Spekulatius

Any change in bank regulation is several years out. It's wont affect the current situation.

@Sweet WSJ article: https://www.wsj.com/articles/big-banks-could-face-20-boost-to-capital-requirements-c68c1e1b?mod=hp_lead_pos2 Sounds to me that the main targets will be banks with trading business and banks from $100B to $250B in size . Then there is the treatment of AOCI losses that may apply to all banks (HTM bucket). Personally, I think they need to increase the risk weighing for treasuries based on duration.

@John Hjorth Maybe you should wait until the crash comes to you in Denmark. I don’t see why it wouldn’t happen there, since echt rising interest rates have an effect everywhere. With real estate , you want to know the terroir so to speak, the closer to home, the better. According to some charts, the household debt in Denmark is one of the largest in Europe so it’s not like there aren’t any potential issues in Denmark.

Unruly they are: Shops plundered around Belgorod, I am guessing they try to take advantage of the chaos caused by the Ukraine raids there.

Yes, Vonovia has a bunch of operational issues. i don’t think the energy issue has played out that badly mostly because of state subsidies. I epxedct this issue to resolve itself since Ng wholesale prices are now back to 2021 level so once those hedges roll off, energy should become much cheaper than even at the start of the Ukraine’s invasion. As for Berlin, there was a referendum in Berlin to have large property companies housing taken over by the city. 60% of the voters agreed to this and now the politicians try to figure out if, how and when they can do something. It won’t be a confiscation, because the property companies will have to be compensated which also begs the question how to pay for this. this is going to tear a whole to dig ire out I think and could end up being a windfall for the property companies as they likely will get compensated reasonably well. Anyways, just reading management transcript does not inspire much confidence in this company and then we have the issue with the horrendous debt as well as the tax leakage for dividends due to withholding for US investors. I think there are easier investment to buy, like US apartment cos that are way less leveraged and much more straightforward.

@alwaysinvert Thanks for the fantastic background on the Swedish real estate crisis (if it’s even that). Seems quite similar to what is happening in Germany. It’s mostly an issue with valuation and financing due to rising interest rates. Vonovia $VNE.DE (German real estate co) has a debt to EBITDA of ~16x which seems similar to Castellum 14x. It very high but both have no issue with the asset themselves with virtually all the real estate occupied (Vonovia is at 97.5% occupation) and rising rents, some of which are rent controlled too. VNE also has most financing done via unsecured bonds because they are investment grade. So, what is happening in Sweden plays out in many countries in Europe almost the same way, I think.

Well, it may work for him, but not his subscribers. After all, these penny stocks are worse than a zero sum game in total, if someone makes money, so somebody else needs to lose it.

I think too that his system may work, or at least has worked. I listened to a few of Sykes videos on YouTube. He watches penny stock in hot sectors. He buys the laggards not the leaders after the leaders have run already. He looks for signs that they are manipulated and looks for the early signs that they might pop. He sells into the spike and trades the technicals or based on his hunch. He might short on the way down when the spike has played out. So not scalable. He can probably put a few hundred thousands of work at most. His gains are probably only a few thousands maybe ten thousands. He rinses and repeats this many times over. Once you make a few millions, this becomes tedious work , it’s mentally exhausting and I think that’s why he went from this trading to teaching how to trade. If @Gregmal says he is legit, then I believe it - he has no reason to lie about this. And I absolutely think that a trader in this inefficient corner of the market can make money somewhat consistent. What Jack Kellogg is doing (from the first article) seems to be different though.

Or it did work and but does not work any more and that’s why they try to make money teaching classes. If they really had a way to make money easily, they wouldn’t tell other people about it for very little money and even teaching these classes would be a relatively unproductive use of time. It just does not pass a smell test.

Iceland in 2008 was a small economy that became a hedge fund hotel and the excesses basically destroyed their banking system and economy. They basically had to totally reboot (without bailout) and got out of the calamity pretty quickly. Real estate was not at the core of the Iceland crisis. I think the 90's Swedish Real estate crash is the script here, not Iceland in 2008. Same country, same actors, same root cause, just 30 years later.

