Gregmal

I am genuinely curious if there’s even been studies about which is worse for you, drinking 2 alcoholic beverages a day, or 2 Coca Colas?

Normalizing rates is a good thing, absolutely. Overdoing rates, IMO is dumb because the biggest inflation inputs are issues the Fed has no control over. Their mandate may be to fight inflation, but if inflation is being caused by things beyond any of the tools they have, my guess would be that they see this and come to the conclusion that, like everyone else in government, pass the ball. Investing wise, energy is can’t miss. It’s the easiest dollar to make and has very little risk if you play it right. I’m just not an energy expert and I hate investing in the space, so I’m not being as big of a pig here as I probably should be. Otherwise, I think residential real estate is also pretty easy money. Housing may slow, sure. Don’t own home builders who need volume…easy enough? But it will slow because the Fed prices people out. Which makes rents inevitably go higher…which is…Good if youre investing in rentals! 95% of existing mortgages are 30 year fixed. Most of those people have big equity. Housing can slow, sure, but all you need to tap home equity is A COMP. Sales can go from 10 per day to 1, and you can still tap home equity. As long as prices don’t decline huge there’s a fortune to be made in the space, which is hard to see things going back to pre COVID level, but even if so, the homeowner is in better shape now than in 2019. And guess what, if the Fed prices folks outta homes, guess what happens next? Government intervening and loosening lending standards or subsidizing it. And this does nothing to account for the insatiable institutional demand as housing continues to become productized. So yea, not much else, just housing and energy but why try to decipher the mess that is the rest of the market? Isn’t the point just to find the easiest dollars/lowest hanging fruit and just take it? Is it really worth trying to figure out what AMZN or Netflix rerates to under so many different scenarios, most to the downside, in exchange for measly 15% annual returns? I think the biggest lesson so many can observe from the last 18 months in the market is that most people have NO CLUE what they are investing in. They buy tickers that are popular and like when it goes up. When it goes down, they hate it. They like that the stocks go up and that’s it and once it doesn’t….game over. So always ask yourself what you are really doing. I’d say even 95% of people buying something simple like GOOG, even folks here, have no clue what they’re buying. The can read the income statement and know of what Google does, but so they really understand it intimately? Nope. When shit hits the skids they either revert to blind faith(cough BABA) and just throw in the towel. No rational action. Totally the wrong approach to investing. Anything you are eying needs to be evaluated in the context of “would I make a private investment, with an exit only on a liquidity event, at the current market price?” If so, feast, if not…pass. This isn’t the type of market where you wanna be investing chasing your tail and making decisions based on guesses of whether the market is going up be down 20% in the next 3 months. Imagine doing that in 2008 or 2009?

LOL that’s good right there. Especially the first part. Replace 2020s “but COVID!” with “but inflation!” Maybe add a one liner saying something about stealth tax or whatever, and you have 2022 in a nutshell. No need for anything else. All one has to do is so say “inflation” and the room goes silent, some gasp, and nothing further is needed to let everyone know doom and gloom is upon us and the end is near. Except this time a mask won’t help you!

See you guys and raise you topping off my home heating oil tank. 550 gallons filled 200 at 5.40 up from 2.68 in Q4…fun fun. Thank god for oil calls.

It’s would be great if every consumer good came with the stringent underwriting checklist that comes with, say a mortgage before the purchase. But people like material things. People like experiences. No one is talking about banks lending again, which is healthy. Over and over it seems there is a need to just regurgitate last weeks headlines or repeat something that happened during the 70s just cuz it’s en vogue. I’m not sure yet where the best way to play all this is, but for sure the best fallback is always just to stick with quality and invest for the long haul. A lot of times the better assessment come from evaluating the worst case scenario. And what if the worst case scenario isn’t so bad? Ok we get a recession and 50% stock market “crash”….so what? Do you die? Does the world end the follow day? Do we never ever come back? We re already off 20% on the “indexes” and more on individual stuff. Doing anything scared is never really ideal and the beauty of the stock market is the volatility and opportunity. Then on the other side, as we ve seen plenty of time, there is also quite a bit of evidence inflation already peaked(the CPI today provided zero that dispelled this possibility) and the fear mongering crowd again does it’s thing but like so many times before turn out to be wrong. In between there’s a lot of different possibilities as well. So I think as always it’s kinda of just prudent to buy stuff that’s reasonably valued, durable, well capitalized, and kind of let the charlatans worry about where “the markets” goes next week. Or what “the Fed” will do. Because again, the Fed hasn’t really done anything yet and they’re getting an awful lot of credit which just shows how bogus 95% of the talking head analysis is.

