stevenkesslar

So I was going to start a post called "Our Summer of Queer Love." But I decided to just post this here, since the thread is about LGBTQ films in general. I really liked both of the films above. The question Handsome Devil begged is what would happen if Nick Galitzine's Gay character fell in love? Now the whole world is learning. Queer Stories Strike Back! ‘Heartstopper,’ ‘Red, White & Royal Blue’ and ‘Bottoms’ Lead a New Surge of LGBTQ Content I was curious about how any of these films, or any LGBTQ films we've seen so far, fit into a list of the best rom coms ever. So I Googled this list on Rotten Tomatoes, which seems as good as any. THE 200 BEST ROMANTIC COMEDIES OF ALL TIME It's interesting that all of the Top 5 are from Hollywood's Golden Era. (I actually liked Holiday, which is not on the list, better than The Philadelphia Story. But that's what you get when you mix a somewhat more serious love story with rom com.) The top Gay male rom coms on that list are Fire Island, at #30, and Bros at #52. I liked both. But my main reaction to this list is that if Fire Island and Bros are as good as it gets, maybe we simply have not entered the Golden Era of Gay Rom Coms yet. I can't wait. Interestingly, #22 on that list - meaning the best LGBTQ rom com ever according to Rotten Tomatoes - is a film I'd never even heard of: Appropriate Behavior. Have any of you seen it? Probably not. Because the US box office gross was $46,912. Is anyone surprised that didn't persuade Hollywood to make more rom coms about Bisexual Persian women? I'm having a reaction to some really dumb shit that is being said by a few Gay film critics. Like, where is this stuff coming from? Here's another one who bitch slaps RWRB by saying it lets Gays "be really freakin dumb" in a movie. I'm fine with the criticism that any or all of the Summer Of Queer Love films are dumb Hallmark movies. I tend to like the serious ones that bomb commercially. Anyone up for Operation Hyacinth, Fireworks, or Mariposas Verdes? Those are downer movies I tend to watch on my own. But here's the part I absolutely do not get, in the words of the Gay film critic above: I know nothing about Matthew Lopez of the other up and coming queer film makers quoted in that Variety article. But I feel like I could have guessed how any of them would respond to these criticisms. And here Lopez is, saying it in his own words: No intention, huh? I mean, that Daily Beast article was a real head scratcher. Especially if you feel RWRB is Hallmark level, how could you not get the in-your-face intention of the movie? And if you are a Gay man that cares about Gay Stuff, how could you not get the real world context it relates to? Who's the moron? The film makers and their audiences, or the film critic? Is the distinguishing characteristic of LGBTQ cinema supposed to be that it flops at the box office? Here's a list of LGBTQ films I've watched in the last few months. Either because they are new, or they were on my long list of LGBTQ films I had never gotten around to: Bishonen, Primos, El Cazador, Mariposas Verdes, Fireworks, My Partner, Golden Delicious. To my knowledge, not one of them was remotely commercially successful. Now skip this paragraph if you don't want to know anything about the plots of those seven movies. We have two Gay honor killings, two Gay suicides, one Straight creep preying on hot Gay kids to do dark web porn, and three actual Gay love stories. But anyone who thinks RWRB was slow placed or lacked chemistry should avoid these other Gay love stories. Because they make RWRB look like like a roller coaster ride porno movie by comparison. Fireworks, which is a new Italian film, was particularly well done, I thought. With two hot young Italian actors portraying young lovers coming out. But because they were actually coming out in Sicily in the 1980's, of course they had to be killed - probably by their families. It's Brokeback Mountain, Italian Style. And it's a true story that is credited with starting Italy's first and largest national LGBTQ rights organization. Again, I liked all seven films. And I'd recommend any of them. Other than I know they would bore some of my friends to death. So, for me, our Summer Of Queer Love is like a breath of fresh air. I hope it is just the beginning of a Golden Era of LGBTQ rom coms, comedies, and love stories. Thank God for the film makers who are savvy enough to create films that are commercially successful to a broad audience. They are NOT morons. They are clearly intentional. And I can't wait for more.

I loved the film, obviously. But I'll compare it to a few other LGBTQ films I loved. And there's a few spoiler alerts in here. So if you don't want to know anything about the films I mention, don't read this post. Or just don't read it because it's verbose. 😉 I'm going to post in another thread about how RWRB is part of our Summer Of Queer Love. So in a different post I'll suggest maybe we all deserve a Golden Era of LGBTQ rom coms that hasn't even begun yet. I'm really looking forward to Bottoms. If the reviews are right, it's an anti-RWRB. The book and film of RWRB had to be ultra-politically correct in order to work. Bottoms sounds like the exact opposite: irreverent satire about everything. Including political correctness. Why not have every kind of LGBTQ comedy in the world? But in this post I'll go down the other road: serious drama. I loved Call Me By Your Name. I loved God's Own Country even more. If I had to pick one LGBTQ film that just blew me away for it's subtlety and script and fine acting in the last decade or so, it would be God's Own Country. Would RWRB have been better if it ended with TZP staring into the camera and crying over his lost love? Or if there'd been even less foreplay, and more emphasis on Galitzine's prince being more or less emotionally autistic? Those movies did wonders for the careers of Timothee Chalamet and Josh O'Connor. Who are both outstanding actors. They won, or were nominated for, lots of awards. Good for them. I love it that we've established that outstanding Straight actors can advance their careers with empathetic portrayals of Gay men. But, for me at least, Red White And Royal Blue was the most emotionally satisfying of these three films. I mean that in the sense that, in some basic way, a fairy tale is more emotionally satisfying than Shakespeare. Especially when it is a fairy tale you want to believe in. And that may be part of the difference. I'd argue all three of these films had happy endings. In the sense that the Gay men they portrayed came out and had a deeper sense of self-worth, power, and love. But is there something wrong about just being sexy, and winning? Another very apt comparison right now is with the movie Blue Jean. Have any of you seen it? Probably not. I haven't. It made a whopping $110,772 in the US box office. I read reviews by a Gay film critic who trashed RWRB and lavished praised on Blue Jean for "challenging homophobia and exclusion." Oh. Like RWRB didn't? The only thing I could think is this is why I've never met a film critic who actually has experience volunteering on an LGBTQ campaign. Let alone winning one. Blue Jean got a "must see" 87 on Metacritic. RWRB got a so-so 62. They make good comparisons, because both are set in England. One sounds like it movingly portrays the reality that in 1980's England, for a lesbian in love, it was a victory to simply survive. The other accurately portrays a world in which a closeted Gay leader is fighting for, to quote, "an infinitesimal shred of self preservation." And then with the help of his lover he decides, in effect, Fuck it. Let's just flip the whole order upside down. Is that somehow supposed to make Blue Jean emotionally deeper or better? I don't think so. This is a slightly cruel thing to say. But it feels more like some Gay film critic who has been around a long time and likes to pontificate about how oppressed we are. And who doesn't know how to deal with us creating our own fairy tales in which we define our lives, fall in love, and live happily ever after. It's 1000 % clear on social media why young queers in particular love this movie. They want to be able to define their lives, fall in love, and live happily ever after. And anybody who was around for the massive fight against homophobia should feel very good inside about the better world we created. What's cheesy about that? Brett Marchant, the Gay critic I mentioned above, sets out three criteria that he thinks RWRB fails to deliver on. It does not have a "recognizable Gay relationship," it does not have an "undeniable sense of romance." And it is not funny. So judge for yourself. I love both the videos below, which summarize the plots of two movies I love. So don't watch them if you haven't seen the films, and don't want any spoilers. I also love the songs. It's cool that young queers with basic film editing skills can now take what some Gay director did and create their own magical little worlds. I wish I had that when I was a Gay kid. Again, I absolutely fell in love with both of these films. But do Alex and Henry not have a recognizable Gay relationship? Are they not undeniably romantic? And are they not adorable, charming, and funny? And with all due respect to Josh O'Connor, is he the Gay romantic we all want to get dicked down by? (Rachel's Hilson's line in RWRB, who was another one of the great supporting cast.) Give me a fucking break!

