I’ve been wondering this I’ve been wondering this question a lot lately, and wonder what others think.
The thing that gets me is that I hear so much about how employers are having a hard time hiring and having to raise wages. Wages are a big part of company costs these days and any boost in wages is not likely to be transitory. (Once you raise someone’s pay it’s really tough to convince them to take a pay cut.)
In the past I’ve heard arguments that there have been pretty big structural changes that have driven inflation down. (ie. Globalization being a huge influence on driving down labor costs) So, I wonder if these structural changes are still going to be sufficient to keep inflation low.
At the same time, long term bond yields remain stubbornly low, so there must a be a lot of investors thinking inflation is just not going to be an issue. Or maybe the low bond yields are totally the result of the fed’s quantitative easing?
Just wondering what others think and why?
an
July 6, 2021 @
11:36 AM
I voted for 4-5% but I’m I voted for 4-5% but I’m hoping for 6%. Like what you said XBoxBoy, once you give someone a raise, it’s almost impossible to take it back without the risk of them leaving. So, unless the entire corporate world decide to give everyone a pay cut, I don’t see wage going down.
brg654
July 8, 2021 @
10:40 PM
an wrote:once you give [quote=an]once you give someone a raise, it’s almost impossible to take it back without the risk of them leaving[/quote]
if everyone gets a 5% raise, you’ll have 5% inflation. if everyone gets a 5% raise this year, and a 2% raise next year, inflation is back down to 2%. that’s the very definition of transitory inflation.
you don’t need wages to fall for it to be transitory. the underlying factors driving lower inflation – an aging population and rising savings rates – hasn’t changed during the covid crisis. in fact, it’s made it worse. workers saw how quickly jobs can disappear, and the saving rate has gone up, even after adjusting for the stimulus. meanwhile, on the demographic front, births just fell to their lowest levels ever, deaths have increased (hopefully just a one-year event due to covid), and immigration stagnated as a result of the pandemic and government policy.
the move in the 10 year bond yield from 1.7 to 1.3 has been driven by a realization that the fed is right and inflation is transitory, along with slower growth prospects as we move back to trend 2-ish% real gdp growth in 2022 and beyond.
an
July 8, 2021 @
10:58 PM
brg654 wrote:if everyone gets [quote=brg654]if everyone gets a 5% raise, you’ll have 5% inflation. if everyone gets a 5% raise this year, and a 2% raise next year, inflation is back down to 2%. that’s the very definition of transitory inflation.[/quote]
I understand that if it goes back to 2%, then that’s transitory. However, I don’t see that happening. We’ll revisit in a year to see if it’s transitory or not.
an
September 13, 2022 @
11:55 AM
an wrote:brg654 wrote:if [quote=an][quote=brg654]if everyone gets a 5% raise, you’ll have 5% inflation. if everyone gets a 5% raise this year, and a 2% raise next year, inflation is back down to 2%. that’s the very definition of transitory inflation.[/quote]
I understand that if it goes back to 2%, then that’s transitory. However, I don’t see that happening. We’ll revisit in a year to see if it’s transitory or not.[/quote]
1 year and 2 months…
an
September 13, 2022 @
12:07 PM
an wrote:I voted for 4-5% but [quote=an]I voted for 4-5% but I’m hoping for 6%. Like what you said XBoxBoy, once you give someone a raise, it’s almost impossible to take it back without the risk of them leaving. So, unless the entire corporate world decide to give everyone a pay cut, I don’t see wage going down.[/quote]
My hope came true. Although last July, I voted for 4-5%, I changed my vote late last year to 6%+.
CA is talking about $22/hr for fast food workers being the law, I doubt wage will ever go down.
The-Shoveler
July 6, 2021 @
1:11 PM
IMO Wages/Rents etc… are IMO Wages/Rents etc… are sticky FED is way behind (maybe on purpose).
At this point I hope I am wrong, But IMO a million dollar 401K is not going to last you too long in 5 years.
sdrealtor
July 6, 2021 @
2:04 PM
It will in Arkansas. It will in Arkansas. Everything is relative
gzz
July 6, 2021 @
2:35 PM
Have a look at the Have a look at the composition of the Fed. Lots of elites and people who represent financial elites.
As long as this is the case, any hint of inflation will be stamped out.
Are there serious signs that the overall price level is higher than the 2016-2019 trendline? Not really. Just anecdotes about perennially volatile commodity prices and comparisons with the unusual 2020 baseline.
I think keeping inflation below a 2% is bad policy, but not one that will be ending anytime soon.
Rich Toscano
July 6, 2021 @
3:28 PM
gzz wrote:
Are there serious [quote=gzz]
Are there serious signs that the overall price level is higher than the 2016-2019 trendline? Not really. Just anecdotes about perennially volatile commodity prices and comparisons with the unusual 2020 baseline.
[/quote]
Yes, there are. Here are the month-to-month changes in core CPI over the past 3 months:
This is Core CPI, so commodities don’t come into it, and these are monthly changes, so there are no base effects from last year.
We’ve rarely seen changes at this level since the early 1980s, and never in the 2016-19 period you cited. Now, whether this is transitory is a whole other (difficult, imo) question. But for now, there absolutely are signs of higher than normal inflationary pressure.
gzz
July 6, 2021 @
6:02 PM
Yes, there are. Here are the
Yes, there are. Here are the month-to-month changes in core CPI over the past 3 months:
Where you worried about runaway deflation then? I don’t remember anyone at the time with that concern. Rather, there’s a common and irrational cognitive bias deep within our society fearing inflation, instilled on us by economic elites who own and dominate the media and demonize the booming and egalitarian 1970s.
At the moment we have catch-up inflation after a deep deflationary recession. That is a good thing.
CPI increase between May 2017 and May 2019: 4.63% over two years.
CPI increase between May 2019 and May 2021: 5.15% over two years.
Given that CPI overstates inflation compared to other measures, doesn’t seem to be very high to me.
Rich Toscano
July 6, 2021 @
8:22 PM
gzz wrote:
Yes, there are. [quote=gzz]
Yes, there are. Here are the month-to-month changes in core CPI over the past 3 months:
Where you worried about runaway deflation then?[/quote]
Nice strawman. I said nothing about “runaway” inflation. I just cited data to show that your claim (“Are there serious signs that the overall price level is higher than the 2016-2019 trendline? Not really”) was wrong.
As for this “Given that CPI overstates inflation compared to other measures, doesn’t seem to be very high to me” — the question wasn’t whether inflation seems high to you. It was whether there is non-anecdotal evidence of above 2016-19 trend inflation. And the answer (when comparing core CPI to itself, btw) is yes.
Rich Toscano
July 6, 2021 @
8:46 PM
BTW the non-strawman version BTW the non-strawman version would have been this:
If you had said in Mar-May 2020 that there is “no sign of inflation BELOW 2016-19 trend,” would I have disagreed? And the answer is, yes, very much so.
XBoxBoy
July 13, 2021 @
6:51 AM
Rich Toscano wrote:
Here are [quote=Rich Toscano]
Here are the month-to-month changes in core CPI over the past 3 months:
This is Core CPI, so commodities don’t come into it, and these are monthly changes, so there are no base effects from last year.
