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US Household net worth at record highs.

By Strategist following x   2014 Jun 5, 7:14am 9,073 views   43 comments   watch   nsfw   quote     share    


http://www.cnbc.com/id/101735281

cherezoff | iStock | Getty Images
U.S. household net worth nudged up 2 percent to a record high $81.8 trillion in the first quarter as the stock market continued its upward climb and property values rose, data from the Federal Reserve showed on Thursday.\
The S&P 500 rose 1.4 percent in the first quarter as the Fed continued with a highly accommodative monetary policy for a recovering U.S. economy. For the year to date, the S&P is up 5 percent, and hit a new intraday record high on Thursday.
U.S. household debt also rose 2 percent in the first quarter, excluding charge-offs of home mortgages. Net originations of home mortgages continued to be weak, according to the Fed.

#housing

4   Heraclitusstudent   ignore (2)   2014 Jun 5, 9:10am   ↑ like (0)   ↓ dislike (1)   quote   flag        

Strategist says

We are on the verge of a gigantic wealth effect about to flood the country like a tidal wave.

The same fed-created fake wealth that fueled the Bush bubble. All measured in an increasingly narrow market, and financed by poor idiots millenials holding the bag with the increasingly futile hope that they can get in on the riches.

6   Heraclitusstudent   ignore (2)   2014 Jun 5, 9:56am   ↑ like (0)   ↓ dislike (1)   quote   flag        

Strategist says

We are on the verge of an incredible boom.

Strategist says

I'll bet you $100 there wont be a bubble.

How about a boom AND a bubble?

7   Heraclitusstudent   ignore (2)   2014 Jun 5, 9:57am   ↑ like (0)   ↓ dislike (1)   quote   flag        

Strategist, were you trained as an economist?

8   Strategist   ignore (2)   2014 Jun 5, 9:57am   ↑ like (1)   ↓ dislike (0)   quote   flag        

Heraclitusstudent says

Strategist says

We are on the verge of an incredible boom.

Strategist says

I'll bet you $100 there wont be a bubble.

How about a boom AND a bubble?

A boom OK, but followed by a plateau. No Bubble.

9   Heraclitusstudent   ignore (2)   2014 Jun 5, 10:07am   ↑ like (0)   ↓ dislike (1)   quote   flag        

Strategist says

A boom OK, but followed by a plateau. No Bubble.

What is your reasoning?

10   Strategist   ignore (2)   2014 Jun 5, 10:26am   ↑ like (0)   ↓ dislike (1)   quote   flag        

Heraclitusstudent says

Strategist says

A boom OK, but followed by a plateau. No Bubble.

What is your reasoning?

1. Booms and bursts don't have to keep taking turns. No reason why prices cannot plateau for a few years.
2. The last bubble was caused by excessive leverage. The last 5 years have too little leverage due to cash buyers. This makes for a good, strong foundation for a stable housing market.
3. The last 7 years has seen very few new homes being built. The shortage is resulting in higher rents and higher home prices. It will take years to catch up. You cannot have a bubble in the middle of a shortage.
4. Household formations have slowed down due to the economy, with the millenials going back home. As the economy recovers they will find jobs and bid farewell to mom and dad.
5. I want to be rich. Bubbles are a nuisance.

11   Heraclitusstudent   ignore (2)   2014 Jun 5, 10:47am   ↑ like (0)   ↓ dislike (1)   quote   flag        

Strategist says

1. Booms and bursts don't have to keep taking turns. No reason why prices cannot plateau for a few years.

2. The last bubble was caused by excessive leverage. The last 5 years have too little leverage due to cash buyers. This makes for a good, strong foundation for a stable housing market.

3. The last 7 years has seen very few new homes being built. The shortage is resulting in higher rents and higher home prices. It will take years to catch up. You cannot have a bubble in the middle of a shortage.

4. Household formations have slowed down due to the economy, with the millenials going back home. As the economy recovers they will find jobs and bid farewell to mom and dad.

I agree, and that works for RE. But what about stocks?

