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playeroneplayertwo · 6 years ago

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Editorial: ‘Til the Money Runs Out

(Unless otherwise clarified, all prices are MSRP, or manufacture standard retail price)

The subjectivity evident in any critical analysis of a book, movie, or board game is–I would hope–obvious. Value, however, feels far less subjective.

How much someone is willing to pay for something varies greatly depending on the person, not only based on what we’re talking about, but also how much money that person has. With that out of the way, let’s talk about a sticky wicket in the hobby of board gaming: value.

It wasn’t long ago that this idea felt less nebulous, with value often coming down to the argument of collectable games vs non-collectable games. Things are a little different now. Collectable card games (CCGs), expandable games/living card games (LCGs), legacy games, campaign games, mystery games, and consumable games have gone a long way in complicating a once-simple(ish?) idea. These days, everyone has an idea of what’s a good value, and what’s not. Lots of people have axes to grind against games deemed “of poor value.” I’ll try not to fall into such a black and white box.

When I originally thought about writing about value, my main angle was simple: Magic (1993) vs an LCG, like Android: Netrunner (2012) or Lord of the Rings: The Card Game (2011). As a former fan of Magic transformed into an avid LCG fan, I bristled at the less than rosy coverage most LCGs received from the gaming community, in regards to value specifically. I knew firsthand how expensive a collectable game like Magic could cost. With a 15-card Magic booster pack costing $3.99, and a booster box of 36 booster packs coming in usually around $100, it gets expensive quickly. Individual cards can be bought online for anywhere from 10¢ to $50+, this is a deep hole that is hungry and ready to eat you alive.

For anyone who has not played a collectable game, it is set apart from LCGs by randomness. A collectable game is purchased in packs of randomized cards, so oftentimes you will purchase a pack and get nothing you want or need. This happens far more than you would believe. LCGs/expandable card games are unique because they are available in fixed, non-randomized sets, whether that be small expansion packs of larger deluxe expansions. The rub is that these will cost more. For example, the typical small expansion pack for an LCG is typically $14.99, but you know exactly what you receive in that expansion, and additionally you’ll receive multiple copies of each card–something that never happens in collectable packs.

This distinction alone is worth a deeper dive, but we’ll only gloss over it briefly. Head to head LCGs or expandable games (like the now OP Android: Netrunner, Legend of the Five Rings (2017), Doomtown: Reloaded (2014), or Game of Thrones: The Card Game (2015)) offer a large pool of cards with a fixed distribution. You would conceivably be able to buy the core set for one of these ($40), plus perhaps four small expansions ($60 total), which puts you in at $100. For $100, you could buy a booster box of Magic cards and maybe build two strong decks, if you’re looking to have a satisfying experience. The randomness will throw a wrench in here, because you could theoretically get enough good cards for more than two solid decks; you could also get mostly junk.

Reviewers often balk at the LCG model, because while it appears to solve the money-pit aspect of CCGs, they are still not cheap. That being said, for people who are merely interested in the game–but not deck construction, LCG core sets offer plenty of introductory level gaming to help you discern whether you actually like a game or not. If you do, and you know what you like about the game (eg factions or mechanics), the set expansion packs allow you to build up where you want. Why buy an expansion pack for a faction you don’t like or don’t play? You don’t have to!

The cooperative LCGs are a different story. They, too, have the $15 expansion packs, but in addition to cards you’ll add to your pool for deck construction, you’ll also get quests to play against, essentially a typical “expansion” that brings in additional content beyond merely deck construction.

Whether it be cooperative or head-to-head, LCGs are expensive, but unlike CCGs, LCGs have simultaneously removed both the excitement of the blind buy as well as the frustration of the bad buy. Granted, in the small box expansions, you’ll still be getting cards you don’t need or don’t want, but at the very least, you will be getting at least a few cards you know you want (if not, uh... why did you buy it? Do your homework!).

As a player of both Lord of the Rings: The Card Game and Arkham Horror: The Card Game (2016), I would argue that the best value for me in LCGs probably lies in the cooperative line. By giving players both quests to pursue as well as player cards tailored to those specific quests, these small packs never feel incomplete. And, I would argue, getting a core box of Arkham Horror or Lord of the Rings is a great value as an introduction to satisfying, well-supported systems.

