#Sentiment very much feels like 2011, 2015, and 2018.
The time to start paying attention to risk management is when the day stock indices continue making new record highs,
while fewer & fewer index components do NOT confirm those new highs.
Last we saw this, in February 2020, we sold a lot of our holdings.
$SPY $ACWI
The lowest quality corporate credit is signaling risky times ahead, as spreads tighten towards 2007 levels.
While no indicator is perfect, historically very tight spreads between CCC junk bonds & Treasuries have indicated euphoric sentiment and overbought public securities.
The put-call ratio 10-day moving average is indicating outright greed in our opinion.
It is mind-boggling that investors are loading up on this many calls — after one of the strongest rallies ever witnessed, with today's nose bleed valuations.
This is what risk looks like!
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Flexibility & versatility are key traits of investors.
The ability to view the same thing from different perspectives is critically important.
Since we develop our own RE projects as well as participate via lending in others, we attempt to learn from both sides.
Examples.👇
In the post-Covid markets, it has become more important than ever for lenders (senior & mezzanine debt) to assess the true financial position of the borrower (sponsor).
Lenders should demand strong finances & ample liquidity to sidestep future potential problems...
...which are common in the world of RE development (cost overruns, slow sales & delays).
As a lender, we want to know if the developer can handle these issues without additional emergency funding?
As a developer, we want to leave ample cash on the sidelines so we don't rely...
The following just happened 30 mins ago. #truestory
My taxi driver was complaining about how difficult business has been without tourists in Malta, so he decided to take his luck with the crypto speculation.
For the whole 20 min ride, he talked to me about Etherum & Bitcoin...
...saying it has been really slow there for a while now, and since he has bills to pay, he is now focusing on DogeCoin.
A friend of his sold the taxi business & put it all into this coin — basically giving me the executive summary from A to Z why it's going to the moon.
I've learned so much about investing in my 20 min cab ride.
Now, I too will be acting on other people's tips.
The new word on the streets is Snoop Dogg & Miley Cyrus will be pumping the DogeCoin up soon.
My new taxi driver friend will be buying some tonight after his shift.
"The average house in the UK currently costs more than eight-times average earnings (data at Dec 2020).
Before the current episode, this 8X earnings level has only been breached twice previously in the past 120 years."
"It may only be of historic curiosity, but it is interesting that house prices were even more expensive in the latter half of the nineteenth century.
They then went on a multi-decade downtrend relative to earnings. This only bottomed out after World War I."
"Three important drivers of this: more houses, smaller houses & rising incomes.
More houses: doubling in the stock of housing in the UK between 1851 and 1911. It rose from 3.8 million to 8.9 million houses – for reference, today it stands at more than 28 million."