Gregmal

Been picking at SPCE Jan 2023 $10 puts

The thing I dont see a lot of folks processing is that we're on the precipice of a major shift, if it has not already occurred. Cash is worthless and bonds are done with the decades long bull run. Hard assets are now in line for a run on par with what we saw out of tech the past decade. How do we know? Because just like with tech, we see the crowds screaming bubble after ONE year! You need folks in denial for the markets to really get going... And then again in 2012. And oh so most definitely after 2013...that had to be the top. Home prices rising 20% year over year after largely nil for a 5-10 year stretch doesnt mean jack. By process of elimination cash and bonds will be phased out by sensible investors. Leaving equities and hard assets. Equities have enjoyed the run, hard assets, not so much. The last crutch to destroy is the notion that a 3-5% mortgage will kill housing. By the time thats done being destroyed as a narrative you'll probably want to be selling your housing stocks to the folks who after thinking that for a decade now want to buy....but we're a long ways from that. As Ive said a million times, why wouldnt our housing market follow some similar trajectory to Canada, especially now that the underwriting process isnt Wild West style like in 2000-2006.

How much of the supply has been vacuumed up by institutions like BX, Blackrock, REITs, etc since 2010? People still want to own homes and there is a record shortage of them available. Buffett also said we were in for a Great Depression in 2020….. The institutionalization of housing in many ways is very similar to the BTC bull thesis in that the capital available will inevitably dwarf the product available. Plenty of people gave us great technical sounding, academic arguments on BTC at 10k, 20k, 30k….and Buffett also had an opinion. Sometimes things are just simple. Home prices and rental prices are going to play a game of who can rip hardest and in part bootstrap each other higher one level at a time. The biggest component everyone misses is just how much demand is currently sidelined. It’s silly to just assume everyone who’s looking has bought and there’s going to be this precipitous fall down.

Succession 3 episode 1 was good. I was also incredibly surprised with how good Billions finale was. I have generally found Billions stale and cliche as well, but season 5 ending was incredibly savage. Quite sad what happened to Lewis in real life.

Kids were watching V for Vendetta again. Just something about the story line that resonates. Governments using a virus as an excuse to steal freedoms from their people and ultimately trap them within the system. Good storyline!

Theres also the fact that institutions, being the smart money, did what smart money typically does...they effectively missed both industrial and MF. Especially foreign money. The move up in the past few years really just got the appetite going. If you asked a European investment firm what they knew about US MF housing 5 years ago they'd scratch their heads. A lot of that is cultural. Nonetheless, when its likely the safest amongst the safe RE type investments you can make, and inflation protected, you better believe a long, hard rerate is coming. Except....there's really not much supply. These morons will be paying up, for a long time.

I dont think being super bullish in 2013 was the right move. The housing market really didnt do anything until 2020. The institutions can underwrite whatever they want but theres a very fixed supply of existing MF and SF housing and massive constraints for a long time until that can be built out. Best case if you start today is ~2-3 years assuming you have a great contractor and elite leasing team. Thats all that matters if you're in an area that people want to be. Ive got equal concerns about all the office overhanging NYC type markets being converted to MF as well...but whats that gonna take? 5-10 years to build?

A few cases of Eagle Rare 10 year. Preparing for the impending bourbon crisis.

Yea I certainly wouldn’t go too wild on any of the specific companies. But that’s kinda the point of just settling on some long dated calls and then letting it be. Very little money upfront and solid long duration upside optionality. 90% of my exposure is between the futures options and index calls.

Yea it’s unique and nuanced. I don’t have an opinion on iron ore other than higher for longer so CLF works. I think crude rips and I hate oil and gas companies so I just want the sure thing. But if you know a company well gibbons is right. I don’t. I’ve gotten some RIG, NOV, SLB leaps and a few others. There’s a varying spectrum of probability and outcome, but also correct is you don’t want to pick the idiots who hedged out the whole book and some future production and then….whoops.

Todays earnings kind of another reminder for the "cant find anything to invest in crowd"....whats the reason for not investing in banks?(besides being scared of one's shadow)...if nothing changes, they still earn gobs of money, allocate capital wisely, and trade at 10-15x. If the risks of relevance emerge(IE inflation) they clean up. Doesnt sound like a tough choice to be long any of the BAC/JPM/WFC/C/TFC bunch should one have a stunted list of investment options.