[/quote]
The trend continues or maybe even accelerates:
June: 0.9% = 10.8% annualized[/quote]
Amazing. At what point, if ever, will the USG recognize this inflation? You gotta feel bad for the retirees living of SS and other fixed income continuing to get their 2% COLA increase throughout all this, what a joke!
sdrealtor
July 13, 2021 @
8:35 AM
Current projections are in Current projections are in the 4% range similar to what government and public sector employees see.
Anonymous
July 13, 2021 @
9:01 AM
sdrealtor wrote:Current [quote=sdrealtor]Current projections are in the 4% range similar to what government and public sector employees see.[/quote]
What government employee has seen a 4% COLA raise, can you give one example? Just saw military is estimating a 2.7% increase for 2022. SS got only 1.3% in 2021, way below any reasonable estimate for inflation. Let’s see what happens next year but up till now the USG has not been willing to recognize or admit the inflation reality.
utcsox
July 13, 2021 @
11:56 AM
deadzone wrote:sdrealtor [quote=deadzone][quote=sdrealtor]Current projections are in the 4% range similar to what government and public sector employees see.[/quote]
What government employee has seen a 4% COLA raise, can you give one example? Just saw military is estimating a 2.7% increase for 2022. SS got only 1.3% in 2021, way below any reasonable estimate for inflation. Let’s see what happens next year but up till now the USG has not been willing to recognize or admit the inflation reality.[/quote]
Here is one example.
The San Diego Unified School District on Friday agreed to teacher salary and staffing increases as part of a plan to accelerate learning following unprecedented school closures brought on by COVID-19.
The proposal is part of a tentative agreement between San Diego Unified and the San Diego Education Association, effective through June 30, 2022 pending ratification by both parties.
To help retain teachers, the agreement calls for a 4% on-schedule salary increase effective July 1, 2021 . The district said some 86 teachers will be assigned to help reduce elementary school class sizes, as well as 12 school psychologist positions.
yes good point, I did read yes good point, I did read about generous raises going for San Diego teachers and firefighters I believe. Will wait to see if anything like this happens on the Federal level, I tend to doubt it.
of course inflation is way higher in San Diego county relative to the rest of the country. So 4% is certainly less than actual local inflation.
XBoxBoy
July 6, 2021 @
4:09 PM
gzz wrote:Just anecdotes [quote=gzz]Just anecdotes about perennially volatile commodity prices[/quote]
Ok, my response is no where near as good as Rich’s, but here’s an anecdote. I went to industrial metal supply today to buy a piece of aluminum that would have cost me $40 at the most prepandemic. I paid $81 today! Whole smokes, now that’s inflation!
Part of this is undoubtedly supply chain. But I can’t help but think lots of companies are thinking, “Hmmm… bet I can get away with raising prices, everyone else is.”
sdrealtor
July 6, 2021 @
5:03 PM
Got to McDonalds for another Got to McDonalds for another anecdote and order a basic combo meal. Its almost $10 now with tax
gzz
July 6, 2021 @
6:17 PM
I purchased a desktop I purchased a desktop computer in both 2021 and 2011.
The 2011 was $1462 all in with tax and ship and had a slow first gen SSD of 120GB, 2GB of ram, and a first gen i7.
The one I purchased this year was $550 all-in and has 16gb of much faster ram, a faster m2 1TB SSD, a CPU I imagine is 2 to 20 times faster depending on the task, and uses much less electricity.
Adjusting for quality, inflation was about -15% a year for 10 years. Even valuing them the same, it was about -67% over ten years.
an
July 6, 2021 @
9:17 PM
gzz wrote:I purchased a [quote=gzz]I purchased a desktop computer in both 2021 and 2011.
The 2011 was $1462 all in with tax and ship and had a slow first gen SSD of 120GB, 2GB of ram, and a first gen i7.
The one I purchased this year was $550 all-in and has 16gb of much faster ram, a faster m2 1TB SSD, a CPU I imagine is 2 to 20 times faster depending on the task, and uses much less electricity.
Adjusting for quality, inflation was about -15% a year for 10 years. Even valuing them the same, it was about -67% over ten years.[/quote]wonder what the cost of a mainframe was in the early 70s and the cost of a pc was in mid 80s.
Having used extensively when I was a kid a C64, an 80s IBM PC, and an Apple IIe, the C64 was my favorite. The family C64 was used regularly until about 1995 when we got a $2000 75mhz Pentium with Win95 and AOL. Probably 200MB HDD and CD reader but not burner, which would have added another $500.
sdrealtor
July 7, 2021 @
9:25 AM
In the late 80’s I paid $1000 In the late 80’s I paid $1000 for a 31″ Toshiba TV that weighed as much as a house. Now you can buy a bigger better flat LCD TV for not much more than $100. This isnt deflation its tech advancement. My $10 Happy meal was under $2 then. Thats inflation
gzz
July 7, 2021 @
11:43 AM
SDR, that is literally the SDR, that is literally the definition of deflation: the price of things decline.
There are a lot of reasons it may happen, including progress in technology.
Relatedly: people pointing to commodity prices going up need to explain how the officially inflation stats in the 1980s of ~5% inflation was wrong, because commodity prices were declining.
You never see that happen though, because anecdotes about higher prices are always about impending doom, but not falling prices.
an
July 7, 2021 @
1:49 PM
Price increase & decrease all Price increase & decrease all based on supply vs demand (econ 101). As new product gets introduced to the market, demand for older product goes to 0, hence declining prices. You get constant new product in tech hardware. However, you don’t get any anywhere else. It’s not like there are new kind of milk where demand for older kind of milk goes to 0. The only similar analogy you can give is expired milk cost $0 since no one want it. It’ll get discounted over time till it gets to $0.
gzz
July 7, 2021 @
2:11 PM
“It’s only tech” seeing “It’s only tech” seeing deflation is not true.
Milk, your example, has been generally on a price downtrend. In 2008 milk averaged $3.80 a gallon, in $3.30 in 2020.
Also, “tech” as a catagory would need to include more and more things like cars, solar panels, pet toys, smart light bulbs.
As new product gets introduced to the market, demand for older product goes to 0
Sometimes. On the other hand, a Samsung Galaxy 7 was something like $800 when introduced, $600 a year later, and now off-brand phones with basically the same specs are about $50-100 and still sell to the US poor and developing nations.
sdrealtor
July 7, 2021 @
2:08 PM
That’s not deflation. It’s an That’s not deflation. It’s an entirely different product and technology. It’s not the same thing. Inflation is best measured across the same item like a commodity or a happy meal
gzz
July 7, 2021 @
2:23 PM
That’s not deflation.
There’s
That’s not deflation.
There’s not much point in debating the meaning of a word with someone who has a non-standard definition.
Inflation is best measured across the same item like a commodity or a happy meal
So measure inflation by looking at goods whose price tends to rise, while ignoring those where it tends to fall?
Are the official stats wrong from the 1980s, and instead massive deflation in the 1980s during the long commodity bust?
sdrealtor
July 7, 2021 @
3:34 PM
Another strawman. You are Another strawman. You are getting good at that. You need to meausre inflation across the same thing. The rent for a 1 BR apt, an apple, a happy meal, a gallon of gas. A 30″ crt tv is not the same thing as an lcd flat panel tv. It has the same general functionality but it is not the same. Its not unlike comparing a battery operated sex toy to a hooker. Same output but its just not the same thing
Coronita
July 7, 2021 @
3:55 PM
gzz wrote:I purchased a [quote=gzz]I purchased a desktop computer in both 2021 and 2011.
