patrick.net

I would caution here, that rebound was strong but it came from a 5 days non-stop selling streak and it likely not going to last. While people should always have some money invested and diversified now is not the time to indiscriminately buy stocks, esp. not tech - IMO.

clambo says

’m yelling at everyone to invest because you will need more money in the future than before the gigantic government money spending recently.

There is no guarantee that the inflation will show up in high growth momo tech stocks which benefit from low rates, maybe better to invest in Dow / agriculture / energy stocks now.

That being said, the recent volatility is a perfect environment for day trading which has been muted during the long and boring decade long run-up since the 2008 recession.

@mell,
i get your comments but I am wondering what your timeline is? For me, investing in stocks is always long term. I am not a trader at all.
what are your thoughts on the growth of the EV market within the next decade? How should I think about the expectation that a boom in the EV market translates into higher stock valuation for companies that play in this market? (Nvidia, Nio, Tesla, GE, F, MSFT and many others)

G36 says

@mell,
i get your comments but I am wondering what your timeline is? For me, investing in stocks is always long term. I am not a trader at all.
what are your thoughts on the growth of the EV market within the next decade? How should I think about the expectation that a boom in the EV market translates into higher stock valuation for companies that play in this market? (Nvidia, Nio, Tesla, GE, F, MSFT and many others)

I think there are tech stocks that are safe to hold since they make a lot of money such as aapl, nvdia msft - that doesn't mean they won't get beaten down but it will likely be short lived unless we enter a full blown recession. I'd be cautious on tsla (due to it's sky high valuation/multiplier and increasing EV competition) and stocks that don't turn a solid profit yet, growth can quickly disappear and in a recession company that aren't profitable are punished brutally as there's always the risk of dilution or bankruptcy. I don't have a good read on longer term economic climate but 1) we're overdue for a recession and 2) this administration does not instill economic confidence. If you're young and holding forever then this won't matte that much, more if you're holding good companies or not, but eventually you want to use that money and buy nice things or you have to use it for some reason, then timing will definitely matter. The EV market will heat up and I think there are multiple companies that could eat tsla's lunch rather sooner than later. But tsla does much more than just EVs and will always have cult status. Generally renewable energies are sound due to the promotion by the administration, however China has been cutting margins with their cheap products in that space for a while now. My safest sector bet is always biotech, but there the risk is more with individual stocks. Generally energy, agriculture, defense and such do well in an inflationary environment, better than tech. So it may be time to revisit the good old dow for a change.

thanks mell for the clarification!

I am with you on most of it. BTW, I also hold biotech/life science. (Thermo Fisher Scientific for instance is one of my long term holds, 2020 was a record year for them).

"We're overdue for a recession" Are you basically saying, a "natural" recession that brings us down to the mean versus a one-off event like Covid?
To me, we just had a recession and are coming out of it (start of the next bull market). I dont think the FED will ever allow for a natural recession. Its manipulated by stimulus, money printing, depressed rates. That wont stop and the old saying that they wont have any tools left isnt true in my mind either. They can print forever, buy assets directly and even go negative on rates.

G36 says

thanks mell for the clarification!

I am with you on most of it. BTW, I also hold biotech/life science. (Thermo Fisher Scientific for instance is one of my long term holds, 2020 was a record year for them).

"We're overdue for a recession" Are you basically saying, a "natural" recession that brings us down to the mean versus a one-off event like Covid?
To me, we just had a recession and are coming out of it (start of the next bull market). I dont think the FED will ever allow for a natural recession. Its manipulated by stimulus, money printing, depressed rates. That wont stop and the old saying that they wont have any tools left isnt true in my mind either. They can print forever, buy assets directly and even go negative on rates.

Covid was not a natural recession, so I think we're due for a "normal" one. I agree the Fed will do whatever they can to prevent it from happen, but it will work only so long as the bond market is under control. It's difficult to say but the statement that we will never have recession again (which some pundits have voiced) is definitely a bold one. The Fed is mighty but not limitless. But we'll see!

mell says

It's difficult to say but the statement that we will never have recession again (which some pundits have voiced) is definitely a bold one. The Fed is mighty but not limitless. But we'll see!

I agree with that.....recessions will come.....but you need a black swan event like covid etc.

nice recovery on tech stocks....

I should have bought even more NIO....

mell says

the statement that we will never have recession again (which some pundits have voiced) is definitely a bold one

Sounds very much like "We have reached a permanently high plateau" in 1929. And boy were they wrong.

Patrick says

mell says

the statement that we will never have recession again (which some pundits have voiced) is definitely a bold one

Sounds very much like "We have reached a permanently high plateau" in 1929. And boy were they wrong.

Is it time to buy 30y treasuries

RC2006 says

Patrick says

mell says

the statement that we will never have recession again (which some pundits have voiced) is definitely a bold one

Sounds very much like "We have reached a permanently high plateau" in 1929. And boy were they wrong.

