[carlsbadworker]

I don’t think there is any reason for the S&P 500 to crash because it is supported by the healthy profit margin (which is itself supported by the business friendly political atmosphere).
But on the other hand, I will be nervous to step into this market as well.

[carlsbadworker]

This is an interesting perspective:

The GOP tax plan cap-gains provision would provide a “cap-gains escape mechanism” for unorthodox parties to liquidate an historical amount of Real Estate and to move capital into growth or higher yielding assets.

Thought?

[carlsbadworker]

Focus on the work, away from the character.

[carlsbadworker]

[quote=Escoguy]I think in the 80s or early 90s, the UK got rid of their version of the mortgage interest deduction. Had no impact on property prices, in fact, prices probably appreciated even faster than when it was in effect.

Many owners overestimate the value of the deduction.

One indirect impact, there may be less charitable giving when you can’t itemize. One would need to setup something like a donor advised fund when income is high and perhaps not donate every year. Most people won’t think of that.[/quote]

Sure, home price won’t decline because corporations can deduct the interest and all expenses and pay only 20% on any capital gain. Home ownership is likely going to decline, as it did decline in UK since that took effect.(source: https://www.the-american-interest.com/2017/11/14/anatomy-homeownership-crisis/)

If you are top 1%, obviously this is a fantastic law. The income inequality skyrocketed since 1974 when they removed mortgage deduction:
https://www.equalitytrust.org.uk/how-has-inequality-changed

Yet, it is all based on if you assumed social mobility is over-rated over the long run for the country, even though some research has proved otherwise. (https://www.oxera.com/getmedia/ea133d87-911f-4d0f-87fb-16964c74f569/Social-mobility-and-the-economy.pdf.aspx?ext=.pdf)

[carlsbadworker]

“Homeowners, at least in aggregate, are not funding a spending spree with the equity in their homes.”

http://www.mortgagenewsdaily.com/11102017_housing_bubbles.asp

[carlsbadworker]

[quote=flu]BTW: losing the state tax deduction is probably not going to fly….

https://www.politico.com/story/2017/11/12/brady-state-local-tax-deduction-244812%5B/quote%5D

By the way, I think the complete elimination of the SALT in the senate bill existed only so that politicians in high tax states can show some “wins” in the eventual bill. They are probably the ones who begged to have in the initial bill so that they can screw the middle class at the same time claiming that they fought to get something for them.

[carlsbadworker]

[quote=flu]BTW: losing the state tax deduction is probably not going to fly….

https://www.politico.com/story/2017/11/12/brady-state-local-tax-deduction-244812%5B/quote%5D

The only difference between the house and the senate bill on this was whether to allow a capped property tax to exist. The state sale/income tax deduction is gone in either version. They have to pay for the corporate tax cut somehow and I think the best scenario for now is that they eliminate it in phases to get some people who are too stupid to think about long term to support it.

[carlsbadworker]

[quote=Nazzy_17]Can anyone personally recommend a broker for the purchase of an investment property?
Thank you[/quote]

I recommend HLS above. He is a longtime user on this site and you can’t go wrong with him as many on the site can vouch, including me.

[carlsbadworker]

[quote=spdrun]Plenty of recessions worldwide have been combined with high youth unemployment.[/quote]

The way I see it, there is no good outcome in the medium run: either the population growth continues and we have more people than the planet could sustain it; or we have an aging population and the world’s youth cannot support the increasing amount of global debt:
[img_assist|nid=26439|title=global debt|desc=|link=node|align=left|width=400|height=300]

And while technology is helpful in the long run, it has detrimental effects in the short run because the world now needs less capital and less man power to produce. The first helps to create asset bubbles as money can’t find its productive use. The seconds helps to increase social unrest, as many people can’t find productive use of their time.

[carlsbadworker]

[quote=kev374]I don’t own a home, I rent.[/quote]

I always think the best rental property is to own your own house. You get the best tenant: yourself, so it is guaranteed occupancy 100% of the time. And you get lower owner-occupied rate.

