Gregmal

Either you're exaggerating or times have really, really, changed. Hearing Harrisburg brings me back to the glory days. Good friend went to school around there and had my fair share of fun at some of the bars and clubs in the area. Including an episode with said buddy and some twins where the phrase "2 nickels equals a dime" instilled an important life lesson. Total shit hole of an area though. At least back then. Roaring 20s? 6 cap!

Every facet of the bear cases generally rely on things that could apply to plenty of other investments...particularly new or disruptive ones that people missed and are bitter about. Its always important to be critical...but part of being critical is being open minded. I think there's merit to crypto, but also think its value is no different than that of gold...basically, whatever someone else is willing to pay for it. No intrinsic value whatsoever. Doesnt mean it doesnt have a purpose, just means you need to be a little sharper with your transactions/trades. Theres times when its got a valued place in ones investing/trading tool belt....IE against the backdrop of inflation...but also susceptible to piece of shit mode....be careful. My favorite bear argument is the "aids criminals" one. Cuz cash doesnt LOL!

Yea I think his presence on the board is consistent with the logic behind why they arent selling. He is this for personal, largely non financial reasons.

Does 50 bps over the next two years mean anything to anyone in the non WS trading world? The real economy? Total desperation move hoping to grab headlines and push back on a narrative. Calling bs.

If I was a FFH shareholder I'd be tempted to grab Prem by the ankles and shake him upside down asking repeatedly, "where's all our money" from the past decade's historic bull market.

Doesnt really matter how influential the country is IMO, as long as incremental users are added to the ecosystem. I wouldnt expect the US or a major old money establishment type regime to cede control. Imagine what kind of stimulus pickle they'd be in if we still had the gold standard or BTC type currency? How would they send poor people their stimmies? Frozen chicken packages? Gold plated coins? food vouchers funded by future tax credits? It would be hilarious. But the existing system is setup so they can retain control and influence and I agree they'll come up with something dumb, IE crypto funds terrorism or some stupid argument to ban it before they let it take over.

Trading sense wise, I actually think there's a case to be made that the worse sentiment gets the more likely $100k becomes. Sentiment just fuels the next move in the opposite direction. I mean this is still positive YTD dont forget. I already laid out my original trade, so no, not buying as theres other stuff more compelling to me here, but man this has been worth the price of admission.

Fed may try continuing to scare people out of the inflation trade, but you cant fight fate.

Its like one of those 0 gravity amusement park rides. Gets real fun when there's nothing supporting you!

Its not going public anytime soon because the tech driving the tenant selection filter would be protested, called discriminatory, maybe even racist and probably censored from being available on any platforms. So I will just keep it to myself since I dont care about any of that nonsense and just care about getting results. Its like what stop and frisk was to NYC public safety but for my RE portfolio! Jokes aside, I swear like 50% of landlords I talk to have a problem with pot smokers lol. Just cuz its legalized doesnt mean folks should feel entitled to smoke inside property that isnt theirs. You get walloped if you smoke in a rental car...why do these deadbeats think they can smoke in a rental unit? I guess again its probably somewhat area related. Certain parts of the country people always seem to need to have a chip on their shoulder and sense of entitlement. Those types also dont really care about their communities so theyre less likely to stand up to a neighbor who's being a dipshit. Other places...that sort of behavior doesnt last long before life gets uncomfortable for those types of people. Personally, I tell all my tenants the same shit. I dont care what you do in may unit, take a sledge hammer to all the walls and BBQ in your living room for all I care. Just make sure the unit is in the same shape when you leave as it was when you got there. Otherwise, do what you want provided it doesnt get me in trouble.

Yea there's good people out there. Just have to be patient in finding them. You essentially want to deal with "privileged" people. Someone who feels shame handing in their rent on the 2nd of the month rather than the 1st, even though contractually they have til the 5th. Not someone who takes til the last possible minute afforded, feels entitled to take their time paying, or makes excuses based on things in their lives that have nothing to do with me. Poor people too often make their problems your problems. I just want someone who has dignity and goes about their business. 700 credit score and 4 year college degree probably "weed" out most of the pot growers. A w2 verifying they have a real job also probably means they dont have time for crap like that and arent taking stupid risks. The beauty of residential for a normal dude is you can lock it in with a 30 year mortgage and once its rented, if you have a good tenant, you literally do nothing but cash checks. Once in a while you have a system repair, IE plumbing, AC, electrical, etc....but you pay those one offs and otherwise your mortgage acts as a savings account, you get to write off the interest and sometimes taxes, and get the appreciation for free. Its awesome.

