YouSaid · the spoken record

Stinson Dean

lines on the record: 49
first: 2021-11-08
most recent: 2021-11-08
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“All of a sudden turning the tables back against the employee. I don't know how you pull that off. So wages are sticky in and of themselves. To me, to answer your question, you got to ask yourself, how does labor get oversupplied again with all these retirees that had early retirement and then just every year more and more boomers are aging out? I don't know how we get oversupplied again, but I'm not an economist. But I want to.”
2021-11-08 · Odd Lots · Stinson Dean on the Lumber Crash That Followed the Boom · IDENTIFIED FROM THE TRANSCRIPT · source
“A piece of data that shocked me was early retirees coming out of this pandemic was massive. Like those folks aren't coming back. They're at least not going to come back 40 hours a week. And we're in a different demographic patch that is incredibly bullish housing. But the teenagers in the early 20s, like that labor force is small. So to me, we do have a structural upshift forecasting five to ten years out certainly beyond that. We have a Demographic cliff that's in plain sight, and our productivity, we're going to have to have a productivity boom from automation to all the technological advances that happen in an economy. So I don't see labor being oversupplied anytime soon. On top of the political ramifications of...”
2021-11-08 · Odd Lots · Stinson Dean on the Lumber Crash That Followed the Boom · IDENTIFIED FROM THE TRANSCRIPT · source
“Being a waitress or a waiter and getting cut because we're slow and the unpredictable, like I'm going to take my time. And I heard about my buddy who works here and this is the kind of culture they have. But it's like, we're being interviewed just as much as the employee. And when you're making minimum wage, you're not typically in that bargaining position, but now they are. So it just has exposed people. So the labor is out there. And the point of that tweet was we're staffed. We're not having a problem. Also paying the money to be in the game and we're investing heavily in the culture, which is a thing, but that's not new. But I do think it's new to emphasize the culture for low wage blue-collar work. That has never been an emphasis to quote unquote retained talent. And we leaned into that.”
2021-11-08 · Odd Lots · Stinson Dean on the Lumber Crash That Followed the Boom · IDENTIFIED FROM THE TRANSCRIPT · source
“What they want to do, what kind of hours they want to have, and pick the right job instead of the next job. And as a competitor and former athlete and coach, like that, that to me means you have to compete that much harder for labor than before because folks are being very picky and they don't have to come work. This idea of unlimited cheap labor. It's just not a thing anymore. And folks who haven't experienced that market, like we did, my team did when we coached football and recruited high school athletes with a very limited supply of talent. It's weird to think that you really have to cater to and sell something beyond the pay. Because these folks, like I've done the retail hours and I've done”
2021-11-08 · Odd Lots · Stinson Dean on the Lumber Crash That Followed the Boom · IDENTIFIED FROM THE TRANSCRIPT · source
“Any other job market, like folks who've been without a job, they have a gap in their resume, right? We've all heard like, you don't want a gap in your resume. Well, the leverage has shifted to employees so hard, it's like, we don't care if there's a cap, you know, we're going to interview you and go trust our process and see if you're going to be a good fit. And the extended unemployment benefits allowed people who typically would be paycheck to paycheck. And I just I hate my job I'm going to go to the next job and hope I like it without any time in between, without any time to do a job search because I don't have the savings paycheck to paycheck. Well, unextended unemployment allowed folks like that to take their time, to get their bills paid. There's a mortgage forbearance, a rent moratorium. They have a little bit of breathing room to evaluate.”
2021-11-08 · Odd Lots · Stinson Dean on the Lumber Crash That Followed the Boom · IDENTIFIED FROM THE TRANSCRIPT · source
“Staff and accepting less margins, lower profits to be overstaffed. If I wanted to squeeze my margins out, I would have a terrible business owner experience. I would be complaining all the time as well. But I'd rather make less than empower others more and have a sustainable business rather than being an employee at my own company. That's the business side of it.”
