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Serenity Alternative Investments Blog - REIT Performance Q1 2020: Swans, Shorts, Safe

posted by Serenity Alternative Investments Fund I
4yrs ago 221

Serenity Alternative Investments Blog - REIT Performance Q1 2020: Swans, Shorts, Safe


“I was constantly told by adults that the war, which ended up lasting close to seventeen years, was going to end in “only a matter of days.”


― Nassim Taleb, The Black Swan


  • PERFORMANCE: Serenity Alternatives Fund I returned -5.6% in March bringing YTD returns to -3.7%. The MSCI US REIT index returned -21.6% bringing YTD returns to -27%.
  • PROCESS: Every production version of Serenity’s multi-factor model has outperformed the REIT index YTD. Our quant model + risk management process has our fund 23% ahead of the benchmark after only 3 months.
  • POSITIONING: REITs are cheap due to the recessionary environment, but we are only buyers of high-quality portfolios and balance sheets. There is an incredible amount of bad news on the horizon. BE CAREFUL out there.
  • NEW SHORT IDEA: Why MREITS have exploded and what may look SAFE…may not be.


The black swan! The global pandemic! What an easy lazy comparison to modern times. “We could have never seen this coming!” Said every talking head in the financial media over the last 6 weeks.


I’m not terribly interested in the black swan facet of Taleb’s philosophy right now. Besides he’s already come out and said the pandemic is not, in fact, a black swan…


What I am interested in is Taleb’s exploration of decision making amidst uncertainty. That is more salient…how we make decisions when the range of outcomes is wide or even un-knowable. THAT is where he is relevant to today’s environment.


In the quote above, Taleb discusses the illusion of understanding, which is the fact that “everyone thinks he knows what is going on in a world that is more complicated (or random) than they realize.” This attitude abounds in finance…from daily headlines describing what is moving the Dow, to confident projections of stock market bottoms made by people that did not predict the top.


Frankly, the narrative spinning gets tiring.


To see the entire post click here.

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ALL ALPHAMAVEN CONTENT IS FOR INFORMATIONAL PURPOSES ONLY. CONTENT POSTED BY MEMBERS DOES NOT NECESSARILY REFLECT THE OPINION OR BELIEFS OF ALPHAMAVEN AND HAS NOT ALWAYS BEEN INDEPENDENTLY VERIFIED BY ALPHAMAVEN. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. THIS IS NOT A SOLICITATION FOR INVESTMENT. THE MATERIAL PROVIDED HEREIN IS FOR INFORMATIONAL PURPOSES ONLY. IT DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY INTERESTS OF ANY FUND OR ANY OTHER SECURITIES. ANY SUCH OFFERINGS CAN BE MADE ONLY IN ACCORDANCE WITH THE TERMS AND CONDITIONS SET FORTH IN THE INVESTMENT'S PRIVATE PLACEMENT MEMORANDUM. PRIOR TO INVESTING, INVESTORS ARE STRONGLY URGED TO REVIEW CAREFULLY THE PRIVATE PLACEMENT MEMORANDUM (INCLUDING THE RISK FACTORS DESCRIBED THEREIN), THE LIMITED PARTNERSHIP AGREEMENT AND THE SUBSCRIPTION DOCUMENTS, TO ASK SUCH QUESTIONS OF THE INVESTMENT MANAGER AS THEY DEEM APPROPRIATE, AND TO DISCUSS ANY PROSPECTIVE INVESTMENT IN THE FUND WITH THEIR LEGAL AND TAX ADVISERS IN ORDER TO MAKE AN INDEPENDENT DETERMINATION OF THE SUITABILITY AND CONSEQUENCES OF AN INVESTMENT.