why I Fire People Every Day - Warren Buffett," YouTube, 0:20 mark, November 16, 2021

Mike Bell sees economic recovery in 2024

You will see a recession in all major economies this year, but the market spent 2022 pricing that in and will spend this year looking ahead to an economic recovery in 2024.

~ Mike Bell, global markets strategist at JP Morgan Asset Management, January 6, 2023

(As quoted by "How ETF Investors Are Playing ‘the Most Anticipated Recession of All Time’," ETF.com, February 06, 2023)

Janet Yellen: "You don't have a recession when you have the lowest unemployment rate in more than 50 years"

You don't have a recession when you have 500,000 jobs and the lowest unemployment rate in more than 50 years.  What I see is a path in which inflation is declining significantly and the economy is remaining strong."

~ Treasury Secretary Janet Yellen, as appeared on ABC's Good Morning America, February 6, 2023

Carl Icahn on artificial intelligence

Some people get rich studying artificial intelligence.  Me, I make money studying natural stupidity.

~ Carl Icahn

Stephanie Pomboy on the myth of strong corporate balance sheets

I don't think the excesses on the credit side are on the consumer balance sheet so much as they are the corporate side which was the prime credit taker during this free money bonanza.  Bloomberg just reported that in January large corporate bankruptcy filings were the largest since 2010.  So you're already starting to see things turn, and as I suggested with this idea that it was an interest rate shock, that hit, when it happens... is going to be much more profound than the markets presently expect.  They're looking for sort of a gradual and modest deterioration in credit conditions and I think we'll see something far more severe and that it will play out much more rapidly.  The interest rate hit doesn't happen until you have to pay higher interest rates, obviously, so if you have an adjustable rate mortgage and they take mortgage rates to 7% at the peak, that didn't affect you at all if you didn't have a reset.  It only affects you when the time comes to reset.  And the same is true, obviously, on the corporate side.  On that score, there are several myths around the strength of corporate balance sheets, but an important one is that companies shrewdly took the opportunity to lock in the incredibly low borrowing costs that we saw during the pandemic/stimulus bonanza for as long as they possibly could...  The fact is, they may have borrowed long, but they borrowed a ton short.  And we know that because there's a trillion dollars in corporate debt here in the U.S. that has to roll this year and then there's another trillion that has to next year and there's another trillion in 2025.  So there's going to be no relief from this impact of higher interest rates in the foreseeable horizon.  The only thing, I guess, that could stave off a significant wave of corporate delinquencies would be for the Fed to swiftly pivot and cut rates back down to where they were.

~ Stephanie Pomboy, "Don't Be Fooled: A Hard Landing Lies Ahead For The Economy (And Markets)," Wealthion, 7:45 mark, January 31, 2023

Henry Adams on politics

Politics, as a practice, whatever its professions, has always been the systematic organization of hatreds. 

~ Henry Brooks Adams, The Education of Henry Adams (1907), Chapter 1

Vanity Fair on the political fight over taking credit for the Covid vaccines

“Trump's supporters want him to get credit for the vaccine which many of them refuse to get as a way of owning the libs.  Got that?” the New Yorker’s Susan Glasser tweeted Wednesday night.  Fox News, which can’t seem to get its COVID vaccine story straight, “almost immediately aired a complaint that Biden didn't extend a thank-you to Trump for accelerating the vaccine timeline,” according to CNN’s Brian Stelter.  Both Stelter and Glasser point to hypocrisy on the part of Trump supporters, particularly those on conservative media outlets like Fox, who at once argue the former administration deserves more credit for the U.S. vaccination effort and fuel skepticism about getting the jab.  Trump on Thursday called vaccine hesitancy “a big situation” but didn’t commit to doing anything about, even as he acknowledged requests for him to make a public service announcement promoting the vaccine to his followers, as Biden’s top health official urged this week.  As Politico reported, all living former presidents and first ladies appeared in a vaccine PSA last month—with the exception of the Trumps.  In January, the former president opted not to get the shot publicly, as other officials did, and his endorsements of the vaccine have largely been made in passing.

~ Vanity Fair, "Trump's Latest Delusion: 'I'm the Father of the Vaccine'," April 29, 2021

Donald Trump: "I'm the father of the vaccine"

They want me to do public service messages and everything about everybody taking the vaccine and look, I guess in a certain way I'm the father of the vaccine because I was the one that pushed it.  To get it done in less than 9 months was a miracle.  Fauci said it would take 3 to 5 years.  He thought it was something that just wouldn't be that effective because it would take so long to get.

I pushed the FDA like they have never been pushed before.  I wouldn't exactly say they're in love with me.  This is a very bureaucratic organization.  I pushed them like they've never been pushed before and that's why we have it.  When they did the pause on Johnson & Johnson, I thought that was a very very stupid thing to do.

~ Donald Trump, Fox Business interview, April 29, 2021

Jim Chanos: bear market could go as deep as 1,800-2,000 on the S&P 500

I’ve been on the Street [since] 1980 [and] not one bear market has ever traded above nine times to 14 times the previous peak earnings.  If you think [S&P 500] earnings are peaking now at $200, that’s a long way down.  That’s 1,800 to 2,800 [on the S&P].  We are not anywhere near that.

~ Jim Chanos, "Short-selling legend Jim Chanos hints at risk of bear market unlike anything he’s experienced since starting on the Street in 1980," MarketWatch, January 31, 2023

(S&P 500 closed at 4076.60.)