ERICOPOLY

Are you through with the "you win" crap? Go back and read again what I wrote. What exactly triggers you to be so reactive?

I was vaccinated two weeks ago today with the Pfizer shot and studies have shown that the first dose alone gives 80% protection. Now I'm ready to behave pre-covid, travel, bars, etc... I think it will continue to surprise people how fast things continue to improve because if you have access to a shot there is really no excuse left to be scared of normal life. That personal experience and rapid psychological shift has encouraged me to agree with Greg's pointing to the pre-covid price (which as he says was before the positive improvements). It was already my opinion generally, but actually getting the vaccine and experiencing the restlessness first hand helps.

I do have a long position in APTS that I started yesterday which is why I am thinking more about it today. That's how it works in my brain, unfortunately. First the positive thoughts, the purchase, and then the creative worries that aren't probability weighted.

I'd readily suffer a 10% penalty if I felt I could reinvest at discounts twice as great. I think I am projecting the way I would behave in the event of a market dislocation. Perhaps a diverse group of retail investors won't think that way.

The 2020 Annual Report raises the point that the illiquid private market for their preferreds would also put a discounted price on the securities to deter the preferred holder from that avenue of exit. I don't know how the private market discount stacks up against the 12% redemption haircut. Also, does anyone know who holds these preferreds? Diversified into lots of investors or is there any single-party concentration?

If high interest rates were killing the values of fixed income securities across the board, a 12% penalty may not prove to be enough of a deterrent. I am not expecting high interest rates -- I raise the issue only because it's a scenario that would motivate a rational yield-hungry investor to exit the preferred.

Just thinking out loud here... 1. If rising inflation were to occur, we should have rising interest rates. Substantial inflation could lead to substantial interest rates. 2. Today's owners of the preferreds may decide that their yield isn't high enough and may want to exit their investment. 3. Because the preferreds aren't listed, it may be preferable to redeem their preferreds for common stock instead of selling the preferred to another investor. So my thought here is that although MF rents can increase annually with inflation, that very scenario may dilute the common.

Is this a seller's market or a buyer's market for MF? Is this the time to issue preferreds and acquire more MF with the proceeds? (logically that's the same thing as deciding to buy more MF with your cash instead of retiring existing preferreds).

I take it the market doesn't like the $1.2b of preferreds versus the $500m. market cap which was ever so recently $300m and the idea of being forced to redeem preferreds with stock on the whim of the investor who holds the preferreds. Given the events of the past 13 years in the market, these risks matter.

It was argued that the office properties were acquired with preferreds. Well, if a significant amount of the sale proceeds from office properties goes into buying more MF properties then it's a shell game. They are in effect issuing preferreds to buy MF. No difference if that coin passes under the office property shell first.

I've been reading the posts. Greg is surprised that the stock didn't go up $1 or $2 after the sale was announced and Greg has also pointed out that the market "the suits" doesn't like the preferreds. He points out that the value of the properties are obvious, in which case the market sees the value because it is obvious. So the problem is the preferreds as he has pointed out. However... I read the press release by the company and they said they are going to use the sale proceeds to acquire more properties and reduce the preferreds. How much to each? My take is that press release said two things: 1. The properties can be sold (the quality of the assets is obvious so the market already knew this) 2. Management would rather buy more properties than retire preferreds. So the hatred will continue. Not sure why the stock will pop in that case?

Tobacco use increases the addictiveness of those other drugs. quote: "Thus, nicotine makes it easier for other drugs to teach users’ brains to repeat their use." https://www.drugabuse.gov/about-nida/noras-blog/2018/09/recent-research-sheds-new-light-why-nicotine-so-addictive#:~:text=Kandel have identified a molecular,brains to repeat their use.

At $44 today, WFC is trading at a $9 discount to early 2020's valuation. That's equivalent to the discount they should get for earning $2 less per year for the next 4.5 years. Or $1 less per year for 9 years. (ignoring present value of money arguments which only make the discount even weirder). We're coming out of a pandemic, not going into one! Reserves are being released, not built. Now is not the time to be putting large discounts on the stock (IMO). California's governor has said he'll look at fully reopening the state's economy by mid-June (less than two months away), paving the way for other liberal states to follow if they don't first lead. At some point a $9 discount in the stock needs to answer to the following question: FOR WHAT MATHEMATICAL REASON?

USB is more of a vanilla comparison. USB also sits today where it did in early 2020 before the pandemic.

Investors are pricing in the pandemic for all 3 of the largest banks, and the same is true for any expected tax increases. I can't explain that large of a gap between their relative stock performance with merely the effects of the cap -- WFC needs to rise 32% to $58 per share just to match the 15 month price performance of the other two. $44 is also the lowest point for WFC for the trading period Jan 2014-Dec 2019. That's six years. At the start of that period there were 28% more shares. And at the peak it hit $66 during Jan 2018, the month before the asset cap. EPS were about $1/quarter. And, by definition, the bank today is closer to the day when it has the asset cap lifted. Unless it never has it lifted.

JPM and BAC are both trading roughly 10% higher than their pre-pandemic early 2020 prices. And USB is a few percentage points away from it's early 2020 price. comparatively... WFC today still has another 22% to climb before merely getting back to its 2020 start.

This pandemic is only a blip in a DCF. You're making way too much out of it.

"I expected we'd be here at $4x but with the asset cap lifted." But it was over $50 early last year without the asset cap lifted.

Why get inoculated for polio or hepatitis? Because the cost/benefit ratio is extraordinary. This can get ugly fast so let's not make quick judgement. Hopefully he makes an informed decision and that's it. It still his decision. Valuearb, I think asking why never is not an option is totally fair. In my age range, there have been 5485 deaths over the past year (per CDC). Whats more is that a lot of the people who die from Covid either have pre-existing conditions such as obesity, high blood pressure etc which I don't have. The average vaccine takes years to pass between different stages of the approval process. This one got approved in less than a year. Furthermore, in the US you have no legal recourse if there are long term effects from the vaccine. If you are eager to get the vaccine that's your choice, if I choose not to that's mine. If you get seriously ill from covid-19, do you pay your medical bills cash out of pocket or does somebody else pick up the tab?

The theory sounds right but house prices in the 60s/70s/80s just kept on rising.

I'm sort of curious about that effect. If Grandma dies of covid-19 her house is sold and her heirs remodel their kitchens, spending more money in a short period than Grandma would have.

There were winners and losers in the 1970s. I've heard my father commenting many times about how that period of inflation rapidly paid off the house and brought the family a higher standard of living. His pay rose with inflation.

Was the pandemic the cycle, or a cycle within a cycle?

Did you continue to buy WFC as it declined into October/November 2020? I think that WFC still has room to go, much of the potential good news hasn't had an opportunity to show up yet. I lowered the strikes to $20. Mostly this was done on 9/25/20.

I started reading this thread again this week for the first time in at least 6 months. The politics section was a nice distraction to increase my patience and be more of the "bordering on sloth" type of investor.. Looking back after a year of WFC, all I will say is that BAC hit $18 almost a year ago and now it's $37. I'm glad WFC is recovering because I have so much of it via options, but I wish I had played the pandemic differently. I still have all the WFC that I bought but I view it as a mistake because I would have done better with a different horses. I have a small basket of Australian big-4 banks including ANZ which is up about 100% since I purchased on 5/1/20. I just didn't act to the degree I should have. Oh well.