Gregmal

I like Bass but have never really been too impressed with his investment skills. He is definitely a unique mind. He’ll see the black swans that other people can’t. But he also sees too many of them that don’t exist and his investment strategy always seems to be inspired too much on those swans. His critique on energy was spot on. The administration that a lot of people voted for is begging and doing favors for terrorists in exchange for oil but then screwing Americans and Canada with stuff like the Keystone nonsense. I wasn’t paying attention the whole talk but he mentioned mild to moderate recession, but also 30-40% lower stock prices by Elections. Did I miss his reason why? Rate hikes we already know about balance sheet run off don’t equate to substantial and widespread profit declines that would warrant a revised market price. Or should the SPY simply trade at like a single digit multiple just cuz? If liquidity was the only thing that mattered to multiples we wouldn’t have private equity, angel investors, heck houses aren’t really that liquid either…so I guess I missed how he went from A to D there.

Not that I totally buy it as anything super meaningful, but when you look at the basis for rent vs own for literally everything else in the world, renting a house is insanely inexpensive.

Yup, it’s a beautiful thing. If the “stonks” go down cuz people that push paper wanna create fictitious narratives all the better. These types of assets are unbelievably dynamic, resilient, and low risk. Of course I also wanna make clear I am speaking of the US housing and rental markets, not Canada. I don’t know enough about Canada real estate markets to have a high level opinion, I also don’t live there or invest there so I don’t care what happens there. On the surface the fundamentals in Canada look significantly worse than the US. But rather than get all caught up in doom and gloom I think it’s important to respect and even appreciate what the Canadian housing market has done now for two decade and then extrapolate that to what can happen in the US which is a better and more liquid market.

I think if you want to see “break” look at the segment(didn’t get a lot of attention of course) on MBS selling with Powell testimony. Already adapting because what? Market froze up or was manipulated for a day? I too am holding out hope for cheap private market real estate, but as the days go on the odds of that get smaller. I have yet to see a single intelligent and relevant bear argument for housing getting whacked big. It’s all stupid “look at the chart, 2005 again!” which misses every underlying fundamental. Or contradictory shit like 6% mortgage will kill housing prices(as prices continue to set records) but then talk up inflation and high housing prices lol. Or how rents are gonna soar forever but there s a glut of multifamily being built. Can’t have it both ways. Or “there’s lots of price drops in my market!” And it’s like yea so what? Remember all the “Zillow paid too much!” And then they offload everything at better than expected prices in a couple months. I see tons of price cuts in lots of markets I follow. 95% of them are just listings that were not based in reality in the first place. The overall core of the housing market is insanely strong. I said a couple years ago we were in the first or second inning of a housing super cycle. One that would follow the tech bubble cycle, IE 1990s first wave followed by 2010-2020 act 2 that dwarfs act 1. Imagine selling the Nasdaq at the 4000 mark or whatever earlier this decade when it hit that cuz you were an idiot who just said “look at the chart, 1999 all over again!”? So maybe now we are in the 3rd inning. It’s never straight up with no pullbacks. This phase looks like the one where all the folks with 2008 PTSD think they’ve got it figured out and get smoked. By the end of the cycle everyone in the world will think housing is indestructible just like they did with the FANGs last year. Gonna be fun.

Yea am I the only one who thinks Berkshire will actually do better once the new guys fully take the reigns?

Crime definitely increases with fewer abortions. The demographics don’t lie. That’s why I always chuckle when you see the wealthy white teenage suburban girls getting all passionate about it. Or on the other side the stay at home housewife being all pro life…It’s like yea, your virtue signal is showing. Abortion is mainly a thing for poor minorities.

Ok I was just kidding. Obviously the market didn’t go up because of the ruling. It’s was because of the Fed!

Grabbed some ALCO into the rebalancing sell off. Only WS products could bring you a reason to dump 800k volume in final 4 minutes of trading on a stock doing 40k a day average.

