[patientrenter]

davelj, my budget for a home is less than 15% of my net worth. Why? Because I am so conservative that the other 85% of my savings is “spoken for” – all used to pay for all my other living expenses. I try to live within my investment income. Earned income goes to increase my investments, which produce more income, and that allows me to spend more (eventually). So it’s actually very hard for me to substantially increase my material living standards. Getting a few hundred thousand for free in a legally sanctioned, government-supported, scam that I am paying for anyway could dramatically increase my total housing budget.

I will have to skip describing the regulatory bodies I must give background info to. I am reasonably known in my segment of my industry, and I enjoy the anonymity of this board.

Valuing acquisition targets: I just couldn’t imagine our CEO caring if my credit score was good when I gave him the estimated value for an acquisition target, so that’s why I raised that example. Bad attempt at humor. I don’t normally do acquisition valuations, but this one would have been on the front page of the WSJ if Mr Geithner had approved it. (I liked this decision of his, since I didn’t think we should buy the target.)

Anyway, I want to remain anonymous, so I will have to quit giving any more info that could be clues. I still would buy a house using borrowed money provided by a hare-brained govt scheme to support home prices, as long as it was easy and I had no liability. The recent events really have altered my view of the prevailing morality in our population and their institutions, and what I should do about it. All that quick dumping of the moral hazard issue, in ways that just happened to work nicely for the people doing the dumping? Well, since they don’t much care about moral hazard, I know they won’t mind my little addition to it.

[patientrenter]

davelj, my budget for a home is less than 15% of my net worth. Why? Because I am so conservative that the other 85% of my savings is “spoken for” – all used to pay for all my other living expenses. I try to live within my investment income. Earned income goes to increase my investments, which produce more income, and that allows me to spend more (eventually). So it’s actually very hard for me to substantially increase my material living standards. Getting a few hundred thousand for free in a legally sanctioned, government-supported, scam that I am paying for anyway could dramatically increase my total housing budget.

I will have to skip describing the regulatory bodies I must give background info to. I am reasonably known in my segment of my industry, and I enjoy the anonymity of this board.

Valuing acquisition targets: I just couldn’t imagine our CEO caring if my credit score was good when I gave him the estimated value for an acquisition target, so that’s why I raised that example. Bad attempt at humor. I don’t normally do acquisition valuations, but this one would have been on the front page of the WSJ if Mr Geithner had approved it. (I liked this decision of his, since I didn’t think we should buy the target.)

Anyway, I want to remain anonymous, so I will have to quit giving any more info that could be clues. I still would buy a house using borrowed money provided by a hare-brained govt scheme to support home prices, as long as it was easy and I had no liability. The recent events really have altered my view of the prevailing morality in our population and their institutions, and what I should do about it. All that quick dumping of the moral hazard issue, in ways that just happened to work nicely for the people doing the dumping? Well, since they don’t much care about moral hazard, I know they won’t mind my little addition to it.

[patientrenter]

davelj, my budget for a home is less than 15% of my net worth. Why? Because I am so conservative that the other 85% of my savings is “spoken for” – all used to pay for all my other living expenses. I try to live within my investment income. Earned income goes to increase my investments, which produce more income, and that allows me to spend more (eventually). So it’s actually very hard for me to substantially increase my material living standards. Getting a few hundred thousand for free in a legally sanctioned, government-supported, scam that I am paying for anyway could dramatically increase my total housing budget.

I will have to skip describing the regulatory bodies I must give background info to. I am reasonably known in my segment of my industry, and I enjoy the anonymity of this board.

Valuing acquisition targets: I just couldn’t imagine our CEO caring if my credit score was good when I gave him the estimated value for an acquisition target, so that’s why I raised that example. Bad attempt at humor. I don’t normally do acquisition valuations, but this one would have been on the front page of the WSJ if Mr Geithner had approved it. (I liked this decision of his, since I didn’t think we should buy the target.)

Anyway, I want to remain anonymous, so I will have to quit giving any more info that could be clues. I still would buy a house using borrowed money provided by a hare-brained govt scheme to support home prices, as long as it was easy and I had no liability. The recent events really have altered my view of the prevailing morality in our population and their institutions, and what I should do about it. All that quick dumping of the moral hazard issue, in ways that just happened to work nicely for the people doing the dumping? Well, since they don’t much care about moral hazard, I know they won’t mind my little addition to it.

