“What the new year brings to you will depend a great deal on what you bring to the new year.” – Vern McLellan (author)
Once again, ‘tis the season for the annual juxtaposition of surprise at how quickly the year flew by and appreciation for how many menial and meaningful accomplishments occurred (when you take the time to stop and think about it). Sticking with a new-ish tradition – now going on the third annual edition – today is my opportunity to summarize everything we’ve covered in 2023. In other words, it’s the Alt Blend 2023 Indextravaganza! Here we go!
A Random Walk to Start the Year: Alt Blend Editions 55 & 56 (1/11/23 thru 1/25/23)
Combating physical and identity theft and comparing crypto vs. the Dotcom bubble.
- Be Better Than Me in 2023: After personal experiences on the losing side of both home robbery and pick-pocketing (what a week!), and there are some lessons for being both proactive and reactive to help protect yourself and your family and navigate recovery from these types of encounters.
- Crypto: The Dotcom Bubble Sequel?: My limited real-time experience of the Dotcom bubble and bust, some Super Bowl fun facts, and similarities/differences between budding tech of the late 90s and crypto circa early 2023.
Real Estate: Alt Blend Editions 57-67 (2/8/23 thru 6/28/23)
A long overdue deep-ish dive on real estate, which was a major concern of investors in early 2023 (due to media headlines); geographies, property types, risk/reward implications, nuances, emotional implications, valuation, and a completely fabricated case study.
- Real Estate – Part 1: The “Where?”: Real estate is literally everywhere. Putting the size of this asset class into perspective. ‘90s finishes making a comeback, and new, more convenient ways for investors to access private real estate markets.
- Real Estate – Part 2: Geographical Potpourri: Remembering Home Interiors We know location matters, but what are the regions that comprise the US (hint: there isn’t one correct answer)? And what about America’s 20 belts and three tiers of cities? Find out here.
- Real Estate – Part 3: Intro to Property Types: My love for college towns, the real estate investment cycle, and laying the foundation (nice, eh?) for a conversation on the property types of commercial real estate.
- Real Estate – Part 4: So Many Property Types, So Little Time: While it’s not 100% consensus, I offer that breaking commercial real estate down into eight property types seems reasonable, and then we start to examine risk/reward of real estate projects.
- Real Estate – Part 5: Risk & Reward Profiles: Setting expectations across the spectrum of Core, Core Plus, Value-add, and Opportunistic real estate projects.
- Real Estate – Part 6: Turn Off and Tune Out: Current media headlines and taking a slight detour to address client questions/concerns regarding an “imminent collapse” of commercial real estate. A reminder to breathe; remembering what matters regarding a property’s financial health (credit vs. equity, loan-to-value, types, location, etc.).
- Real Estate – Part 7: A Piece of Land for Peace of Mind?: Property types AND project types both matter to understanding the risk/reward of real estate. Beginning a journey through underlying sub-types of general property types, first with Multifamily and then Office.
- Real Estate – Part 8: A Piece of Land for Peace of Mind (continued)?: A quick tangent to talk about the Berkshire Hathaway annual meeting and then getting back on track, examining sub-types of Industrial and Retail segments.
- Real Estate – Part 9: A Piece of Land for Peace of Mind (continued again)?: Continuing into sub-types of Hotels & Hospitality, Mixed Use, Land, and Special Purpose property types.
- Real Estate – Part 10: Le Magnifique: Pittsburgh’s love for Mario Lemieux (the GOAT of hockey 😊). Comparable, appraised, and assessed property valuation methods. More insight on commercial real estate fallout and an honorable shoutout for fulfillment centers.
- Real Estate – Part 11: Valuing the Office: Other valuation methods, including per unit (aka “per door” or “per key”), cost/income (per rentable square foot), replacement rate, net operating income (NOI), capitalization rate (cap rate). And, finally, using everything we’ve learned to gain perspective via a farcical case study of the fake mixed-use Dunder Mifflin building that starred as the backdrop in the hit TV series The Office.
