TwoCitiesCapital

Lolz

+1

This was my read as well, buy Schwab won't let me submit orders to buy more :/

Thank you Chris. I thought state congress is the same thing as state legislature but it seems like there is no such a thing as state congress. My apologies. Let my assumptions get the best of me. Figured this case was no different than all of the others that have been tossed for being B.S. hard to know what's legitimate with the party that has cried wolf a thousand times in response to the elections and has been wrong on most counts. Full disclosure: right leaning independent here, so don't toe the left party line. Just sick of this circus surrounding all the election "fraud" BS coming out of the right. Like children throwing a tantrum and I let my assumptions get the best of me.

Trump has far more urgent things to do in the next 35 days than releasing FnF. Given the alt left's attitude toward him, I think his entire business may face bankruptcy soon once he leaves the POTUS position. The left will show the country whoever goes against them will end up bankrupt, and probably in prison, so in the future no more Trumps will show up. Only RINOs and alt left socialists. But I just don't see how Trump can turnaround himself at this moment. I feel really sad for him and for this country. Good thing Trump already has a lot of practice with going bankrupt! Even before the left hated him! And maybe all those colleagues of his who are in jail can help him navigate the internal social hierarchies if he joins them. As an American, I haven't seen anything out if the judicial system that concerns me just yet. I don't think the case with Texas was ignored or thrown out for political reasons - I think it's because it's become evident through the dozens of other lawsuits that there is nothing to substantiate the claims. We, as a democracy, cannot throw out votes just because we don't like them and the SC has seemingly done the correct thing in response. The real threat here is what it's been for the last 8 years I've owned this - timing/delays. I can only hope this is coming to and end one way or another.

Had someone said that when Walmart was only 14 years old they would have been 100% correct. The full market cap isn't available for sale due to lost coins, satoshi's stash which might also be lost, and new institutional demand with cost basis of ~18-20k which likely won't be made available for sale until prices are significantly higher, or lower, than they are today. There is a finite amount of Bitcoin available, even considering additional "supply" from leveraged derivative products. And like any physical commodity, selling too many future claims on physical ownership leads to squeezes - BTC will be no different. The fact of the matter is that daily volume is ~$1B across all exchanges on average. If Walmart was a company with no institutional following//investors with only retail hobbyists following it that all of the sudden had billionaire hedge fund investors buying it, major corporations adopting signing on as "customers", and major institutions publicly signing on to buy ~$1B of it's stock over the course of 4-6 weeks, then I imagine you'd be hearing similar things about Walmart. It's not the intrinsic "value" driving this these - it's very difficult to come up with a value for this. But I can tell you that flows measuring billions into an asset class defined by fixed supply does tend to lead to higher prices. No guarantees, but the set-up is favorable.

Might only be a small amount for the general equity - but buys like this matter. Roughly 10% of daily BTC volume here and is transferring more BTC to longer term holders with high cost basis. These coins aren't going to be available back on the market any time soon.

Yea, I know that Santander has been working with them over the last 2-3 years using their blockchain technology for ForEx operations and has been expanding that relationship - but that partnership does not use the XRP/ripple coin for execution. Very unclear to me what, if any, utility and value is driven by the XRP coin. It does seem that Ripple itself has embedded itself as the go-to company for blockchain solutions with financial institutions which is a valuable place to be, but also skeptical of them because the bulk of their NAV and funding availability is based on the value of a shit coins that I don't understand the 'why' to it's existence.