Ive been politely(and sometimes not so politely) been suggesting this to folks for a long time. Put your fuckin geek sheets and Excel tabs away and focus on the bigger picture. If a 10-20% valuation differential matters to your investment thesis you're wasting your time. I always get a kick out of the smart guy book reports that ultimate lay out a thesis that more or less says, "if a, b, c, d, e, AND f, occur...you've got 25% upside"...so dumb and such a waste.

AAL puts.

Yea I don't want and wouldnt recommend getting too much exposure to individual companies. I have leaps on a few, but this is where Kuppy nails it. Too often folks look at a situation and immediately gravitate to "gee I'll buy a 2% position in XOM/OXY/etc common stock!"......yawn and yuck. The key is finding the most efficient way to put on the trade and make money. You can have tons of scenarios as we've all seen where oil goes nuts and the companies fuck up. So just being long the futures or even better call options on the futures is the best way to play it, or so Ive found.

Thats fine and all but prices are largely driven by future expectations. Is it going to be easier, or harder to increase output going forward? Is demand going up or down? Then add in easy money and the locust nature of speculators to an already out of whack supply/demand equation and you get....well, what we've seen in everything from Gamestop to Uranium. Tangentially, I recall back in the early part of the decade how easy it was to start up an O&G venture. We'd get PPMs all the time as well as offers to go out and see all these "deals" that were in the works. Now, as others have said, even the majors are going to have trouble getting reasonable terms to refi existing debt. I mean on one side we have Cathy Wood saying oil should head back to $40 because we're about to get deflation, and then on the other side you have guys like Tepper and Kuppy lickin their chops at this setup. In between we have the policy makers playing the "lie to me slowly" game. No inflation. Transitory inflation. Gonna be a little longer than we thought. Gonna be a lot longer than we thought but still temporary. Uh oh, we lost control! Everything one needs to see to make highly assymetric bets is right in front of us. Its pretty awesome.

The price movements and covid caused bottlenecks are what make this stuff sooooo easy to trade. Its all so predictable and has been for way too long that at points I wonder if it really is this easy. But when you have folks like the ESG clowns investing irrationally, that removes a certain layer of efficiency from the market.

Prem is just playing 4D chess. He’s hidden from the market his experience and expertise in tech. He’s even purposely made some bad investments just to throw off anyone hot on his trail with respect to his secret tech talents. Obviously BB is the next Apple. Don’t doubt, or pout. Have faith….FFH is the next Naspers. Between Digit and BB pretty soon you’ll be able to buy BB shares at a 20% discount to market through simply purchasing FFH shares and better yet you’ll get everything else at FFH for free.

I can sympathize with folks who have a couple hundred thousand in retirement funds in their 60s...it shows an effort and if you're not white collar its hard to get much more than that. But theres no excuse for not owning a home over the past 5 decades. Housing has spent exactly what? 5-10 years during that stretch as arguably unaffordable? Stop. fucking. renting. Now its getting past the point of no return which will just make it worse for folks as far as housing goes. But back to these people. Not only do they have 0! but they are talking about $4000 in debt as this huge thing. "Chipping away" at it? How do you chip away at $4000 lol? Isnt that like just something you pay in a month or two? Or roll into a no interest promo balance transfer? Part of me feels bad for folks, part of me doesnt understand at all, and part of me is thankful because if the majority of people weren't so dumb it would be harder to do well in life and certainly make things much more expensive.

Why dont we just give China and Russia the edge forever in terms of both technology and energy? Here's another insightful take...partially for what Putin is saying, but also the embedded narrative arrogance from the author. https://www.cnbc.com/2021/10/13/putin-says-russia-is-not-using-gas-as-a-weapon-is-ready-to-help-europe.html Along with this https://www.washingtonpost.com/business/energy/dont-blame-climate-activists-for-the-global-energy-crisis/2021/10/10/ce8372b0-2a22-11ec-b17d-985c186de338_story.html These ESG tools want to continuously push alternatives that have no place yet and when you screw with supply of essential products and services you bring on disaster. Of course, I'd expect Putin to get it...he's savvier and smarter than any US president Ive seen in my lifetime....but its just crazy watching these idiots in America and Europe grandstand about climate and interfere with energy production and then have the nerve to try to blame others for the crisis theyre creating.

