Gregmal

Exactly

This has been a thing with @LearningMachine for a few years now. 10% rates. It’s definitely not the most realistic assumption, but it’s worth considering.

KB Homes says whats up fellas?

Totally. I find companies were I trust management and then hope and even sometimes encourage them to limit disclosure. Too many scumbag social media divas and short sellers out there why even play that game? An average investor wants as much disclosure as possible because they’re lazy and don’t want to do the work themselves.

Own vs renting correlates. If it’s too expensive to own, get ready for your rent to jack up because your landlord knows this. If both are too expensive, find a more reasonable area. There’s really no other way around it. Especially in a major hub, London, NY, Miami, Vancouver, you’re a global destination for 1%ers. You can roll the dice waiting for the 1-2x a generation “opportunity” with the risk it doesn’t come or too much of your life is spent paying someone else’s mortgage, or just bite the bullet. 3 options, that’s it -forget all the stuff you think you know and just buy -rent potentially forever -move I run into so many “I bought after the GFC” braggarts mainly bc I worked in finance for a bit…but banking on that is living life by the exception to the rule playbook. For a regular person, looking to have a life, it’s terrible advice and terribly misleading to think of you just sit on your hands perpetually you’ll have a generational deal on your lap. That’s not to say don’t have a slug of cash ready and waiting for that if it occurs, but I can’t imagine holding up my life waiting for a 1 in 15-25 year event that may never come. Sometimes we think things are expensive, but that’s just the cost of having such an asset. We re seeing it with Manchester United right now. Ratcliffe keeps opining that he won’t overpay and that $4b was lunacy…and he just lodged a $5b bid. Which still probably won’t even be good enough. It’s your life, what do you want for it?

Congrats! Folks don’t get it. My sister in law asked me “what should I bid” and I said at least asking but really it depends how badly you want something. Especially if you’re living there. Housing is unique. Majority of the time, you want something unique, you have to overpay a little. That’s just the way the world works. Fortunately, even though they seem like big numbers, over the life of the loan they’re less impactful. If you put all the people who overpaid by 5-10% for a home they wanted in a bucket I’d guarantee they’re better off than the people who refuse to budge. Especially when it comes to a livable place/shelter…time is money and waiting around years comes with a cost. You have to do what it takes. Investment properties are much more granular, but if you’re using it, just get it in your name then work backwards if need be.

It’s almost always a good time because you control your destiny! Tangentially I was shocked to hear this anecdotal piece from a family member. She’s 28 and looking to buy and saw a starter home in Parsippany for $400k. Listed Monday and best and final due Thursday. 70 offers at or above ask. It’s why it’s so dangerous with RE to make generalizations because it’s all so specific to individual areas. The more NYC detonates as far as safety, traffic, and general livability aspects, the more suburbia gets jacked.

Yea he s a piece of shit. Your job is done, sit down Fauci.

Prices held. This will start the beginning of the rate spread compression which is occurring just as folks are starting to get used to….higher rates. Pricing may not accelerate right away, but volume should start moving. Volume moving up is good for everyone in the ecosystem. For the last year anyone outside of actual property owners took it on the chin. All that’s gonna start buzzing again.

Yup. This is the turn.

It’s amazed me how much ignorance there is around this in the markets and amongst participants. It’s probably the easiest to understand aspect of the whole thing and night and day clear why there wasn’t inflation pre COVID and there was post COVID.

October 2021 had a 75 bps position in BRG via call options. 50 bps in PTON puts. 300 bps in VIX calls to hedge out and effectively guarantee a big year. BRG got sold(which was the thesis) and 11x’d. PTON crumbled on sales deceleration, ~7x on the puts. People got scared of the South African variant omicron over thin trading Thanksgiving weekend. 6-7x on VIX. Part of this is playing individual themes but generally, that’s less than 5% of the portfolio structured in a way to capture upside and when right turned into 20-30%. Just one example I could easily put down but you can do it in different ways and however it suited what you invest in and how you invest. A bunch of us I know were doing it with Berkshire in the low 200s coming out of COVID. The key is overcoming the inherent fear of “losing money”. Losing money and seeing volatility are two different things. You can’t play poker effectively if you’re always worried about wagering your chips. You have to let the situation and the numbers talk to you. With investing you don’t have to do anything and you can also tailor how you wager to enhance your odds.