A Random Mid-Year Walk: Alt Blend Editions 68-71 (7/12/23 thru 8/23/23)
Trading, investing, concerts, secondary markets, co-investments, more Dave Matthews Band song titles than you ever wanted to hear in one blog post, ‘90s clothing stores, private credit, securitization, some Allman Bros references, and – of course – Zombies. Um, what?
- Trading vs. Investing: Trading and investing align with very different investment objectives, but we attempt to refine this concerning both traditional and alternative assets. One thing’s for sure: financial planning and investing go hand in hand.
- Warren Haynes and Secondary Gains: A recap of a Dave Matthews Band (DMB) concert, unbelievable Led Zeppelin cover, and surprise guest appearance by Mr. Warren Haynes. Me wasting your time and mine with about a thousand DMB song references. A refresher on primary funds, secondaries, and co-investments, and why I think they’re so interesting.
- Hot Topics: Opening our closets to dig out those old clothes from when we were “cool.” RIP Pee Wee Herman. Private credit, including solar lending, a securitization update, and the PE path of 90s mall-staple clothing store, Hot Topic.
- Zombie Funds and Other Fun: Zombie companies, zombie funds, and maybe even zombie countries? Why zombie private funds exist and why they may present interesting opportunities. And references to the Allman Bros and The Cranberries because life is short.
The Horizon: Alt Blend Editions 72-75 (9/6/23 thru 10/18/23)
Using Jack Johnson’s song, “The Horizon Has Been Defeated,” as a jumping-off point for discussing investors’ newfound love for cash now that high-yield savings or money market funds yield about 5 percent interest. Also, real estate distress, the future, and trying to make sense of the world in which we live.
- The Horizon, Part 1: Time Horizon: Penn State open mic in the early 2000s, the dangers of choosing short-term investments (cash) for long-term needs (portfolio growth and combating inflation) or sitting on the sidelines vs. enduring volatile periods in markets. Aligning investments with time horizon.
- The Horizon, Part 2: Distress: Revisiting the dangers of Part 1, from David Bahnsen’s perspective. The ongoing commercial real estate “distress headlines” and what is being done about it. Bank failures, I-95 collapses, and private credit. The misalignment of the depository banking model and what opportunities it has and may continue to create for investors.
- The Horizon, Part 3: The Future: We can’t predict the future, but we can feel good about how we stack up vs. our ancestors. Considering some ideas, we may see become more prominent going forward, like “decumulation portfolios” and tokenization. More private equity should breed more secondaries and co-investments, and – as housing markets calm – mortgage spreads should eventually narrow again.
- The Horizon, Part 4: The Horizon: The problem with perception, the vast underground kingdom of fungi. Like trees, private investments may move slower than we can perceive, but that doesn’t mean they’re not doing anything. In support of illiquidity, the ongoing investor-friendly evolution of Alts, and a pragmatic perspective on crypto.
A Random Walk to Finish the Year: Alt Blend Editions 76-78 (11/1/23 thru 11/29/23)
Ideas on happiness (and how Alts may help), we lose Matthew Perry but gain some perspective on Alts, and embrace both inflation and uncertainty to round out our lessons for 2023.
- Agency & Gratitude: Paul Conti’s perspective on Agency & Gratitude as attributes of happy people. How these ideas apply to both choosing an advisor and Alts.
- RIP Miss Chanandler Bong: The death of Matthew Perry and nostalgia for Friends. Using some of Chandler Bing’s most famous quotes as jumping-off points for various topics like blockchain, financial planning, being open-minded, trading (vs. investing), and considering one’s legacy.
- Moving Targets: Using my commute to NYC for perspective on embracing uncertainty and inflation. Knowing WYOWYO (why you own what you own) as a vital component of long-term investment success. How Alts can help provide investment discipline.
This may be the easiest edition for me to write each year, but it’s certainly not the quickest. THANK YOU for bearing with me through another year of Alt Blend! I hope you learned something useful (or else what’s the point of this?). Please let me know of any feedback, how this blog can be more useful, and any future topics you’d like me to explore.
Until next year, this is the end of Alt Blend. Happy Holidays! See you in 2024! Fin.
Steve
