Kuppy on Inflation

[fareastwarriors]

Sales load

1.25% mgmt fees

and performance fees?

 

Fuk these guys. 

[thepupil]

yep...probably get same gross return buying MAA CPT EQR AVB PLD PSA HLT MAR INVH AMT etc. but then underperform with BREIT on the fees....but you get that sweet sweet volatility suppression. 

[Gregmal]

Yea but it would blow your mind how much people value not getting daily mark to market! Not kidding! Thats what they pay for. 

[fareastwarriors]

Just for kicks, I went to look at the performance of my old firm. All their equity funds are underperforming their indices for past 3,5, and 10 years. Their income stuff are beating slightly. They don't manage not exotic stuff. The benchmarks are like S&P 500, MSCI EAFE/World... So much underperformance but yet AUM up by hundreds of billions in last couple of years. 

 

It such a good racket... 

 

At least my old firm only charges 40-70 bps for their funds.... 

 

Edited January 14, 2022 by fareastwarriors

[thepupil]

20 minutes ago, fareastwarriors said:

Just for kicks, I went to look the performance of my old firm. All their equity funds are been underperforming their indices for past 3,5, and 10 years. Their income stuff are beating slightly. They don't manage not exotic stuff. The benchmarks are like S&P 500, MSCI EAFE/World... So much underperformance but yet AUM up by hundreds of billions in last couple of years. 

 

It such a good racket... 

 

At least my old firm only charges 40-70 bps for their funds.... 

 

Tell me you worked for Capital Group without telling me you worked for Capital Group

[Spekulatius]

2 hours ago, thepupil said:

yep...probably get same gross return buying MAA CPT EQR AVB PLD PSA HLT MAR INVH AMT etc. but then underperform with BREIT on the fees....but you get that sweet sweet volatility suppression. 

You open a brokerage account, buy the above Reits and then throw the password away. Volatility problem solved.

[CorpRaider]

3 hours ago, fareastwarriors said:

Just for kicks, I went to look at the performance of my old firm. All their equity funds are underperforming their indices for past 3,5, and 10 years. Their income stuff are beating slightly. They don't manage not exotic stuff. The benchmarks are like S&P 500, MSCI EAFE/World... So much underperformance but yet AUM up by hundreds of billions in last couple of years. 

 

It such a good racket... 

 

At least my old firm only charges 40-70 bps for their funds.... 

 

Man I agree.  Feel like I missed BEN. Though I do own a little BK.  I keep looking at invesco and of course blk, but I really sweat the agency costs/risks as passive minority shareholder with these smartish greedy sumbitches out there.

Edited January 15, 2022 by CorpRaider

[Ulti]

https://calculatedrisk.substack.com/p/lawler-more-on-investor-purchases-e45?utm_campaign=post&utm_medium=web

 

It seems like with the above, crowdsourcing via real estate fintech , and companies like Blackstone

buying MF..... there is a long runway for companies like AIV APTS and CLPR. Am I missing something?

[Gregmal]

5 hours ago, Ulti said:

https://calculatedrisk.substack.com/p/lawler-more-on-investor-purchases-e45?utm_campaign=post&utm_medium=web

 

It seems like with the above, crowdsourcing via real estate fintech , and companies like Blackstone

buying MF..... there is a long runway for companies like AIV APTS and CLPR. Am I missing something?

For years I’ve bought various “alternative investments”. One of which is sports cards. There’s ~130 PSA 9 or better Wayne Gretzky OPC rookies. There’s maybe another couple hundred lesser equivalent of the Topps version. There is no shortage of demand for these, and while they aren’t “super rare”, they always generate a lot of interest when they hit the auction block. Over the existence of this asset it’s outperformed the S&P, easily. The major trend is that more and more people move into the market and over time the card begins to be appreciated in ways, by more people, that it previously wasn’t. I gave up even bothering to argue with people about art and sports teams…they too have this sort of characteristic rerating feature continuously occurring. MF is seeing this same thing happen but in a much more condensed timeframe. Same with industrial and self storage. There’s only so much of it, and especially if there’s a cash flow, almost an inevitable supply/demand imbalance. There’s folks out there with their negative yielding cash and bonds, no yield gold, etc. The more people look at MF the deeper the market gets. It’s still got a long way to go to rerate to it’s equivalence on the risk spectrum with other assets. I don’t have it on hand but check out the numbers of international buyers of US MF assets. It is likely to be a new and prosperous, secular bull market, and it’ll last way long then folks think.