Or not. I'll give you my predictably long-winded take below. But are you suggesting a recession is imminent? So here's two answers, one very anecdotal and one very broad. My nerdy nephew and I have been in hyper-pen pal mode this week. I just loaded up on a bunch of SOXL at $20 a share. He was hoping to buy more on Thursday for under $20. On Wednesday night before bed I emailed him and said it looks like he would not get his wish. Both SOXL and NVDA (it's biggest component) were up close to 10 % in pre-market trading, based on another over the top AI-driven earnings report. Then Powell opened his mouth and it all changed. Today my nephew got his wish since SOXL dipped under $20. But, right or wrong, we're reading all our RSI and other momentum indicators and thinking full speed ahead. Take that, recession! On a macro level, the Fed estimates for 3rd quarter 2023 GDP growth went from 0.6 % to 1.9 %. Take that, recession! The Fed estimates for fourth quarter GDP growth went from -0.00 % to 1.2 %. Take that, recession! Let's just stipulate my nephew and I don't know shit. But, supposedly, the Fed knows something. 🤔 Since this started as a thread on Dick's and shrinkage and organized crime, let me at least attempt to make this somewhat on topic. Does Dick's bad quarter tell us that something has to give? No, I'll reiterate. They were, and are, an earnings machine. If I weren't buying tech stocks with even better growth prospects, I'd buy them on the dip. Dick's is still worth more than double what they were a few years ago. Which suggests the economy is humming along. And their consumers are "doing very well," as they claim. Arguably, something does have to give. The rampant pessimism and gloom. But I don't blame people. Inflation sucks. Or, it did suck. But how to square the circle with all this consumer debt and delinquency? If Moody's is right, as I cited above, the net effect of student loans kicking back in will be to shave 0.25 % off GDP growth. Let's add a bit more for the pricey auto loans some of the same people have. If correct, that means it could have been 2.25 % or 2.5 % GDP growth instead of 1.9 % I swear to God I read somewhere in the last few days that some Fed-related document was actually talking about 3 % third quarter GDP growth. So it's possible for most consumers to be doing well. While others, particularly Gen Z and Millennials, perhaps are doing less well. My Millennial nephew reports that there are plenty of people driving fancy electric cars and buying fancy $15 cocktails in the fancy suburban bar he works in, when he is not secretly making a fortune in stocks. He does not regret not going to a fancy college, or not owning a fancy electric car. 😉 In the shorter term (say next few years), my guess is something is going to have to give. But it will be political, not economic, in nature. And it will be coming from Millennials and Gen Z, who the data tells us are feeling the brunt of it. All of that is beyond the scope of this thread, or website. In the longer term (say next decade), I'll be broken record about Stanley Druckenmiller, who knows a thing or two about investing. If we want to fuck up our own investment environment as much as we possibly can, we should pretend like the record level of government debt means nothing. Polls says that most Americans, regardless of ideology, agree with Druckenmiller, who is center/right. I sure do. Because it isn't about ideology. It's about not shitting in the bed you invest in. But that is a problem for down the road. Or down the toilet, if we do nothing.

If anyone does have the porno version of the film, how does one get it? Just asking for a friend. 😁

Take this as a less verbose addendum. I just read the new posts today on that other site I hyperlinked above. Somebody posted this interview today. It's hilarious. And kinda sorta makes the same points with a funny story. If it's hard to come out about having hair on your ass, I'm guessing coming out as Gay or Straight might be a lot harder. Nick mentioned in his Variety interview that it's a very sensitive topic. Ya think? But this part of what Lopez believes shines through in the film. And is I'm sure why so many people - especially I'm guessing young people - are falling in love with it. Let's just let people be beautiful for the way we are, naturally.

I'll give you a complicated answer. Because, as many have commented, real life is more complicated than a two hour fairy tale. I'm talking about IRL, based on my perceptions on social media. Which also means, "Who the fuck knows?" Nick did something I thought was classy. I'm guessing his agent called a Gay reporter at Variety who is married to a guy, and they had an interview about what it's like to be a Straight actor empathetically portraying Gay men, often coming out. I posted it above. If I go by many comments on social media, there are Gay men who don't want to believe this truth. Which is fine. Who cares if lots of Gay men would rather think Nick is Gay, as long as they buy tickets to his movies? As much as some people think the movie was Hallmark trashy, there was that whole thing about privacy and being able to come out on our own terms. Which totally resonated for me. So I like the way Nick essentially came out as Straight to his fans. With Taylor I'm basing it on what is being said on Gay social media. Here's 105 pages of it. And people say I'm verbose! I think the right way to say it, if I assume the movie is actually correct, is that if Taylor were Gay, and if he loved someone IRL, why would that be an issue? Why wouldn't a Gay talented actor have the same opportunities to swoon teen girls as Nick has to swoon Gay guys? I read some comment on some user review, maybe on Rotten Tomatoes, where some teen girl literally wrote something like, "I refuse to believe he is Gay." And therein lies the problem. I'm the least Hollywood person in the world. I'm an organizer and social justice guy. It would be ironic if all the swooning teen girls who want to be inclusive aren't 100 % inclusive when they write shit like that. Which is why I am delighted that, once again, the LGBTQ community is setting an inclusive and supportive standard. And saying, in effect, we love Nick just the way he is. Some people are just born Straight. What are you gonna do? 😄 Now I'll blab about a few other related things. Whether this movie deserves to be a rom com classic or not, it's already clear that it's going to be at least a little bit of a cultural inflection point. In a way that thrills me. So these comments deal not with any criticism of the film, but with LGBTQ cinema. The thing we know for sure is that Lopez is Gay, and quite open about it. Thank God! I have no reason to criticize a film I loved. But, for the sake of argument, it could have been better by being either a brain-disengaged rom com (as The Guardian argued), or a serious Tony-level Gay love story with cultural conflict and coming out drama built in. That said, I think it's a good bet that the success of this film guarantees we'll have more of all of the above. This is now the #1 or #2 or #3 movie on Amazon Prime in (name most any country in the world, except homophobic ones like Russia or Iran.) Even if I didn't love the movie, I'd love that. I can't find anything detailed about who is actually watching the movie. But I'm guessing that the target audience, like for most rom coms, tends to be younger. As many might guess, I'm not really a fan of texting. Lopez made texting look fun. I'm guessing that was intentional. Even if it didn't work as well for Gay men of a certain age. I'm guessing Lopez made lots of directorial choices with that audience (teen love) in mind. It's no surprise that organizations like GLAAD are pushing it as a "groundbreaking LGBTQ film." It also happens to be selling lots of Prime memberships. I think Lopez deserves a Tony for being Best Pragmatist. Another part of the reason it worked so well for me is that, right or wrong, the book and film are propaganda and inspiration for same sex marriage. I think intentionally. I had a wonderful long walk last year with a friend who worked for Freedom To Marry where we did a deep dive into what precisely about THE MESSAGE worked. And how she then helped export it to Ireland in a campaign to win same sex marriage there. Based on my understanding of what worked, whether in slick ads or local door knocking teams I helped train as a volunteer, the scene I would single out is Henry telling the King and his brother that we are "deeply in love" and "deeply committed." On the level of bumper sticker, that's what won it. I thought that scene with the King was brilliant, on multiple levels. First, since the gossip is that no Grade A actor wanted to play a homophobic Queen - especially right after a beloved Queen died IRL - they cast one of the UK's best Drama Queens as a homophobic King instead. I read Stephen Fry asked to play any small part in the film he could. So now I know I like Gay Queens playing homophobic kings. And while I was watching it, I was thinking, So the guy who I think is probably Straight IRL is making the case for same sex marriage, and deeply committed queer love. And the guy who I think is probably Gay IRL is keeping his mouth shut. Other than when Fry, the Drama Queen, bitch slaps him. This is ironic. And maybe brilliant. Speaking about the way the world should be, the movie is of course an easy target for the criticism that nothing, nothing, nothing in it could possibly be real. It's just a fairy tale. But if you believe that, here's a few questions. Is same sex marriage legal in Ireland? And what kind of delicate leadership decisions did THAT involve? Granted, Ireland does not have a Gay prince. But they do have a Gay PM. History, huh? 😍 I'm pretty sure from what my friends tell me that his process wasn't particularly easy, though. I think we are neither at the beginning nor the end of this whole coming out thing. Maybe TZP is Gay, maybe not. I think the movie is correct. We should let him figure out what he wants to tell us. And more broadly support any LGBTQ actors who do want to come out. Just like we should support Straight actors and "allies" (Nick's choice of words to describe himself) who want to come out in Variety.

