8 Comments
Jun 12Liked by ColoradoWealthManagementFund

Is O trading as much, or more, on its legendary success reputation than the likelihood it can sustain that success?

And maybe a follow up: What are equal or better net lease REITs for now and into the future.

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Jun 12Liked by ColoradoWealthManagementFund

Is their purported size and cost of capital (WACC) advantage truly an advantage ?

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Jun 11Liked by ColoradoWealthManagementFund

What would it take for O to grow AFFO by 5%

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Jun 11Liked by ColoradoWealthManagementFund

has O completely exited office?

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author

Thanks. Don't know how I was missing this one in the list.

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If you had 10 grand to invest in either O or ADC which would you choose and why?

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Let's assume that the inflation is not as stated by PPI and CPI and that it's higher. Let's also assume that the US cannot tax away it's ballooning debt, and that it can pay off it's debt by inflating the dollar away or we might not have a choice if countries dump dollar and stop using it for oil trades so the dollar devalues. Are NNN companies well positioned for such a move, or are they a terrible idea if their long term leases have fixed increasing prices?

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author

Fun question. And it's important. For several years I've assumed something somewhat similar to this as the most likely scenario.

I didn't get everything right. I thought CPI would be a decent but not great estimate of inflation. Actual prices rose more. Official numbers were down from "quality" adjustments.

Despite this weakness, I still use "real" rates to reference CPI adjusted rates. Perhaps we should add another word to reference rates adjusted for actual price changes.

I also predicted the government would do this quietly. Run inflation at 2% to 3%, nominal rates at 1%, and thereby finance itself at negative 1% to negative 2% in real terms. Instead, stupid deficit drives higher inflation and draws attention. The Federal Reserve jacks up nominal rates and drives real rates to the higher levels than seen in over a decade.

So we're rocketing over a financial cliff. The Federal Reserve is doing it's "job" in the short term by fighting inflation (but not effectively). It is smothering the future of the country in the process.

I would prefer an economy without inflation. But it's only a slight preference. Many other things are worse than inflation. High unemployment is horrible. Much worse.

It becomes obvious if you look at the forest instead of the trees. How bad is it if 10% or so of our work force produces no value and just consumes services paid for by welfare programs? Well, that means over 10 million capable Americans produce nothing while their skills degrade. That's obviously horrible.

But the one that really gets me is the stupid "openings to seekers" ratio. It's a garbage stat. Let me offer jobs at $.01 per hour without benefits. I'll offer thousands of jobs. That's the extreme example, but we're at or close to all time record lows for real minimum wage. If we double minimum wage, openings plunge (if they are real). But that's obviously inflationary

So the Federal Reserve uses seekers to openings to prove the labor market is tight, but it would give the opposite sign if we added new inflationary policies. It's evidence the Federal Reserve just doesn't understand economics in a real world setting.

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