mardi 27 octobre 2020

Liberté 45

There's a well-known guy in Quebec. His name is Pierre-Yves McSween. He's exactly my age (41 years old), he has a crazy curly haircut but a nice smile and appears on TV, on Twitter, and on various other medias. 

He recently released a book called 'Liberté 45' (do I really have to translate that in english?). 

I haven't read the book yet but I plan to do so. However, I know what he's writing about because so many people talked about that book lately. 

It's about making the choice of not spending too much while you're young to enjoy life later in life (around age 45, for instance). 

I couldn't disagree with that. Because that's exactly what I've done with my life. And now, I can travel 3 or 4 times a year without having to face any consequence on my budget. But I keep my cars 10 years. 

However, life has learned me that what's good for someone may not be for someone's else. We don't have the same genetics, the same background, the same values. For instance, if my parents would have died in their 40's, I think that I would feel much more the need for enjoying life each day of my life. I think it would be almost stupid to plan a far future when your genetics may not be on your side. Also, if you're inclined to depression, why wouldn't you do some parachute, buy new shoes or change your haircut every week to avoid becoming suicidal?

There's no truth for everyone. The truth of Pierre-Yves McSween and me is that we're insecure and money gives us a security that we can't find elsewhere. Most of our actions come from our fears and insecurities. That's how it works.  The important thing is to make the choice that suits you fine. 

But everyone should take consideration of all the possibilities you have as soon as you can. It includes reading that book about living an humdrum life followed by a more exciting life or reading the book of Frank Abagnale about starting early with something exciting and illegal. 

There's a wide range of choices and even if I couldn't recommend the illegal way of living your life, it's still a possibility and it could save you from depression or suicide. 

jeudi 22 octobre 2020

The Trade Desk (TTD): When a great stock is too expensive

Here's my approximate opinion about forward PE:

FWD PE under 10: Don't touch that stock;

FWD PE between 10 and 15: That stock won't probably rise that much but there may be a few exceptions among the group;

FWD PE between 15 and 25: Good place to look. Very few stocks with an explosive growth, but possible to achieve 10-15% every year with a good selection;

FWD PE between 25 and 35: Usually, some very solid companies in that range. A good place to look if you're sure that you've found an exceptional company that did well for the last 5-10 years;

PE between 35 and 50: Very expensive territory but some explosive growth there;

PE over 50: Speculative territory. Some ultra-growth stock there, but very tough to fully understand what the future could be.

Let's take a look at The Trade Desk (TTD). When I first bought the stock, it was already expensive, probably selling for something like 50 or 60 times next year's earnings. But the growth was great and the stock had almost everything I was looking for. 

Recently, TTD hit 600$. The forward PE is now about 150. So I decided to sell my shares. Because how can someone be comfortable with such a forward PE ratio? I mean, even with a PE of 15 or 20, we're never sure about the exact value of a specific stock. When the PE is over 100, the margin of error is very high. It doesn't mean that the PE won't expand even more. But it means that you're in the fog. And my conception of an investor is someone who knows what he owns and is able to value it. 

Last summer, my friend reminded me that I told him to stay away from Tesla though the stock more than quadrupled since the beginning of the year. I told him that the FWD PE of the stock was already extremely high before (something like 80-100) and it's now 130 while the current PE ratio is over 1000 (!!!!!). My commentary was that even if the stock performed incredibly well, it was even less rational to own it now than before.

I strongly believe that we must be able to fix a limit above which we can't keep a stock anymore. Otherwise, investment is only a question of feeling and it may even become some kind of irrational love. 

mardi 13 octobre 2020

Time to be aggressive

In case Joe Biden is elected three weeks from now, the market should go down because business taxation should be increased under a democrat governemnt. 

If Trump is reelected, the market will probably go up a lot, because it looks like that the market is crazy about that cocksucker. 

It's gonna be an exception, but I wouldn't care losing some money for being rid of that fucking asshole. Also, the market is expensive, so I'd take a 10-15% drop with pleasure.

I wrote something about that lately, but I think that it's time to gather as much money as possible because banks make it easy for us to get money for almost nothing (rates under 2%).. 

For instance, I've increased my mortgage and I'm gonna put the money in my margin account, which will allow me to use more margin (more money on the account = increased margin). That recipe will throw you off a cliff if you're a gambler. I don't recommend that to anybody.  .

I'm doing that because borrowing money is extremely cheap these days but also because I feel that I'm gonna lose my mind sooner or later. Being unable to go outside my house because of that red alert is becoming to be hard on my nerves. I need some thrill. Borrowing money, buying electronic drums, eating my own shit. Anything to make that isolation exciting.  

mardi 6 octobre 2020

The social dilemma

On Facebook, I follow Dave Taylor who's Bryan Adams former bassist (he was with Bryan Adams  from the beginning of the 80's to the end of the 90's). Don't ask me why I follow him. He hasn't achieved anything and his bass lines are not that brilliant. . 

Dave Taylor recently wrote on Facebook that he would delete all his social media accounts because of "The Social Dilemma", a documentary on Netflix about the dangers of social networks (mostly Facebook). 

So, I watched the documentary to learn a bit more about the dangers of my daily life on social medias. 

I just finished it and, frankly, it's not that good. A lot of Google, Facebook, Twitter and other medias ex-employees talk about the dangers of social media. We hear that people become addict to Facebook (mostly teens) and that they are manipulated to some extent. Then, we see some fake scene where a  teenager receives "likes" on Facebook and a single comment about the size of her ears that make her very sad and preoccupied (in other words, 100 likes and we're happy and a single bad comment and our confidence his destroyed). 

The documentary ends with some crazy scene with riots and insurrection all over the world caused by disinformation on Facebook. What the fuck?

