patrick.net

Patrick says

Also interesting to me that we can have big consumer price inflation and big stock price deflation at the same time. So cash is not necessarily losing value if you plan to buy stock with it.

I think it is safe to say that expectations are driving the market. The pullback is directly related to consumer price inflation as the Fed has its feet to the fire to try to tame inflation via QT and interest rate hikes. Will be interesting to see what happens to RE in the long term.

Do I buy a house now or continue renting?

Lol!

If the rent is less then the cost of owning the equivalent house (interest, taxes, insurance, opportunity cost) then rent. Otherwise buy.

It's a complicated calculation, but not that complicated.

I'm no longer a fan of the NY Times, but they do have a good calculator for this:

https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html

I tend to ignore macroeconomics. You really don't know what is going to happen there, so just concentrate on value.

Patrick says

Lol!

If the rent is less then the cost of owning (interest, taxes, insurance, opportunity cost) then rent. Otherwise buy.

It's a complicated calculation, but not that complicated.

I tend to ignore macroeconomics. You really don't know what is going to happen there, so just concentrate on value.

Thanks Patrick for keeping it simple. We're moving to the Nashville area (from SCAL) and have never owned a home, so the wife is keen on owning. I'd hate to see the Fed ratchet up interest rates only to have me buy at the top of a bursting bubble, but I agree on the macroeconomic guesswork of that.

@porkchopexpress

I just added these two lines:

I'm no longer a fan of the NY Times, but they do have a good calculator for this:

https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html?source=patrick.net

porkchopexpress says

I'd hate to see the Fed ratchet up interest rates only

I'd wait a bit before buying anything to see what the fed is actually going to do in the first say, almost half of this year. If they crash the market further everything will go down. Gold, silver, houses, stonx, the price to get your nails done at the local asian stripmall.

"everything bubble"

The real problem with RE is there has been very little building since 08 and so we're supply constrained. Due to that RE may hold up pretty well.

House prices have actually gone up and there's no let down in sight as long as work from home is a big thing, rates are relatively cheap, inventory is restricted and unfettered immigration continues.

porkchopexpress says

Patrick says

Lol!

If the rent is less then the cost of owning (interest, taxes, insurance, opportunity cost) then rent. Otherwise buy.

It's a complicated calculation, but not that complicated.

I tend to ignore macroeconomics. You really don't know what is going to happen there, so just concentrate on value.

Thanks Patrick for keeping it simple. We're moving to the Nashville area (from SCAL) and have never owned a home, so the wife is keen on owning. I'd hate to see the Fed ratchet up interest rates only to have me buy at the top of a bursting bubble, but I agree on the macroeconomic guesswork of that.

If the price didn’t go too high there, try start looking for deals for your primary residence. I suspect the inflation will continue as the corrupt gov “spending” $T that we don’t have and lack of new building activity should push prices higher. But again it’s complicated math.

FJB says

porkchopexpress says

I'd hate to see the Fed ratchet up interest rates only

I'd wait a bit before buying anything to see what the fed is actually going to do in the first say

Remember, we're in a free market capitalist system and not a centrally planned Soviet system!

You can tell, because we have to know what a centrally planned, private central bank decides to do, and we KNOW they wouldn't be corrupt. I mean, if they MIGHT be corrupt, certainly they would be audited, right?

</sarcasm>

People, we're in the early stages of soviet style communism. Not what Marx stupidly wrote about, what happened in Russia.

richwicks says

You can tell, because we have to know what a centrally planned, private central bank decides to do, and we KNOW they wouldn't be corrupt. I mean, if they MIGHT be corrupt, certainly they would be audited, right?

Great argument for a decentralized currency or asset like bitcorn!

By June all mask mandates nationally and vaccine mandates will be over. Democrats can’t afford to lose midterms to what is now a flu.

They will pass a smaller build back better bill…. The stock market will roar back with all the new money and EV cars for everyone at a $15k discount. It won’t end well… but they really have no choice.

That or a new deadlier virus called Covid 2.0 hits our shores this summer and lockdowns all over again.

Good prediction, in the short run the S&P is looking very close to the 200 day moving average. It's do or die time I think.

Actually it's below the 200:



this is bad juju...

DJIA 33,334.03 -931.34 (-2.72%) As of 11:50AM EST.

Uh, Oh. There go some more Hummers from the portfolio. Will I have to cash out the crap shacks and find a trailer park in Texas?

Its lost a year of gains, aside from massive inflation propping it up it could loose another 10% easy

It’s down 11.8% in 2022 so far.
That’s not as much as it gained in 2021.
Edit: when I refer to the stock market, I mean the W5000 index (Wilshire 5000)=“total stock market index”.
I’m not interested in the various sub-categories therein.

DJIA 33,172.96 -1,092.41 (-3.19%) As of 12:40PM EST.

RC2006 says

Its lost a year of gains,

Years? It's roughly where it was last June.

Rin says

Ok, the following is not my opinion but that of another trader I know.

