Gregmal

Started selling some Dec VIX calls

AAPL Puts

If you guys like RFP and think the catalyst is expected in a 3 month or so timeline, why not blast the April $10 calls for a couple bucks?

CLF, CLPR, CLI and AIV

I'm where you are on the RE stuff mainly because nothing has changed for the worse and we already know what happens with the whole covid stuff if things play out in the worst case scenario. Been there, done that. Playbook isnt a secret, so some of these sell offs arent warranted. I don't even think there will be lockdowns in the more liberal places, this will mainly just be an excuse for widespread mail in ballots to help 2022 mid terms not be a bloodbath. So much ado about nothing and really I think theres some knee jerk covid pussies selling on top of folks taking profits because lets face it, a lot of these names have straight up printed cash this year. AIV for instance Ive watched as its got hit hard but realistically its back were it was like a month ago....and up like 70% still. In the real world rents are still flying, MF is still printing 3s and 4s. I mean sometimes I am a little tone deaf and aloof, but the other day I was out by the mall and it was packed like Ive never seen it before, and then I thought about it and realized it was Black Friday. But at the same time, its a freakin mall where half the anchors are gone and it looks like the parking lot of a Giants game. Consumer is good! So I wouldnt lose sight of that amidst the panic. In many ways I think the market just needed an excuse to sell off. Much like late 2018. The Fed is an excuse. Covid is an excuse. Garbage tech bubble bursting is an excuse. My table pounding trade at the moment is to sit tight but really I think shorting 1/3/6 month OTM puts on some of these is table pound worthy. CLF Feb 17s over $1 and 14s for 50c. CLPR you actually can get some change on the 5s for June and nearly $1 on the 7.50s. CLI $15s for well over $1. Yea I am long VIX calls but its as a short term hedge and frankly, VIX over 30 and especially 40+ which I think we hit this week or next, has always been a level where you want to.....well, I'm not giving investment advice but if you've been there you know what you do when its at those levels LOL I mean something is off and either I'm missing it or the market is just doing what it does every once in a while. Some things are still in the bubble and I wouldn't touch them with a 10 ft pole but others are back at levels where they are nice and if you take 10-20% off from current levels theyre 20%+ position size worthy. I think perhaps this may just be the setup for the same shit that outperformed this year to do so again next.

Trump is actually a good one, at least in terms of the underpinning to the philosophy. Its basically also the Brookfield strategy. Use as little of your own money as possible to get on the deed of a good asset and then let time and leverage do its thing. Then cash out your equity/refi as soon as you can and snowball the thing. Feel free to ignore the names Brookfield or especially Trump if it triggers you, but those strategies if done right are pretty potent.

If Prem is decisive, barring a major market move down, then thats all that will matter and shares will do well. If the market craps out and FFH holdings go to hell, Prem will likely be perceived as the patsy who capitulated right before the decade long bull market ended. So essentially, its a market direction wager where I think you have much better risk/reward than the average security. I also dont think we're headed for a widespread market implosion. The test would be determining Prems resolve if the market goes south. Last time he told everyone the company was well capitalized and then ran into a liquidity crisis, got a bailout gift from reddit and didnt take it, and then decided to buyback FFH just as the Fed started to taper. So its an ongoing experiment.

While this may not be a welcome thought, imagine the poetic irony of the market top possibly being marked by the capitulation of a guy like Prem Watsa. Short the whole way through. Then vows never to short again. Holds his crapcos. Right as we peak? I do have some economic exposure here, and I dont necessarily think the market has peaked(or at least not the parts of the market I live in) but rather we are in a phase in which leadership transitions, but the market is a dark and sneaky psychological bitch. So the thoughts crossed my mind. And I'll just reiterate that I think this would instantly be 20% higher if Prem announced that he sold the entire equity portfolio. Or at least most of it. But Prems gonna Prem. Arrogant through and through.

Yea see something I struggle with, albeit in a minimal degree because I dont invest in Chinese RE and have little desire to at this point, but who picks up pieces here? In the US, or Canada, shit blows up and the knives come out. BAM, BX, and the like. Now US investors and especially of late, foreign institutional investors even starting to come around to asset classes like industrial and multifamily, dips here are bought and money gets made. With the capital controls and outward perception of hostility to foreigners, who buys this Chinese real estate? At what price? A little too vague for me.