[50centdollars]

16 hours ago, Gregmal said:

For years I’ve bought various “alternative investments”. One of which is sports cards. There’s ~130 PSA 9 or better Wayne Gretzky OPC rookies. There’s maybe another couple hundred lesser equivalent of the Topps version. There is no shortage of demand for these, and while they aren’t “super rare”, they always generate a lot of interest when they hit the auction block. Over the existence of this asset it’s outperformed the S&P, easily. The major trend is that more and more people move into the market and over time the card begins to be appreciated in ways, by more people, that it previously wasn’t. I gave up even bothering to argue with people about art and sports teams…they too have this sort of characteristic rerating feature continuously occurring. MF is seeing this same thing happen but in a much more condensed timeframe. Same with industrial and self storage. There’s only so much of it, and especially if there’s a cash flow, almost an inevitable supply/demand imbalance. There’s folks out there with their negative yielding cash and bonds, no yield gold, etc. The more people look at MF the deeper the market gets. It’s still got a long way to go to rerate to it’s equivalence on the risk spectrum with other assets. I don’t have it on hand but check out the numbers of international buyers of US MF assets. It is likely to be a new and prosperous, secular bull market, and it’ll last way long then folks think.

 

Same with the comic book market. I've collected vintage comics for about 10 years now. I stopped at the beginning of last year when the market went up 400%. 

[Spekulatius]

9 minutes ago, 50centdollars said:

 

Same with the comic book market. I've collected vintage comics for about 10 years now. I stopped at the beginning of last year when the market went up 400%. 

There is survivorship bias with collectibles as well though. I think stamps did lousy for example (except the very high end ) and possibly many others. People forget those - the just end up in flea markets.

Edited January 17, 2022 by Spekulatius

[rkbabang]

18 minutes ago, Spekulatius said:

There is survivorship bias with collectibles as well though. I think stamps did lousy for example (except the very high end ) and possibly many others. People forget those - the just end up in flea markets.

 

 

There is a survivorship bias with anything and everything.  You could say that about stocks. Everyone focuses on the Apples and Amazons, but no one remembers the Blackberrys (unless you are a Fairfax shareholder).

 

[Gregmal]

Nobody forgets about the 52 Mantle or 79 OPC Gretzky. 
 

Doesn’t matter what you invest in, keep it simple. Buy high quality, and stick with things that have demonstrated a long and sustainable market/demand profile.

 

A beanie baby was popular and had widespread demand for what? 2 years? Pokémon was what? A few years…then long stretch of no demand. Then periodically popular? Big different and it really isn’t all that hard to figure out the differences. 

[Gregmal]

How many people would have thought this a good investment?

 

[Spekulatius]

5 minutes ago, Gregmal said:

How many people would have thought this a good investment?

 

Purdey is the Rolls Royce of shotguns.

[drzola]

Spoiler

 

 

[drzola]

Sweet shotgun 12 gauge?

 

[Blugolds]

I dont know anyone who collects beanie babies anymore...and I doubt that the ultra wealthy ever did, low end cheap collectibles are just that, maybe there are some low end collectors looking for one here or there..

 

I remember back during the GFC talking to a family friend who deals in collectable wooden boats...Garwood, Hackercraft, Chriscraft, all the way to Riva..his business did not feel anything...those who had money..had money, regardless of what main street was dealing with. When you get into the upper echelons of collectables, the returns can be good because those potential buyers will be potential buyers regardless of what the markets do and they could care less if you're asking what would equate to a 10-20% return/yr on your purchase price...if they want a Purdey, they want it and sometimes it comes down to "one is available for purchase" without regard to price. Someone who will pay over a quarter mil for a wooden boat to add to their collection doesnt care if you are making $20k on it in 6 months, they care more about how it will score with judges at the next show so they can brag to their buddies that they won another trophy, many areas are the same, horses, cars, bikes etc. 

