Gregmal

Then the other really big news event, is how we should celebrate that some lady hogged a senate seat, not only well past her years of usefulness, but literally until death!

All these scoundrels leech off each other. Yesterday a prime example. So we get the CNBC crew, holding their annual weasels in suits conference...making a big deal of it. Headliner? That guy with a financial position banking on higher rates. He introduces this position by touting it on Twitter where everyone gets whipped into a frenzy and bids the market towards his desired finish line. He then gets billed "headliner" with all his snippets retweeted and highlighted all over the media. Again, he's pushing this position that the media helps come to fruition. In return the media gets your eyeballs, which they benefit from. When his position is revealed to have made "lots of money", then they get to do it all again, this time adding in the featured presenter was "the guy who called xyz"...making it even more market moving and cant miss. You ask yourself what really changed in the month or two since "headliner" revealed his rate rise wager? The answer, fundamentally? Absolutely nothing!!! LOL Meanwhile where are the enforcement agencies? Oh theyre trying to convince us MaraLago is worth $18M and that its time to go get your covid booster again.....

It ignores it because it doesnt exist. There was no meaningful inflation in housing over the decade covering 2010-2020 and surprise, surprise, only started showing up when the government got involved. Then, right when every two bit builder is about to blow us into oblivion with new supply, they interfere again and trap everyone via the high rates that are "said" to be the answer LOL. If it sounds too farfetched to be true, thats because it is, and what theyre after isnt what theyre telling us theyre after.

Yea I think the million dollar question is whether this is an insider job meant to basic reset everything for 95% of people and implement a new agenda..such as all this ESG nonsense, or if its just their excuse to escape post GFC world monetary policy and just get back to kinda what everyone of that age believes normal is, IE 5% rates on savings and whatnot. The only thing that is clear, is that when people are acting, and their actions and words make zero sense, they are lying to you. And these guys have been lying to us for a while now. I mean it makes no sense to be saying inflation is entrenched and hike to hell on that premise and then after 70% of it disappears go "oh it was just supply chain driven". It doesnt make any sense to complain about shelter and housing being elevated when YOU are the single biggest contributor to that. So in a way its gonna be the ultimate exercise in deductive reasoning and dot connecting and from there you just gotta figure out how to express it in a way that makes money.

Yea what’s concerning me here is that we have no more real rate sensitive inflation at all. It’s housing and energy and even with those two being robust we re at like 3 and that’s gonna stay around those levels or go lower. What’s really changed though is NOW all these suited bozos are admitting most of the inflation was supply chain based! Which in other words, meant for that stuff to resolve, they didn’t even need to hike in the first place, at all! So not only were they hiking for something they didn’t need to be hiking for, but now they’re staring down an arbitrary number of 2%, yes totally made up and not based on anything, and like Kaskari or whomever that bald dope was making the rounds earlier in the week, they are now blatantly threatening that if the economy stays strong they are going to try to stop it. So as I suspected awhile ago, much of this has nothing to do with inflation, certainly not much to do with actual Fed controlled inflation, and seems to be something much more agenda driven. Imagine you have government officials openly rooting against the economy and telling us if we get raises or if millions don’t lose their jobs they’re gonna keep trying to hurt us? And where is the sleeping, slipping, stumbling President? No where to be seen.

Yea it’s a great market. It really just seems like no one has a clue what they’re doing. You have growth and trillion dollar size being bid like a Barry Honig stock promotion, people still paying single digit cap for junk like Realty Income, and cash, which is the ultimate depreciating asset, being called king. I have started doing a bit more on the negative/neutral side. Oil and water can’t mix.

So the media is lying again? Go figure

What’s he saying? Haven’t kept up with Twitter since they required an account to view stuff. Always valued wabuffos thoughts.

Added more Nintendo.

I just dont know why people keep making claims about "the top"...Last I checked we never regained ATHs. And last I checked, the last couple months tons of stuff is wayyyy off the highs. Is this again just a byproduct of people staring at the index trackers or are they not paying attention to whats really going on?

LOL I actually just for shits in a small account bought $10k of those ESS 2048s. Print showed me losing 1.7% today on them. I think this has got to be somewhat of a product of just boredom.