Hey man it’s all just dirt. No bias against dirt

For me, I just try to keep it simple. The basic underpinnings of RE investing rely on scarcity and an irreplaceable or desired nature of the asset. So look for good assets. Cash flow is important but IMO overrated. You want optionality. You also should look at the type of debt, specifically term and recourse/non-recourse nature. Management is important, but IMO again overrated. The number one thing I focus on after the above is then what is the private market telling you in relation to the asset/collection of assets? If you can get in at a discount you compensate greatly for other things, specifically, Ive found, less than stellar management. You also dont want to invest where there are secular headwinds, unless, and thats a big unless, the assets are best in class and have optionality. SPG comes to mind there. Same with a lot of other retail. Good retail in a hot area is probably one of the best asset classes to own, especially when the market sentiment is penalizing great assets because of bad ones(or good companies like SPG because of bad ones like WPG). Rural housing in a sub optimal economic location won't do it. Sub par housing in an optimal economic location, IE NY/SF, is money. Or think Simon malls. Great locations, optionality. Just in the past 2 years Ive seen a local Simon mall, basically for shits, carve up several random pieces of parking lot space and turn them into restaurants or NNN lease type assets.

It all depends on what your objectives are. I know @Viking has a goal of staying retired young rather than seeking to acquire more money that isnt incrementally as meaningful to him as what he currently has, and have had numerous conversations on COBF over the years regarding that. If your objective is being able to pay bills, realistically you shouldn't need a ton of capital to do that. If you are looking to compound capital, in absolute terms, then holding cash and will continue to be your worst enemy. I think @musclemanpoint about Dalio in 2020 is actually supportive of the opposite. If you were fully invested in Feb 2020, even after the big drawdown, you were likely whole again within a quarter or two...is THAT, really something to be scared of? Whereas, like I said, the folks who went to cash, didnt really get back into the game until way later. 6-12 months after the covid crash, you could still make the statement that staying the course is early 2020 was the right choice. I do agree with @muscleman on RE though. Given the outlook, certain types of RE, and all that comes with them, IMO are better than gold and the risk adjust returns are insane if things roll the way I think they likely will over the next 3-5/10 years.

https://www.cnbc.com/2021/11/30/ray-dalio-says-cash-is-not-a-safe-place-right-now-despite-heightened-market-volatility-.html A good summary just today from Dalio. There is this grand illusion that money in your checking account is not losing value just because the number doesnt change. Even outside that, theres literally millions of different near riskless things one can do to generate mid single digit returns in a non correlated way. Separately, but relatedly, about this time last year I facetiously responded to a "cash" and "market top coming" topic by saying an idiot could just cover their eyes and go 80% long BRK, 30% long MSFT, and be 10% short ZM and make money while gasp! being on margin. Wouldnt you know, the idiot woulda done just fine. Same thing applies today. People just perpetually over estimate risk and probability and give too much anchor faith to "their" assessments which on a general basis, are typically off quite significantly.

But thats not whats being said, and additionally thats a bad comparison. I think tech is toast and have been rotating between heavy and moderate short exposure since this time last year. However I just see being in "cash" as both lazy and unintuitive and shooting yourself in the foot for false security. I mean if you expect inflation, theres literally tons of different investment options out there, and not much is 50-100x sales crazy. If you expect deflation, theres ways to play that too. If you expect stagflation, even better. In between theres a plethora of ways to play all the in between that over time will do well too. Holding cash is basically saying "I dont know what to do" and "I have conviction in nothing", in which case, just stick to indexing. JMHO. Also, in 2011-12, much of the smart money who was bearish said shit like "14x is the norm and we're at 17x and due for a 20% correction"...LOL, yes, that was the smart money. Academic and all. There was also the European Debt Crisis crash in 2H 2011 which was basically a spitting imagine of whats happening now. GFC fresh in everyones minds and of course the situation in EU led everyone to go down this wild 2008 inspired rabbit hole which led to shit like BAC going from $12 to $5 but it was really the PTSD that fucked those people and it wasn't GFC 2.0 just a massive fat pitch BTFD opp. Same here today. Its not March 2020 2.0. A bigger pullback in select stuff, ironically some of the best inflation protected stuff, is another fat pitch.

