Gregmal

This whole thing has basically been Pavlov’s Bell x Stanford Experiment. 95% willing yet unknowingly participate. Very enlightening.

Eh I read super compelling and thoughtful research 5 years ago that predicted negative returns for the following decade. Then we have a redonkulous 5 year stretch. The future can unfold in ways we either underestimate or can’t predict so IMO it’s better to just focus on owning quality stuff and then managing the risk on, risk off aspect.

This is a good point. People get way too hung up on silly words. Recession? So what? I'd be more focused on the how and why of it. Rather than just some dumb thing that largely everyone is already aware of. Same shit folks were doing with OMG WORST NUMBARS! SINCE GREAT DEPRESSION when everything shut down in Q2 2020. Yawn. Get over it. What did you expect to happen when it became illegal to go to the store?

https://seekingalpha.com/news/3786402-opendoor-offerpad-among-ibuyers-selling-homes-to-corporate-landlords-boomberg Wait so the iBuying is really just a funnel for institutions to accumulate properties? Again, who woulda thunk it? This notion really isnt THAT farfetched. When you think of underwriting costs, loan discounts, selling concessions, all that shit and then some companies and institutions pay for other products...the idea that a long term, institutional holder would give a hoot about overpaying by 10-20% for a long duration asset like a home really kind of shows its immaterial. Especially since most of these long term holders will keep these assets own the books at cost and then split off cashflows to products/funds being managed. For those familiar with the WS game, its actually a perfect product. Have a third party acquire in bulk, then acquire those homes at a blended bulk rate, this rate can be sold to your investors as reasonable even if its slightly over market. Then you can play games with the financing and rents and its truly a great product. The chickens of course ONLY come home to roost if you are a forced seller, and given the dynamic nature of financing for housing, plus ridiculous amounts of liquidity out there, the music aint stopping any time soon. If fact, I think this is only just getting started. If a PE would buy a REIT for 30% premium to its public traded shares, why wouldnt they pay a 15% premium to current market for 1,000 SFH in a good area? So this is all taking place in a market were supply is at all time lows.....building materials are expensive and also sometimes hard to acquire....sooo much liquidity out there and insatiable demand for good housing....bubble? Nope. Maybe the 3rd inning or so.

Added nicely to AIV and PSTH

Yup. And it will be OK. So let’s just get there already. The people whom are uneasy will get used to it once they see there’s nothing to worry about.

I think its fine if people are genuinely serious about their concerns. But whats happening is the same shit that occurred with the PPE loans. Its overrun with scammers. If we were fining people who were just trying to operate their small businesses, or threatening folks walking alone on the beach at one point, lets return the favor. If you're one of the scoundrels with the teachers union pushing for virtual classes, you damn well better be masked up in your house, 6 feet from another person. If not, boom, fine. None of this teaching from Puerto Rico or Sanibel Island shit. How'd you get there? Plane? Boom, fired. If you're telling your boss you cant go into the office cuz you're scared. Cool, I support that. If I catch your ass at a restaurant or bar? Boom, fired. If you are genuinely operating out of safety concurs theres nothing to worry about, but we need to rid the majority of folks who just want to return to normal from the leeches like the unions and 9-5er who is just posturing out of self interest. If you dont want to go to the office, negotiate a new employment contract, dont claim you're scared of a cold.

LOL as a 90s and early 2000s child, I can relate. My siblings and I had many a things like that. However, recently while visiting my parents in Tampa, in their 3 car garage, which is floor to ceiling stuffed with the remnants of 5 kids now out of the house, next to that bag of beanie babies, was a box containing a bunch of boxes of baseball cards I got in middle school. One of which was an 80s set, entire thing maybe cost $5-10 in the late 90s. In that set, a Barry Bonds rookie, current value, ~$700. No dividends though, but capital gains work just the same. If nothing else, it’s validation that supply and demand ultimately rule all.

See that’s part of the thing though. When does that sort of nonsense stop? Of course if you are really sick then take care of yourself, do what you’ve gotta do. But in the same light, people are staying home, for 10 days at a clip, in many cases, for no reason. Like if this was 2015 most of these people would have just gone to work without even thinking about it. Last year folks were jokingly saying the next step of this COVID evolution would be for the clowns like the teachers unions to demand virtual classes because of flu season and stuff like that. But that’s now reality. Everyone has their socially acceptable fallback response related to “COVID” and “better safe than sorry”. But if you ask them to be honest and describe what’s going on without the word COVID, the insanity really emerges. I stayed home from work for 10 days cuz I had a runny nose. I cancelled Christmas because nana stuck something up her nose and it said positive I need to quarantine because my throat is sore LOL, WTF, and well, Where does this shit end?