Beyond card games, the water actually gets far muddier when you expand what you’re talking about. Legacy games and escape room games (which is a term I’ll use to encompass both consumable games and “mystery” games that, once solved, can’t really be replayed satisfactorily) have managed to blur the lines in terms of value considerably. Let’s start with legacy games.

A legacy game is a game that evolves the more you play it, and with the exception of Charterstone (2017), most legacy games cannot be played beyond the completion of their main narrative arch. For example, Pandemic Legacy (season one or two) leads the players through a series of games that add up to a long-form narrative. As the games unfold, the rules of Pandemic will change, as will the cards, board, and other components, making the last game wholly unique from the first. However, once completed, you can’t play it again. You may as well recycle your game. Charterstone, Stonemaier Games’ take on the legacy game, at least leaves you with what amounts to a custom-designed worker placement game that is replayable. Legacy games can be played anywhere from 10-20 times before you complete the story. That being said, because they have so many components, they are usually quite expensive: Pandemic Legacy (2015/2017), $70; Charterstone (2017), $70; Betrayal Legacy (2018), $75; Rise of Queensdale (2018), $80; and the peril-plagued SeaFall (2016), $80.

After looking at these numbers, take a minute and compare them to the LCG/CCG numbers above. Yes, they are cheaper, but they also have a limited lifespan. Is a legacy game worth $70-$80 if you can only play it 12 times? That’s about $7 per play, cheaper than (or at least comparable to) a movie ticket for a good night spent gaming. Seems like a decent deal, right?

What about consumable or “mystery” games? In this case, I’m looking at you Exit (2016), Unlock (2017), and T.I.M.E. Stories (2015). Other games will fall into this category too (further escape room games or a host of Sherlock Holmes or similar mystery-type games, like Consulting Detective (1981) or Chronicles of Crime (2018)), but these three games are hyper present in the hobby today. Both Exit and Unlock retail for $15, but they will each offer a one-time experience only. Unlock games are mystery-based, so once you’ve worked your way through, they essentially can’t be replayed because the answers will all be known. As for Exit, this is probably one of the more controversial because it is literally consumable. At the end of a game of Exit, that $15 game you bought is now destroyed. Cards are cut, the book is written on or torn up, maybe event the box is destroyed. Unlike Unlock, you can’t even trade it to someone who has not yet played it. Each set of Unlock and Exit is unique, offering lots of new games, but it’s a flat $15 each time you play. Still cheaper than a night at the movies.

Which brings us to T.I.M.E. Stories (2015). T.I.M.E Stories is essentially a board game version of Unlock: card-based and entrenched in a branching narrative with puzzles. You’ll play one set of T.I.M.E. Stories maybe three times, at most, before it’s completed and cannot be replayed. The core box ($50) sets you up with the components and one mystery. Additional mysteries are available in modular expansions for $25 each. At its heart, T.I.M.E. Stories is most analogous to a BluRay player, with each expansion being a new BluRay you pop in to watch. In the long run, it’s also the most expensive of the bunch.

So what’s the point of all this? Board games are expensive, but you know that. Your average big box board game (ie not a traditionally labeled “filler game”) runs anywhere from $30-$60 MSRP.

Ah, but who pays MSRP these days? you’ve been muttering this whole time.

Who’s paying MSRP? Well, if you’re looking to support your brick and mortar local game stores, you should be. Yes, this is a tough case to make, because money is money. It’s hard to rationalize spending $90 on Scythe (2016) to support your local store when you can buy it online for $52. I can try to make my best possible case for spending that extra $40, but like I said, it’s a tough sell. $40 is a whole other game. I’d like to say I only shop local, but it’s simply not true. This hobby is expensive, and while I buy local when I can, more often than not I buy online from brick and mortar places like Cool Stuff Inc or Miniature Market. It’s worth making a case for buying local, though. Do you like having a local store? If you want to keep having a local store, shop there. Support them. Give them your money when you can. It’s hard out there for brick and mortar stores. And please, don’t expect a brick and mortar store to sell at online prices. I don’t want to have to explain profit margins; in almost all cases it’s just not feasible.