You could make the argument that we were heading into a recession regardless. PMIs had been sub-50 globally for some time. Manufacturing had already been in a multi-month contraction. Who is to say that had covid-19 never occurred, that we wouldn't have found ourselves in a recession by this summer anyways? There's always a catalyst. Covid-19 is no different. Something always happens that we can blame the recession on, but it's the environment that makes us vulnerable to that shock. An inverted yield curve, declining PMIs, manufacturing weakness, global trade thrown into disarray/uncertainty, make us vulnerable to whatever shock comes - whether that be covid, or s string of corporate defaults, or a currency shock, etc. The vulnerability makes that a recession versus a wall of worry that we climb over. Seems like a bogus argument for 2020. The economy could have been at max strength, but still would have been hammered due to COVID shutdowns. We can all play the guessing game of whether a U.S. recession would have rolled in by now anyway, but the idea that the economy was fragile and COVID was just the tipping point? That's implausible. Simple way to look at it is that a huge number of countries had a COVID recession - were they all going to have a recession anyway? Clearly not. My point isn't to say that Covid wouldn't caused a recession. My point was to say that maybe a recession was going to happen even without Covid and we would've just blamed it on some other catalyst. We always look to catalysts, but what matters is the environment that allows us to be vulnerable to that catalyst. What was the catalyst for 2008? Real estate prices falling. But that wouldn't have been a huge thing in and of itself. But it was paired with an inverted yield curve, weakening growth, over leveraged consumers, and severely under capitalized banks (relative to the risk they were taking). So what was the real cause of the recession? Home prices falling? Failing banks? Or the environment of all of them together making us so fragile we couldn't handle the falling home prices, or other economic occurrences, when they happened? We were already visibly seeing signs of a recession. I didn't foresee covid. Covid isn't why I was 50% cash. I was 50% cash because I was fairly certain the odds of a recession were high given what the economic data was showing in September of 2019. Didn't know what would cause the tip, just that it appeared we were approaching a tipping point and sold. Sure, blame the recession on Covid. It certainly made it worse, but I'm of the mindset it was happening anyways as demonstrated by my positioning in late 2019.

You could make the argument that we were heading into a recession regardless. PMIs had been sub-50 globally for some time. Manufacturing had already been in a multi-month contraction. Who is to say that had covid-19 never occurred, that we wouldn't have found ourselves in a recession by this summer anyways? There's always a catalyst. Covid-19 is no different. Something always happens that we can blame the recession on, but it's the environment that makes us vulnerable to that shock. An inverted yield curve, declining PMIs, manufacturing weakness, global trade thrown into disarray/uncertainty, make us vulnerable to whatever shock comes - whether that be covid, or s string of corporate defaults, or a currency shock, etc. The vulnerability makes that a recession versus a wall of worry that we climb over.

Short Duration Bond Funds - 24% EM Value Funds - 15% Fannie/Freddie Preferreds - 10% International Value Funds - 6.0% Exor - 5.9% Sberbank - 5.4% Altius Minerals - 4.5% Mortgage REITS - 3.5% GBTC - 3.5% (I trade around the growth/contraction in NAV premium - primary BTC allocation not disclosed here or considered in overall portfolio totals) Fairfax Financial - 2.5% Fairfax India - 2.5% Santander - 2.45% Rolls Royce - 2% High Yield Bond Funds - 2% Emerging Markets Bond Funds - 2% Eurobank - 1.5% Gazprom - 1.35% GLD/SLV call spreads - 9% @ notional (currently ITM) TLT call spreads - 1.9% @ beta adjusted notional (currently OTM) Slight amount of leverage gained through option spreads. Short a couple of names using put spreads too, but collectively only 3-4% of portfolio in beta-adjusted notional and all OTM after recent rally. Not many changes in 2020. Basically a broker record in this regard because it's been similar themes driving me since 2015 because the same stuff is cheap. Exited Fiat for increased exposure to Exor. Also was fortunate to have been called out of my Seritage position at $30+ and never restablished given Covid. Added Rolls Royce (probably one of my best moves this year - better to be lucky than smart ) Reestablished a position in Fairfax sub-$300 after closing out the whole position in early 2019 deciding I was wrong on rates (next best move) Added slightly to Fannie/Freddie Preferreds, Santander bank, Altius Minerals, and Exor during the crash. General macro themes are basically unchanged: Long real assets/producers Dramatically overweight international vs US Ultimately waiting for fatter pitches. Was 1/2 cash for the crash, which was great. Still missed my opportunity to add as I didn't think 2,300 was gonna be the bottom. Basically bought high yield bonds, emerging markets bonds, and added modestly to a handful of equity positions waiting SPY to hit 2,000 before adding heavily to equities, but the market started climbing the very next day. Was also still very long puts on SPY/QQQ which I didn't cover for a few months because I'm a stubborn skeptic of this rally/valuations which definitely hurt performance this year.

