Red Lion

Sold the BIP I just bought inside my 401k and redeployed into CPT as I feel that it offers less risk for a similar reward profile, and I still have a pretty big position in BN (#3 position) so I'm feeling that diversification away from Brookfield entities is probably a smart move.

CPT

Bought a big chunk T Bills maturing 7/25/23 for a 4.85 YTM. I am still looking into brokered CDs, but I think the T-bills give me liquidity as good as cash (for my purposes). Right now I'm sitting on a pretty big chunk of cash(T bills maturing 7/11 and 7/25) while contemplating the pros and cons of buying a private market real estate investment vs. investing in stocks or other securities. Also waiting for the right opportunity (in either of the above asset classes).

Short term t-bills and probably short term TIPS would do well under a scenario where rates go to 10% with 7% + on the 10 year treasury no? I would think almost everything else would selloff, and even the good businesses will probably sell off with the rest due to the prevalence of indexing. I'm not a real estate expert, but didn't residential real estate do OK during the rising interest rates of the 70s and 80s? I know this isn't a security, but you can get 30 year fully amortizing non-recourse multifamily financing on a Fannie Mae Small balance loan today as low as a 5.2% fixed rate with 55% LTV if this link is correct. https://selectcommercial.com/fannie-mae-loans-small-rates.php I think the max loan size is only 6 or 7 million, but there are other longer term loans available on multifamily as well. Anyway, if you can buy an apartment building at 55% LTV with a 5% CAP rate with fixed rate 5.2% financing and rates actually go to 10% (because of persistent HSD inflation), then it seems like the cashflow growth would be very attractive even if CAP rates expanded. Also, the small balance loans are assumable, so if rates go up that would bolster the value of the property to some degree if you did want to exit during a high interest rate period.

Could the all powerful fed just avoid the valley of death and manage this problem with QE? Either way, reading this post makes me want to raise cash.

Are the brokered CD’s fdic insured up to 250k? I was reading that they might not be?

Bought some CLPR today. I have $5 calls expiring in June - September. My thinking here is that I will sell the calls for a loss after 30 days, unless the price rebounds in which case I can still exercise and be around a full position.

More TD and JPM.

BAM and AAPL. Both seem overpriced, and they were starter positions. I’ve added a lot of exposure over the last month, so I thought having a little dry powder is prudent.

I think a lot about this. I should probably just do 90% SPY and 10% T-Bills, rebalance once a year, and find something more productive to do with my time. I enjoy following the stock markets, and I certainly think I can outperform the above strategy, but maybe I'm blind to my own shortcomings (I've found most people are, I try not to be, but still am).

I sent you a dm.