[patientrenter]

davelj, my budget for a home is less than 15% of my net worth. Why? Because I am so conservative that the other 85% of my savings is “spoken for” – all used to pay for all my other living expenses. I try to live within my investment income. Earned income goes to increase my investments, which produce more income, and that allows me to spend more (eventually). So it’s actually very hard for me to substantially increase my material living standards. Getting a few hundred thousand for free in a legally sanctioned, government-supported, scam that I am paying for anyway could dramatically increase my total housing budget.

I will have to skip describing the regulatory bodies I must give background info to. I am reasonably known in my segment of my industry, and I enjoy the anonymity of this board.

Valuing acquisition targets: I just couldn’t imagine our CEO caring if my credit score was good when I gave him the estimated value for an acquisition target, so that’s why I raised that example. Bad attempt at humor. I don’t normally do acquisition valuations, but this one would have been on the front page of the WSJ if Mr Geithner had approved it. (I liked this decision of his, since I didn’t think we should buy the target.)

Anyway, I want to remain anonymous, so I will have to quit giving any more info that could be clues. I still would buy a house using borrowed money provided by a hare-brained govt scheme to support home prices, as long as it was easy and I had no liability. The recent events really have altered my view of the prevailing morality in our population and their institutions, and what I should do about it. All that quick dumping of the moral hazard issue, in ways that just happened to work nicely for the people doing the dumping? Well, since they don’t much care about moral hazard, I know they won’t mind my little addition to it.

[patientrenter]

gary, there is an upward survivorship bias in most reported stock returns. This is true for mutual fund returns and returns by country.

I am not sure I buy into the idea that the S&P 500 has one, though. When one company replaces another in the index, let’s say because the old company was doing poorly, then the index has already dropped to reflect the poor price performance of that stock all the way up the day that it’s thrown out of the index. And if the new company was included because it was doing very well, none of the corresponding stock gains would be included in the index. The index only reflects future gains from the new company.

Even if you argue that a company that has been ailing for a long time will tend to underperform in the future, and vice versa for strong companies, you can always replicate the resulting good index performance in your own stock portfolio by simply selling all the stock of the companies that are removed from the index on the day they are removed, and using the proceeds to by stock in the new companies.

But I do like your insight into what drives stock prices in the aggregate economy, in the very long run. In the aggregate long run, the actual cash that companies hand over to their owners, in the form of dividends and stock buybacks net of dilutions from employee stock options/grants, is all that owners get. If a law were passed tomorrow disbarring any company from paying cash to its owners (in dividends or buybacks) then all public companies would become worthless overnight.

In good times, when stocks are overpriced, then dividends and buybacks tend to be overlooked as the basis for valuing a company. In bad times, dividends and other real cash become the basis. I actually use this as a one barometer of market sentiment. Company managements have a tremendous incentive to emphasize non-cash earnings, since then they are essentially raising capital without having to fight hard to prove they will return all that capital with interest.

So finally, what can you expect to earn from stocks? Nominal price growth that is very unpredictable and cyclical, but should revert over time to the nominal growth of the economy, plus your share of the total stock buybacks made by the company… less dilution caused by employee stock compensation… plus dividends. Actually, you should also deflate the growth in the economy in total for IPOs and other capital-raising efforts by companies in the aggregate. So add dividends to davelj’s 5.5% and adjust for buybacks, ee option grants, IPOs etc to your taste. Over long periods, those add up to a negative, I believe.

[patientrenter]

gary, there is an upward survivorship bias in most reported stock returns. This is true for mutual fund returns and returns by country.

I am not sure I buy into the idea that the S&P 500 has one, though. When one company replaces another in the index, let’s say because the old company was doing poorly, then the index has already dropped to reflect the poor price performance of that stock all the way up the day that it’s thrown out of the index. And if the new company was included because it was doing very well, none of the corresponding stock gains would be included in the index. The index only reflects future gains from the new company.

Even if you argue that a company that has been ailing for a long time will tend to underperform in the future, and vice versa for strong companies, you can always replicate the resulting good index performance in your own stock portfolio by simply selling all the stock of the companies that are removed from the index on the day they are removed, and using the proceeds to by stock in the new companies.

But I do like your insight into what drives stock prices in the aggregate economy, in the very long run. In the aggregate long run, the actual cash that companies hand over to their owners, in the form of dividends and stock buybacks net of dilutions from employee stock options/grants, is all that owners get. If a law were passed tomorrow disbarring any company from paying cash to its owners (in dividends or buybacks) then all public companies would become worthless overnight.

