Red Lion

My biggest holding is Apollo. Pretty large company although it still hasn’t joined the s&p500 yet. We are up 250% in the last 5 years. Trades at 12x trailing gaap earnings. This doesn’t seem crazy speculative to me. There are tons of other great companies trading at totally reasonable valuations. I wouldn’t be buying the index here, but I wouldn’t bet against it either.

Do you do these swing trades in a tax advantaged account?

Exactly this!

I’d support Dinar for treasury secretary

Another friend recommended the Anderson valley again. Finally wrapping up a busy several months, and I’m thinking this would be a great place to explore. I’ve been to the Russian River once, and it was great, would love to spend more time there. I’ve been drinking a lot of Frank Family 2019 Cabernet Sauvignon (I think the best value I can find in the local markets) and Rombauer (I think their Zin is a great value, and we belong to the club so we do get a lot of the special zins like the el dorado and fiddletown.

Bought 400 shares of BTI in my 401k. I’ve been letting my contributions stack, and all my high conviction ideas are trading at all time highs. It was down to BTI or more CLPR. I’m a bit of a yield hog in my 401k and tend to trade way better in my taxable accounts due to closet momentum chasing.

I feel like everything is so hard to predict. When you only need to predict a few things that no one else cares about, that’s when I take my swing.

Not to sound like a global macro guy, but isn’t this exactly what has to happen for the USA to outgrow its debt:gdp problem? It seems like the same thing happened the last time our national debt was this high.

It's sort of irrelevant because I don't have a macro trade in place on this (unless you count real estate), but I think we are going to see the opposite occur. It probably doesn't matter as long as we invest in productive assets either way, but my position is that interest rates cannot return to the 5-7% level for any meaningful period of time because the federal government can't withstand this level of interest burden based on the monumental debt to GDP. Maybe debt always historically reverts to the 5-7% level, but not when there is such an absolute high level of debt in the system. The only other time we had this level of national debt was right after WWII, and we actually maintained low interest rates and inflated our way out that time. So I suspect that through yield control / quantitative easing / and of course Federal reserve setting the short term rate we will have lower rates for longer while the economy inflates itself out of this staggering debt:GDP. The alternative, if rates revert to 5-7 or higher level, where does the cash flow come to pay the interest on the national debt? You can't raise this money through tax revenue without causing a depression, at least in my opinion, especially with the level of debt in the private economy and rolling over debt at higher rates along with way higher income tax. So assuming we run this 5-7+ interest rates for a long period of time, without raising massive amounts of tax revenue, then there are only two alternatives to pay our deficits: 1) Continuing to issue even more 5-7+ rate government bonds, entering into the "White Swan" debt spiral that Taleb is talking about; or 2) Congress prints money to pay the national debt Under both cases we probably lose reserve currency status, and cause a great deal of pain. So it really does seem like the path of least resistance is to have lower interest rates, to use yield control, and to try to grow GDP faster than the national debt for long enough to straighten out our finances.

You should have asked a couple weeks ago! These are both going to serve FEMA's goals at housing Lahaina fire victims and I doubt I'll see them again for at least 2 years. Of course, I will be trolling the markets for more opportunities, and Oahu is a bit more affordable (crazy to see these words come from my keyboard, but true).

This makes total sense to me. And I do think the big risk right now are the high tax high crime blue states, and I have to admit that's where most of my real estate investments are sitting right now. But even there, I think certain sub markets are set to flourish, and of course the high tax high crime blue states make it almost impossible to build housing stock, so it's all about picking the right areas and obviously looking for ways to bring a property to its highest and best use. I've noticed for example that even in the high tax areas like California, there's been a big movement from the SF Bay Area towards the Sacramento valley area which still has the same taxation and laws, but has/had a more attractive cost of living and less crime.

Does anyone consider that with wage growth now coming in quite a bit higher than cpi, and rates coming down, housing certainly seems likely to (eventually) grow into its valuation?

