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October 12, 2020 at 6:37 PM #819907October 12, 2020 at 7:37 PM #819908sdrealtorParticipant
The Dow was 25582 when he made the original post. It’s 28837 today.
The s&p 500 was 3080 when this post was made. It’s 3534 today.Say what you will about the future, his sell everything now call was way too early if not dead wrong. I think that’s fair to say
October 26, 2020 at 7:21 PM #820000daveljParticipantSorry, I literally haven’t read anything on this thread since I first posted. Market’s up a bit but don’t be fooled… bubble insanity almost always lasts longer than anyone thinks it will – that’s its very nature. You’re here so you know this.
Anyhow, great recent interview with Jeremy Grantham. He covers a lot of ground, including the current bubble, environment, Covid, and VC, among other things. Grantham is probably the foremost expert on financial bubbles and hasn’t gotten one wrong in his career. Just something to keep in mind if you watch and think, “This guy’s got it all wrong.”
The current bubble and implications are from roughly 06:00 to 20:00.
Be careful out there.
October 27, 2020 at 10:27 AM #820004phasterParticipantinteresting comments by grantham
WRT the pandemic agree that americans by in large do not have much discipline (and the number of deaths in the USA is a reflection)
WRT his thoughts on “debt” disagree
@53:10 yet from a u.s point of view looking at internal debt it’s totally irrelevant
this is because I wonder about the economic drag and social disruption caused by pension debt obligations owed public union workers,… to illustrate an example consider prop 15 (risk vs reward) by the numbers,…
[quote]
A record number of companies are leaving California for states with a better business climate, and a new report shows that Texas remains their No. 1 destination.The study estimates that 1,800 relocation or “disinvestment events” occurred in 2016, the most recent year available, setting a record yearly high going back to 2008. About 13,000 companies left the state during that nine-year period.
During the study period, 275,000 jobs and $76.7 billion in capital funds were diverted out of California.
If voters approve Proposition 15 in November, a state analyst says it will generate between $8 billion and $12.5 billion in new tax revenues for the state each year.
According to the measure, 60% of the money would go to local governments and 40% would go to schools, including K through 12 and community colleges.
Since 2017 The California Assessors’ Association (CAA), has monitored and analyzed the administrative complexities and estimated costs of implementing two proposed initiatives commonly referred to as “split-roll initiatives.” These initiatives generally would require regular reassessment of Commercial and Industrial property at current market value, and would eliminate Proposition 13 protections for significant numbers of those properties. “TheCaliforniaSchoolsandLocalCommunitiesFundingActof 2020”, the most recent version of “Split-Roll” has now qualified for the November 3, 2020 ballot.
• Cost to implement is projected at $1.01 Billion during the three-year phase in period
• Implementation would require a trained workforce that is not available today and would not be available for many years.
…given the immense anticipated Statewide implementation costs and complexities, as well as the disparate impacts to the various California counties we are compelled to oppose this initiative. The California Assessors’ Association advises a no vote on The California Schools and Local Communities Funding Act of 2020 (initiative No. 19-0008-Amendment 1) on the November 3, 2020 ballot.
