Gregmal

Repurchased some Berkshire

What do you mean by unwind? Printing as everyone calls it, is a process generally used to smoothen out turbulent markets and economic times. They can or can’t unwind? IDK…who is really effected either way? How? And does it really matter?

https://vosscapital.substack.com/p/the-big-long-a-deep-dive-on-us-housing-7c3?r=9dts&s=r&utm_campaign=post&utm_medium=email

Dude I remember chugging those at my little leagues games in the 90s. Were only 99c. Great value

Anyone want this entire “inflation” thing put in a nutshell? Here you go. How in the fuck do you create a shortage of baby formula? Answer: have the government shut down the largest factory producing baby formula! Easy. Now apply to oil and gas. Apply to farms/factories. Apply to restaurants. Apply to the pool of potential laborers. Apply to the entire economy as we saw over and over again the last few years. Making sense now?

2018 aggressive

So what happened to home prices and rents during the greatest inflationary period in history? How about energy? Asking for a friend.

Sounds like you’re….gonna be in cash for a while. All seriousness, I think attributing what computers and short term market participants do and a 50 bps hike to the same root I think is a bit of overkill. No different than a hedge fund guy talking up a stock. It can and does move markets short term for all sorts of reasons. But it doesn’t mean that the hedge fund guy controls the returns for that stock. Not the fundamentals. Rates matter, and they don’t. It’s complex rather than just rates low good for stocks, rates high bad. We still have a sub 3% 10 year and we’ve had some of the greatest bull markets in history with rates significantly higher than that. You can take virtually any short term series of events and draw all sorts of conclusions though. But at some point it gets carried away with itself. I mean, how did housing do from say, 1970 right before the torrid inflation up til the big housing crash in early 1990s? There’s always places to invest.

Right on. Where’s my money and when do I get it back goes without fail here because multiple contractions are brutal and if that’s the factor you are relying on, you’re fucked. If you can buy something earning it back in 7-10 years who cares about the market. If you can buy something that would immediately sell for 3x in an auction, good. Whereas forget Tesla, but something like Amazon, or Netflix, where do you get comfortable at those multiples and with so many underlying question marks? That’s clearly what the market is struggling with and things always tend to get nasty when there is no underlying consensus among market participants on a valuation floor. The only thing everyone is becoming aware of is that the framework of this past decade just went out the window.

The only caveat is not to get too short sighted based on one year, or even two of earnings. Didn’t we learn that during COVID?

Exactly. Outperforming anything comes down to separating noise from reality. Nothing has really changed other than overvalued stocks, buoyed by COVID related bumps, became the straw that broke the back of the overvalued and high multiple trade. It went on for 5-10 years, it’ll probably take some time to sort out. But it seems to just be a classic rotation. The only thing the Fed really has had to do with anything is encourage/discourage momentum. They haven’t had any influence on real investing. In my head I think, is James Dolan celebrating the potential Chelsea deal value implications, or cheering on the success of the Rangers? Or crying and considering getting rid of his teams because the market might go down next week? As a share owner sometimes I wish it was the later, but that’s beside the point. If you aren’t comfortable with what you own going down you shouldn’t own it at all. That’s in essence what the market is coming to terms with. As @LearningMachine says, when do I get my money back? And for much of the market, people now say “oh shit”. Even with good high quality stuff. “Oh shit”. If you’re buying good cash flows or at huge discounts to asset value….it then becomes “thank you I’ll have another”. Times like these separate the men from the boys and the boys from the girls.

Right on my man. Every single year since I’ve followed markets there’s these big scare themes. And like gossip mags at the grocery store checkout, people can’t get enough. Every 5% dip we have CNBC Market in Turmoil specials. Every 10%+ pullback we get Grantham, Hussman, and Faber interviews. Ultimately though, the markets are beautiful because they give you whatever you are looking for. As to outperforming…. Idk, outperform what? An index? Who the fuck cares? Focus on finding attractive opportunity sets. I agree special situation, event driven, and cash sub stuff helps greatly too. I also hedge with options. If the market decline 10% but you scrape 3% off via bearish hedges, provided your longs aren’t total dogs, it adds up over time. But overall, rearrange your focus. Ignore the crowds. Typically a good starting point is looking at what everyone is currently consumed with at the moment…and immediately discounting that hysteria. Look at the other side. Look elsewhere. There is really not much money ever made doing what everyone else is doing.

Well one, they’re on Twitter so they need to be discounted. And two, it’s been en vogue every year since 2009 to call for another 2008. That was a once in a lifetime series of events. It’s not happening again. I try to be open minded, but I typically just write off anyone who starts beating the 2008 drum. There are no parallels to that today. The stock market probably better resembles post tech bubble period and the inflation situation isn’t at all comparable to 1970s. I continue to be amazed by how investors and media alike get absolutely petrified by the word recession. We ve had them before. We ll have them again. Shorting or cashing up every time a shadow emerges for the last decade doesn’t work unless youre a guy who’s brand is peddling dog shit like Hussman or Grantham. But recall, those guys, their returns certainly don’t keep the lights on or cover the rent.