 

For any car guys, Mopar collectors are fanatical. More than any other group that I've been around. I own a 1st gen Camaro and the Chev and Ford muscle car guys know their stuff, but the Mopar guys are on a completely different level. My childhood friend is one of them, specifically the 1968/69 Dodge Chargers, the prices that he gets for parts like doors, grill etc are unbelievable, so much so that he can search the country and find something that looks like it is headed to the scrap heap, buy it, have it shipped and know that he can double his money on parts alone from what are essentially small pieces. This is nothing compared to several Hemi's he has, intakes, carbs, heads etc...if the casting numbers are right, you can almost ask whatever you want because if thats what someone needs to complete their build it can mean that a period correct restored car goes from say $60k to over 6 figures and all you want is $10k for a block. 

 

The interesting thing about many of these collector items is that it also helps to be "known" in the group, many of which are relatively small. I had a coworker who's father had a rare car, rare enough to take it Barret Jackson and sell for over $300k.

 

Side note: If you want to really be amazed by a business, the money to be made is in being BJ..the fees they take are amazing, not just a commission off the sale like RE...they really take their pound of flesh and its no wonder they move them fast and run multiple auctions throughout the country...wow, talk about a great return. That was the first thing I thought when he told me about the entire process, multiple fees, insurance, transport, inspections, fees for reserve etc...its huge.

 

During the pre-inspection there were several guys looking at the car, interested in that specific make and wondering where it came from, they had not seen or heard about the car. It sold, but they were told that had it been offered by a "known" collector it would have likely brought even more, but since he was an unknown guy who happened to have a "barn find" from the middle of nowhere it almost detracted from the price. They said that he should have joined some forums, got in with some clubs/groups and built up some anticipation/marketing to really bring top dollar. 

Edited January 17, 2022 by Blugolds11

[Gregmal]

26 minutes ago, Blugolds11 said:

I dont know anyone who collects beanie babies anymore...and I doubt that the ultra wealthy ever did, low end cheap collectibles are just that, maybe there are some low end collectors looking for one here or there..

 

I remember back during the GFC talking to a family friend who deals in collectable wooden boats...Garwood, Hackercraft, Chriscraft, all the way to Riva..his business did not feel anything...those who had money..had money, regardless of what main street was dealing with. When you get into the upper echelons of collectables, the returns can be good because those potential buyers will be potential buyers regardless of what the markets do and they could care less if you're asking what would equate to a 10-20% return/yr on your purchase price...if they want a Purdey, they want it and sometimes it comes down to "one is available for purchase" without regard to price. Someone who will pay over a quarter mil for a wooden boat to add to their collection doesnt care if you are making $20k on it in 6 months, they care more about how it will score with judges at the next show so they can brag to their buddies that they won another trophy, many areas are the same, horses, cars, bikes etc. 

 

For any car guys, Mopar collectors are fanatical. More than any other group that I've been around. I own a 1st gen Camaro and the Chev and Ford muscle car guys know their stuff, but the Mopar guys are on a completely different level. My childhood friend is one of them, specifically the 1968/69 Dodge Chargers, the prices that he gets for parts like doors, grill etc are unbelievable, so much so that he can search the country and find something that looks like it is headed to the scrap heap, buy it, have it shipped and know that he can double his money on parts alone from what are essentially small pieces. This is nothing compared to several Hemi's he has, intakes, carbs, heads etc...if the casting numbers are right, you can almost ask whatever you want because if thats what someone needs to complete their build it can mean that a period correct restored car goes from say $60k to over 6 figures and all you want is $10k for a block. 

 

The interesting thing about many of these collector items is that it also helps to be "known" in the group, many of which are relatively small. I had a coworker who's father had a rare car, rare enough to take it Barret Jackson and sell for over $300k.

 

Side note: If you want to really be amazed by a business, the money to be made is in being BJ..the fees they take are amazing, not just a commission off the sale like RE...they really take their pound of flesh and its no wonder they move them fast and run multiple auctions throughout the country...wow, talk about a great return. That was the first thing I thought when he told me about the entire process, multiple fees, insurance, transport, inspections, fees for reserve etc...its huge.