The 2011 was $1462 all in with tax and ship and had a slow first gen SSD of 120GB, 2GB of ram, and a first gen i7.
The one I purchased this year was $550 all-in and has 16gb of much faster ram, a faster m2 1TB SSD, a CPU I imagine is 2 to 20 times faster depending on the task, and uses much less electricity.
Adjusting for quality, inflation was about -15% a year for 10 years. Even valuing them the same, it was about -67% over ten years.[/quote]
The price of tech gear, computers, tv, etc are a bad example of proving/disproving inflation or deflation.
Computers and tvs in particular will always get faster and cheaper over time, and that’s independent of how everything else is doing. It’s not a great marker of whether we have inflation or not, and it’s more of an exception than the rule, because the cost of a brand new tech of costs significantly more due to R&D costs and costs of making that new tech, but over time, cost of manufacturing and making it more readily available gets cheaper..Partly also as more of the manufacturing is moved overseas to cheaper cost areas, which keeps prices low…
That’s like saying back in the 80ies one pays $1000 for a 300 baud modem but in 2021 you’re paying $80 for a cable modem that’s several X faster than the modem…Technology advances, cheaper manufacturing costs,etc…
Cars … not sure if it’s a good indicator of inflation right now. Car prices are moving up, but I think that has more to do with a parts shortage that’s putting a supply constraint on new cars, and that’s spilling over to the used car markets, which is why a lot of used cars bought in 2017-19 can now sell for about the same price now…Maybe more of supply constraint? Also, it’s hard to compare a likewise car model this year to something similar that was sold 20-30 years ago, because car manufacturers are packing more and more bells and whistles to mark up the car prices.
For example, a 3 series BMW would be in obtainble in the low 30ies but the entry 3 series reach close to mid-40ies to low 50ies now, because of all the bloatware tech they are putting into the cars. And they do this intentionally because most people lease these days…
What I thought was interesting was seeing the prices of simple non-tech things, like plumbing fixtures. I just had 3 moen faucets repaired, and the replacement faucet cartridge were almost $50/each. Last year, they were around $25…
And other things like price of food, price of eating out, seems to have gone up quite a bit.
sdrealtor
July 7, 2021 @
3:56 PM
Exactly. Comparing the same Exactly. Comparing the same thing over time is where you see true measures of inflation. Is gzz’s billing rate the same today as it was 5 years ago? You’re getting the same thing
EconProf
July 6, 2021 @
7:52 PM
I’d guess 6% for this I’d guess 6% for this calendar year and perhaps 8% next year. Since Rich has documented about an 8% rate, annualized, for March, April, and May, this may prove to be conservative, for several reasons:
The government tracks the price of a “basket of goods” (and services) monthly to describe inflation. I’m guessing that there must be a time lag between the sampling and actual reporting that is giving us understated inflation numbers now. We’ve all heard about the tripling of lumber prices, and big jumps in copper, oil, silver, etc. These ingredients, or input prices, will eventually be reflected in the prices of final goods.
In addition, rental housing costs make up over 1/4 of the CPI, and rents are poised to jump given the scarcity of rentals–another lagging indicator. Given the Fed’s rapid increase in the money supply combined with massive deficit spending, inflation will clobber middle and lower income groups. Landlords not so much.
Anonymous
July 7, 2021 @
5:09 PM
Inflation is insane right Inflation is insane right now. Biggest problem is housing and rent on national level. Was on vacation in Montana recently. Talked to a girl working in a bike shop in Helena. She moved there from Bay Area during beginning of Pandemic. Said her rent has doubled in the past year. Was hearing similar stories from many people over there.
Problem is, although wages are also going up in many places like this, there is no way salaries are keeping pace with these housing costs. Something has to give.
Thank you Federal Reserve!
Coronita
July 7, 2021 @
6:08 PM
deadzone wrote:Inflation is [quote=deadzone]Inflation is insane right now. Biggest problem is housing and rent on national level. Was on vacation in Montana recently. Talked to a girl working in a bike shop in Helena. She moved there from Bay Area during beginning of Pandemic. Said her rent has doubled in the past year. Was hearing similar stories from many people over there.
Problem is, although wages are also going up in many places like this, there is no way salaries are keeping pace with these housing costs. Something has to give.
Thank you Federal Reserve![/quote]
Wages never keep up with cost of living and a lot of assets. This should be one of the lessons everyone learns sooner versus later. That’s always how it’s been and always how it will be.
If one stays working at the same place forever, you get maybe a 2-3% raise per year. While the rest of the world’s cost is moving much faster.
So one either fix one’s living/operating expenses as soon as it’s financially possible …or the longer one whats, the great the chances one runs into not being able to keep up, assuming that net income coming in from a job does not really materially change.
This 29-year-old just boosted her salary by $22,000 — here’s how she did it
Jordan Bradford graduated college in 2012 with a degree in psychology. After deciding she didn’t want to pursue further education in the field, she got hired at an association-management firm in her home state of Georgia.
“I had this job for five years, but I wanted something new and believed I was being underpaid,” Bradford told MarketWatch.
She looked to Washington, DC, for new opportunities and found a job as a manager at another association-management firm this past November. Soon after taking on the new role in DC, she realized she was being underpaid there as well. She began actively looking for a new job in April and officially switched companies three weeks ago.
“I now have the same role and same title, but I’m making $22,000 more,” Bradford said. “My original company in D.C. was surprised that I was leaving, but they understood my reasoning.”
This is actually a pretty decent article… The one part that hits home and describes exactly what many of us already knew several years (decades) ago….
Moving around can boost your salary
Moving jobs quickly can be beneficial to your salary, and that’s typically the main reason people do it. Consistently remaining employed at a company for longer than two years will decrease your lifetime earnings by 50%, according to CPA and tax expert Cameron Keng.
While employees who stick at the same company can generally expect a 3% annual raise, changing jobs will generally get you a 10% to 20% increase in your salary, Keng estimates.
“The biggest benefit you often get from changing jobs is a pay increase you wouldn’t have gotten otherwise,” Lee said.
“It’s easier to get your compensation in line with market levels if you move jobs often,” Sutton said. “It’s essentially the only way to do it.
Anonymous
July 7, 2021 @
6:22 PM
In the long run most skilled In the long run most skilled professional workers are compensated based on their experience and skill set. Sure you can job skip around to get large bump in your salary and it can put you ahead of your peers. But at a certain point, you risk promoting yourself out of a job. Your theory only holds water during long periods of economic growth in certain industries perhaps. But if there is a recession, such as Defense in the 90s or .Com in the 2000s, guess who is going to get laid off first? The mid-manager or Senior Engineer making 200K a year, that’s who. And now when they start looking for another job and they are telling the recruiter they make 200K, good luck with that.