It’s all the equivalent of having a hang nail and being told the right thing to do is to cut your hand off. Only to find out the doctor advising you makes a shit ton of money when that happens, and that other guy found a way to take out an insurance policy on your hand, and the third guy you got an opinion from is just an idiot who listens to the first two. Higher prices suck but they happen for many reasons. Not all bad and some because of government stupidity. I’m not sure how the solution to squeezing someone at the pump or at the grocery store is to take their retirement money, home equity and their job security….seems sketchy. I am not aware of any middle class folks who bought vacation homes in 2010.

The specific aspects are that workers have tremendous leverage because of all the help wanted signs. This is bad for big corporations and bad for shareholders. The solution many are proposing is to eliminate the need for all those jobs. Who benefits from that? Energy and housing issues are not solvable in a constructive way through rate hikes. Most else is simply supply chain related. So again, not really much rates are gonna do. Yet people keep lobbying for rate hikes? Why? Again who benefits? Is bringing rates to 10% gonna produce more oil or wheat? Some things just have need to play out on their own. The more you mess with them, the more problems get created.

Exactly. This notion that we need to stop everything for the lower dung rung that can’t get it right no matter what, is ludicrous. Same as how teachers in school need to teach to the middle core of the class that’s interested, hard working, and capable. Don’t worry about the ends of the bell curve. Especially not the dopes sitting in the back refusing to pay attention or incapable of showing up to class. As someone who fell into the later category, there was nothing anyone could do to force me to be interested in stuff I just didn’t want to do. Same goes for much of the population when it comes to providing for themselves. The focus should be on those who want it, and are willing to put in the work. And for these folks, the economic situation is about as good as it can get. Would be awfully shameful if the Fed attempted to solve a problem it doesn’t have the tools to handle, because a bunch of loud mouths with more resources than they need want higher interest or better investment returns…. And FWIW I still don’t see a scenario where the US housing market falters. From day one of COVID the path forward was going to be rents and housing prices taking turns supporting each other and buoying the residential real estate space. If the answer right now is to price normal people out of the housing market, rents have to go higher. To the degree housing continues to be productized the way it is, there’s going to be a ridiculous supply and demand imbalance on the institutional side…as there has been. Everyone worries that the public market reacts first and then the private….and maybe that’s true. But it’s not really that relevant because it always reacts hastily first. Like some investors, if you panic and sell shit down at the first sign of trouble, you may look good in that one instance, but if you do that all the time who cares because for everyone one time the public market leads, there were 19 other times where it “lead” and was wrong, so why give it credit for 1/20? Private market for residential real estate is still white hot.

To be fair, the Fed hasn’t really done anything yet. But again, it’s COVID hysteria playbook all over again. Folks take their positions, start screaming and yelling, the media makes the stories unavoidable and makes terrifying people it’s objective, and before you know it some guy will be crying on TV about how his father couldn’t afford Manischewitz Grape juice this Passover while his minions are liquidating the rate swaps. The big question IMO is does the Fed buy the bs and overreact, or does common sense prevail and some acknowledgement that their tools don’t solve the problems occur?

You have no better look through as to what the issue and what the solution is than how COVID was handled. The government thought(or wanted) to try to control something it has no control over. And just messed things up even more, especially in certain states/areas. The current inflation is a byproduct of that. The answer isn’t to take more measures that just create other, bigger problems and don’t have any bearing on the inflation problem…it’s to back off and let it play it’s course. If people can’t afford things, prices will come down on their own. Purposely making them unaffordable? Eh that’s pretty diabolical. Now imagine doing all this knowing the end beneficiaries are big corporations and people with excess capital to deploy?

Japan has had zero rates for decades. The issue is that you think the Fed can solve the inflation problem and they can’t. Rates have nothing to do with it. The issue larger scale, is that others know they can’t but are pitching it as a solution, for their own benefit. Cough, Bill Ackman.