Off topic. But if the issue is what could mess up a stock rally, I'd worry a lot more about that than organized crime. Moody's says that when student loan payments kick in again it could shave something like 0.25 % off GDP. If true, that's a blip. Not a recession. I just read something about soaring auto loan delinquency rates, because interest rates for overpriced cars spiked. If I recall right the article said something like 1 in 3 consumers with student loans also have relatively new auto loans. But I don't think this is inconsistent with Dick's saying "our consumer is doing very well." We're talking about a slice of Gen Z and Millennials who already have problems affording rent or buying a home. And are now going to have deeper problems. When my Millennial nephew who chose not to go to college is not busy making money on SOXL, he walks to work in a nice suburb. Where he serves fancy $15 cocktails at a bar and makes something like $500 a night. He feels like suburban America is thriving. And he doesn't feel a lot of sympathy for his peers with student and auto debt.

So out of curiosity, I checked on the ten largest retailers in the US, according to their trade association. For purposes of a thread on investing, I think the relevant question would be this: are retail Goliaths no longer good investments, because we somehow broke America and made it the land of the criminal and the home of the break-in? So of the Top 10 retailers (I excluded Amazon since they are mostly not brick and mortar), seven have seen their stock price go up since January 2020. And three have gone down. I picked January 2020 to see whether something changed during COVID times. Apple went up over 100 %. Three more (Costco, Kroger, and Lowes) went up between 50 and 100 %. Three more (Walmart, Home Depot. Albertsons) went up 25 to 50 % since January 2020. This of course includes all kinds of factors, as did Dick's 25 % drop. As I said above, even after tanking 25 %, Dick's stock price is still over double pre-pandemic levels. I see no reason to say retail theft is making it impossible for retailers to make money in the US. Or anywhere, since many of these companies operate internationally. The three that are worth less than their January 2020 price are Target and CVS, both down 15 to 20 %, and Walgreens, down over 50 %. The big notable hit CVS just took was when Blue Cross California dumped them. Walgreens has been the runt of the retail litter for most of the last decade. But they cite a loss of COVID-related services as a big reason for their recent losses. Makes sense. Their stock price did surge in late 2020 and early 2021 when they became a vaccination center. Now it's just gone back to being the runt of the litter. In terms of whether larceny theft is actually a huge problem within the ocean of what drives corporate profits for huge retailers, The Atlantic argues it is hard to argue either way. Because the statistics are muddled. And people tend to mix apples and oranges. Try finding a recent and easy to understand FBI report. Here's a few relatively recent reports that would address whether there's reason to think something about retail crime broke during COVID times. Safehome.org says larceny theft went up 3 % from 2020 to 2021, but was still 25 % below 2011 levels. Overall property crime was down 28 % from 2011, and burglary was down 58 %. The one property crime that spiked was car thefts. This Council on Criminal Justice Report which goes to June 2023 says two things: 1) Larceny theft is cyclical, and always peaks in the summer; 2) the overall trend of larceny theft is down about 10 % or so from five years ago. I agree with Kevin's point. Even just talking about "shrinkage" is complex, since shrinkage happens in a number of ways. But there is no evidence that, overall, a crime wave is plaguing retail America and making big retailers like Dick's bad investments. I'm guessing lots of people, including me, might buy on the dip. 🤑

On the face of it, cue up the doom and gloom melody: And yet. I read two articles off Yahoo. This first said shrinkage by organized crime was about one-third of the miss. And writing off outdoors stuff was the rest. Both were called "short term." It seems like it's popular these days to think everything sucks and cities are all going to hell in a handbasket because of lawless hoodlums, or whatever. My impression is at this kind of scale it's actually organized crime that does need to be cracked down on. But it's not a crisis. The first Yahoo article also said this: Of course, that's corporate PR. But it doesn't sound like the economy is going to shit. Meanwhile, the second Yahoo article said this: So it's an anecdote. But it sounds like the same idea as building bridges and chip factories: all these investments being made in a bigger economy. Better this than stock buybacks. We'll see. The article also uses the word "rebase." Even after a 25 % drop, Dicks is still more than double the roughly $45 share price right before COVID. And it went from a PE of 11.39 for the last year, which was low relative to the last 20 years, to a PE of 9.69. These are the kind of stocks I'm buying right now. Although I'm gambling more on tech stocks like INTT and ALGM. Same idea, though: just lost a third of their value. But still profit machines with unusually low PEs. My basic calculation is that Jim Carville always wins: we do want to be reincarnated as the bond market. And smart investors never fuck with an inverted yield curve. So at some point - maybe next month, maybe next year, maybe not - a recession will hit and take down the market 20 % or more. Dick's is telling us consumers are doing "very well." So don't hold your breath for that recession, darlings. If I'm going to be stuck, because I'm stupid and can't predict these things, these are the kinds of stocks I want to be stuck with.

Great. I'll fuck him then. As long as I can get TZP out of the way, I'll have no competition. Besides, Taylor has a BF. Nick just doesn't realize he needs one yet. 😉 This is what the Steven Kesslar School Of Sexual Finishing is for. Serious comment. I think this helps answer the question of whether this is a community. Or what kind of community this is. My buddy Dane Scott already texted me the GIF of TZP in Minx with the incredible cock. I texted back, "I think it was a prosthetic. But one can always hope." So having been the best little whore I could be, it doesn't surprise me in the least that this is a community that mostly wants TZP to be a stripper. And we want the cock to be real, and available to grab. That's who we are. That's what we do. What more could one possibly need? Matthew Lopez said his intention was to film a Gay fairy tale about hope and love. The thing I am proudest of as a Gay man is that I was one of a million little ants with no fucking power that was supposed to be crushed. Just like we always were. And instead, to quote someone famous who is NOT a prince: "It’s thousands of years of culture and history is just being changed at warp speed. It’s hard to fathom why it is this way." I dunno! But I know my friends and I helped do it. So we are now seeing the fruits of cultural change. In about a decade, we went from a princess ad that fucked up same sex marriage for a while to a charming prince who likes to bottom and wants a hubby. I can't think of a Gay fairy tale about love and empowerment that could be sexier, or sweeter. It wasn't as complex as it could have been. But fairy tales never are. To quote both Alex and Henry at the end of the movie, "We won." That's who we are. That's what we did. That's what I love about the LGBTQ community. 😍 And if Straight guys like Nick want to be our ally, that's another win I'll take.

Great! And now that you have some time, can you STFU and come mop my basement floor? It got a little bit wet from all the rain. 😉

Sweetie. That's awfully optimistic of you. 😉 I don't pay that much attention to Burry. I actually prefer his Christian Bale alter ego. But when I did check in in January of this year he correctly predicted 0 of the first 2 market dips. I remember the second tweet in particular because he was making a sensible argument that the beginning of this year looked a lot like one of the 2001 bear market rallies. Implying that it might be a long way down. Instead, it was a long way up. Same difference, right? 🙃 What was most interesting about that article @marylander1940 posted is it said Burry recently bought Expedia and MGM. In the first month or so of COVID Expedia lost over half its value. MGM tanked from like $35 a share to almost $5 a share. Both have recovered. Although when Burry bought them in Q2 2023 you can make an argument they were in buy the dip territory. The equivalent of those January tweets is everybody is being very impatient waiting for over a year for the next recession to arrive. I can't see why Burry, or anyone, would buy Expedia or MGM if they thought we were right about to enter a recession. Then again, I predicted 0 of the last 23 times Christian Bale looked sexy. Including in The Big Short. So what do I know?