October 27, 2020 at 10:32 AM #820005phasterParticipantcontinued
looking at the worst case numbers prop 15 will raise $8 billion minus $1 billion in set-up costs (according to CA assessors) leaving 7 billion net
now .6 x 7 billion = 4.2 billion “admin” fees
bottom line what remains is 2.8 billion for education
looking at the population of this state
https://censusreporter.org/profiles/04000US06-california/
an estimated number of those in the school age is bracket is approximately 39512223*(.12+.13)= 9,878,055
so 2800000000/(9878055*(.12+.13)) is,… about a ballpark of just over a thousand dollars more per student (during the initial 5 year period after prop 15 passage) AND in the meantime there will be accelerated job loses perhaps much greater than what has already happened (which most likely will really hurt those on the low end of the income ladder,… i.e. women and black owned business) which is basically why the NAACP has said prop 15 isn’t a good idea (BUT has lots of teacher union backing)
NOTE FDR a democratic “hero” recognized public employee unions are a bad idea,…
[quote]
All Government employees should realize that the process of collective bargaining, as usually understood, cannot be transplanted into the public service. It has its distinct and insurmountable limitations when applied to public personnel management. The very nature and purposes of Government make it impossible for administrative officials to represent fully or to bind the employer in mutual discussions with Government employee organizations. The employer is the whole people, who speak by means of laws enacted by their representatives in Congress. Accordingly, administrative officials and employees alike are governed and guided, and in many instances restricted, by laws which establish policies, procedures, or rules in personnel matters.Particularly, I want to emphasize my conviction that militant tactics have no place in the functions of any organization of Government employees. Upon employees in the Federal service rests the obligation to serve the whole people, whose interests and welfare require orderliness and continuity in the conduct of Government activities. This obligation is paramount. Since their own services have to do with the functioning of the Government, a strike of public employees manifests nothing less than an intent on their part to prevent or obstruct the operations of Government until their demands are satisfied.
October 27, 2020 at 4:00 PM #820013gzzParticipantDave you were wrong!
I was too, in a way. My assets are $10 in RE for every $1 in stocks and bonds. Given that ratio, I felt it was prudent to hedge my extreme RE long with a net short in stocks. As a result, my stocks are -15% or so as a whole YTD. Winners are short SPG and LYFT and long Hanes, iRobot, Kraft, really almost all my longs. Big losses in Tesla and MGI shorts, which I am holding long term. I suggest shorting both at current prices, but I’m perhaps a bad example!
I agree with David Einhorn:
https://www.valuewalk.com/wp-content/uploads/2020/10/Qlet2020-03-1.pdf
October 28, 2020 at 11:09 AM #820022daveljParticipantI don’t short. Ever. My bet against overvaluation in the stock market is just to own safer and/or cheaper assets. Although, truth be told, I don’t invest much in stocks anyhow, so there’s that. I generally find the major indices to be useful only as signals – I don’t give them much thought outside of the extremes (eg, now). Right now, I have a lot of cash, some outstanding RE loans in Texas (1st trust deeds), some foreign RE, a few private bank investments, some emerging markets equity funds (hey, there are some stocks!), and some venture capital. It’s just a hodgepodge of stuff I like and am comfortable with.
I’m generally early (re: wrong) regarding bubbles… but my bet is this one pops sooner (say, within the next year) rather than later. But, alas, the exact timing is always precarious and rather pointless in trying to predict…
October 28, 2020 at 1:17 PM #820025sdrealtorParticipantBut timing is everything. There will always be cycles and making your timing bets correctly is what determines winners and losers. In 2003 it was obvious we were in a housing bubble but the biggest gains came after in 04/05.If you sold a year or two early you missed out big time
October 28, 2020 at 2:03 PM #820030Rich ToscanoKeymaster[quote=sdrealtor]But timing is everything. There will always be cycles and making your timing bets correctly is what determines winners and losers. In 2003 it was obvious we were in a housing bubble but the biggest gains came after in 04/05.If you sold a year or two early you missed out big time[/quote]
Catching the tops and bottoms of bubbles/crashes would be great if it were possible, but it’s not. All you can do, in my opinion, is to buy stuff that’s reasonable/cheap, and sell when it’s expensive.
To use your example, if you sold RE in 2003 and then bought back when it was cheap post crash, you did great. So what that you missed out on a couple years of illusory, temporary gains.
Anyone who happened to hold on until the peak simply got lucky — they held a grossly overpriced asset, and it got even more overpriced. Nobody could have known just how far it would go, or exactly when it would top out.
Again, it would be great to catch the tops and bottoms on the nose but it’s not possible in the real world. What is possible is to buy cheap and sell expensive. I am fine to let the heroes try to catch the turn… imo that’s a good way to wipe yourself out.
On a kind of related note, it’s too early to declare Dave wrong or right. If you re-read the original thread, it seemed pretty clear that it was a longer-term forecast. Not just 5 months. I am not endorsing the opinion, just saying that it’s too soon to say if it’s right or wrong.
