Gregmal

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.

Her husband is a hedge fund manager and obviously knows the secret of ITM options aka stock substitute. 1200 strike on GOOG at 2500 expiration is just running a 1.7x levered position….if you guesstimate when the underlying was when he put it on. The author, yea, doesn’t know what’s going on.

Whatever Costco is trading at…

So you mean the whole “go get COVID tests” gold rush for big pharma was an orchestrated scheme? And that it’s just coincidental that they wait til after Christmas to tell people, quietly at that, that the testing kits “may not” be reliable for the new variant? Sheeeet. There’s so much wrong with all of it. All you can do is worry about tending to your own garden. The more insanity and stupidity you look for the more your mind gets blown. And you also realize that it is the way it is for a reason and the whole thing is so much bigger than you or I and there’s nothing you can do about it.

https://seekingalpha.com/news/3784178-house-speaker-nancy-pelosi-buys-millions-of-dollars-in-call-options-in-google-disney-others Nancy blasting the calls again LOL

On cue, things are starting to inflect. https://nypost.com/2021/12/28/defiant-gothamites-show-covid-panics-days-may-finally-be-numbered/

Yea good point. Definitely true. Im referring to AAPL right now and like the put in existence with a good chunk of Berkshire long, but yea. The Index would be a wider and cheaper net to cast as a hedge. Dont think theres anything compelling about trying to be short any of the FANG stuff with the expectation of making money though. Just kind of an insurance policy.

Yea I also wouldnt be fooled by the indexes just slowly grinding higher. A whole lot of the market has gotten utterly smoked. Just as going into 2021 shorting the ARKs was the way to go because it excluded the big tech behemoths, I actually think right now that if you are playing the next leg of this, the way to do so is actually OTM puts on some of the FANG type stuff. On a risk adjusted basis its kind of the AAA tranche type play. I am half-assedly doing it on a couple, but my expectations are not high; as long as I can cover my ass on the margined stuff and net out profit I'm good. Hedges arent typically meant to make money, theyre meant to provide freedom to still play ball. The problem with the rubbish tech is that the more it goes down the more expensive it gets to short. It was glorious shorting ARKK and ARKG last Q4 into Q1 cuz while everyone was mouthing off about them being ridiculous, no one had the balls to short them. Go look at the ARK threads. Recurring theme was, "(insert Cathy bashing, etc).... but I'm not short cuz you cant short this market"(LOL ironic right? psychology is a bitch, eh?). Now, its a totally different story. So its less attractive.

Whats happened with office is akin to letting people who have been married for a decade plus start having open relationships. At first, March 2020, it was weird. But the longer it goes on the more normalized it becomes and after awhile, everyone gets comfortable, sees its doable, and many probably even like it better this way. IMO office is forever changed/past the point of no return and theres going to be long term effects to this that arent fully yet appreciated. Of course, there are still obviously people who like going to the office, and folks who like ordering around minions from their corner offices...but enough of the foundation has cracked that the industry is going to need to make the new model work. And it will be painful for those reliant on the old model. At any given company there are probably only a handful of people important enough to be making the decision of whether workers have to be there or not. I dont want to play the game of guessing what theyre thinking, when they're thinking it, and in aggregate, when enough of them will get to the same conclusion. Given the situation in the labor market right now, they dont exactly have a lot of leverage and additionally having hiring flexibility via remote work may actually be more beneficial than sticking to the talent pool within 50 miles and competing with every other business in that radius as well. So you step back and its like...why would I buy an office REIT at a 5-6 cap when you can buy MF more or less in or around that same cap rate? Or SFH. Or industrial. Or grocery anchored shopping. There s a ton of shit thats good and will continue to work and then theres office, still stubbornly hanging in there on the cap rate side, so for me it s a pretty easy decision.

Here's my problem with office. Its not really a recovery trade. MF was/is awesome. You know what unlocked Sunbelt mania 2021? When those governors kept things open in summer of 2020. Contrary to popular belief, not EVERYONE just went back to bars and clubs and all that shit, but it let the people who wanted to, do it. Those people then allowed/encouraged everyone else to dip their feet back in the water. Then it was a tidal wave of folks realizing they could go back to life as they wanted to live it. The neat thing with the covid situation is that after everyone gets back to normal, its over. Vaccinated or not, everyone will get this thing. So people go out and are free and comfortable and I mean if their worst fears happen, generally speaking, if you're young/healthy/vaccinated, you get sick for a week or something and then! IT really is over and you're on the other side of all this. So you just need that momentum to build. Thats why NYC not shutting down this past 4-6 weeks(and assuming they dont for the next 4-6 weeks) is absolutely huge. It lets the real recovery begin, which is the mental one. Next year you won't even be having these convos and everyday folks won't even care about the next variant. Then people start going bonkers for all the stuff they were hesitant to do prior. Which is why I think the coastal MF stuff and the entertainment stuff, casinos probably too, are just going to kill it for 2022. Office though? NYC NEEDS office to truly be back. You know how many businesses suffered from other businesses not doing things like holiday parties and all that? Or the workers who get out at 5 and spend hours at the watering holes? The bankers going to the strip joints and the strippers who then buy fancy clothing at the expensive clothing stores? Office is a big component of the engine that drives NYC. And who really drives office? Makes the decisions? Signs the leases...A bunch of rich, live in a bubble, cover your ass centric, risk averse blowhards. MF is how you play the people coming back. I haven't quite figured out what or how the office play works. Because its not recovery and its not "the people" who make it work. Its the c-suite. And those act out of their own self interest and survival instinct, so its really hard for me to see what pushes THOSE people, to all of a sudden get driven to push people back in. Gorman at MS apologizing recently for pushing people back to the office IMO was one of the biggest negative things to happen recently for an asset class. It kind of sends a message to others who pushed for a return to take notice, sit down, and STFU.

Cliffnotes answer: so much that can go right and not a whole lot I see can go wrong. Longer answer: money flow drives everything. people with cash and bonds will continue to get itchy and antsy as inflation becomes real and unavoidable. BTC and the like have shown people are fine with Kuppys project Zimbabwe toaster analogy. Gold at least has a few thousand years worth of human psychology backing its relevance as a store of value. Ive watched it for a while now and despite its poor performance, it does react well to inflation related data. Basically Bitcoin with erectile disfunction type trading though. To me it seems priced as though the expectation is that it will trade the way it has for the past decade. But then you look at other commodity related stuff. Nat gas, uranium, etc. The cycle of demand+speculators+predictable endings can be spectacular. So, something like the Jan 2024 $155 calls look good. IMO something has to give soon here and the next 12 months should let you know if the trade is good or not. Too much stuff in the space; iron ore or lumber for instance, the companies there are spring loaded and trading at 1-3x earnings because of the expectation this will dissipate but will have no choice to move soon if it doesnt. So your upside takes care of itself and if gold does 10% a year you basically double your money. You dont have think too hard to see a scenario where gold could double or do something nutty either. Gold has shown it can also do well in bad markets. So you have oh so many ways to win. Whereas downside wise? IDK, say it goes down 10% in the next 12 months you still have a good amount of time value on the options so there's some downside protection as well if you structure the trade right. Your skew is good and upside very levered. On top of this I'll disclose that historically I have absolutely hated gold and thought it was worthless. I still do kinda(as in Id much rather invest in other stuff), but the setup is definitely there if you connect the dots.

Slightly ITM GLD leaps

If there was a skew that to me seemed unconditionally attractive it would be MSGE. AIV should work too. Thoughts on both are around here if folks wanna look.