[quote=kev374][quote=flu]futures way down with trade war escalation.
stabilization of the markets my ass.
Gold on the other hand….[/quote]
S&P is up as we speak and it has bounced off the 200 DMA which is a key technical.
As for buying a home..i’m not against real estate in general but I am against buying it at these prices as it represents a greater risk than the stock market.
Your thinking is not accurate in my opinion that the stock market has risk… stocks have wild gyrations in the short term but over a long period 10-15 years stocks have always been a super bet…infact Case-Shiller analysis has documented that investing in equities is far superior than investing that capital in a house.
Buying a home at a 40-50% DTI which people very frequently do these days is exceptionally risky. There used to be a reasonable DTI in the past decades, 28% Front end ratio, all that is blown out of the water these days because banks themselves don’t follow it. There are plenty of people who blindly sign anything the banks give them, then they cry like victims saying the bank made them do it. No personal responsibility for guaging affordability on their own… a ton of people think they can afford it because the bank told them so which does make them idiots.
I think you fail to understand that a starter home (1500sqft with 2 car garage in Irvine) costs $800,000, even with a 20% down (which is a ridiculous $200k and would consume most people’s entire savings if they even have such a down.. everyone does not have rich Chinese parents!) with the plethora of fees HOAs, Mello Roos, City taxes etc. the increased expenses for maintenance, furnishing the home, fixing other stuff etc. etc. with such leverage you are one step away from bankruptcy if you lose your job. And since all your savings is now in your home (downpayment) you lose that as well.
With stocks at least I can sell my stocks even at a loss… and for the record, I am diversified, I have bonds as well which is the beauty of investing in stocks, I can buy any amount I want. I can’t buy half a house.
Buying a home in the current environment is an extremely bad financial move, just my opinion, of course you have yours. Just because I waited for things to come down and they didn’t does not mean I was wrong on concept, overvaluations and bubbles can last a very long time.
Yes, eventually your home will come back up in value through a severe downcycle but it’s much more likely you will lose your home and will not be able to ride out a hard time than having your money in stocks and being able to ride it out. As I said I have six figures in bonds which could tide me over for a few years in an absolute emergency. If I put all my money down for a home I would be seriously F-ked![/quote]
So just one question….
So your argument is, that you were better off to speculate in the stock market in January by putting a large portion of your net worth all into the stock market on one index fund
…better than if you were to have speculated in the stock market this month, by doing the same thing with the same amount of money this month?
or
…better than if you were to have put 20% down on a $300k condo and left the remaining amount in cash as an emergency fund, possibly in ladder of CD’s, with a smaller percentage in SPY (with that smaller SPY purchase taking an 11% hit)….
I’m sorry, I’m an idiot, I’m just not following why going all in (or at least mostly all in) into the stock market seems to be a safer route….
