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Why San Francisco should spook every REIT investor who’s not paying attention

Jun 08, 2023

Good morning! 👋

Before we get rolling, I’d like to issue a special shoutout to Amit Kukreja and Adam Bergman, who very kindly invited me to sit down yesterday for a wide-ranging conversation on Palantir, investing, and a whole lot more!

And, of course, to everyone who took time out of their busy day to tune in—YOU rock!

That interview, in case you missed it and would like to watch it again, or even for the first time, can be found here. (Watch)

Now, let’s get after it!

Futures are down slightly as I type in the wee hours (it’s about 0400 on the West Coast), which doesn’t surprise me one bit. The 10-year has risen slightly, which means the cost of money for the big, leveraged traders has gone up.

For everyone who’s joined us recently, this is critical.

Headlines don’t mean squat.

Today's markets are dominated by highly leveraged, highly computerized traders who borrow tremendous amounts of money to purchase the stocks they're interested in. So, not surprisingly, they’re very sensitive to the interest rates—like the US 10YR—that dictate the cost of money.

When the 10-year yield rises, the cost of money goes up, so big traders will typically “get off the gas” starting with the most liquid stocks, usually Big Tech. They don’t want to get the institutional equivalent of a margin call.

When the 10-year goes down, the opposite happens. The big traders usually start buying because the leverage helps ‘em maximize returns.

Either way, that’s information we—you and me—as investors and traders can use to our advantage!

Here’s my playbook.

Something’s not right

Something is off.

SEC Chair Gary Gensler is cracking down on crypto, but lawyers for Binance (one of the firms on the SEC’s sh__ list) allege that he offered to serve as an adviser to the firm in March 2019 while still teaching at MIT’s Sloan School of Management. The filing also claims that Gensler met with Binance founder Changpeng Zhao for lunch in Japan. (Read)


Seems to me that the future of digital assets is at stake, at least in the United States.

Meanwhile, China’s going to continue with plans to roll out the digital yuan and, in doing so, has an incredible opportunity on its hands to rewrite global markets in its own image. A threat the West still does not fully comprehend.

Invest because of China, not “in” China!

PLTR: Game on!

Sooner or later, every stock that takes off attracts naysayers the way hot dogs on the grill attract hungry picnickers.

Palantir is no exception.

Frankly, I don’t give a rat’s you-know-what because that’s how Wall Street plays the game. They’ve spent billions of dollars learning how to push your buttons in ways that make you scared, uncertain, doubtful... because they know that makes it easier to separate you from your money.

The way we—you and I—win as investors is a) to rewrite the rules on our terms, and b) to pick battles that they have no interest in fighting.

Keep your emotions out of the equation.

One way to handle that as an investor is to buy a little at a time, using Value Cost Averaging (VCA) or Dollar Cost Averaging (DCA) to control risk while harnessing the volatility others fear. Another is to use LowBall Orders as a way to accumulate shares at prices YOU are prepared to pay over time. You could also Sell Cash-Secured Puts to get paid as you “shop.”

Trading is different. If that’s the way you roll, you want to be prepared for who’s on the other side of the trade.

Cue the music...

WEC in firm command of the obvious

World Energy Council CEO Angela Wilkinson says that the “the world’s energy system is no longer fit for purpose.”

Ya don’t say.

The latest report suggests 50% of the global energy system will still not be electrified by 2050, which, of course, will put a pent in the net-zero pledges from governments around the world. (Read)

Two things come to mind:

  1. Yes, we will need dinosaur juice for a lot longer than people think; and,
  2. The world’s best companies may bypass the electric grid entirely (because they’re aware of the challenges and the obvious).

Energy is a continuum, not an on/off switch like people think. It’s not a coincidence that OPEC+ and China are in cahoots.

Invest accordingly.

Will the last person in San Fran turn out the lights?

Park Hotels & Resorts, Inc., one of the country's largest publicly traded REITs, has stopped making payments on “both its 1,921-room Hilton San Francisco Union Square and 1,024-room Parc 55 San Francisco properties and expects to remove them from its portfolio, citing several ‘major challenges’ in the California city.” (Read)

Not that this is a surprise.

Crime, personal safety concerns, and drugs... just aren’t the tourist attraction you’d think. 🤦‍♂️

We’ve talked since the beginning of COVID about the real estate crash that now looms over our country. And along the way, I’ve repeatedly recommended every investor seek alternative REITs to avoid it. Upgrade to Paid

The way I see it, SF is the proverbial canary in the coal mine.

Putskies or at least an inverse fund may be worth a look. I’m also beginning to wonder about municipal bonds and CA state debt (again).


West Coast Ports Plugged $CMRE

Los Angeles and Long Beach are stacking up as the maritime supply chain strains in shades of what strikes me as COVID 2.0, only without the virus this time. (Read)

Nearly half of all US intermodal shipments are related to international trade, so this could negatively impact rail traffic, particularly on the West Coast.

Or at least that’s the thinking.

My take is that a comparatively inexpensive stock like Costamare (CMRE) could do well under the circumstances. I’m going to throw a line in the water at $8 or less per share and not a penny more.

Bottom Line

85% or more of all buy/sell decisions are wrong—meaning individual investors have a remarkable tendency to buy when they should be selling and sell when they should be buying.

Keep your emotions out of the equation!

You'll be amazed at how much opportunity you see.

Now let’s get out there and MAKE it a great day!


Keith 😊


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