I've been shorting the Nasdaq via put spreads. Hasn't worked so well. Was also shorting American Airlines and Carnival Cruises via put spreads with the thesis being all value will accrue to the debt holders higher in the cap structure and the equity could go to single digits for each if this is more prolonged than we currently expect. That was working well until just recently. Probably still up a 5% or so on the position, but that's all mostly time value due to how I structured the spreads (buy in the money, sell out of the money) and because I rolled to lower strikes back in October saving me from this pain.

The way to accomplish a BTC split is not to make more than 21 million of them, but to start measuring thingd in Satoshis instead of fractional BTC. Stocks split because fractional shares didn't use to be a thing (not the case any more) and because of irrational behavioral issues where people tend to like to buy stocks ~$10/share. I'd imagine you'll actually see fewer stock splits in the future now that brokerages allow for fractional trading. BTC is divisible, and liquid, at the satoshi level and doesn't need to split to accomplish smaller, bite size pieces. Don't understand why institutions would feel the need to demand more than 21 million BTC for liquidity when there are 2,100,000,000,000,000 Satoshis available

It could be a Total Return Swap that they're short. Those have a fixed duration/maturity and there can be a fee for exiting the position early if they can't find another buyer since the instruments are bespoke and over the counter. That being said, I'm sure whatever fee would've been owed would've been less than losses on Tesla so far so I dunno.

I don't know if I agree with you. Bitcoin has rallied to tops with several hundred percent gains followed by 80-90% corrections multiple times. I dunno why 2017 would've changed that dynamic. Particularly since you have big institutions stepping in with purchases of $50-250 million and not retail higher a buying 2-5k. I've watched Bitcoin since back in 2011. I thought it was a bubble and felt vindicated every time it dropped 90%. Only to realize it recovered to new highs and the next 90% drop was higher lows. It had staying power that took my ~8 years to recognize and appreciate. The reason I invested? Not because it's digital gold, or a store of value, or because it's here to replace the dollar (none of which I agree with). It's the protocol for payments on the web just like HTML is the protocol for webpages and SMTP is the protocol for email. Bitcoin is the protocol for payments on the web - the difference is you can own Bitcoin where you can't own HTTP protocol or SMTP protocol. How much is it worth? No idea. But I don't think we've reached peak valuation of a network with less than 10% global adoption.

MicroStrategy buying another $50 million @ 19.5k in addition to the $250 million they bought a month or two ago. Institutional demand is here and is growing. And if 1-2 buyers are taking 50+% more of new supply (estimated that Pay Pal alone is 70% of new supply at the moment), the price will have to move upwards with every incremental institutional buyer entering the market.

Also, Warner and Crapo took Mnuchin out to dinner Wednesday night, after the hearing in which Warner said nothing negative about GSE's and Crapo was positive. Forgot to give link: On Wednesday night, Senators @MarkWarner & @MikeCrapo took Secretary Mnuchin to dinner, two sources tell me. Among other topics, they discussed the bipartisan COVID relief framework. Warner is one of the Dems most involved - so here's another way lawmakers are working the WH. As luck would have it, I may have been dining at the same restaurant that night. Upon seeing the trio, I sent over an appetizer of beautifully plated goose-eggs benedict to Warner and offered to pick up the tab for them if anything positive for junior preferreds was finalized at the dinner. Crapo said if I was a taxpayer I would be picking up the tab either way. When I said "that doesn't sound like protecting the taxpayer to me" Mnuchin just shrugged. Almost got a seat at the table? They were in the room where it happened! Some would kill for that privilege. /hamiltonjokes