2021-11-08 · Odd Lots · Stinson Dean on the Lumber Crash That Followed the Boom · IDENTIFIED FROM THE TRANSCRIPT · source
“Folks, what a work environment can be and could be with folks who have a more communal mindset. And a lot of that I tweeted, a lot of that comes from my time as a football coach and a football player. It's kind of like a locker room vibe in that there's a brotherhood and a sisterhood of hard work and accountability. And we've all seen each other struggle and persevere and get promoted and have failures and building that culture when we were recruiting athletes like you had to sell something beyond scholarship because everyone had scholarship. And that's kind of the mentality we brought to this is everyone's got a $15 wage. Now let's go compete with the best of the best. So we're trying to compete against Amazon by selling a differentiating culture. And that starts with or a big component, I should say, is being oversized.”
2021-11-08 · Odd Lots · Stinson Dean on the Lumber Crash That Followed the Boom · IDENTIFIED FROM THE TRANSCRIPT · source
“Longest tenured dedicated employees and work them down to the bone so you can maintain your margin because it's just a matter of time before they quit and you don't have a business anymore. And there's the altruistic side, which I'm not arguing for, or that's not my point. My point is it's great business practice to pay lower level employees and treat them as if you know their revenue producing high commission salespeople. They're just as important and now they're able to flex for the first time. And I think it's great. It's a lot of fun. It's challenging, but it's very fulfilling to know you pay equal to Amazon, but they come work for you instead and your turnover is lower than all of your peers and you're affecting lives and you're showing”
2021-11-08 · Odd Lots · Stinson Dean on the Lumber Crash That Followed the Boom · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, it's just a great point because the minimum is 15 bucks to just play the game. Then what is it after that? And we like to sell like we have a community. We're picking up for each other. If someone needs to have time off or there's an emergency, folks are expected and the culture is to pick up their slack. So there's coverage there. And everyone doesn't feel like they need to come into work or let the team down because they're so thinly staffed, no one can do your job and pay them well enough where they feel like they can take some time off and not get a full paycheck that week and be okay. And I just think it's such a short-sighted and stubborn practice by business owners to cry and complain about the cost of labor and take their most loyal.”
2021-11-08 · Odd Lots · Stinson Dean on the Lumber Crash That Followed the Boom · IDENTIFIED FROM THE TRANSCRIPT · source
“To be in business. We don't expect to raise prices dollar for dollar for wage increases. We hope to raise them, you know, 70 cents for every dollar and wage increase we get. I'm just making that off the top of my head, but we accept the fact that this economy is pro-employee. And if you're not good at that part, you just won't have a business or you'll be running every aspect of the business yourself because no one will want to work for you.”
2021-11-08 · Odd Lots · Stinson Dean on the Lumber Crash That Followed the Boom · IDENTIFIED FROM THE TRANSCRIPT · source
“And we run our business with our businesses, I should say, with our eyes wide open, saying, again, the reasons are debatable, but at least I'll give you my perspective. In Washington, the government didn't have to do a federal minimum wage of $15 an hour. There's a few levers to pull, and guess what? $15 an hour is the clearing wage. And that like I was like, that's where the rules of the game are going. So we just need to get there first and accept it. And this is the one where, to me, I differentiate a lot because nothing I said is super rocket science. It's just a market that you got to pay to cover. And we no longer have unlimited cheap labor. We, our companies, are fully aware and willing to accept lower profit margins.”
2021-11-08 · Odd Lots · Stinson Dean on the Lumber Crash That Followed the Boom · IDENTIFIED FROM THE TRANSCRIPT · source
“And it's been, I don't know what word to use, enjoyable to watch. Business owners who are reliant on cheap labor lose their minds because they have to work at the staffing side. And they think they're entitled to profits.”
