moneyball

I think when looking at office it's helpful to separate the market into NY class A and then everything else. For a number of reasons trophy NY is its own animal. We've still yet to see any real capital formation around all of the other office deals across the US that need to get recapitalized. Much of the early price discovery actually was "fake" in that they were sold to people who themselves were looking to make money from syndicating the deals, not from ownership. Given the extremely high replacement cost / replacement economics of office buildings, I believe for the best buildings we will see rents that exceed levels real estate investors could ever dream of five-seven years ago. In a lot of ways I think the QE cycle artificially lowered net effective rents and in addition to supply/demand we will witness this unwind with rents at the top end.

Do you have logic for how you get there or is that a view? This is the country that elected to keep their economy shut down way past when it was reasonable to ostensibly show the rest of the world how centralized their power over the country is/was.

All depends on whether you subscribe to the belief that China sizes their stimulus with currency in mind. Timing on last announcement seemed to coincide with US rate cuts. If China's policy is to have a strong/stable (artificially weakened) currency then its puts them in a box with what they do on the fiscal side.

While I have a financial interest in what happens here - and just in general wish for a better future for US China relations and their citizens - I have to say that as a lover of history and psychology I am extremely interested to see how things develop. Will we get crazy tariffs? Will the threat, or implementation, of tariffs be what develops communication between two countries that are tied to each other economically? Or will everything just go off the rails?

Today setting up to be interesting test of resolve for China bulls

Even in a world where China did such a thing, The US would have to make the decision to nuke the US economy. I’m reminded of Syria and Obama’s hard line in the sand…

Congrats. Wanted to do that play in early August/late July, but was too chicken. How do you think about timing for the new calls vs. rolling position into equities?

And this is ultimately what make a market^^^ I ultimately believe that governments act based on the constraints that they are under. Bailouts weren't popular in the US during the GFC and ultimately didn't get passed until the market made the politicians pass the bailout measures. Looking back it's funny to think about how much talk there was about moral hazard back then. Fast forward to covid and we basically told everyone who managed a business prudently that they were an idiot and it is better to run your business in an incredibly fragile manner because you will get an automatic bailout. I digress. Over time we've seen governments take actions they would have never taken before when faced with a terrible economic environment whether that is going off the gold standard, breaking a currency peg, creating new lending programs or sending folks cash in the mail. In many of these situations the governments fought against taking action but ultimately acquiesced. I'm young and can stomach the risk I have if this doesn't pan out. My belief based on bottoms up and top down investment analysis is that the outlook for US stocks seems just okay from a real returns basis. Chinese stocks are absurdly cheap. To me it seems easy to have a visceral reaction to all of the risks presented by Chinese investment. Not as easy to have the same reaction to a future world where those risks don't materialize. That to me is what creates this opportunity. Agree with you that there is no guarantee Tepper is right, but this type of investing is where the guy excels and his track record shows it. My sense is he has an ego around being known as an all time great for investing in situations like this and isn't just pumping his book - his track record shows that isn't his MO (again just my belief). He called to get on CNBC and talk about it. Not something he really does. Now if this was General Ackman I'd be scared lol.

My personal view is that overall economy in China is bad. But some of the tech companies are world class companies and are growing despite the overall economic picture. Two major risks in China are government not caring about economy and war/sanctions. I think we have more clarity now on risk one and positive reflexivity in the stocks. If government is willing to actually address economic issues then who cares that the market is up 20-50% from the lows because the stocks are de-risked and prospect for growth over next 5-10 years is higher which is what we are really playing for. Even better given the actual/perceived mismanagement of the economy there are a lot of levers that can be pulled to increase the attractiveness of the stock market/market for investment. I know there can be disagreement but I agree with Mr. Tepper. Also believe that given the prevailing view that China is un-investable there is a long way for fund flows to go if people get FOMO. I say all of this as someone who would never have invested in Chinese equities 3 years ago.

Over last two days have been increasing my china exposure. Hard to buy stocks and materially increase positions that in some cases are up 50% from some cost basis trades, but think that there is a real chance that risk adjusted returns have increased and despite material performance, high quality companies are cheapest in the world. Still have some struggle with how much China exposure to have though because of some of the risks we all know.

The value proposition for gold comes from its position as a diversifier within a portfolio. Holding it as its own portfolio seems suboptimal. My belief is that given current fiscal/demographic picture in US having allocation to inflation hedges (gold, real estate, bitcoin) is a good idea as a part of an overall portfolio.

Unfortunately you have to pay capital gains tax on sales of physical gold.

Could someone post or dm the bond prospectus, I know it’s out there but had it saved in a place I no longer have access to. Thanks if you have it!

Got my copy yesterday. Only about a quarter of the way through, but already have the impression that Ed Thorp might be one of the smartest people alive. Highly recommend picking up a copy.

I don't have the hard data right now to back me up, but I would suspect that there are a disproportionate amount of wealthy 50+ mm individuals who have made their money through real estate.