Gregmal

Yea well thats why investing is awesome. It can only cost you what you put into it. It can go up multiples of that. Too many people treat buying a stock like theyre shorting a call option. If you size it correctly and the worst case is only 100% loss, thats a huge advantage over time, assuming your selection process is semi competent.

Yea that's where my trading instinct is leaning a little. These are the type of "all hope is lost" setups where fortunes can be made. 3:1 or 4:1 from previous levels didnt really seem all that appealing....again, note to self, I was basically just asleep on this here because "so much upside eventually"....definitely should have been more active but yea from current levels you dont need a whole lot to get a pretty wicked return and downside is probably muted a bit. My problem is that I dont see any resolution that changes the overall bind shareholders are currently in. And that this has been a waste of time for a decade and theres better ideas out there.

https://seekingalpha.com/author/glen-bradford#regular_articles You wanna start the gofundme or should I? I enjoyed his analysis from time to time but holy risk management.

Already word out from NYT that Calabria is gone. Any guesses on a replacement? My guess is its a walking diversity meme that will use shareholder resources to get lower income folks into homes on terms not available to other parts of the population. Debating whether to sell out here, but will probably just keep it til year end rounds out and I can do some more tax planning. Also want to keep an eye out for any angle where there could be a glimmer of hope. Typically when all hope is lost thats where an opportunity emerges. But as I said before, this isnt a market driven investment. And I see no light at the tunnel as far as getting out of the current government dictated situation.

A few post mortem notes, at least my take aways: 1) Anyone who says politics and investing shouldn't go together can go fuck themselves. 2) This was not something that was going to be settled by market factors, but rather the "system/establishment". Trading to de-risk should have been a given, and I didnt really do this here because the position was small. Can do better there for sure. 3) If the past 18 months have branded with a white hot iron anything into folks, it should be that regardless of red/blue, government can and will do absolutely whatever they want and people have no recourse or at best a very expensive legal journal with shitty risk/reward skew. There's still gym owners with 7 figure fines and court battles for doing nothing but trying to operate and serve their customers. Every year that passes people have less sympathy for investors who last money in 2009. Dont fight the Fed, and dont fight the government. Period. 4)America is in the process of doling out dual class share structure vouchers. Certain people just dont have rights anymore and others are seeing their greatly diminished. Here, on the lowest end, you still had people with savings whom were harmed. There is a significant portion of the country that feels that if you have money to save/invest, you have more than you need. On the other end, you had a bunch of wealthy hedge funds....LOL yea right! No way they get their headline victory. This I feel is ultimately what determined the outcome. 5) Fuck Mnuchin. He was kind of the key and chose the establishment and self interest over doing what he was put in place to do.

At least these things will finally provide me some sort of value. Much needed tax losses.

Every facet of the bear cases generally rely on things that could apply to plenty of other investments...particularly new or disruptive ones that people missed and are bitter about. Its always important to be critical...but part of being critical is being open minded. I think there's merit to crypto, but also think its value is no different than that of gold...basically, whatever someone else is willing to pay for it. No intrinsic value whatsoever. Doesnt mean it doesnt have a purpose, just means you need to be a little sharper with your transactions/trades. Theres times when its got a valued place in ones investing/trading tool belt....IE against the backdrop of inflation...but also susceptible to piece of shit mode....be careful. My favorite bear argument is the "aids criminals" one. Cuz cash doesnt LOL!

Yea I think his presence on the board is consistent with the logic behind why they arent selling. He is this for personal, largely non financial reasons.

Does 50 bps over the next two years mean anything to anyone in the non WS trading world? The real economy? Total desperation move hoping to grab headlines and push back on a narrative. Calling bs.

If I was a FFH shareholder I'd be tempted to grab Prem by the ankles and shake him upside down asking repeatedly, "where's all our money" from the past decade's historic bull market.

Doesnt really matter how influential the country is IMO, as long as incremental users are added to the ecosystem. I wouldnt expect the US or a major old money establishment type regime to cede control. Imagine what kind of stimulus pickle they'd be in if we still had the gold standard or BTC type currency? How would they send poor people their stimmies? Frozen chicken packages? Gold plated coins? food vouchers funded by future tax credits? It would be hilarious. But the existing system is setup so they can retain control and influence and I agree they'll come up with something dumb, IE crypto funds terrorism or some stupid argument to ban it before they let it take over.

