"Rivets are popping. We have seen this movie before. The Fed tightens, things break, the Fed reacts by opening the monetary flood gates and the cycle begins all over again."
Still learning a lot about this but the difference between Larry’s outlook and Kenny’s seem to be very stark. Perhaps it’s a difference in philosophy?? Kenny seems to be more of a DCA long term optimist while Larry sees a grim outlook in the near future and is looking to take advantage. Just me???
I have to disagree with the BREIT notes. I am an investor in it and the yield was only 4.5% range – which I do not consider to be a “high yield”.
In addition 90% of their debt was locked in at a fixed rate for 6 years – so short term rates increasing should not have an impact on the fund. They do not have commercial office space in Manhattan in the portfolio. They are currently in the 95% range of occupancy. The financial crisis in 07-09 - obviously had the over leverage of CDS and other crap. But also the mark to market accounting was a downfall for many banks. IF there was a mortgage for $500K - but if the mark to market accounting was saying the house was worth $300K - they had to mark it down on their books - even if the borrower was making their mortgage payments.
If BREIT owns an apartment building that on paper may have dropped 20% in mark to market value - but is still 100% rented and everyone is making their payments - i am willing to ride it out.
For the gold conversation – I am more asking questions because I do not know the answer. From google – it appears the US Government owns $5T of gold. Which is a drop in the bucket of how much “currency” we have out there. As the biggest gold owner in the world – my question is “Is there enough gold in the world to back any currency at this point? Or you make the case that gold is should be worth $100,000 oz?”
Larry is great, always follow him. Not sure I agree with him on a bright Bitcoin future but over all a greaat analyst.
Still learning a lot about this but the difference between Larry’s outlook and Kenny’s seem to be very stark. Perhaps it’s a difference in philosophy?? Kenny seems to be more of a DCA long term optimist while Larry sees a grim outlook in the near future and is looking to take advantage. Just me???
I have to disagree with the BREIT notes. I am an investor in it and the yield was only 4.5% range – which I do not consider to be a “high yield”.
In addition 90% of their debt was locked in at a fixed rate for 6 years – so short term rates increasing should not have an impact on the fund. They do not have commercial office space in Manhattan in the portfolio. They are currently in the 95% range of occupancy. The financial crisis in 07-09 - obviously had the over leverage of CDS and other crap. But also the mark to market accounting was a downfall for many banks. IF there was a mortgage for $500K - but if the mark to market accounting was saying the house was worth $300K - they had to mark it down on their books - even if the borrower was making their mortgage payments.
If BREIT owns an apartment building that on paper may have dropped 20% in mark to market value - but is still 100% rented and everyone is making their payments - i am willing to ride it out.
For the gold conversation – I am more asking questions because I do not know the answer. From google – it appears the US Government owns $5T of gold. Which is a drop in the bucket of how much “currency” we have out there. As the biggest gold owner in the world – my question is “Is there enough gold in the world to back any currency at this point? Or you make the case that gold is should be worth $100,000 oz?”
As always good analysis from Larry, appreciate his views analysis, and extended outlook.