tede02

Although it's true no hard evidence was presented at the hearing, what I've learned digging into this topic is there is significant evidence, but the challenge it's all classified. For example, when the UAP task force released it's first public report in 2021, it stated that 144 cases were studied, and a grand total of 1 was identified. Of the 144 cases, 80 were detected via multiple sensors. And yet, the public got to see NOTHING. When it comes to UAP, the pentagon hides behind, "we can't disclose our capabilities".....except when a Russian jet sprays jet fuel on one of our Reaper drones or the Chinese fly a spy balloon over the continental US, we get clear pictures within 48 hours. It's a complete joke and breeds suspicion. Additionally, John Ratcliffe, the former head of DNI, said publicly in 2021 that there are far more incidents than the public knows and he went on to further state definitively that there are satellite images. As frustrating as this is, it was interesting to see that none other than the senate majority leader, Chuck Schumer, inserted language into the pending defense bill which would mandate the release of UAP records. https://thehill.com/homenews/senate/4097653-senators-to-offer-amendment-to-require-government-to-make-ufo-records-public/

I had some correspondence with an asset manager in the Class A space very recently. He said there is almost no bid for anything right now outside of private money looking for fire sales. I asked him where he's seeing cap rates and he said it's near impossible to generalize because nothing is moving unless there is seller financing. But to generalize anyway, he suggested quality properties without leasing issues would probably be in the high single digits which I think is about double where things were in 2021. This is complete conjecture from me but I have a feeling 2023 is going to be the bottom. The headlines are so, so bad right now. The banks don't want to lend, etc. But if I had to guess, there won't be a quick rebound. The only way interest rates are going to drop fast is if the economy softens materially and that won't be good for office space either. Probably going to take years for things to shake out especially when you think about the possibility of repurposing buildings, etc. But the situation is more subtle. There are newer Class A properties that are attracting tenants and near or completely leased. They seem to be the winners in this cycle.

It's a good point on the 1999 comparison and inflation being a different factor. There are always so many factors at play. It's tempting but over-simplified to look at one variable, like interest rates, in isolation.

Out of curiosity I charted the S&P500 during the tech bust along with short treasurys and Fed Funds. Very different market response compared to 2022/2023. What's striking to me is the S&P500 essentially declined pretty consistently from late 2000 through late 2002 despite the Fed cutting rates all the way through this period. Contrast that to the last year or so. Although the Fed has been raising rates to the point of material real yield, not only has the S&P500 rallied, market multiples also appear to be expanding. It's just fascinating to me because the situation is very counter to conventional thought and consensus. This game never ceases to amaze me.

One reason I'm amazed at the strength in equities this year is investors can literally earn 5%+ sitting in a money market instrument. I'm surprised that yields in that range have not sapped more demand for equities. That said, clearly the AI narrative/story has driven most of the rally this year. I agree with Viking's comments about all the cross currents. Really tough to have a strong view. Buying 2-year treasurys as an equity hedge also seems interesting. Worst-case is you hold to maturity and get your 5%. If economy falls off a cliff, short-rates very likely to collapse and you could find yourself with a decent total return/offset to equity losses. Bonds are presenting an actual alternative to stocks for the first time in 15 years. This post is kind of all of over the place but as an aside, I was shopping car loans this week because I'll be in the market in th next 6-12 months. I could pay cash but was curious where rates are for top credit, etc. Rates were 6%+. Also noticed mortgage rates are pushing into the 7s. It just makes me wonder if the economy is going to crash into a wall at some point vs. this gradual slowing that seems to be taking place now.

Wow, in March, before SVB went down, the 2-year broke through 5% before crashing down under 4%. Consensus was pretty strong that we wouldn't see 5% again and yet here we are. The 10-year is above 4% also which is toward the high side of it's range. Gundlach has talked about buying long bonds as an credit and equity hedge. This is an intriguing idea.

Cattle mutilations are a really weird phenomena too. I've read about it a little bit in recent years. There are cases globally. In the US it has been investigated by law enforcement and various individuals. From what I understand, no one has ever been caught and there are remarkable similarities in incidents spanning the globe. Like I mentioned in a previous post, prior to a few years ago, I dismissed all this paranormal stuff as tabloid trash but after some of the UFO developments in recent years and listening to serious and sober people that have investigated these topics, it's opened my mind to the notion that we might know a lot less than we think.

I sold my META position recently. Bought it on the way down last year at various price points. Generated a nice gain but I ultimately sold largely because I just don't have any insight into the metaverse thing and the equity is a lot less cheap on a fundamental basis.

I have some stuff in a free version of dropbox. In the last year I finally broke down and purchased 100GB of storage via Google One mainly for pictures and video. I'm a business owner and use Onedrive for that. It's kind of amazing how managing data can turn into a burden as it gets spread out across various cloud platforms and or devices. Over the last 5-10 years I recall reading many articles of how big cloud storage is going to be, etc. and I never fully grasped the magnitude but I definitely see it now. Probably a decent runway still.

One thing thing I don't quite understand is why they are searching thousands and thousands of square miles. Intuitively, I'd assume the mother-ship was parked directly above the Titantic ship wreck and the sub would essentially descend vertically on the shortest possible path which would provide a relatively defined area to search. Maybe there are strong ocean currents in that area or something but the sense I get is they have no clue where the submersible is.

This 2020 documentary was eye opening to me. It covers the history of the ufo/uap topic going back to WWII. Prior to a few years ago, I gave no thought to this subject other than figuring it was nothing more than tabloid/click bait trash. But after seeing this documentary, hearing from navy pilots and other credible observers, plus watching the constant drip of new videos leak out of the department of defense, it's persuaded me to keep an open mind that there may be something to all this.

