[Rich Toscano]

[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.

[Rich Toscano]

[quote=CA renter][quote=Rich Toscano]As I said in another post: “I understand that it’s a popular pastime to spread misinformation and conspiracy theories about this pandemic, but please don’t do it here.”

Disinformation like this does real harm. I don’t want it on this site. Thank you.[/quote]

Hi Rich. Just saw this now. What, precisely, is the “misinformation” or the “conspiracy theory” that you’re referring to? I’ve linked directly to the organizations’ own videos. I just want to be sure that we can have a clear understanding of the definition of these terms.

https://www.piggington.com/ot_countering_disinformation_and_propaganda_act_thoughts?page=4%5B/quote%5D

The misinformation is right in the title, which suggests that the Covid-19 pandemic was planned. This is an outlandish and dangerous assertion and I’m not even going to engage with it.

I’m not really sure how defining terms will help, but fwiw wikipedia’s definition of conspiracy theory seems pretty good — emphasis mine:

A conspiracy theory is an explanation for an event or situation that invokes a conspiracy by sinister and powerful groups, often political in motivation, when other explanations are more probable.

(In case being discussed here, VASTLY more probable).

I’m afraid you’ve just touched on my hot button issue here, CAR. I think the spread of misinformation is the single biggest threat facing our society, and I just won’t have this website be a part of it. Sorry. There are (unfortunately) plenty of other places on the internet to post this stuff.

[Rich Toscano]

I definitely did not request that you post your personal investment returns here, just to be clear on that.

People kept posting their returns during a market meltup, so I asked if they’d keep doing that if OP was right and the market tanked. It was meant as friendly teasing, not a request. Also note: the market has not tanked.

[Rich Toscano]

As I said in another post: “I understand that it’s a popular pastime to spread misinformation and conspiracy theories about this pandemic, but please don’t do it here.”

Disinformation like this does real harm. I don’t want it on this site. Thank you.

[Rich Toscano]

[quote=The-Shoveler]Just using a Mask probably is not going to give you much protection IMO.

Need a face shield so you don’t touch your face as much, and antiseptic gloves as well, else I think you are just fooling yourself IMO.

Some Doctors now saying Covid has been circulating in Socal since last December well before any lock downs forced biz closing ect.., Its only because the majority here do not use public trans that we did not see fast spread like NYC. Other than that all these drastic measures really did not do much good at all and caused far more harm than good IMO.[/quote]

Please don’t use this site to spread misinformation about the pandemic. There are at least 2 wrong statements in your post.

I understand that it’s a popular pastime to spread misinformation and conspiracy theories about this pandemic, but please don’t do it here.

[Rich Toscano]

[quote=gzz]
Now we have even lower rates, even lower inventory, [/quote]

These aren’t two independent things… the low rates are causing the low inventory.

But yeah as sdr says, prices are rising fast… pr/sqft for single family homes was up 5% last month. (charts soon). That’s a noisy figure but 5% is really high.

[Rich Toscano]

Are you guys also going to share your returns if davelj turns out to be right in the end? 🙂

[Rich Toscano]

I like having these as two forum threads that you keep updating… easier to follow that way. Thanks for your efforts!

(Hope to update my #s this weekend)

[Rich Toscano]

The real issue IMO is that RE just isn’t interesting any more. It was interesting during the bubble, and then during the crash. Now, it’s boring. It’s been the same story for years now (prices high but rates low, etc etc).

Even the global pandemic and financial panic didn’t really move the dial on the local market, as sdr pointed out with his realtime updates.

Real estate is boring now! And that’s why people don’t discuss it much.

Brian was annoying, but he wasn’t the cause of that imo… he was just filling a void. The problem was that he was doing so in a very self-righteous, partisan, and inconsiderate manner.

[Rich Toscano]

[quote=FlyerInHi]This is not about whether you can thrive and prosper as an individual or family. What do you feel about the future of the country?