In the long run, what does this all mean? I could throw my opinions at you endlessly about how I think T.I.M.E. Stories is, for Player Two and I, not worth it, or about how Exit is worth it, or legacy games don’t work for us, but that’s not what I’m here for ultimately. I guess I’d like people to ease up on LCGs, and maybe think twice about those hot hot big box legacy games, or remember to pass on their Unlock games to friends or families to get extra miles out of those small boxes. The breadth of the hobby is wide, and it is getting wider every year. Ultimately, you need to decide what you’re willing to invest, and in this case I don’t just mean you money, but also your time. Which of these games will you get your time value out of? If you buy a legacy game with shoddy mechanics, it will fail you on value across the board, because you won’t even finish it. LCGs or CCGs will offer you–theoretically–endless play, but if you don’t like the game enough, or it’s not nuanced enough to sustain those theoretical infinite plays, what’s the point?

The best advice I can give new gamers is to start small. Do your homework on small box games first. There’s a reason that in our first episode recommended gateway game was Oh My Goods! (2015). It’s a quality game that teaches new players a lot about engine building euros, it’s got decent replayability, it’s got two expansions, and it’s only $15. If you are new to the hobby, figure out what you like. Don’t run out and buy Lords of Hellas (2018), Batman: Gotham City Chronicles (2019), or Gloomhaven (2017) on a lark, because you’ll be unloading tons of money on something you may loath.

There’s nothing wrong with starting small. Trust me, in the long run, it will save you a lot of time and money.

#board games #value #editorial #my two cents

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valuentumbrian · 5 years ago

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Never Been More Bullish Even as Buffett Dumps Airlines

Image Source: IATA. Data Source: McKinsey & Company (IATA). Airlines haven’t been able to earn their estimated cost of capital for as long as we can remember. There have been hundreds of airline bankruptcies since deregulation in 1978.

By Brian Nelson, CFA

On Saturday, May 2, Berkshire Hathaway (BRK.A, BRK.B) reported expectedly weak first-quarter results. We won’t be ditching Berkshire Hathaway’s stock in the Best Ideas Newsletter portfolio so long as Uncle Warren is at the helm, but there were a couple takeaways from the report that we want you to be aware of (we’ll have another more extensive note focusing more exclusively on Berkshire coming out soon).

The first big piece of news, something that should not be surprising to any reader of our work, is that Buffett sold his stakes in the airlines. We’ve already talked extensively about how the Oracle made a mistake in owning the airlines in the first place in Value Trap and in the following article, “Buffett Makes Another ‘Unforced Error’ in Airlines,” and we’re not reading anything at all (not on the economy, not on the equity markets) into his decision to unload shares.

Despite their oligopolistic structure, airlines do not have “moats” and arguably have decrepit economic castles. A company is generally considered a “moaty” enterprise if its ROIC, or return on invested capital, consistently exceeds its WACC (ROIC-WACC = economic profit) and is expected to continue to do so, as a result of a benign industry structure and impenetrable competitive advantages. Consistent economic profits have never happened for airlines. Airlines have always been terrible long-term investments.

According to the IATA, for example, industry-wide ROIC averaged a mere 6.7% during the 5-year period 2014-2018, well below the group’s estimated cost of capital (see image at top of this article), a period that coincides with one of the most prosperous economic environments ever witnessed across the globe. There have been hundreds of airline bankruptcies since deregulation in 1978, too, and there hasn’t been one instance where the airline industry’s ROIC has exceeded its WAAC in more than 20 years (even when oil prices collapsed in 2015/2016, ROIC still came up short).

Image Source: American Airlines’ 10-K, released February 2019. A flu pandemic is a documented risk factor in airline regulatory filings.

Though COVID-19 was an unexpected catalyst, so was SARS, 9/11, oil price shocks and the Iraq war. While COVID-19 may look like it came out of left field, when it comes to the airline business, these types of shocks are part of their operations (a flu pandemic is even a documented risk factor in their regulatory filings, see image above, as illustrative), and therefore not extraordinary or even anywhere close to being considered a black swan. Massive buybacks by airlines in recent years are simply unforgiveable, as many executives even used the bankruptcy process to optimize their operations during the past few decades. They knew they were rolling the dice in a bad business.