Sorry to hear that. I wouldnt give up on residential, its tricky to figure out but once you do its easy money. Single family detached kinda sucks but its still workable. The trick is to keep politics out of it and use common business sense. First, covid was an anomaly so some of the hiccups manifesting from that should be discarded. But overall, avoid areas that pander to scumbags. You want to be in areas that respect the rights of businesses and property owners. Also, ignore the urge to get "labeled"....every successful residential property owner who's honest will tell you, you ABSOLUTELY need to profile people. Once, and only once, I was in a unique situation and had a couple who was a walking stereotype. But I was sympathetic to them because they came from the shitty parts of NJ and had kids that they wanted in a great school system. Husband was a cop and a nice dude, the wife was a beast of a women and brought with her all the "shitty area" attitude stuff people who live where I do seek to avoid. Well, initially I wanted to help them and convinced myself to overlook their awful credit school, shitty income, and probably "shitty area" inspired mentality. They seemed like a nice young family with 3 kids under 5 who genuinely wanted to be here. So I made an exception and it was a total nightmare. As my 3rd grade teacher used to say, "one rotten apple ruins it for everyone"....so think with your head or think with you heart or whatever the saying is....but from then on, its simple. 700 credit score minimum. 4 year college degree. white collar only unless you are a business owner or have a hell of a reference list. The other thing is that the people with the above desirable attributes are also generally so much more reasonable and easy to deal with. I have excellent, almost friend like relationships with all my current tenants. I interpret the constitution as allowing property owners certain rights. I dont care what some dipshit politician wants to tell me. I have tried being a "nice guy" and at the end of the day pandering to those type of well intentioned feelings is expensive which is what a lot of people dont get. Want to make donations? Do it through charitable giving, not owning real estate. So despite being in a state thats abusive to landlords, thankfully, I live in a very solid county and city. With like minded and good people. They very quickly let the bad apple tenants who were playing games and skipping rent know that this behavior didnt fly around here and they could either change, or go back to where they came from where that type of stuff is accepted. Thankfully, they moved. This lesson was modest in cost, probably less than $10k total. But its important. Taking the first application for a rental that comes your way is not the way to go. Its YOUR property and if you only want to rent it to only half black, half Chinese people, with red hair and jewish background, that should be your prerogative. You'll pay a price in that your property will likely be vacant for awhile, but its better than dealing with people and situations that arent enviable. All jokes aside, its basically an investment grade bond vs a junk bond situation...and it pays to be thorough and diligent with tenant selection. I learned from the above and after closing on a new property in January 2020, had competing offers. Ask rent was 2200. I had a stereotype from the bad sections of NJ, with a 6 year old child, smoker, crap credit score, etc...but $200k a year as an independent contractor who basically traveled 90% of the time doing face to face sales all over the US. She offered $2500 a month. I wanted to take this but flagged it as super high risk even though she seemed like a nice girl with a daughter I wanted to help. Instead I went with a normal, boring couple with a kid and a dog, 700 credit, $80k in w2 income who had lived in the areas their whole lives for $2250. Well, covid rolled around and despite both losing their jobs, they paid every single month. Whereas I guarantee you the higher offer tenant, would have been the first in line to stop paying rent. Once you get it down, its easy money. Im in NJ and just raised annual rents 6.5% with 100% renewal rate in a year properties appreciated 25%+. NY Times just put out a puff piece on my town being a hidden oasis an hour from NYC...so life is good. Just have to rejigger the components sometimes.

Its really just the Trefalet outfit that has a big handle on control via share ownership. Otherwise there's a pretty solid record of doing the right thing with this group. I do think there is legitimacy to the concern of a stale, good ole boys club, entrenched board...but I dont care because they've been making the right moves for several years now and thats all that matter. If you go back and pull up their reports + outside analysis of the evolution and 5 year plan thats been executed since 2017-18 or whatever, its impressive.

https://www.wealthmanagement.com/multifamily/us-apartments-have-risen-top-foreign-investors-wish-lists?NL=WM-056&Issue=WM-056_20210617_WM-056_322&sfvc4enews=42&cl=article_2&utm_rid=CPG09000011488665&utm_campaign=32894&utm_medium=email&elq2=2ca6806f518c43ab80e8dd9cc74cac39&oly_enc_id=0563H6121845H6E "Currently multifamily is seen to be an extremely effective inflationary hedge, given that the leases mark to market on an annual basis. Going into what many predict will be a period of higher inflation, that is an extremely attractive investment characteristic."