I’m not feeling optimistic right now. Covid, police abuse, injustice, substance abuse, etc…
So many people are now in dead end situations — no skills, no money, rents keep increasing.[/quote]

This question is dumb. As if such a complex topic as “the future of America” can or should be boiled down to a binary question. It’s just an attempt to start yet another political flame war, and that’s exactly what it became. (The fact that it accidentally led to some actually interesting replies doesn’t make it ok).

I’ve made it abundantly clear to Brian aka flyerinhi that his partisan soapboxing, and his insistence on bringing every conversation back to the same old tiresome political arguments, are not wanted on this forum. He just doesn’t care. It’s very annoying (intentionally so, I suspect) and disrespectful to everyone here. There’s nothing special about this post in particular… it’s a cumulative effect, and I’ve just had enough. Brian is banned.

And the people did rejoice.

Also PCinSD is banned for being a weird troll.

[Rich Toscano]

[quote=saiine] Feds now buying individual Corp bonds. I can’t wait for them to announce that they will start buying all Robinhood portfolios which solely contain Hertz.[/quote]

Ha!

[Rich Toscano]

[quote=saiine]There’s no version of reality where we are not at an ATH in November for the election. [/quote]

This reminds me of my business partner’s friend who said “I’m 100% certain the market will be lower in a month” and sold everything… on March 23 (the day of the low… mkt was up 25% a month later).

If you believe you KNOW what the market will do over a short term time frame… you are fooling yourself, my friend.

[Rich Toscano]

[quote=scaredyclassic]ah, you’re right. i do in my heart believe there is some reality that things have to come back to.

i think my statements are just evidence that i’ve finally capitulated to the bulls, which is an extremely bearish sign.

here’s what i find difficult personally, and why i think it’s important to automatic invest. sometimes good things happen to you, repeatedly, and you pile up much more cash than you might have expected. it’s very difficult to put it anywhere and to wait for “value”. where if you’re just on a robot invest situation,a nd everything is set every month, there’s no more thinking.

it feels like when you are stuck with a lot of cash, you by default become kind of market timer, even if it’s a relatively long term investment because you sit there waiting to pull a trigger. but that’s not really market timing, that’s just being afraid to commit to the buy portion of buy a nd hold on a given day with a large amount of money.[/quote]

I think systematic investing is good and it’s smart that you’ve found a way to automate it… that reduces the chance of making emotional decisions.

But I do want to clarify one thing. I’m not thinking in terms of “investing” vs “not investing” as a binary thing. There’s a world of investments out there and at any given time, some are probably priced for decent returns. So it’s more a question of “investing in what?” I’m hoping that having made that distinction, some of the things I said will make more sense.

[Rich Toscano]

[quote=scaredyclassic]

kind of.

But it really doesn’t matter what you think it’s worth.

Or even what it is “really” worth.

All that matters is what other potential buyers will think it’s worth. And I guess what you’re saying is that eventually, once we all sober up, we have to come around to good old common sense.

but others are crazy. from the top down, every aspect of government, finance and law is crazy. we never really fully sober up. So isn’t it still timing in the sense that you ahve to say prices are relatively sober right now, as opposed to stupid drunk pricing? How is that not a form of timing.

I might very well buy the 5 million condo if i thought others were going to think it’s worth 10 million in 5 years, regardless of the rent. but even if we assume people are goign to come to their senses, that happens ona timeline, a downward slope,a nd one has to pick a moment of relative soberliness to put money in.

even though you analyze for value, the investment has to be made at a specific time. which is…timing.?[/quote]

I don’t agree with your basic premise. This is a nihilistic view: valuation doesn’t matter, nothings matters, etc. But it does matter, or at least it always has. Historically, there has been a strong tendency, on average, for asset classes to revert to historically middle-of-the-road values. If you want to make the case that that won’t happen any more, fine — but then you’re doing the “this time is different” thing.

Maybe it is different, but I think that this is the less likely case. Every time valuations are wacky, in either directions, there are always lots of rationalizations for why it will always be thus. You just did it with “everyone’s crazy, and will always be crazy”. That’s no more compelling to me than what we heard during the housing bubble, they’re not making any more land, etc. (And btw, the rationale you described for buying the condo for $5 mil is exactly what people said in that bubble). It’s just a narrative, and those come and go, following the market around the whole way.

