Gregmal

Boomp. Got top? TSLA and Moderna vs APTS? Update? Holla back

Like so much of this is stuff that’s overblown and deliberately spun into some negative for reasons beyond me. For instance, the claims that inflation is “stealing peoples paychecks”…..Um, where were all these folks offering to hand back their 3-5% annual raises the past decade when inflation was nil? Oh, we only complain because for a year or two it went up and even though we can easily take other jobs but chose not to?

Probably bitter savers or short sellers. But those were the losers so who cares? They got it wrong. Banks got recapitalized. Unemployment low single digits. Household wealth back up. But folks are bitter because the Fed largely did what it told them it was going to do. Dunno why but ok.

I mean you think Powell or Biden want “recession causer” tattooed to their legacy? Especially if they don’t need to. Or because some folks are trying to convince them that lumber pricing isn’t supply chain related and cars will never depreciate again? Weren’t folks just running their mouths about wheat? Whoops. Burry nails it with Target. Great example there. Folks are saying this is proof of inflation, the inventory issue? No. It’s proof that supply chain gets clogged and folks buy the bullshit and then order WAYY too much easy to produce shit and then get it…whoops again. For all the whining about the Fed, to be honest, if you look at what they’ve done, the tightrope they’ve walked since GFC, to get things back to a decent place, I think it’s actually pretty remarkable. And there’s a better chance than I think folks expect that they bide enough time for the non Fed supply chain issues to work out so they can claim another victory and avoid a real recession.

He s on point. I am still amazed at how folks are reacting to all this. Writing is on the wall and it’s literally just a matter of time. Probably a month(August or so) til you get the last few rate hikes and numbers to start comping lower. Fed says we did our job. Numbers support it. Administration says yay victory in November. Yet that doesn’t stop folks from panicking. Massive overreaction emotionally. Calling for solutions that provide zero rational end result. Early stages of COVID everyone said supply chain would be a casualty. Folks then started seeing it as some of the US got back to normal but missed the whole part where certain shit states weren’t. So they made the right call, “transitory”; just were off by a year. And now everyone is under the assumption and hypnosis that toilet paper, cars, home building related stuff, commodities, etc isn’t supply chain related or fixable. LOL some crazy shit.

You’d think they want to drill on federal lands? Nope. They wanna open abortion clinics. Kewl

It’s only perplexing on level 1. If you’ve been in the game long enough it’s just how the dinner table gets set. Same way a new investor hears a buyout rumor and thinks “interesting let’s get in”, whereas an experienced one thinks “somebody wants an exit”. Media and analysts are all minions that serve the real players.

Wait, is that wheat back at February prices?

I actually think airlines are a great hedge here. I laid it out a while ago. But basically all the inflation inputs, like energy and labor plus rising rates, effect airlines more than anything. Something like AAL, which has a boat load of debt coming due on 2025? Puts are 2-3x the basis already, and if it works out they’re 10-20x. If those same inputs ease, a lot of other stuff soars.

My summary of Howard Marks. Mr Marks, what do you think of the current 2+2 issue? Well, borat pause, it could be something centering on something in the area of 3-5, but if it breaks the other way, all bets are off.

Bob Vila?

I mean come on, does anyone you’ve ever met in finance really deserve to make what they do? Especially those who make a career out of it and get to the compounding level. I returned 20% so I made $7M last year… I also think it’s a classic gatekeeper career. Name anywhere else where you have to conform to establishment and good ole boys club like finance. Private school. Elite grades. Elite references. Ivy League. Know somebody to get in. Not attainable to 98%.

I actually view this as a positive. Buffetts made some good moves but has also made a lot of mistakes the past 10+ years. Sitting on cash and selling stocks bc of COVID fears for instance. Accountability and something to prove mentality from the new guys would be more than welcomed.

That’s another element that becomes subject to individual interpretation. I mentioned avoiding thinking of your own situation for that reason. Everyone has personal stuff to be grateful for or resentful of. But how about the other side of the coin? What would a random third party think of let’s say, your parents net worth stacked against a list of their life accomplishments? Would the result be, about right? Underpaid? Overpaid? We see in movies all the time, terrible father, super career focused, built a company that employs hundreds, net/net….net worth probably reflects value to society. Shitty parent though. Vice versa true too. Steel worker who retired at 70 and is worth $150k but did everything for their kids. Society value? Probably little. Family value, through the roof.

Yea I find topics like this fun because there really are a number of ways to evaluate this, and almost all of them are somewhat correct, even though they support entirely different answers. Someone working the checkout at a QSR probably has a net worth reflective of that value. Someone in debt, has literally been a net taker from society. Someone who runs an auto repair shop, probably has more utility than a QSR clerk. But then the next layer is ethics. A teacher can change a kids life and may be overpaid or may be underpaid or may be a temp. Two auto repair shop owners can have vastly different worth depending on how aggressively they sell. And so on. Fun mental exercises.