Market seems to like the SC ruling….

Regardless of whether we are at the bottom or just a wee bit off the top, an investor who brings personal accountability to the table when selecting their investments should do well. It’s so hard for most to do because we are surrounded by bullshit and narrative/headline peddlers. Every day CNBC, Cramer, Seeking Alpha, etc have headlines about why things are moving. 95% of them are nonsense and either aren’t true or don’t matter if you have the right investing hat on. I’ve seen “here’s why ABC is down today” and looked at ABC and it finished up. I’ve seen analyst opinions from guys who can’t pick from a QSR menu let alone a stock. We are surrounded by WS clowns and fund managers who peddle ultra bombastic and unaccountable self serving doo doo. Ever notice how every fund manager is 300% responsible for their winners(even while underperforming the basic index?!?) but when they have losers there is always a million excuses about how someone else did something or an unsavory actor is the reason they got “screwed”. Yea hi Melvin! None of these clowns are ever at fault and thus need to peddle excuses and reasons and the media carries on this wagon too. So throw it out the window. If YOU buy or sell anything YOU are responsible for it and have to make sure YOU can live with the range of outcomes associated with it. If that’s kosher with you, then is it really that hard to invest?

Haha yea all good. I think a lot of times simplifying elements of the equation is the easiest way to back into a framework that suites what you’re trying to do. The Fed is given a crazy amount of credit because people need explanations for everything when a lot of time you can get by without needing the explanations. Why did the FANGs plummet? You can probably list a million reasons, many of which I’ve detailed the past year or so. It’s probably a combination of things. But the easiest answer for most is “the Fed”. The Fed basically works as a helping hand when things get rough. The disgruntled savers or fund managers who got burned on their shorts bitch cuz they got it wrong, and trash the Fed, but ultimately the way I’ve always come out seeing it, is that they help when it’s rough out and when it’s not, they remove the training wheels. The economy being where it is, isn’t too bad, and has a lot of room to improve if things like commodities, which have always been pitched as supply and demand sensitive cyclicals…follow the basic premise of that and revert to more normal prices. Sure, the big corporations and elitists are pissed they have to pay workers more, but we need to stop believing this is a bad thing. Rates IMO aren’t a big deal in the 3-5% range. All in all, an investor shouldn’t be bothered or change their approach trying to time or avoid 15-20% corrections. But at the same time, historically, those type of corrections don’t occur for no reason. It’s almost always some knee jerk pricing in of folks getting scared of some big scary event. It’s become exacerbated by computer trading the past decade. Look at late 2011…perfect example. But I think if you back up, look at things with a 2-5 year horizon, much is these stupid headlines and fear inspired narrative don’t matter as much. The Fed is hardly out of “bullets” or whatever folks mean when they say that and Congress can always take action to improve situations that are clearly not working. These aren’t always immediate fixes, but over a mid duration time period almost always seem to work their way into the picture. Housing is the easiest example. How does it get solved? If commodity prices come down prices can get lowered(see LEN recent commentary) while companies keep their profits. If that doesn’t work you’ll likely see first time homebuyer programs reintroduced. If it doesn’t make housing more affordable, chances are your doing pretty well if you own a home yourself. Lot of different angles that work and eventually I think all of them happen to occur simply because in time, we almost always end up getting to where makes the most sense.

Lol this narrative conundrum has been driving all the market nonsense for two months now. Quick! Buy banks they do well with inflation…wait, no sell banks they do poorly in a recession! Wait, it’s inflation, no it’s recession! Hold on, they own mortgage bonds…ah 2008 repeat!

Flip that around. If those fears were not existent, would the broader market have fallen to the extent it did? IMO, Nasdaq? Maybe. Everything else? No way.

Yup. Buy things, assets or brands that are indestructible, and highly coveted. Check a few boxes...good insider ownership, fortress balance sheet, etc. Then just accumulate for life.

