[carlsbadworker]

[quote=gzz]

The main point of contention is whether the recent rise in inflation will be temporary or more protracted.

You know I am on Team Transitory. My view that the Fed is doing a great job and should be commended is the true contrarian take of 2021.

That aside, I am dubious that moderately higher inflation will actually have any effect on interest rates. Not even a couple years of 6% inflation, which is very unlikely.

The old model where inflation and nominal interest rates moved closely in tandem was based on a world where the marginal and median dollar saved was from middle class families. That world is dead, replaced by our current world of extreme inequality and elite domination. And while a middle class family may decide to spend more if inflation is high and return on their bank account balances is low, the wealthy just don’t work that way.

Rates are low and will continue on a secular path even lower, real and nominal both, because demographic and technological change has resulted in a permanent “creditworthy borrower’s” market. We are getting rarer, and savers are getting more common.

You have savings to lend, but want stability, low risk, and liquidity? Take a number bub, nobody cares in 2021.

The idea that savers can say “Due to higher inflation, I won’t lend out my money unless I get a commensurable higher rate” just doesn’t fly. The marginal and median dollar saved is saved by someone with a high net worth who does not have a bunch of consumption he will substitute for savings if he doesn’t get his desired rate.

Negative real rates are our future, and negative nominal rates will be a regular thing too in a large and growing portion of the world.[/quote]

Very good points. I like it!

[carlsbadworker]

So what explains all these?
1. The number of occupied U.S. rental-apartment units jumped by about half a million in the second quarter, the biggest annual increase in data going back to 1993, according to industry consultant RealPage Inc. Occupancy last month hit a new high of 96.9%.
2. Eviction bans also are playing a role in keeping the market tight, because about 6% of tenants are normally forced to vacate each year.
3. Renters now crowding the market have higher salaries, in part, because many of them, in normal times, would be buying homes instead. The average income for new lease signers in July hit a record of $69,252, according to RealPage, which captured data for professionally managed buildings. Year-to-date, their incomes shot up 7.5%.
4. Nicolle Crim, vice president of Watson Property Management’s Central Florida division, says she wished she had more to offer. But the for-sale market is so strong that owners are selling for big profits. As a result, Watson now manages about 4,000 single-family home rentals for individual owners, down by a third since the pandemic began, she said.

All these points to there’re less supplies for rental (landlord selling, eviction ban), which drives up the occupancy and qualified income to rent.

So all the suppliers go to new home ownership, despite record price increase? Then why would the article says “Renters now crowding the market have higher salaries, in part, because many of them, in normal times, would be buying homes instead.” How come we suddenly have so many eligible home buyers?

https://www.census.gov/housing/hvs/files/currenthvspress.pdf

[carlsbadworker]

I don’t think Uber ever can make money…unless it invents self-driving car. It’s just math.

However, I think it is unfair to compare Amazon cash burn with today’s tech cash burn. In Amazon days, Internet just started to grow, so there isn’t many Internet users…it takes years for Amazon to get 1 million users (which was a big deal back in 1997). Today, tech grows at much faster pace, given most business has higher upfront costs to acquire a customer, their corresponding higher cash burn could be a positive rather than negative sign.

[carlsbadworker]

Wow. This thread is so one sided.

So let me provide some counter arguments.

1. “the whole idea that a number generated by a computer algorithm and based on no other use or value other than its uniqueness”

The value of cryptocurrency is not based on its uniqueness, but the fact it is a programmable system to communicate ownership and transaction. Correspondingly, There are more than 8,000 monthly active developers working on various cryptocurrency projects, with some 80% of those developers starting in the last two years. These engineers create value by solving problems (payment is a much big problem in developing countries).

2. “Why does anybody think that governments are going to let untraceable money stand?…governments will be left with no choice other than to take action.”

Why does anybody think that governments are going to let free speech to be mediated by a few large company like Facebook? Again, if you take a US centric view, maybe there is more to lose than what the government could gain. But Chinese government is already minting cash digitally, in a re-imagination of money that could shake a pillar of American power.

3.”These exchanges are regularly hacked or just giant frauds.”

