what asset classes are unloved and cheap currently?

[blahblahblah]

In the future asset prices will do whatever the guys at the top want them to do. Since I am not in that club, I really have no idea what to invest in.

Gold scares me because it would be easy for a few powerful players to control that market. There’s not too much of the stuff floating around. I could see it skyrocketing, then plummeting like a stone and leaving everyone hanging out to dry.

I do have a gut feeling that high inflation is on the way, though. If you’re confident that you can continue to earn a living and you expect high inflation, then why not load up on as much debt as possible and buy as much property as you can? Of course if it turns out to be deflation you’ll be screwed.

I need a drink. And it’s only 8:20am!

[enron_by_the_sea]

BP falls another ~12% today. From 04/26/10 BP fell a lot, but so did other oil stocks. Comparing fall in BP to say fall in XOM, BP might have lost another
~ 48Billion in market cap so far.

If we assume worst case of 60-70 billion of liability (per the article in guardian), the stock needs to fall to at least ~25 before it moves into cheap territory (it is 37 today)

Of course, they can somehow fix the well tomorrow, and then today’s price is justified. Stock market is very efficient discounting machine in this case.

[enron_by_the_sea]

BP falls another ~12% today. From 04/26/10 BP fell a lot, but so did other oil stocks. Comparing fall in BP to say fall in XOM, BP might have lost another
~ 48Billion in market cap so far.

If we assume worst case of 60-70 billion of liability (per the article in guardian), the stock needs to fall to at least ~25 before it moves into cheap territory (it is 37 today)

Of course, they can somehow fix the well tomorrow, and then today’s price is justified. Stock market is very efficient discounting machine in this case.

[enron_by_the_sea]

BP falls another ~12% today. From 04/26/10 BP fell a lot, but so did other oil stocks. Comparing fall in BP to say fall in XOM, BP might have lost another
~ 48Billion in market cap so far.

If we assume worst case of 60-70 billion of liability (per the article in guardian), the stock needs to fall to at least ~25 before it moves into cheap territory (it is 37 today)

Of course, they can somehow fix the well tomorrow, and then today’s price is justified. Stock market is very efficient discounting machine in this case.

[enron_by_the_sea]

BP falls another ~12% today. From 04/26/10 BP fell a lot, but so did other oil stocks. Comparing fall in BP to say fall in XOM, BP might have lost another
~ 48Billion in market cap so far.

If we assume worst case of 60-70 billion of liability (per the article in guardian), the stock needs to fall to at least ~25 before it moves into cheap territory (it is 37 today)

Of course, they can somehow fix the well tomorrow, and then today’s price is justified. Stock market is very efficient discounting machine in this case.

[enron_by_the_sea]

BP falls another ~12% today. From 04/26/10 BP fell a lot, but so did other oil stocks. Comparing fall in BP to say fall in XOM, BP might have lost another
~ 48Billion in market cap so far.

If we assume worst case of 60-70 billion of liability (per the article in guardian), the stock needs to fall to at least ~25 before it moves into cheap territory (it is 37 today)

Of course, they can somehow fix the well tomorrow, and then today’s price is justified. Stock market is very efficient discounting machine in this case.

[sdcellar]

[quote=AN][quote=cantab][quote=sdrealtor]FWIW houses that i have seen are not close to 2X’s 1996 prices adjusted for inflation. Maybe 2X’s 1996 prices but not adjusting for inlfation. Not sure if that is what you meant to say but its not the case that i can see.[/quote]

In Pacific Beach and La Jolla, houses are selling easily for three times their 1996 or 1997 prices. 3x nominal equals 2x inflation-adjusted, approximately.

Here is an example:
http://www.redfin.com/CA/La-Jolla/1110-W-Muirlands-Dr-92037/home/4916121

1110 West Muirlands Drive in La Jolla sold for $340,000 in early 1997. It had languished on the market for many months. Ocean view, backs to golf course. It’s had a major remodel since 97, but not recently. In 2008 the owners listed it for over $2M. It didn’t sell, but it would sell instantly now at over $1M.[/quote]
To backup sdrealtor’s point:

http://www.sdlookup.com/MLS-100030782-920_Santa_Queta_Solana_Beach_CA_92075

Sold in 1994 for 318k, 1996 for 407k, currently asking 789k. It also have ocean view. Looks like it was recently remodeled too.[/quote]1994/$318K in today’s dollars is $467.8K. 1996/$407K is $565.5K. The first is more than 2x inflation and the second is 1.4x.

If this is a good example, this would mean the number we’re really “approaching” is 1.5x? Does this make this asset class cheap?

