Gregmal

Yea we shall see and it’ll be interesting. Win/win if you own good allocators who have FCF to work with for sure. While never in a million years would I buy a 5 cap Taco Bell, I guess the case to be made is if inflation is real, and even at an obnoxious level for a little bit, say 5%…you get zero net yield but the underlying land and building value should hold well given that’s what inflation actually is. Those sort of inputs going up. And even if it’s 5% for a few years, it won’t be for the duration of the lease. In the meantime, we will continue to watch as things comes down and see if the Fed believes millions need to lose their jobs(IE 100% of their purchasing power) so that those that are working aren’t losing 1-2% of theirs. Which is essentially what the case would be if inflation next year is at 4-5%. I just can’t see how that’s warranted, but I ain’t Bill Ackman or Larry Summers rich.

Yea I think those are good descriptions. You are basically valuing what you can’t value in the entire equation but rather than doing the typical value investor thing and claiming that this figure represents an overvaluation, you are assigning it to “something”.

My friends family owned a big parcel on route 17 in Paramus that they leased for 30 years to Staples. The rent was a joke. And by the of the lease Staples basically had free rent and made 2-3x the lease subbing it out. They covered it all and then some just by leasing 1/4 of the entire thing to Trader Joe’s. You basically have no optionality with retail NNN.

Even outside of this manufactured inflation crisis, since like 2013 I’ve just scratched my head wondering why someone finds a triple net lease at a sub 5 attractive, at all. I’d rather pay a 3.5 cap on multi family knowing the rents roll every 12 months than sit on one of these 4-5 cap retail assets that’s locked at the business owners discretion for basically 25 years.

Outside of the fact I think someone like EQR buys VRE, I think the private market sees the opportunity. Fed sees all inflation indicators are ticking down and in many cases big. Everyone wants a victory. The Fed and most of their liberal participants see the setup. So they see what the market did(IE rally big in July) but also want to hold things in check til more verification occurs. So they talk tough at Jackson Hole, basically saying “please sit tight til more time passes and more data comes out”. Then they pivot and these assets rip.

Brand new Taco Bell in Chicago MSA. 4.5 cap. 7.5% bump every 5 years. Store is apparently bullet hole free.

I sense some of the expectation side is variable. The FANGs IMO are a great example of this, as are biotechs. You buy these with either faith that the market is efficient(not me) or a vague understanding of the variables that influence it’s valuation. Probably more in the category of event driven trading, but as those variables change you can sometimes anticipate big moves. For instance many of the CRISPR stocks have a big value assigned to them because many in the community believe it to be a once in a generation type breakthrough. If something newer and better comes along sooner, even if just in the conceptual infancy stage, for little other fundamental reason, I’d probably imagine a lot of valuation hair cutting even if the specific treatments continue to show promise.

What’s nice with Fairfax or Berkshire here, and additionally a number of smaller companies like maybe a Stelco and even smaller like potentially a PCYO, is that they’re prepared for this and have been. If you haven’t been a shareholder longer term ish, the underperformance stemming from preparing for this current environment isn’t your problem. So today you get to step in and get the finished product which looks excellent just the same as those who waited it all out, just without the frustration. With more cash and liquidity than they know what to do with, and a commitment to buybacks….there’s just not many ways where you end up in a spot where you don’t win big. As long as one views these investments as that, and doesn’t hang on the daily quotes, you have to kind up be a happy camper whether the market is up, down, or sideways knowing the value that’s being created.

I remember in high school they said red cars were the highest to insure. Good luck my friend.

Ya PenFed just offered my wife a refi to wrap a 2017 Traverse car loan at a 5% rate into a brand new 84 month loan at 4.5%. Car will be 12 years old with 200k+ miles by the end of that loan. We have 800 credit scores, but still, that’s a shit deal for the bank.

Yea I think that’s one of the problems with the automation systems that IB uses. I’ve been exercised on stuff at 11pm when there’s still weeks or months left til expiry.

Woo-hoo also just saw I got filled earlier today on a few hundred more aiv 7.5s

Added another 10% to JOE and VRE positions as well.

I hopped off the high multiple train awhile ago, but stuff like WM, AAPL and COST still kind of disprove the notion that those are the things that’ll get whacked.

Being in the office is largely driven by power dynamics and serves many purposes but the biggest is the egos of the higher ups.

Added some Fairfax

Yup. Thats the thing. Some folks just always peddle the same shit. Nothing worth listening to. In fact, I think one of the greatest mistakes people make is that they start giving it credibility when its the flavor of the month, thinking the author is an expert on the subject.

Well, theres also the notion that people become accustomed to just throwing around terms such as "money printing" when they dont even really understand it or its perceived impacts. Restoring or recapitalizing banks following a systematic failure is a lot different than sending every living soul $1000 a month. So many of these people seem to think doing things to help stabilize an economy(something in pretty much everyones interest) is the same as just handing out freebies all the time. Like who and WTF was talking about money printing and "liquidity sloshing around the system" in 2015? That clearly wasn't the case, yet there was no shortage of people saying that.

A lot of people in the market simply dont know or truly believe that they are buying companies or businesses. The feel smart reading general population produced fodder not knowing todays headlines are more or less meaningless. Add in the systematic incentives for creating transactions, and you can see why so many behave the way they do. The majority of the financial world's ecosystem incentivizes transactions, not sound investing.

LOL destroy the economy because @fareastwarriorslunch cost $4 and some fruitloop in NYC paid $13 for a latte.

A lot of the same people claiming the Fed needs to keep raising because of inflation, who simultaneously are saying housing imploded, are citing the shelter component as the reason inflation hasn’t peaked!

That’s Wall Street marketing for you. Ever hear of Whitney Tilson?

Kudos to you my man. What always gets overlooked in all the formulas is that it’s not about the destination but the journey.

Yea there really isnt an affordability crisis in most of the places wealthy WS folks are claiming. Everyone just wants more in perpetuity. Including the plebs. $30 increases in gas and grocery for the week shouldn't really be a valid excuse to destroy the economy and take away peoples jobs. I think I mentioned earlier, but one of the most bizarre things Ive heard of in my life was my friend who does home improvements and contracting in Bergen County, NJ. For those that dont know, Bergen County is basically the wealthy suburban place most NYC high earners live if theyre in NJ. And he said sometime around May business went from booming to just quiet, overnight. Folks, mostly white collar finance, legal, media type people all basically said the same thing.."the big reset is about to happen"...LOL its like theres a memo that goes around to the have's so they can prep in advance, get over to cash and long some puts, pad the savings accounts, and the pee ons who are busy really working dont get the notice until the pink slip comes in.

You must love Faber then. That guy is a true character.