2021-11-08 · Odd Lots · Stinson Dean on the Lumber Crash That Followed the Boom · IDENTIFIED FROM THE TRANSCRIPT · source
“Promoting so this gal is a nurse and she's in her scrubs and she's like, I am a nurse now, but it's because I worked at Amazon and they paid for my tuition and Amazon clearly was not a lifelong career in the warehouse. But like I got to where I wanted to go. And I look at that. I'm competing for the same exact employee. Like we at minimum need to pay what Amazon's paying, 15 bucks an hour or more, 20 bucks an hour, depending on where you are. So the beautiful part from a commodity trading perspective, like I know where everyone's bid is. There's no secret. I know where I need to be. And then, of course, we're dealing with human beings and we feel like we can sell a culture and a vision and a community that can put us over the edge when you're doing the bare minimum of just paying as much as Amazon.”
2021-11-08 · Odd Lots · Stinson Dean on the Lumber Crash That Followed the Boom · IDENTIFIED FROM THE TRANSCRIPT · source
“At scale and not be the ones having to drive the trucks, which isn't the best use of our time, we're going to have to pay the folks and find a clearing wage. So we immediately raised our starting pay $2,000 a year more benefits. We actually offered college tuition before Amazon, I think, made the headline. And it's fascinating. Amazon has commercials on the radio during football games.”
2021-11-08 · Odd Lots · Stinson Dean on the Lumber Crash That Followed the Boom · IDENTIFIED FROM THE TRANSCRIPT · source
“Be upset. I'm not going to push back on budgets if it revolves around labor. So we are overstaffed. We have a very happy workforce. And we're not working everyone to death because we refuse to pay higher wages. So what I see and what I've learned is the labor market's tight. Why it's tight as a business owner I don't care. I have opinions on it. My business partners have opinions on it. We don't agree, but we do agree on the reality that the lumber market's tight. And if you sign up to be a business owner, you sign up to be an entrepreneur, you don't have the luxury of complaining. You have to deal with reality. And the reality is if we're going to run a business and not.”
2021-11-08 · Odd Lots · Stinson Dean on the Lumber Crash That Followed the Boom · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah. So if you pay people more, it works. I try to keep things. I start from the very simplest explanation. Like the labor market as a commodity trader, the labor market, I don't want to liken folks to pieces of lumber, but it's a finite commodity that has fluctuations in supply. So as a commodity trader, I looked at this market and said we're heading for very tight labor market. And if you are bullish on whatever commodity you start buying, you get long. And so I told our operators that we need to start locking in labor, that we already have and hire and build a bench and be overstaffed. If you're overstaffed, that's the goal. Like I'm not going to.”
2021-11-08 · Odd Lots · Stinson Dean on the Lumber Crash That Followed the Boom · IDENTIFIED FROM THE TRANSCRIPT · source
“I love the talk about it, and just for the record, I give you like a heads up that you ask me. So I own several companies outside of lumber and inside of lumber that I have a total headcount of about 100 employees. The vast majority of which drive a truck and make $40,000 a year. So, I just have been on the front lines of hiring, staffing, paying, negotiating with the largely uncollege-educated $40,000 a year laborer. So that's where most of my perspective has come from is being on the front lines of the labor market.”
2021-11-08 · Odd Lots · Stinson Dean on the Lumber Crash That Followed the Boom · IDENTIFIED FROM THE TRANSCRIPT · source
“On the other end, and I mean, these are worldwide commodities, metal, oil, natural gas, like we don't have a structural shortage of those raw commodities. The line of the CapEx has been reduced because These things are a little bit easier to switch on than, I mean, we've seen it over and over. So I'm not super cycle for multiple years commodity guy because I just think market forces will work itself out.”
2021-11-08 · Odd Lots · Stinson Dean on the Lumber Crash That Followed the Boom · IDENTIFIED FROM THE TRANSCRIPT · source
“One to watch because they have no idea that I know a guy commerce, kind of how that works. And they think there's going to charter a boat. And so Costco or a home builder all of a sudden has to deal with this risk that they used to just easily lay off on their vendor, that will limit their ability to perform their business because they're dabbling in something they have no idea what they're doing. And so it just limits production if you think of like home home building because we're not sure what we're doing. We're going to pull back on the risk and try to feel our way through this market in which we find ourselves having more risk and price fluctuations than we've had to deal with in the past. So if that plays out.”
