We are finally pretty much settled into the sunshine state
at last. They really should call it the “sunshine interrupted by a few hours of
intense end of the world type thunderstorms” state. It is of course summertime
in Florida and it is hot during the day and just about every afternoon you get
a low budget end of the world movie type thunderstorm to shake things up. We
really hit the neighborhood lotto given that we negotiated everything from Maryland
and had a friend check the place out for us. The Summerport neighborhood of
Windermere is as close to sitcom perfect as you can get. Lots of kids, friendly
neighbors so far, trails for walking and biking, countless lakes and ponds in
the area, a great pool and just about everything else we hoped to find.
To sum up, I fucking love it here. My northern friends worry
about the heat of summertime. Who gives a sht. Yes it is hot and humid but so
is the Mid Atlantic in the summer. You will never hear me bitch about the heat.
I will sit on the lanai (Floridian for screen in porch) and read a book, smoke
cigarettes and drink iced tea in the middle of the day. I take the dog for
several long walks a day regardless of temperature. The upside there is that I
lost about 10 pounds since we got here without giving up grease or gravy. I
love this shit. I will love it when there is a foot of snow on the driveways of
my “can’t handle the heat “friends up north. No one ever shoveled sunshine.
Getting me back north of the border may turn out to be impossible. I should
have moved here when I first started thinking about ten years ago. I can take
all the old people move to Florida jokes. Fuck you I am getting old and I live
in Florida. I have mandles and a sun hat. Kiss my happy ass.
One of the cool things about this development is that they
have kept a ton of open space and left large pockets of undisturbed nature. In
this case this means lot of lakes and what was once a swamp apparently. Every
day on my walks I see a shitload of wildlife and birds. Now, herons, cranes, armadillos
and lizards of various stripes are interesting but I am absolutely fucking fascinated
by alligators. I see one or two a day at least lurking with their nose and eyes
just above the waterline in the various ponds and lakes around here. Most of
them are smallish but we did have about a five footer swim over to take a look
at us one day. They are just stealthy fucking death machines and cool to watch.
I am told that when they get over six feet or so or become aggressive they are
removed to less populated areas and I have to admit I cannot fucking wait to
see a gator capture on one of my walks.
Now lets move on to more interesting topics. The market
continues to befuddle and bewitch most participants. Old traders and investors
as just confused as shit these days. All the old patterns, statistics and told
that worked for decades just are not worth a shot right now. The macro guys are
getting screwed like a hooker holding a two for one sale at a Viagra clinic.
There are almost no carry trades left with the developed world holding firm to
ZIRP and money printing. The macroeconomic fundamentals are just fucking
horrible but the central banks keeping throwing the markets treats in the form
LTRO and money printing so shorts get just crushed in spite of near depression
levels of economic activity. To make it worse China has discovered a new source
of enjoyment in screwing traders with rhetoric. Gonna ease, shorts get crushed.
Growth slowing, longs get crushed. I suspect they are just making this shit up
and then watching the carnage they create in the markets.
It is no better domestically. Jobs still suck. Real estate
is being talked up but there is another wave of foreclosures to come in many
areas of the country so I doubt we have a true bottom yet. The first guys to
call a bottom usually get crushed and I suspect that happens here. The introduction
of hedge fund money into the rental real estate market is probably going to
create an excess of rental single family homes while simultaneously driving
purchase prices up at the same time. If I was sitting on a shitload of cash I would
get in front of the funds right here and accept some downside pricing risk on rental
homes. You can get a better price and pick up a much higher term rental yield
that the funds will be able to when they all rush into the local markets. I would become best friends with the officer
of every bank in town that has OREO on the books and offer to take it off their
hands at a reasonable price. We are not at a bottom but we are close enough
that a shitload of money can be made, especially if hedge and private equity
money begins to distort valuation over the next few years.
The stock market has worked higher even as the fundamentals
worsen. Revenues this earnings season were just awful. Margins held up and are
still at historic highs as corporations fight to control costs and caught a
break from lower material costs in the quarter. We have seen many of the mo-mo
stocks get crushed in here as a result of revenue shortfalls, earnings misses
and lowered guidance. The sluggish economy is catching up with many of these
stocks and this is usually a warning sign.
If you dig deep enough into the market there are still
opportunities. I like the long term outlook for commercial real estate and think
REITs like KRG, CDR, CWH, NRF and ABR will pay off huge for patient investors. Gradual
improvement sin both commercial and residential real estate are going to help the
banks improve their balance sheets and I like regionals like KEY, HBOS and
HBAN. Smaller banks are facing higher regulatory costs and many will have to be
sold to larger acquirers. I have a list of about 100 banks that trade below
tangible book value, less than $1 billion in assets and excess capital. I
expect to make a lot of money off these names. I am watching the 13d filings of
bank activists like Joseph Stillwell and Lawrence Seideman for cheap banks with
a potential catalyst.
