TomB16 investing blog

Discussion in 'Investing' started by TomB16, Aug 7, 2019.

  1. ValueNZ

    ValueNZ New Member

    Joined:
    Feb 17, 2024
    Messages:
    6
    Likes Received:
    1
    Yeah fair enough, it depends on whether you're borrowing at positive or negative real interest rates.
     
  2. TomB16

    TomB16 Well-Known Member

    Joined:
    Jun 22, 2018
    Messages:
    4,337
    Likes Received:
    2,668
    This is probably difficult for non RE investors to understand.

    Interest rates matter but only the inflection, not the magnitude.

    Interest rates are built into commercial RE contracts, as is most property maintenance. The leases will pencil out, over time, regardless of inflation and interest.

    The key is they use interest rates from the previous year so leases perform poorly for owners in a rising rate environment. On the other hand, leases perform like gangbusters in a falling rate environment.

    These contracts also make it very difficult to stop inflation. Its difficult for most business to manage a 12% lease increase without bumping prices accordingly, even if inflation has returned to only 3%.

    In these cases, business often go bankrupt waiting for their lease and inflation to stabilize. Sometimes, companies are deliberately run into the ground to get out of 30-40 year property leases while a new company is created to scoop the business and employees from the ashes of the old. Sometimes companies get caught doing this but its pretty rare. It usually works.

    This is why the fed is deliberately trying to kill a small ratio of companies to stop the inflation cycle. Nothing short of doing this can stop inflation.
     
    #1062 TomB16, Feb 20, 2024
    Last edited: Feb 20, 2024
  3. TomB16

    TomB16 Well-Known Member

    Joined:
    Jun 22, 2018
    Messages:
    4,337
    Likes Received:
    2,668
    Canada is working on some sort of hydrogen production agreements with Germany.

    How many billions are morons going to waste on hydrogen? If they would take a basic physics class, the world would be a better place.

    So many people think they can make any decision, even if they don't have basic knowledge about it. Ignorance is lethal.
     
  4. TomB16

    TomB16 Well-Known Member

    Joined:
    Jun 22, 2018
    Messages:
    4,337
    Likes Received:
    2,668
    How is Powell still running the fed? Seems very strange to me.
     
  5. TomB16

    TomB16 Well-Known Member

    Joined:
    Jun 22, 2018
    Messages:
    4,337
    Likes Received:
    2,668
    Even though I like Intel and had planned to hold for the long term, my position is now under a long term sell order for all units. They were purchased in 2022 at roughly $26. It is not a large position.

    I still believe in Intel, to a degree. They have massive amount of government money coming in for the next few years. Their fabs could easily catch up with TSMC, or close, but I don't see a lot of upside in INTC, anymore. As it isn't distributing much, it's time to cash out the gain.

    Future platforms will enable amazing things but I'm of the opinion we simply do not require nodes beyond TSMC's N3E and N3P. Intel's 15k CPUs will be made by TSMC on N3P in 2H24. These CPUs should have rough parity to AMD's 8000 series.

    I'm not saying we should stop developing lithography platforms or that more powerful semiconductors will not have an application. I just believe 4k video with 100 fps frame rates is getting into territory of diminishing returns for gaming platforms. The gaming cash cow appears to on a down ramp. Gamers haven't upgraded yearly for a while. Even two year upgrade cycles has slipped to three. Before the year is over, gaming systems with five year life cycles will be the norm.

    So, time to take my gains and buy a mobility scooter.
     
  6. TomB16

    TomB16 Well-Known Member

    Joined:
    Jun 22, 2018
    Messages:
    4,337
    Likes Received:
    2,668
    Politics. Strap in.

    Canada has an election no later than Q3 of 2025. Right now, it appears the Liberal government is unlikely to retain minority power. During my lifetime, the early favorite has only won a few times across many, many elections. Word to the wise: ignore early polls.

    The Canadian RE sector is suppressed by current government policies. RE is down and REITs are down.

    Here is the situation:

    If conservatives gain power, RE will jump. If conservatives retain power, I suspect RE will sink further.

    I believe the up side is far greater than the down side. I also believe the up side is a bit more likely than the down side.

    Tom's opinion: With prices depressed, this makes it a good time to look for bargains on Canadian REITs with excellent potential for a strong 18 month return.
     
  7. TomB16

    TomB16 Well-Known Member

    Joined:
    Jun 22, 2018
    Messages:
    4,337
    Likes Received:
    2,668
    I currently have two long term buy orders in place for companies I consider incubator stage. Both are micro-cap, penny stocks. I will reveal these companies when the orders are either filled or expire.

    One of the things I struggle with is figuring out how long my industry knowledge will remain helpful, given I haven't worked in over two years.
     
    T0rm3nted and Lori Myers like this.
  8. TomB16

    TomB16 Well-Known Member

    Joined:
    Jun 22, 2018
    Messages:
    4,337
    Likes Received:
    2,668
  9. TomB16

    TomB16 Well-Known Member

    Joined:
    Jun 22, 2018
    Messages:
    4,337
    Likes Received:
    2,668
    The Boeing issues clearly demonstrate a core piece of investment theory: When a company goes toxic, it is extremely difficult to bring it back to a functional working environment.

    It can and has been done but it's really, really difficult and also rare.

    If a new CEO is to right the ship, he is not only going to need to be an excellent CEO but he will also need to be a ruthless sociopath who kicks the cancerous management and staff under him to the curb. That guy probably exists but Boeing is not going to find him or her.
     
    roadtonowhere08 and T0rm3nted like this.
  10. TomB16

    TomB16 Well-Known Member

    Joined:
    Jun 22, 2018
    Messages:
    4,337
    Likes Received:
    2,668
    My money market fixed income is now averaging 5.3%.

    That's not enough for long term sustainability, as inflation is a bit higher, but it's getting close. These are interesting times.
     
    Smokie likes this.
  11. roadtonowhere08

    roadtonowhere08 Well-Known Member

    Joined:
    Apr 13, 2020
    Messages:
    600
    Likes Received:
    506
    So what you are saying is.... Elon should be the new CEO? :lauging: A Boeing/Space X merger. Sounds like fun.
     
    TomB16 likes this.
  12. TomB16

    TomB16 Well-Known Member

    Joined:
    Jun 22, 2018
    Messages:
    4,337
    Likes Received:
    2,668
    That sounds like a nightmare. I would sell both companies short. Six months later, I would be as broke as everyone else who has bet against Elon. :D
     
    roadtonowhere08 likes this.
  13. TomB16

    TomB16 Well-Known Member

    Joined:
    Jun 22, 2018
    Messages:
    4,337
    Likes Received:
    2,668
    Let's see... Money markets currently paying 4.83%. Best 1 year GIC is 5.13%.

    The fed is talking about interest rate reductions soon. Unless they are full of crap, the smart thing to do is buy the GIC and lock in the higher rate.

    So, I just pushed a bunch of loose cash into money markets.
     

Share This Page