Gregmal

Because you have consistently limited the start points to first, only 2022. And now mid 2021. Inflation began in summer 2020. But even using your second starting point, the returns are positive during a period which many other things didn’t do well. So the argument here is essentially 1) 2022….occasionally stocks don’t do well(while ignoring some bonds but touting others…again cherry picking) or 2) there was this other 2.5 year stretch where stocks only did 7% and that’s awful but it’s been a good year in fixed income with 0-5% returns?

Right so the goal “compounding capital as fast as possible” is somewhat contradicted by only seeking “absolute returns”, especially when the absolute returns pale in comparison to readily available alternatives. Like if the objective was to compound capital fast, and one hugely accessible, diversified and liquid option does 20% and the other does 0-5%….how is that anything but a failure? Or is that when we stretch the goalposts again? Historically, stocks are what compound capital the fastest over a medium to long term period of time. There’s numerous reasons as to why and most are sustainable phenomena in places like the US. Short term, if it ain’t obvious by now, people are just guessing and only with hindsite and a conveniently picked start and end date does the crystal ball exist. This year is evidence of that.

Because this largely isn’t true and short term cherry picked datapoints can be manipulated to say pretty much whatever one wants. If we pinch the timeline in here, then discard that, then only talk this subsector of an asset class, and then discredit that leg of the rally…..I mean it’s just all a little too far fetched and unproductive. I mean bottle all this up and summarize it and it’s basically “don’t own stocks cuz occasionally there’s short term periods where they do poorly or something else in the universe does better and every once in a while you get a big decline”….I mean just up thread you’re kinda of downplaying how poorly bonds have done because “they’re up across all accounts” and the goal is absolute returns, and then a few points later it’s like “oh 6.7% over a tough two year stretch sucked compared to other things”…wouldnt the consistent logic dictate that single digit bond returns are awful because you should’ve owned the Nasdaq for 2023? So again it all just kinda comes back to this generally obvious idea that unless you are hyper focused on the short term guessing games that likely don’t have probability of desired outcome any more favorable than casino games…stocks are what you wanna own?

I don’t understand what intellectually honest and beneficial conclusion we can arrive at by continuing to claim this. Inflation started in June/July 2020. Today we are still in a modestly higher than normal inflation environment. So there is your inflation timeline. Why the insistence on cherry picking what was essentially a 6-12 month market panic?(that has since proven temporary and corrected itself). It just seems disingenuous to keep doing this and I don’t know but if I had to guess it’s being done to rationalize positioning a certain way, but ultimately void of real supporting data.

The reasons IMO are simpler than one would think. You see it now from all the people who predicted doom last year. Or the year before. Or the recessions...theres always an excuse or a "darnit! if it wasn't for xyz....I woulda been right" approach. Its almost an addiction. Why haven't we had the most predicted recession ever yet? Oh because of stimulus! Oh because of credit cards! Oh because the government goosed GDP by spending! But the answer to overcoming that stuff is by inverting the approach a little. Why is it the more times than not, bad outcomes are avoided? Well, gee, probably because its in everyones interests to avoid them LOL..duh. Everyone, from company employees, to governments, etc...is generally working to keep things as is or make them better. Sure we can argue about the potency or effectiveness...but from 30,000 feet above, it really shouldnt be shocking why the terrible outcomes dont happen nearly as often as predicted.

I think once you remove the fan favorite stocks that the market is neither expensive nor setup for any sort of outlier stretch worth fretting. But ultimately, the exact PE can change and all I have to go off is historically how I’ve heard the exact same arguments about how it’s super unlikely to see favorable future returns and yet here we are. So instead of drawing some definitive conclusion I just kinda shrug and then look for stocks to buy and there’s no shortage of stuff you can buy and make money. On rates, again, idk but I think people tend to get too obsessed with rates. There’s always kinda been this love affair people have with proclaiming that rates are the end all, be all in determining stock values. Which I’ve never quite understood because you also learn on day 1 or 2 when investing, that stocks are different than bonds. The 30 year matters and it’s what? A couple points higher than it was a few years ago. Definitely not life changing. Other than that, who cares what short term rates are because they’ll soon need to be replaced as a bond eventually gets extinguished.

All I’ll say is that since I’ve been in the market, now over a decade, almost two actually, there was an overwhelming chorus of people voicing @TwoCitiesCapital concerns. Recession calls literally every year. Bubble calls dating back to 2012. “How in the world could we possible get positive returns on a forward basis” the whole way. Especially starting in 2014. Forward returns will be awful were a popular refrain in….2015….. Of course none of this matters because every year that goes by we have more and more hindsite wisdom as to why the past is unsustainable. You can literally check the “bottom” thread to find this exact wisdom at this point last year! The same negativity was present 20-40% ago! But now they’re even MORE certain. Prescient calls about how this time is different and 400,000 intelligent reasons why. And even an idiot could have just bought the market or the biggest and most popular names out there and crushed the precious treasury/bonds/note and gotten 4-7, maybe even 10 years worth of returns! So I won’t go as far as to say to totally ignore the skepticism; but I will say it’s ALWAYS there. It ALWAYS sounds great and intelligent. And so far, it ALWAYS fails to impress. Bottom line is if you are young…own equities. Bonds are for retirees and the .5% who can slay distressed. That’s not anyone here.