It’s human nature to think that there must be a good reason why the situation will endure. But if you look back, it hasn’t been like that. To use your metaphor, people have always sobered up in the past. (And in the case of too-cheap assets, I guess they’ve gotten over their hangovers). I have yet to hear a good reason why this should have changed. In the other thread, I linked to an article specifically talking about why it’s unlikely to have changed: https://www.pcasd.com/content/will-value-investing-rise-again

(And scaredy, you might appreciate this irony… the reason I think value investing will continue to work is that everyone is crazy and will always be crazy… or at least will overreact. With the requisite moments of clarity).

“So isn’t it still timing in the sense that you ahve to say prices are relatively sober right now, as opposed to stupid drunk pricing? How is that not a form of timing.”

This is not market timing because you’re making the decision based on valuations and long-term (say 7-10 year) prospective returns. Market timing involves much shorter timeframes, and also involves the prediction of a specific path (as opposed to just a distant, and approximate, endpoint). So no, I don’t see that as “market timing” based on the conventional understanding of what market timing is.

“even though you analyze for value, the investment has to be made at a specific time. which is…timing.?”

Every investment has to be made at a specific time! If that’s your definition, then everyone on earth is a market timer.

[Rich Toscano]

[quote=svelte][quote=Rich Toscano]

Where we might part ways is in other risk assets. There are areas of the global stock market that — even after this huge rally — are still priced for positive long-term returns. In specific, developed intl value stocks are priced for returns that are slightly under the average stock returns — not great but ok. Emerging value stocks are priced for substantially higher than normal returns.
[/quote]

So here is where I get confused.

I’m pretty sure I’ve heard you say, Rich, that one shouldn’t try and time the market but should invest for the long term as in decades.

But the above sounds like you’re advocating investing in those areas that, at the present time, give the best chance for above average returns.

Is that not timing the market?[/quote]

No, that is not timing the market!

And also no, the thing above that is not what I am saying. I’ll start with that one. I’m not saying you have to invest for decades. I’m saying that you have to consider that the price for stocks is based on decades’ worth of their expected earnings. So, shorter term changes to that earnings stream should not, in theory, change their fair value all that much. (In practice, of course, it often does, but that’s a whole separate topic). But that’s not the same as saying that an investor necessarily needs to hold them for decades.

OK, onto the fun question. This is one that I have strong opinions on, so apologies in advance for what will probably be a surfeit of exclamation points.

Anyway no, a thousand times no — value investing is NOT market timing!

Let me illustrate with an example to start. Let’s say there is a modest condo that, if you bought it, you could rent out for $1,000/month. It’s for sale for $5 million.

Would you buy it? No, of course not. Why would you buy something for $5 mil when it only rents out for $1k/month? It’s way too expensive.

Is this market timing? Again — of course not. You simply evaluated what the investment is worth, and compared that to the actual price (the key point here being that those 2 things can be different).

It’s no different with stocks or anything else.

Market timing entails making guesses about what the market will do over the short term. It’s path dependent.

The thing I’m talking about here (which I describe as value investing as shorthand) entails having an estimate of likely longer term returns, and investing accordingly. It is not path dependent.

Let’s take US stocks as an example. I mentioned that I’m bearish on the S&P500. Is this because of a necessarily dismal economic outlook? No! It’s due to valuation. The S&P500 is very expensive. It is pricing in an unusually great outcome. If you merely get an average or even above-average outcome… it is likely to do poorly.

So my “claim” here is that the S&P500 is likely to generate poor returns over the coming 7-10 years.

But how will that look? Will there be a crash? Will it just waffle along sideways, without going much of anywhere for many years? Something in between?

I have no idea. To answer that question would be market timing.

But what I’m saying here is: I don’t know the path it will take, but I think it’s likely that when we look back a decade from now, this thing will have done pretty poorly. That’s not market timing. It’s simply having an awareness of what something is worth, and thus the likely returns, before you invest in it.

Does this distinction make sense?

[Author]

Posts