The land is silent...before the storm!
On the vast fields of snow, the wind is blowing strong
With it's frozen cold and relentless touch
It leaves a dead and hollow land of ice
Depreciation = (Costs - Residual Values) / Useful Life
The squeeze was rational; Residual values higher, useful life and cost unchanged for the current inventory - sticky prices analogy - in the short-term.
Long-Term: Everything adjusts. Used car market normalizes bringing the depreciation amounts to the previous levels by normalizing the residual values to bring them to unchanged.
Add in lower corporate costs and decreased shares from repurchases and a slightly higher multiple - for conservative's sake - and fair value is around 55 - 60, 80% lower.
"The way to make lots of money in investing is find out all the popular narratives that are wrong, and when they begin to crack, bet against them." - George Soros
So, others have attempted and all have failed and paid a price. Why should I succeed? I will substitute narrative here for value determinant. I see the value determinant in these abnormal circumstances as from used car prices - everything else is noise for now. The cracks have started to appear. If the used car market prices have topped out, which I believe that they have, earnings will follow it lower. I believe the beginning of the end is here.
On the vast fields of snow, the wind is blowing strong
With it's frozen cold and relentless touch
It leaves a dead and hollow land of ice
Depreciation = (Costs - Residual Values) / Useful Life
The squeeze was rational; Residual values higher, useful life and cost unchanged for the current inventory - sticky prices analogy - in the short-term.
Long-Term: Everything adjusts. Used car market normalizes bringing the depreciation amounts to the previous levels by normalizing the residual values to bring them to unchanged.
Add in lower corporate costs and decreased shares from repurchases and a slightly higher multiple - for conservative's sake - and fair value is around 55 - 60, 80% lower.
"The way to make lots of money in investing is find out all the popular narratives that are wrong, and when they begin to crack, bet against them." - George Soros
So, others have attempted and all have failed and paid a price. Why should I succeed? I will substitute narrative here for value determinant. I see the value determinant in these abnormal circumstances as from used car prices - everything else is noise for now. The cracks have started to appear. If the used car market prices have topped out, which I believe that they have, earnings will follow it lower. I believe the beginning of the end is here.