Gregmal

That’s 100% it. It wasnt the inflation hoax…but the accompanying rate floor going forward which changes a lot of the strategy viability going forward. The decade of carrying Googles, Mastercard/Visa and Costcos on margin cuz 1-2% carry cost is basically free is done. That’ll take a while to unwind. But there’s plenty of other stuff to buy anyway so who cares.

Sticky icky, icky.

Yes. And last we checked oil is now back at $70 but for some reason people want to keep talking about inflation even though there’s been none for quite a while now and continuing to fight this boogeyman that doesn’t exist will just harm the economy way more than grocery prices being 10% higher ever would. Of course it’s all just a bs cover by the 1% to perpetuate the “great reset”.

OTM March puts on TSLA

Shorted puts on HHC and MSGE

My thinking is more along the line of @SharperDingaan. Stories of who went or was going under are greatly exaggerated. Lehman and especially Bear didnt need to go under. Everyone took safety net money. Goldman also happened to make a ton of money on the short trades. Didnt they get AIGs bailouts money to payout their CDS? The cries of Government Sachs that echoed for years are founded in truth.

Thought about it some, its always at the top of my buy list but never quite gets bought, but Goldman Sachs? Long term winner, will be around. Brand name that attracts top talent. Cheap. Anyone beg to differ?

This became questionable as the tech and crypto booms took over the past few years.

Best railway ever went bankrupt. Today is it TPL.

So TOL reported yesterday and crushed all the estimates by a country mile or two. Guidance calls for expected declines but still healthy profit margins which should probably even improve/offset price declines as inputs on the commodity side see the futures market declines start reaching the end user. Several other key takeaways from their call include subjects that simply get ignored but are standard base info for folks who follow real estate....housing is regional....West Coast is bad, but Florida, Atlanta, Carolinas, Virgina and NY/NJ/CT/MA areas all remain strong. 55+ robust everywhere. Lots of stuff that simply flies in the face of the stuff being peddled by the doom and gloom crowd. There was basically a brief several week period in January where the market dumped these but ever since they've more or less been shitty shorts. Partially IMO because, as a lot of us talked about last year, the whole volume drying up issue was already prevalent for much of 2021 due to inventory issues. So while 2022 has seen that accelerate, its hardly out of left field. Yet, the earnings from last few years plus the pieces of the backlog that are making it to the finish line have more or less put the tier one guys like NVR or TOL and DHI in remarkable shape financially. They're buying back tons of stock, many have what I'd call adequate land holding, although that varies. They're healthier than they've probably ever been. So whats the short angle? Everything Ive been hearing for the past 2-3 years is basically the typical "next years gonna be awful" short sighted fear pump bs short sellers are known for. If folks recall, in March 2020 we had our first cry of housing is collapsing because I guess folks thought there'd never be another open house or something and like today, transactions dried up for a bit. The only real angle is operating leverage and its well known negative impact however again, if we look at this, profit margins and balance sheets are currently nowhere near this even factoring in forward guidance being given. Even if it occurs, whats 1-2 years of earnings worth? 20-25% in some very severe cases? Seems like a waste of time. I try to keep an open eye to opportunities but it just seems the whole short homebuilder thing is a pee-wee hedge fund trade mainly by guys thinking one day they'll be starring in the Big Short part 2 or something...oblivious to the fact that today is nothing comparable to GFC. There still remains robust demand for housing, rising rates have simply, gasp....done what they were supposed to do and slowed things down. In a world where theres so many really good, shitty company shorts, whats the point in trying to squeeze the last drop of blood from a stone with blue chip homebuilders trading at single digit multiples, on whats basically a next years gonna be bad thesis that gets chased in perpetuity? Im not long any at the moment, outside of a tracker in NVR and some short put positions I've been rolling for the last few months, but think that if we're in a forward looking market, sometime over the next 2-3 quarters we should see that point of inflection where the market realizes we're not having 7%+ mortgages in perpetuity. So perhaps theres a trade setup in the making?

