Gregmal

Closed my $300 June QQQ puts and then shorted a bunch more for ~$12. This seems overdone.

I’d agree. But it’s the cost of admission. Disneyland is also overpriced. He who has the gold makes the rules. Childhood friend of mine left NJ bc he couldn’t get a cop job due to all the red tape. Was welcomed open arms in Palm Beach and now does private details for Ken Griffin and all those fellas in that circle. Purchased a home outside Boca in 2019 for $600k. It’s now worth north of a mil. In a way, being overvalued insulates value. Keeps a whole row of buyers(like me in FL for instance) sitting and waiting for the next pullback which usually takes much longer to occur than everyone hopes. Again look up north to Canada.

https://fortune.com/2022/04/27/how-likely-home-prices-decline-in-every-major-housing-market-corelogic/amp/

But now is a good time to have a high cash allocation? You can hold cash forever, make a purchase, and have the market cut right through it shortly there after. Bottom line, and I don’t think it’s really disputable, is that holding any amount of cash for an extended period of time leads to underperformance. Even if you cherry pick the hell out of the historical data, there are very few actual prolonged periods where you’d have been better off hold it vs just rolling up the sleeves and buying something of quality at an average or better price.

Yea I was wondering if you saw a specific angle or trade associated with the data point. I largely think the biggest data/numbers are hard to do anything with because of the fact that they are so widely followed.

Duh LOL. Tilson is establishment Wall Street. A clown who was given everything, took his fees, sold his "wisdom", and now parades around like he's hot shit because he has money.

I would almost guarantee you I’ve made more money in the stock market than Whitney Tilson. Despite all the advantages he was given.

LOL Tilson. I recall reading something from him in 2015 about how the only 2 stocks you needed to own for life were Berkshire Hathaway and Howard Hughes. 50% is a far better batting average than he usually puts up. Completely ignoring the stupidity of the premise that the average person should only own 2 stocks, regardless of what they are. Now, after calling Howard Hughes 1 of only 2 stocks one needs to own for life, he's predicting the end of real estate. Whatever that means. Seems par for the course.

Significant in the context of what though? I don’t see it’s significance relative to company specific earnings which are being reported for the same period. Like just in general as interpreted by the Fed or what?

Swing some ALCO into more AIV and VRE

Exactly. In a simple way, a stock will either go up, or it will go down. From there, you probably don’t need to worry too much about why it goes up assuming you are long. So then focus on mitigating the reasons it would go down. The majority of macro are easy to hedge. So then really you only need to focus on company specific. Even within all that there is tons of volatility in which you get small moves for no reason. The biggest thing I try to focus on is avoiding substantial impairments on large positions. Those are tough to recover from. Everything else is a relatively easy and solvable problem. A 2% position goes down 70%? Well the more it goes down the less relevant it is to you overall portfolio. And if it’s 70% down but you still like it, it’s a hell of an opportunity. If not, you need a small fluctuation on the rest of your portfolio to make up for it.

The thing most fail to understand with housing is that it is very, very hard to become a forced seller. I mean it all comes down to lending standards and sure some brokers are great at "making the equation work", but generally speaking, you have to be deemed a credible borrower or you dont get the loan to buy the house. And if the situation isnt right, or one people want to accept, people generally just dont sell. The only way a demand problem is solved, is through building more. Except the builders also "should" have financial incentives. And there is also limited space to build in MSAs where people want to be. You can keep going further out, and that works, but it doesnt make the better located properties any less desirable.

The other thing as well is that over the course of my investing life, I’ve kind of become less and less enchanted with those sort of “apply a discount rate” or “project multiples going out x years” and all that sort of traditional analyst stuff. Not to say there’s never any value in it but most of the time it’s got too many underlying variables and if one’s off the majority of the conclusions are useless. Even the best analysts I’ve seen, when making projections, rarely demonstrate the ability to forecast correctly more often than not. Conversely, it’s a lot of the sentiment in what Buffett and Munger and even a guy like Ackman portray when they describe what they like to invest in. Moats. Brand power. Superb management. It’s easier IMO to simplify these things because if you check the boxes in the second paragraph, chances are you’ll do better than average. Whereas in a scenario where Costco reverts to a lower multiple, in a vacuum, it goes lower. But general guess what also happens? So do the shitty Costco knockoff companies or less established retailers. The reason for the multiple decline is generally a macro reason, applied across the board, and the better companies tend to get less punished than the “cheap” shitty ones.