October 28, 2020 at 4:03 PM #820032sdrealtorParticipantSo you know Im gonna disagree. If you sold in 2003 you missed the biggest part of the gains and you dont have to be lucky with RE like stocks. RE doesnt turn quickly. You could have sold anytime from Feb 2004 through July 2007 and done significantly better than selling in 2003. You probably could have sold for a lot more in 08 or 09 than 03 also but would have given up significant parts of the incremenetal gain. With RE you have plenty of time to sell near the top if you sell once things start turning down.
Buying is another matter as leverage works against you not for you as it will owning/selling RE. I will agree you dont have to catch exact tops or bottoms in RE to be successful.
But a sell now imperative with RE is a fools folly IMO.
Also he said sell because things (equities) are already way over stretched. the implication was the bounce back from March decline was illusory as was the run up to March. It was a sell now call not in 6 months
example: house next to me sold in Nov 2003. Even at the absolute bottom it at best matched that price between 2009 and 2011.
October 28, 2020 at 4:35 PM #820035Rich ToscanoKeymasterLike I said, whether his call to sell in June was good or bad will only be known in hindsight. Given that he was talking about after the pandemic is over and all the economic impacts have percolated through, that is the appropriate time to look back on whether he was right. Not now.
SD Case-Shiller in Nov 03 was 182. Post-crash, it didn’t get back to that level until June 2013, and that’s without accounting for inflation. (Which would actually be the correct comparison, and would push the rebound date even further, but I don’t have it handy).
October 28, 2020 at 5:12 PM #820036sdrealtorParticipantYou dont buy SD Case-Shiller to live in or rent out you buy a home. Its an index. I think we all know its flawed with limitations. Its best use is directionality rather than real magnitude. My example was real actual example not some derived mathematical calculation.
Real example: A model match to my neighbors house with far inferior lot sold across the street from us in June 2013. We have a perfect example! It sold for 10% more than the neighbors Nov 2003 price. The lot premium would add another 5 to 10%. Had my neighbor sold his house in June 2013 (and I wish he did as he’s not my favorite) the price wouldve been close to 20% above the Nov 2003. Indexes dont tell the real story. The real story tells the real story
One more real story. I have a bunch of folks trying to buy homes now some of whom are regular readers/lurkers here. We routinely run into 10 plus offers on homes priced at comps with negotiated prices typically 5% and in many cases more above asking prices. That leaves a pile of unfilled orders. I wouldnt expect a decline in Spring as even a remote possibility around here
October 28, 2020 at 5:38 PM #820037Rich ToscanoKeymasterDisagree; the index is the best way to measure the magnitude of the change in aggregate. The CS index (which is very well constructed) tells the real story of San Diego as a whole much better than a couple examples from a single neighborhood.
October 28, 2020 at 7:22 PM #820038sdrealtorParticipantWhile you like that as an analyst there are no case shiller homes for sale. No one buys an index home, they buy an actual home. Their risk asset is a property and the accompanying mortgage not some index construct. It tells a nice story but it does not tell the story of an actual homeowner or investor. It’s just a story like Go Dog Go is
And for the record there were lots of predictions here but only one person was actually spot on regarding what happened during the bubble and subsequent burst. everyone else was left making excuses as to why they were off because things changed but I alone had no excuses to make. Of course past performance there’s no guarantee of future performance;)
November 5, 2020 at 6:05 AM #820098CoronitaParticipantI don’t know but it seems like the markets have more room to run…
Wasn’t one concern was an all blue congress and presidency would mean massive capital gains tax hikes?
It seems like that is going to be unlikely for the next 4 years. The blue wave didn’t happen.
GOP will still hold on to senate
Democrats hold onto House, and lost a few seats so there is more of a balance
Even if Biden/Harris wins, which personally I’m hopeful for versus the Asshole Crybaby In Chief, it appears there’s a limit on what tax increases he can do with a stalemated federal government. That should be good news for us, right?
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