My buddy Dane Scott had the perfect two reactions when we watched it together: 1) Applause, 2) "Finally, somebody wrote a good Gay rom-com." I haven't seen The Inheritance. But kudos to Matthew Lopez for being able to go from a six hour Tony-winning AIDS drama to a light and sexy fantasy in which Gay woke always wins. I'm all for being versatile. 😉 When I like a movie I tend to read lots of reviews. This ending to the LA Times review summed up what I thought was so fun about the movie, from the perspective of a Gay man: And Galitzine: He's always fun to watch. Can't wait for Mary and George. I think this probably proves that it is less important whether the actor is Straight or Gay, and more important that he is just sexy and hot. Galitzine as a Straight actor who actually played rugby playing a Gay rugby player in Handsome Devil was very hot and sexy to watch. Galitzine as a campy Gayish Prince Charming in Cinderella, much less so. But whatever went wrong with that Prince Charming, Prince Henry has now redeemed it. There's been a lot of speculation about Galitzine's sexuality. I like the way this podcast interview with Gay critic Marc Malkin handled it. Just matter of factly talked about what it's like to be a Straight actor trying to do a faithful job playing Gay roles. It's nice if we are now at a point where we can have talented Gay writers doing rom coms, hot Straight men playing Gay Princes with "voracious and animalistic" sexual desires, and hot Gay men in real life swooning women in movies off their feet.

It's a perfect example of why it makes sense to pay attention to macro factors like inflation. And why it is also very difficult to figure out what to then actually do. Pick your poison. This also indirectly addresses the question of whether there was any way in 1998 to guess Coke would go flat for 15 years or so. One way to look at it is even if you were wrong by a year, either way, and you sold Coke in either 1997 or 1999, you still had a decade or so to buy Coke stock back for way cheaper than you sold it for. The fundamental issue is whether it ever makes sense to head for the doors if you think something like inflation is going to be driving a massive bear market. There was a thread about that here just like a year ago. So here's perma-bear Grantham, who is in fact one of my favorite talking heads, and his bubble call being discussed in a brief segment about one year ago. And here he is four months ago in a very cogent one hour interview I paid particularly close attention to. Part of the reason I like him is he sounds like a socialist capitalist, if there is such a thing. Like he talks about how in the good old days companies used to use capital to build factories and hire workers. Now they do stock buybacks instead. But I digress. In both cases, if we are simply talking about calling a bubble and using rear view mirror judgment, he was wrong .......... so far. A year ago would have been a particularly good time to buy a lot of stocks. I took Grantham's detailed warning four months ago as a sign to be cautious. Because he talked through the fundamentals, and addressed the fact that we seemed to have already gone through the first phase of a secular bear market. Which made perfect sense at the time. One way I think about it is that from 2000 to 2002 the S & P basically went down 30 %, had a bear market rally, then went down a total of 40 %, had a bear market rally, then went down a total of 50 %. Which was finally the bottom. In March 2023 Grantham could sensibly argue when you factor in inflation the S & P is already down over 30 %. So enjoy your bear market rally. But what do we think comes next, folks? The easy familial way to say it is this is precisely where and why my nephew completely kicked my ass. We were exchanging lots of emails with lots of charts about this at the time. Including Jeremy's rant. The analogy my nephew used is that if you have a chance to pick up pennies in front of a steamroller, you might want to give it a pass. If it's instead picking up gold bars before a bicycle whizzes by, that's a different thing. In this case, it turned out to be gold bars. My big capital gain this year came from selling a rental home. My nephew, who rents, seems to be poised to make enough on tech stocks to buy a house in a nice suburb. And bikes for him and his wife, too. Fucking smart ass Millennials! If you go back to what Grantham was saying this Spring, it's extremely difficult to say this is turning out to be a bear market like 2000 or 2008. If it had played out that way, we wouldn't be heading back up right now. In the interview you just posted (here's the Yahoo version, since the Fortune version you posted was behind a paywall) Grantham comments specifically on this recent turn: Well ......... yes, no, maybe. He is hedging his bets. If this were a bear market, a reasonable comparison would be one of the biggest gaga stocks of the 2000 bubble, Intel. It went from $75 in 2000 to $15 in 2002. Again, it could make sense to hit the sell button before that happens - just like Coke. But AI-based Nvidia going from about $300 a share in May, which was still below its 2021 high, to a new ATH of almost $500 recently just can't be discussed in a bear market framework. Grantham himself is more or less conceding that his "we're in the middle of a bear market" call earlier this year wasn't quite right. Again, one could argue this is why you should just ride it out, even if it hurts awful. In that interview of Druckenmiller I posted earlier in this thread he mentioned NVDA as one of his biggest current holdings. Stanley said he thinks this AI stuff is so powerful it will keep going up for years. Take that, Jeremy! Since I am basically reciting greatest hits, I'll mention Lynn Alden again, who I posted an interview of above. She makes a point that is aging well. Which is that this is less like the Naughties bear markets. Or even the inflationary bear market of the 1970's. She compared it to the post-WWII 1940's, when supply constraints caused a big inflationary spike for about a year that led the market to tank in 1946. It's an interesting comparison. In part because the second act was a 1947 lull and then a recession in 1948. It's actually the last time a sitting President was re-elected during a recession. In part because the 1946 inflation hurt was over. And the brief and shallow recession didn't actually start until November 1948. My crystal ball sucks. But that's an inflation-related historical stock market example that I'm keeping my eye on. Grantham's big bubble pop certainly seems like it may have taken a detour. Or maybe it was hijacked by AI. 😉

Well, again, yes and no. Yes. You're right that if you bought Coke stock in 1980 and sold it today, it went from a split-adjusted price of $1 to about $60. Not bad. And you got dividends along the way, which as of now are about 3 % a year. As I said above, my calculation of Berkshire's annualized return of 38 % a year compounded from 1980 to 1998 was crude. Because I didn't even include dividends. No. Coke is an excellent example of my point above. If you bought Coke for $44 in 1998, at a peak, it took about 15 years for the stock to simply be worth what you first bought it for. Again, there's dividends along the way. But that's a long dry run for Coke if you're simply counting on dividends. If we are talking Buffet-level wealth, the other thing that has to be factored in is capital gains taxes. It certainly makes no sense to pay short term capital gains rates by gaming a stock like KO every year. In large part because there's no reason to sell a stock like Coke when the stock price keeps going up. On the other hand, if you'd owned it for a decade and you thought it was topping in 1998 it could make sense to pay long term capital gains and get out and invest in something else. You'd have had 15 year to try "something else" and you could still buy it back for the same price. Stanley Druckenmiller is a good example of an alternative billionaire strategy. His idea is to jump from one asset type to another. If Coke ain't working for you, buy gold. He's made money every year. I'm not arguing against Buffet. Quite the opposite. My best investments have all been buy and hold real estate. And that works nicely because of the leverage of using the bank's money on a mortgage paid by tenants to gain appreciation. When I first started trading stocks in 2000 I got the wrong impression, precisely because of what I pointed out above. In January 2000 buying Coke or Procter & Gamble was a bad idea. You wanted to buy some worthless biotech or .com company and make 100 % in a month or so. For some strange reason, that didn't last long. So what I eventually figured out is that it's better to view stocks like little homes. The more expensive, like Apple, usually the better. Although Berkshire itself costs more than most people's homes. I posted that chart from John Hussman earlier in the thread. It's worth a repeat on this point of buy and hold. The debate I've been having with my nephew, who is skeptical about how long this bull market will last, is whether at some point it will just makes sense to buy Treasuries instead. The red line shows the annual return of the S & P 500 over Treasury bonds. Obviously, in most years going back a century it is better to invest in stocks rather than bonds. Hussman is an excellent example of how to totally fuck up long-term investing. As I cited in a post above, he has been arguing since 2014 that the market is overvalued and it's time to get out. As his blue line "risk premium model" above shows. So he has the great distinction of being wrong and having crappy returns pretty much every year for a decade. I'd listen to Buffet instead. The issue as I see it is if it is 1998 or 2000, and stocks like Intel or Coke, let alone Pets.com, having been going up like a skyrocket, maybe it is time to get out of a long term trade. And buy Treasuries, or something else. We now know that would have been a smart move in 2000. But by 2002 it was better to buy stocks again for years to come. And in 2022, thanks to inflation, we also learned that even though it may have made sense to sell stocks and buy Treasuries, it turned out they both sucked. Basically, inflation sucks. So, yes. It's always smartest to be like Buffet as Plan A. That said, I know my nephew is simply praying the rally lasts til Fall so he can cash out a 300 or 400 or 500 % gain, or whatever it is at that point, pay capital gains tax on a huge tech stock win at the long term rate, and try Plan B. Fucking Millennials! No patience. They always want it now.