“Let them fail,” we said more recently, and here’s what we said about what to expect from airlines in Value Trap, released December 2018:

Buffett said once that he had an 800 number that he would call anytime that he wanted to buy an airline stock again. Maybe that number has been disconnected after all these years, as Berkshire Hathaway is once again an owner of airline equities. Though the structural characteristics of an industry can and do change over time, I’m very skeptical the airline business has changed permanently for the better. Today’s airline business may be more oligopolistic in nature and much more profitable thanks to consolidation and the right-sizing of capacity, but it retains a notoriously cyclical passenger-demand profile, ties to the level and volatility of energy resource prices, considerable operating leverage, all the while barriers to entry remain low, exit barriers remain high, and fare pressure endures. The next downturn may not see as many bankruptcies as prior economic cycles due to lower unit-cost profiles, but it may turn out to only be modestly “less bad” for equity holders.

Warren Buffett ditched airlines because he knows they are terrible investments and just made a mistake, while prudently reducing exposure to the aerospace/airline industry because Berkshire also owns metal-bender Precision Castparts, one of our favorite companies that makes metal castings for jet engines. Boeing’s (BA) massive debt raise has been a material positive for the aerospace supply chain, including Precision Castparts, but the ill-health of Boeing’s airline customer base will mean commercial aerospace demand will also remain subdued for some time. We told you to stay away from Boeing a long time ago, “Boeing’s Fall from Grace.”

Image (March 21, 2020): Boeing was added to the Dividend Growth Newsletter portfolio January 27, 2017, and removed March 16, 2018, prior to the unfortunate accidents that have claimed the lives of hundreds of people. We warned readers to stay far away of Boeing's stock days before its huge collapse.

Today, we remain unequivocally bullish on equities for the long run. This is somewhat of a change during the past week or so. As with Professor Siegel, we do not expect markets to come anywhere close to retest the March 23 lows. While it is now much more difficult to call near-term direction than at the top in February and in dollar-cost averaging near the bottom on March 23, we’ve never been more bullish on the long term, “Staying Focused on the Long Term,” as we fully expect moral hazard advice (indexing) to not only continue to be supported via bailouts and stimulus, but actually be rewarded, a key lesson following any financial crisis.

Image Source: The final lesson to learn from financial crises. Value Trap: Theory of Universal Valuation.

The Treasury is expected to borrow ~$3 trillion during the current quarter, a tally that is nearly 6 times as much as the nearest record quarter of July-September 2008 during the depths of the Great Financial Crisis. The Fed plans to start buying ETFs this month, and Apple (AAPL) is borrowing 10-year debt at incredibly low rates of just 1.65%. Enter 1.65% as the discount rate in a DCF model. The bias is to the upside! The world also now has several ‘shots on goal’ for a new coronavirus vaccine with drug companies scaling up production even as any possible vaccine remains in early trials.

Concluding Thoughts

Warren Buffett wrote his now-famous op-ed to the New York Times on October 16, 2008, and this is what you need to know:

Over the long term, the stock market news will be good. In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.

The news may be scary in coming months, and market volatility may elevate again, but we’ve never been more bullish on the longer run. The biggest advantage of an individual investor is something called time horizon arbitrage. As many professionals continue to fear a break below the March 23 lows in the near term, we’re focused on how this market absorbs the tremendous and unprecedented stimulus in the coming months and what that means for nominal equity prices in the longer run.

It may not happen this month or this year, but we expect lift off as investors race to preserve purchasing power! Our favorite ideas for a portfolio setting remain in the Best Ideas Newsletter portfolio, Dividend Growth Newsletter portfolio, and High Yield Dividend Newsletter portfolio. Our favorite brand new ideas, released each month, are included in the Exclusive publication.

Facebook (FB), PayPal (PYPL), Visa (V), and Alphabet (GOOG) remain among our favorites, in particular.