 

During the pre-inspection there were several guys looking at the car, interested in that specific make and wondering where it came from, they had not seen or heard about the car. It sold, but they were told that had it been offered by a "known" collector it would have likely brought even more, but since he was an unknown guy who happened to have a "barn find" from the middle of nowhere it almost detracted from the price. They said that he should have joined some forums, got in with some clubs/groups and built up some anticipation/marketing to really bring top dollar. 

Yea these are all good points. Quality is paramount in non traditional investment markets. A close second is knowing your liquidity parameters because these are often NOT liquid markets in a traditional sense. A broker at minimum is gonna charge 10% and sometimes as much as 30%. But to your point, with the right quality of asset, it doesn’t matter because of the pool you are swimming in. Another good example is Persian rugs. 

[Spekulatius]

It's not just quality, it's mind share. Stamps have lost mind share because people stopped using them for the most part basically. old furniture has lost mind share ( at least a couple of years ago, there was a bear market for antique furniture) because people didn't want to have them in their living room or kitchen any more.

 

I do wonder how stiff like NFT will be doing in 10, or 50 years? Maybe it will but I could well see that people completely moved on to something we don't know about yet. Some people collect old bank notes but what if we stop using bank notes entirely and generations growing up will just think they are pieces of paper.

 

It is true that stocks have survivorship bias too but generally speaking, even a company that eventually dies should have thrown off enough cash before it dies to make it a worthwhile investment. i read someone did the math on GM that if you bought it early on, you made a decent return through dividends from it, even though the terminal value was zero because they went bankrupt in 2008. Same applies to houses.

 

Even land can depreciate. My family owned vineyards and they went from being worth 100-200k/hectare in the 70's  to being virtually worth no more than grass land next to it (5-10k/ha) 30 years later because cultivation became cost prohibitive and the planted acreage shrank. Well, If you owned land in the Champagne region that would have been different, so it all depends.

Same with houses - I have seen houses in Germany where population losses occurred in some areas going to way below replacement value and selling for cheaper than they did in the 1970's 40-50 years later. Those owning RE in Detroit have a similar experience.

 

For those reasons, I like cash flowing assets.

[Blugolds]

4 minutes ago, Spekulatius said:

It's not just quality, it's mind share. Stamps have lost mind share because people stopped using them for the most part basically. old furniture has lost mind share ( at least a couple of years ago, there was a bear market for antique furniture) because people didn't want to have them in their living room or kitchen any more.

 

I do wonder how stiff like NFT will be doing in 10, or 50 years? Maybe it will but I could well see that people completely moved on to something we don't know about yet. Some people collect old bank notes but what if we stop using bank notes entirely and generations growing up will just think they are pieces of paper.

 

It is true that stocks have survivorship bias too but generally speaking, even a company that eventually dies should have thrown off enough cash before it dies to make it a worthwhile investment. i read someone did the math on GM that if you bought it early on, you made a decent return through dividends from it, even though the terminal value was zero because they went bankrupt in 2008. Same applies to houses.

 

Even land can depreciate. My family owned vineyards and they went from being worth 100-200k/hectare in the 70's  to being virtually worth no more than grass land next to it (5-10k/ha) 30 years later because cultivation became cost prohibitive and the planted acreage shrank. Well, If you owned land in the Champagne region that would have been different, so it all depends.

Same with houses - I have seen houses in Germany where population losses occurred in some areas going to way below replacement value and selling for cheaper than they did in the 1970's 40-50 years later. Those owning RE in Detroit have a similar experience.

 

For those reasons, I like cash flowing assets.

 

True, even with cars its the same. They make reproduction metal panels for the mopars, but they fit lousy and everyone wants NOS (new old stock) or original that is clean. What made me think of this is that the reproduction market for Camaros is intense...you can build an entire car from a magazine if you want, on top of that you can buy and entire unibody camaro for about $13k...they make them...so that influences the market. They dont make chargers like that 

[Dinar]

1 hour ago, Spekulatius said:

It's not just quality, it's mind share. Stamps have lost mind share because people stopped using them for the most part basically. old furniture has lost mind share ( at least a couple of years ago, there was a bear market for antique furniture) because people didn't want to have them in their living room or kitchen any more.