12   Strategist   ignore (2)   2014 Jun 5, 10:58am   ↑ like (0)   ↓ dislike (1)   quote   flag        

Heraclitusstudent says

4. Household formations have slowed down due to the economy, with the millenials going back home. As the economy recovers they will find jobs and bid farewell to mom and dad.

http://finance.yahoo.com/news/tidal-wave-millennials-could-unlock-203616094.html

13   Strategist   ignore (2)   2014 Jun 5, 11:06am   ↑ like (1)   ↓ dislike (1)   quote   flag        

Heraclitusstudent says

Strategist says

1. Booms and bursts don't have to keep taking turns. No reason why prices cannot plateau for a few years.

2. The last bubble was caused by excessive leverage. The last 5 years have too little leverage due to cash buyers. This makes for a good, strong foundation for a stable housing market.

3. The last 7 years has seen very few new homes being built. The shortage is resulting in higher rents and higher home prices. It will take years to catch up. You cannot have a bubble in the middle of a shortage.

4. Household formations have slowed down due to the economy, with the millenials going back home. As the economy recovers they will find jobs and bid farewell to mom and dad.

I agree, and that works for RE. But what about stocks?

Stocks are a different animal. Definitely more volatile due to them being liquid and subject to daily economic data and rumors.
I would say the Dow will breach the 20,000 level by 2017. 20% corrections are guaranteed at some point, I think will happen after it pierces the 20,000 mark.
Right now I am into:
Home builders.
Apple
Zillow
SPY
And some losers that I dumped.
Hard to predict stocks.

14   Heraclitusstudent   ignore (2)   2014 Jun 5, 11:14am   ↑ like (1)   ↓ dislike (0)   quote   flag        

Strategist says

4. Household formations have slowed down due to the economy, with the millenials going back home. As the economy recovers they will find jobs and bid farewell to mom and dad.

Actually I think the point 4 is not that important. The economy will recover and young people will get a job but still be too poor to buy. On the other side a lot of old people will have to sell and live with children in order to retire. A lot of households are just not coming back. By historical standards the 1990-2005 is the anomaly, not the correction that happened after that.

All this means more construction, but no new RE bubble.

I'm not so sure about stocks.

15   Strategist   ignore (2)   2014 Jun 5, 11:19am   ↑ like (0)   ↓ dislike (1)   quote   flag        

Heraclitusstudent says

Actually I think the point 4 is not that important. The economy will recover and young people will be too poor to buy.

Many will eventually move out, at which point they will either buy, or they will rent. Either way, someone will need to buy. An investor who like to buy rentals, or they will purchase if they make enough money.
California is ridiculously expensive for most first time buyers, but not most other states.

16   Heraclitusstudent   ignore (2)   2014 Jun 5, 11:22am   ↑ like (2)   ↓ dislike (0)   quote   flag        

Bitcoins arent the future? says

The 'U3' U.S. household net worth statistic is rising because we decided to exclude anyone who has given up on ever being wealthy...

When Bill Gates net worth is $100 trillions and everyone else at $0, the title will still be: "US Household net worth at record highs", and the article will announce proudly "Total household net worth was $100 trillions".

17   Strategist   ignore (2)   2014 Jun 5, 11:29am   ↑ like (0)   ↓ dislike (1)   quote   flag        

Bitcoins arent the future? says

Strategist says

We are richer then ever. How can we not afford homes and cars?

The 'U3' U.S. household net worth statistic is rising because we decided to exclude anyone who has given up on ever being wealthy...

It will start trickling down...it always does. Every time the rich spend money, other individuals get a paycheck. If they build a $50 million home, a lot of labor will go into that.
We can also tax the filthy rich.

Heraclitusstudent says

When Bill Gates net worth is $100 trillions and everyone else at $0, the title will still be: "US Household net worth at record highs", and the article will announce proudly "Total household net worth was $100 trillions".

At that point they will either tax him 99% on his wealth, or guillotine him.

18   Heraclitusstudent   ignore (2)   2014 Jun 5, 2:59pm   ↑ like (0)   ↓ dislike (0)   quote   flag        

Strategist says

At that point they will either tax him 99% on his wealth, or guillotine him.

No, 50% of people will say other people just don't work hard enough.

19   thomaswong.1986   ignore (5)   2014 Jun 5, 3:05pm   ↑ like (0)   ↓ dislike (1)   quote   flag        

Strategist says

foreigners coming in with ship loads of cash to buy everything American.

if a foreigner is really wealthy there are better selections of homes and lifestyles then Palo Alto or SFBA..