In good times, when stocks are overpriced, then dividends and buybacks tend to be overlooked as the basis for valuing a company. In bad times, dividends and other real cash become the basis. I actually use this as a one barometer of market sentiment. Company managements have a tremendous incentive to emphasize non-cash earnings, since then they are essentially raising capital without having to fight hard to prove they will return all that capital with interest.

So finally, what can you expect to earn from stocks? Nominal price growth that is very unpredictable and cyclical, but should revert over time to the nominal growth of the economy, plus your share of the total stock buybacks made by the company… less dilution caused by employee stock compensation… plus dividends. Actually, you should also deflate the growth in the economy in total for IPOs and other capital-raising efforts by companies in the aggregate. So add dividends to davelj’s 5.5% and adjust for buybacks, ee option grants, IPOs etc to your taste. Over long periods, those add up to a negative, I believe.

[patientrenter]

gary, there is an upward survivorship bias in most reported stock returns. This is true for mutual fund returns and returns by country.

I am not sure I buy into the idea that the S&P 500 has one, though. When one company replaces another in the index, let’s say because the old company was doing poorly, then the index has already dropped to reflect the poor price performance of that stock all the way up the day that it’s thrown out of the index. And if the new company was included because it was doing very well, none of the corresponding stock gains would be included in the index. The index only reflects future gains from the new company.

Even if you argue that a company that has been ailing for a long time will tend to underperform in the future, and vice versa for strong companies, you can always replicate the resulting good index performance in your own stock portfolio by simply selling all the stock of the companies that are removed from the index on the day they are removed, and using the proceeds to by stock in the new companies.

But I do like your insight into what drives stock prices in the aggregate economy, in the very long run. In the aggregate long run, the actual cash that companies hand over to their owners, in the form of dividends and stock buybacks net of dilutions from employee stock options/grants, is all that owners get. If a law were passed tomorrow disbarring any company from paying cash to its owners (in dividends or buybacks) then all public companies would become worthless overnight.

In good times, when stocks are overpriced, then dividends and buybacks tend to be overlooked as the basis for valuing a company. In bad times, dividends and other real cash become the basis. I actually use this as a one barometer of market sentiment. Company managements have a tremendous incentive to emphasize non-cash earnings, since then they are essentially raising capital without having to fight hard to prove they will return all that capital with interest.

So finally, what can you expect to earn from stocks? Nominal price growth that is very unpredictable and cyclical, but should revert over time to the nominal growth of the economy, plus your share of the total stock buybacks made by the company… less dilution caused by employee stock compensation… plus dividends. Actually, you should also deflate the growth in the economy in total for IPOs and other capital-raising efforts by companies in the aggregate. So add dividends to davelj’s 5.5% and adjust for buybacks, ee option grants, IPOs etc to your taste. Over long periods, those add up to a negative, I believe.

[patientrenter]

gary, there is an upward survivorship bias in most reported stock returns. This is true for mutual fund returns and returns by country.

I am not sure I buy into the idea that the S&P 500 has one, though. When one company replaces another in the index, let’s say because the old company was doing poorly, then the index has already dropped to reflect the poor price performance of that stock all the way up the day that it’s thrown out of the index. And if the new company was included because it was doing very well, none of the corresponding stock gains would be included in the index. The index only reflects future gains from the new company.

Even if you argue that a company that has been ailing for a long time will tend to underperform in the future, and vice versa for strong companies, you can always replicate the resulting good index performance in your own stock portfolio by simply selling all the stock of the companies that are removed from the index on the day they are removed, and using the proceeds to by stock in the new companies.

But I do like your insight into what drives stock prices in the aggregate economy, in the very long run. In the aggregate long run, the actual cash that companies hand over to their owners, in the form of dividends and stock buybacks net of dilutions from employee stock options/grants, is all that owners get. If a law were passed tomorrow disbarring any company from paying cash to its owners (in dividends or buybacks) then all public companies would become worthless overnight.

In good times, when stocks are overpriced, then dividends and buybacks tend to be overlooked as the basis for valuing a company. In bad times, dividends and other real cash become the basis. I actually use this as a one barometer of market sentiment. Company managements have a tremendous incentive to emphasize non-cash earnings, since then they are essentially raising capital without having to fight hard to prove they will return all that capital with interest.