Just out of curiosity, I checked. This relates to the point about whether aggregate economic factors, like inflation, really make a difference. Or whether what matters more is good value-based stock picking, like Buffet does. And since you aced the first riddle, I'll try another. Buffet and Charlie Munger decided to have a competition. Over a period of several years, Buffet bought stocks that increased in value at the rate of 38 % annualized. Munger did the same. Except his basket of stocks actually decreased about 2 % a year. Then Buffet let Munger in on a little secret. After that, Munger's next set of investments grew at the rate of 16 % a year. What do you think Warren's little secret is? I read a very verbose and technical article years ago that argued that Warren Buffet is a secret market timer. And therein may lie the answer to the riddle. Those numbers are correct. But it wasn't Buffet v. Munger. It was Buffet and Munger v. Time. Berkshire Hathaway started around a low of $245 a share in 1980. By 1998, when it hit a peak, it was worth $84,000 a share. A crude calculation is that's about 38 % a year compounded. From 1998 to 2009 Berkshire went from $84,000 a share to $70,000 a share. That's about a 2 % a year decline. From 2009 to now Berkshire went from $70,000 to $543,000 and change. Crude calculation is that's about 16 % a year. I'd argue it's not that timing is of the essence. It's that timing is the essence. Of course, Buffet's point would still be that you can't predict these things. Like I argued, corporate profits actually grew way more in the Naughts than in the Nineties. And Buffet's portfolio is big and diverse enough that things like GDP and aggregate corporate profits and inflation matter. So since these things can't be predicted, just buy and hold, he says. What's interesting that I just learned looking at the chart is that Berkshire Hathaway hit a peak in 1998. And then it actually hit a low in Spring 2000. Right when the Nasdaq was topping at 5000 thanks to companies like Pets.com. Another riddle. But that answer is simple: Coke. Buffet's beloved Coca Cola was worth about $1 in split-adjusted terms back when Berkshire got started in 1980. It peaked at $44 a share in 1998. By Spring 2000, when Pets.com was all the rage, Coke lost half its value and was selling for $22. Coke is worth $60 today. If you bought it for $40 in 1998, you did okay. If you bought it for $20 in 2009, you did better. Meanwhile, Pets.com hasn't been seen for a long time. Just like the imminent recession. 😉

Exactly. We shall see. Maybe the market will broaden out, which it appears to be doing right now. Or maybe a recession (how long has it been missing now? I've lost track) will bring it all crashing down. But that's a very good example of @bigjoey's point. It's not the overall economy, stupid. It's the specific stock. That said, it's not necessarily that NVDA, which my nephew holds, is more profitable than OLED, which I hold. They're both good tech stocks. OLED made $4.37 a share last year, about three times as much as the $1.47 a share last year made by NVDA. Yet OLED is selling for $154 and is up 28 % YTD. NVDA is selling for $409 a share, and is up 179 % YTD. What's the difference? PE inflation. OLED has a PE of 35, well below it's 20 year average PE. NVDA has a PE of 213, about four times its 20 year average PE. As Stanley Druckenmiller commented in an interview on inflation I posted earlier in the thread, that's "nosebleed" territory. My explanation for it is that Wall Street is now gaga about AI. The same way they were gaga about moving factories to China 20 years ago. It helps keep inflation down, and what not. One wonders what the long term impact will be. But that's beyond the scope of a thread on inflation. Let's just move on and say it's Wall Street going gaga, stupid. Yes and no. To the "yes" part, I'll add the "pain in the ass" factor. I bought a home in Utah in 2005 which was a total pain in the ass for over a decade. It was an old home that kept having issues, I was several states away, and unlike other cities I never managed to find a reliable handyman that stuck around. The only good thing I can say is if I ended up buying in California instead in 2005, at the height of a national housing bubble, I would have been one of the millions who got foreclosed on, perhaps. My nephew thinks real estate is all about location. Specifically, California versus Illinois. He's trying to convince his retirement age Mom to move out of a home in a nice Chicago suburb she's lived in for over 40 years. That home, while pricey, is only worth about 10 % more than it was in 2006, at the height of the subprime bubble. Meanwhile, since he's my stock and financial pen pal (and, believe it or not, just as verbose as me), he knows I just sold a home in California for three times what I bought it for a decade ago. Talk about housing inflation! Lest anyone mistakenly get a good impression of California, it is really all about timing. Not location. I bought the home in 2012, at the bottom of a massive foreclosure fire sale. At the time it cost me about 60 % less than the 2004 sales price. I'm guessing it probably just sold for about what it was worth in 2006. So my sister-in-law arguably did a little better, since at least her value is a little higher than the nosebleed days of 2006. But in both cases, it's really not where you buy. It's when. Which is the key point. Buy cheap, and hold for the long run. To that point, my sister-in-law isn't really needing a pity party. Since she and my brother bought the house 43 years ago for about one-tenth of what she could probably sell it for now. So maybe it's not worth much more than 2006. But she'll be fine. Chicago is actually relatively affordable. So it will help when she decides to be a retired tenant paying rent instead. Meanwhile, my nephew stupidly invested about $50,000 of his Mom's money in SOXL last fall, of which NVDA is the biggest component. It's now gained about four times. So in six months he pretty much made up the appreciation his Mom didn't make since 2006. I'm not sure it actually makes any sense based on valuation or any actual characteristic of the asset, honestly. My nephew and I agree it's mostly just Wall Street going gaga, stupid. 😉 That's the thing about inflation, as we're now learning. Whether it's 9 % annual inflation, or PE's of over 200. What goes up like a space ship always comes down. Look out below!