[quote=kev374]So, at this stage it is either get back into stocks (which are at all time peaks) or get into real estate investment at a $700-800k price point which is nerve racking.[/quote]

Yes, savers are screwed as all assets are very pricey at the moment, and I don’t see any reason for the liquidity to dry up anytime soon. As GMO says, “Either valuations will revert to historically normal levels and near-term returns will be very bad [purgatory] or valuations will remain elevated relative to history [which means]… near-term returns will be less bad but still insufficient to investors to achieve their goals [hell].”

[quote=HLS] many stocks are nowhere near “all time peaks”(The manipulated indexes are at peaks)
Plenty of ways to make money if you think the indexes are going to fall. Plenty of stocks may be cheap today.[/quote]

While there’re plenty of stocks that may be cheap today, I don’t understand the argument that they are cheap because there are nowhere near “all time peaks”. Individual stock doesn’t follow mean reversion. Bad stock goes to zero and good stock goes close to trillion dollar valuation. Individual stocks at all time peaks do not mean they are bad investment, as long as they are still priced lower than the future discounted cash flow, or grow faster than the market currently predicts.

[carlsbadworker]

I think some of the comments are short-sighted. Yes, automation and robots are going to kill manufacturing jobs and retail jobs, but so what? That doesn’t mean overall jobs are going to decline.

Manufacturing already employs less than 10% of the U.S. workforce and retail is on the way below 10% soon. So when these jobs disappear, just like water, they will just flow elsewhere.

First, funds will be established to educate these unemployed workers. Do you think they will use efficient online education method? Nope, that’s hard to monitor and discriminate against low-income American, so I bet they will put more money in traditional classroom styles. So that means more teachers, and more federal and state employees to monitor the spending.

Second, when people are unemployed, they will likely need more health and social assistance, a segment that has quietly grown above 12% of U.S. workforce already, given most are government funded and inefficiently ran.

Last, the resulting income gap and wealth distribution means the current housing inventory is completely disconnected from the real America. People need either more one-bedroom apartments or McMansions near the beach, both of which are not adequately produced yet and that means more construction jobs. Or Trump could simply order to build more infrastructure, and FED can keep printing money to pay for it. And construction has seen absolutely no productivity growth for years, because, after all, there is no Moore’s Law for backhoes.

So in summary, when jobs are disappearing from manufacturing and retails, the part of economy that we see huge productivity growth in the past few years, they will just migrate to the unproductive sectors of the economy: education, healthcare, construction and government itself…all of which will just become a much larger percentage of the economy in the next decade. And new jobs will be created there.

[carlsbadworker]

I would like to offer my contrarian view against the sentiment of “move on, there is no bubble here”. While overall there is some data to prove such hypothesis,I think we are over-estimating our ability to predict the future due to our failure to provide detailed documentation of past predictions. For example, while many people predicted housing decline in the previous bubble, how many predicted 50% drop in some areas? How many predicted current level of S&P again? We tend to over-emphasize one directionally correct prediction and think we can tell the future, but it is such a complex system that often behaves unpredictably.

Mark Twain has said the only difference between fiction and reality is that fiction has to be believable. Reality constantly defies the normal human narrative, and I will argue that the data in front us currently are not strong enough to argue either for or against the bubble. So don’t be too sure of your prediction.

[carlsbadworker]

But according to the report, it is not all that bad for rural: a higher percentage owned their housing units “free and clear,” with no mortgage or loan (44.0 percent compared with 32.3 percent).

[carlsbadworker]

[quote=bearishgurl]As it should be. Apple’s profit is way too high on iphones as it stands. Let them employ the country who is BUYING most of their phones and made it possible for them to start their company and flourish!
[/quote]

So BG, you are arguing that Apple should stay in China?

http://www.telegraph.co.uk/finance/newsbysector/mediatechnologyandtelecoms/electronics/11567022/Apple-sells-more-iPhones-in-China-than-US-for-first-time.html

I am confused.

[carlsbadworker]

[quote=AN]Hope and Change 12 years in a row. Seems like it’s a winning message LoL.[/quote]

The ironic part is that the change Trump supporters seek is for things to remain the same as “good old days”. Make America Great again = We Want No Change, even while the whole world is changing around them.

[Author]

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