patrick.net

Logan Mohtashami says

However, you're running into a better demographic patch in a few years, this isn't like 2006, it's the exact opposite

That chart is moderately convincing of good times to come for home builders. Thanks for it, you've sure piqued my interest. How deeply have you looked into this?

I'm pretty laymen on the topic of housing demand, but I wonder how much this partial age segment (20-39) matters. I know people are waiting significantly longer and longer to marry and have children these last couple decades, and I think I heard that marriage+children is a big first-home purchase driver.

But also, what about the 40+ age segment? I'm more concerned about boomers that die or goto elder care, returning their home to the market, generating added supply that cancels the new demand from the 20-39 year olds.

I guess I'm looking for a more holistic view, and wondering if you've pursued that angle and have any info or charts to share. Well...I know you always have charts haha :p

See ya Logan. Thanks for taking a shit on these guys then leaving. Go out enjoy you life then come back next year. Don't worry, they'll still be here.

goat says

I'm more concerned about boomers that die or goto elder care, returning their home to the market, generating added supply that cancels the new demand from the 20-39 year olds.

Bingo. Not counting all the immigrants (and there are tens of millions) the boomers are 80M on the ground, same size as Gen Y (as all the boomers had 2.1 kids)

Boomers are age 53 to 71 this year. Gen Y is 17 to 35.

anonymous says

I'm not asking for anything close to numerical accuracy

https://fred.stlouisfed.org/graph/?g=fgpt
This is just a one-off chart comparing real GDP (red, 1960 = 100) to real corporate profits (blue, 1960 = 100).

This shows corporate profits could fall 50% to fall back to the long-term trendline. But the question is why & how they got their post dotcom expansion in the first place.



^ real (2017 dollars) corporate profits.

I mean, they tripled 2001-now. How did that happen? Real GDP is up $5T since 2000.



shows corporate profits have risen from 4% of GDP to 9%.

jazz_music says

Old age is the time when people reconcile and make peace with the world and their long journey through this world. Every culture there is attributes a long list of benefits to achieving old age. Not everybody gets to achieve old age, and if they do, its because they did something right.

I can't remember the last time you said something this good. You must have run out of the good Jamaican stuff.

Logan Mohtashami says

This will be my last post on this thread and for 2017.

You are such an asshole Logan. How can you leave me to handle all these crazy bears?

Logan Mohtashami says

Personally, I think you're terrible because you're all too old and cranky

I tell the youth, don't listen to Boomers, they're old and they have way too much baggage

They want to see America fall like Rome or become like Greece or what ever you old people call us....

Boomers are the most vain idiots ever. They literally think the world revolves around them, and thus because they are almost checking out of this world it's now apocalypse this and apocalypse that. They can't deal with the fact that they will leave this world, and this ball will just keep strumming along even better without them.

I suppose TV and Movies can partially be blamed for their condition.

Strategist says

OMG. Someone give me a gun. I need to shoot myself. I can't stand the pain.

Is that supposed to be ironic ? That is considering the numbers of middle aged people committing suicide or becoming addicted to opioid pain killers ?

>>What Happened To The Great American Crash?!?!?!?!
>>By Logan Mohtashami
>>A. Lack Discipline

Logan cannot formulate a complete thought, let alone a complete sentence. Logan's ability to formulate a coherent sentence is like that of a woman of ethnicity on a bad daytime TV dating show. Has everyone seen the following conversation a few times already?

TV host: What kind of man are you looking for?
WOE: Treat me like a lady!

jazz_music says

Logan Mohtashami says

What Happened To The Great American Crash?!?!?!?!

Ans: It was postponed by bail outs, Quantitative Easing and changes such as suspension of Mark To Market in Generally Accepted Accounting Principles. (GAAP)

And why would they not want to postpone it again and again?

Of course there is always the "they don't ring a bell at the top" theory:

anonymous says

For guys like HEYYOU and DEEPCGI to be proven correct the Dow needs to drop to below 2000 points, and stay that way for years.

In other words their version of doom involves riots & tanks in the street.