No need to guess just stagger put sales at levels you're comfortable with. Personally I sold earlier in the year after a many year hold. Would probably be interested again at 25x NTM.

Probably a useful tangential exercise is to identify features of successful public and private investments over the long haul. Many times, a common trait is a niche or specialty sector, limited coverage or investor awareness, and polarizing dynamic/angle. Been hearing my whole life how overvalued/expensive sports teams are. Each sale sets a new record. Or Hamptons homes. Ferraris. Some of the insurance brokers IMO fit this well. Very limited coverage, hardly a robust or enthusiastic widespread investor base. Sometimes optics issues. Something like RICK too a good example.

Theres not competition or replacement, whether its 20-50 years out, for one of a kind assets or for well located, physical places. So yea the MSG stuff and JOE are weighted the way they are for me for a reason. If the non physical places become a thing then Nintendo will work for me too!

Yup. Inflation story is dead. Its all too predictable that of course now they begin screaming recession as loudly as they can.

I have never met a fund of fund guy who is honest. Objective, how do I maximize the duration of the fee income? Then the fee income. Look for something edgy to sell, that is actually plain vanilla and not edgy at all, so I can tell a story. But thats a different story. Its not world class tail wagging the dog institutional alpha. Epsilon Energy. Two big, dumb tutes competing to blow out of the stock in June. Company bought back a ton of stock. Growing earnings, no debt, still rolling.

What about crypto? Just today on cnbc you had two headlines. One prediction that BTC is going to $5k and the other that it’s going to $250k. Can at least one of those guys lose their job depending upon where we are in a year or two? Not to mentioned all the fund of fund guys. Pure frauds.

Isn’t it crazy how many professionals and institutional investors have chased their tails this year? Been the ultimate contrarian indicators? Star of the year has to be the Tiger cubs. Single-handedly creating the bottom in many tech stocks in June, then went long Lamb Weston in July. But there’s no shortage of champions. Everything from storming the castle in Q1 because FANG stocks are cheap after a 10% pullback from ATHs. To calling 40% declines from the June lows for all the indexes. Then there’s the homebuilders at the lows….why aren’t they trading at 1/3 book? Earnings are gonna slow down! Or the gold bet that just never panned out? How bout we short everything bond because they’re all going to be worthless when the fed has to raise rates to 9% to beat inflation? It’s their mandate! So much laughable behavior from the pros this year. Including all the experts who mocked the Reddit/WSB crowd; how stupid were they? They didn’t know anything and their fundamental research was wrong, they just got lucky. Meanwhile out of the other side of their mouth when the entire market tanks of course all their short thesis’ were “prescient” and “timely” and worthy of taking victory laps on….they’re no different than the meme stockers really. They just wear suites and write better. So one thing is obvious more than ever. Most people, including the ones who claim to be experts, do not engage in real investing activity and more or less just react to stock price movements. They love it at $100 and hate it at $50 and are giddy or depressed at every up or down in between. I’ve long thought 1 year performance is pretty meaningless unless investing in a clear event driven situation. But it seems these people need it to spin their typical web of bullshit necessary to gather fees. So, how about we list winners. Companies who have executed this year, have bought back stock after the declines took place, who are real longer term, fundamental winners. No requirement for short term stock performance. Who earned their stripes so far this year? First one that comes to mind for me is Madison Square Garden Sports. Long accused, baselessly as being a bad allocator and having no respect for shareholders, they’ve executed on the business side, paid a $7 special dividend, and nailed the bottom on the share repurchase timing. There is no evidence that in an inflationary environment that their assets would be worth less, in fact, the only evidence we ve gotten this year is that they’re worth more. Let’s hear about the fundamental winners. I’m in the market for buying awesome assets with great allocators. Lack of institutional shareholder base is a huge plus. Who are some candidates?