Trading sense wise, I actually think there's a case to be made that the worse sentiment gets the more likely $100k becomes. Sentiment just fuels the next move in the opposite direction. I mean this is still positive YTD dont forget. I already laid out my original trade, so no, not buying as theres other stuff more compelling to me here, but man this has been worth the price of admission.

Fed may try continuing to scare people out of the inflation trade, but you cant fight fate.

Its like one of those 0 gravity amusement park rides. Gets real fun when there's nothing supporting you!

Its really just the Trefalet outfit that has a big handle on control via share ownership. Otherwise there's a pretty solid record of doing the right thing with this group. I do think there is legitimacy to the concern of a stale, good ole boys club, entrenched board...but I dont care because they've been making the right moves for several years now and thats all that matter. If you go back and pull up their reports + outside analysis of the evolution and 5 year plan thats been executed since 2017-18 or whatever, its impressive.

https://www.wealthmanagement.com/multifamily/us-apartments-have-risen-top-foreign-investors-wish-lists?NL=WM-056&Issue=WM-056_20210617_WM-056_322&sfvc4enews=42&cl=article_2&utm_rid=CPG09000011488665&utm_campaign=32894&utm_medium=email&elq2=2ca6806f518c43ab80e8dd9cc74cac39&oly_enc_id=0563H6121845H6E "Currently multifamily is seen to be an extremely effective inflationary hedge, given that the leases mark to market on an annual basis. Going into what many predict will be a period of higher inflation, that is an extremely attractive investment characteristic."

The problem on the 50% decline in stocks position is that you sit on the sidelines for an entire decade waiting for an entire decade when theres plenty of easy low hanging fruit. And I am not sure its as frequent as once in a decade. Tech burst in early 2000s but quality businesses I dont think went down that much. 2008 was definitely unique, but even during covid 50% wasn't seen in most quality names. So being 50-100% in cash is IMO unequivocally dumb. There's also the fact that most of the time, those folks waste years waiting, and then when it happens are too busy screaming how they were right and its only going to get worse...rather than being opportunistic. I recall some dipshit in 2008 made the papers saying the S&P had another 20-30% to fall when it was at 700. The doomsday stuff is just a losers mentality. If something thats gone up 5 fold goes down 50%, where you really better off not buying it? A BRK B share was like $90 in 2012. Agree on the 30 yr fixed. Love em.

Yea I don't own much, and by and large its contract specific, which at least with most public companies, I am not sure is even disclosed for investors. But many times its CPI+ a few %, or the other common ones are ~10% increases every 5 years or something. One is ok and the other is not good and there's some variations in between. Was just pointing out how despite the craziness of what we are seeing today, a 20 year Chick-Fil-A or Chase NNN is currently a 3 cap asset. It makes sense lazily that a 10% inflation print should equal a 10% treasury and subsequently lets say a 12% cap rate for a good asset. But its not really that simple. What do we base 10% inflation on and come to that conclusion? I view inflation as the loss of purchasing power. But even there...where and how does this get measured? Is it CPI? What if CPI is wrong? Do investors just ignore it even though they're really predicating these rates on a faulty moniker? If CPI says 3% but its really 10...who determines the market? I mean again, everything I see looks like its at least 10% more expensive, probably even closer to 20. Local baseball stadium the other day had hiring signs up starting at $20 a hour to works the concessions. And signs at the concessions apologizing for being short staffed....So again this kind of leads me back to the idea that productivity/consumption and wage increases will really be a driver if this plays out. Which bodes really well for crude. I think if nothing else, I hope I've read wabuffos analysis largely right, at least in terms of the spigots analogy. Which makes sense. You have this kind of one time disruption and discombobulation. Its created one hell of a distortion. 10 year should probably be a good bit higher than 1. But to have this sort of hyper inflation you need more than one off stimulus making its way into the hands of the public. My expectation, which isnt worth a whole lot, is probably that we will see a good healthy sized jump in rates, and then stabilization. 2-4, maybe 5% on the 10 year type stuff.