Dear Doomsday Wishers,
There is a reason why Warren Buffett is filthy rich. No one has ever beaten his predictions.

http://money.cnn.com/2017/09/20/investing/warren-buffett-dow-1-million-100-years/index.html Warren Buffett: Dow will hit 1 million in 100 years
Warren Buffett isn't nervous about a stock market bubble. The legendary investor thinks anyone betting against America is "out of their mind."

https://www.google.com/amp/s/www.bloomberg.com/amp/news/articles/2017-09-29/s-p-says-china-s-debt-will-grow-77-by-2021-bold-action-needed

This was an interesting read. Logan, I really don’t think your demonstration of fundamentals via charts give China enough credit here.

What if the US saw it’s debt increase by 77 percent by 2021? None of you would even factor it in to your market fundamentals. But why stop at 77 percent? These numbers are so min-bogglingly high that we should just make it an even 80 percent, and set aside enough food to feed all the poor on earth for 100 years.

The debt of nations just doesn’t exist at all for you perpetual bulls does it? Well, to simplify it a tiny bit, let’s just say that about 35 percent of the US national debt is nothing more than a promise to future retired people. Except of course the nation’s productivity and NOT just the face value of its existing real estate has to increase along with the debt and the population and the increase in life expectancy.

It doesn’t have to crash, it just has to go nowhere slowly for a while, and you’re screwed.

Strategist says

Buffett thinks long term. He knows that bad times will come, and bad times will go, but it's the bad times that are the best buying opportunities, because the American economy only goes up in the long run.

It's a fractal evolution: there are depressions every now and then that takes 20 yrs to cure, and there are dark ages on a regular basis too that take 200-1000 yrs to cure.
"only goes up in the long run" depend on where you sit.

deepcgi says

The debt of nations just doesn’t exist at all for you perpetual bulls does it?

The problem with Logan is he focuses on all the short term variables showing things are going well, while conveniently leaving out the several variables that are unsustainable and showing that we're screwed, in the mid to long term.

In the long term, everybody will die once the decaying process starts after we peak at 30 years old. But this does NOT prevent us from enjoying a little victory feeling here and there during the decaying process.
A nation starts corruption/decaying process the moment the money become unsound and manipulatanle.

DEEPCGI said: "It doesn't have to crash, it just has to go nowhere slowly for a while, and you're screwed."

I've asked you this before and you ran away - if one buys at 3k sees it rise to 22 and Drifts down to 19k over 20 years - how exactly are they "screwed"?

Better yet who is more screwed the guy above or the guy who sidelined himself at 6k expecting it to crash to 3k? In 20 years when it's time to hang it up - would you rather do so from the perch of 19k or from your perch of 6k?

Let's see if you can answer truthfully versus run away.

If you don't understand root cause, and you never have, you'll continue scratching your head at people who are afraid of collapse.

Numbers you should try looking into:
Longest, largest period of inflation of a fiat currency backed by nothing in human history
Dollar de-valued by 98% since the 20's

But can someone who makes a living on leverage think in terms of real purchasing power outside of credit? Based on you I'd say no.

Dear Bears,
The Bulls are in charge. Another day, another high. When will you learn. Sigh!

NuttBoxer says

Dollar de-valued by 98% since the 20's

You should look at value of an hour of labor. If the value of labor is constant, who cares if it takes $1 or $1 bazillion?

anonymous says

So do you want 5-10 percent yearly average for next 10 years or do you want 30-50 percent. It a gamble. And it is risky. But it is not necessarily wrong strategy if you are disciplined and wait for your turn.

Most people lose out by trying to time the market. Everyone thinks they can beat the market because they have no lose system or formula, and then they lose. Most fund managers with all their fancy degrees and skills, can't even beat the S@P 500.

When God speaks, people listens.
https://www.cnbc.com/2017/10/03/after-winning-bet-against-hedge-funds-warren-buffett-says-hed-wager-again-on-index-funds.html After winning bet against hedge funds, Warren Buffett says he'd wager again on index funds

People don't understand inflation. The problem is not inflation.
The problem is that the government created a mechanism whereby tons of money CAN and MUST be printed, but at the same time wages are crushed, so corporate profits and assets go through the roof. All for the benefit of the rich. It is a (not so) subtle mechanism, hidden in plain sight.
All this of course with a bit of added instability when inflated assets realign with reality.
Only chumps mistake this for a long term trend.

Heraclitusstudent says

The problem is that the government created a mechanism whereby tons of money CAN and MUST be printed, but at the same time wages are crushed, so corporate profits and assets go through the roof. All for the benefit of the rich. It is a (not so) subtle mechanism, hidden in plain sight.