I can also say, in an unofficial non medical capacity, that Wild Turkey Rare Breed, weighing in at 117 proof, is highly effective treatment for the sore throat. In case anyone was wondering

This is one way to approach it and I can’t say I disagree with your logic. However I think his sentiment is pointed towards people with a different mindset. There’s plenty of people out there who don’t compound at high rates, hold lots of cash, and act like they need to conserve and protect 1-5% positions with the goal of compounding them at 10-15% a year….if nothing else, you use small positions to take big shots down field. There also should kind of be an inverse relationship between the size of the position and the expected return. Everyone likes to pretend that you wait for the fat pitch and then put 30% in it, but 95% of investors can’t capitalize on those because they get scared by the perceived risk. So generally if you have a 10-20% position, you can get by compounding at a more conservative rate. But I don’t want to waste my time waiting 5-7 years for a 1% position to turn into……a 2% position! So that’s where you take a few hacks at something disruptive and speculative and a 5-10 bagger can move the needle a little.

Pretty much everyone I know has had it in the last month. One person, double vaxxed last June got it and was tired for 2 days. Held out of work for 10. Works for a union in NYC doing built to suite offices. Another person, full blown Q Anon type, unvaccinated construction guy, got it “from a vaccinated liberal asshole who insisted I wear a mask at his house for the job estimate”. Said he slept for 5 straight days. Modest fever and chills. Then back to work since he works for himself. My kids have all passed around runny noses since basically back to school. Mother in law, double vaxxed plus booster went to a Billy Joel concert at MSG late in December and tested positive later. Had a cough and sore throat for a week. Father in law no symptoms another friend, double vaxxed plus booster had a fever for one day and a tickle in his throat for a week. His wife the sniffles. 1 year old kid a fever for 2 hours then congestion for a day or two. I’ve probably had it during this time as I’ve hung out with all these people and had a throat tickle and on/off runny/stuffy nose. Haven’t bothered getting tested though. If everyone wasn’t running around yelling COVID I wouldn’t know the difference between any other winter season of my life. And if I actually got sick and felt that bad I’d just go to the doctor.

So whats the issue? Is it troubling that in a vacuum they have more debt, or is it wise that they used the debt to buy quality assets that have proven to become more valuable than the cash they borrowed? Ive always thought the "oooh too much debt" concerns were very first level thinking.

Yea but the cheese stands alone. Long live LG. 12% YTD and counting LOL

Exactly. Models and detailed forecasting is largely a Wall Street created product phenomenon drummed up as important because frankly, how else to you justify paying a bunch of risk averse math nerds six figures? When investing in real life, focusing on qualitative is SOOOOO much more important than quantitative. Which isnt to say quantitative doesnt matter, but it just matters a lot less than most think. Up until the recent tax shield thesis on sports teams, it always made me laugh how uncomfortable the "traditional" investment community got when discussing things like sports teams and art. They just didnt get it. Still probably dont. Same sort of quality, scarcity, irreplaceableness applies to businesses. Focus on owning the best ones, and look for the market to occasionally serve up a decent entry to what is considered "the norm". Which if the norm for the past decade or two is is 30x, then the discount may be 25x. Deal with it or dont invest. The market and the millions of participants out there dont give a fuck that YOU think 25x is too rich and it should be 15x. Today, with money so freely available, theres more and more competition for great assets. It makes perfect sense. I dont see that ending because theres too much dry powder out there to jump in when someone gets bumped out. Remember all the PE firms who created their "distressed RE opportunity fund" entities during April and May of 2020? Yea, so much for that. Theyre now the ones paying 3 and 4 cap rates. So much for distressed. Unless you are predicting some 1 in a 100 year event sitting around fearing these things is a losers game. And well, even a lot of times if you predict the 100 year event, its still a losers game.