Homebuilders in general just aren’t a great way to play housing because you need both volume and price. Then you also need somewhat of a decent captain on the ship. I think you can(and I have done so myself with what I’m invested in) refine all of these things into simpler ways to express a robust housing market. Homebuilders went down because the paper pushing WS guys always try to front run a theme and if higher rates materially slows volume then how does it make sense to own something you bought on the basis of pumping out homes like hotcakes? Should they trade at 5-7x? Probably not. I mean from what I’ve seen they’ve all met and mostly raised guidance. The folks shorting them are making money despite being totally wrong. Which is one of the beauties of the public markets. So many ways to win. You can often make money even when you are wrong, as long as you get the important variable correct, which the past 6 months has been to just be short anything. But it’s important not to confuse the public market stocks with the real assets. Private market for real estate is the real market. What’s public makes up like a sub 10% portion so it’s not really all that relevant. The real players are swallowing up everything that’s modest or better on the quality side. Throughout the entirety of my investing life, the public markets have been largely wrong and all over the place on traded real estate because it’s the only way for most to express their real estate disdain or enthusiasm. Can we actually imagine the dumbasses who sold their MF REITs bc of COVID? Fuckin retards. Did the private market panic? Nope. No one I’m aware of sold anything the way the public dopes did. Same thing is happening now. Everyone is lining up their cash piles and praying for deals and raising money for distressed funds. Just like Q2/3 2020. Outside of office and blue state retail I just don’t think they get anything to buy. Unlike with stock, where most people have no clue what they are buying, even with ticker symbols they know like Costco or Apple, real estate everyone has confidence in buying the dip on because it’s tangible. Costco pulls back 30% and they freeze even though they were waiting for the pullback. If a house you are eying so you can get out of that shitty rental and start a family gets a 20% price cut? You probably get a semi boner.

IIRC ~4-5%.

Ok so interesting thought, see the above. I’ve heard some say that in life the bigger the problems you address or solve, the more money you make. Look at the richest folks, guys like Bezos, Musk, Gates…they undoubtedly changed the world and have been compensated accordingly. Conversely, look at folks on welfare programs and in debt, the opposite is pretty clear as well, IMO. I’d suggest folks DO NOT think of themselves personally when answering this to avoid biases. Also exclude clear outliers like fraudsters or people who work in finance. By and large, does the amount of money one has, reflect their value?

I think micro wise you’re in the right ballpark but bigger picture asking the wrong questions. The right questions IMO would be…how unassailable are the Berkshire businesses? Obviously the equity portfolio is a huge question mark. The subs? I think they are generally quite stable and setup in a way that allows autonomy and independence which derisks a lot of the Warren will go away fear. There is great simplicity to much of Berkshire but also much complexity in terms of the structure and risk assignment.

To put that in perspective, the IWM would need to be around 105-120, from current 175 and a 52 week high of 244. Wouldn’t having something like this occur, require a wee bit more than 3-5% rates and a mild recession LOL? I do currently have a couple remaining hedges on, which include September, October and November IWM puts around the 180-200 strikes, but IDK. Dude is either looking for attention or seeing something he ain’t talking about.

I like Bass but have never really been too impressed with his investment skills. He is definitely a unique mind. He’ll see the black swans that other people can’t. But he also sees too many of them that don’t exist and his investment strategy always seems to be inspired too much on those swans. His critique on energy was spot on. The administration that a lot of people voted for is begging and doing favors for terrorists in exchange for oil but then screwing Americans and Canada with stuff like the Keystone nonsense. I wasn’t paying attention the whole talk but he mentioned mild to moderate recession, but also 30-40% lower stock prices by Elections. Did I miss his reason why? Rate hikes we already know about balance sheet run off don’t equate to substantial and widespread profit declines that would warrant a revised market price. Or should the SPY simply trade at like a single digit multiple just cuz? If liquidity was the only thing that mattered to multiples we wouldn’t have private equity, angel investors, heck houses aren’t really that liquid either…so I guess I missed how he went from A to D there.

Not that I totally buy it as anything super meaningful, but when you look at the basis for rent vs own for literally everything else in the world, renting a house is insanely inexpensive.

Yup, it’s a beautiful thing. If the “stonks” go down cuz people that push paper wanna create fictitious narratives all the better. These types of assets are unbelievably dynamic, resilient, and low risk. Of course I also wanna make clear I am speaking of the US housing and rental markets, not Canada. I don’t know enough about Canada real estate markets to have a high level opinion, I also don’t live there or invest there so I don’t care what happens there. On the surface the fundamentals in Canada look significantly worse than the US. But rather than get all caught up in doom and gloom I think it’s important to respect and even appreciate what the Canadian housing market has done now for two decade and then extrapolate that to what can happen in the US which is a better and more liquid market.

I think if you want to see “break” look at the segment(didn’t get a lot of attention of course) on MBS selling with Powell testimony. Already adapting because what? Market froze up or was manipulated for a day? I too am holding out hope for cheap private market real estate, but as the days go on the odds of that get smaller. I have yet to see a single intelligent and relevant bear argument for housing getting whacked big. It’s all stupid “look at the chart, 2005 again!” which misses every underlying fundamental. Or contradictory shit like 6% mortgage will kill housing prices(as prices continue to set records) but then talk up inflation and high housing prices lol. Or how rents are gonna soar forever but there s a glut of multifamily being built. Can’t have it both ways. Or “there’s lots of price drops in my market!” And it’s like yea so what? Remember all the “Zillow paid too much!” And then they offload everything at better than expected prices in a couple months. I see tons of price cuts in lots of markets I follow. 95% of them are just listings that were not based in reality in the first place. The overall core of the housing market is insanely strong. I said a couple years ago we were in the first or second inning of a housing super cycle. One that would follow the tech bubble cycle, IE 1990s first wave followed by 2010-2020 act 2 that dwarfs act 1. Imagine selling the Nasdaq at the 4000 mark or whatever earlier this decade when it hit that cuz you were an idiot who just said “look at the chart, 1999 all over again!”? So maybe now we are in the 3rd inning. It’s never straight up with no pullbacks. This phase looks like the one where all the folks with 2008 PTSD think they’ve got it figured out and get smoked. By the end of the cycle everyone in the world will think housing is indestructible just like they did with the FANGs last year. Gonna be fun.

Yea am I the only one who thinks Berkshire will actually do better once the new guys fully take the reigns?