Spekulatius

Maybe we can fold the 2001 tech stock crash and the 2007 housing crash all in one. That could be a lot of fun!

The answer to the bubble question depends on 1) will interest rates remains low 2) will cooperate to rates remain low 3) will cooperate profit margins remain at current levels or even go higher. If the answer to all those questions remains yes, then we are not in a bubble. If one or more of these factors (which so far have been tailwinds) become a headwind, then valuations are most likely adjust accordingly.

There is always not her court case, but we are now 9 years past the NWS, so I think the chances of any dramatic reversal through courts are very very small. Not worth betting on, imo. I think the remaining bet is mainly a political one on the chance is that the landscape changes with the next administration will do things differently as far as GSE’s are concerned. Again, we had a couple of administrations - the GSE were quasi nationalized under Bush, NWS under Obama, pretty much nothing under Trump and now a few changes with Biden. I think the chances of anything happening with the next administration are slim, but not non-existent. The LT call option value is there, it’s just not worth much because the odds of it happening are pretty small, imo.

I agree on this. Especially if reading about these things likely just increases an inherent bias that exists to begin with and sucks people even more into this bet. I hate binary bets like this and I followed several other ones like BMYRT. In the end, they all seem to be crapshots and it turns out the “experts” didn’t really have an advantage over the average Joe. If you treat it like crapshoot and put in your bets and accept the outcome, it’s probably OK to bet on this within risk limits. Beyond that, it is just poor investing and no better than those folks gambling on weekly options on WSB.

3rd Avenue RE fund also got into Fannie/Freddie late last year: https://thirdave.com/wp-content/uploads/shareholder-letters/Archive/TAREX/2020-Q4-TAREX-Shareholder-Letter.pdf Seems off mandate to me and I am sure they are going to get heat now that this bet didn't work out.

Cheers:

Sorry for the losses to everyone who invested here. I know I was only an casual here and had a diverging opinion, mostly because of my instinct to avoid any investment that looks like a binary event. I have played a few and watched many more and they never seem to work out as expected. I hope everyone is OK and can move past this.

The government can take banks into receivership of they fail. It has happened many times and it is nothing new. Same for insurance companies although that it more regulated at the state level and much rarer.

I believe it is settled that these are basically government institutions now. One thing that is remarkable is that the Common is actually down less than the preferred. Who would have thought?

No expert on legal docs, but it sounds to me like we are done here.

Interesting enough, I have the opposite experience with as regards to OTC stocks with IB. Fidelity shows the correct Bid/ask even for stocks you can’t buy any more (dark stocks). With IB, I have gotten executions outside the bid/ ask spread shown both above and below. My casual observation regarding Fidelity and IB execution is when I sold relatively low priced and lower volume stocks on both my IB and Fidelity Accounts at the same time. Then Fidelity seems to score well, and with the price improvement, the average price I got is above my limit with sells, vs at limit for IB. I think Fidelity is one of the few brokers that don’t get paid for order flow, also that payment for order flow isn’t a totally black and white statement either: https://www.spglobal.com/marketintelligence/en/news-insights/trending/IiJL9zOpAk76f_BrDunluA2

Smallish starts in CNNE, PROSY (Holding cos) and a small add to BAYRY.

Since BTC is now legal tender supposedly in El Salvador, anybody has to accept it. it will be interesting to see how street vendors in El Salvador and the many small business deal with BTC payments and the volatility. I suspect there are going to be a lot of exceptions - otherwise I think we will see a lot of chaos and bankruptcies occurring from folks that find themselves on the wrong side of the volatility or that possibly get scammed.

BTC at $29.7K this AM. Looks like the line has been breached. This could be fun. Never a dull moment in crypto land.

In terms of quality of execution, I think Fidelity is on par or better than IBKR (based on the price improvements I am getting).

Tarex has been a terrible performer. 2* rated on Morningstar. I always liked their commentary but they really went into some areas that had strong headwinds (Japan, Hongkong).

Interesting chart regarding valuations and equity multiples:

A 50% decline in stocks is not a low probability event. It is more like a once in a decade event. We have sen those in 2002 and in 2008 and I think we will see one this decade too, but one can’t know for sure. High inflation typically hope so when their is political upheaval in combination with some economic stress factor (both are typically related to each other). I think a value like 10% is possible if the political stability of the US takes a severe hit and the financial markets lose confidence. It is a low probability scenario, but it is not impossible Imo. FWIW, the best inflation hedge is a 30 year fixed rate mortgage. To hedge yourself, you would want to have as much fixed rate 30 year mortgage debt as possible on your property. It also comes with a free call option to refinance (without penalty if you are in the US) if you are wrong.

I would be careful with NNN leases or NNN Reits. Most of these leases have annual escalators that are capped at some not so high value. If inflation really would go to even 5%, this would probably exceed the cap and then you own basically a long duration bond with an coupon below inflation, and some risk.

I agree. You are also paying through the nose for a business with an obsolence risk. What is the FCF yield - maybe 5%?

@wabuffo succinctly explained the case for gold, imo. Miners could be better, but traditionally, mining stocks / even gold mining stocks) also get whacked badly in a Stock market downturn, so as a hedging instrument, they may not work well at all. Holding cash in the 70‘s was not so bad, because savings accounts and short term bonds/ treasuries were actually yielding something. You still lost purchasing power as the yields didn’t keep up with rising inflation, but it wasn’t a catastrophic loss, I think

Reits are very sensitive to credit market conditions. That means that once there is some sort of a hiccup in the financial system, Reits are going south in a hurry. Crude is not a good inflation hedge because it’s is highly sensitive to marginal demand/ supply imbalances. The changes in crude prices in the past decade had very little to do with inflation.

I kind of like the yellow metal here and bought more today. I regard it as a better alternative to cash basically. Sure, it could go down, but there is also a chance that if inflation kicks in with negative interest rates, that it goes up a lot. Gold has been a store of value for more than 5000 years and I think it will be for a while in the future as well. my vehicle of choice is IAU since it had lower fees than GLD. I wasn’t aware of GLDM so maybe that’s a better alternative. Gold miners are tricky and it isn’t clear that it works well in and inflationary environment. When buying a miner, you are basically making a bet that the mining costs go up less than the price of Gold, which isn’t necessarily a given. In the depression in the 30’s gold miners did well, because the price of gold was fixed and their input costs (labor, materials ) were falling significant, so their margin improved. That’s unlikely to repeat itself however.

My experience with the Etrade is dated but their mobile and PC apps were solid, when I used them. I use mostly IBKR nowadays.I I think their mobile apps are solid and robust, but their GUI isn’t exactly user friendly. The biggest weakness is reporting, imo.

Just a bug in the algos. Easy fix.