So riddle me this, Batman. Here's one that blew my mind when I learned it several years ago: Corporate Profits After Tax Buffet's argument is that it's not the economy, stupid. Except in the very long run. It's the profits of the strong companies you buy for cheap, and hold on to as they grow. As he has famously proven. Therefore, it follows that a period when corporate profits boom is great for stocks, right? Nope. In the short term, it's not necessarily even the profits, stupid. From 1996 to 2000 corporate profits languished, from 587 billion in 1997 to 490 billion in 2000, as that FRED chart shows. Meanwhile the Nasdaq quadrupled, from 1250 to 5000 or so. Then from 2000 to 2006 corporate profits tripled, to almost $1.5 trillion. The Nasdaq went from 5000 to 2500 or so. When I first saw that years ago, I decided that's a riddle I can't figure out. Other than if you build a bubble on companies like Pets.com, that earn nothing, maybe it all makes sense. More recently, the stock market behaved better. Corporate profits soared for a few years during COVID. So did the S & P 500. Buffet himself diagnosed one of the problems in this 1999 essay. He pointed out that between 1964 and 1981 the US GDP rose 370 % and Fortune 500 revenues sextupled. During those 17 years, the Dow went from 874 to 875. The culprit? Buffet points to the precise subject of this thread: inflation. More specifically, sky high interest rates and things like 14 % 30 year Treasury bonds. I think Buffet is right that is there is one consistent way to fuck up the stock market, it's the inflation, stupid. Pick any period when inflation stayed above 5 % for a year or more, and that's a stock bear market. From mid 1946 to end of 1947, pretty much the whole period from 1973 to 1992, and recently of course from late 2021 to end of 2022. They all sucked for stocks. This still doesn't explain why the stock market went sideways in the Naughts. Even though inflation and interest rates were low and corporate profits soared. Slow digestion after we burped up a bubble, maybe? Sky highs PEs in the late 90's didn't help, either. Thankfully, I read that essay decades ago and decided I can't compete with Buffet. So I'll just be a dumb whore, I figured. It worked out well for me. But when it comes to stocks, I figure it's best to be like Buffet. Apple is by far the biggest chunk of his portfolio. And it's the poster child for consistently growing profits and even a relatively consistent PE. Anyhoo, now that COVIDflation is working its way out of the planet's digestion, hopefully it's clear skies ahead. And, in deference to Buffet, I also think it's the PE, stupid. Apple went from a 20 year average PE of 25 to a forward PE of 32 today. A bit high. But nothing a little correction someday won't fix. Meanwhile, NVDA went from a 20 year average PE of 68 to a forward PE of 220. Talk about PE inflation! It's always fun while it lasts. But look out below.

That was helpful advice. Thanks. I just had a big cash inflow from a home sale and I was about set to take @jawjateck's instructions from Page 2 and sign up for Treasury Direct. The rates on short term bills are all in the low 5's. And the process seems easy enough. I recently got kicked to Schwab from Ameritrade, due to a merger. I hate their stock trading platform. But I figured I'd check. Sure enough they have very similar Treasury-based money market rates. Their rate is almost exactly 5, which I'm guessing factors in a 0.35 % expense ratio. But I figured the convenience was worth it because the whole point is simply to park it temporarily while I dollar cost average it in to stocks in the (hopefully) continuing bull market. Since the account, including a transfer to my checking, was already set up it was super easy to just do it that way. I checked with B of A, where I have my checking, and their rates were significantly lower. So, yeah, big banks mostly suck. By the way, has anyone found the crystal ball that tells us whether the bull market is ongoing? Asking for a friend. 😉

It is interesting. Just going from the CPI alone, one third of which is housing, there was clearly way more COVIDflation nationally than COVIDe-flation. But NYC got COVIDe-flation for a while. Not a surprise since it was basically Ground Zero for the first deadly wave. I think the way to visualize is is there was a steady increasing price trend, and COVID deflated it for a bit. But it sounds like it's now right back to trend. My nephew sent me this housing price index for high tier homes in San Francisco. I've now switched the topic from renting apartments to buying homes. But it's a good example of the opposite. There was an obvious price surge up above the trend, which has now more or less deflated. Some unfortunate buyers lured by low interest rates no doubt bought pricey homes at levels they may now regret. This house right by Dolores Park in SF was one I always loved, right around the block from where I rented an apartment. Good example. Its Zestimate was basically in the ballpark of $2 million. Although it dipped a little in the first months of COVID. But then it surged to $3 million in 2021, when interest rates were record lows. And since then has basically dropped back down to where it was. Somebody had to buy a house like that for $3 million nearby. And they probably now regret it. A friend of mine in SF who posts here had the exact opposite. His one bedroom condo near City Hall plunged, and has yet to recover. All the young techies who worked at Twitter and wanted to walk to work are now probably buying or renting in the burbs. What all this suggests is that rumors of the death of New York City or even San Francisco are greatly exaggerated. People are still willing to pay a premium to live there.

Very smart move. I was curious. Because what you experienced and what I experienced as landlords was almost the exact opposite. So I went searching for data on rents in NYC and found this really interesting chart: What's interesting is that landlords in NYC had almost the exact opposite problem of most of the US. Including, I'm guessing, landlords in most of the US. The basic COVIDflation problem has been that surges in demand were met with constraints in supply. Manhattan had exactly the opposite, briefly, as that chart from Sept. 2020 shows. In effect, NYC briefly solved the Great Millennial Housing Affordability Problem. At least for a year or so. I checked what Zillow says about rents on the suburbany homes I rent in places like Sacramento and Palm Springs. If they are correct, even by Fall 2020 rents were higher than Spring 2020 when COVID started. The massive rent surge happened in 2021, when everybody wanted to move to the burbs suddenly. Supply and demand. A brief eyeball check on Bloomberg says average apartment rents in Manhattan were $3700ish in early 2020, right before COVID. And they dipped at low as maybe $2700, a $1000 price cut, by the end of 2020. Ouch! Bloomberg says they recently reached an all time high of about $4150. It's also an interesting example of what seems to be almost a universal. With some big exceptions, like working from home, COVIDflation did not change any long term trends. It simply distorted them temporarily. So the S & P 500 had a huge spike up when inflation boosted corporate profits. That now seems to have mostly balanced out. And the index is seemingly back on pre-COVID trend. Same with Manhattan rents. They had a scary (for landlords) drop down, but are now seemingly back on trend. Unfortunately for many West Coast renters, they have not experienced declines from the massive spikes in rent of 2021. All this suggests the three main problems are supply, supply, and supply.

I was reading Lyn Alden's Twitter feed last night and came across a retweet of an interesting chart that relates to my point. Just from eyeballing it, the divergence between average rent and income starting in 1999 was maybe 25 % right before COVID. As of that chart it's now 58 % since 1999, with increases in average rent far outpacing increases in income. Add renewal of student debt repayments this Fall and younger renters who went to school are going to be under a lot of financial pressure. My guess, almost my hope, is it leads to actual rent deflation. Meaning rents come down from their wildly elevated levels. I don't think it's good for an economy when young capitalists have a harder and harder time buying a home and starting a small business. Not everybody can become young and filthy rich by creating the hottest new app. Meanwhile, if you check in that website on home price trends I posted above, the Case Shiller home price index for an average price home in the US went from 100 in 2000 to 293 now. So landlords and home owners won. Tenants lost. As an oversimplification, I do think it means Baby Boomers won and Millennials lost. You can supplement that with these two charts: It should be no surprise that during a period of a few decades when rents and college education costs have been soaring, home ownership among younger Americans who are far more likely to rent has declined. Even for White college graduates with bachelor's degrees. Anecdotally, I know as a landlord this is not because they don't want to own homes. They can't afford them. One of my Portland tenants told me during COVID he had to eat into his down payment savings, even though as I said above I cut his rent 5 %, mostly as a symbolic gesture. Everything else cost more, he said. And his income got dinged during the worst of COVID. Another family I rent to in Portland, a couple with two kids, used their COVID stimulus to start a small business. If it were the Portland of 1990 when I moved there, they could afford to buy an inexpensive home like I did. Today they are simply priced out. My point is I see this as a bomb we are building that in some way and at some point will explode. It's not good for the economy. For some of us I guess the good news is we won't have to worry about it, since we'll be living in the great retirement home in the sky when the bomb goes off. 😉 P.S. It's a tangent. But kudos to Lyn Alden for modeling what Twitter actually could be, rather than a hate-based dumpster fire. I posted a one hour deep dive interview with her about inflation trends above. Which is obviously what I prefer. But she uses Twitter to make these pithy data points about the economy, usually with a graph or two. Who knew Twitter could actually make us smarter? 😀