2021-11-08 · Odd Lots · Stinson Dean on the Lumber Crash That Followed the Boom · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I do. To put a little bit of context about around the lumber glut being really was exacerbated by the supply chain issues. But it was happening before trust bleeds were an issue, before appliances were an issue. To me in lumber, it happened because of the price risk transfer from supplier to homebuilder. And homebuilders didn't know how to deal with it. So they just overalle was on your show and she tweets a lot over and over, limiting sales by design is wild that a business would do that. But I get it. That's how they're mitigating risk. So if risk is getting moved to a part of the supply chain where they're not used to handling it, like Costco chartering their own boat or whatever, right? You guys talked about that with one of your container folks. And he goes, it was read between the lines. He was like, yeah, that's going to be an interesting.”
2021-11-08 · Odd Lots · Stinson Dean on the Lumber Crash That Followed the Boom · IDENTIFIED FROM THE TRANSCRIPT · source
“And then from a terms and negotiation standpoint, there's less people for them to turn to in the supply chain because the supply chain has consolidated considerably in the last five years.”
2021-11-08 · Odd Lots · Stinson Dean on the Lumber Crash That Followed the Boom · IDENTIFIED FROM THE TRANSCRIPT · source
“And that's what got us in our squeeze. Now, coming out of that, the suppliers who are bigger in scale than they were, facing national homebuilders, are like, yeah, we're not going to do 90-day pricing. So the homebuilder suddenly has to have expertise in lumber price risk management, which they don't have. They've never had to have that because their supplier gave them a fixed price and they moved on. Now the supplier's giving them a two to four week price and the home builder needs to used to is accustomed to a 90-day fixed price. So I've seen home builders actually steal very talented buyers from retail lumber yards to come work in-house. You hear stories of home builders warehousing their own materials. And I don't think that's going to end well unless they bring in some talent. But they're just not tools to handle price.”
2021-11-08 · Odd Lots · Stinson Dean on the Lumber Crash That Followed the Boom · IDENTIFIED FROM THE TRANSCRIPT · source
“I'll speak briefly, I'll attempt to, because this is a little out of my scope, but from because I'm further back in the supply chain. From what I can observe, okay. The home builder has less bargaining power and leverage than they've had this whole cycle 2008 onward because the supply chain consolidated around them. Their suppliers have consolidated the suppliers suppliers have consolidated. So they're not in a great position. And it's really manifested in the last six months because on the lumber side, it came down to risk. Who is going to warehouse figuratively and literally the lumber price risk? And for 12 plus years, it's been the lumberyard has been committing to prices over 90 days and buying the lumber second, hoping to buy it cheaper.”
2021-11-08 · Odd Lots · Stinson Dean on the Lumber Crash That Followed the Boom · IDENTIFIED FROM THE TRANSCRIPT · source
“Maybe a little higher 350. So there's a lot of announced investment into selling yellow pine. But this goes into the larger point of Canadian lumber and selling yellow pine are different, used differently, and you can't, unless we build homes differently, all that announced production doesn't really alleviate the shortage of lumber in the way we build homes now. If we start building homes with Southern Yellow Pine, that's different. But there is CapEx in the south, but in Canada, the finite log supply that limits anyone from putting risk on the production basis up there. In fact, the Canadians are the ones opening sawmills in the U.S. South. So that's a really interesting dynamic”
2021-11-08 · Odd Lots · Stinson Dean on the Lumber Crash That Followed the Boom · IDENTIFIED FROM THE TRANSCRIPT · source
“There's a lot of announced investment greenfield acquisition in the southern U.S. to produce more southern yellow pine. Southern is incredibly profitable at these current prices, which are at the low end of the last 18 months. Incredibly profitable. Two by fours are going for over $700 per thousand. And I don't know the Sudden Yellow Pine game as well, but I'm guessing their production costs are...”