So when you own a bond, how much do you get compensated if the investment is validated via an acquisition? How much do you get compensated for volatility? Just within the universe of companies I follow, with stocks, good market or bad, you generally get 5-10/20% fluctuations frequently, to where you could literally just trade around a core and generate that mid single digit return in a matter of weeks/months. Same with selling options for premium. In general I feel like the underlying and maybe not soooo sooo obvious attraction people have to bonds is a feeling of security due to market to market because you don’t see the same fluctuations as with stocks. But that safety IMO is derived from perception, and perception may differ wildly from reality. For instance, after all the circus, it is stocks, and not bonds that have largely recovered from last years transition period. And this despite the fact there has been underlying assumptions the entire time that “stocks will do poorly”.

Is the fact that stocks can be volatile really a reason to be afraid of them? 2020 for instance? Two types of thought I guess…to some it was awful because stuff temporarily went down. To others it was beautiful because you had a generational opportunity to make a fortune. The takeaway regardless? Now 3 years later pretty much everything is substantially higher then before it happened and really, unless you had a 1.5 month liquidity need, it was a blip on the radar.

I personally dont think it gets nearly that bad. At least not for asset values. But again, mainly because what they are doing has been so well orchestrated to the people with wealth. Everyone who is just waiting; now they are getting 5% freebies while they wait for vacation homes and bragging rights associated with getting bargains when those just trying to hang on puke.

LOL now imagine telling those people that we're gonna embark on a multi year crusade where we attempt to "solve" the problem by giving even more free money to those with assets, at the expense of wage growth for the other 95% of folks? Yes, this is really happening. Anyone seen the rates for a used auto loan lately? Definitely helping the little guy!

Yup. The Fed officials are not even hiding it. They think wage growth for the average person is unacceptable and the jobs market should favor big companies.

The most bizarre thing was that when COVID first hit, everyone and their mother was like omg supply chains are gonna get fucked, and hard over the next few years. Then that plays out and half those people for some reason thought inflation was fueled by other stuff. Mainly the biggest bias I’ve ever seen, the “money printing bubble from 2014” thesis. It didn’t take a rocket scientist to see that shutting shit down, paying people to stay home, etc, would create inflation. And it shouldn’t have taken a rocket scientist to see ending that, would end inflation. The only trick, which wasn’t even that hard, was timing the lag and accounting for the capitalist aspect relating to pricing power. The stuff that didn’t hold pricing power, went right back to normal. Stuff like housing and Hershey bars, held better cuz no one wants to live in a tent or eat store brand candy.

And the “never in history” stuff was just so fundamentally lazy because it refused to consider content. If we have short term, COVID caused inflation obviously short term rates will be higher than long term rates. And by the way, never before in history had we had COVID before either. This is just one of the million problems with trying to be a macro expert.

And of course what does this “analyst” do? Moves the goalposts for his recession prediction back another 6 months lol.

Weird. Remember last 12 months or so all those people talking about the “E”?

Obviously gas stoves and water heaters. Also shower head water volume.

small adds to CLPR and KVUE

Exactly. More or less summed up as, how come the past is so much easier to predict than the future. 5-10 years ago who cared about Nvidia?

St Joe. The good things Florida has going for it are tailwinds, and if you look deep enough, you'll see the bad stuff for most of Florida is also a tailwind. Hamilton Thorne too I can see just having a forever runway. Nintendo as well. The cool thing is you only really need one or two of these type of investments to work to be in great shape, life-wise.

Yup, the big cities are effectively dead without office. It’s still reverberating. But from the top down everything relies on office occupancies. The tax base especially drives the long term prospects. So for places like SF or NY…I mean yea it’s great you still have people living there, but the recovery has an awfully long way to go. People will sign 6/12 month leases without thinking, but net/net you need a massive turnaround in office absorption and a 10-20 year commitment in the current environment just doesn’t seem like it’s enticing too many companies.

Wonder if they’ve set equitable water distribution regulations yet? Or are they waiting for the fire first? Whoops.

Yea to me it’s basically about taking that 4 months and sacrificing 2 more plus a day and that is how you get the best of both worlds. Not everyone can or wants to carry two properties though. There’s nowhere better than the northeast in the spring. There’s little worse than the northeast from January through mid March.

Exactly. Now factor in state taxes. The owner of a $500k home probably pays another 1-1.5% of the home value in state taxes annually. So even if insurance rates double from todays levels, it’s still not really material. None of this ever gets mentioned though because there’s a very obvious agenda underpinning it. Even if both were equal, you then have the whole better weather element. Myself? I don’t get the attraction to 90+ and humid as shit 85% of the year…but lots of folks definitely like it. It’s not a coincidence that anyone who’s half successful moves on from being a full time resident in the northeast by 65.

Welcome to Wall Street. You have crooks everywhere who make a lot of money and acquire lots of expensive things, and then point to having expensive things and making more money than other people are reasons why you should believe theyre successful.