Dudes I just want a forecast on Costco stock. We continue to over shoot every bear target there. Another 20% down takes us back to the price Buffet sold at! Will anyone ever get this name right using the spreadsheet and formulas?

The current sell off discounts quite a bit. In other words, you’ve got a lot prices in already.

Personally I think there is a lot of very attractive stuff right now if you decide to be agnostic to the next couple months. Could fill a pool with the number of companies that are setup well for the next 5-10 years

Humble brag?

Agree. Commodity investing is all about timing. You seem to make a fortune in a short period of time once every 5-10 years. The rest of the time you tread water or lose your shirt. I hate it, but you have to go where the money is being made if you consistently want to be making money. Just dont forget to take money off the table as you make it cuz one way or another what you have in this space tends to get wiped out.

I mean sure, most of us are good. Ive got 6 houses already with tons of 30 year fixed locked and equity over 50% in most of them and it seems half this board has cash earmarked for a pending housing crash so they can scoop up more. My main point is to highlight how ridiculous a notion it is, largely one peddled by rich folks, that raising rates is helpful to the middle and lower classes. Its like, yea...ok. Philip Morris once said cigarettes were good for you.

Not NY, but same trend https://nypost.com/2022/06/23/ken-griffins-citadel-moving-to-miami-from-chicago/ Surprised this didn’t happen sooner. Griffin already owns some of the best real estate in Palm Beach. Like probably close to a billion dollars worth.

MSGE and EPSN adds

I would evaluate everything. All time high is just a relative term. It’s kind of irrelevant. One days all time high is another persons dip buying opportunity. I mean look at all the FANG stuff lol. Stocks went up 100% as they continued to be “too expensive” and at “all time highs”….and then they pull back 10-20% and everyone piles in cuz they’re cheap. At prices still representing large premiums to previous “too expensive, all time highs”. Would you take away financing when that segment of employment is strong and workers have leverage for higher wages? Isn’t that kind of when they need it? So you can turn it into something? Let’s face it, none of these folks will likely EVER be able to pay cash for a house. Getting a down payment in the bank is hard enough. None of these people are buying homes or making big purchases when they’re unemployed or the economy is in the shitter are they? The icing on the cake that solidifies all this is Powell even admitting on several occasions that raising rates has nothing to do with many of the inflation issues they’re trying to tackle. That the Fed is helpless. Perhaps their biggest weapon, which he is to his credit effectively using, is talking the talk which can lead to stuff like my buddy contractor mentioned. Folks reacting to the idea of it all, and maybe driving the narrative.

The same bs argument folks made about gas and grocery greatly effecting the lower folks....is it or more, or less? than 200-300 bps being added to the monthly payment on a $250-300k mortgage loan? Whereas whats more important to that person in terms of their future? The $40 gas that goes in the tank that burns and is gone or the home that solidifies your future stability and grows your net worth? Theres been no good argument that raising rates does anything but helps rich people and savers. Savers of course saving because they have more than they need.

I think part of the equation is realizing the wealthy folks are always gonna do well. Like we discussed in the JOE thread, $1.5M 5,000 sq/ft lots are still moving as are the mansions. Taking financing away from the folks without resources is the absolute worst thing you could do. To his credit, a lot of the Obama programs with regard to housing and especially homebuyer credits changed lives. Ive watched literally every GFC related documentary or show ever made because I like the housing stuff. You could say they should have known better, or whatever, but the majority of the folks who got hurt were all lower income in marginal neighborhoods who basically just said, "I want to make it. I wanted the American dream. I was willing to take the upfront risk because if I could get into the house I would do everything to make sure I paid my mortgage"...and well, that largely worked for a while, but those folks didnt read the fine print and got blasted on the rate resets. But by and large, lower interest rates benefit normal people. Gates and Bezos will over course outpace them in terms of what they have in absolute terms, but for most people...just getting something is very meaningful.