Gregmal

Jim Chanos doing a classic case of “I was wrong about everything fundamentally but hey the whole market went down big so I’ll take a victory lap on my short position” with data center REITs today. Might be time to look at those lol

And as folks continue migrating to the same states they have been for decades, aka MPC dominated states, even building friendly ones, it’ll only get worse. There’s communities with 2500-3500 sq/ft minimums…imagine that?

No business got fucked around by everything more than the hospitality biz did. Staff were all let go. Then some came back. Then let go. Hours were part time and inconsistent. Certain regions of the country didn’t allow it or even if they did have demand. Basically the entire space employment wise got nuked. It many regions it was like this for almost two years! This is before vaccine requirements and all that which guess what, doesn’t really work with businesses that rely so much on undocumented labor! Places that were open, especially early, it seemed there was almost a civic duty acknowledging the hardships and I remember standard early in the pandemic was tipping 30-50%. You knew it sucked for the employees and all you had to do was open your eyes while eating. Even delivery guys got 10%. Then things opened back up and eventually demand exploded and these places ain’t stupid, they saw they could raise prices as much as they wanted because most had multi month reservation lists. And they deserved to after the hardship. But the worker situation is most severe on the lower/middle end of the spectrum. Never underestimate the incompetency of Howard Hughes but I haven’t seen one higher end dining joint with a help wanted sign up. On the lower end it’s every friggin store. However even this, is easily solvable and that’s just by letting people exhaust themselves paying these absurd prices. Eventually folks will run out of money or find better uses for it than $75 a person meals. It’s so baffling how most can’t see the other side already….the cycle already played out with big tech. Super charged demand gets wildly misread and they can charge whatever they want and hire a million people and then demand naturally wanes and whoops now they’re firing and cutting costs lol.

Berkshire, Fairfax, St Joe

VICON. Basically their motion capture technology and equipment is in everything from movies, to videos games, to sports and life sciences. Balance sheet flawless. Conservatively managed. Total bitch to accumulate though but worth a look.

I guess part of the thing too that’s baffled me on the inflation front is how much of the complaints circle around things that are 100% discretionary items. Restaurants have to be like the number one example of how “out of control” inflation is, and it’s like ok step back a minute. When TF did everyone become entitled to restaurant dining? And I guess whenever they felt it a basic human right, when did they decide that it should be cheap? Restaurants are the prime example of shut down/start up/ shut down/start up crap that went on during COVID and the varying effects of such on the business. Does anyone remember the kind of antics that went on early with COVID and hospitality? Total shutdown. Now bring back 20%. Pay as always shit. Ridiculous restrictions, masks, distancing. Waiters don’t make money at 20% capacity. Prices had to go up because of all the meddling and interference. So many people in that line of work just tired of it and moved on to other fields. But now we thinks it’s because of inflation?

There’s still a good amount of new supply coming to market over the next few years. Much more of an institutional product than SFH so I think you’ll see stabilization rather than big increases or decreases.

Well, we know who to thank for promoting bleach. Clorox should be sending Trump and Fauci stock option packages. I agree on the smaller stuff like beans, and am partially being facetious, but at the same time these are scale things. Can’t afford groceries is bull shit. Just work the math. Spek I think you even said the same thing a bit back on gas prices when you really break down what that cost is for most people. If it costs an extra 10c per mile to drive to the store and you pay 40c more for bread and then 20c more for beans on top of $1 extra for the frozen pizza and $3 a pound more for the chopped meat….like come the fuck on. The biggest things to worry about really are the commodity inputs. Those getting out of hand will hurt. What’s funny now though is for instance lumber….crushed. Should help make housing more affordable right? Nope, thanks Fed! The stuff we see in services is entirely our choice, whether it’s Dairy Queen or Disney, no one says you need to pay that. If you can afford to and think it’s worth it, maybe you do. If not, you don’t. Certainly not life or death inflation barometer calling for an economic nuke.

It just another laughable annual trend. In 2020 everyone became infection disease experts. 2021 they were home flippers and crypto experts. 2022 they’re inflation experts. What will 2023 bring?

Yea this is one of the more amusing aspects of this whole thing. 95% of the people squawking about inflation have no clue what they’re even talking about. How many times I’ve heard “prices need to come down” ….stopping inflation would simply mean that prices no longer go up. So no they don’t need to go down, that’s deflation. If everything price wise just froze for 12 months inflation is 0. Even though you still think prices are “high”. High prices aren’t inflation. Is a Ferrari or Patek “inflation”?

Oxford Metrics I’m not sure I’d call a UK company but it trades in London and is stupid cheap.

Like give ‘em the stimulus checks when things are tough and if they blow it or chose not to work, cool. Giving away $10,000 and then taking one’s job or ability to pay rent is a little more nefarious.

UVE was always the go to blow up short if you’re betting on hurricanes. The bigger guys will eat it, then pass it on. Key is seeing the other side.

Raise, chill, let the effects take place? Talk tough in between? I’m kind of in the camp of helping when it’s warranted and then acting as necessary but with caution. Actively being the aggressor will potentially lead to massive civil unrest. Let people do it to themselves.

Inflation duckers

Considering most middle class folks rely on things like this, market products, many out of their control, such as 401k nonsense where it s "pick a managed product"....this is going to be a real thing. Even upper middle class....how many are in total junk like private yield pig CRE products, OZ funds, and other alternatives that are hugely levered and misaligned incentive wise? At some point this reverberates bigly, elsewhere. We keep talking about things going up, but many of those are still choices with alternatives. You dont need to eat Bobby Flay or even Burger King burgers....Costco sells em for like 80c per. Shop-rite its $5 a pound. But that managed product they've been forced into for 20 years now getting a 30% haircut because the $14 Burger King is deemed unacceptable? At some point there will be widespread, warranted anger because again, the system is showing how rigged it is. If $14 Burgers cause a recession, so be it. Deliberately causing one, which I won't go as far as to say thats what the Fed is doing, but theyre getting close, is abominable.