Coronita
July 7, 2021 @
7:48 PM
. .
sdrealtor
July 7, 2021 @
11:18 PM
deadzone wrote:In the long [quote=deadzone]In the long run most skilled professional workers are compensated based on their experience and skill set. Sure you can job skip around to get large bump in your salary and it can put you ahead of your peers. But at a certain point, you risk promoting yourself out of a job. Your theory only holds water during long periods of economic growth in certain industries perhaps. But if there is a recession, such as Defense in the 90s or .Com in the 2000s, guess who is going to get laid off first? The mid-manager or Senior Engineer making 200K a year, that’s who. And now when they start looking for another job and they are telling the recruiter they make 200K, good luck with that.[/quote]
My best friend was that guy. He is a commercial real estate finance guy. About the most susceptible to downturns as can be. Youre view of the world had him getting laid off first. Here is what actually happened.
He had spent the last 30 years job hopping and was not attached to a single employer or job. As soon as things started turning south his experience job hopping helped him see what was coming. He went to his employer and told them to lay him off and hire him back as a consultant. He had the guts and confidence to do that. One by one everyone else with his skills got laid off. They kept him on because he was flexible and could take on as much or as litle as they needed him. He picked up a few side projects along the way through his network developed from his 30 years of job hopping. When things got tougher he lowered his billing rate but he never went a week without some work.
Then things started coming back and his rate went back up even higher. Then they hired people back but with his billing rate he was making a ton more. He was making as much as the top level guys. Last year they hired him back at a salary almost double plus bonus and full benefits.
He never got attached or too comfortable with any one job. He bought a home when the numbers made sense and didnt worry about prices dropping more which they did in Newport Beach.
He made a ton more than he would have had he chosen the safe comfortable long term skilled professional route you just espoused. He played golf at least 3 times a week through it all and still does. He traveled extensively, lived a great life and still does. He didnt spend his life talking himself out of opportunties. He finds them, does the math and moves forward when they make sense. Without catching any bottom or top, he has gotten far ahead of people who devoted the last 30 years to a single company. There isnt one path in life
Coronita
July 8, 2021 @
8:27 AM
deadzone wrote:In the long [quote=deadzone]In the long run most skilled professional workers are compensated based on their experience and skill set. Sure you can job skip around to get large bump in your salary and it can put you ahead of your peers. But at a certain point, you risk promoting yourself out of a job. Your theory only holds water during long periods of economic growth in certain industries perhaps. But if there is a recession, such as Defense in the 90s or .Com in the 2000s, guess who is going to get laid off first? The mid-manager or Senior Engineer making 200K a year, that’s who. And now when they start looking for another job and they are telling the recruiter they make 200K, good luck with that.[/quote]
I didn’t originally want to comment on this because this thread was about inflation. But you know you are totally wrong about this in many ways.
1. Many people who move for higher pay don’t make a lateral move. They usually move for higher pay AND a higher position. And provided you are perceived competent in that higher position, if a layoff happens, it’s not necessarily that you will be laid off. For instance, if you moved into a leadership position, chances are (again if you are perceived competent), you’ll probably be the one making the decisions on who to layoff.
2.Also, layoffs aren’t strictly based on cost and how much someone makes. Layoffs often times are done to cull perceived under-performers or negative performers..without having to go through the red tape of firing people with cause by putting them on a performance plan and PIPing them out. There are two kinds of people that are undesirable on a team
a. Negatively productive performers. These are people who by their presence makes the team less efficient and worse off by being there.
b. Under-performers. Those are people that while not be a team detractor, aren’t as effective as someone else could be if you replaced them.
You generally what to get rid of (a) people right away, or get them off your team and have someone else deal with them where as (b) people you aren’t in as much as a hurry and you can keep them around until the next round of layoffs in the future (they might have some historical knowledge that is useful, so you want to keep them around long enough so they can transfer their knowledge to someone else).
While some managers and company insist on using a performance improvement plan as the primary way to get rid of a perceived underperformer, many managers and companies avoid it because especially in CA, it takes too long, and the longer someone you want out hangs around, the greater the chances are that person will bring down work morale for everyone else while they have to go through the 1-2 month PIP process. Layoffs on the other hand dont drag this out. they are silent, and planned, and executed pretty quickly. People don’t get to linger around to drag down morale, and generally you let the person leave on better terms than if you PIP them out. It’s more humane and less likely to receive blowback, because it’s not perceived as personal… You eliminate the position/responsibility because for example the technology/product direction has changed, and since those underperformers didnt try to pick up new skills and new responsibilities, they are no longer needed and can get RIFed in an annual bottom performing layoff. You give them a nice departing package as a condition of not coming back around a sue the company, and since you eliminated the project and job responsibilities with that project, you are covered by all the “at-will” employment clauses in CA. lots of tech companies in the Bay Area do this to weed out the bottom performing 20%…Other companies have no problem and directly firing them… But the end goal is the same…
Obviously, i oversimplified how this works in practice, as there are many rules you have to follow or youll get in trouble, for instance, you can’t have a job opening for the exact same role/position while you are also eliminating that position/role…so often times companies promote someone they want to get rid of into a role/title they don’t plan on keeping…It can be viewed as a “move up” and feels good, but the real purpose isn’t a promotion, but a way to isolate and eliminate a job at a company. Its an alternative way to get rid of people you dont want on the team: “promote out”
(fwiw There are other ways you can get rid of people you dont want, and that involves reassigning them to “death march” projects with an impossible deadline and impossible to complete that is totally boring and tedious..with the intention of making their life so miserable that they quit on their own. Imho thats cruel to do, and if the person really is a “lifer” that doesnt give a rats ass and is there just collecting a paycheck, they might not care, and you are still stuck with them. So it might not work, and which point you have go back to the original 2 options of either PIPing them out or lay them off by eliminating the death march project. I would never do this, but many people do. This is all covered in that book I suggested people read awhile ago:
21 Dirty Tricks at Work: How to Beat the Game of Office Politics so you learn to spot when these sort of games are being played, especially if you work at a big bureaucratic US company that tend to all be the same in the games that are played, despite what leadership tells you how much they care about you (they dont)…you dont have play win… you learn so avoid getting played. https://www.amazon.com/dp/1841126578/ref=cm_sw_r_cp_apa_glt_fabc_JYMHZ89MVEBPAK2QEZZ2 )
This book is also good at explaining at how managers are so good at selling workers to work on a “death march” project and get people really excited about a 3% annual raise for going “above and beyond” when in reality someone that is average performing gets 2%… It’s kinda of a joke, because an effective manager can sell this sort of bullshit to people when the bottomline is that 1% difference for being a star performer, after taxes, translates into a few extra cups of starbucks coffee, where as the 2% performer probably is better off using his spare time doing a “side hustle” as these millenials call and, do be financially better off, not to mention be better healthwise.