Agree with a lot of your points. Ive lived well singling out hairballs that are maybe a bit less hairy than advertised in the smallcap space. Especially last few years with REITs. In fact the only two, non trackers I own now, are AIV and some CLPR. But its clear to me ones probably not gonna lose money on the bigger bluechips at these prices. What Im struggling with is pinpointing where those returns lie....5-10% in a world with 6-8% margin costs and 5-7% bonds/notes, doesnt really stand out to me. Im trying to see the angle where maybe Im missing a path to say, 12-15%.

Gotcha. What I kind of struggle with isn’t necessarily needing Herculean returns. But as a base, I’m always 100% invested. So generally I view the margin cost as a mandatory hurdle, plus whatever I view as risk adjusted appropriate above that. So with MF, risk here imo is super low, but saying 7-10% returns doesn’t leave much margin of safety and without an upside catalyst it just looks a little too static within most scenarios. If I’m in the 5-10% return range, why not just buy notes or bonds? Which is kinda the @TwoCitiesCapitalargument with a lot of stuff, and despite playing devils advocate often, agree that if these are your expectations, why bother? I guess the disagreement is that I think there’s plenty of equities than can do 10-20% for at least a few years which is adequate. But let’s say I didn’t see any of those, then yea I’d struggle reaching on equities for maybe an extra 1-4%. Thinking about it a bit recently and maybe the answer is selling somewhat outta the money puts on some of these.

Ok so using this, and it is a little interesting, what’s the high conviction argument for owning ESS equity if the expectations are 5-10% vs the note?

How much statin are you taking lol?

Charts again an example. @thepupil and I and others have discussed Howard Hughes. Based on the last 3/5/10….I have virtually no confidence that higher rates, lower rates, or neutral, that this is a company that will be any better than the average at creating value. Alexandria or say Essex/Avalon/Camden? Sure, once the widespread rainstorm in Reitville stops, I think names like that will again begin the slow march higher, almost near certain of it. From there it’s just about quantifying what “higher” is.

I agree, but think in time the context becomes clearer. For instance, even after such a recent decline, who's created more value in the office space? VNO or ARE? The rate stuff has largely impacted public stocks because its where anyone with a few bucks can put on their macro trades. Once things stabilize I would expect the best of breed to again resume their exhibitions of such.

One year charts I never look at because anything can happen short term. It’s useless. But 3/5/10 I think reduces the impact of short term events. 3 years ago for instance was near the COVID bottom. 5 years ago anything worth a damn should be able to demonstrate value creation regardless of the macro. That statement is doubly true over 10. That’s all I’m trying to gauge. If there’s no take private then from the current base you need long term value creation to do the job. What’s managements record? Will I be diluted? Is it a kingdom builder? Is there a regional angle? These are the questions I’m asking myself.

Was referring to 2014- today cus it’s basically 10 years. Why stop at 12/19? Looking at 3/5/10 year for a handful nothing really stands out.

I guess put a little differently, in 2021 you had both a relative rerating occurring, and also a sort of get out of jail free moment for a huge part of the sector, especially non traded. The first part happened and still stuck. More evidently displayed in SFH but there was no reason for the spreads between say a 3/2 in Connecticut vs a similar home in Austin or Tampa. That’s happened and the rerate is done. The latter is really where almost all of us here made tons of money because it was obvious as day. You had these guys who were running small cap reit and non traded just raping shareholders for years. They get an opportunity to basically cash in and boy did they. Would be like granting immunity to any criminal who decides to go to confession next week. What would anyone with a brain do? Bet on people going to confession next week. Those two things were the catalysts for the trades all of us were banking for the 18 months it was occurring. Outside of that though, it’s less clear to me where value was being created. Ignore the COVID period and go back 5-10 years, brainlessly picking a date say to say 2014…I don’t have numbers off hand, but how well has something just run of the mill normal, not good but not bad, say ESS done annualized? Camden and MAA got most of their outperformance from rerating, not anything operational really. AVB and EQR have been a waste of time. So I suppose asking differently, where does the outperformance going forward come from? Is there another rerate on the horizon? Does the management teams do something differently than they’ve done the last 5-10? What gets this working? This is totally a trade or investment I could dig if we were funding it with 3% margin, but at 6-8%?