See this is one of the things. Perhaps we are already in a recession? I mean it’s amazed me whether COVID or several other things how folks look at what their eyes are telling them but succumb to what they’re being told and go with it. We’ve definitely hit a recession in terms of the standard definition nevertheless the current media and administration tell us otherwise. Look at stock prices of many different companies. From Berkshire to FedEx to REITs and even something like MSGE….it’s not like we are 10-20% off highs; individual stuff in many cases is -30-50% already. Might that be more indicative of what’s already occurred?

Absolutely agree with both @stahleyp and @crs223. First, I'd discount "some" of the market action possibly. These sort of group trades and computer driven moves have become every other year events. Fundamentals be damned. Dont think even a smaller cohort can do stuff like this? A couple weeks ago I was reading an SEC investigation into manipulative short selling. Was expecting to see stuff like Kerrisdale posts about. These small caps with funky trading dynamics...nope. JPM, AMZN, META where securities involved. Short term, anything is possible. But larger picture, "rates going higher"(to 4/5/6) for like a few years doesnt change the long term business value much more than when everyone thought they were so clever abandoning stocks because COVID was going to bring earnings to 0 for a year. In that situation most of the detailed work showed that "maybe" a 10% correction should have occurred. So here, IDK, its been a cute trade, but acting like earnings are going to fall off a cliff and stay down forever, while the fed keeps raising rates forever, IDK, seems highly improbably. If we get 1 or 2 years of an earnings decline? OK, does that really warrant -50% top to bottom? In which case rates go back to 1-2% and I'm sure instead of the bear camp saying theres 200% upside they'll still be saying we've got much further to fall. One of the things I dont think many really address is just how far in advance the Fed told everyone they'd raise and IDK but 3-4% shouldn't shock anyone. If you're off and theyre at 6%, everyone still had plenty of time to prepare. So most of these companies(Im talking about quality, not bullshit companies) had world's of time to prepare for this. And most have. They've raised on attractive terms over the past 12 months. Hedged their rate exposure. Whether its Berkshire, Apple, Fairfax, or Stelco, Aimco, or FRP Holdings, everything I follow for the most part has seen management take actions to weather the storm. Same with the housing universe/REIT universe. Balance sheets are in better shape than they've ever been. Is there just going to be a unanimous behind the scene collusion by everyone to just abandon owning assets? Folks just need to get off the ledge and think. I'd own BRK shares on a non transferrable basis at todays close for 5 years, at least and be happy to do so. Same with pretty much everything else I own. At some point the obsession over whats coming next week while ignoring whats beyond that is crazy.

^exactly and that IMO is the real bear case driving markets right now. These guys are just not inspiring confidence and if they don’t stop hiking soon because they’re looking at the same backwards data that got them into this mess, ugly it will be.

You guys see the Fed guy recently lamenting how rents are still high lol? Well gee, you didn’t really think that whole “price normal people out of home buying” thing did you?

Pretty sure in both 2008 and 2020 bottoms occurred within 12 months. In 2020 probably within a couple weeks. That’s the problem generally with sell offs is that the noise and current headlines get everyone trying to guess the tomorrows tape, or exact bottom or avoid the next leg and in the process forget entirely about the fact that investing should be about longer term fundamentals. For instance it’s hard to envision a scenario where Berkshire at 260 or FFH at 460 doesn’t make tons over money over the next 3-5. In the short term if there’s another 10-20% folks feel good avoiding it, but longer term it’s just always kinda the same thing. Markets are always moving ahead, when we hit earnings trough the market will already be way off the bottom. Things in general seemed priced in until the recent possibility was raised that the Fed would purposely put us in a recession and destroy jobs. Which even there, is eventually something that will have to be fixed. And it will be. They’ve already said this is temporary. Unless you’re investing with a 6-12 month window, in which case I guess it’s possibly permanent. Thankfully I don’t have that problem. So, take your pick. Sit around trying to guess a million different short term variables, most temporary, or just play the long game. I try to do a bit of both, but the major skew really should just be towards acquiring great and indestructible assets.

I’d also argue that historically speaking, 4% rates and $80 oil isn’t really anything special in terms of high or low. Dollar is another story lol

There’s never been a decline, period, like even 2-5% declines, where “lower” wasn’t the forecast somewhere. Even at 670 in 09 we had another 30% to go. Look at @LC example with 3% return 30 years ago. What a waste. This is just where fools and their assets part ways. They get fooled into believing the day to day quotes they get represent the value of what they own, and the whole irony there is that if that were true, there’s no point to buying anything but an index.

Enough people see their retirement account statements and you’re gonna see all sorts of funny stuff. First one probably being jpow at senate hearings asking why $20 a week higher grocery bills called for destroying middle class dreams of home ownership and 75 being the new retirement age due to 30-50% declines in 401k. This whole year has been hilarious in so many ways. But really it’s been no different than the last couple; blind leading the blind and feebly serving the wealthy and their agendas. Like Mr Sokol today offering to PAY MORE for a shipping company!

MSGS and Berkshire. Sold some more October IWM puts and swapped into far OTM VIX calls. Feeling like folks are nearing capitulation.