@Viking this is a fantastic post, and a fascinating and impressive story! Sorry for the short response, as I know this post was partially in response to my query in the What are you Selling thread, but I'm getting ready to get the toddler out the door to a medical appointment. I agree that the highest returns are likely to come from concentrated investment portfolios. I agree with @SharperDingaan that you need to be concentrated to get wealthy, and diversified to stay wealthy. I have personally experienced both sides of the concentration coin, and am in the middle of a couple year long diversification campaign for managing my own stupidity. Traditionally I've had a concentrated portfolio, beginning with buying gold coins as a teenager in the late 90s (my first multi bagger) and rolling that money along with savings (and even some 0% CC cash advances in the aftermath of the GFC) into stocks with some big swings, but favorable high double digit annual returns (around 15% from the late 90s to 2016 when it all went to shit...) Then I went on to do something REALLY STUPID in 2015. I took a highly concentrated position in Kinder Morgan warrants which got wiped out and took a massive over 50% drawdown on my portfolio. During this same year I got divorced (not as a result of the investment drawdown at least) and suffered a personal hospitalization during a lapse of insurance coverage. This sent my net worth significantly negative, and I still had a huge tax bill that I didn't have the money to pay. So this period in my life certainly taught me some hard lessons about risk management among other things, and it continues to color my philosophy. On the flip side, I've done very well with concentration both before and after my huge drawdown in the public markets, but the most life changing example of this has been in my business endeavors. I do own a 50% stake in two different closely held corporations. The first had been fairly successful as far as these things go, and the second ended up providing a compelling opportunity. Ended up going all in on the second corporation including with borrowed money. This second venture is on track to return about 100X its investment (pretax) in operating cash flow, and has turned into a life changing opportunity. I should point out that this strongly influences my investment strategy because now only about 8% of my liquid net worth (and a lot less depending on how you value my closely held shares) is inside tax advantaged accounts, the other ~92% is in fully taxable accounts, and I am currently in a pretty high tax bracket in a high tax state. So that brings me to my current chapter. I think I could put up higher returns with a concentrated portfolio. I've done it from around 1998-2016, and again from 2018-2021. In between I had invested any available capital in my first closely held corporation and paying back back taxes. For me it's not worth the risk of making another stupid decision like I did in 2015/2016 to try to get 15%+ annual returns. Also, I now have a strong desire to find long term compounders that can increase in value tax deferred over time to be sold off as my tax bracket allows to prudently manage returns. One idea that I've been gravitating towards since the beginning of 2022 is to make a variety of changes that I believe will allow me to earn a decent after tax return. I would like to limit each position by invested capital to 5% of the portfolio. Try not to make more than 25% of my investments in one particular industry, and try to avoid taking on more than 50% of investments with strong correlations to higher or lower rates for example. Focus on companies earning high returns on invested capital at decent valuations. I don't exactly have a buy and hold plan, it's more of a hybrid. The plan is to let the winners ride tax deferred, and then to evaluate losers and underperformers to sell off in a tax neutral fashion if possible to raise capital for additional investments. I think you'll almost certainly outperform my strategy, particularly on a pretax basis, but I think you're a better investor than I am anyway, and I really just need to beat inflation by a few percent a year with as little tax friction as possible, and I'll be just fine and sleep well at night.

I would get killed on taxes or I would try to take more of an approach like this. You seem to be killing it though!

Sold my APO 401k position inside my 401k (at an unusable loss) and bought back in my taxable account. I put half of the proceeds to work on the Vornado M class preferred shares.

And this is why I diversify and set position size limits for myself. I’ve definitely been known to be wrong before. But I think I’m more familiar and comfortable with a larger allocation with the asset management or annuity businesses without the same degree of asset liability mismatching risk in the banks.

This is why I think apo/ares/owl may be a good way to play this current sell off. I feel like they stand to benefit, and typically raise their capital from pensions, long term annuity contracts with punitive early termination clauses, and some publicly traded bdc’s.

I was thinking the exact same thing. Almost zero competition either because even though this is such an obvious phenomenon, high school kids are going in huge percentages to take on student loan debt to get into dead end careers.

I’m going to steal this metaphor and my friends will think I’m genius.

Plan value to the moon

Added TD to my bank basket.

Haven’t a lot of those mark to market losses already reversed with the huge move in treasuries?

I just put on something very similar today with C, JPM, WFC, BAC, and PNC with a 5% portfolio allocation. I’m considering adding more names to the basket (1% positions each). This is partly because I’m not intimately familiar with the sector and the highest quality names like Jpm seem to trade at a higher valuation. Also partly because I see banking as inherently black box, so I would prefer to own a basket than a concentrated position for that reason as well. I think regulatory risk is always there with the banks. The powers that be seen to be signaling they will bailout uninsured depositors but not bank investors. Competition from an alternative business model could be a risk but I don’t think a huge one. Eg alternative asset managers, private credit, and insurance. Continued yield curve inversion could certainly pressure NIM if it persists for the long term.

Started a basket of banks. C, JPM, WFC, PNC, BAC.

I got some for next November at a 5 handle. Not quite 2 years.

Starter in C. I don’t have any banking positions and am obviously tempted to buy a basket as I become more familiar with the landscape given the current market conditions and sell off. I do have a fairly high allocation to financials between the alt managers and insurance holdings, so I’m trying to gauge my position sizing accordingly.