I agree with you in regard to crappy momo stocks. But real businesses that just get "pricey? I think in the later case you just run into problems with multiple expansion being tapped out. Whereas with the former you basically start a death cycle. Stock goes up just cuz. People buy those stocks just cuz. Those companies attract top talent who are kosher being paid in stock, just cuz. Then once that unwinds, its all over. Stuff like SPCE and PLTR come to mind. Versus an AAPL, AMZN, etc who might just need some cooling off period. Which I guess just leads back to the problem of referring to "the market" as if its one thing. As Jim Cramer says, 100% accurately, there's always a bull market somewhere. I feel fairly certain that the bull market WILL NOT be in tech stocks this year. But I do like "the market" if we're talking housing, banks or energy for instance. Its all relative. The interesting thing in all of it is what is safe. Whats always been safe isnt safe anymore IMO, which puts folks in an interesting situation.

Personally I think this sort of framework is ALL wrong. Similar to the other thread where @Parsad mentioned how if you dont follow macro, you are just guessing...bc guess what? Show me a macro guy who's consistently forecasting every twist and turn of the market, consistently....there's none. Buffett even says dont waste time on some of this stuff. Anybody who is pretending to calculate an IV on a company and tells you its anything but guesswork is lying. Is there ONE person out there who can show me a PRE blastoff DCF correctly calling AAPL, DPZ, GOOG, COST, WM, V, etc? Everyone I know who has tried using that framework..missed them entirely, or bought them, and then sold many bags ago....at best being delegated to rebuying at higher prices trying to squeeze out the next "forecasted" 25% to IV. Its a sham. I mean didnt we just see a hedge fund dude pitch PTON at $90 AT SOHN! using a DCF or some crap model? A better approach is to try and get familiar with where a company is in its growth cycle. What type of brand and earnings power there may be; and also triangulate the qualitative state of things. TAM is relevant to the extent the brand and management are top notch. Where are the moats or advantages? Will they need capital to grow? I would also throw in that the spread sheet analysis isnt useless, but probably better suited for private investment and relevant to those buying whole companies and thus expecting to rely on the cashflow and all that good stuff. But investing in public markets is a different game. Too few people realize this. There's no right answer but there's certainly wrong ones. Key is staying flexible and managing your positions and risk through sizing. Would also recommend reading through the COST thread. That one is enlightening.

There is also just a total bullshit narrative sold by financial professionals that we need to have a "crash". Collapse is also a popular word. It is just as likely, if not moreso that we just have an extended period of shit returns or gradual grind down of companies that didnt deserve to be where they were in the first place.

More money has been lost preparing for the crash than has been lost in crashes...or so I've heard. All I know is that I heard people making these same arguments back in 2011, and on and off they've been reiterated pretty much every year since then. Sometimes they have slightly different framing, but its always the same stuff. Would I own much tech? Not a chance in hell. The frameworks of this dudes case here is GFC 2008. Very rarely does the next crisis mimic the last one. It is generally something new that folks haven't prepared for. Such as...maybe inflation not being transitory?....In which case debt levels won't be the problem. Sometimes it pays to think outside the box. I stopped subscribing to Barrons some time ago because of the proliferation of articles like these. Bit more professionally crafted than Motley Fool, but still somewhere on par with Seeking Alpha or VIC, neither if which I find crazy enlightening.

Just my opinion and not investment advice of course, but I’d look to take 5-10% allocation, and buy long dated ATM and OTM calls on both the commodities and the companies that are best in class and carry low risk of being mismanaged. Risk a few % to make 5-10x or more if things get nutty. The way I see it, is that most people think inflation is one of the main risks to “the market”. So essentially you are putting on a trade that can be classified as protection/insurance while also working regardless. The bigger the inflation the bigger the windfall, assuming it’s structured correctly.

Yup. Who coulda seen this coming? Psychology is often predictable. And what’s interesting, is look at energy. Outside the US, most of the world is still hiding in their bunkers. Wait til they flip the lights back on. Crude futures still look highly attractive. As do many other commodities.

Eh in the simplest of examples, you don’t need to understand a whole lot of anything to know that “at strike X I no longer realize downside in stock ABC”. Of course one can make this as simple or as complex as they wish, but fundamentally some of this stuff is obnoxiously simple. Certainly not 2/20 worthy difficult.

Macro forecasting is a waste of time. Buy shit you know and understand and when you get itchy just hedge it out.

Which kinda just unveils some of the other secrets of the hedge fund guys. Even the ones who say they don’t use leverage, use tons of leverage. If the average person knew how much margin and other sorts of leverage via derivatives these guys use, you would’ve had GME type squeezes going on long before Jan 2021. I don’t believe it’s coincidental how the financial literature tells people to avoid using leverage. Those things are best kept on the DL.