One of the hardest problems post-pandemic will be how to revive so-called "left behind" places.

Post-industrial towns, run-down suburbs, coastal communities - these places were already struggling before the crisis and have fared worst in the last year.

What should we do?

Interpretation of Financial Statements - preliminary filters.

1. Looking for sustainable competitive advantage:

When looking for sustainable moat, you wanna see consistency - in earnings, in having low debt, in having growing earnings, low spending in capital expenditures, etc.

The longer the company has existed, and if it sells you the same product for years (like Coca Cola), it reduces production costs and other costs (R&D, Training, marketing) slowly as the company ages.

When costs are reduced, margins and profits increase.

2. What to look for in an income statement:

Let's take a look at Apple:

i) You want to see earnings grow at a steady pace. Take a look at the net income below.

ii) Another thing that's important is a consistent and high gross margin.

As a thumb rule, Warren Buffett wants to see a gross margin of around 40% or above.

Although not quite 40%, it's around that range with respect to Apple.

Compare this to Apple's competitors.

Samsung's gross margins are around similar range, highest being 45.7% in 2018, and Huawei had a gross margin of 38.6%.

1/ How to raise a real estate fund (and, ideally, avoid getting sued)

Have warned everyone it’s better to raise capital deal-by-deal, bc it’s easier to raise & bc it's better for the sponsor. Still, there’s interest in learning how to do a fund… so, here goes.

2/ Don’t think of doing this unless you have a record of successful deals, ideally mostly/all in the same asset class / strategy.

Remember: You will be asking LPs to invest in YOU; they need to feel like you know what you’re doing.

3/ Really helps to have a list of prospective LPs BEFORE you start your raise. The more high-quality leads you have, the more likely you are to succeed. (I built my list via my blog initially; now twitter leads predominate - see my bio.)

4/ Find an experienced attorney. Doesn’t need to be a huge, expensive firm, but you want someone who has done a lot of private offerings before. Don’t agree to a big fee yet… at first, you just want a few hrs of her time for advice.

5/ Find an experienced CPA. Ideally, your existing CPA has worked on a lot of private deals before. If not, get a new one. Prospective LPs need confidence that someone good is overseeing the bookkeeping and doing the tax prep.

1/x The market continues to try & shake out weak hands from overextended positioning by both HF & Retail...After a strong Vanna run up overnight, as expected, retail exuberance exploded on the open in the form of retail call buying, this fragility, paired w/a)Mean reverting flows

2/x from pinned Index Vol b) well documented, risk parity rebalancing flows & c) selling flows tied to bank EOY liquidity constraints. In combination, these flows have together have amounted to substantive selling pressures, strong enough to counteract the positive vanna/ charm

3/x flows, & point to continued likely index RVol an IVol pinning...Historically, the week of quarterly OpEx markets are notoriously volatile intraday, but also mean reverting like we saw today. I think it is fair to expect continued IVol compression & more of the same underlying

4/x chop. Vanna/Charm flows will lose their oomph after Wed 12/16 vixperation morning. There’s a window of weakness which I’ve spoken to for a month that falls 12/16-12/23. That could open a brief window that could lead to revaluation of the real risk & short interest,post 1/6...

5/x but the overwhelming 10k 🦍 of index Vol compression should still hold any correction in time & price in check in the shortterm and it’ll be hard to have anything blow up too bad in SPX land given how cheap & abundant Xmas Vol is 12/23-12/24. NTM, a stim deal & potential Fed

It's out! The @EU_Commission winter economic forecast for 2021 📊
🇪🇸 +5.6% GDP
🇫🇷 +5.5% GDP
🇭🇷 +5.6% GDP
🇸🇮 +4.7% GDP
🇲🇹 +4.5% GDP
🇵🇹 +4.1% GDP
🇸🇰 +4.0% GDP
🇭🇺 +4.0% GDP
🇧🇪 +3.9% GDP
🇷🇴 +3.8% GDP
💶 +3.8% GDP
🇪🇺 +3.7% GDP
🇬🇷 +3.5% GDP
🇱🇻 +3.5% GDP
🇮🇪 +3.4% GDP
🇮🇹 +3.2% GDP

🇩🇪 +3.2% GDP
🇨🇾 +3.2% GDP
🇱🇺 +3.2% GDP
🇨🇿 +3.2% GDP
🇵🇱 +3.1% GDP
🇩🇰 +2.9% GDP
🇫🇮 +2.8% GDP
🇧🇬 +2.7% GDP
🇸🇪 +2.7% GDP
🇪🇪 +2.6% GDP
🇱🇹 +2.2% GDP
🇦🇹 +2.0% GDP
🇳🇱 +1.8% GDP

Vs📈 2020:

🇪🇸 -11.0% GDP
🇬🇷 -10.0% GDP
🇲🇹 - 9.0% GDP
🇭🇷 - 8.9% GDP
🇮🇹 - 8.8% GDP
🇫🇷 - 8.3% GDP
🇵🇹 - 7.6% GDP
🇦🇹 - 7.4% GDP
💶 - 6.8% GDP
🇪🇺 - 6.3% GDP
🇧🇪 - 6.2% GDP
🇸🇮 - 6.2% GDP
🇸🇰 - 5.9% GDP
🇨🇾 - 5.8% GDP
🇨🇿 - 5.7% GDP
🇭🇺 - 5.3% GDP
🇩🇪 - 5.0% GDP
🇷🇴 - 5.0% GDP
🇧🇬 - 4.9% GDP

🇳🇱 - 4.1% GDP
🇱🇻 - 3.5% GDP
🇩🇰 - 3.5% GDP
🇱🇺 - 3.1% GDP
🇫🇮 - 3.1% GDP
🇮🇪 - 3.0% GDP
🇪🇪 - 2.9% GDP
🇸🇪 - 2.9% GDP
🇵🇱 - 2.8% GDP
🇱🇹 - 0.9% GDP

Commissioner @PaoloGentiloni says the forecast is based on the assumption that restrictive measures to contain the #coronavirus will be eased in the second quarter of 2021.

Inflation Is Coming!

Some say: Inflation didn’t rise after 2008-2015 Fed QE, so it won’t rise this time. Here are the problems with that argument.

1) From 2008-2015 regulators hammered the banks, so while the Fed’s balance sheet expanded, M2 did not accelerate.

2) In 2020, we used the banks to push out money, the opposite of the first round of QE. PPP loans were financed through banks and unemployment checks were direct-deposited.
3) The M2 measure of money is up more than 25% in the past 12 months.

4) That alone, 25%+ M2 growth, is enough, but we are compounding the problems.
5) Regulating fossil fuel production drives energy prices up.
6) Ag, industrial & transportation are energy intensive, and many claim they are bad for the environment. Result: higher prices.

7) Federal government borrowing and deficit spending encourages more Fed money printing, and artificially lifts demand.
8) Higher tax rates, rising minimum wage, and big government crowd out the private sector; reducing supply.
9) Demand up; Supply down! Inflation is coming.