Come on Spek, lighten up. How funny would it be to see the reaction from all these arrogant academic lecturers currently preaching rate hikes as the only salvation, from their high horses? Spouting theories that have almost zero structurally significant supporting evidence?

They would be burning textbooks before long.

I mean you can do what nimrods do and look at data you’re fed by people who like feeding you manipulated data, or just live in the real world. Between summer 2020 and summer 2022 we pretty much had across the board 30-50% inflation in everything. The biggest drivers were COVID restrictions. Then fuel on the fire was stimulus checks going to everyone. If a worker deserving $18 an hour can get $28 to stay home and said restaurant is only allowed to operate at 20% capacity despite nearly limitless demand from folks with thousands of dollars of Monopoly money coming in monthly, in hand wanting a table….I mean come the fuck on. But all that’s over. Generating beyond 5% annual inflation will be absurdly challenging, despite what the people who called it transitory last year may now say.

The counter is that most people are oblivious to regular low single digit inflation. We ve been told inflation wasn’t 0 or whatever the entire pre COVID period. No one had a care in the world while getting 3% raises. They just started bitching when post COVID real inflation was like 20-30%. Getting back to inflation below a mid single digits numbers won’t be anything worthwhile to anyone not some financial propagandist.

Longer term I don’t think we are anywhere near 5%. But the issue is stability. Not some stupid made up “2%” number. All systems need flexibility to evolve. Meanwhile talking heads and inflation experts have in the last two years: -smugly declared transitory only to now just as snuggly declare it entrenched -cried for a decade about Fed credibility when the dollar says “scoreboard” -refused to give up on 2014s busted “money printing” thesis -don’t seem to understand the differences between slowing inflation, price stability, and deflation. They continue to demand deflation in the name of “restoring price stability” which is just dumb. For instance how many times have we heard about how high prices are and that they “need to come down”?? Stopping inflation just means they stop rising. Nothing to do with going down. -insisted we have rate hikes to solve things that have nothing to do with rates.. It’s all been one big circus. At the center of it much of the loudest COVID screamers. Enjoy them for what they are, but they don’t deserve credibility.

Many people have spent a decade claiming the Fed has no credibility. The “Fed has lost all credibility” crowd, sang at its loudest this summer….and the dollar sat at an all time high. So “credibility” IMO is overrated. Credibility, if defined by the “I hold tons of cash/short the market” crowd, doesn’t matter at all. More relevantly, I think there’s great credibility in moving and adjusting to situations. Sitting here and demanding 2% inflation is equivalent to the investor who demanded a sub 14x PE on the broader market in 2013…. If they demand it in a stupid way that we get back to 2% and blow things up it will be a generational opportunity for the investor who doesn’t shit in their pants at the thought of portfolio volatility. Every mistake can usually be undone. However the other scenario is that they get with the program and then everyone sitting around being a negative Nancy misses the boat on plenty of opportunities which are already pretty damn good. I just don’t see a point to sitting around scrupulously fretting every flavor of the year “crisis”. That’s just not how long term money is made, although on the internet everyone can do that and still make 20% a year so who knows.

Yea this is actually eerily in line with my thoughts. 2% is a ridiculous totally made up target that is irrelevant to the extent they let it be. Sub 5% inflation is fine as long as it’s stable and predictable. Plenty of stuff will thrive. Much ado about nothing.

The managers themselves I have no opinion on. I remember buying BX at like 28-30 not “that” long ago. It wasn’t popular and everyone bitched and moaned that it hadn’t done shit for a decade since the ipo and that insiders didn’t own the same shares as everyone else. I sold most of it right before covid in low $60s. I don’t think over the 5 or whatever year period that the world has changed that much, but $85 doesn’t scream anything noteworthy to me as far as cheap or expensive. They’re cyclical and rates are important to the game they play, so it’s just not high conviction(or any conviction) in any direction for me. If I had to pick one, it would be BAM cuz I know that regardless of what happens they’ll cook their books to make it look better lol. Just kidding of course.