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  1. #1681
    Join Date
    Dec 2009
    Location
    North of Durham
    Quote Originally Posted by Kdogg View Post
    I was referencing the higher yielding, riskier stuff that can lead to this:

    https://www.nytimes.com/2011/12/24/b...pay-bonds.html

    We havenít seen anything on this scale in munis in the past. The problem predated the pandemic.
    There is a lot of nuance in munis and a lot of previously held assumptions are now being questioned. There are some who now argue that contrary to long-held belief, a really strong revenue pledge is worth more than a general obligation pledge, which used to be the gold standard. But generally speaking, the 3-year default rate on any AA rated muni bond is approaching zero. But that is also a reason not to buy a single issuer bond if you are just investing a small amount of money because you do put yourself at risk to a black swan event happening to that issuer, such as Brazos Electric in Texas which I believe was rated in the A range a few days ago and is now filing for bankruptcy.

  2. #1682
    Quote Originally Posted by CrazyNotCrazie View Post
    such as Brazos Electric in Texas which I believe was rated in the A range a few days ago and is now filing for bankruptcy.
    I'm surprised we haven't seen more bankruptcies among the smaller utilities. My electric is handled by the large city owned utility, but my natural gas is handled by a small 50 person utility with $6-7 million in revenue. Most months I pay the $15 minimum charge. Those days are likely over.

  3. #1683
    Join Date
    Dec 2009
    Location
    North of Durham
    Quote Originally Posted by YmoBeThere View Post
    I'm surprised we haven't seen more bankruptcies among the smaller utilities. My electric is handled by the large city owned utility, but my natural gas is handled by a small 50 person utility with $6-7 million in revenue. Most months I pay the $15 minimum charge. Those days are likely over.
    Most utilities have decent liquidity (cash on hand) and are legally allowed to pass through unlimited rate increases, so that traditionally makes them solid credits. This was a real black swan event with numbers several orders of magnitude bigger than what anyone could have expected - they can only pass through so much of a rate increase, particularly in areas that are already struggling due to covid as well as energy volatility over the past few years. I think those that can are going to try to stretch out their payments and try to gradually recoup the money.

    There should be regulation and redundancy to help prevent something like this from happening, but many people don't like regulation and raising taxes to pay for redundancy doesn't win elections.

  4. #1684
    Join Date
    Feb 2007
    Location
    Central New York state
    Quote Originally Posted by Jeffrey View Post
    Maybe, buy one or more stocks yielding at least 5% and set stop losses at - 3%. Iíd buy multiple, in different industries, equally weighted.
    An interesting suggestion; thanks! Will play around with the idea - and see what other questions/choices present.

  5. #1685
    Quote Originally Posted by BlueTeuf View Post
    An interesting suggestion; thanks! Will play around with the idea - and see what other questions/choices present.
    My pleasure! Itís worked well for me.

  6. #1686
    Quote Originally Posted by CrazyNotCrazie View Post
    This was a real black swan event with numbers several orders of magnitude bigger than what anyone could have expected - they can only pass through so much of a rate increase, particularly in areas that are already struggling due to covid as well as energy volatility over the past few years.
    Absolutely, only The Republic of Texas could have created this black swan event!
    Last edited by Jeffrey; 03-02-2021 at 08:23 PM. Reason: Stay out of jail.

  7. #1687
    Quote Originally Posted by Jeffrey View Post
    Absolutely, only The Republic of Texas could have created this black swan event!
    What I think is kind of dumb on the part of Texas is that California showed decades earlier what not to do. And on certain levels they did it anyways.

  8. #1688
    Join Date
    Nov 2007
    Location
    Vermont
    Quote Originally Posted by Jeffrey View Post
    Absolutely, only The Republic of Texas could have created this black swan event!
    yes, this was (if you will) a predictable black swan event.

  9. #1689
    Smart move... time is on their side!

    https://apple.news/ARL5OiJU6QEyC37dUVHE6CQ

  10. #1690
    Join Date
    Jan 2010
    Location
    Outside Philly
    Quote Originally Posted by YmoBeThere View Post
    What I think is kind of dumb on the part of Texas is that California showed decades earlier what not to do. And on certain levels they did it anyways.
    You're surprised Texas would say, "hold my beer?"

  11. #1691
    Quote Originally Posted by bundabergdevil View Post
    You're surprised Texas would say, "hold my beer?"
    To be fair, they may have said, "Here, hold my Shiner." Which of course is the national beer of Texas.