That's nice to know. 😉 So this is a post about housing inflation. I'll make two main points. A broad generational point. Which is that Baby Boomers like me were lucky with housing inflation. And Millennials and Zoomers aren't so lucky. And then a specific point about the short term deflationary impact of the challenges Millennials and Zoomers are about to face. Most of my wealth is in real estate, as well. My income did not got up 40 % after COVID, if I refer to rental cash flow. But that's because I'm stupid. Instead of raising rents when COVID hit, I actually dropped them 5 % for a few years. I raised them back to where they were before COVID last year, and am back to small annual rent increases. It got me very loyal tenants, but not more income. That said, I don't feel like I had to ride out a storm. When COVID hit, the value of all my homes soared. If that's a storm, I want more storms. Meanwhile, as rents in all the West Coast cities I own homes in soared I gave my tenants a huge incentive to stay put and pay the rent. They did. If that's a "very dark tunnel," where do I find more tunnels like this? 😉 I did sell two homes that were rentals, one last year and one last month. I sold them both for roughly 30 % more than they worth in early 2020 when COVID hit. What storm? And that 30 % was chump change, in terms of how housing inflation (or appreciation, if you prefer) helped me. I bought both homes during the GFC at fire sale prices. So one was sold for just over 2.5 times what I paid for it. And the other more than triple what I paid for it. I may be stupid. But I'm still a capitalist. If I count my income that way, as one off capital gains, it went up way more than 40 % from my normal income. My generational point is that the housing inflation game has worked out very well for Baby Boomers like me. Or, if I go by my Gen Y nieces and nephews, it also worked out well for that cohort. Especially if you went to college and work as an executive for a big accounting firm or biotech company. One of the Gen Yers just bought a second vacation home, for cash I think. Woo hoo! Another pays more each month to board his daughter's horse than any of my tenants pay me in rent every month. Ain't it wonderful? For Millennials and Baby Boomers, not so much. It's easier to make an argument that they had the wind at their face, rather than their back. The nephew I have referred to several time rents. He and his wife could probably afford a home, especially after what he's likely to make in the stock market this year. But his focus now is convincing his Mom to sell her home, since she's of that certain Baby Boomer age. When she does, she'll make a huge windfall compared to what she bought the home for decades ago. In addition, my nephew just made something like $100,000 for her on stock market bets. Which will make it much easier for her to transition into renting a place she actually likes in a pricey suburb. I'd argue she is a typical Baby Boomer, like me, who had the wind at her back when it came to home prices and housing inflation. Her son, not so much. He's not an easy one to scapegoat as the lazy Millennial who wants a free ride. He chose not to go to college. And both he and his wife work for local small businesses, in his wife's case a family-owned one. Typical Main Street capitalism. He loves to trash the waste of academia. But we both agree the smartest thing we could do is send everyone to school for free to get engineering degrees, like China does. It turns out that engineers can usually afford to buy homes, even pricey ones. And they tend to be good for GDP growth. Bottom line is I feel lucky to be a Baby Boomer. I didn't ride out a storm. My whole life, I have had the wind at my back. Especially when it comes to real estate inflation. Did I mention that of every large city in America, just by chance I happened to live and buy homes in Portland, where prices appreciated the most? Please, make it rain more. 😉 Now on to my short term point. My best guess is that the related problems of student debt repayment and housing (un) affordability will now be deflationary. But probably not cause a recession. If I wanted to argue we're about to enter a recession, I think the single best argument is that chart above. When you look at all those charts on home price (and rent) inflation, it sure looks a lot like where we were right before the GFC. That said, instead of being a nation awash in predatory loans with teaser adjustable rates that are ticking time bombs, we're a nation awash in stable and very affordable fixed rate mortgages. As you noted @pubic_assistance. So I'm not holding my breath for a housing crash. What's amazing to me is that, if anything, lack of supply seems to be trumping wavering demand. At least for now. In addition to just selling a home I own, I also just helped one brother sell a house by hooking him up with a realtor that teams up with investors who do gut rehabs and tear downs. We were both surprised that he got more than either of us expected from a local flipper, based on what the comps for the last year were. I'm now conspiring with my nephew and his Mom to do the same thing. It's almost bizarre given how high mortgage rates are. But I have to conclude that homes are selling for surprisingly high prices because of the lack of supply. This is not 2008. So I don't think housing is going to drive a recession. Resuming Student Loan Payments May Exacerbate Affordability Crisis and Pressure Retail Sector That's not a report on housing inflation, per se. But it provides a very clear shorter term picture of some deflationary pressures. Moodys says the upcoming resumption in student debt payments may shave 0.25 % or so off GDP. Which is equivalent to the bonus GDP growth we just got, that drove up the stock market more. So a little pain among maybe 5 million Millennials does not a recession make. That said, it will put downward pressure on rents, and retail. Some Millennials and older Zoomers may have to move to less expensive digs to save money on rent, as that report argues. Since rent is about one third of CPI, it helps drive CPI down, too. I have to mention that I found it funny that even the Wall Street Journal labeled these huge increases in items like rent "greedflation." But, as they noted, capitalism eventually solves the problem somehow. That's the next chapter in our COVID recovery program. 😉 It doesn't help that, thanks to inflation, many borrowers with student debt payments restarting soon already have levels of non-student debt higher than before COVID. The stimulus checks are long gone. And as prices, especially rents, rose higher than wages Millennials probably made up the difference with credit cards. Or, in some cases, they may have decided since I can't buy a home at least I can have a nice pair of designer shoes. So this is mostly bad news for Millennials who want affordable housing, ideally that they own. And mostly good news for Baby Boomers who own pricey homes, or a lot of cash from selling them, and just want low inflation. If the idea is to create a long term investment environment that grows generous returns from either the S & P 500 or bonds, it's not clear this makes a whole lot of sense. Here's the core problem as stated in the Moodys report above: If I go by my own nieces and nephews, there is really no problem to be solved. Most went to college. Most own at least one home. Even if they didn't get an engineering degree, they got good jobs in corporate America, or started or work for small businesses. That's a good recipe for wealth creation. In my family it worked well for my parents' generation, my generation, and the next generation. But it's very clear that for lots of Millennials and Zoomers who are trying to follow the same path but don't work in Silicon Valley, it ain't working so well. At some point, like our massive debt bomb, this hurts the goose that keeps laying the golden eggs.