 

I do wonder how stiff like NFT will be doing in 10, or 50 years? Maybe it will but I could well see that people completely moved on to something we don't know about yet. Some people collect old bank notes but what if we stop using bank notes entirely and generations growing up will just think they are pieces of paper.

 

It is true that stocks have survivorship bias too but generally speaking, even a company that eventually dies should have thrown off enough cash before it dies to make it a worthwhile investment. i read someone did the math on GM that if you bought it early on, you made a decent return through dividends from it, even though the terminal value was zero because they went bankrupt in 2008. Same applies to houses.

 

Even land can depreciate. My family owned vineyards and they went from being worth 100-200k/hectare in the 70's  to being virtually worth no more than grass land next to it (5-10k/ha) 30 years later because cultivation became cost prohibitive and the planted acreage shrank. Well, If you owned land in the Champagne region that would have been different, so it all depends.

Same with houses - I have seen houses in Germany where population losses occurred in some areas going to way below replacement value and selling for cheaper than they did in the 1970's 40-50 years later. Those owning RE in Detroit have a similar experience.

 

For those reasons, I like cash flowing assets.

Spek, I love German wines, if you do not mind sharing, where are these vineyards?  Also, do you know of any good place in the US to buy Ice wine?  My wife and mother love it.  

[Spekulatius]

28 minutes ago, Dinar said:

Spek, I love German wines, if you do not mind sharing, where are these vineyards?  Also, do you know of any good place in the US to buy Ice wine?  My wife and mother love it.  

 I am from the Mosel valley near Bernkastel-Kues. You find German wines in the liquor stores (Loosen Weingut etc.) , but ice wines are very hard to find. In fact I think it's hard to make them because the temperatures in Germany don't really fall low enough in winter  any more.

 

If you do like German style wines, look for wines from the NY Finger lake area. I am a fan of these wines and have a wine club membership from a vineyard there. They make great Rieslings and other whites there, because as I found out, l the slate soil there is very similar to the slate soil in the Mosel or Rhine valley, where the best Riesling grows. You will also find ice wines from the Finger Lake area because it does still get cold enough there. You can PM me if you want leads to vineyards etc.

[Dinar]

10 minutes ago, Spekulatius said:

 I am from the Mosel valley near Bernkastel-Kues. You find German wines in the liquor stores (Loosen Weingut etc.) , but ice wines are very hard to find. In fact I think it's hard to make them because the temperatures in Germany don't really fall low enough in winter  any more.

 

If you do like German style wines, look for wines from the NY Finger lake area. I am a fan of these wines and have a wine club membership from a vineyard there. They make great Rieslings and other whites there, because as I found out, l the slate soil there is very similar to the slate soil in the Mosel or Rhine valley, where the best Riesling grows. You will also find ice wines from the Finger Lake area because it does still get cold enough there. You can PM me if you want leads to vineyards etc.

Thank you very much, will do.

 

[Gregmal]

So for sure I’ve been one of the biggest inflation is happening mouth pieces for the last 5 quarters or so, but really, isn’t 90% of this really just self inflicted? 
 

Housing IMO is different. Low end restaurant and warehouse labor is different. But the end of the day, on the consumer good side, it’s really just a result of there being shortages everywhere. Why is this so terrifying to people? It’s easily solvable. 
 

Now I don’t think this gets fixed overnight. Instead of fixing the ports or allowing more oil to be drilled this administration basically just wants to sit around and talk COVID all day. Instead of sending messages on the supply chain, they’re wasting time sending people freakin testing kits LOL…but I don’t get why there’s so much concern. This isn’t an insurmountable problem. The last few polls show 80% of Americans view inflation as their largest concern…when will Snorlax get the message and stop obsessing over a cold? I definitely would have figured heading into mid terms there would be more focus on solving this. 
 

IMO once you see these measures we may start seeing deflation. Just something I’m keeping an eye on.