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Aerospace & Defense - Prime: BA, FLIR, GD, LMT, NOC, RTX

Aerospace Suppliers: ATRO, HEI, HXL, SPR, TDY, TXT

Insurance: ACE, AFL, AIG, AJG, Y, AFG, ACGL, AIZ, AXS, BRK.B, LFC, CINF, CNA, CNO, RE, ERIE, FAF, GNW, HCC, LNC, L, MFC, MBI, MCY, MET, MKL, NAVG, PRE, PRA, PL, PRU, RGA, RLI, RNR, SIGI, SFG, STFC, SLF, ALL, CB, HIG, PGR, TRV, TMK, UNM, WTM

Pharmaceuticals - Big: ABBV, ABT, AMGN, AZN, BMY, GSK, LLY, MRK, NVO, NVS, PFE, SNY

Pharmaceuticals - Biotech/Generic: ALXN, AGN, BIIB, BMRN, GILD, MYL, REGN, TEVA, VRX, VRTX, ZTS

Airline Related: AAL, ALK, DAL, HA, JBLU, LUV, SAVE, UAL

Biotech Related (vaccine/treatment): MRNA, INO, NVAX, BNTX, APDN, VXRT, TNXP, EBS, PFE, JNJ, DVAX, IMV, IBIO, REGN, SNY, GSK, ABBV, TAK, HTBX, SNGX, PDSB

Treasury Related: TLT, TBT, IEF, SHY, IEI, EDV, TMV, TMF, VGLT, SHV, BIL, VGSH

Other: XAR, IBB, JETS, SPY, DIA, QQQ

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Valuentum members have access to our 16-page stock reports, Valuentum Buying Index ratings, Dividend Cushion ratios, fair value estimates and ranges, dividend reports and more. Not a member? Subscribe today. The first 14 days are free.

Brian Nelson owns shares in SPY and SCHG. Some of the other securities written about in this article may be included in Valuentum's simulated newsletter portfolios. Contact Valuentum for more information about its editorial policies.

#airlines #aerospace #warren buffett #berkshire

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courtneytincher · 6 years ago

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America’s Key to Keeping ISIS Defeated