Is there really a take private angle here for most of these though? Largely in the reit space I see so much rhetoric that looks anchored to misunderstood biases developed in 2021. What made the 21 small cap reit trade so easy was management incentives and having BX in the process of ramping up a fresh new vehicle with seemingly unlimited capital. I see few REITs that have a management incentive to sell. Most acquirers have stepped aside. On top of this there’s just the historic footnote that these have poor governance laws being in Maryland. Seen a lot of people rush into large-cap reit like it’s 2021 but the problem is it’s not and few really seem to recall what it was like evaluating REITs in say 2014….anyone remember? Of course not because it was boring and your return profile was like 5-10% annually. REITs in a normal market are kinda like longer dated bonds and the only difference between them all Id argue is management quality. Does anyone think any of the bigger ones have a legit shot at going private? The draw is still there and yes these are not efficiently priced at all….but again, this has almost always been the case. REITs and public real estate is never priced accurately. But partly that’s because few of them have the incentive to make it accurate. And of those that do, even fewer actually do it.

Why would you look at the 30 year over that time if the argument is that you can’t use the 30 year’s performance for the past few years as a proxy for how well bonds did? Wouldn’t the pro short duration bonds argument comp be using short duration?

The point of watching what someone is doing, is to learn or stimulate idea generation. Theres plenty of investment guys who I think are decent, but theres also a certain class that I think are totally dangerous. Theyre dangerous because clearly they have enough money to live however they want....right there they are different than most people whom are going to follow them. But because of that....in contrast to lets say a guy like Buffett, or Tepper....they develop this kind of self defining persona. Im not convinced its 100% a chosen and purposeful embrace, but it is very obvious from a few feet back. Where making money isnt good enough anymore. They have to try to make money in a showoffy way. In a more complicated way. In a more contrarian way. Would be like Tom Brady or Joe Montana no longer trying to just throw completions, but only ones 20 yards down the field into triple coverage. I mean look at the very reason people even know who Mike Burry is....because he supposedly walked into GS, DB, etc and specifically created a brand new and exotic instrument that most still didnt even understand after he did it! Thats your "ah let me copy Burry" awakening call? It was a gripe I had with Prem for most of the past decade. Its why you still know Einhorn is lost....after the pathetic decade he put in, he finally has a decent stretch, and then you look under the hood and....his top position, which is something like 30%++ of his fund, does 130% or whatever in the quarter and you think man! good for him he must be crushing it, and then you see he only made 15% on the Q and its like Oh....guess he's still shorting all this other crap trying to be the smartest guy in the room....why you should just never listen to Kyle Bass. Or the dudes like that who just always seem to be opining about something "ABSOLUTELY MASSIVE AND BAD!!!!" being "just around the corner".... So, in summary, be careful what you fill your head with and dont let guys who's main objective isnt making money, infect you with their rhetoric.

It’s funny you highlight this. My buddies girlfriend was terrified of Trump getting re elected and looking to dump her entire retirement account and cash out and he asked me what I thought and noncommittally basically said EXACTLY that. Tech bubble, LTCM blow up, 9/11, GFC, Europe debt drama, flash crash, Asian August crash in 2016(iirc), the Xmas pants shitter event in 2018, COVID….and here we are.

If I took 31,000 shares of CKX and dumped them at the open, the stock would decline massively I assume. Let’s say I did that over a week. Average volume still indicates this would cause big time volatility. Like above, did the value of the business change? I guess it depends on how you view things. If you view your ownership as such, the value probably didn’t change despite the market playing poker with you. If you don’t know much and are just paper flingin or buying what others are buyin…I guess you would care. You just need to be confident that what you own is worth what you believe it to be, and not in the position where you are so desperate for cash that you need to liquidate into that quote. It’s really that simple. I saw Accenture quote me a penny during the flash crash. Is that proof that perfectly good business’s stocks can go down 99% in one day and thus one needs to be worried about that? If I don’t have any ideas, yea, maybe 5% is appealing. It’s better than nothing(IE no ideas).