What are you absolutely not buying and why?
1) UK housing, UK housebuilder companies
A housing crash in price terms hasn’t even started yet (unlike e.g. Canada, New Zealand, Australia), but clearly, people can no longer access mortgages affordably.
UK housebuilders are down some 50% in share price already, but back in 2008, they dumped 80-95%, so…
Last week saw the fastest withdrawal of mortgage products from the mortgage market in UK banking history (over 1000 withdrawn by the end of one day, more than 1/4 of all available home loan products in the UK).
2) Banks, generally
I have no idea who is exposed to UK pension funds (fun times due to begin 15th October), who is exposed to Credit Suisse (CDS spiking upwards, bond prices looking troubled), who has been messing around in all the other awful idiot geared-to-the-roof lunacy that will come to light after 12 years of desperate yield-chasing.
Reverse repo is getting flooded with money, presumably as banks don’t want to lend overnight to anywhere else. This & CDS spiking on institutions, reminds me of 2008.
(CDS spiked up to 500pts not long after this article)
Reading tweetstorms like this, I feel: I have no idea what is going on in banking right now, and no practical way of keeping up with the people who do have an idea what’s going on.
3) Anything in countries exposed to brutal housing market shocks due to variable rate mortgages being commonplace: Netherlands, Spain, UK, Australia, Canada
The UK, Spain & Australia in particular stand out for me as being ‘very banky stockmarkets, very housey economies, very variable-ratey mortgages, very inflaty problems’
4) High PER stuff in the USA, especially with the strong dollar
Amazon current year 100x forward 50x
Tesla current 87x forward 41x (after the recent crash)
Healthcare & diagnostics (despite Jim’s compelling articles on these, the PERs are very high across the sector 25-35x, too much for me)
NVIDIA (about to experience a brutal earnings crash from: excess 30x0 inventory, collapse of gpu mining, restriction on sales to china (being added to currently), and starting from one of the highest PERs in the semi sector. Also no pricing power at TSMC imho. And prices so high for years they’ve been destroying their own markets.)
High street / shopping / commercial / retail (recession, inflation pressure & new covid strains bursting on the scene). Cinema chains, ‘in-shop’ premium goods (Nike), Costco fwd PER 30x, fizzy drinks & breweries.
Saul stuff e.g. SAAS hypergrowth. Good luck achieving hypergrowth right now.
Anything exposed to rising debt default… credit cards? Visa & Mastercard 30x ish current 22x forward, which I don’t entirely believe.