J Darrin Gross
I'd like to ask you, Nick Deangelo, what is the BIGGEST RISK?
Nic Deangelo
The biggest risk, I'll give you the biggest front side and the biggest backside. Biggest front side is always going to be due diligence on our side, we have beaten that to death. We have overlaid many economic factors. Our due diligence confidence is at an all time high. But what I see in the marketplace is many people not doing the due diligence to a real, true conservative estimate of outcomes that is the biggest risk. And we saw that the last few years. And we see the back end of what that looks like, the optimistic, the rosy projections, things like that, and that's consistently what we see. And then on the back end, let's talk portfolio strategy. We have over 600 mortgages. We got, you know what, 19 syndications that we've done, the number one risk that I've seen on that side is not thinking long term. I know I beat that to death, but in the same vein of the underwriting and being over rosy with your projections and not really looking at the real numbers and the real economic data on the back end of a portfolio, if you're not thinking long term, and you're not thinking. How these pieces come together, and you're not thinking about how the management performs consistently over a long period of time, then you see shortcuts evolve. You see bad systems evolve. You see all kinds of shorter term thinking that lead to much bigger, snowballed problems later on. So if people are heavy on their due diligence on the front end and know exactly what they're trying to target and whether or not something is specifically in their Buy Box or not, and how to get that information effectively. That's one piece. And then on the back end, it's building everything for stress testing over a long period of time, thinking about a portfolio in that same vein. So if you're doing those two things, I think you're going to be very, very, very well hedged against stress and risk in the future.