I generally don’t try to complicate it in a situation such as this. If I can borrow at a rate that justifies it, holding low single digit quasi forever positions in these sort of names means you benefit should they do what they do. They’re never going to 0. If you get the much bigger derating then you amplify the size of the position. I just think waiting 5-10 years with no assurances in order to justify owning businesses of this caliber makes little sense.

My father has been yelping about how the Fed is taxing savers since like 2012. It’s true. But. In regard to unstoppable brand and businesses…doesnt it kind of make sense? Look at Berkshire or more aptly I think is Simon Property. Let alone Costco and WM. These guys are best in class assets/businesses…sure. But they can borrow, globally, like anywhere, at rates significantly below inflation or whatever. Berkshire has been tapping Japanese debt markets if I’m remembering correctly. So think about it. You have businesses that are inflation+. And on top of that carry investment grade credit rating. And on top of that can borrow wherever in the world savers are most desperate. When you look into it, 30x for certain companies is not what it seems. There’s flexibility and dynamic/opportunity embedded in that valuation.

That’s what I mean. Owning a home kills like 4-5 birds with one stone. Ok it doesn’t go up, well you’re still putting a big % of your would be rent into a de facto savings account. The Canadian mortgage stuff is foreign to me. But I have no clue how every American doesn’t own as much house with a 30 year fixed mortgage as possible. Even at 5-6%. Stuff goes up, you’re good. Rates go down refi. I probably wouldn’t be deterred until we hit low teens in terms of taking out a fixed rate mortgage.

Is there a point in time when “bubble” and “speculative excess” wasn’t widely attributed to, or code word for, normal people getting wealthy? Basically a red alert for the wealthy and establishment folks that they need to knock the lesser beings down a notch?

Given the relatively recent development/advances in regards to brokerage firms and liquidity levers, I don’t see any reason why anyone under the age of 65 can’t invest in a sub 10% position with a 20 year horizon. If you need your last sub 10% before then…you ain’t ready to retire.

These businesses can do whatever that want and have limited to no real competition. Every comp I’ve seen to COST is a misguided false assumption of retail hierarchy. WM is in a league of its own. So while the rich bankers and politicians itch in their skin about normal people making money in stocks, housing, crypto, ooops I mean, “speculative excess”, and look to set fire to the prosperity of those who don’t have divine right to their wealth, I think it’s become obvious that bonds and cash are not where a sensible person wants to be, so then at that point you have to ask “where?”. And I keep coming back to integral and irreplaceable assets. Convince me otherwise that dollar cost averaging through indestructible and unique assets/businesses doesn’t work over a 20-30 year horizon.

I’m not disagreeing that they’re optically expensive. But personally I don’t know why any bond in the history of earth has had less than a 10-15% coupon. I couldn’t fathom buying one below that. Even government guaranteed stuff; 5%? Unless I can borrow below that and arb it risk free then why would I waste my time? I’ve thought similar about office REITs. 5 cap? Huh? For secular decliners? Not attractive at all. But people, lots of em, pay that price. So while I’ve always been uncomfortable going out there and buying stuff like COST and WM, V at times too….if you can make the case for other asset classes then why can’t you make the case for the best companies in the world? Especially one as dynamic as COST or WM? Id rather own those at 30-40x than a bond with 2+ years duration at 5%. At least with the equity you own something. Bonds are just a claim to a fixed check and the assumption that you get your principle back. If not you have to become an active business owner….yawn.

If funny to think that everything the Fed is doing is basically to spite the poor and middle class. Whelp, can't have EVERYONE living so well. Hmmm, lets try to price the marginal homebuyer out of the market. Hmm, lets give banks an excuse to raise their rates. 25% on credit cards wasn't enough. Overpaying for cars isnt bad enough, lets boost the car loan rate. The real problem is still the politicians. Focus on fixing the supply chain. Instead, Murphy in NJ just banned using bags at retail and grocery stores! Nice complement to the straw ban. Why not every state and fed agency taking their pound of flesh via energy taxes drop those? Nope. 10% of my cell phone bill is taxes and surcharges. But at the federal level theyre more concerned with Ukraine posturing and keeping Elon from letting Trump have a Twitter account than solving problems for American citizens. Its not hard to see why the lower and middle classes think the system is rigged.

No what I meant was that if past analysis, which almost always was basically some iteration of “too expensive” has been repeatedly wrong, what makes one confident that this time their take, the same take that has been wrong, is now right.

Just posing a theoretical question in regard to the FANGs or stuff like WM/KO/COST. If you dont own them, and have missed the majority of their runs, what credibility does the analysis have? Is there a reason to believe this time is different than the conclusion derived from the past however longs data points that led to the decision to not be invested in those names?

there go the Qs

Waste Management is the new FANG LOL