2021-11-08 · Odd Lots · Stinson Dean on the Lumber Crash That Followed the Boom · IDENTIFIED FROM THE TRANSCRIPT · source
“I got mocked for saying, for implying this time is different. And they were right. Like, sure enough, like. We didn't stay above a thousand, and a little bit of my naivete and inexperience and lack. But now I know”
2021-11-08 · Odd Lots · Stinson Dean on the Lumber Crash That Followed the Boom · IDENTIFIED FROM THE TRANSCRIPT · source
“When they figure that out and they implement it and they reduce their on hand inventories, they reduce their output will be just around the time the secondary market has been depleted and now that end user, the retail lumber yard will then turn to the mills to get ready for Q1 spring building season, the seasonal lumber party that we have every year. And the mills are going to have tooled down because they haven't seen demand in three months. So we have to restrict supply to bring the containo in and work through the pile of lumber we have. But I feel like because we're so out of whack and we're hitting these extremes on the upside and the downside that we're not done, that pendulum is not done swinging. So I'm a little nervous for a really bullish Q1 and not enough perfection. To meet it.”
2021-11-08 · Odd Lots · Stinson Dean on the Lumber Crash That Followed the Boom · IDENTIFIED FROM THE TRANSCRIPT · source
“Now, here's their moment to blow out their pile and turn their inventory into cash. Everyone has held lumber longer than they've ever felt comfortable with and at much higher volumes. There's a big pile of lumber we got to get through. So the producers need to reduce their output. And I'm afraid”
2021-11-08 · Odd Lots · Stinson Dean on the Lumber Crash That Followed the Boom · IDENTIFIED FROM THE TRANSCRIPT · source
“Now is that big pile of lumber at the retail level is getting lower and lower. But now there's this big pile at the secondary level we got to deal with. So that's getting bought. But if a retail lumber yard is buying from the secondary market, they're not buying from the sawmill. So the sawmill is, I think, headed for a little bit of pain here. Their break-even prices are significantly higher because log costs are up. lumber tariffs are doubling in a couple weeks and labor. So they don't have the break evens that they did in the past. So anything under 600, the major sawmills are losing money. And here we are at 600. And they're not seeing the demand because the buyer can lean on the secondary market, which has been painfully holding on to lumber since 1100 bucks and just trying to average average, average, average.”
2021-11-08 · Odd Lots · Stinson Dean on the Lumber Crash That Followed the Boom · IDENTIFIED FROM THE TRANSCRIPT · source
“So this idea of hire for longer, we're almost double the five-year average price. The Mills used to love $400. Now we're oversupplied at $600. And for it to change, we need to produce less. But the problem with that is the supply chain's so out of whack the amount of inventory held by each player, the producer, the secondary market, the retail lumber yard. Ideally, everyone has a little bit and it's all pretty smooth. Well, it just became this thing where the mills had all of it. And then the secondary market now owns most of it because the retail lumber yard, their whole goal this summer was work down that high price inventory like I talked about earlier. Don't rebuy. Don't add average in. Get rid of the high price stuff and then we'll deal with it. So what we're seeing.”
2021-11-08 · Odd Lots · Stinson Dean on the Lumber Crash That Followed the Boom · IDENTIFIED FROM THE TRANSCRIPT · source
“No, so it's the question the industry is trying to answer. And to me, the answer is simple, but not easy. We have to cut production. And we're producing more than we're, I call it installing in homes. And that's a recipe for oversupply and lower prices and a $100 contangos. We're just way out producing the capacity to build homes, which is shocking because just six months ago, we're at $1,700. And if you didn't see the $1,700 spike on a chart, and here we are at $600 on futures, that would be the record high price ever in lumber prices and lumber futures going back 30 plus years. $600 has never been seen before. Outside of the last 18 months. But now we're talking about curtailing production.”