Why do you think wages are crushed?

Strategist says

Why do you think wages are crushed?

Primarily automation, but outsourcing as well

joeyjojojunior says

Strategist says

Why do you think wages are crushed?

Primarily automation, but outsourcing as well

I think wages are starting to pick up. Minimum wages for low skilled workers is increasing. The demand for technology jobs is out of sight. Unemployment is low. Corporate profits are up. Economy is improving. It all spells higher wages.
My 21 year old son graduated from college this year, and had a job waiting for him. 3 months on the job and he's making $7,000 per month. That's a lot of money for a 21 year old with no real experience. Southern California economy could be doing better than I thought.

Strategist says

Most people lose out by trying to time the market. Everyone thinks they can beat the market because they have no lose system or formula, and then they lose. Most fund managers with all their fancy degrees and skills, can't even beat the S@P 500.

I absolutely agree with that statement! True. True! True!!!

But, If you were fully invested for past 8 years, and maybe you will stay another year and rake another 10 or more percent and than exit and wait patiently for another opportunity (recession)?

I think that might be a smarter thing to do than stay invested considering historic timelines of bull markets. The odds are on your side.

Downturns come suddenly without warning and they happen quite fast. As long as you have strategy in place you might benefit from getting out year ahead of the downturn hugely.

You asked, so I'll tell you. I am odd. There is the truth of it. Over the past 30 years, over and over, I managed to build unique things that people in certain industries offered me huge money for, and four times I have walked away from enormous green, on principle. A number of people have told me I'm afraid of success, but I accomplished what I set out to do in every case, so I consider those good accomplishments in any light, but slimy greed beasts always seem always to cling to powerful new opportunities.

When I was a kid, I got a view of how greed, arrogance, and even religious pride could destroy good things and good people. Just because everybody is doing it, doesn’t make it alright. I don't care if God agrees with the principle or not. It has always been plain for me to see that we are pretending we don't see the disaster we are kicking down the road.

Have a kid in college? They are already seeing it and feeling all around them. Bachelor's degrees are worthless, student loans are enormous, downpayments out of reach. The only hope they have is your charity or early demise.

The bad part is, we can't wish away all the red. The national debt is their pensions, social security, health care, and untold future entitlements yet to be promised in exchange for votes.

Now though, the global debt beast is like Jupiter on the horizon of Io. It's so huge it fills our entire field of vision. We should have let the economy crash completely of its own weight, and let the true healthy survivors benefit, but instead we throw 800 billion dollar TARPS over the gaping hole to save privileged asset classes, and pretend we are actually going to pay that money back with interest in the future.

At this stage, it can't be fixed by crypto-currencies and derivatives, I promise.

anonymous says

Strategist says

Most people lose out by trying to time the market. Everyone thinks they can beat the market because they have no lose system or formula, and then they lose. Most fund managers with all their fancy degrees and skills, can't even beat the S@P 500.

I absolutely agree with that statement! True. True! True!!!

But, If you were fully invested for past 8 years, and maybe you will stay another year and rake another 10 or more percent and than exit and wait patiently for another opportunity (recession)?

I think that might be a smarter thing to do than stay invested considering historic timelines of bull markets. The odds are on your side.

Downturns come suddenly without warning and they happen quite fast. As long as you have strategy in place you might benefit from getting out year ahead of the downturn hugely.

You don't know when the downturn comes and goes. They use thousands of variables on Super computers to predict the GDP and still get it wrong. I do time the market at times, but for the retirement accounts I just invest in the S&P 500 and keep it there. The last few years I have invested mostly in the "ITB" as I am fully convinced the home builders will have a booming business in the next few years.
I think forecasting is more of an art than a science.

Strategist says

$7,000 per month. That's a lot of money for a 21 year old with no real experience. Southern California economy could be doing better than I thought.

Sounds like a lot but $84,000 paints a big-fat target on you for the IRS and FTB. Plus the 9.25% LA County sales tax, LOL.

Payroll and income taxes take your net income down to $5,000 per month. Then half your take-home goes to your 1B apartment. Spend $11,000 per year on stuff and that's another $1,000 in sales taxes. Car payment gas and State Farm takes the rest.