Is it time to buy 30y treasuries

Who knows, the more the government meddles the more difficult ot becomes to predict natural cycles and the severity. But the recent volatility is likely here to stay and this was just a good
rebound after a lot of selling which will certainly return sooner or later. I'm going with a sideways market with a good possibility of a recession in 2H21.

RC2006 says

Is it time to buy 30y treasuries

I don't really know, but I would think it's just the opposite.

Interest rates can't go down because they are almost zero already.

But they can go up in spite of the Fed. And when rates go up, bonds go down.

Patrick says

RC2006 says

Is it time to buy 30y treasuries

I don't really know, but I would think it's just the opposite.

Interest rates can't go down because they are almost zero already.

But they can go up in spite of the Fed. And when rates go up, bonds go down.

I thought US treasuries do better than stocks in depression style crash?

So much better to follow this thread with the Crypto Spammer on ignore. Thank you, Patrick, for the feature.

dang, I had a lot of limit orders and wanted to buy more tech stocks on the cheap-cheap, missed out on some and who knows if they fill.....wish those dips would last longer.

B.A.C.A.H. says

Thank you, Patrick, for the feature.

And I love my new name and symbol! Thanks Patrick :)

What do you guys think about this guys numbers? Are we on the cusp of our next crash, whats going to happen when people start foreclosing buy the millions?

https://youtu.be/ZFXObY99bXg

foreclosing by the millions? all these people that refinanced in the last 7 years have extremely low rates while rents and house prices skyrocketed.
People that own houses have tons of equity and jobs. People who got screwed by covid are low paid workers. They never owned houses in the first place.
Lets say you have had your house for a while, refinanced and lose your job. So what? You can always move back to a friend, mom and dad or downsize and rent out your house at a profit. Or you just live with roommates. You foreclose if you buy a house that you cant afford in the first place and then lose income on top of it. Those times are over. I live in a very nice area and none of these people look like they barely got into those million + homes. Vacations, nice German car's and pools in the backyard, many have dual high incomes. Obviously, your neighbor isnt telling you what they make exactly, but when you hear doctor, pilot, CPA, business owner (weed grower), supply chain leader, tech, etc, you know there is a good chance that all that stuff isnt bought on credit cards.

A bubble bursts after an euphoria phase. Since years we hear housing will crash. You hear nobody say, buy now or be priced out forever. Rates just inched up which puts pressure on house prices (a good thing). multiple years - each year - we hear foreclosure crisis.....I believe it when I see it.

I closed on a new construction (phase 1) as an investment. Surprised it was very much comparable to re-sale in terms of pricing. Minus the front and backyard (its just dirt). But sometimes I rather have dirt than demo all that shit out. Anyways, try to find good contractor, good prices and a quick timeline. Contractors can pick and choose in SoCal right now. Everyone works from home, people have money and get their yards done. concrete, lumber etc went up in price and are in high demand. I am betting on inflation to go up and house prices to keep climbing.

BTW., There is a very interesting area out of state where big corporations are planning sites. An enormous business park and I dont think that has hit the news yet and thats my next investment spot for a rental. So clearly, I am a housing bull for the next few years.

The YouTube is interesting.

Looks like a good strategy is to wait for a while if you want to buy a place.

RC2006 says

What do you guys think about this guys numbers? Are we on the cusp of our next crash, whats going to happen when people start foreclosing buy the millions?

https://youtu.be/ZFXObY99bXg

I agree with bitcoin here. You won't see any significant housing crash until jobs are lost in the millions, and we're talking upper middle-class, high paying jobs. The people working service jobs don't have houses in the first place, they're renters and that's why rents have been crashing. Also banks are really thorough these days and don't lend to people who don't have enough assets to pretty much buy the place for cash. You can still get jumbo and low downpayment loans from other lenders and FHA (but there's mortgage insurance needed there which would pick up the loss). Also the xi-den immigration policy of open borders will put enormous pressure on the low to mid level housing market as well as stabilize rents, central or south American immigrants don't mind packing a starter home with 5-10 people (the people losing out will be lower and middle-class Americans). Plus supply has been non-existent, it will take a lot of foreclosures to increase the supply significantly. That doesn't mean that shacks aren't overpriced. But I don't see a housing crash or even significant downturn until we enter a significant recession with high-paying job losses. Stock market will stay volatile and I don't expect any major gains, sideways and maybe even slight downward pressure.

Another reason there will likely be no housing crash is stagflation. Have you looked at lumber prices lately? Through the roof. Builders will not build many new units as there is no money to be made due to the high costs. The existing shacks will be bid up instead.

mell says

Have you looked at lumber prices lately? Through the roof. Builders will not build many new units as there is no money to be made due to the high costs.

I wonder if that will make steel framing more popular.

Hope you guys bought the dip! Stocks are up "bigly"!