You really just need to focus on buying indestructible businesses or assets continuously through the cycle. Be a little more aggressive when others are scared but it’s more about staying the course and investing in things where you won’t likely have permanent impairments on meaningful invested capital. Staggering puts sales is also a very healthy strategy for those who get cold feet buying on the declines. Sell a BRK $300 put with a June expiration. Then a $280 Sept. Then a $260 October…and so on. That way rally or not, you’re accomplishing objectives. Sitting on your hands hoping to avoid corrections historically has been a suckers play. Easier to just hedge them.

The counter to that, not disagreeing though, is that wages went nowhere for almost the entire period following the GFC. Same largely with a lot of goods and services. So on top of there being a bit of catching up to do, you also had all these big companies pledge to $20+ minimum wages by....22/23. Voila! Just came in heavy on the back end.

Yea I second that. I just don’t find a HELOC attractive when you can/could just do a cash out refi into a new 30 year fixed. I proudly smashed the refi button on 4 properties last 18 months. Been laughing to the bank ever since. It’s almost too good to be true. Where else can you borrow 7 figures at 3.5%

100% spot on.

This is essentially the crux of what governments do. They create problems, blow them up, and then fix them and take credit for saving the world.

All good. I am personally not considering or referring anyone here as part of the wealthy elitist cabal lobbying for economic destruction. Everyone here I assume has the same goals, to compound wealth. 100% agree. My understanding of that as I’ve come to exist as an American, is that it’s best done, on a risk adjusted basis, through accumulation of assets, preferably good ones. Indestructible ones. One s that others want/envy. My belief is that the Fed is being deliberate in taking their time. This would have gone away substantially last year but we just couldn’t resist doing the COVID scare shit again in the winter and then on top no one forecasted Russia into the model. But now virtually all of the USA is 100% open. The comps are about to start getting tougher and I think the Fed is rightfully weary of much of the rhetoric they’re getting from hedge fund guys and politicians. IMO they’ve done a great job since the GFC, and nevertheless there’s always someone whining about them. They see widgets aren’t increasing 15% a year for 5 years. They see a lot of this isn’t in their hands it’s in the hands of politicians and voters. So I expect them to continue doing exactly what they’ve told us they’ll do. I’m just getting confused on the inflation definitions people are using because I’m assuming they are referring to CPI which they must not know how it’s calculated if they’re expecting large ramps from here. And if we don’t get those, we stop hearing about the urgency to raise rates, instead how we re “beating inflation”, and nice story heading into November. Things are sooo bad for democrats right now that at some point I think you have to start looking at what dots can be connected and how likely they are. With the bulk of the inflation being easily fixable and the comps getting hard to beat, I think it’s a low hanging fruit of a victory for them to take. Which off the back of an already healthy economy and job market spins well on your election post card.

https://nypost.com/2022/05/16/walmart-targets-college-grads-for-210k-store-manager-gigs/ $200k for college grads to work at Walmart? They must be stopped!

We have decades of data available to easily determine what’s a quick fix and what isn’t. Readily available commodity based stuff is simple, and that’s a huge chunk of this “inflation” issue that everyone who wrote it off last year now thinks will go on forever. Energy and housing? Yea that’ll take a little longer but hey, stop voting like retards and that will work itself out too.

Basically. So there’s that, and then of course also the sketchiness/fox in the hen house element commonly threading all the “concerned citizens” whom will happen to profit from said events. It’s not like we haven’t seen how this game is played before. It’s hardly different than Ackmans Herbalife crusade. We must help those most vulnerable! Ha yea, sure man.

I just think this notion that there’s people so useless and helpless that they can’t get it right in just about any situation, is crazy. We shouldn’t be pandering to them. We shouldn’t be putting it at the expense of the ambitious or risk takers or producing members of society. Should there be a safety net? Absolutely. I am not even against a UBI. But to derail an economy where the semi competent or better are thriving, thinking you’re going to help someone who refuses to live within their means or seek to improve their means so they can afford a $2 increase in soda prices or $25 extra a week in gas is absurd. And let’s not even get started on the subject matter of what these folks can still manage to afford. Gas and groceries are a problem but a new iPhone every 18 months and $200 shoes always seem to be on display? Like come on.

All this said, I do think savers getting 4-5% relatively risk free would also be very healthy for the economy.

I think what’s still not really being answered is this; Saying “fighting inflation” is cool, but, is the worst of it ahead of us or behind us? If some people truly are helpless or lost causes, does removing opportunity for everyone else by killing jobs and economy solve that? Is that fair? Who benefited in 2009? How about in 2020 when many of these same folks said we had to kill the economy to save lives? Only to then implement useless strategies that not only didn’t save lives but likely cost more when accounting for all the side effects. Now they wanna do it again. Raising rates doesn’t do jack for 90% of the inflation issue and at a certain point becomes harmful. Same as lockdowns and restrictions. The only thing worse than not actually accomplishing your objective is then compounding it by causing even more damage. And again, I can’t help but notice that there is a significant overlap between the folks advocating for this, and the folks that would stand to profit from it. Crying on tv about humanity and doing the right thing as you cover your shorts and go long….