Naughty or Nice

Today’s episode is focused on four items in the investment world that have been either naughty or nice. The naughty or nice list is pretty long this year, and even a small fraction would not fit in your morning espresso cup. So we’re only going to talk about 4 today.

Top of the nice list.  The increases in real estate prices have been nice indeed. I’m not that keen to buy at those prices, but hey, selling at high prices is very acceptable. We had several asset sales that helped strengthen the cash line on the balance sheet. Selling assets is always a hard decision. You put in all the work and the future appreciation is cut short in exchange for taking the money now. The market has peaked in many areas, and despite this, there is still tons of money on the sidelines in search of opportunities. 

I’m going to declare anything real as nice and anything that’s abstracted from real as naughty. That’s a timeless fundamental, that frankly was forgotten by many in 2018. In the second half of the year, more and more people became face to face with this fundamental either by choice, or whether if was forced upon them by the marketplace.

There were a few particularly bad offenders, most of them fuelled by hype rather than substance. 

2018 was the Year of the crypto fraud. There were 1,227 Initial coin offerings in 2018, having raised over $7.5B dollars. Last year Initial coin offerings raised $5B largely using crowdfunding. In 2018 more than 1,000 coins failed outright.

The irrational exuberance of the stock market was definitely naughty this year. It caught some institutional investors in its cross-hairs. The Swiss central bank was one of the king pins.

Rounding out the list, the strong economy has been pretty nice. It's meant stronger than expected rents, a high occupancies acros the portfolio.