  12. #1692
    Join Date
    Jan 2010
    Location
    Outside Philly
    Quote Originally Posted by YmoBeThere View Post
    To be fair, they may have said, "Here, hold my Shiner." Which of course is the national beer of Texas.
    Shiner and Kolachis, man. Texas has a few secrets.

  13. #1693
    Join Date
    Jan 2010
    Location
    Outside Philly
    I'm continuing to note with interest the string of large corporations announcing permanent switches to remote flexible working arrangements. Ford has become the latest. I don't know if these announcements will be enough to truly soften real estate prices and rentals in large coastal cities but, anecdotally, the people taking advantage of the remote flexibility in my new company are actively moving out of state --- several to Florida for sunshine and no state income taxes and then a few to quieter areas or areas closer to home.

  14. #1694
    Join Date
    Dec 2009
    Location
    North of Durham
    Quote Originally Posted by bundabergdevil View Post
    I'm continuing to note with interest the string of large corporations announcing permanent switches to remote flexible working arrangements. Ford has become the latest. I don't know if these announcements will be enough to truly soften real estate prices and rentals in large coastal cities but, anecdotally, the people taking advantage of the remote flexibility in my new company are actively moving out of state --- several to Florida for sunshine and no state income taxes and then a few to quieter areas or areas closer to home.
    I live in NY which is very finance heavy. I read something in the past few days that the banks are going to be pushing hard for people to start coming in - I think JPM is going to try to have interns in. Banking and industries like it are very dependent on mentorship and teaching, which is best done in person. I am in my 40s so don't need mentorship per se but I started my job at a big bank remotely last spring and it was a nightmare. At least for now, tech companies are going to the other extreme and seem to be pushing remote hard. I know people in their twenties are much more tech savvy but I think that knowing how to work in an office and in person learning is really critical to career development.

    I have also heard that some companies will let you work where you want, but your pay will be adjusted accordingly - move from NYC to Montana and you will get a pay cut. It will be interesting to see how it shakes out. Personally, I am very eager to get to the office (I have still not been to my office despite approaching my one year anniversary) - my ideal would be working in the office with a lot of flexibility, which is the direction I feel like a lot of companies were moving in anyway before the pandemic. But I don't know how that works from a real estate perspective.

  15. #1695
    Join Date
    Feb 2007
    Location
    New York, NY
    Quote Originally Posted by CrazyNotCrazie View Post
    I live in NY which is very finance heavy. I read something in the past few days that the banks are going to be pushing hard for people to start coming in - I think JPM is going to try to have interns in. Banking and industries like it are very dependent on mentorship and teaching, which is best done in person. I am in my 40s so don't need mentorship per se but I started my job at a big bank remotely last spring and it was a nightmare. At least for now, tech companies are going to the other extreme and seem to be pushing remote hard. I know people in their twenties are much more tech savvy but I think that knowing how to work in an office and in person learning is really critical to career development.

    I have also heard that some companies will let you work where you want, but your pay will be adjusted accordingly - move from NYC to Montana and you will get a pay cut. It will be interesting to see how it shakes out. Personally, I am very eager to get to the office (I have still not been to my office despite approaching my one year anniversary) - my ideal would be working in the office with a lot of flexibility, which is the direction I feel like a lot of companies were moving in anyway before the pandemic. But I don't know how that works from a real estate perspective.
    Trying to read the real estate tea leaves seems akin to predicting the weather. The overall climate trend can probably be predicted (RE goes up, weatherís getting warmer), but the flux over the next year or two has to take into account lost jobs in some industries, remote work, the intensification of splits between the haves and have-lesses, the shut-in desperation of urban folk, and the built-in bias of a real estate industry that wants to sell real estate.

  16. #1696
    The only place I can get close to 5x leverage is with a mortgage.*


    *Assuming recommended 20% down pay

  17. #1697
    Join Date
    Jan 2010
    Location
    Outside Philly
    Quote Originally Posted by YmoBeThere View Post
    The only place I can get close to 5x leverage is with a mortgage.*


    *Assuming recommended 20% down pay
    Do you want to be?

  18. #1698
    Quote Originally Posted by bundabergdevil View Post
    Do you want to be?
    Only until the shoe drops.

  19. #1699
    Join Date
    Jan 2010
    Location
    Outside Philly
    We watched the Warren Buffet documentary on HBO last night. Fun view for those that havenít seen. Heck of a mind to have and a good disposition to go with it.

    It was funny to hear how Berkshire is run (no PR, no HR, nothing youíd expect to see).

  20. #1700
    Join Date
    Jan 2010
    Location
    Outside Philly
    Weeeeee!

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