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Tiho Brkan Profile picture
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11 Jul, 5 tweets, 2 min read
Not going to be popular with this tweet, but the truth needs to be stated.

Central banks are creating massive inequality problems with 1% of asset holders (including myself) benefiting at the expense of the whole society.

I'm not a fan of taxes at all, let alone high taxes...
...as history shows they stifle future potential economic growth.

However, history also shows massive inequality (eventually) results in breaking social fabric via revolutions & civil wars.

The few are benefiting over many with huge CEO compensations, low company tax rates...
...landlords & rent-seekers are not paying any taxes via special schemes (1031 & depreciation),

while many struggle to earn a minimum wage & cannot afford basic healthcare needs.

The system will never be in balance, but currently, it's completely one-sided with MASSIVE risks.
In the book titled “The Great Leveler” Stanford university professor observes major historical events where economic and social inequality was at extreme,

and concludes solutions was eventually achieved in four different ways: warfare, revolution, state collapse, or plague.
I'm not sure there is a solution apart from history taking its own course of mean reversion (as it has before, evident in the book above).

However, I did come across this image — which I wholeheartedly agree.

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More from @TihoBrkan

Tiho Brkan Profile picture
24 Jun
What: litigation funding cases in the UK

Why: carefully selected & diversified portfolio of litigation cases can return 30%+ annually while being totally uncorrelated to traditional assets during a potential crash, plus Pound might rise vs $USD giving additional returns
Litigation funding is outperforming all other asset classes including private equity, real estate, private debt, hedge funds, and the stock index funds.

Yet it still remains very unsexy due to a high barrier of entry (expertise & know-how, large minimum ticket sizes, etc).
Additionally, the UK litigation cases are denominated in British Pounds — has recently broken out of its 13-year downtrend against the greenback.

We are hopeful the Pound might continue appreciating, gifting investors a double return (underlying ROI + exchange rate carry).
Read 5 tweets
Tiho Brkan Profile picture
24 Jun
1/ At the start, none of us know what we are doing. That is why in this business, it is important to execute in the right order.

At the start, your job should be to focus on learning about as many things as possible (a generalist) and to diversify your capital by spreading bets.
2/ As many years pass, your knowledge & experience will enable you to find an edge & sidestep pitfalls/traps in investing/business.

Finally, only now you're finally ready to become a specialist & start concentrating bets for maximum return.

Don't mix up the order, like so many.
3/ Tim Ferriss does a great job explaining why, in business and especially in investing, it is probably more important to be a generalist.

Jack of many trades, and mastering many of them — should be the new way of looking at it.

businessinsider.com/tim-ferriss-it…
Read 4 tweets
Tiho Brkan Profile picture
22 Jun
A bit late with this one. RIP David Swensen.

Had an enormous influence on me, helping me to step outside of public securities "tunnel vision" many years ago and diversify with alternative assets.

The Yale model changed the way private money allocates.

ft.com/content/e43825…
Swensen's portfolio allocation weighting over the years.
"Mr. Swensen often blasted the excessive costs of the mutual-fund industry and the conflicts of interest on Wall Street. He bashed activist investors as value-destroying and asset-gathering managers as out for themselves."
Read 4 tweets
Tiho Brkan Profile picture
21 Jun
Technically, the Nasdaq 100 seems to have peaked in February of this year.

Sure, the index has managed marginal new highs even in recent days but seems to be losing momentum (bearish technical & breadth divergences).

$QQQ $NDX
Additionally, the economically sensitive semiconductor sector also peaked in February and has failed to make new highs since.

Worth watching closely. $SOXX
Another economically sensitive sector is Asia, especially emerging economies in this region.

A clear and decisive peak in February for the broad Asian equity index.

If the world is reopening, recovering & returning to above growth — why are global equities underperforming?
Read 4 tweets
Tiho Brkan Profile picture
18 Jun
1/ At the top of the last real estate bubble,

we were told many US states (California, Nevada, Florida, etc) and various countries around the world (Spain, Ireland, etc) were suffering from property shortages.
2/ Once artificial demand pulled back as the downturn started, it turned out we never had any shortages at all.

Many were just buying their 3rd, 5th or 13th investment property by using excessive leverage.

I assume we will get a similar, or worse outcome in the next 5 years.
3/ Excessive leverage fuels booms like nothing else,

and it typically create enormous oversupply (mortal enemy of long term prices).

I can only imagine how much malinvestment we will have to deal with once the tide pulls back and we notice many are swimming without shorts.
Read 11 tweets
Tiho Brkan Profile picture
12 Jun
Where are all the bears?

#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.
Read 4 tweets

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