Its like people rather lose money via the inflation monster because "the number in my checking account is still the same" and it makes them feel better than seeing a temporary red down arrow....I think its all but a certainty that the top is/was in(IMO it was Feb 2021, not now or whenever) for most of tech and high growth, high multiple stuff. But a new horizon is emerging and there's a good bit to eat there IMO.

So then certainly there would be beneficiaries of this? Rhetorical question. But we both know the answer. So again, why be in cash LOL?

Yea everyone has a different strategy but holding large amounts of cash is both bizarre and inefficient. I know plenty of people and even active managers who sold because they were scared of COVID in February, March and April 2020. No one that I am aware of became fully invested again until the market had already surpassed previous highs and even a year later most of them still weren't back to being invested. Over time Ive learned to hedge whenever some sort of short term uncertainty arises. Selling long term holdings to avoid 3-6 month paper losses is dumb.

More DIS, also a little more FRFHF. This has been my portfolio lately....and so I oblige.

Closed for ~$2.8. Not bad for a few weeks work.

It is somewhat true. This past January I left NJ where I couldn't go to a restaurant or a reasonably expect to socialize publicly. Still mask central as well. A week later I was in FL bar hopping and dining out 2x a day with no restrictions. Not coincidentally, it was a mere week or two after inauguration when NY and Co started announcing reopening plans. There was certainly coordinated efforts to stunt things. How coordinated, I dont know. I didnt really care because where I live in NJ no one followed that stuff anyway and then I spent a lot of time in the South so it didnt effect me. But I just remember driving back and crossing into NJ on the turnpike and laughing because after getting totally back to normal then the first thing I see is a HUGE government sponsored billboard saying "traveling from out of state? Call xxxxxxx or text "ABC" to find out how long you need to quarantine"....and just being like "yea fuck this state". That said, relevant to this topic, covid poses no threat to the market, other than short term opportunity for people who arent scarped of a short term paper loss IMO. Its done and people still worrying about it and selling their stocks in fear of the next variant should just index or something. The threats to the market IMO are still rate and inflation related and this holiday season should give a good indication of where the consumer really stands. If we can bulldoze through this and then get some pricing relief into Q1 there may be some opportunities. Either way though I still think theres lot of shit masquerading around that is going to have a very hard time.

4 horseman with a weight toward the ones in locations that value freedom + JOE, ALCO, DIS. We already have the playbook here, and if the covid nonsense doesnt repeat, the dip is just a blip on the radar. If lockdowns happen again, something like JOE benefits, no reason for -8% today. Bring it covid queens.

And definitely agree on tax considerations. I know I’ve talked with a bunch of folks here about this recently, but if you have a lot of capital gains this year….I’ll just speak for myself actually…I’d rather have some big short bets on into end of year and pay less taxes than just do nothing or sell and generate more tax liabilities.

Hedging is so complex and not really one size fits all so it’s quite hard to really give a good answer. generally though I like 20-30% OTM VIX calls with 4-6 weeks of time in front of them. If I’m feeling extra bearish I’ll also add 40-50 strikes which are often had for next to nil. On top of that you can pick your spots with longer dated puts. Then layer accordingly. PLTR for instance I have $25 puts. AAL $25 and $10 strike. SPCE $10. It’s late and I don’t have time to get into the logic behind all but as you can see some you just want to mimic an outright short while other instances you are playing for a complete blowup. Happy and Healthy Black Friday to all!

China/Didi delisting rumors, China RE, next round of Covid variant hysteria, and earnings void + blackout periods…. Got VIX? Will be an interesting December

That’s been the point I’ve raised quite often with this stuff. Who really notices the incremental difference enough to warrant a waste of time calling and dealing with the provider(an experience that often times is downright awful)? Let alone paying more? I have Sprint and am fully aware how awful sprint is for phone service especially in my area. I have Optimum and they are mediocre too. But “awful” is what? Occasionally a dropped call or static for a few seconds or a couple seconds extra to load a webpage? That’s really not that big a deal and to me, not worth wasting time and money to change.