Sorry. I know. Verbose. Every night I go to bed wishing that I could become filthy rich just following Elon Musk's one sentence investment advice on Twitter. Instead, I have to contend with the ugly reality of charts and graphs like the ones above. Not to mention a nephew who is smarter than me. Ugh! Your chart on diversification makes the point nicely, @KeepItReal . And that first chart I posted above is a nice simple image about some of the data points on Hussman's chart. About choosing stocks versus bonds. 2000 was the end of a secular bull, and a good year to pick bonds. 2002 was the end of a massive bear correction, and a good year to pick stocks. What is interesting to me is that even 2006 and 2007, which I would describe as the end of a cyclical bull market, still turned out to be good years to choose stocks rather than bonds for the long term according to Hussman So, again, as your chart also shows, most of the time stocks win. I call the game I play with my nephew Spirograph. Which I used to like as a kid. So we spend an inordinate amount of time in emails playing with charts and graphs. And we waste a lot of time throwing shit at the wall to see what sticks. Knowing that most of it will turn out to actually be shit. The chart we are playing with now looks kind of like the first one. I bought tech stocks last Fall and moved into cash earlier this year because I thought we were in a bear market rally. I was clearly wrong. My nephew's main point has been that the S & P has been, and still is, on a long term bull trendline. Which starts in 2009 and in the chart above goes to 2020. So the long bull market is probably still on, he has argued. With some short-term distortions based on COVID that now mostly played out. Here's something you can try safely at home. Look at the S & P on log scale since 2009. It is easy to draw a channel with 90 % + of all the activity inside it. The main exceptions are the start of COVID, when the index crashed below the channel, and the top of the COVID stimulus bubble, when the index briefly surged above it. My point, which I can't find a recent graph that illustrates, is that what happened in late 2022 and early 2023 looks like a retest of the bottom of the trend line in this long term bull market trend. So like in other retests, such as 2012 and 2016 on the first chart above, a reasonable assumption is that if the S & P 500 retests and doesn't crash through - like the bears said it would, to 3500 or lower - it will probably go higher. With some peaks and valleys along the way. That's why I've been buying tech stocks back. But even if I am right, we'll have some scary corrections. Maybe soon. As you note, @KeepItReal, diversifying into bonds after the shittiest year on record for bonds may be a good idea. The second chart is from Glenn Neely. Two things about him. First, he was awfully cute, in a nerdy way, back in the late 1980's. Guys like Druckenmiller admit they were stunningly wrong in predicting a Depression after the Black Monday 1987 crash. Neely predicted a massive bull market. He of course turned out to be right. That second chart was Neely's prediction last year based on a theory I will call Spirograph On Steroids. I was a skeptic. But he has been mostly right, so far. He uses his own wave theory. Which he of course sells to people who want to get rich. He said that in late 2022 and/or early 2023 the S & P 500 would test bottoms. Check. Then Neely said after that the most likely direction was up, in a big way. Check, so far. Honestly, when my nephew sent me this stuff last year I kind of dismissed the idea. But it's partly because I'm older now and I take less risks. He's younger and he takes more risks. As I indicated above, his risk taking just paid off in a big way. I'm delighted to have lost the debate. If you want to do a deeper dive into voodoo wave theory, here's a video of Neely in September 2022 which has aged well. As any good salesman or investor would, he hedged his bets. He said the most likely scenario is the S & P does some retesting and churning, but ends up taking off in a huge bullish move in 2023. Back then he predicted (at about 11:00 in that YouTube video) that the less likely scenario was a much deeper dive down, to like S & P 3150. In the ballpark of what Morgan Stanley's bearish Mike Wilson was saying at around the same time. Lions and tigers and bears! By December 16 of last year Neely was saying that his bullish view is looking correct. And pretty soon we'll be headed to an all time high. At 12:00 in that second YouTube interview he predicted the new ATH would be S & P 5500 or so, which would be reached by "late 2023 to mid-2024." Last December that seemed almost insane. And, again, even Neely was hedging against himself. But now it doesn't look so crazy. A very easy way to visualize it is that what the S & P has to do is repeat the surge off the trendline from early 2016 to early 2018 as shown in that first chart above. That bullish surge now looks modest compared to the 2020/2021 COVID surge to S & P 4800. The 2016 surge went from S & P 1810 to S & P 2870. That's about a 60 % surge in roughly two years. If you start at the Fall 2022 S & P bottom of 3490 and add 60 %, you get to right around S & P 5500. Maybe bullish Neely will be right, again. I wouldn't bet on it. But I would not bet against it. Or, in a word, diversify. I'm guessing now is probably a good time to buy either stocks or bonds. Then again, it is so much easier to think of this problem by putting my whore hat on. As anyone who's ever chosen between two escorts knows, the correct answer is, "Don't chose. Try both. Maybe even at the same time." 😉

Let's see. Oh yeah. There's a chart just for that. I'll spend one long paragraph saying things that are mostly factual and clear. Then I'll go off into the fuzzier math of Fed policy and investing crystal balls. By the way, does anyone own an investing crystal ball that actually works? 😉 What the red line in the chart above shows, as a fact, is that it's better to invest in stocks than bonds almost all the time. Last year of course was one of those rare periods when both sucked. That in itself argues that after a bad year, or two, the pain tends to go away. Certainly the pain has gone away with stocks so far this year. To choose stocks over bonds for the long term and fuck it up, you really have to have horrible timing. So if all you had was $1 million and you invested it all in stocks and all in the year 2000, you made a big mistake, according to the chart above. That chart says over a 12 year period you cut your annual return by 7.5 % or so over what you would have made with bonds. But if you just waited until 2002, and invested the same $1 million, your return would have been significantly better if you chose stocks rather than bonds. It's clear that most of the time, investing in stocks - like an S & P index fund - is better. And if it is one of those rare bad times, like at the peak of a stock bubble in 2000 (or, possibly the peak of a stock bubble in 2022???) what that chart above says to me is just wait a few years. If you are instead investing $100,000 a year over ten years, and every year you choose stocks over bonds, that chart suggests in the long run it will always pay off. Even though in a few of those years bonds may have been the better choice. Assuming your crystal ball works better than mine. You of course didn't ask whether to invest in stocks versus bonds. You asked whether now is a good time to invest in bonds. My crappy investing crystal ball says yes, for the reasons you said. After it is done getting worse, it usually gets better. 😉 Same with stocks. I believed the bears, like Mike Wilson and his S & P 3500 call for 2023, and sold lots of tech stocks at a small profit earlier this year. Now I'm buying them back. If I were doing bonds, I'd do it the same way. Incrementally, and cautiously. So there will probably be a premium for investing in bonds as rates start to fall. But I agree with Kevin, that if you want to invest it helps to "have a take about how to invest in a given environment." So there are some big variables. If the post-GFC bull market in stocks really has ended, which I doubt, bonds will almost certainly be better. Which is Hussman's main argument. As that chart above suggests. But if these fabulously rich people like Stanley Druckenmiller I cited above are correct in arguing inflation may be sticky because we have a huge fucking debt problem we refuse to deal with, that could definitely impact your 12 year return on bonds. Now I'll careen off into some of the verbose and (ugh!) chart- and fact-infested debates I have with my nephew. Who mostly subscribes to the idea that the Fed and Jay Powell are incompetent. I'd buy that idea if he blamed Greenspan, who believed in the fairy tale that capitalism always knows best and self-regulates. Until AIG and Countrywide and much of the global economy self-regulated themselves into an abyss 15 years ago. To me, Powell is less ideological and more pragmatic. He tinkers. Right now it is hard to make a case that he got the tinkering wrong. If you agree with me, it's bullish for both stocks and bonds. But check back with me in a few years. If you are a masochist, here's a great idea. Read this unending diatribe, from fund manager John Hussman, who created that chart (and many others like it) above. His main point, to simplify, is that the Fed totally sucks. And he makes some good points, which my kinda libertarian nephew likes. If you can bear the misery of reading them. Me being a shitty uncle, I did one of my annoying fact checks. Turns out Hussman used the same theories and same charts to predict the bull market was ending in 2014. He literally said 2014 was comparable to 1929, right before the crash. Oops! If you'd listened to him and bought bonds rather than stocks back then, it would have been a very bad call. To be clear, my main intent in clubbing poor Hussman with facts is to prove just how hard it is to have a good crystal ball. If you want an even bigger headache, look at the 10 year return on his fund, compared to the S & P 500. I'm guessing, based on his flawed analysis, he ignored stocks and focused on bonds. Oops! I told my nephew of course Hussman blames the Fed. He sure needs somebody to blame for his crappy crystal ball. So now that I have set up the complicated context, my nephew was arguing that maybe this decade will turn out to be one of those decades where it is better to invest in bonds rather than stocks. My main reason for agreeing with him would be if I bought the idea that we will keep building a debt bomb that will eventually explode, kinda like the bomb that went off in 2008. Even though that would harm the returns on bonds, it would probably hurt the returns on stocks (a secular bear market) far worse. I'm an optimist in that I just don't think people are that stupid. Hard as we may try. So I think Hussman got his facts right, and his analysis totally wrong. My nephew and I agreed that Hussman's logic works best if you are the kind of investor, like my Mom was, who just buys and holds forever. But if the question is whether 2023 or 2024 is a good time to buy bonds, as opposed to 2025 or 2026 or the whole next decade, it's probably a good time to buy bonds. That said, I'll close by mentioning that actions speak louder than words. At the same time my nephew was scaring me with these doomsday arguments, and arguing maybe the 2020's are the decade of bonds, he took more risk than his uncle. He kept buying tech stocks. His problem now is that all the SOXL shares he bought at like $8 last October have tripled or even quadrupled. He is praying to God the bull market continues. So he either doesn't sell, or at least pays capital gains at the long term rate after holding them for a year. Three months to go. You ain't gonna get returns like that on bonds. Even if it turns out to be a great time to buy them.