Crypto is absolutely moving up for reasons other than inflation hedging. Paypal announced crypto adoption a few weeks back and it has been estimated that they've been sucking up 70% of new Bitcoin supply since. If one player is sucking up 70% of new supply, in addition to that supply being curtailed with the halving of production earlier in the year, there is NOT a lot of new BTC supply going around to satisfy this newly forming institutional demand. Demand from the likes of billionaires (Druckenmiller, Paul Tudor Jones, etc), investment management companies (Blackrock, Vanguard, etc) and companies involved with adoption and/or payment processing (Square, PayPal, MicroStrategy) are not small sums and will likely continue, and potentially accelerate, with the growing acceptance of the currency. Prices will have to move higher to incentivize sellers to meet the demand. Lastly, on the comment of gold demand moving to crypto - Im sure a small amount of gold demand is moving to crypto. But the gold market is measured in several trillions and BTC market cap measured at $342 billion even at all time highs. If even a small amount of gold demand moves to crypto, it will shoot crypto into the stratosphere and incentivize the selling back into Gold at some point as relative prices will be out of whack. There's enough space in the world for both of them just like there is enough space in the world for silver and platinum alongside gold.

Honestly, this is our fault. We get hyped about $8-9/share so it falls back to $7 before closing

+1

Especially when you rewrote your convert. This.... 7$/share wouldn't have been anything previously with Fairfax's ability to convert to 50 million shares @ $10. But now Fairfax gets to convert into 55 million shares @ $6 - meaning they're ~$100 million in the money for bonds that wouldn't have been worth more than par back in September.

Lol

The odd thing about all of this is that I've still been able to pick up shares in the more illiquid names fairly easily. I picked up some more FMCCJ a few days back @ 12.25. Again @ 13.00 two to three days later and again this AM @ 14.75. All using limit orders for odd lots. I'm not purchasing in size mind you, but have been surprised that I've been able to increase my position a few % points using low ball limit orders despite the news flow/share prices moving the right direction. I'd think anyone holding these illiquid preferreds would be following this rather closely - most of the tourists are going to be in the more liquid issues and the common. So who is selling this stuff @ 25-30% of par on this news and why? Also, anyone looking to increase their position to leverage the upside might be able to do so!

I wonder who these folks are? I'm sure that a portion of the population has demonstrated that they're ok "living with the virus". I'm also sure that the families and friends of the 260k that are dead and a portion of the 40% of the population that is at risk due to comorbidities might feel different and "demonstrate" their feelings on the matter. You can't just say "these folks can stay home" and "these folks can live with the virus" when the two populations both represent significant portions of the overall population. Both have the ability to harm one another (either economically via lockdowns/voluntarily staying at home or via virus transmission). Ultimately, it IS up to the politicians to walk that fine line between both outcomes and for us to follow their lead. Ultimately, the best way forward economically is to reduce the threat if the virus so EVERYONE can feel comfortable walking around, working, participating in the economy, etc. That will require a combination of behavioral changes, new regulations, and vaccines/scientific breakthroughs. What we've seen so far is that a large portion of the population is struggling with the behavioral change piece which means the regulatory side if things has to carry a heavier burden - a la shutdowns. Lol I tend to be a right leaning centrist. I've had many a conversation with Republicans who wanted me to vote for Trump b/c he's "business friendly", the "stock market is booming", etc. Imagine my surprise when they fail to change their minds when presented with facts like stocks did better under Obama and Clinton than any recent Republicans you can pick OR that 100% of the recessions in the last 30 years occurred under Republican leadership. I'm shocked that the Republicans have been so good at marketing themselves that people still believe they're the best for business and stocks...

All this talk of the end of NYC is hilarious. Y'all might have a case of COVID can't be solved and population density is forever a threat, but in the event of actual vaccines and or herd immunity, NYC is back in business in 2-3 years. High paying jobs are still there. Bars/restaurants/nightlife/entertainment is still there and unparalleled in most cities. Covid throws a kink in that - no one wants to pay 4k/month for a 600 sq ft apartment you can't leave - especially if you can work remotely - but ultimately the solving of COVID will solve that and people will go back to paying 4k/month for apartments just to sleep in again. Disclosure: lived in NYC for 7 years and left in 2017