HeadSet says

mell says

Have you looked at lumber prices lately? Through the roof. Builders will not build many new units as there is no money to be made due to the high costs.

I wonder if that will make steel framing more popular.

It's not just lumber its everything.

HunterTits says

mell says

people working service jobs don't have houses in the first place, they're renters and that's why rents have been crashing.

Wife and I make over $200k but rent because we can't afford to buy a house. So much for your logic.

It depends on what you're looking for, you need to go with a starter shack and not more than 2 bedrooms unless. We had to go for 3+ due to kid/family and you need at the absolute 800k to buy a decent place, so $200k combined is not that much. However it's doable, note that you may be more conservative, Americans usually max out everything to afford their dream home, so that's why there are still many buyers for little supply. But there have been many more low income renters who lost their jobs due to the stupid lockdowns and they all moved out of SF/bay area and caused the rents to crash more than the SF house prices.

WookieMan says

Part of my animosity towards CA. That place should be destroyed.

Hey, that's my home you're talking about.

If you want to send in an army to overthrow the regime I will support you, but destroying the state to save it won't work. The democrats have been trying that for decades.

Onvacation says

WookieMan says

Part of my animosity towards CA. That place should be destroyed.

Lol, beautiful weather here in SoCal :) Some people seem very jealous! :)

There's no doubt about the fact that CA, and esp. SV has brought tremendous progress and growth to the US as well as wealth. The decades leading up to Y2K were golden years for many in SV and traditional family values were still abound. The vibe was libertarian. CA lost its way in the new millenium, so the degeneration isn't older than 20 years. OK, Gray Davis / Enron was a big turd, but besides that CA was doing well in the last century. The more rural areas are still beautiful and sport much more common sense.

mell says

The more rural areas are still beautiful and sport much more common sense.

Exactly. People in other states dont even know about these beautiful rural areas in CA. There are some hidden gems.....not for long....unfortunately, people will build more and more here over time.

mell says

There's no doubt about the fact that CA, and esp. SV has brought tremendous progress and growth to the US as well as wealth. The decades leading up to Y2K were golden years for many in SV and traditional family values were still abound. The vibe was libertarian. CA lost its way in the new millenium, so the degeneration isn't older than 20 years. OK, Gray Davis / Enron was a big turd, but besides that CA was doing well in the last century. The more rural areas are still beautiful and sport much more common sense.

You left out the part about the tsunami of H1's

mell says

Americans usually max out everything to afford their dream home

Yes, but not me, and the frustration with all those others is what drove the creation of this site to begin with.

I finally arrived, in a way. I gave notice at work today, will be done with work in two weeks.

I'm able to retire early because I put it all in the stock market and not in the housing market.

Starting after April 16th, I'll be able to put more effort into fixing problems on this site and starting some other projects I've been wanting to work on.

I expect the stock market to implode and an asteroid to hit after that for good measure. Just so I don't expect too much and thereby ruin my good luck.

Patrick says

I finally arrived, in a way. I gave notice at work today, will be done with work in two weeks.

I'm able to retire early because I put it all in the stock market and not in the housing market.

Damn! Congratulations @Patrick!!!

How old are you? in your 40's? 50's?

50's

Patrick says

50's

Awesome! You retired in your 50's and are a life long renter in CA? Many people say renting long term in places like CA is financial suicide. You clearly prove them wrong.

It was always cheaper for me to rent than to own the same house here, from the moment I first rented it until now.

I mean this on a monthly cash flow basis, but also with regard to appreciation. The appreciation in the stock market was almost always better than the appreciation in the housing market, even in California.

Patrick says

mell says

Americans usually max out everything to afford their dream home

Yes, but not me, and the frustration with all those others is what drove the creation of this site to begin with.

I finally arrived, in a way. I gave notice at work today, will be done with work in two weeks.

I'm able to retire early because I put it all in the stock market and not in the housing market.

Starting after April 16th, I'll be able to put more effort into fixing problems on this site and starting some other projects I've been wanting to work on.

I expect the stock market to implode and an asteroid to hit after that for good measure. Just so I don't expect too much and thereby ruin my good luck.

Wow!! Congratulations! Need to make some dough for a few more years, besides I very much enjoy the tech I currently work with as well as trading, but I def see semi-retirement on the horizon in the 50s as well. This needs to be celebrated.

Perfect time to buy some bitcorn Pat!

mell says

I'm able to retire early because I put it all in the stock market and not in the housing market.

Congratulations!

just_passing_through says

Perfect time to buy some bitcorn Pat!

He already owns Bitcoin....0.01 Bitcoin.

Now I'm worried about taxes and how to minimize them.

I found a great site about this:

https://www.gocurrycracker.com/never-pay-taxes-again/

The downside to his strategy is that it hurts your ability to get Obamacare subsidized insurance. But he talks about that as well:

https://www.gocurrycracker.com/obamacare-optimization-early-retirement/