12 Comments
Member
11 December 16, 2022 10:14 pm
Amazing analysis. It would take me a year or more to gather the data, interpret it and then fashion my thoughts with far less findings, reasoned opinion and cautious suggestions than you have presented in this Friday's opus.
Member
3 December 16, 2022 11:32 pm
Thank you for your insight. Although I hold number of Brookfield companies, I sometimes wonder if these series of spinoffs and the complexities of these assets being tied to each other may create problems in the future. Any thoughts?
Member 22353December 17, 2022 9:47 amThey've been generating growth by spinning off funds and moving assets among their various funds for a long time, and, like with Brookfield Property, buying spin-offs back in if they get too cheap. It is very confusing for investors to follow, there are a lot of moving targets, but I think the flexibility that Bruce Flatt et al get from the smorgasbord of public and private funds has been a net positive for Brookfield shareholders. Might not be true in the future, and they are all interconnected, so there might, of course, be some kind of risk in there that I'm not seeing.
Member
144 December 17, 2022 12:45 am
An analytical tour de force on Brookfield! I own BIP. I was planning on going the same route on Roku. Took the tax loss and planned to repurchase but still not ready to buy it.Warning: TL:DR AHEADI want investments that either pay me now (dividends, T-bills, I-bonds, REITS, etc) or companies that produce tangible products for the future. Except for AVB, SPG and O the REITs and LPs I own are not commercial or residential real estate- like STAG, CCI, DLR, EPD, etc.This summer and fall I took a lot of my pandemic stocks to the woodshed and put the proceeds into farm land, fine art, timber, and other tangible assets. I made my first land purchase about 14 months ago. I'm already overweight gold and silver, mostly bought during the GFC.The T-bills are my substitute for a bank account. I have them laddered at the short end so if I need cash I can just let some roll off. Some people have pointed out that T-bills pay less than inflation. I just tell them that T-bills (and cash) have beaten the piss out of the stock market this year so I'm camping out in the 4% bracket.I still have some of what I call internet glue stocks, which work in the background to manage transactions and sales such as TTD and SHOP. Let Amazon and Etsy slog it out- I'm going for the picks and shovels.Listening to Jeremy Grantham convinced me to buy small caps - both domestic and international. I also think Mexico is going to be our next China, sending trucks across the border filled with things formerly purchased from China. I had to use ETFs because I don't know anything about international stocks. Truth be told I don't know anything about US stocks either. But since I think Mexico is going to be a major beneficiary of the trade war with China I'm looking at CRE in Laredo or El Paso.I think Marks is exactly right. For decades everyone has looked like an investing genius but I think it's Benjamin Button time. All the geniuses who fail to foresee the unwind and change strategy are going to end up unhappy. I read a blog by a young doctor who brags about how much he's made buying SFH for rental income. His wealth increased so fast that he must be heavily leveraged. He uses the income from one house to finance payments on his next one using other properties for collateral. Great strategy for ZIRP but I think he'll get bogged down by higher rates, the value of his houses are going to fall, and in recession he might have to lower rents. I recall in 2008-9 one of my friends owned 4 SFH rentals. Her tenants stopped paying their rent. She subsequently learned that all 4 tenants had moved without notice.I consider the GFC to be a warning shot. If Draghi hadn't opened the Draghi Put I think we would have seen this disaster sooner.It's going to be a rocky road. The prequel is Weimar before hyperinflation. The CB did a ping pong between tightening and loosening. When they tightened and unemployment rose and the economy cooled people demanded loosening. When inflation came back they clamored for higher rates.Von Mises was right. No graceful exit.
- Member 22353December 17, 2022 9:39 amI agree that Mexico seems likely to be a beneficiary, though I haven't identified any Mexican stocks I want to buy at the moment.Sounds like you've got a clear strategy, that's half the battle. I have been a little surprised that gold hasn't had more of a "moment" in the last year, the collapse of crypto at the same time the stock market was panicking would seemingly set the table for Gold perfectly... but not yet, largely because of the shock of rising interest rates. We'll see if it had its run next year -- gold has often done extremely well after financial crises and crashes.
- Member 504December 17, 2022 1:52 pmI think gold has not gone up because the US dollar is stong relative to other currencies.