20   FunTime   ignore (0)   2014 Jun 10, 4:38am   ↑ like (0)   ↓ dislike (0)   quote   flag        

http://www.thestreet.com/story/12739876/1/rich-get-richer-as-a-million-more-americans-hit-millionaire-status.html

http://www.ehow.com/info_8328120_net-worth-determined.html

"Net worth forces you to face your debts and deal with the fact that some of your possessions, such as your house, may not be adding to your financial well being after all."

21   corntrollio   ignore (1)   2014 Jun 10, 5:04am   ↑ like (0)   ↓ dislike (0)   quote   flag        

thomaswong.1986 says

if a foreigner is really wealthy there are better selections of homes and lifestyles then Palo Alto or SFBA.

Agree, that's why the "foreigners are snapping up everything in the Bay Area with all cash" thing that's repeated by realtors in the face of evidence against it is stupid.

22   Strategist   ignore (2)   2014 Jun 10, 5:54am   ↑ like (0)   ↓ dislike (0)   quote   flag        

Heraclitusstudent says

Strategist, were you trained as an economist?

Yes. And finance.

@Heraclitusstudent

23   Strategist   ignore (2)   2014 Jun 10, 6:15am   ↑ like (1)   ↓ dislike (0)   quote   flag        

Call it Crazy says

Strategist says

Heraclitusstudent says

Strategist, were you trained as an economist?

Yes. And finance.

Really??? economist and finance??

That's really scary....

Economics for love, and finance for money.
There are two types of economists....."Those who don't know, and those who don't know they don't know.

24   Ceffer   ignore (1)   2014 Jun 10, 6:17am   ↑ like (1)   ↓ dislike (0)   quote   flag        

Seems like it is fewer people having lots more money, rather than more people having more spendable money.

Fewer people with tied up increasing assets can't quite make up for more people having more spendable money.

25   BlueSardine   ignore (2)   2014 Jun 10, 6:42am   ↑ like (0)   ↓ dislike (0)   quote   flag        

@SoftShell

just trying to stay current...

Strategist says

Heraclitusstudent says

Strategist, were you trained as an economist?

Yes. And finance.

@Heraclitusstudent

26   Dan8267   ignore (3)   2014 Jun 10, 6:56am   ↑ like (1)   ↓ dislike (0)   quote   flag        

Strategist says

We are richer then ever. How can we not afford homes and cars?

The household wealth figures are bullshit. They include overvalued houses. In reality, everyone is poorer except the 1%.

27   Heraclitusstudent   ignore (2)   2014 Jun 10, 7:13am   ↑ like (0)   ↓ dislike (0)   quote   flag        

Strategist says

Yes. And finance.

@Heraclitusstudent

Good to have a real economist on this board.
Most of us are trying to understand pieces of what is going on without enough training to see the whole thing.

28   CovfefeButDeadly   ignore (5)   2014 Jun 10, 7:28am   ↑ like (1)   ↓ dislike (0)   quote   flag        

Hells frozen over.

A thread where I agree with everything Heraclutus and Dan say.

29   CovfefeButDeadly   ignore (5)   2014 Jun 10, 9:38am   ↑ like (0)   ↓ dislike (0)   quote   flag        

Lol@ inter webs betting!

31   indigenous   ignore (0)   2014 Jun 10, 12:37pm   ↑ like (0)   ↓ dislike (0)   quote   flag        

Strategist says

Yes. And finance.

What type of economics? What school?

Roberto got an economics degree from Berkely, which is an oxymoron.

32   indigenous   ignore (0)   2014 Jun 10, 1:44pm   ↑ like (0)   ↓ dislike (0)   quote   flag        

Blurtman says

James Goldsmith

Yet he does not mention mercantilism? The re-balancing would have been much quicker without and would have been a win win.

Blurtman says

and disagreed that the USG could aid in the re-structuring of the US auto industry.

And that was wrong? There you go. Economics and Berkley are oxymorons.

33   Robert Sproul   ignore (0)   2014 Jun 11, 12:46am   ↑ like (0)   ↓ dislike (0)   quote   flag        

Or:
"Americans fared better after Great Depression than today"
"To sum up, there are some tiny improvements in the job and income numbers, but only if you limit the analysis to the last few years. Look back a decade or four decades or even eight decades, and the story changes from an America of growing prosperity to one of falling incomes, not enough jobs and ever fatter slices of the income pie for the elite."

http://america.aljazeera.com/opinions/2014/6/jobs-unemploymentincomeinequalitygreatrecessiondepression.html


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