Putting $23,500 into the 401k and IRA (good luck finding $2,000/mo tho) can knock the income taxes down $8,000 to $11,000. Not bad getting a 35% return the first year, but that's the marginal tax rate you're looking at in CA.

Strategist says

You don't know when the downturn comes and goes.

Specific predictions are for chumps, however it is just as absurd to claim we know nothing.
In particular it doesn't take a genius to tell you that 8 yrs into the bull market and 200+% up from the lows, there are far more risks and less opportunities than there were in 2009. Therefore, it is reasonable to take some money off the table and buy bonds.
Don't be rash. Going 100% to cash is also a risk. But it totally make sense to reduce slowly exposure until the next recession hits, which it will statistically in the next 1-2 years.

joeyjojojunior says

Primarily automation, but outsourcing as well

driving home, it hit me all the immigration since the 80s has stopped 70s-style wage inflation in its tracks.

I don't care about the debt, if we need more money we'll print more, just like Japan.

But what keeps my up at night is:

https://www.bea.gov/newsreleases/international/intinv/2017/intinv217.htm

Bellingham Bill says

Strategist says

$7,000 per month. That's a lot of money for a 21 year old with no real experience. Southern California economy could be doing better than I thought.

Sounds like a lot but $84,000 paints a big-fat target on you for the IRS and FTB. Plus the 9.25% LA County sales tax, LOL.

Payroll and income taxes take your net income down to $5,000 per month. Then half your take-home goes to your 1B apartment. Spend $11,000 per year on stuff and that's another $1,000 in sales taxes. Car payment gas and State Farm takes the rest.

Putting $23,000 into the 401k and IRA can knock the income taxes down $8,000 to $11,000. Not bad getting a 35% return the first year, but that's the marginal tax rate you're looking at in CA.

We are in San Diego County, but not much difference from LA.
So far my son is living at home. I pay his expenses as if he is still a student. He drives the 2011 Prius we gave him 3 years ago. His only expenses are gas and personal expenses, and is saving most of his net pay check.
I have offered him the same deal as my daughter 4 years ago, when she graduated. Stay at home and I pay everything except for personal expenses. Save up $50K and I will match it for a down payment on a 3 bedroom condo. Rent out the other 2 bedrooms and most of the house payments will be met. In his case he may need to save up 75K as home prices have increased. It worked perfectly for my daughter, but my son is a different animal. I hope he takes my offer.

Strategist says

I think wages are starting to pick up. Minimum wages for low skilled workers is increasing. The demand for technology jobs is out of sight. Unemployment is low. Corporate profits are up. Economy is improving. It all spells higher wages.

I agree, but the GOP thinks this is intolerable so their tax plan is to monetize this potential and suck it all up. Rising wages are the last thing they want. They want higher corporate earnings and higher CEO bonuses, that's all.

Heraclitusstudent says

Strategist says

You don't know when the downturn comes and goes.

Specific predictions are for chumps, however it is just as absurd to claim we know nothing.
In particular it doesn't take a genius to tell you that 8 yrs into the bull market and 200+% up from the lows, there are far more risks and less opportunities than there were in 2009. Therefore, it is reasonable to take some money off the table and buy bonds.
Don't be rash. Going 100% to cash is also a risk. But it totally make sense to reduce slowly exposure until the next recession hits, which it will statistically in the next 1-2 years.

You have a point about slowly reducing exposure, though It's still a form of market timing, which I don't think you should do so in a retirement account. Outside my retirement account, I even play around with options. The risk has never bothered me.

DEEPCGI so it's settled then - someone who stays in for 20 years of stagnation is in no way "screwed". The only one who is screwed is anyone who follows your advice and checked out years ago when the market was 6k.

And once again I agree with you that in the ultra long term there is NO DOUBT it all goes "poof" and the last bag holder gets nothing. However as I said a long time ago "inevitable" does not mean "imminent" a lesson you have yet to learn.

I too used to fear "debt" "inflation" and other social constructs. However the US is nowhere close to being consumed by these demons. Remember "bondzilla" which would punish the US for too much debt? Lol - what a steaming pile of BS that was!

The reality is for all its flaws the US is still the world's dominant hegemony. Like the UK which peaked 220 years ago we started our collapse 70 years ago but it won't will be for another hundred years before we have a true rival.

Thanks Because of how shitty the rest of the world is, like it or not, the US has the lowest carrying cost in the history of civilization- and no that's not an exaggeration. To position yourself on the other side of this bet is the epitome of foolishness.