It happened awhile ago when i was in a pure technical and a realatively new principal engineer in the group. Although I had not been around long enough, my VP had a short list of engineers who he wanted out. They kept all the principal engineers and leads who were the highest paid, and some of them were pretty new. The axe fell on the several mid and senior engineers who were perceived as old timers that while not paid as well…people had the perception weren’t really that productive and/or difficult to work with. That’s how layoffs typically happen. Almost all managers have a list of employees ranked from top to bottom in their mind and IF there ever was a layoff, they would cull from the list starting with the bottom performers and keep culling until a target cost savings is met.its rare that you would simply get rid of someone because they earned the most. After all, there probably was a reason why you authorized to pay them more when you hired them. Some of my new engineers are a lot more dedicated than some of my old engineers I inherited that i would consider slightly as dead weight. Even if they cost less than my new engineeers, they still cost money, if there are layoffs in the future, theyd be the first to go. And there’s also something to be said if you’re are building a team, you want to staff it with people you pick, not inherit people from the previous team. Often times, those people that stuck around have a lot of baggage and negativity you won’t find in new people and while they might have a slight advantage of having the historical know-how of how things work, their knowledge is only good as far as how willing they are willing to work without being a pain in the ass… Too much baggage and PITA factor, and pretty soon the new guy that costs more willing to do more will catch up, and do a better overall job then a deadweight that only shows up to collect a paycheck.
3. Layoffs also happen a lot that are age/time based, even if it’s an illegal practice. It happens a lot particularly in companies that offer a pension or large stock grant, when an evil management tries to layoff people that have been there a long time…They do this because they don’t want to pay the old timer’s pension or stock benefits for those years of service…or often the perception is that they can find someone that is in their late 20ies early 30ies who would do more work more efficiently… So it’s not unheard of that at these evil companies, out of nowhere some of thes old timers will suddently get PIP’d out , because usually those evil companies use the PIP process to justify firing with cause (hence no unemployment benefits and pension, etc)… So evil management will often just make impossible goals for an individual they want to get rid of just to make sure they fail and have cause to get fired. I’ve seen this happen so many times to people, particular in the defense industry and the public sectors where jobs are not union protected. It’s the only way to get rid of people that would otherwise be a “lifer” at that company. I would never do something like that and if I was asked to do something like that, I think I would quit my job because I wouldn’t want to be part of a company that rolls that way, but that’s just that’s me. Other managers/directors would have no problem throwing someone else under the bus for no reason if it means they get a larger bonus.I saw it happen a few times at Intuit too. A few folks that were otherwise great performers were PIPed out and they came back and sued intuit. I think some of them settled outside of court. One in particular was a really talented woman, and when I heard what they did to her, I was like “what the hell were you thinking?” No matter, because I think the settlement made her whole, and she’s now a director at another company, way better position than she had before.
4. Lastly, often times, moving around, getting those 20+% bumps helps you amass your income much earlier during your career. That larger income upfront potentially enables people to buy/obtain things to fix their living costs earlier. It often enables people, for instance. to purchase a house earlier and/or pay down a house earlier and/or have sufficient money to invest in something that generates passive income sooner. And the sooner that happens, the less likely those individuals will need continue to count on their wage income all the way to 60+. (if they want to continue working, that’s a different story).
I think that’s really ultimate end goal for all what we do, whether we work at a job or have a “side hustle” as some of these millenials call it.
And it’s important to keep that in mind because especially in tech, I don’t think you see many pure engineers still continue to do what they do all the way until they are 60+…..
brg654
July 8, 2021 @
10:34 PM
Coronita wrote:I didn’t [quote=Coronita]I didn’t originally want to comment on this because this thread was about inflation. But you know you are totally wrong about this in many ways.[/quote]
as a mid-level manager in a large company, i can say your entire comment is spot-on.
Coronita
July 7, 2021 @
6:20 PM
also, using the montana relo also, using the montana relo person…thats why im not really sure people who move to a lower cost area are really better off in the long run id they still count on a job to pay for living expenses. yes the cost of rent is lower relative to CA but so is their wages and opportunities maybe…
Anonymous
July 7, 2021 @
6:27 PM
Coronita wrote:also, using [quote=Coronita]also, using the montana relo person…thats why im not really sure people who move to a lower cost area are really better off in the long run id they still count on a job to pay for living expenses. yes the cost of rent is lower relative to CA but so is their wages and opportunities maybe…[/quote]
Well, in the case of low wage work like in a bike shop, they may make as much in Mt as in Santa Cruz so even with rent doubling it would still be far lower cost of living.
But keep in mind people aren’t necessarily relocating out of Ca just for financial reasons. For many I think it is lifestyle reasons.
an
July 7, 2021 @
8:59 PM
In California, you don’t have In California, you don’t have to tell them what you made. So the company can just offer you what the market rate is when there’s a recession.
Anonymous
July 7, 2021 @
9:55 PM
an wrote:In California, you [quote=an]In California, you don’t have to tell them what you made. So the company can just offer you what the market rate is when there’s a recession.[/quote]
Exactly my point. So if you were overpaid previously you will have to be willing to take a major pay cut at your next job.
an
July 7, 2021 @
11:01 PM
deadzone wrote:an wrote:In [quote=deadzone][quote=an]In California, you don’t have to tell them what you made. So the company can just offer you what the market rate is when there’s a recession.[/quote]
Exactly my point. So if you were overpaid previously you will have to be willing to take a major pay cut at your next job.[/quote]
You’d still make more than if you never moved.
The-Shoveler
July 8, 2021 @
2:47 PM
I was just looking at a stat I was just looking at a stat (percentage of US population worth over 1 Million), what surprised me is over 10% of the US population has over 1M socked away (and that is not including the value of your primary).
(if everyone’s a Millionaire no one is)
So if you just socked away your millionth Dollar, get ready, you’re basically just average (OK maybe a little above).
The-Shoveler
July 8, 2021 @
3:04 PM
If inflation is running at 5% If inflation is running at 5% and you’re lending long term money at 2.5%.
Hmmm this could get interesting.
XBoxBoy
July 8, 2021 @
4:35 PM
The-Shoveler wrote:If [quote=The-Shoveler]If inflation is running at 5% and you’re lending long term money at 2.5%.
Hmmm this could get interesting.[/quote]
In a sense this is already happening. 10yr treasuries closed at 1.29 today but were at 1.25 overnight last night. Of course that’s investors lending to the government. If it gets turned around so that investors can borrow at 1.25 with inflation at 5% I would expect the price of assets (think housing and stocks) to continue their frenzied path up.
I’m not sure we can claim inflation is running at 5%, but it seems clear to me that it is running at more than 1.25% so return to investors on treasuries seems to me to be a losing investment. But, what do I know. There must be enough investors interested in the 1.25% return or the bonds wouldn’t be being bought and rates would be rising instead of falling.
Anonymous
July 8, 2021 @
9:01 PM
XBoxBoy wrote:The-Shoveler [quote=XBoxBoy][quote=The-Shoveler]If inflation is running at 5% and you’re lending long term money at 2.5%.
Hmmm this could get interesting.[/quote]
In a sense this is already happening. 10yr treasuries closed at 1.29 today but were at 1.25 overnight last night. Of course that’s investors lending to the government. If it gets turned around so that investors can borrow at 1.25 with inflation at 5% I would expect the price of assets (think housing and stocks) to continue their frenzied path up.
I’m not sure we can claim inflation is running at 5%, but it seems clear to me that it is running at more than 1.25% so return to investors on treasuries seems to me to be a losing investment. But, what do I know. There must be enough investors interested in the 1.25% return or the bonds wouldn’t be being bought and rates would be rising instead of falling.[/quote]
Investors aren’t buying 10yr at 1.25%. The Fed is doing most of the buying.