- Member 22353December 17, 2022 2:12 pmAlso true, though the reason for the dollar's rise is also mostly interest rates (with a dollop of fear and flight-to-safety)
- Member 144December 17, 2022 2:42 pmPlus the fact that CBs hate how gold shows how fraudulent fiat is and they can manipulate the physical price trading paper gold on the comex. Just once I'd like to see 10% of the buyers stand for delivery. It would destroy comex. I thought Basel 3 would address this but it hasn't made a dent.
- Member 144December 17, 2022 2:54 pmWhich is why I decided to go international/developing markets with part of my portfolio. Mexico has its own currency so I'm hypothesising that assets can be bought on the cheap there. There are dozens of countries either pegged to the dollar or that use the dollar. I wonder how their exports are doing.It's kind of pathetic that a country with trillions in debt and painted into a corner is considered to have the "safe haven" currency.
- Member 16December 18, 2022 6:56 amNovice question, but where do you buy and store gold/silver? I wouldn't want to keep large amounts at home.
- Member 144December 18, 2022 9:46 amSeveral possibilities.1. NOT a safe deposit box.. Some banks won't allow it. If your box is robbed you can't claim the contents with your insurance company.2. Possibly in a serious vault at home,but you'll cough up the combination when they start torturing you or your kids.3. In a funeral urn labeled "MOM" or another hidey hole at home.4. Offshore bullion vaults. They offer allocated gold. Bullionvault and Goldmoney are two that I've used. I closed my Goldmoney account because they have terrible customer service. You can set up an IRA to buy gold on these vaults but you'll pay the IRA fees plus the vault fees5. Certain funds like OUNZ or BAR, with allocated gold (NOT GLD, which does not offer allocated gold. Your holdings are vulnerable to a creditor attack on GLD). OUNZ allows you to redeem your shares in physical gold. The beauty of that is when you take delivery (minus a fee) there's no capital gains. You owned allocated gold through the fund and now its at your house. No sale of gold has taken place. After that, there's no paper trail if you sell and you don't pay the 20% collectible tax.6. Private vault near you.
- Member 144December 18, 2022 9:22 amHow about KOF? They had a killer year and despite the price rise it's paying a 4% dividend.
- Member 22353December 18, 2022 12:05 pmHaven't looked at that in a while. Both KOF and the more diversified FEMSA might be good plays on Mexico and the Peso.
Member
504 December 17, 2022 1:42 pm
Exemplary analysis, Thanks! I was leaning toward adding to my BAM spinoff, too.
Member
14 December 17, 2022 3:29 pm
BNRE (Brookfield Reinsurance) has fared poorly since split from BAM June 28, 2021. It is now down 50%. This does not reflect well on BAM.
- Member 22353December 17, 2022 8:02 pmPart of that is the spinoff itself, BNRE is exchangeable for BN.
- Member 144December 18, 2022 9:25 amBN seems to be getting better analyst evaluation than BAM.
- Member 22353December 18, 2022 12:04 pmAnalysts love complexity and hidden value, investors tend to love clarity and steady earnings and dividend growth. Both are attractive, for somewhat different reasons.
Member
16 December 18, 2022 4:05 am
When was the charitable drive? I never saw an article for it.
Member
11604 December 18, 2022 8:14 am
Brookfield Corporation (BN) Stock Forecast & Price Target from @Tipranks $BN https://www.tipranks.com/stocks/bn/forecast Thank YOU Travis for this excellent analysis of Brookfield et al Best to all
Member
19 December 18, 2022 6:03 pm
Hi Travis, In which account do you recommend holding BAM, taxable or tax deferred Thanks
- Member 22353December 18, 2022 9:15 pmI hold it in a tax-sheltered account, but it will probably be eligible for the lower dividend tax rate o that may be a consideration for some. There's no Canadian withholding tax for dividends in US IRA accounts, but otherwise there may be a tax, in which case you'd have to claim it as a foreign tax paid to get credit when you file.Everyone's tax situation and long-term plan are different, but I generally like to let high dividends compound tax free when I can.
Member
35 December 23, 2022 12:44 pm
Does anyone else hold Brookfield stock in a Schwab account? It's been a week since the spinoff, and Schwab still shows the old cost basis for BN and no cost basis for BAM ("100% gain"). I remain somewhat confused as to how properly to recalculate the cost basis.
Member
11604 December 25, 2022 2:13 pm
$BAM SA article: https://seekingalpha.com/article/4566008-brookfield-asset-management-could-change-your-life Best!