The problem on the 50% decline in stocks position is that you sit on the sidelines for an entire decade waiting for an entire decade when theres plenty of easy low hanging fruit. And I am not sure its as frequent as once in a decade. Tech burst in early 2000s but quality businesses I dont think went down that much. 2008 was definitely unique, but even during covid 50% wasn't seen in most quality names. So being 50-100% in cash is IMO unequivocally dumb. There's also the fact that most of the time, those folks waste years waiting, and then when it happens are too busy screaming how they were right and its only going to get worse...rather than being opportunistic. I recall some dipshit in 2008 made the papers saying the S&P had another 20-30% to fall when it was at 700. The doomsday stuff is just a losers mentality. If something thats gone up 5 fold goes down 50%, where you really better off not buying it? A BRK B share was like $90 in 2012. Agree on the 30 yr fixed. Love em.

Yea I don't own much, and by and large its contract specific, which at least with most public companies, I am not sure is even disclosed for investors. But many times its CPI+ a few %, or the other common ones are ~10% increases every 5 years or something. One is ok and the other is not good and there's some variations in between. Was just pointing out how despite the craziness of what we are seeing today, a 20 year Chick-Fil-A or Chase NNN is currently a 3 cap asset. It makes sense lazily that a 10% inflation print should equal a 10% treasury and subsequently lets say a 12% cap rate for a good asset. But its not really that simple. What do we base 10% inflation on and come to that conclusion? I view inflation as the loss of purchasing power. But even there...where and how does this get measured? Is it CPI? What if CPI is wrong? Do investors just ignore it even though they're really predicating these rates on a faulty moniker? If CPI says 3% but its really 10...who determines the market? I mean again, everything I see looks like its at least 10% more expensive, probably even closer to 20. Local baseball stadium the other day had hiring signs up starting at $20 a hour to works the concessions. And signs at the concessions apologizing for being short staffed....So again this kind of leads me back to the idea that productivity/consumption and wage increases will really be a driver if this plays out. Which bodes really well for crude. I think if nothing else, I hope I've read wabuffos analysis largely right, at least in terms of the spigots analogy. Which makes sense. You have this kind of one time disruption and discombobulation. Its created one hell of a distortion. 10 year should probably be a good bit higher than 1. But to have this sort of hyper inflation you need more than one off stimulus making its way into the hands of the public. My expectation, which isnt worth a whole lot, is probably that we will see a good healthy sized jump in rates, and then stabilization. 2-4, maybe 5% on the 10 year type stuff.

Ok yea. Dont totally disagree. Ive been prepping for some of this stuff myself for a good bit now. But I also think the assumptions are too draconian. My analogy about the 50% decline in stocks folks wasn't meant to indicate you are saying that, as I know you're buying some stocks...but what I meant is that there's folks who get so wrapped up in such a kind of low probability event that it paralyzes them to an extent that realistically they're better off just discarding the fear as irrational. I know this because I had a German client who I had to fire because from 2013-2018 he was so negative and every 1% down day in the market got loud and obnoxious about how this was the start of the big crash. And it just got stupid and was a distraction and he has been in CDs for almost the entirety of the past decade. I think to a certain degree fearing a treasury thats currently at 1.5% going to 10 while the rest of the developed world remains between 0-1%(if not negative) is probably equally detrimental. 3% I could see. 5% I can see. While I get there are measures that claim to track this sort of stuff, what really is 10% inflation(just using a number). Year over year a pork belly or corn contract can see 10% increases. John and Jane Smith can see 10% wage growth. How does this mandate a 10% treasury? I mean again, I'm being told we're at 5-6% or whatever, which I am not sure I believe based on what my eyes are seeing, but trying to now imagine "this"(the 5-6% print and corresponding everyday prices...IE $10 2x4 and $8 12 pack of Coke) ballooning into an extended long term trend....I think the probability of that is the same as Berkshire Hathaway filing bankruptcy.... If the extreme inflation is only expected to occur for a few years, the market would price that in. Everyone always jumps to the 70s but the situations I dont think are really comparable. Right now we have a real bottleneck which is throwing prices of most everyday things out of whack. I mean theres scenarios where used cars are selling for more than the MSRPs on new ones! But I also think this pulls back and then while there is inflation, its more controlled. You can say the Fed is going to "lose control"....and thats possible. But what does that mean and how do we quantify it and what do we translate this to? There is also of course, this saying...something about not fighting the Fed...and its kind of been good advice.

