Lol exact same gif I sent @BasicBlue today when I texted him that screen shot.
I did exit two positions this week (UMC and APT) and kept it in cash because I think there’s a lot more downside than upside right now. So if the Cramer curse continues, I’ll make out well with that.
Now 140 
It was up 8.1% this year through yesterday after 2022’s disappointment. So far, so good.
But there’s a reason for Wall Street’s feeling of malaise outside of the tech megacaps. Strip away the glittering headlines for gainers like Nvidia Corp. and Meta Platforms Inc., and what you’re left with is the S&P 495. That gauge? It’s not very pretty.
“The average stock is down year to date,” said Crossmark Global Investments’ Bob Doll. “The Dow is down year to date. Eight of 11 sectors down, year to date. This market is narrow and getting narrower. And that is generally not healthy.”
Reminder about the positive skewness of stock returns. Any given individual stock is a big underdog to perform as well as the overall market.
Look out, it’s coming.
Boomers are absolutely going to try to control their children with promises of inheritance while spending every dime and inevitably expecting their kids to bail them out. This is basically guaranteed to happen to me. Fuck that.
My boomer parents are going to die with nothing because they put their entire life savings into gold prior to turning it over to the banks as collateral in 2010 when their business went under. Nice.
Possibly the dumbest article ever on yahoo finance and that’s saying a lot.
Hot tips:
- Invest in the companies creating AI.
- Use AI to bring in more income or save your business money.
- Own a piece of the companies that are utilizing AI.
THANKS
AI cubed.
#2 is equal to the usual representation of step 2, “???”
OK inflation is coming back down.
So I’m a complete idiot on this stuff… but has the fed done a really good job? Kinda seems like it
I think it may be “the fed’s rock prevented all the tiger attacks” scenario
Maybe… but right now we’re in this spot and this doesn’t happen much
https://twitter.com/byheatherlong/status/1679106321935638529?s=46&t=N0_fcOKIYYmlCS2e4YShsQ
Wages > inflation isn’t something we can take for granted
There’s a pretty compelling case the Fed has managed this exceptionally well.
I don’t think we’ll know how this has really gone until extend and pretend unwinds. Honestly though I’m pretty OK with the big victims from this being bankers, institutional fixed income investors, and real estate investors.
I think the financial markets have another big crack up in them basically, but I’ll fully admit I’m 100% long equities like always.
It sounds like they’re still going to do one more rate hike, and then we’ll see if they go pause or cut. There’s a chance that the privacy equity guys and real estate investors may dodge rain drops here and get the rate cuts they need just in time. But it’s gotta get cut quite a bit in a short amount of time to bail them out, I would assume.
I still think this is a spot where we could see a commercial real estate crash, stock market crash, and housing market crash that are relatively disconnected from the real economy.
I’m not sure we’ve ever seen a spot like this before, but it makes sense in my head that if asset prices are disconnected from reality, an asset price crash can remain disconnected from reality too.
But it’s also possible that the rate gets cut fast enough that the loans can get rolled over without too much trouble, and there are plenty of forces to drive residential housing prices way higher.
Commercial real estate is probably the thing that kind of has to happen, because at some point pretending people are going to come back to offices in 2019 numbers and that brick and mortar retail isn’t a downtrending industry has to stop.
It’s really hard to inflict the necessary pain without tanking the larger economy.
It’s been crazy town in CRE for over a decade. ZIRP predictably drove asset prices to completely ridiculous levels and the equity will need to be wiped out in many cases. But it’s a testament to the Fed’s ability to manage competing priorities that they’re going to engineer that without any bailouts and without significant spillover into the larger economy. Also, bank regulation of large banks is very good and they have an abundance of capital to absorb CRE losses.
Feel like it’s pretty 
to pat selves on back about anything macro financial until like a decade later
O’Shaughnessy: “Fidelity had done a study as to which accounts had done the best at Fidelity. And what they found was…”
Ritholtz: “They were dead.”
O’Shaughnessy: “…No, that’s close though! They were the accounts of people who forgot they had an account at Fidelity.”
Private equity is a scam, part infinity. Take it away Matt Levine:
Two basic features of private equity economics are that if you raise a fund and you spend $1 billion to buy a company, and you do a good job running the company and it becomes worth $5 billion, then:
- You charge a management fee — say, 2% per year — on the $1 billion you paid for the company, not the $5 billion it’s currently worth.
- If you sell the company — to a strategic buyer or another private equity firm or in an initial public offering — you collect $800 million of carry (20% of the value that you added to the company), but you can’t charge the management fees anymore.
It would be good, for you, to mark the company to market. Raise your own new private equity fund, and sell the company from your old fund to the new one at its current market value. Then:
- You can keep charging 2% per year, but now on $5 billion rather than $1 billion.
- You can collect your $800 million of carry now, and then if you add more value you can collect more carry when you sell it.
This is called a “continuation fund.” The Financial Times reports on “a new and controversial type of transaction that is fast becoming the private equity industry’s hottest trend in the US, UK and several other markets — deals in which a buyout group in effect sells a company to itself”:
Such deals have partly been a consequence of the tidal wave of cash that has flooded private markets during the long era of low interest rates. As that era comes to an end and a downturn looms, these deals are set to become more attractive than ever for private equity groups with companies to sell.
The deals — a way for buyout groups to return cash to their original investors within a pre-agreed 10-year time period, without the need to list companies or find outside buyers — have been growing in popularity since the early days of the Covid-19 pandemic, when a market freeze prompted a search for new options. …
Equity market investors are becoming increasingly vocal about how private markets value companies. Vincent Mortier, Amundi Asset Management’s chief investment officer, said this month that parts of the buyout business “look like a pyramid scheme” because of “circular” deals in which companies are sold between private owners at high valuations.
Speaking privately, some pension funds are frustrated. “This is wonderful for the [buyout groups]; it’s one of the best things they ever discovered,” says one pension fund’s head of private equity, who asked not to be named.
But “it’s one of the worst things” for their investors, he adds. “The pie is getting bigger” as private equity balloons in size, he says, but “more of the pie is going to the [private equity firm] and less is going to [its investors].”
There are some obvious valuation conflicts of interest: The private equity firm is a fiduciary for both the selling fund and the buying fund, so it is hurting some of its investors if it overpays or underpays for the company.
Private equity firms often arrange continuation fund deals without running a competitive sale process in which corporations or rival buyout groups are invited to bid.
In those deals, the pension plans and other investors in the older fund selling the company say they cannot be sure they are getting the highest-possible price.
Data on sale prices would appear to confirm their worries. Forty-two per cent of continuation fund deals value the underlying company at less than the private equity firm had told the investors it was worth, according to research by Raymond James. Half value the companies at the same amount the private equity firm had estimated it to be worth and only 8 per cent are sold at a premium.
Holy wow. I’m a really really really dedicated PE hater how did I not already know about this?