XBoxBoy
July 9, 2021 @
8:32 AM
deadzone wrote:Investors [quote=deadzone]Investors aren’t buying 10yr at 1.25%. The Fed is doing most of the buying.[/quote]
While I know the fed is buying a lot of treasuries, are they buying more than half? (Which would be my definition of “most”) Do you have any data to back up that claim?
Coronita
July 9, 2021 @
10:04 AM
XBoxBoy wrote:deadzone [quote=XBoxBoy][quote=deadzone]Investors aren’t buying 10yr at 1.25%. The Fed is doing most of the buying.[/quote]
While I know the fed is buying a lot of treasuries, are they buying more than half? (Which would be my definition of “most”) Do you have any data to back up that claim?[/quote]
I will never understand treasuries and bonds. I just haven’t been able to get them to work in my portfolio. I buy a little, not sure why, because they usually make up the negative portion of my long term account.
I just haven’t been able to get them to work in my portfolio. I buy a little, not sure why, because they usually make up the negative portion of my long term account.
People were predicting it’s a great time to buy bonds and treasuries back in march. not really that great.
I have an unrealized gain of 40% in the international junk bond fund EHI from 1/2016 purchase, and it paid out another 40% or so in income, though the income was taxed at full ordinary income rate, so my pretax gain of 80% is not as good as a stock going up that much with lower tax rate that can be deferred forever.
I purchased taxable muni fund GBAB in March 2020 which is up 26%, and paid out about 10% in income.
In general, however, people with large fix rate debt secured by RE should not be buying longer bonds, since they are correlated assets. I couldn’t help myself, because the risk/reward during my entry seemed too good to pass up. I am steadily selling them off as they go up and the correlation with my RE becomes a bigger issue as the RE goes up and dominates my portfolio.
Anonymous
July 9, 2021 @
12:11 PM
XBoxBoy wrote:deadzone [quote=XBoxBoy][quote=deadzone]Investors aren’t buying 10yr at 1.25%. The Fed is doing most of the buying.[/quote]
While I know the fed is buying a lot of treasuries, are they buying more than half? (Which would be my definition of “most”) Do you have any data to back up that claim?[/quote]
Excellent questions.
So for the period since the pandemic started, which is what we are talking about, Fed has purchased approx 2.1 Trillion in treasuries as of April 29th (certainly much higher now).
So not quite 50% but damn close and certainly enough to totally control the interest rates. This is a totally manipulated market. What do you think interest rates would be in a free market with out the Fed’s quantitative easing?
gzz
July 9, 2021 @
12:41 PM
I disagree on the potency of I disagree on the potency of the Fed’s bond purchases on interest rates.
Absent those purchases, the economy would be more depressed, in turn reducing private sector demand for funds, in turn shifting demand to government bonds because of the lack of private offerings. So same rate, but in a different recessionary equilibrium.
Further, non-Fed buyers still purchased $1 trillion+ of treasuries. They would not have done so at such a low rate if they expected rates to spike up because of Fed cession of purchases or inflation.
Anonymous
July 9, 2021 @
12:50 PM
gzz wrote:I disagree on the [quote=gzz]I disagree on the potency of the Fed’s bond purchases on interest rates.
Absent those purchases, the economy would be more depressed, in turn reducing private sector demand for funds, in turn shifting demand to government bonds because of the lack of private offerings. So same rate, but in a different recessionary equilibrium.
Further, non-Fed buyers still purchased $1 trillion+ of treasuries. They would not have done so at such a low rate if they expected rates to spike up because of Fed cession of purchases or inflation.[/quote]
If it weren’t for the Fed, the US Government couldn’t be spending money like a drunken sailor.
The net effect of this policy is to enrich the upper 10% and particularly upper 1%. Whether this is a good policy or not depends on your position.
In other words, if you have a lot of money in stock market or RE, then you love this policy. Everyone else is pretty much being F’d in the rear.
gzz
July 9, 2021 @
1:00 PM
deadzone wrote:
If it weren’t [quote=deadzone]
If it weren’t for the Fed, the US Government couldn’t be spending money like a drunken sailor. [/quote]
Sure, in turn depressing the economy and causing the market interest to decline. That’s my point. The Fed purchases stimulated the economy to a higher level but at the same basic interest rate.
[quote=deadzone]The net effect of this policy is to enrich the upper 10% and particularly upper 1%. Whether this is a good policy or not depends on your position.
In other words, if you have a lot of money in stock market or RE, then you love this policy. Everyone else is pretty much being F’d in the rear.[/quote]
We’ll have full stats later, but the stimmy checks and extended and enlarged unemployment caused the fastest and largest decline in both total and childhood poverty in our records. That’s what happens when there’s a firehose of free money that includes the poor. Here’s some details on this topic:
PPP, on the other hand, increased wealth inequality.
Whatever the net effect, it will primarily be the result of tax and spending decisions of Congress, not the monetary policy of the Fed. The President’s proposed tax plan will reduce inequality and be borne by the 1%.
Anonymous
July 9, 2021 @
1:18 PM
The spending decisions of the The spending decisions of the USG are reliant on Fed support. Again, without the Fed and the manipulated low interest rates the USG could not service their debt. They are painted in a corner.
The stimmy checks were not intended to “help” the poor. They were to induce consumer spending. People making up to 200K were getting checks. My retired parents got checks. Basically a ridiculous amount of money was wasted by giving it to folks who didn’t need it. You are a fool if you truly believe these checks were intended to help poor people.
gzz
July 9, 2021 @
2:52 PM
Again, without the Fed and
Again, without the Fed and the manipulated low interest rates the USG could not service their debt.
Wrong. In fiscal year 2020, net outlays for interest were $345 billion, 1.6 percent of GDP.
You could double the interest rate, and it would still be the pittance of 3.2% of GDP. Oh wait it is fixed rate, so you can’t double the interest rate except on new debt, so it would be maybe 1.7% of GDP.
There’s just no evidence Fed purchases of debt caused long rates to decline. Nations with less aggressive monetary policy also saw rates fall.
All the Fed does is swap actual dollars for dollar-like bonds denominated in dollars. The effect is marginal compared to the bigger factors of demographics and business cycles and fiscal policy.
All the things people say about our monetary policy was said about Japan’s 10-20 years ago, and proved wrong.
Anonymous
July 9, 2021 @
5:00 PM
gzz wrote:
Again, without the [quote=gzz]
Again, without the Fed and the manipulated low interest rates the USG could not service their debt.
Wrong. In fiscal year 2020, net outlays for interest were $345 billion, 1.6 percent of GDP.
You could double the interest rate, and it would still be the pittance of 3.2% of GDP. Oh wait it is fixed rate, so you can’t double the interest rate except on new debt, so it would be maybe 1.7% of GDP.
There’s just no evidence Fed purchases of debt caused long rates to decline. Nations with less aggressive monetary policy also saw rates fall.
All the Fed does is swap actual dollars for dollar-like bonds denominated in dollars. The effect is marginal compared to the bigger factors of demographics and business cycles and fiscal policy.