It was too much for me. 

That documentary looks like an episode of "Black Mirror". And while I surely know that Facebook is not a virtuous company, I still think that it has some good and some bad. It's like alcohol. If you drink moderately, you'll have fun. If you're always drinking, it's not gonna be OK.  So, I have to say that I don't really care about people who can't control themselves because if it's not Facebook, it's probably cristal meth that's gonna kill them. 

Frankly, the documentary shows how brilliant are the people running Facebook to make us a bit dependant about it. If they weren't that brilliant, Facebook would be an average company. Like Bed Bath and Beyond. 

To my understanding, one of the worst brainwashed country on earth is China and they don't use Facebook because the governement doesn't allow people to use Google and Facebook. How could our society be so ill because of Facebook? 

Of course, anybody could use Facebook with evil intentions and teenagers use Facebook to bully other people instead of bullying them in real life like in the good old days. Is that really worse? At least, the victims have the proof of the bullying on their phone, which wasn't the case in the past. 

So, no big deal to me with that documentary. I still like Facebook with it's 30% margins and it's ROE of 25. No competition in sight for Facebook and Instagram and people working there know how make people dependant. That's what every business is looking for, as horrible as it may sound. 

I'll keep my social media accounts open. I don't see the threat, probably because I'm not addict at all.

No great bass lines, no writing credits for the music, conspiracy views… I think I see why Dave Taylor isn't Bryan Adams bassist anymore. The question that remains is "Why did I follow him on Facebook"? 

lundi 5 octobre 2020

How stupid people are

We're now in the second wave of COVID-19 in Quebec. Yesterday, I learned that there was a COVID case at my son's school which is located something like 10 000 kilometers away from China. That fucking virus has traveled literally to my front door. 

What is more worrying than the virus itself is surely how stupid people are. You've surely heard about all these "covidiots" who think that the virus is a scam and everything the governement is doing is part of a plan to take control of our freedom. If you're one of these people, please, don't even write a comment to explain your point. I don't want to read what you have to say. Please, just shut the fuck up and chose the way you want to disappear. 

Today, there was a girl on a facebook group of my neighbourhood writing "Since there's a case of COVID at our school, I will give a lot of my maternity milk to my kids and since my breasts are full of milk, I can give some to you to reinforce your immunitary system". 


If you'd be one of these people accepting the offer of drinking maternity milk of a girl you don't know, please, don't write anything in the comment section because I'll be able to identify you and I'll despise you forever. Even if you're a very good investor and bring nice things in the comment section, I won't have any respect for you anymore. So, please, shut the fuck up. 

We have a couple of obligations: first, to stay away from these people. Second, to act in a different way to these people, which implies to read a lot of things and develop our judgment (which usually goes with reading a lot). Third, to question our own choices and try to see what's rational and what's not (which is difficult because we're all conditioned to consider some things "normal" to some extent). 

At least, in the investment world, most of us seek only profit. So, we don't discuss too much about opinions and convictions, which is a very good thing, because convictions and opinions open the door to a lot of things we don't want to know about other people. Like when we learn that they drink maternity milk or their own piss for detoxing purpose. And, while some invest like braindead, most "real" investors have a rational approach most of time (even if they're wrong, their decisions are based on something that's usually a little bit intelligent. 

And we don't argue too much between investors. Most of us try to improve, try to learn how things work. And when we see that something doesn't work, it's not always easy, but it's a very good idea to look somewhere else. For instance, I've recently realized that I owned some stocks that didn't grow as much as I wanted. I even sold one of the stocks that I considered a "permanent stock". Only time will tell if I was right or wrong, but at least, my decision wasn't based on a fucking conspiracy website about some gigantic imaginary hoax. 


jeudi 1 octobre 2020

How to become your own hero

Over the years, a few people have told me that I've influenced them. Lately, there's even a guy ($o$ in the comment section) that told me that I was his investment hero. 

Wait a minute. That's too much. 

And while I'm sure that some people would feel glorified to hear such things, I think that it's not appropriated. Anybody that's curious and that reads on investment could learn and understand what I'm doing. However, you must have a good bullshit detector, which is not the case to all intelligent people. 

But once you've reached a certain point, you can almost decide in 10 minutes if you want to invest or not in a company. Because you know how rare are some attributes of a company. So, when you find these rare great things, you usually know that it's gonna be hard to find something similar. In august, while I was at Vicario's cabin in Vancouver, he explained me how he chosed stocks and I saw that he knew in a few minutes what he wanted to buy or not. Which made me understand that he could probably spend not too much time on investment and spend most of his time on his boat, trying to catch salmons between a beer, a sandwich and a piss in the ocean. 

That's what all these people who need a guru should try to reach: the level where you know how special a company is versus the rest of the market. And for that, you don't need anybody. You just have to analyze hundreds of companies by yourself and compare them on various levels. It's not that hard, but it's long and you have to be curious. 

If you want a metaphor, it's like checking girls and rating them. For instance, at the beginning of the 90's I discovered Mary Elizabeth Mastrantonio (lady Mariann in the movie Robin Hood). Now, 30 years later, I've seen tons of other beautiful girls, but I still find her attractive (well, mostly on her 80's and 90's pictures). To know how beautiful a girl is, you must know what the average is. So, check as many girls as you can, and find the ones that are exceptional. And then, give them all they want. After my metaphor about luxury cars and great sport players, here's another one. I wonder if I'll be able to find a fourth metaphor. 

You can start with Constellation Software, Google and Facebook. You'll see quickly that these companies are different from at least 90% than what's on the market. And while you'll be a better investor, you'll also be able to judge other's people picks instead of blindly following them.