Mortgage Rates Double
Together With MasterWorks
Good morning investors,
It is a very strange time in public markets. Over the course of my decade long investing career I have not seen equity prices act so strangely. Zero revenue companies have nosebleed valuations. Commodity prices are acting like alt-coins. NFTs are selling for high six digit figures. And mortgage rates have just doubled.
When you combine an ultra-low interest rate environment combined with a Fed Printer on “infinite print mode” the pricing and valuations of public equities can get wonky. The Fed is conducting “Project Weimar” with our currency and the end result will be incredible.
Excessive money into the system combined with ultra-low interest rates gives investors an incentive to invest in riskier assets as discount rates are lowered and the risk free rate of return goes down. A simpler example for those not trained in traditional business school: as banks reduced interest rates from 8% in a savings account down to 0.008%, investors were forced to seek a higher return in risker assets.
My goal with investing is to achieve a strong absolute return every year while protecting my principal from any major loss. I am a Graham-Dodd student by heart and practice margin of safety investing with any asset I buy. When speculator hype comes to certain sectors of the market I ignore it and stick to what works — buying a dollar for $0.40 cents.
During the SPAC craze I watched investors turn a small amount of money into a fortune. I sat on the sidelines and watched crypto investors make millions. I didn’t participate in the electric car revolution and I have never bought a hot tech stock. Throughout my ten year career of investing I have bottom fished the market for stocks so low that if I am wrong in my forecasting, I really won’t lose to much. The goal of all investing should be to protect your capital. Margin of safety investing protects capital.
Readers of this newsletter should never expect me to write about a hot new craze. I am not trying to be the Whitney Tilson of newsletters and write about this new TaaS company or Metaverse company that is some small subsegment of Google or Facebook. I only write about obscure value stocks that most investors don’t even know exist. Focusing on these small unloved stocks is my competitive advantage. And I don’t plan on changing this technique to chase some biotech that could potentially cure cancer.
Either this Friday afternoon or Saturday morning I plan to have my next research report out on a new stock that I have been buying. Short interest is 40%, there are a few asset sales coming up and the stock has gotten completely hammered. If you want access to this report along with everything else I write about subscribe to Alpha Letter Pro. If for whatever reason Alpha Letter Pro is not for you, I will refund your money, no questions asked.
Alpha Letter is a reader-supported publication. To receive new posts and support my work, consider becoming a paid subscriber.
Finally, I have been chatting with a handful of you in our free chat room on the Odyssey app. After downloading the app (IOS only) you can use this link to join the discussion. I post there a few times per day on companies I am researching and also my general thoughts on everyday market moves.
New "Institutional Grade" Opportunity for Accredited Investors
A turbulent market. Rising inflation. Low-interest rates.
It's no wonder countless investors want to diversify. While you're still considering options, 9,782 accredited investors have found a potential answer.
It's a new "institutional grade" product that gives you exposure to what the Wall Street Journal calls one of the hottest markets on Earth – the art market.
Most people don't think of art as an investment, but those people are missing out. Just ask JP Morgan. In a recent report, they called art a "powerful financial asset" that could "serve your larger wealth plans."
Why art? Well, art has a low correlation to public equities. Plus, contemporary art prices outpaced the S&P 500 by 164% from 1995 to 2021.
With top works selling for $10 million, you used to need generational wealth to diversify with Picassos and Warhols. That is until Masterworks changed everything.
Their revolutionary fund-like product lets you invest in 60-80 masterpiece paintings through an SEC-qualified vehicle. By securitizing multimillion-dollar paintings, you can diversify your portfolio with one easy investment.