All the things people say about our monetary policy was said about Japan’s 10-20 years ago, and proved wrong.[/quote]
If you say so. So why then is the Federal Reserve buying all this debt? To manipulate the interest rates and the ultimate goal obviously is to blow up the stock market, RE and other asset bubbles to create the wealth effect. When you say the economy is so great, well no it isn’t. The economy is the Fed. The economy is the Stock Market and housing market. Just like the 2000s, the wealth effect is the only thing driving the economy. If the economy was truly great, or even healthy, you wouldn’t need the Fed to keep printing money to buy debt. Fact is there is no organic market for this debt. Just like how the Fed bailed out all of their banking buddies in 2009 by printing money to purchase garbage mortgage securities. It is truly disgusting.
Coronita
July 9, 2021 @
3:00 PM
deadzone wrote:
The stimmy [quote=deadzone]
The stimmy checks were not intended to “help” the poor. They were to induce consumer spending. People making up to 200K were getting checks. My retired parents got checks. Basically a ridiculous amount of money was wasted by giving it to folks who didn’t need it. You are a fool if you truly believe these checks were intended to help poor people.[/quote]
Um. How were people making 200k+ getting checks? Please explain. I definitely would like to know.
The only stimmy I got was for a few months, I worked for 4 days, furloughed for the 5th, but was paid UI benefits from both the fed and state that ended up being more than how much if I worked that day…
The stimmy checks were not intended to “help” the poor. They were to induce consumer spending. People making up to 200K were getting checks. My retired parents got checks. Basically a ridiculous amount of money was wasted by giving it to folks who didn’t need it. You are a fool if you truly believe these checks were intended to help poor people.[/quote]
Um. How were people making 200k+ getting checks? Please explain. I definitely would like to know.
The only stimmy I got was for a few months, I worked for 4 days, furloughed for the 5th, but was paid UI benefits from both the fed and state that ended up being more than how much if I worked that day…[/quote]
Up to 150K income per family got 100% stimmy, gradually reduced amounts up to 200K
The stimmy checks were not intended to “help” the poor. They were to induce consumer spending. People making up to 200K were getting checks. My retired parents got checks. Basically a ridiculous amount of money was wasted by giving it to folks who didn’t need it. You are a fool if you truly believe these checks were intended to help poor people.[/quote]
Um. How were people making 200k+ getting checks? Please explain. I definitely would like to know.
The only stimmy I got was for a few months, I worked for 4 days, furloughed for the 5th, but was paid UI benefits from both the fed and state that ended up being more than how much if I worked that day…[/quote]
Up to 150K income per family got 100% stimmy, gradually reduced amounts up to 200K[/quote]
Ah, you are talking about the first round of stimmy.
The stimmy checks were not intended to “help” the poor. They were to induce consumer spending. People making up to 200K were getting checks. My retired parents got checks. Basically a ridiculous amount of money was wasted by giving it to folks who didn’t need it. You are a fool if you truly believe these checks were intended to help poor people.[/quote]
Um. How were people making 200k+ getting checks? Please explain. I definitely would like to know.
The only stimmy I got was for a few months, I worked for 4 days, furloughed for the 5th, but was paid UI benefits from both the fed and state that ended up being more than how much if I worked that day…[/quote]
Up to 150K income per family got 100% stimmy, gradually reduced amounts up to 200K[/quote]
Ah, you are talking about the first round of stimmy.[/quote]
two rounds of stimmys had same rules as i recall and now there is another thing coming out for folks with children.
XBoxBoy
July 9, 2021 @
12:42 PM
deadzone wrote:What do you [quote=deadzone]What do you think interest rates would be in a free market with out the Fed’s quantitative easing?[/quote]
Really no idea, but certainly wouldn’t be as low as they are. But many other things would be very different too. I doubt if the economy would be growing like it is for one.
But don’t get me wrong, I don’t disagree that the fed has been very aggressive in holding down rates. While that has caused some bad things, I’m not convinced that on whole it has been worse then if they did nothing to interfere.
Coronita
July 11, 2021 @
8:17 PM
another datapoint of another datapoint of inflation….
Back in August 2019, i bought a whirpool dishwasher model WDF520PADM from home depot for a rental for $277
(i added $95 for a 5 year extended warranty and $25 haul away for a total of $399 before tax.)
Today, the same dishwasher, that my parents want to buy for a rental, before extended warranty and haulway cost is….
1. When people report 1. When people report uncritically 2020-2021 inflation figures, they are biased or uninformed. It is trivial to just report 2019-2021 figures to filter out the pandemic effect.
2. About a third of June’s inflation is from used car prices.
3. The media and sheeple love inflation stories. Not much evidence of expected long inflation when looking at TIPS v regular bonds. Today implied expectations is 2.33%. OMG!!!!!
gzz wrote:1. When people [quote=gzz]1. When people report uncritically 2020-2021 inflation figures, they are biased or uninformed. It is trivial to just report 2019-2021 figures to filter out the pandemic effect.
2. About a third of June’s inflation is from used car prices.
3. The media and sheeple love inflation stories. Not much evidence of expected long inflation when looking at TIPS v regular bonds. Today implied expectations is 2.33%. OMG!!!!!
Do you get out much? I see it everywhere. I’m sipping a coffee right now that went up 10% this year.
I’d love deflating building prices. Working on plans for a multi unit development right now. Would love to see costs drop in couple years when we are ready to go
gzz
July 13, 2021 @
11:37 AM
SDR, I am also drinking SDR, I am also drinking coffee now, an iced Nespresso. The capsules direct from Nestle are the same base 70c each they were 10 years ago. However, my most recent purchase was the best promo the entire time, and worked out to about 54c per capsule. Normally the promos are more like 10% off.
They have free overnight (to my address at least) shipping when you buy $50 worth.
We have the BLS so we don’t have to rely on such anecdotes.
While I am having it black, if I wanted to add milk to it, the price would be about the same as it was when I first purchased it in the 1990s.
sdrealtor
July 13, 2021 @
1:18 PM
gzz wrote:SDR, I am also [quote=gzz]SDR, I am also drinking coffee now, an iced Nespresso. The capsules direct from Nestle are the same base 70c each they were 10 years ago. However, my most recent purchase was the best promo the entire time, and worked out to about 54c per capsule. Normally the promos are more like 10% off.
They have free overnight (to my address at least) shipping when you buy $50 worth.
We have the BLS so we don’t have to rely on such anecdotes.
While I am having it black, if I wanted to add milk to it, the price would be about the same as it was when I first purchased it in the 1990s.[/quote]
Nespresso was a novelty premium product when it first came out and had premium pricing. Now its a commodity. The market for it has fundamentally changed. Not a good example
gzz
July 13, 2021 @
4:05 PM
Nespresso was a novelty
Nespresso was a novelty premium product when it first came out and had premium pricing. Now its a commodity.
The type of coffee you buy goes up in price is a good example of inflation, the type of coffee I buy goes down but is “not a good example”?!?
I am not sure what you mean by “not a good example.”
I think it is another example of someone saying the decline in the market price of something “doesn’t count” as inflation “because reasons.” And in general, of the bizarre cognitive bias people have of thinking inflation is higher than it really is and always accelerating.
Are there any items whose price has declined that is a “good example” of deflation? Clothing? TVs? Furniture? Long distance calls? Computers? Flash drives?