These are early days in crypto. Just like when web started, there are lots of “websites” that are hacked or just giant frauds. But it doesn’t mean there isn’t going to be real business like Amazon emerging from these. The current bitcoin adoption rate has promised that the largest digital coin will hit the one billion user mark nearly two times faster than the internet did.

Regulations will come and so will the use cases.

4. “I like the chances of my COIN puts.”

Nobody is investing in Coinbase based on its PE ratio. Even Coinbase itself is not aiming to make money: it aims to make money during crypto bull market and lose money during crypto bear market…so that it could spent money to built up the payment infrastructure for the future, similar to the way Amazon uses investor money to built up the distribution centers.

—–

That all, said, I have no doubt that crypto is in bubble territorial, but bubble is maybe what we need for every technology revolution. In fact, you look at history, every major technology change comes with a financial bubble. Industry revolution -> South Sea Bubble; Railroad -> Railway Mania; Age of Oil/Automobile -> The roaring 20s; Internet -> Dotcom bubble. It is the bubble that provides the financial capital to lay out the infrastructure to allow the next generation of entrepreneurs to take advantage of it.

I do not personally own crypto…other than the free credit from my coinbase account. But I think it is wrong to completely discredit crypto…and there might be good investment opportunities after all the dust has settled.

[carlsbadworker]

[quote=XBoxBoy]Looking at the site where you got this chart, it looks like they are using price to income to determine their price index. If income is low, then the Price to Income Ratio will be higher. Thus poor countries will have the highest ratios.[/quote]

Right. But US income range is similar to European country, Australia or our neighbor Canada. But its price to income ratio is almost half of those countries.

[carlsbadworker]

[quote=gzz]Fintech is a bubble IMO.

Plain old visa works fine.

They seem to target very subprime: people who don’t have $200 for an online purchase.

Or else they just replicate a 50 year old tech…. But with an App! Like square.

Or crypto scams.

It’s not that there’s no market or the companies are bad, just that they’ll never justify their absurd valuations with real cash profits.

Similar for B2B cloud software companies. Tons of them in a fairly mature sector with no profits and P/S above 10. Just how big a market do people think HR and CRM software is?[/quote]

Facebook was in very mature sector with an app. Look how big they’ve become. I’m not discounting all the good points you made, I just feel that we need to have some humility toward SaaS businesses.

[carlsbadworker]

[quote=evolusd]Like the idea, but vanity is real and few will want to drive this funky looking car. Model 3 is beautiful and pretty damn efficient.[/quote]

You are kidding, right? Vanity is about owning things others don’t have…the funky looking is feature not a bug.

[carlsbadworker]

Inflation is like toothpaste– once it’s out, you can hardly get it back in again.

-Karl Otto Pohl, German-Swiss economist

[carlsbadworker]

Fry’s closed down overnight:
https://www.cnn.com/2021/02/24/business/frys-electronics-closure/index.html

[carlsbadworker]

[quote=scaredyclassic]Idaho. Wait… vegas[/quote]

Utility bills will be much lower in Vegas? Come on, you know how hot it would be in summer?

[carlsbadworker]

I will try to guess use math. 1/3 price means property tax rate is $3000*3/$16500 = 54.5% of the CA rate.

So that’s the lowest property tax rate in the US. Top 3 lowest property tax rate states are: Hawaii, Alabama and Colorado. Alabama should be cheaper in per square feet and Hawaii does’t need winter pool. So I would guess Colorado.

[carlsbadworker]

[quote=sdrealtor]MM should see a $1M sale this year. Getting closer. Wouldnt be surprised to see the standard 3/2 1300ish SF homes hit 800K[/quote]

That would be a hell of a ride. Have you factored in that mortgage rate might be higher this year? New stimulus, inflation concerns, a brighter covid outlook…

[carlsbadworker]

[quote=scaredyclassic]My kids are telling me there is no way bitcoin cannot go higher over next decade and i am a conservative old fart for thinking 5% gains over the next decade is remotely acceptable.[/quote]

You are a conservative old fart regardless what you think about bitcoin.

[carlsbadworker]

[quote=Coronita]I’m not doing so well this year. My returns suck. they are around 4%. Everyone else is doing double digits… [/quote]

FYI. Index is up 4% this year. So “everyone else is doing double digits” is sample bias.

[carlsbadworker]

fair point.

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