So finally, what can you expect to earn from stocks? Nominal price growth that is very unpredictable and cyclical, but should revert over time to the nominal growth of the economy, plus your share of the total stock buybacks made by the company… less dilution caused by employee stock compensation… plus dividends. Actually, you should also deflate the growth in the economy in total for IPOs and other capital-raising efforts by companies in the aggregate. So add dividends to davelj’s 5.5% and adjust for buybacks, ee option grants, IPOs etc to your taste. Over long periods, those add up to a negative, I believe.

[patientrenter]

gary, there is an upward survivorship bias in most reported stock returns. This is true for mutual fund returns and returns by country.

I am not sure I buy into the idea that the S&P 500 has one, though. When one company replaces another in the index, let’s say because the old company was doing poorly, then the index has already dropped to reflect the poor price performance of that stock all the way up the day that it’s thrown out of the index. And if the new company was included because it was doing very well, none of the corresponding stock gains would be included in the index. The index only reflects future gains from the new company.

Even if you argue that a company that has been ailing for a long time will tend to underperform in the future, and vice versa for strong companies, you can always replicate the resulting good index performance in your own stock portfolio by simply selling all the stock of the companies that are removed from the index on the day they are removed, and using the proceeds to by stock in the new companies.

But I do like your insight into what drives stock prices in the aggregate economy, in the very long run. In the aggregate long run, the actual cash that companies hand over to their owners, in the form of dividends and stock buybacks net of dilutions from employee stock options/grants, is all that owners get. If a law were passed tomorrow disbarring any company from paying cash to its owners (in dividends or buybacks) then all public companies would become worthless overnight.

In good times, when stocks are overpriced, then dividends and buybacks tend to be overlooked as the basis for valuing a company. In bad times, dividends and other real cash become the basis. I actually use this as a one barometer of market sentiment. Company managements have a tremendous incentive to emphasize non-cash earnings, since then they are essentially raising capital without having to fight hard to prove they will return all that capital with interest.

So finally, what can you expect to earn from stocks? Nominal price growth that is very unpredictable and cyclical, but should revert over time to the nominal growth of the economy, plus your share of the total stock buybacks made by the company… less dilution caused by employee stock compensation… plus dividends. Actually, you should also deflate the growth in the economy in total for IPOs and other capital-raising efforts by companies in the aggregate. So add dividends to davelj’s 5.5% and adjust for buybacks, ee option grants, IPOs etc to your taste. Over long periods, those add up to a negative, I believe.

[patientrenter]

[quote=Eugene]What do you mean when you say that Seattle has better culture? How does that affect you in your day to day life? Do they have cashiers at Wal-Mart quoting Sartre and Nietzsche?[/quote]

Sartre and Nietzsche? Are you a teenager?

[patientrenter]

[quote=Eugene]What do you mean when you say that Seattle has better culture? How does that affect you in your day to day life? Do they have cashiers at Wal-Mart quoting Sartre and Nietzsche?[/quote]

Sartre and Nietzsche? Are you a teenager?

[patientrenter]

[quote=Eugene]What do you mean when you say that Seattle has better culture? How does that affect you in your day to day life? Do they have cashiers at Wal-Mart quoting Sartre and Nietzsche?[/quote]

Sartre and Nietzsche? Are you a teenager?

[patientrenter]

[quote=Eugene]What do you mean when you say that Seattle has better culture? How does that affect you in your day to day life? Do they have cashiers at Wal-Mart quoting Sartre and Nietzsche?[/quote]

Sartre and Nietzsche? Are you a teenager?

[patientrenter]

[quote=Eugene]What do you mean when you say that Seattle has better culture? How does that affect you in your day to day life? Do they have cashiers at Wal-Mart quoting Sartre and Nietzsche?[/quote]

Sartre and Nietzsche? Are you a teenager?

[patientrenter]

[quote=partypup]Open question to everyone, here. I don’t think this virus will end up being particularly deadly. I would be surprised if it ended up exceeding a 5% mortality rate in the U.S…..
[/quote]

partypup, 5% of the US population is over 15 million people. I consider that a lot of dead people.

Of course, the whole thing is over-hyped. It fills air-time, and gives people a scary thrill, like a good ride at Disney. It’s as likely to become a repeat of the 1918 flu as the two-headed baby fathered by aliens will get up from the cover of The National Enquirer and walk around with a ray-gun.

[Author]

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