[sdcellar]

[quote=AN][quote=cantab][quote=sdrealtor]FWIW houses that i have seen are not close to 2X’s 1996 prices adjusted for inflation. Maybe 2X’s 1996 prices but not adjusting for inlfation. Not sure if that is what you meant to say but its not the case that i can see.[/quote]

In Pacific Beach and La Jolla, houses are selling easily for three times their 1996 or 1997 prices. 3x nominal equals 2x inflation-adjusted, approximately.

Here is an example:
http://www.redfin.com/CA/La-Jolla/1110-W-Muirlands-Dr-92037/home/4916121

1110 West Muirlands Drive in La Jolla sold for $340,000 in early 1997. It had languished on the market for many months. Ocean view, backs to golf course. It’s had a major remodel since 97, but not recently. In 2008 the owners listed it for over $2M. It didn’t sell, but it would sell instantly now at over $1M.[/quote]
To backup sdrealtor’s point:

http://www.sdlookup.com/MLS-100030782-920_Santa_Queta_Solana_Beach_CA_92075

Sold in 1994 for 318k, 1996 for 407k, currently asking 789k. It also have ocean view. Looks like it was recently remodeled too.[/quote]1994/$318K in today’s dollars is $467.8K. 1996/$407K is $565.5K. The first is more than 2x inflation and the second is 1.4x.

If this is a good example, this would mean the number we’re really “approaching” is 1.5x? Does this make this asset class cheap?

[sdcellar]

[quote=AN][quote=cantab][quote=sdrealtor]FWIW houses that i have seen are not close to 2X’s 1996 prices adjusted for inflation. Maybe 2X’s 1996 prices but not adjusting for inlfation. Not sure if that is what you meant to say but its not the case that i can see.[/quote]

In Pacific Beach and La Jolla, houses are selling easily for three times their 1996 or 1997 prices. 3x nominal equals 2x inflation-adjusted, approximately.

Here is an example:
http://www.redfin.com/CA/La-Jolla/1110-W-Muirlands-Dr-92037/home/4916121

1110 West Muirlands Drive in La Jolla sold for $340,000 in early 1997. It had languished on the market for many months. Ocean view, backs to golf course. It’s had a major remodel since 97, but not recently. In 2008 the owners listed it for over $2M. It didn’t sell, but it would sell instantly now at over $1M.[/quote]
To backup sdrealtor’s point:

http://www.sdlookup.com/MLS-100030782-920_Santa_Queta_Solana_Beach_CA_92075

Sold in 1994 for 318k, 1996 for 407k, currently asking 789k. It also have ocean view. Looks like it was recently remodeled too.[/quote]1994/$318K in today’s dollars is $467.8K. 1996/$407K is $565.5K. The first is more than 2x inflation and the second is 1.4x.

If this is a good example, this would mean the number we’re really “approaching” is 1.5x? Does this make this asset class cheap?

[sdcellar]

[quote=AN][quote=cantab][quote=sdrealtor]FWIW houses that i have seen are not close to 2X’s 1996 prices adjusted for inflation. Maybe 2X’s 1996 prices but not adjusting for inlfation. Not sure if that is what you meant to say but its not the case that i can see.[/quote]

In Pacific Beach and La Jolla, houses are selling easily for three times their 1996 or 1997 prices. 3x nominal equals 2x inflation-adjusted, approximately.

Here is an example:
http://www.redfin.com/CA/La-Jolla/1110-W-Muirlands-Dr-92037/home/4916121

1110 West Muirlands Drive in La Jolla sold for $340,000 in early 1997. It had languished on the market for many months. Ocean view, backs to golf course. It’s had a major remodel since 97, but not recently. In 2008 the owners listed it for over $2M. It didn’t sell, but it would sell instantly now at over $1M.[/quote]
To backup sdrealtor’s point:

http://www.sdlookup.com/MLS-100030782-920_Santa_Queta_Solana_Beach_CA_92075

Sold in 1994 for 318k, 1996 for 407k, currently asking 789k. It also have ocean view. Looks like it was recently remodeled too.[/quote]1994/$318K in today’s dollars is $467.8K. 1996/$407K is $565.5K. The first is more than 2x inflation and the second is 1.4x.

If this is a good example, this would mean the number we’re really “approaching” is 1.5x? Does this make this asset class cheap?

[sdcellar]

[quote=AN][quote=cantab][quote=sdrealtor]FWIW houses that i have seen are not close to 2X’s 1996 prices adjusted for inflation. Maybe 2X’s 1996 prices but not adjusting for inlfation. Not sure if that is what you meant to say but its not the case that i can see.[/quote]

In Pacific Beach and La Jolla, houses are selling easily for three times their 1996 or 1997 prices. 3x nominal equals 2x inflation-adjusted, approximately.