Ok yea. Dont totally disagree. Ive been prepping for some of this stuff myself for a good bit now. But I also think the assumptions are too draconian. My analogy about the 50% decline in stocks folks wasn't meant to indicate you are saying that, as I know you're buying some stocks...but what I meant is that there's folks who get so wrapped up in such a kind of low probability event that it paralyzes them to an extent that realistically they're better off just discarding the fear as irrational. I know this because I had a German client who I had to fire because from 2013-2018 he was so negative and every 1% down day in the market got loud and obnoxious about how this was the start of the big crash. And it just got stupid and was a distraction and he has been in CDs for almost the entirety of the past decade. I think to a certain degree fearing a treasury thats currently at 1.5% going to 10 while the rest of the developed world remains between 0-1%(if not negative) is probably equally detrimental. 3% I could see. 5% I can see. While I get there are measures that claim to track this sort of stuff, what really is 10% inflation(just using a number). Year over year a pork belly or corn contract can see 10% increases. John and Jane Smith can see 10% wage growth. How does this mandate a 10% treasury? I mean again, I'm being told we're at 5-6% or whatever, which I am not sure I believe based on what my eyes are seeing, but trying to now imagine "this"(the 5-6% print and corresponding everyday prices...IE $10 2x4 and $8 12 pack of Coke) ballooning into an extended long term trend....I think the probability of that is the same as Berkshire Hathaway filing bankruptcy.... If the extreme inflation is only expected to occur for a few years, the market would price that in. Everyone always jumps to the 70s but the situations I dont think are really comparable. Right now we have a real bottleneck which is throwing prices of most everyday things out of whack. I mean theres scenarios where used cars are selling for more than the MSRPs on new ones! But I also think this pulls back and then while there is inflation, its more controlled. You can say the Fed is going to "lose control"....and thats possible. But what does that mean and how do we quantify it and what do we translate this to? There is also of course, this saying...something about not fighting the Fed...and its kind of been good advice.

How do you conclude that 10% inflation means a 10% cap rate? For instance right now people are saying theres about 5% inflation. We have a 1.45 10 year and the highest quality NNN and MF stuff trading near a 3 flat. Its been expected that year over year we see massive jumps and increases in everything simply because of how much of an outlier last year was. But you arent really saying you see consistent, 5-10% PER YEAR! inflation for a sustained stretch, are you? Let alone for so long that a 10 year fixed is in trouble? You have this as a 65% likely if I read your earlier post correctly? Im just trying to understand because I think a lot of what you're digging at is important. But I feel like it also may be getting into the category of folks who won't buy stocks because they consistently think a 50% decline is right around the corner. Perhaps a bit too extreme in terms of pessimism or assignment of odds to low probability events.

A cap rate is just a function of NOI. If you can raise rents annually to track inflation, all else should remain equal. How wouldnt you be just fine with a 5-10 year mortgage vs a 30 year in such case? In fact, your rate and also cost(as I said earlier, many 10 year mortgages are IO) would be locked in and even lower. If you unload the property before term is up, no issue there. If you refi its at a higher rate but one thats been tracked and covered by your annual NOI growth. If they keep heading higher, you continue to capture spread, and if they come back down...you can refi. There's a reason MF RE has basically been the institutional t-bill for decades. Its pretty durable in almost any situation. That said, the 10 year is currently ripping....at 1.45. I think we're closer to talking about 2 caps than we are 10s.

Most REITs/institutional RE operators dont use 30 yr mortgages. Its not the same as Joe Schmoe buying his home. Typically 10 years is the standard in CRE or with REITs, and often its 10 yr IO. Oil may not historically have a 100% correlation, but when I draw out the Venn diagram, there's more than enough overlap for me to conclude that "if this, then that", with respect to future inflation and the price of crude.

I don't think you need to be loaded with 30 year mortgages to own real estate. Multi family, Single Family, mobile home operators should all do well regardless with the ability to annually raise rents. Having long duration debt would be a strength, but its hardly necessary. Just avoid anything in a rent controlled area and you're good. I'd say 3-5% is definitely much more likely than 5-10%. The latter being pretty outrageous and really only something that occurs in unstable third world countries. Sustained inflation IMO would have to be driven by wage increases, which if that occurs there's a playbook for how to handle it. Bring it on.

+1 on Third Ave. Also, while an attention seeking baby sometimes...Jon Litt/Land & Buildings is usually pretty on point.

^ @Castanza yea thats kind of what I'm trying to get at. Will earmark this for a weekend watch. But basically, you need the most responsive yo-yo here. Its a somewhat tricky landmine to navigate and the last thing one wants is to be the next Peter Schiff who screamed about the GFC well in advance and then it turns out his investors got smoked because he invested in the wrong stuff. I see a lot of people like gold, and I dont disagree its poised to do well. However dont see how crude isnt a superior hedge in every aspect.