I recall hearing how savvy some of you guys were holding all that cash to go and buy SHOP at $700 or those GOOG shares I made 6x my money on and sold to you guys at 2600. Don’t confuse all this with simply not investing wisely. There’s COVID fad stocks which I guess are the only thing to fit your description of “2 year wealth event”….but those were a clear bubble, not the rest of the country, economy, and world. I mean even simply enough, you seem to know oil is going to $150…you rather own cash than oil futures? Rates rising pushes people to rent, private market for MF has barely budged, and rents are soaring, rather own cash? None of this stuff logically, makes very much sense outside of the short term narrative.

Two years? Did you miss the entire decade?

You aren’t addressing any of the points. You’re just stating in a roundabout way: -everything is a bubble and the Fed accidentally crafted a recovery from GFC and those that sat in cash poo pooing the restoration of the economy and missing the lions share of the gains now deserve to get interest? I won’t even touch on the insanity of screaming inflation but holding cash either. Unless of course again the goal is to simply worry about what the market will do tomorrow. Didn’t someone say speculators vs investors earlier?

Essentially the argument I’m hearing over and over again is that in order to solve the problem that some things, mainly little daily life things, like grocery prices, many of which are supply chain related, being more expensive, we need to whack everyone’s jobs and net worth? If oil goes to $150(I think that’s actually conservative) you’ll pay another $25 a week for gas. Solution? Let’s whack $50k off your net worth! Makes sense. Got it. I mean if $150 oil is a problem, won’t that naturally slow things down on its own? How is the answer to high housing prices to make housing more unaffordable. If folks have too much debt(this is thrown around a lot but not true at all) make debt more expensive? Folks like my wife, and @Spekulatius might pass up higher paying jobs because they don’t need them, but is the solution to take that option off the table for folks who do?

Well if certain folks have their way I’m sure those folks will feel even better down the line when their retirement plans that are invested in index funds get walloped. Or when they lose their jobs cuz we have room again to boost profit margins…but hey, it ain’t that bad, an institutional investor will be happy to pay you a 10% premium to 2021 prices for your home… So again, maybe stuff isn’t perfect, but screaming and scaring everyone about how bad it is when the proposed solution is miles worse….it’s not like we haven’t seen this game before. Hasn’t even been 2 years since the last one.

Little more EPSN as well. Added to Tesla short.

What are the number of millionaires over the past 1/3/5/10 years? I’d say that’s more so normal hardworking people benefitting than just a “rich” benefit. At some point everyone needs to get “rich” or they spend the rest of their lives a servant in the hamster wheel. So despite all the popular banter and Fed bash…you could say they did their job. Now folks think it’s beneficial(to whom lol?) to undo it…why? So as @widenthemoat mentioned earlier…people with more than they need get better investment opportunities? Blackstone can buy more residential space in cash?

Exactly. You’re comfortable and don’t need it. If you did, you would.

I can live with getting a 7th home, hopefully in Florida or South Carolina when all the people looking for their first get cleared out of the market due to higher rates….what’s the point of that though? Who needs it more?

I’m not bothered by it. I’m wealthy. It’s all good. It’s just a little fucked up the games that get played though and I’d never really understood or believed the whole “game is rigged” and the “average guy always gets fucked” stuff until the last couple years.

The number of job openings indicates people are not bothered and they are comfortable. Gig economy is also a huge lever for people to make more money. I’d challenge anyone to find a job that’s only increased pay 6% since December 2020….it’s academic crap the same way the CPI last year said inflation was only 8%. It was probably closer to 20%.

This argument legit sounds like some of the old people at one of the HOAs I’m on the board of. OMG our dues when up $70 a month! This is ridiculous. Well, your home values increased $150k….. additionally you’re all getting new roofs. But hey, I’ll pay your $70 a month if you give me the home appreciation? Oh, no? didn’t think so.

I mean in another thread Viking you listed the home equity appreciation and what it equates to. That’s just one angle. Then there’s job market leverage at the workers hands. Now here you’re saying gas and grocery bills negates all that….seriously? I’ll take it ones home and primary income are bigger components of value to than their discretionary grocery bills and gas costs..but hey, just say inflation, inflation, inflation. It’s the new bogeyman now that people stopped falling for COVID.

BATRA