If you're accredited, you can get access with this unique link*
See important Reg A disclosures
Pot stocks gain as marijuana legalization bill scheduled for House vote (Seeking Alpha)
Orion Office REIT stock drops after its inaugural quarterly earnings report (Seeking Alpha)
Alibaba, other China stocks sink after U.S. says speculation on China stock listings premature (Seeking Alpha)
Apple is reportedly preparing an iPhone subscription service that could launch this year (CNBC)
Almost 645,000 people still hadn’t gotten their third stimulus checks by last fall, Treasury says (CNBC)
Anticipated rate hikes could 'topple' housing market (BNN)
Goldman Now Expects Yield Curve To Invert Next Quarter, Sees Inversion Lasting Three Years (Zero Hedge)
Biden would like Russia out of G-20 (Twitter Press Conference)
Biden says U.S. would ‘respond’ to Russia if Putin uses chemical or biological weapons (CNBC)
BlackRock’s Larry Fink, who oversees $10 trillion, says Russia-Ukraine war is ending globalization (CNBC)
Putin’s invasion of Ukraine is seen as his biggest ever mistake — and it will harm Russia for years to come (CNBC)
Russia Says 'Unfriendly' Countries Will Have To Pay In Rubles For Gas Supplies (Radio Europe)
Biden Casually Says Food Shortage "Going To Be Real" As Necessary "Price" Of Anti-Russia Sanctions (Zero Hedge)
Mining firm backed by Bezos and Gates to begin Greenland drilling (Reuters)
Exxon Weighs Taking Gas-to-Bitcoin Pilot to Four Countries (Bloomberg)
Gasoline prices are hitting $6 in some parts of the country and summer driving season isn’t here yet (CNBC)
54% of Canadians cutting back on driving amid high gas prices (BNN)
World looks to Canada to fill potash, uranium void left by Ukraine (BNN)
US natural gas inventories slip less than expected but price surge continues (S&P Global)
Global food crisis is the prisoners’ dilemma of trade (FT)
Russia chokes major oil pipeline in further threat to global supplies (FT)
Top oil traders warn prices could breach $200 a barrel (FT)
Disclaimer: The publisher does not guarantee the accuracy or completeness of the information provided in this page. All statements and expressions herein are the sole opinion of the author or paid advertiser.
Alpha Letter is a publisher of financial information, not an investment advisor. We do not provide personalized or individualized investment advice or information that is tailored to the needs of any particular recipient.
THE INFORMATION CONTAINED ON THIS WEBSITE IS NOT AND SHOULD NOT BE CONSTRUED AS INVESTMENT ADVICE, AND DOES NOT PURPORT TO BE AND DOES NOT EXPRESS ANY OPINION AS TO THE PRICE AT WHICH THE SECURITIES OF ANY COMPANY MAY TRADE AT ANY TIME. THE INFORMATION AND OPINIONS PROVIDED HEREIN SHOULD NOT BE TAKEN AS SPECIFIC ADVICE ON THE MERITS OF ANY INVESTMENT DECISION. INVESTORS SHOULD MAKE THEIR OWN INVESTIGATION AND DECISIONS REGARDING THE PROSPECTS OF ANY COMPANY DISCUSSED HEREIN BASED ON SUCH INVESTORS’ OWN REVIEW OF PUBLICLY AVAILABLE INFORMATION AND SHOULD NOT RELY ON THE INFORMATION CONTAINED HEREIN.
No statement or expression of opinion, or any other matter herein, directly or indirectly, is an offer or the solicitation of an offer to buy or sell the securities or financial instruments mentioned.
Any projections, market outlooks or estimates herein are forward looking statements and are inherently unreliable. They are based upon certain assumptions and should not be construed to be indicative of the actual events that will occur. Other events that were not taken into account may occur and may significantly affect the returns or performance of the securities discussed herein. The information provided herein is based on matters as they exist as of the date of preparation and not as of any future date, and the publisher undertakes no obligation to correct, update or revise the information in this document or to otherwise provide any additional material.
The publisher, its affiliates, and clients of the a publisher or its affiliates may currently have long or short positions in the securities of the companies mentioned herein, or may have such a position in the future (and therefore may profit from fluctuations in the trading price of the securities). To the extent such persons do have such positions, there is no guarantee that such persons will maintain such positions.
Neither the publisher nor any of its affiliates accepts any liability whatsoever for any direct or consequential loss howsoever arising, directly or indirectly, from any use of the information contained herein.