2021-11-08 · Odd Lots · Stinson Dean on the Lumber Crash That Followed the Boom · IDENTIFIED FROM THE TRANSCRIPT · source
“Uncompleted homes, and it shows up very clearly in the housing starts data, the amount of homes we're completing is decoupling from home starts in a way that is pretty glaring and it all rounds out this whole point is we're just not completing homes. So it's hard to roll over and your money and build the next one. So it's just, you know, people sold value. They kept buying, buying, buying, and then not being able to deliver. So for every real car, They bought five real cars. They've maybe delivered one. So every month they'd accumulate four real cars. And that happened over three, four, five months. And here we are.”
2021-11-08 · Odd Lots · Stinson Dean on the Lumber Crash That Followed the Boom · IDENTIFIED FROM THE TRANSCRIPT · source
“And we saw, we know that customers are paying home builders extremely high historical prices for lumber. So every time I buy lumber, I'm largely booking a profit because I know not me, but the retail lumber yard, they know what their home builders are paying. The problem was no one saw just the backlog of...”
2021-11-08 · Odd Lots · Stinson Dean on the Lumber Crash That Followed the Boom · IDENTIFIED FROM THE TRANSCRIPT · source
“that little like four four inch by six inch little nothing you know And it is holding back an entire sector of the economy. And, okay, you got the trust plates in. And then now you need faucets and toilets and refrigerators. So it caught me off guard and just being so narrowly focused on lumber, now I'm like, I got to think more macro than I would. Y'all were talking earlier about the specialists. I'm highly specialized in a two by fours. No idea about metal. But now I'm kind of like there's indicators and I'm looking at and supply data and that now kind of come into view and largely just talking to my customers and what they're hearing on lead times on trusses. But didn't see that one coming. A lot of us didn't. So Tracy, to round out your question, we just kept seeing lumber prices fall.”
2021-11-08 · Odd Lots · Stinson Dean on the Lumber Crash That Followed the Boom · IDENTIFIED FROM THE TRANSCRIPT · source
“So you had lumber that was scheduled to deliver in July. Now it's on indefinite hold. And you have lumber prices falling, falling, falling. So speculators like myself and other folks in the supply chain just kind of buy lumber because they think it's cheap, not anticipating the inability to turn your inventory because there's this bottleneck at the job site of the apartment and of the house, the single family home that is all held up. You can't get to the second floor because you don't have truss plates. And then you need the roof trusses. And then it became, I gotta, I can't fit like there's carrying costs for the builder and the construction loans and the draws. Like they have to close out and deliver the house to get that last payment to that rollout into the next project. So it held up all these other projects because I couldn't complete homes.”
2021-11-08 · Odd Lots · Stinson Dean on the Lumber Crash That Followed the Boom · IDENTIFIED FROM THE TRANSCRIPT · source
“Almost like if you envision building a house, no one could get the lumber for the first floor. Then they got the lumber. Now we need a floor truss, the webbing that goes between the first and second floor. We can't get that. It's backlogged. We can't get the plates. So I don't really need the lumber for the second floor until I get my floor tresses in. And those are months out, months and months.”
2021-11-08 · Odd Lots · Stinson Dean on the Lumber Crash That Followed the Boom · IDENTIFIED FROM THE TRANSCRIPT · source
“The lumber yet, because they're still waiting on the windows and the appliances to finish the house before. So they have a job on the books, but they can't close out the previous house until, you know, they get all the finished products in there that are heavily related to the global supply chain. The biggest issue for us was truss plates, floor trusses, roof trusses, the little butt plates that go on all the joints, metal truss plates. Two companies have 80% of the market share. And when these trusses are specked and approved by the county and like it's, you can't switch the plate to some other plate supplier. Like it's spec specific to some certain technology. And you couldn't get trust plates. And this is just metal from turkey or whatever. I'm not an expert in that supply chain, but it's not domestically produced. So you couldn't get trusses.”