How do you conclude that 10% inflation means a 10% cap rate? For instance right now people are saying theres about 5% inflation. We have a 1.45 10 year and the highest quality NNN and MF stuff trading near a 3 flat. Its been expected that year over year we see massive jumps and increases in everything simply because of how much of an outlier last year was. But you arent really saying you see consistent, 5-10% PER YEAR! inflation for a sustained stretch, are you? Let alone for so long that a 10 year fixed is in trouble? You have this as a 65% likely if I read your earlier post correctly? Im just trying to understand because I think a lot of what you're digging at is important. But I feel like it also may be getting into the category of folks who won't buy stocks because they consistently think a 50% decline is right around the corner. Perhaps a bit too extreme in terms of pessimism or assignment of odds to low probability events.

A cap rate is just a function of NOI. If you can raise rents annually to track inflation, all else should remain equal. How wouldnt you be just fine with a 5-10 year mortgage vs a 30 year in such case? In fact, your rate and also cost(as I said earlier, many 10 year mortgages are IO) would be locked in and even lower. If you unload the property before term is up, no issue there. If you refi its at a higher rate but one thats been tracked and covered by your annual NOI growth. If they keep heading higher, you continue to capture spread, and if they come back down...you can refi. There's a reason MF RE has basically been the institutional t-bill for decades. Its pretty durable in almost any situation. That said, the 10 year is currently ripping....at 1.45. I think we're closer to talking about 2 caps than we are 10s.

Most REITs/institutional RE operators dont use 30 yr mortgages. Its not the same as Joe Schmoe buying his home. Typically 10 years is the standard in CRE or with REITs, and often its 10 yr IO. Oil may not historically have a 100% correlation, but when I draw out the Venn diagram, there's more than enough overlap for me to conclude that "if this, then that", with respect to future inflation and the price of crude.

I don't think you need to be loaded with 30 year mortgages to own real estate. Multi family, Single Family, mobile home operators should all do well regardless with the ability to annually raise rents. Having long duration debt would be a strength, but its hardly necessary. Just avoid anything in a rent controlled area and you're good. I'd say 3-5% is definitely much more likely than 5-10%. The latter being pretty outrageous and really only something that occurs in unstable third world countries. Sustained inflation IMO would have to be driven by wage increases, which if that occurs there's a playbook for how to handle it. Bring it on.

+1 on Third Ave. Also, while an attention seeking baby sometimes...Jon Litt/Land & Buildings is usually pretty on point.

^ @Castanza yea thats kind of what I'm trying to get at. Will earmark this for a weekend watch. But basically, you need the most responsive yo-yo here. Its a somewhat tricky landmine to navigate and the last thing one wants is to be the next Peter Schiff who screamed about the GFC well in advance and then it turns out his investors got smoked because he invested in the wrong stuff. I see a lot of people like gold, and I dont disagree its poised to do well. However dont see how crude isnt a superior hedge in every aspect.

What would be the preference for gold vs crude? I think the commentary we've seen recently, highlighted by Tepper the other day is spot on. The environment is hostile to these companies. Demand will increase almost certainly if the factors driving inflation take place, probably even if it doesnt. Meanwhile supply is hamstrung. "He added the day Exxon Mobil Corp. added activist investors to its board was the time to buy oil stocks -- because it signaled drilling will eventually decrease over time, and with it supply." This occurred a couple weeks ago and prices arent too far off. If we want store of value, IMO it helps having a use for the store of value. You can do plenty with crude....gold on the other hand pivots back towards the "its worth what someone will pay for it" and BTC is better/equal or well you can make jewelry with it arguments which Ive always felt have merit.

Yea I dont know the company that well, but always thought sex appeal was a major part of the brand. Ferrari deciding to target poor/middle class people probably wouldnt be great for the brand either. VS always seemed to be targeting the 18-35(probably a bit earlier than 18 even) crowd, generally those that were in good shape and took care of themselves. Maybe they're changing with the times...IDK. Dont know if targeting all women vs just the upper 20-25% is whats needed... but was just shocking to see that store ads and posters and what they've turned into. Looked like the women's department at Macy's! Jokingly, perhaps it also has to do with the younger generation of females being averse to wearing bras....