The funny thing is the market for construction workers is still hot. New home sales are doing great considering, and presumably remodel activity is heading up with all these people staying at home. I can say that there’s still a very tight market for construction workers in California and Hawaii, and it certainly sounds like around the rest of the country as well. If anything I think we have a demographic time bomb in store for more wage inflation and low unemployment as far as the eye can see. Gen z doesn’t want to work. Millennials and gen x have already mostly taken the non productive boomer jobs. The productive boomers will eventually fully exit the market. We will have a huge, retired and wealthy, boomer generation around with us for the next 30-40 years. Almost zero legal immigration. Birth rates are rock bottom. All the housing stock is aging, and all the boomers are still scared of watching nursing home residents go down like flies. I just don’t see anything short of government shut downs causing anything but more tightness and pain in the labor market.

Spent two weeks on Maui working on fixing up a couple investment properties getting them ready to lease. Such a beautiful place, I wish I’d had more time to vacation. Nevertheless, I’m probably more tanned than any point in my life and got the privilege to see a lot of humpback whales and calves. That was very neat!

This is my goal. Not quite there yet.

Thank goodness I went with real estate instead! Haha. Better lucky than good.

Me neither. This has been a serious effort in personal development, and I’m having second thoughts on a near daily basis. Still the numbers are turning out good, and I’m hoping to work through the issues with coordinating tradesmen, permits, back order supplies, etc. The tax shield is an obsession of mine, but I’m trying to decide whether I have the ability to develop the skills I need to do this. The great thing is that residential real estate is like the stock market, but less efficient, able to take complete control , use leverage, and get amazing tax breaks. So I question as a value investor how I can stay away, I’m like a moth to the flame. This seems like the best way for a smaller player to get an edge.

I gave my stock portfolio earlier in the thread, but I’m about 50% real estate 50% closely held corp stock 15% stock portfolio. The debt being on the real estate but not too much.

This right here is why I started investing in residential real estate. Buy 10 million of 4 CAP multi family with no debt and you’ll basically pay zero tax.

350k is fine if you already own a home but good luck buying one in a hcola without that type of income.

I think dinar mentioned this above, but the boots on the ground say there are a lot of excellent jobs in the construction trades. That’s certainly what I see on the west coast. I think our bigger problem right now is that the entire younger generation want to be influencers rather than pickup any of the highly paid trades right in front of them. It’s a good thing we don’t have too many manufacturing jobs because I don’t think we would find anyone to work them.

One of the issues here is that many of these nanocap companies can be run purely for the benefit of insiders. So an apparent crazy (low) valuation might be completely warranted or even overvalued in terms of your investment odds as an outside shareholder. I think there are probably amazing opportunities in trading nanocaps, but if you have a truly great high ROE business in today's funding market, why be publicly traded at all? You would probably raise private capital to grow the business to a point where it made sense to trade. I love the idea of finding the next Berkshire Hathaway in a nano cap, but honestly there's a reason there are so many shitcos floating around in these realms. I think you have to have management you can trust, and then if you had an undervalued nano cap with some sort of roll up strategy, this could maybe be very attractive, but why isn't this nano cap private? Most of the time, it's because the listing serves as a way to transfer money from shareholders to insiders.

I like APO. I have others that might do better, but if I’m going with one stock I like this one.

I have put my thoughts here on the BN and the APO and BX threads I think. I’m not against BN or BAM, but in my opinion APO/KKR are better then BN and if you want an asset lite alternative then I think owl/ares/bx are better than bam. While bam has a great energy transition / green energy business that I think is best in class, the competitors are getting up to speed in this regard. BN is anchored down by some lousy real estate positions while the sotp is help up with high valuations on the subsidiaries. Anyway I think BN is one of the lowest quality alt investments along with CG. That doesn’t mean you shouldn’t own it, obviously it’s done well over the long term and can work through its real estate hangover to do well going forward, but I think APO/KKR are going to outperform.

I think you should own both. And I should too. I sold KKR to raise capital for a series of 4 real estate deals I closed on since late July. All of these sales were in taxable accounts and it made more sense for me to sell KKR than APO given tax considerations. I think they’re the perfect compliment, they’re two sides of the same coin but APO will outperform with higher rates and KKR with lower. They both are great alt asset managers at a (more than) fair price. So now might very well be a great time to load up. I would buy KKR on margin, but I’ve been regularly dipping into margin to fund some do the real estate renovations since it’s lower cost capital and more tax favorable to me. I expect to be reinstating my KKR position hopefully on par with APO once I start pulling cash out of these real estate investments.