Here is an example:
http://www.redfin.com/CA/La-Jolla/1110-W-Muirlands-Dr-92037/home/4916121

1110 West Muirlands Drive in La Jolla sold for $340,000 in early 1997. It had languished on the market for many months. Ocean view, backs to golf course. It’s had a major remodel since 97, but not recently. In 2008 the owners listed it for over $2M. It didn’t sell, but it would sell instantly now at over $1M.[/quote]
To backup sdrealtor’s point:

http://www.sdlookup.com/MLS-100030782-920_Santa_Queta_Solana_Beach_CA_92075

Sold in 1994 for 318k, 1996 for 407k, currently asking 789k. It also have ocean view. Looks like it was recently remodeled too.[/quote]1994/$318K in today’s dollars is $467.8K. 1996/$407K is $565.5K. The first is more than 2x inflation and the second is 1.4x.

If this is a good example, this would mean the number we’re really “approaching” is 1.5x? Does this make this asset class cheap?

[KSMountain]

[quote=enron_by_the_sea]BP falls another ~12% today. From 04/26/10 BP fell a lot, but so did other oil stocks. Comparing fall in BP to say fall in XOM, BP might have lost another
~ 48Billion in market cap so far.

If we assume worst case of 60-70 billion of liability (per the article in guardian), the stock needs to fall to at least ~25 before it moves into cheap territory (it is 37 today)
[/quote]

I mentioned using Exxon Valdez as an example. I believe up to now (20 years later) they STILL haven’t paid everything out. So I’m saying an estimate of the total bill at some long long future date maybe shouldn’t drive today’s market cap.

[quote=enron_by_the_sea]Of course, they can somehow fix the well tomorrow, and then today’s price is justified. Stock market is very efficient discounting machine in this case.[/quote]

I would imagine that if they fix the well tomorrow, there would be a huge relief rally in the stock, at least for a little while. Don’t you? Again though, that is basically just gambling, it is by no means “investing”.

[KSMountain]

[quote=enron_by_the_sea]BP falls another ~12% today. From 04/26/10 BP fell a lot, but so did other oil stocks. Comparing fall in BP to say fall in XOM, BP might have lost another
~ 48Billion in market cap so far.

If we assume worst case of 60-70 billion of liability (per the article in guardian), the stock needs to fall to at least ~25 before it moves into cheap territory (it is 37 today)
[/quote]

I mentioned using Exxon Valdez as an example. I believe up to now (20 years later) they STILL haven’t paid everything out. So I’m saying an estimate of the total bill at some long long future date maybe shouldn’t drive today’s market cap.

[quote=enron_by_the_sea]Of course, they can somehow fix the well tomorrow, and then today’s price is justified. Stock market is very efficient discounting machine in this case.[/quote]

I would imagine that if they fix the well tomorrow, there would be a huge relief rally in the stock, at least for a little while. Don’t you? Again though, that is basically just gambling, it is by no means “investing”.

[KSMountain]

[quote=enron_by_the_sea]BP falls another ~12% today. From 04/26/10 BP fell a lot, but so did other oil stocks. Comparing fall in BP to say fall in XOM, BP might have lost another
~ 48Billion in market cap so far.

If we assume worst case of 60-70 billion of liability (per the article in guardian), the stock needs to fall to at least ~25 before it moves into cheap territory (it is 37 today)
[/quote]

I mentioned using Exxon Valdez as an example. I believe up to now (20 years later) they STILL haven’t paid everything out. So I’m saying an estimate of the total bill at some long long future date maybe shouldn’t drive today’s market cap.

[quote=enron_by_the_sea]Of course, they can somehow fix the well tomorrow, and then today’s price is justified. Stock market is very efficient discounting machine in this case.[/quote]

I would imagine that if they fix the well tomorrow, there would be a huge relief rally in the stock, at least for a little while. Don’t you? Again though, that is basically just gambling, it is by no means “investing”.

[KSMountain]

[quote=enron_by_the_sea]BP falls another ~12% today. From 04/26/10 BP fell a lot, but so did other oil stocks. Comparing fall in BP to say fall in XOM, BP might have lost another
~ 48Billion in market cap so far.

If we assume worst case of 60-70 billion of liability (per the article in guardian), the stock needs to fall to at least ~25 before it moves into cheap territory (it is 37 today)
[/quote]

I mentioned using Exxon Valdez as an example. I believe up to now (20 years later) they STILL haven’t paid everything out. So I’m saying an estimate of the total bill at some long long future date maybe shouldn’t drive today’s market cap.

[quote=enron_by_the_sea]Of course, they can somehow fix the well tomorrow, and then today’s price is justified. Stock market is very efficient discounting machine in this case.[/quote]

I would imagine that if they fix the well tomorrow, there would be a huge relief rally in the stock, at least for a little while. Don’t you? Again though, that is basically just gambling, it is by no means “investing”.

[Author]

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