When I realized NVDA was selling for around 40X SALES, I bought one Jan 2025 far out of the money put just for kicks.

From everything I read, the source, David Grusch, is highly credible. He was literally one of the people in-charge of the President's Daily (intelligence) Brief among other things and numerous high-ranking people have vouched for his integrity. His claims haven't been proven but, according to the Debrief Article and other reporting, he has provided the congress program names, who's running them and even physical locations where these objects are stored. Will be unreal if this proves to be true.

I share most of this sentiment. AI definitely seems to be a new story people are excited about and I'm not sure we even know what the business model looks like. NVDA is selling for over 30X SALES! LOL. I bought a tiny amount of long waaay out of the money puts for amusement.

This is basically spot on for my wife and me. I was just doing the mental math on the expense of my two young kids the other day and the number was easily $30-40k annually. Nearly $20k of that is childcare.

I bought a trivial amount of far out of the money puts on NVDA.

The last 18 months have really been fascinating and humbling. It's been a great reminder that no one ever consistently knows where things are going. The recession that everyone has been predicting keeps getting pushed out. I distinctly remember one prominent fixed income manager boldly predicting the Fed would never make it to 5% (and yet here we are). And then of-course there is the huge rally in equities this year despite the Fed continuing to hike and inflation staying stubbornly persistent. I reduced exposure to tech and shortened duration in fixed income in the early months of 2022. Those turned out to be good moves. But the bottom presently appears to be Oct/Nov 2022 and I definitely wasn't smart enough to reallocate in the opposite direction at that point. Maybe the Fed is forced to go to 6%+ as Jamie Dimon pondered and the economy does hit a wall at some point. I wouldn't be surprised if the lows in equities are re-tested and long-rates drift up. But who knows. I certainly don't.

Rates are marching up again. The 2-year is over 4.5%. I've been much more interested in the fixed income markets in recent years. It's a different game. Financial media often treat the bond market as a fortune teller. An inverted curve has been historically good at signaling before recessions but in the short-run, the bond market doesn't seem better than anyone else. In March, just before banks started failing, the 2-year broke through 5% when the narrative was inflations is stil hot and the Fed may have to go to 6%. Then the 2-year cratered into the 3s when the narrative flipped to "things are breaking" and recession is imminent. Now we're back to economy still appears resilient so Fed may need to hike a few more times and the entire curve has moved up. LOL. Amusing. Just random musings. I picked up some more short-term treasurys this week with rates popping up. For the hell of it I grabbed a few of the ultra short maturies that gapped out because of showmanship in Washington, etc.

This is just an anecdotal observation from me, but one thing I'm observing in the suburban area I'm in is there is very little office space available. I'm 15-20 miles outside of Minneapolis and there is not much space available, particularly quality buildings. The pain is really concentrated in the urban areas. Will be interesting to see how it all plays out over the coming 3-5 years. Bargain hunters seem to be seeking opportunities: https://www.bloomberg.com/news/articles/2023-05-09/new-york-s-empty-office-buildings-lure-rich-families-hunting-bargains.

Removing the politics section is a good idea. Reminds me of the old saying parents tell their kids, "nothing good happens after midnight." Likewise, there is nothing good that comes out of a political message board. If you need venom or want to spew it, go to the comments section on foxnews.com or msnbc.com.

I also thought Warren and Charlie spoke much better this year than last. Warren especially seemed sharper. I feel very fortunate that these two have been around for the first, call-it, 1/3rd of my career. People in college today won't have the same benefit. Both Buffett and Munger are one-of-a-kind in their own ways. What's especially unique about them is their combined record of success and adherence to principles and ethical conduct. It such a positive example for the world.

For ideas, I was looking at the holdings within the iShares preferred ETF. The fund holds hundreds of preferreds. If you go to the end of the list where the smallest positions are, you'll find the stuff that is the most bombed out. You'll find First Republic all the way at the end! LOL. It's an interesting list to review. Basically all financials, REITs and some misc. stuff sprinkled throughout.

This Bloomberg article caught my attention: https://www.bloomberg.com/news/articles/2023-05-07/preferreds-get-burned-in-historic-rout-spreading-from-banks?srnd=premium. Basically all the carnage in banking and real estate has hit the associated preferred stocks. I've dabbled a little bit in preferreds. I just find these less popular securities interesting. There can be some attractive opportunities for double digit returns when you buy during periods of distress. Probably need to be very careful with banks presently. I found Buffett's comments at the annual meeting striking. There are probably a lot of banks with negative equity right now which means the preferreds are also worth zero. But there may be some REITs with preferreds that will come back to par on the other side of the cycle. I have a position in SRG preferred and a tiny position in SYF preferred presently. Both yielding around 9% based on my average price. Total return will be much higher if they ultimately come back to par.

I found Buffett's comments about declining earnings across their businesses as very likely this year notable. The subsidaries touch so many different industries. It really provides insight into the broader economy. I also found the disagreement between Buffett and Munger with respect to investing opportunities intriguing. Basically Munger said (and has been saying this for a number of years), that investing is a lot harder now because there's so much more competition scouring over everything. But Buffett disagreed a bit and said he still thinks there are plenty of opportunities especially in smaller stuff. I also enjoyed their comments on the banking system and all the insurance businesses that have started and failed over the last decade or so. The commentary around these issues were striking to me. Buffett and Munger must be unmatched in terms of managing risk considering the length of their investing careers. After the AGM, my respect for Buffett's depth of business knowledge always increases. It's probably not a stretch to say there isn't anyone better and may never be.

WSJ had an article on falling diesel prices as a sign that demand for durable goods (and therefore freight) has significantly slowed. The data is noisy but I charted it. There's clearly correlation between recessionary periods and diesel prices. That said, the drop probably wouldn't be as fantastic had the Ukraine war never occured.