So yes while it will inevitably collapse - the idea that it does so during your or my piddly existence on this planet is probably the riskiest conservative bet you can make. Good luck and all, but remember, you were warned.

#InevitableDoesNotMeanImminent

What makes you think I got "out" of anything at 6k or otherwise? You’d love my contact list and what they give me. I work for the high flyers but refuse to live amongst them.

The modern oracles like Buffet don't speak the truth, they say what their followers need to hear. It’s on the first page of the manual on how to be the chairman.

But definitely look more closely at China’s numbers. They are about 25 percent of the sales and 50 percent of the cash, right now. It’s unprescedented and unsustainable.

“Just print more.” Damn. The words of a vampire feeding off of young blood.

Except one stock that pays me a hefty dividend- based on what I paid for the stock-I have been out for two years now almost. If in, would be much closer to retirement-sigh.

But I guess lessons from the 2000 crash, before which I made a ton of money and then lost most of it. I set a target and it exceeded it and got out. Why I got into the landlord business as cash itching for a return and these highs were just too tempting. Almost easy to make money now-scarye asy. The rentals not expecting appreciation-but cash flow, decent area, always rented area but not appreciation.

I don't know, I am surprised by the ferocity of this rally and don't know how much it will go.

I did make one other investment in oil driller and that went south-Ensco. I am initiating some positons in TEVA-while beaten down to the teens-still the world's largest generic drug maker, but sizeable debt ratio. Lets see how this one fares. But not making substantial investment in stock and real estate is too high everywhere except in very few places that you don't accept appreciation. Stocks the only thing with "value" are with risks, everything else is sky high.

deepcgi says

I work for the high flyers but refuse to live amongst them.

That's because you work for them. You obviously couldn't live amongst them.

deepcgi says

The modern oracles like Buffet don't speak the truth, they say what their followers need to hear.

LOL. But you speak the truth? If there was any truth in what you say, you would be rich, instead of working for the rich.

I think I will stick to taking advise from the winners, instead of the losers.

I was referring to this quote: "if we need more, we'll print more money like Japan."

Point 1: The first major item that can't be predicted other than to say it is inevitable is the punctuated equilibrium. Ask Dr. Ian Malcolm next time you're at Jurassic Park, he'll tell you all about predictability in complex systems. He will also tell you that they STILL don't teach that in required science at US Universities, let alone when Warren Buffet went to school. Evolution is not a smooth ever-branching tree of mutations and adaptations the way Darwin painted it. It is ALWAYS punctuated with massive, rapid, equilibrium-shifting events. And it isn't just biology. It occurs in any sufficiently complex system. There is complexity in thresholds of forces which always disturb smooth continuous change. If H G Wells had created an invention he called the "personal computer' in one of his stories in the 19th Century, no matter how prescient or based upon logical research, he'd have been laughed out of both the literary and scientific societies. We are on the threshold of two new punctuated events. They will change everything.

Point 2: There are many ways to create money from nowhere in a world of fiat. You have one barrel of sugar and you sell it on paper to 50 different people. As long as no more than one guy shows up to collect it, everybody is happy. And if two guys do, we'll just sell one barrel to 60 people on paper next year. Or we chop low quality mortgages into hundreds of pieces and mix them with a handful of diced higher quality mortgages, so that we can sell the asset above it's rating. We didn't correct for that financial nonsense after the hiccup in 2008, we doubled-down on it.

Of the 20 Trillion dollar national debt at least 30 percent of it is a promise to the kids - Social Security, Medicare, Medicaid, post military service funding, etc, and we have to make interest payments on that every year. The kids are the ones you are selling 30 percent of the debt to. Every time we 'need more' and create another trillion in treasuries, you are putting your headaches on a new credit card in their name. The debt does not just go away. Nor will it ever just be forgiven or forgotten. When the time comes, the money they were promised just won't be there for them. They will have to adapt by having no retirement. I'm sure future generations will find our use of the word "retirement" to be both amusing and frustrating. It never existed before in history and is already dead, now, because of the debt. I will never retire. There is no such thing.

About 7 trillion of our National Debt, at the moment, is owned by the kids. You're no hero for letting them stay at your house, or lending them bucks for down-payments, because frankly...they own your ass, already.