Relative to the portfolio I mean. A 5% position does 50%, it’s 2.5%…who cares? Waste of a winner IMO. Although separately, you are correct. That’s why getting some money and assets to your name is so important for younger people. Being able to parlay an irrelevant trade into a new car or seeing your fluctuations equate to someone else’s annual salary is powerful.

Is that really the reason the overall market trades where it does? How do you know?

I have actually found it’s really easy to get concentration in a big way if you utilize leverage in a half intelligently structured way. Have had mid single digit positions turn into 20-30% positions, and low teens positions turn into positions greater than 50-70%. The problem blocking many from doing this is 1) understanding how to punchcard this strategy, 2) navigate options trading and 3) they’re petrified of losing let’s say 5-10% which to me is silly because if I’m not willing to risk 5% on a trade, I don’t know how I could ever reasonable expect to make a decent amount of money on it. But that’s really the key. If you are fine putting 5-7% on the line, and can isolate the strategy to punchcard ideas and structure it to the upside, it’s ridonkulously asymmetric.

Since November he’s been saying they’re overdoing it. Now 50 bps cut he s saying. Basically better safe than sorry and it would immediately solve the bank issue. I don’t know if we need to be cutting here, but we definitely don’t need to keep going higher “just cuz”.

Does anyone else get a kick out of some of the tweet responses to Elon? Saw something where Musk and Teary Eyed Bill were engaging. And I could not help but find amusement in the comments. Typical comment was from some internet piker who’s holding lots of cash and short positions, openly talking up all the destruction that’s gonna happen as a result of rate hikes….saying why would we listen to Musk as if Musk is the one with an agenda. And in my head I just see the diagram….in this corner we have a guy who doesn’t seem to care at all about money, who runs an auto company employing tens of thousands of people, with what is probably tremendous visibility into the economy…and on the other side…some piker who’s rooting for and betting on bad outcomes and talking it up on the internet …yea. Who should we trust lol

I like all of it and its always an ever evolving process. It has to evolve generally, because the markets evolve. Stuff that works for awhile can stop working or be competed away. I haven't quite got an answer, but have always tried to do both. So I am generally 130-150% invested. That includes hedges and market neutral stuff, but the crux is to compound constantly. Not businesses but the portfolio NAV. Typically 2/3 of this is in buy and hold stuff and the rest is short term event driven trading stuff. Ive owned MSG shares since I pretty much started out in 2011 or whatever. Hamilton Thorne too has stealthy become a decently long term hold for me. But at the same time, I have done very well with the short term trading stuff. Its one of those things where when I was younger and hungrier Id be cool being plugged in 100% of the time, 24/7 and 365, which is what is typically required to trade in a way that justified it(IE 30%+ annually). But over the years that also got exhausting for me. Towards the end of 2021 I kind of made a conscious decision to use the transition that was occurring in the market to shift to probably 90% buy/hold/passive but the caveat was that I had to find things with the characteristics often displayed in @dealrakers holdings. Buy things that are special, durable, and desired. They should make money, and they should make peoples lives better. Ironically the implementation of this strategy went very well, but all my returns in 2022 where largely from....short term event driven stuff like buyouts and merger arbs. So far in 2023 I haven't done a whole lot of anything, until last week and the week before. Then put ~15% to work between UBS, XLE, TFC and WFC....seems like a market timing move...or maybe just reacting to price versus value? Hmmm..hard to classify and I want to put labels on these things to analyze my process, but at the end of the day, they dont necessarily need to be labelled. I dont think XLE/WFC/TFC are long term holds for me. UBS, maybe? Maybe not LOL. All I do know is the past 12 months or so of being predominantly buy and hold focused and worrying about business fundamentals rather than fluctuations has resulted in significantly higher quality of life for me, which was my goal. At some point the money has less meaning. I am able to do what I want with my life, I'm able to take my kids on vacation for 6 weeks in the winter, I'm able to impulse buy houses, Im able to give my kids whatever they want and more importantly, everything they need. Why not enjoy that? One day they'll be older and even out of the house, and then I can stare at a fluctuating digit on the computer like a gambler and redefine my life again if thats whats necessary.