OH it was you that mentioned the Russell index yesterday.
Turns out your buddy called it.

https://www.thegatewaypundit.com/2022/01/markets-tank-nasdaq-sp-correction-territory-russell-2000-bear-market-territory/?source=patrick.net

I wonder if people are going to make a connection between the stock market crashing and Biden being in office.

They should. His foolish shutdown of the Keystone pipeline raised energy prices, and therefore inflation. Not to mention his unconstitutional mandates and the resultant job losses.

Everything that was feared about Trump was false about Trump, but is true about Biden:

- destruction of economy
- disastrous foreign relations
- descent into authoritarianism
- censorship
- racism
- corruption (notably the overt extortion of Ukraine to pay Hunter)

Let’s wait to see whom Biden blames for the drop in stocks; it’s the nail in the coffin for November 2022.
Even bleeding heart Democrats like money and are annoyed to see it go “poof”.
Of course, so do the infamous “independents”.
Interest rates are probably not going up much, so stocks should come back; GameStop and Peloton and others probably not.
Either way I will have to hang on because my greed exceeds my fear.

Patrick says

I wonder if people are going to make a connection between the stock market crashing and Biden being in office.

Not a crash (yet). The SP500 is up about 11% since the inauguration.

Lately this song has been running through my head so much…

https://youtu.be/DDOL7iY8kfo?source=patrick.net

porkchopexpress says

Patrick says

Lol!

If the rent is less then the cost of owning (interest, taxes, insurance, opportunity cost) then rent. Otherwise buy.

It's a complicated calculation, but not that complicated.

I tend to ignore macroeconomics. You really don't know what is going to happen there, so just concentrate on value.

Thanks Patrick for keeping it simple. We're moving to the Nashville area (from SCAL) and have never owned a home, so the wife is keen on owning. I'd hate to see the Fed ratchet up interest rates only to have me buy at the top of a bursting bubble, but I agree on the macroeconomic guesswork of that.

Just like marriage, buy in haste, repent at leisure. If you've got enough of a war chest to rent for a year or two, do that. You really need to get to know the city, then the various neighborhoods. Every house purchase/sale is up to a 12% round trip, so choosing unwisely will cost you again and again.

FJB says

bitcorn

At first I thought this was a typo.
https://bitcornproject.com/?source=patrick.net
It's real!

As long as my dividends aren't cut, I'm good.

Patrick says

Everything that was feared about Trump was false about Trump, but is true about Biden:

I think it is self-preservation smart for a president to choose a loser VP. Obama did.

Golly. I have already torn all my hair out and it's rebounded a percent.

Predictions of the next 5-10 years?

A lost decade, or full steam ahead due to printing presses?

That was a heck of a comeback - I maintain an overall bullish stance for this week.

Hircus says

Predictions of the next 5-10 years?

A lost decade, or full steam ahead due to printing presses?

"Nobody knows nothing"

djia wound up .29 percent up for the day. Well, at least I panicked while I had the opportunity.

W5000 up 0.45% today, down 8.49% since January 1.
I’m lately just watching WFC which I want to sell.
“Domp eet”

one can still buy mid, small cap and international funds, us large is overvalued.

If your new to an area, probably best if you rent for three to six months to get to know the area well before you buy. As far as house prices, I suspect they will go up for another year two. In many ways it reminds me of the 2004 to 2008 run up beforw the crash. Every cycle is unique, but there are some similarities.

When you do buy, purchase what you can afford. Also, if you can afford an extra payment or two every year, do so.
When I bought 10 years ago that's what I did, and when I found myself unexpectedly unemployed this time last year, I'm glad I had gone about it that way. It saved my bacon.

porkchopexpress says

Do I buy a house now or continue renting?

I'm trying to buy. You can use the R/V ratio to make sure you're getting a good deal. https://www.jasonhartman.com/rv-ratios-good-property-deals-math/?source=patrick.net

I follow the 18.6 year real estate/credit cycle. Late this year/Early 2023 real estate will have it's half cycle low and after that it will continue to go up until 2026/7 and then it will take years before the bottom is in. Sounds crazy but look at history always repeats itself.

https://propertysharemarketeconomics.com/18-point-6-property-share-market-economics/?source=patrick.net

Onvacation says

It's real!

What? You thought I was speaking about bitcoin? C'mon man everyone knows that's just a ponzi scheme.

mich says

I'm trying to buy. You can use the R/V ratio to make sure you're getting a good deal. https://www.jasonhartman.com/rv-ratios-good-property-deals-math/?source=patrick.net

On top of that there, everyone should be more cautious about the massive inflation. Its very likely can not be stoppable with $T spending that we don't have at least in the next few years. It doesn't mean the next R. POTUS will slow down either only will have a different priorities. All middle class and savers are being robbed by corrupt govs.

Hircus says

Predictions of the next 5-10 years?

A lost decade, or full steam ahead due to printing presses?

According to Piper Sandler, we’re in a secular bull market which should last till 2030 or so before we enter a secular bear market (multi-years).

Cyclical bear market can happen within the secular bull market, but the general trend should still be up. I’ll leave this chart from Piper Sandler here.