Louai Beshara/GettyEastern Syria sits at the crossroads of critical policy decisions in Washington. The region is at the center of an escalating crisis in U.S.-Turkey relations, while maintaining America’s presence there blocks Iranian and Russian gains in Syria. It also is key to keeping ISIS defeated. Washington should see eastern Syria as one of the most important strategic pieces of “real estate” to emerge out of the last half-decade of conflict in the Middle East.The area of northeast Syria where the U.S. today plays a critical role, roughly the size of West Virginia, is now a kind of Gordian Knot. While American adversaries, such as Russia or Iran, have a clear goal in Syria, keeping the Bashar al-Assad regime in power and entrenching their influence, the U.S. policy goal is less clear. ISIS, Assad, and Turkey Are Waging a Shadow War on U.S. Allies in SyriaTurkey, a historic U.S. ally, recently threatened to launch a military operation into eastern Syria against key U.S. partners who helped defeat the so-called Islamic State, leaving Washington with a devil’s bargain: leave eastern Syria and watch five years of fighting ISIS and working with local forces collapse, or continue to fuel a crisis with Turkey. The U.S. chose a temporary solution, telling Ankara it would work on a “safe zone” along the Syria-Turkey border.Is eastern Syria just a sunk cost for Washington? The reality is that the U.S., partly by accident and partly by mission creep, has found itself sitting astride the most important nexus of four foreign policy axes connecting the Middle East and the world. One is Iran’s regional strategy, another is Russia’s plans and a third is Turkey’s goals. Lastly, the area keeps ISIS contained. It’s because it ties in to so many agendas that this triangle of land is so important, and so combustible.It didn’t begin this way. Northeast Syria was a poor, neglected part of the country for most of the 20th century. The Obama administration deepened U.S. involvement in the Syrian conflict initially through support for anti-Assad rebels but shifted to focus on defeating Islamic State after 2015. Eventually a coalition of 75 countries signed on to fight ISIS in Iraq, with a handful supporting U.S. anti-ISIS operations in Syria. It was an open-ended war with a mandate to defeat the extremists, morphing into supporting the Syrian Democratic Forces as the central partner on the ground fighting ISIS. The Pentagon wanted a “by, with and through” approach that implied a small U.S. footprint, backing mostly Kurdish fighters. President Donald Trump decided to withdraw from Syria in December 2018, then slowed down. ISIS lost its last major foothold in March 2019 but thousands of its former fighters formed sleeper cells.A Pentagon report released on Aug. 6 says the U.S. has completed a partial withdrawal at a time when the SDF “needed training and equipping to respond to ISIS resurgent cells.” Efforts at stabilization and security, which foresee the training of 110,000 local forces, are continuing but are strained by contradictory policies. U.S. efforts to get the U.K., Germany or France to commit troops to backfill the slow U.S. withdrawal and support a safe zone have come to naught. Leaving eastern Syria now means creating a vacuum and giving ISIS breathing space. It would also mean abandoning partners on the ground, reducing U.S. influence.A second U.S. policy in Syria emerged in the fall of 2018. Although the Trump administration ended support for the rebels, National Security Adviser John Bolton said the U.S. would remain in Syria until Iran left. Officials realize that controlling a swath of Syria, including a military base at Tanf near the Jordanian border, puts pressure on Iran’s support for the Syrian regime and its entrenchment in Syria. America’s presence stymies the Islamic Revolutionary Guard Corps, keeping it from expanding its activities across Iraq and Syria. This is a key concern for Israel which has carried out more than 1,000 airstrikes on Iranian targets in Syria to interdict Iranian support to Hezbollah.Turkey has slammed the U.S. role in Syria, accusing it of training terrorists linked to the Kurdistan Workers Party (PKK) and creating a “terrorist corridor” that threatens Ankara. Washington attempted to assuage Ankara’s anger, putting a bounty on three PKK leaders in 2018 and agreeing to work jointly with Turkey on a safe zone along the Syrian border. But the tensions with Turkey include other, perhaps larger problems, such as Ankara’s acquisition of the Russian S-400 air defense system. Some of these contretemps stem in part from Turkey’s dim view of U.S. policy in eastern Syria. In the process, Russia and Turkey have grown closer. Iran also now boasts of its growing ties with Turkey. Ankara has threatened repeatedly over the last year to launch a military operation into eastern Syria where U.S. forces are based, even saying it has informed Moscow of its intentions. The U.S. warned it against unilateral action on August 6 and promised to do more to create a “safe zone” for Turkey.Such solutions are short-term, and Washington has been cagey about playing a grander role, despite its influence on the ground. Meanwhile Iran, Russia and Turkey regularly meet in the framework of the Astana peace talks on Syria, excluding the U.S. Eastern Syria is now a hinge on which the door to U.S. influence in the region opens or shuts. It is intricately linked to stability in the Kurdistan Regional Government in Iraq, which is a close U.S. partner. American allies such as the United Arab Emirates, whose regional policies tend to be at odds with Turkey and Qatar, oppose Turkey’s desire to launch an operation. "There is no excuse for Turkish control of Syrian land,” The National in the UAE argued on August 8, building on a similar editorial on July 14. But come what may, the White House doesn’t want another “forever war” like Afghanistan.As Iran-U.S. Tensions Rise, Hezbollah Readies for War With IsraelAreas from Raqqa to Qamishli in Syria are no longer just an area to be stabilized against the resurgence of ISIS, or a region used as a bargaining chip with Iran. It is too combustible for either simple mission. Moscow, Tehran and Damascus are eager for American humiliation and seeking to exploit U.S.-Turkey tensions. Washington allies, from the Gulf to Israel, would see a setback if the U.S. withdraws suddenly. That means the U.S. also has leverage over these allies and could encourage more buy-in from Riyadh or Abu Dhabi, to support stabilization and reconstruction. They also oppose Iran’s growing influence, and are at odds with Turkey, so for them northeast Syria is important.Recognizing eastern Syria as more than the sum of its parts is the best way to understand the long-term challenge there. It is the strategic real estate in the Middle East upon which the ambitions of four powers rest, and where U.S. strategy is made or broken.Read more at The Daily Beast.Get our top stories in your inbox every day. Sign up now!Daily Beast Membership: Beast Inside goes deeper on the stories that matter to you. Learn more.

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