My energy names have
all rallied well. Stocks like PTEN, NBR, PVA and HES have done extremely well.
I am not going to chase them here nut I am not selling any either. I would be a
buyer of EXCO on any weakness. Natural gas prices have improved but they are
still very low historically. Coal stocks
have seen a dead cat rally but more problems lie ahead for these companies. The
debt side of the coal picture is much more attractive than the equities right
now.
I don’t really have a clue what the stock market is going to
do. Neither does anyone else. Anybody with a strong conviction about the next 6
to 12 months in the market is a fucking idiot in my opinion. The market is not
particularly cheap at a 16 trailing multiple and a Schiller PE well above the
long term averages. The economy remains weak and it shows in corporate
revenues. We are seeing cracks in market leaders. The fiscal cliff is looming. On
the flip side sentiment readings are pretty neutral and indictors from the
options market are actually bullish over the short term. Zero interest rates
policies will be with us for two more years at least and this pushes money into
stocks. We have never seen this type of global central bank activity so it is
almost impossible to know what will happen. I am sticking with a policy of reacting
rather than predicting and buying what is safe and cheap.
It is an election year so I guess I should comment on
politics. Here is my comment. We have two groups of people telling us how much
of our money they will steal and exactly which freedoms they will curtail and
the great pool of idiocy that is the public is actually arguing which is better. I swear to god if the republican would just
say freedom means free and in addition to lowering taxes and creating jobs we
no longer care who you fuck or what you do with your body they would never lose
another election. They are just too fucking stupid. The libertarians say it and
Gary Johnson is the best candidate they have ever had but the party has too
weird an image to gain ground with most Americans. A quote in the Orlando Sentinel
today sums it up. People like to vote for names they recognize. You fucking
idiots are getting spoon fed pure shit from two sides and arguing over which
tastes better. Having said that I think
that Mr. Obama has been an unmitigated disaster and has to go or we face real
problems in the US. We cannot afford his brand of big government solutions. There
is at least a hope that Romney will use more lube while fucking us.
Any politician who talks about anything but jobs and
education is just another form of thief and liar. Quit relying on sound bites
and ask yourself if you really want to pay for your neighbors at the point of a
gun. Do you really want someone else determining who you can marry? Should a politician
be in charge of your healthcare? Your personal habits? Your sex life? Do you want your children dying to keep the
peace in some far off land that even Sally Struthers won’t visit? I do not.
Both parties are selling a version of lies that has nothing to do with freedom,
liberty or prosperity. Provide a background where the economy can grow and
provide jobs and the local infrastructure to give my children a world class
education without the latest per theories and concepts fucking up their little brains.
Beyond that Mr. Candidate and office holder take your good intentions and shove
them up your ass. I really do not need you to run my life.
Now onto more interesting and important stuff. It is mid-August
and the Orioles are still relevant. We are six games behind the Yankees and in
a dead heat for the wild card right now. We are playing impossible ball and winning
in spite of terrible stats. We have a huge negative run differential. We are 23rd
in the majors hitting just .244. it is sure a s shit not small ball as we are
dead fucking last in stolen bases. It is not defense as we are also dead
fucking last in fielding percentage. It’s pitching with the fifth best team ERA
and the long ball as we are fourth in the majors in home runs. It has to be
management as the team is not looking any different than years past but we are
winning and the bull pen is delivering like it has not in years. Whatever it is
I will take it. The team is fun to watch and we matter in August. That is a lot
more than I could have hoped for in April.
On the football front I have to pick some new teams. I will
still cheer for the Ravens but I will only see their prime time games down here
in Florida. Besides football is more fun when it’s local. I am going with Buccaneers
since they are closest, the Jaguars suck and I spend too many years hating the Dolphins
to cheer for them now. On the college side it was a bit more difficult. I could
have gone with Miami as the U has been a great football school over the decades
but they are too far away and the team looks like they will suck. FSU is a team
I have rooted against forever. I am going with the University of Florida Gators.
Gainesville is closer and I am fucking fascinated by alligators. With my
sunhat, mandels and the cool ass blue shirt with an orange gator on it I am
going to one stylish motherfucker all season long.
Life is good. The kids are all good. The wife is fantastic.
The sun is one bright shining warm ass son of a bitch. I have palm trees and
alligators.
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