Red Lion

I don't disagree with this, but it's more complicated than just that the purchase price needs to come down. If the purchase price was far higher than the cost of building new homes (including land, site prep, utilities, infrastructure, etc.), then we could just build a ton of new housing stock. In many parts of the country, the purchase price of a home is lower than the all in cost of replacement. I just asked chatGPT about the net increase in the housing stock, and it's currently running 1-1.3 million a year (if chatGPT is to be trusted, and I thought I'd rather take the easy way out rather than dig through Fred) on a housing stock of about 150 million. So well below 1% net increase in the housing stock. I also asked ChatGPT what the population increase has looked like since Trump took office the second time (at which point it slowed down for obvious reasons), and that's supposedly averaged around 0.4%. Another factor, is that single member or single parent households have been exploding over the last several decades, so unless that demographic changes, there are more homes needed per person. Why would the purchase price come down (barring financial or real estate crisis) if there's a structural shortage of homes, we aren't building them fast enough, and the price of building a home is equal to or higher than buying one? To me, it seems like the most likely scenario is that housing/rent continues to eat up a larger share of budgets than it did in the past.

If the puts usually expire worthless and you’re putting in 3%, that’s basically a 10% return on 30% cash. Where the cash itself earns about 3.5% right now. I doubt you come out ahead with this approach over the long run, unless you’re just marketing timing. if you are living on portfolio draws at 4%, how many years worth of cash do you really need? Especially if your stocks pay some dividends? Maybe 10-15% tops to avoid selling during a protracted down market.

You could use bull put spreads. I just pulled up Micron out of curiosity, lots of ways to create a 100-200% gain if the price drops a little by next June (with a 100% loss) if it doesn't. I think you could do 500-700% with a drop to $500 if you go further out of the money.

Very impressive.

Makes sense, seeing the same thing with my new ADBE position. If only my alt asset managers would get out of the penalty box.

These have been wildly volatile, I started building a position in BRO/RYAN only to see huge short term unrealized losses, now I'm actually in the green on BRO and down under 10% on RYAN.

Maybe they're trying to sail through any type of insider lockup so they can start dumping shares on the market when multiples improve?

I'm down 7% YTD, which is pretty terrible particularly considering the index performance. Eats up the last few years of outperformance. On the bright side, I feel good about my current portfolio composition.

Don’t you hold cash/t-bills? Or am I mistaking you with another poster?

I’ve got about $750 sitting in kalshi, and there’s an error every time I try to withdraw my funds. Annoying. And a red flag.

This is a great open-minded post. Open mindedness is incredibly rare when it comes to Trump.

I've been dealing with pros and cons of having a second home/vacation residence, and I feel like going somewhere a few months a year is optimal (if you can swing it with your work/family obligations), and then just getting a commercial flight and keeping a car in the garage can work out great!

I actually just meant buying 100 acres of land 5 hours away and then flying there from Vancouver, but agreed about your take. It's crazy.

Could you buy a Cessna and have your cake and eat it too?

More than doubled my new ADBE position.

That's my point, there's a huge difference in tax implications. You can sell losers/duds/underperformers to raise cash while allowing winners to compound tax deferred. If you've got $10 million in a taxable investment account and want to take out $400k a year, you could be paying 37% in a high tax state just on long term capital gains, so tax loss harvesting does have value. You'd probably need a lot more than $10 million to really make this worth your time, and there are direct indexing services available, haven't really looked into them.

I see a lot of value investors say this, but if you're an affluent individual living off of your taxable portfolio, and you can match the S&P performance with 2% positions, this gives a lot of wiggle room for tax efficiency. The big IF is whether you could match the S&P performance, but there have been great investors that had lots of stocks. If you have all your money tied up in 3 stocks that are all sitting on gains, and you're holding them for decades, you have no choice but to sell stock, take margin on a super concentrated portfolio, or hope they pay dividends. If you pick the right 3 stocks, great. If you're taking a buy and hold approach, or buy/hold/tax loss sell the losers, you're more likely to hit some huge long term winners if you get 50 chances. Retirement accounts I think would be a much higher hurdle, since I suspect the highly concentrated portfolio with event driven type ideas probably shows the highest return if well executed.

But his carried interest from the last 2 years will have him splitting his time between his yacht and his private island either way as long as he doesn't keep rolling it over.

This is a great point, and I've been thinking about this post and just haven't had time to respond. I think using retailers is a good example for the point you're making, but I think you'd probably need an individualized analysis across industries to really look at the potential impacts of AI adoption. Many small caps have good gross margins, but do not have the economies of scale to convert those into great net profit margins. I feel like a massive increase in productivity could certainly flow to the bottom line in these types of scenarios. Looking even smaller, non-publicly traded mom and pop type businesses are at the bottom of the food chain. They have the least access to good employees, and higher administrative costs to spread over a limited revenue base. These types of businesses have huge tailwinds from tools like AI (just like they did with the internet/cloud computing/ credit card software / the advent the smartphone / etc.) as it can help level the playing field. As a general matter, employee productivity has been increasing for decades along with higher profit margins. This coincides with the adoption of technology which has assisted the labor force with improved productivity gains, and overall, this has indeed improved profit margins. Just from my own experience dabbling with AI applications, I believe we will probably see a significant increase in employee productivity in a surprising number of fields. I think it's a reasonable probability that service businesses sprout up to offer small/mid cap/private companies access to information, technology, legal, HR, market research, etc. services that have historically been available to Fortune 500 type companies. There will certainly be winners and losers, and retailer seems like the great example of an industry that will stop at nothing to compete its profits away. I think Buffett said something along the lines that the only way to make money in a commodity business is to have the structurally lowest cost of production, and that probably applies to retail as well. I would say for industrial or services type business that already have good unit economics, improved productivity is likely to flow at least in part to improving the bottom line.

It always crashes after I invest the second half of my cash.

They're already invalidating the rights of land owners to pump their own water without limitations set by water boards.

On this subject I just read an opinion piece somewhere (maybe WSJ or Bloomberg?) which was saying small caps and emerging markets may be the best way to play the AI wave as there is the most room for margin expansion, and these tools are being made available to everyone (not just Fortune 500 companies). I found it to be an interesting thesis, this article was suggesting indexes rather than actual companies, but I'm sure there may be lots of smaller less efficient companies that can really improve their productivity and margins with AI tools.

added to FFH, BRO, RYAN, Nintendo trimmed GOOG, sold AMZN

Wow that’s incredible. Would love to try it. I used to dabble in brewing, but this is perhaps better described as alchemy!

How is this possible? Wouldn’t it need to be distilled?