2021-11-08 · Odd Lots · Stinson Dean on the Lumber Crash That Followed the Boom · IDENTIFIED FROM THE TRANSCRIPT · source
“The lack of CapEx includes storage capacity. If the idea is going to, we're going to run lean and mean, turn our inventory. You don't need a lot of space to turn it. Like, ideally, you buy just in time inventory and you don't hold it very long. You turn it into AR, you turn it into cash, you do it over and over. And that's been the model from the producer all the way down to the retail lumber yard. All of a sudden what we call in the lumber industry outtake. How much lumber is leaving the lumber yard and getting installed in a house or an apartment, I'll take grinded to a halt and this is, I think, the bull whip effect if listening to your last several podcasts comes into play in the global supply chain crisis starting to peak right now affects lumber. So a lot of the lumber that's piled up is largely sold. It's committed to a job. But that job is not ready to take”
2021-11-08 · Odd Lots · Stinson Dean on the Lumber Crash That Followed the Boom · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, it was a big deal in my world. And to be honest with you, there's only like six of us in lumber who even pay attention to it anyway. Yeah, it was pretty dramatic.”
2021-11-08 · Odd Lots · Stinson Dean on the Lumber Crash That Followed the Boom · IDENTIFIED FROM THE TRANSCRIPT · source
“To put it. So it certainly didn't show up in flat price. We didn't go negative, but the fact that we had $100 discount to carry lumber from one month to the next contract month was insanity. When I saw that happen and we had pretty large carries in the July contract too, we got a while. There's a lot of lumber out there that we got to chew through before we get back to some kind of equilibrium. And we've been, you know, for months and months been trying to work through that backlog of inventory that's in the pipeline. It's in the hands of different players in the supply chain, largely out of the mills hands. They've blown it out. I own a lot, a record breaking amount of lumber for my little company. And a lot of my counterparts as well and a lot of my customers. So there's just a lot of lumber.”
2021-11-08 · Odd Lots · Stinson Dean on the Lumber Crash That Followed the Boom · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, you would think, certainly yes, like you can stack lumber in a field and it's not going to like contaminate anything. But like the facilities. That specialize in building materials handling were full. They're still full so that the market was paying you $100 to store it for 60 days when the hard cost to do that is like 12 bucks. So the textbook calls it riskless profit. It's an $88 profit, no brainer buy today, sell it for $100 more tomorrow on a futures contract two months out. I mean, it was a no-brainer when it was at $20. And then it got to $30 and $40 and $50. There was no bid because no one had the money, the budget left to buy it because they, you know, they had bought lumber, what they thought was cheap before. And they had no place to put it. So it's like, yeah, I hate Mr. Broker. That sounds like a great deal. I agree with you. This is great value, but I cannot take it. There is no place.”
2021-11-08 · Odd Lots · Stinson Dean on the Lumber Crash That Followed the Boom · IDENTIFIED FROM THE TRANSCRIPT · source
“What's a number, Mr. Customer, that you would buy at? Just give me a bid, you know? And like there's like, there is no number because I have no place to put it. And maybe this happened in oil, but certainly in lumber, I'd already bought what I thought was cheap at the time. So my cash is already, my budget is already spent in inventory. So I have no budget left to average down. And if I did, I have no place to put it. So it turned into a negative oil like we'll pay you to take it from us because we don't have any place to put it either kind of situation. And with lumber, our negative oil moment was, and this is real geeky commodity trading verbiage, but the contango. Went to a hundred dollar discount, which it was the September contract traded $100 below the November contract.”