Its more telling though the look through composition of these people. Soooo self consumed....thinking theyre important enough to personally write the CEO of Capital One...demanding their interest and late fees be cut. Planning on working 10 hours but then deciding that it "just wasnt for them"...but then shameless taking from organizations designs to help those in bad spots. The extra $800 a month made a HUGE difference for them, but they have no interest in real jobs... Its crazy too because it could all work for them, on their budgets, to an even greater degree....If they just went out and got semi skilled part time jobs making $25-40k a year with benefits. In todays labor market, you dont even have to try to get a job that can provide that. And yet, by choice, they do.... this? Live like vagrants?

https://www.marketwatch.com/story/this-couple-retired-2-years-ago-on-about-27-000-a-year-heres-how-its-going-11633706641?siteid=yhoof2 Came across this and looked into it and its actually a reasonably well followed retirement story that is not some typical "how to retire" clickbait story....are people this pathetic or is this just some kind of joke? $27k a year to live on? Dont want to work more than 10 hours a week but then decided they didnt even want to do that? Steve made $350 in a YEAR selling garbage as art? Joan is getting a $45 royalty? An extra $630 writing? They got their pandemic checks even though they weren't effected by anything...they avoid Cleveland Clinic because their medical bills went up $300 in a calendar year even though the husband requires more medical attention? Over the years they've been able to "chip away" at their $4,000! debt...including "writing a letter to the CEO of Capital One"! LOL. And yet, despite basically refusing to work they're at times going to the Salvation Army for help? WTF is wrong with people? And oh yea, what good is retirement if you cant "splurge" on a $5 a month museum membership?

The action in tech keeps pointing to a new stage of the cycle. I dont know how it was not at least reasonably obvious after last year where we went from arguably too expensive to undoubtedly expensive to mind boggling. Of course a lot of it, and subsequently the indexes hide behind the FANG stuff which is still not egregious but just fully valued, but everything under it is beyond comprehension in terms of valuations. The behavior has been validated by the capitulation type behavior of value investors seen everywhere from Twitter to VIC to Sohn. Parallels to Druck in 1999/2000. You can spit your carbonated beverage out seeing people drum up delusion inspired bull cases for garbage. And now even the leaders are fading/acting sloppy. Short interest across the board is basically nil...another tell tale sign. And you've got a lot of snowballs building. Ive got a few shorts and some puts+VIX calls along with some ETF type stuff but overall am not participating in much outside of riding the housing wave and the energy crisis, so I honestly dont care what happens. Cash is a waste of time, period. People have been saying "real estate is bad when we get inflation" and my biggest positions for the past year or so.. APTS(+107%), AIV(+82%), PCYO(+60%), FRPH(+27%), CLPR(+30%)...all so "Hi...yes, no, you're wrong, it isnt!".....on the flip side all those do well if rates remain at 1-2%.......we can let the value guys who missed a decade of easy tech money now fight over who thinks Peloton is cheapest not realizing theyre the last ones left at the party and the keg is empty...but otherwise the market is clearly bifurcated so rather than lazily fall back on "big crash bad!"...have some fun with it and play the game where you win either way. If you're buying tech here and its not FANG I'd underwrite 50% drawdowns into an accumulation strategy(thats basically what Ive done on the ~6% of so tech exposure I have)...otherwise, why even waste time with it? Even the FANGs probably have a few years at least ahead of themselves of boring returns.

Dunno, was going to the driving range yesterday and heard something on one of the radio stations about landlords owning 10 or more units being required to provide internet. It was a shocking new level of "we'll tell you what to do"...even for NY standards. You tell me, this goes to a vote....what happens? Its a classic case of pitting the haves against the have nots.

This is kind of the major issue I have with investing in the blue states. Housing is being viewed as a quasi state run utility almost; even the privately owned stuff. This kind of stuff will only get worse because there is no way around the major affordability issue. Look at large swaths of Europe and even Germany...the effects are disastrous once government starts telling people what they must do with THEIR dirt, bricks, and lumber. The upside we see, in stuff like CLPR, CLI, etc.... it comes with a catch...the higher prices go in these places, the tighter the supply, the CRAZIER these stupid liberals will get. I've got a solid allocation to the above two names but ultimately this is why I favor the Sun Belt stuff. Not only do you have favorable migration trends but you also know that these are the same places that refused to even implement masks in school in the name of "freedom"...they will watch with pride as housing prices go bananas and their dirt becomes viewed as gold. Whereas in other states they view that as a "problem"...