Yea we ve been through this before though. They didn’t need to do anything and those numbers would have fallen off a cliff. Same song and dance and ultimately chart as everything else that went through the COVID phase. CPI chart in 3 years will match ZM chart with an 18 month lag. Shutting the economy and sending checks created inflation. Took 12-18 months to flare up and will flare out 12-18 months from when those two things stopped which were Jan(checks) and March(stupid NY/Ca type state restrictions) 2022. So again, the problem is Jay was lost and got hypnotized by people spewing stories for profit. Same anti “free money for a decade” people asking for “free money” in the form of more interest. It also woulda been helpful if Jay understood what he was doing to the banks he is tasked with regulating. Hanging at 4-4.5% woulda done the job, and voila in a couple months that’ll be “heavily” restrictive anyway….

The issue with Powell is straight forward; he was totally duped. He regulates the banks. He would have still followed "the mandate" doing a more gradual set of hikes, given HE KNEW they take awhile to work. He had the stress tests designed. He devalued the same stuff he knew, and largely made, most of these banks hold. Again, nothing to do with "oh well this one or two exceptionally managed banks managed to get it right"...no, BS....the majority would have the same issues if Twitterers and CNBC crew gets a bank run going like they did at SVB or FRC. Got nothing to do with performance of anything or peoples idea of this or that. He was hypnotized and against much warning, became reckless, and effected the one area he should have known best and been privy to.

I am not sure it’s one way or another but can not fathom that all of a sudden 90% of the banks suck and even BofA is a bad bank. It’s hard to imagine no one there with their fancy degrees and 3 letter designations saw this coming, but it’s also on the regulators who more or less made them hold these things and then chose to rapidly devalue them. Patience is all that was required…it’s still the answer. No one says you cant hike to 20% in due time. But going from a 5 mph school zone to a 70 mph highway in 1/4 mile just doesn’t work. No one has patience or the ability to look more than a few months down the road anymore, and that in and of itself is somewhat troubling as well.

Nah people are freaking out because the guy who told us rate hikes have a lagging effect on the economy, and that the banks are not only healthier than ever but more than able to withstand a recession….something we should be able to take at face value given the fact that he is tasked with regulating them….went from 0-5 in less than a year and caused a banking crisis. If that doesn’t scream inept I don’t know what does. And this isn’t Monday morning QB stuff either; plenty, and I mean plenty of people, right around November were saying that 4 is ok, but he’s getting awfully close to going overboard. And what did Jerry do? Ratchet up the rhetoric and even talk about reaccelerating hikes and terminal rates….Fuckin moron.

He's got a pretty easy job right now if he plays it right. He's got 12+ months of guaranteed CPI contraction and "I just hiked rates like no one in history" to fall back on, which any halfwit would probably be able to parlay into 12-18 months of just sitting tight and being "data dependent". Its almost a certainty now that CPI will be close to negative by August or so.

I think 25 or 0 will tell you more about Powell than anything material otherwise. 25 and done who cares. But from a practicality point of view, there’s no need for another one. By summer you’ll easily see sub 4 CPI and probably sub 2 real inflation. So to me, if we see 25 this time, all it tells me is that this guy is still easily manipulated and still a total slave to the “credibility” crowd, even if it means unnecessarily jeopardizing the rest of us.

See Jay fell for the rhetoric and those within his sphere who were pushing it. Why couldn’t he use some common sense? The ultimate tell of a dishonest take on the inflation is the “it’s their mandate” and “so what keep zirp forever” responses. It’s not all or nothing, especially at such as high level. Saying 5% inside 6 months or whatever is insane isn’t saying they should have stayed at 0%. Or saying 3-4% is fine isn’t violating this “mandate” as well. We keep hearing about these comparisons to the 70s…well guess what? If we applied some common sense and say, capped these hikes to 250-300 bps on a TTM basis, you know….so we could actually be data dependent and see the lagging effects…we d still be at a 10% FF within a few years and back at peak Volker levels many years sooner than it took back then. It’s just that the chumps like Summers, who I am certain is also getting paid by hedge funds for “advisory” work, told him he needed to go bananas to be credible and defeat inflation…yup, it’s as dumb as it sounds and was all along.