2021-11-08 · Odd Lots · Stinson Dean on the Lumber Crash That Followed the Boom · IDENTIFIED FROM THE TRANSCRIPT · source
“Coming in at much lower prices until we saw that retail prices were going to stay high. And I think that's kind of how it played out. Retail prices stayed high relative to replacement costs. And then finally that high price inventory got moved out and prices have come down to the end user. So that was June, July, a little bit of August. Then something really interesting happened. I call it our negative oil moment. So, y'all remember oil went negative. The fundamental reason was there was no place to store it”
2021-11-08 · Odd Lots · Stinson Dean on the Lumber Crash That Followed the Boom · IDENTIFIED FROM THE TRANSCRIPT · source
“Cost being extremely high, and they were able to largely as a group pass along these higher costs and escape somewhat unscathed. It was quite impressive and wild to think that there was no entity out there that could undercut and gobble up market share because they had a lower break-even cost. And I was arguing this will be kind of my final point on that. Like lumber kept going down. certainly went lower than i thought it would go and i'm like well i don't think it's going to bounce until folks step back in and replenish their inventory and if they bought at 1500 and they could buy it 600 their average would be you know a thousand bucks or something and then you'll see lower prices pushed to consumers so until it stopped going down indicating”
2021-11-08 · Odd Lots · Stinson Dean on the Lumber Crash That Followed the Boom · IDENTIFIED FROM THE TRANSCRIPT · source
“I couldn't really explain it. And then I started to think maybe everyone was so upside down in their inventory that they were selling on cost plus with that cost being very high versus replacement cost. And if your competitor down the road also has a high break-even and they could replace and buy more inventory for a lower price, they're going to try to blow out their high priced inventory before they lower their prices. But you can only do that as so long as your competitors are not lowering their prices. And it's seemingly all summer, the cost savings, seemingly were not passed along to the consumer. But the reality is they weren't cost savings because the lumberyard hadn't rebought to lower their break-even price. So they were cost plus with”
2021-11-08 · Odd Lots · Stinson Dean on the Lumber Crash That Followed the Boom · IDENTIFIED FROM THE TRANSCRIPT · source
“We could watch lumber futures get cut in half and go from 1700 to 850. And we would see reports from builders or contractors going in and saying my price is not half of my quote from three months ago. Why aren't I seeing price depreciation that we're seeing in futures and all the things? And to me, that was really telling because in a marketplace and certainly commodities, you should have enough players that all have different trading strategies, different break-even points that one or two of them can offer lower prices, gobble up all the market share, and force their competitors to meet or beat their price. But we weren't finding that this summer. It was bizarre and inefficient.”
2021-11-08 · Odd Lots · Stinson Dean on the Lumber Crash That Followed the Boom · IDENTIFIED FROM THE TRANSCRIPT · source
“Folks covering commitments that they had maybe committed at $600, $700, $800 and they were just waiting for prices to come back down to normal to cover that for hopefully a profit. None of them thought about limiting their losses. There's going to wait, wait, wait. Well, no one could wait any longer. They had to cover. And seemingly everyone was in that boat. So it squeezed us and we blew the top off at 1,700. When it turned, I felt pretty confident that it was over. But a lot of people didn't. And that's what makes markets top is folks who thought we shouldn't be this high all of a sudden start believing we're going to be $2,000 or higher, including the producers themselves. So it was a painful ride down for a lot of folks. And what was interesting, and I tweeted about it through the summer.”
2021-11-08 · Odd Lots · Stinson Dean on the Lumber Crash That Followed the Boom · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I think that's good to kind of pick up where we left off from a price perspective. So when we recorded late April, May, the market peaked in late May. But from mid-April to late May, the market had doubled. It's not like it did some about face immediately. Like there was a lot of price action left. It just all happened in a hurry. So it was a short squeeze. And I think we talked about last time, like eventually people will get covered and then what? And my argument was hire for longer, for lumber specifically because of a lot of structural bullish issues in the log supply, manufacturing and demand incredible wave of demand, as we all know for housing. We definitely squeezed from $1,000 to $1,700. That was all just short covering.”
2021-11-08 · Odd Lots · Stinson Dean on the Lumber Crash That Followed the Boom · IDENTIFIED FROM THE TRANSCRIPT · source
“Thanks for having me back. It's been a wild ride since Oddlots. And we've come a long way. And yeah, we're trading at 600 on the future screen. We got as low as 450. At a high of 1733, you know, for those paying attention. It fell faster than it went up, which was hard to believe that that was even possible. But yeah, it's a different world than lumber compared to what these other folks are going through right now.”
2021-11-08 · Odd Lots · Stinson Dean on the Lumber Crash That Followed the Boom · IDENTIFIED FROM THE TRANSCRIPT · source