Zeihan on a trade agreement (or better early steps of a trade agreement). I agree that the US is moving towards treating Taiwan like a country: https://www.bbc.com/news/business-65773797

@CassiusKing1 I went back into Natalie Merchants back catalogue and very much love some records found there. The one I am particular fond of is "Leave your Sleep". The variety of thongs from Folk, Reggae , Nursery rhymes, Flamenco, Irish, Sea Shanties is amazing. I checked out her website and she had a tour starting in Boston but all the venues are sold out

Nobody outside Sweden gives a hoot if those real estate business go to zero. I personally don't think they are suitable investments anyways if you are US based because of dividend taxation alone. This part of the story ends here for me. The more interesting question is about stability of the financial system and I think we have been there before in Sweden in the early 90's. As I recall, the Sweden basically had their own local version of what would become the GFC that we had in the US from 2002-2007, with mortgage shams, house flipping and securitization gone bad. This housing boom in Sweden from the mid 80's to the mid 90's was also caused by deregulation, lower interest rates and eventually animal spirits. So my guess is that this could end pretty much the same way. I think the Swedish banks got nationalized in the later 90's but not sure. Seems to me like a generational thing going on in Sweden.

This is what can happen if you can’t trade in freely convertible currencies. Russia is stuck with Indian Rupee for their oil exports and can’t do anything with them for now: https://finance.yahoo.com/news/russia-rupee-trap-adding-147-040000882.html

@John Hjorth I dont think most of us are interested in owning Swedish properties Holdco's. The more interesting question for me is how this real estate mess is going to bleed into the broader Swedish economy, especially the banking sector.

Keep in mind that the paper is from 2015 and quite a few family controlled companies mentioned there have underperformed. Groupe Bruxelle Lambert was one I was invested in that comes to my mind. I actually think they have done OK in terms of capital allocation since then. Tessenderlo (not metnioned by discussed here) is another one that screwed owners, but they are smart operators. Might be interesting. We all know about Porsche Holding. Germany, Belgium, France and Italy have tons of family controlled business and my bet is as a group they have underperformed - not sure about European stock market but for sure the US stock market. I guess you just have to pick the right family.

@Luca I wonder if UBS cherry picked the companies or the data. There are many family controlled companies that underperform and those are worse than publicy traded cos that underperform, because it is typically impossible to make changes even with an activist. In Germany Draegerwerke come to my mind. Draegerwerke is in great market (Safety, medical etc) so one would think they should be able to perform, yet they are losing money currently. KSB is another one, but they have been doing better lately.

The UK and the rest of Europe has returned to the office, the US hasn’t.

Is there any investment angle or is it just about the fun watching a slow motion train wreck from the sidelines?

Going all in on European Holdcos. I see. Sofina could be interesting for you - it’s a bit like a publicly traded VC fund. I am not sure how good they are though:

Somero is one I am aware of. Special machinery for concrete application. Maybe a hidden champion. The business is quite cyclical though. They do operate world wide.

Peter Zeihan Uber bearish on China as usual Demographics, poor geostrategic location , Leadership with personality cult etc. I don’t think he quite gets the advantage China has in manufacturing stuff. Mexicos population is not too skilled to take on Chinese manufacturing . They may have different skilled but what China is doing manufacturing electronics like Apples iPhone and many other things is very very complex. It’s not just many workers, these workers are very very skilled at what they are doing and it’s hard to automize (fine motor skills, complexity , tight tolerances. You just can’t hire the same sort of workers anywhere but perhaps in Vietnam or Indonesia (which has Chinese population as well). Anyways, worth listening to, but you need to take some of Zeihans statements with a grain of salt. I do think he gets the broad picture right , after all he is a big picture guy.

I do wonder or the latest drone attacks of Ukraine into Russia are a test for the Ukrainians to Fosbury out how to use lots of cheap ish drones similar to the Iranian Shahed drone used by Russians. The Russians don’t seem to me able to shoot them down, since they even reach Moscow. When they are able to mass produce and deploy these drones there soon could be little fires everywhere - refineries, railroad stations, fuel storage, pipelines, power stations and transmission, government buildings, industrial facilities, bridges. Could be interesting.

Almost looks like an AI software created a pic of this Chinese fellow on the left converting to a Taliban on the right in two steps.

If you want to know how insurance in CA is going, just check out Mercury (MCY). Back when I lived in the state , I had insurance with them and paid ~$500 for a house worth $450k. It almost burned down in the 2017 wildfire - the fire stopped 2 blocks north of my house (sold it in 2015 after moving to the east coast). MCY also got terrible management , imo. My insurance agent was really good though.