The fact there are reasons prices decline, such as they go from luxury to commodity, doesn’t mean it isn’t deflation. Also I don’t actually agree that Nespresso was a premium item in 2011 and isn’t now. Both years you could buy generic pods for less that were not quite as good as Nestle’s, but fine if you mixed with milk or a chocolate protein shake.
sdrealtor
July 13, 2021 @
8:51 PM
gzz wrote:
Nespresso was a [quote=gzz]
Nespresso was a novelty premium product when it first came out and had premium pricing. Now its a commodity.
The type of coffee you buy goes up in price is a good example of inflation, the type of coffee I buy goes down but is “not a good example”?!?
I am not sure what you mean by “not a good example.”
I think it is another example of someone saying the decline in the market price of something “doesn’t count” as inflation “because reasons.” And in general, of the bizarre cognitive bias people have of thinking inflation is higher than it really is and always accelerating.
Are there any items whose price has declined that is a “good example” of deflation? Clothing? TVs? Furniture? Long distance calls? Computers? Flash drives?
The fact there are reasons prices decline, such as they go from luxury to commodity, doesn’t mean it isn’t deflation. Also I don’t actually agree that Nespresso was a premium item in 2011 and isn’t now. Both years you could buy generic pods for less that were not quite as good as Nestle’s, but fine if you mixed with milk or a chocolate protein shake.[/quote]
You are too funny. My cup of brewed coffee goes up but because you find a way to buy a product with discounts (which by the way may not continue to be available) my example of inflation doesn’t count. You just did exactly what you accused me of.
sdrealtor
April 5, 2022 @
10:06 AM
sdrealtor wrote:gzz wrote:1. [quote=sdrealtor][quote=gzz]1. When people report uncritically 2020-2021 inflation figures, they are biased or uninformed. It is trivial to just report 2019-2021 figures to filter out the pandemic effect.
2. About a third of June’s inflation is from used car prices.
3. The media and sheeple love inflation stories. Not much evidence of expected long inflation when looking at TIPS v regular bonds. Today implied expectations is 2.33%. OMG!!!!!
Do you get out much? I see it everywhere. I’m sipping a coffee right now that went up 10% this year.
I’d love deflating building prices. Working on plans for a multi unit development right now. Would love to see costs drop in couple years when we are ready to go[/quote]
Update
In July my morning coffee went up 10% from 2.40 to 2.65. Just went up another 10%+ to $2.95. That’s 23% in less than a year
Not transitory. Very persistent
scaredyclassic
April 5, 2022 @
2:12 PM
sdrealtor wrote:sdrealtor [quote=sdrealtor][quote=sdrealtor][quote=gzz]1. When people report uncritically 2020-2021 inflation figures, they are biased or uninformed. It is trivial to just report 2019-2021 figures to filter out the pandemic effect.
2. About a third of June’s inflation is from used car prices.
3. The media and sheeple love inflation stories. Not much evidence of expected long inflation when looking at TIPS v regular bonds. Today implied expectations is 2.33%. OMG!!!!!
Do you get out much? I see it everywhere. I’m sipping a coffee right now that went up 10% this year.
I’d love deflating building prices. Working on plans for a multi unit development right now. Would love to see costs drop in couple years when we are ready to go[/quote]
Update
In July my morning coffee went up 10% from 2.40 to 2.65. Just went up another 10%+ to $2.95. That’s 23% in less than a year
Not transitory. Very persistent[/quote]
I got a good deal on a thermos. I’m bringing my hot drinks with me.
brg654
July 13, 2021 @
3:28 PM
gzz wrote:About a third of [quote=gzz]About a third of June’s inflation is from used car prices[/quote]
not only that, but when you exclude pandemic-related services (travel, event admission) and vehicles (new, used, parts, rentals), core inflation was .22% in june, a deceleration from .28% in may and .31% in april. http://econbrowser.com/archives/2021/07/inflation
.22% for 1 month is a 2.67% annualized rate. looking more and more transitory with every data release.
gzz
July 13, 2021 @
3:51 PM
BRG – thanks, I learned BRG – thanks, I learned something from your link.
TIPS spread overstates expected inflation, because it includes three things: inflation expectation, inflation risk premium, and TIPS liquidity premium.
TIPS doesn’t just pay you the inflation measure, it also insures you against inflation, moving the risk from the bond buyer to the bond issuer. That insurance has economic value on top of the expected payment for inflation.
Two market inflation expectation measures that do not have this problem are the an adjusted TIPS measure and a separate measure by the Cleveland Fed. The latter says expected inflation is about 1.6%.
Boy I wish I did live in the Boy I wish I did live in the inflationista fantasy world. I think sustained 4% to 5% inflation would be a wonderful thing for economic growth and reducing inequality.
It would be great for me too! I also have $1M+ of fixed rate debt and more than 100% of my net worth is in inflation-resistant assets (mainly RE, secondarily stocks, plus some pretty 19th century gold coins).
Even my bond-ish high dividend value stocks like KHC would really benefit from inflation because they tend to have a ton of fixed rate long debt and pretty good pricing power.
Alas, my dream and the inflationista nightmare of 5% inflation will only sweeten and haunt our sleeping nights, never to see dawn’s early light.
sdrealtor
July 13, 2021 @
8:54 PM
gzz wrote:Boy I wish I did [quote=gzz]Boy I wish I did live in the inflationista fantasy world. I think sustained 4% to 5% inflation would be a wonderful thing for economic growth and reducing inequality.
It would be great for me too! I also have $1M+ of fixed rate debt and more than 100% of my net worth is in inflation-resistant assets (mainly RE, secondarily stocks, plus some pretty 19th century gold coins).
Even my bond-ish high dividend value stocks like KHC would really benefit from inflation because they tend to have a ton of fixed rate long debt and pretty good pricing power.
Alas, my dream and the inflationista nightmare of 5% inflation will only sweeten and haunt our sleeping nights, never to see dawn’s early light.[/quote]
So just there you admitted that basically your entire net worth is invested in hedges against inflation yet you wonder why you don’t feel or see inflation. Of course you don’t
scaredyclassic
July 13, 2021 @
9:16 PM
Shitty motel room was $200, Shitty motel room was $200, think it was 140 ish not long ago.
200?
Jeeeeeeeez
Reality
July 13, 2021 @
9:48 PM
gzz wrote:
It would be great [quote=gzz]
It would be great for me too! I also have $1M+ of fixed rate debt and more than 100% of my net worth is in inflation-resistant assets (mainly RE, secondarily stocks, plus some pretty 19th century gold coins).
[/quote]
Explain to me how stocks are inflation resistant. Inflation goes up, interest rates are raised in response (one would think), which causes stocks to go down.
XBoxBoy
July 14, 2021 @
7:43 AM
Reality wrote:
Explain to me [quote=Reality]
Explain to me how stocks are inflation resistant. Inflation goes up, interest rates are raised in response (one would think), which causes stocks to go down.[/quote]
If inflation is caused by an overheated economy that is good for stocks. Business is booming, people are buying things, companies are making profits. When the economy is in a deep recession, inflation is likely to be non-existent. Maybe even deflation is present. Times like that are bad for stocks.
Currently we are hearing talk in the news that if inflation goes up, the fed will allow rates to go up and that is bad for companies that need to borrow money which means falling stock prices. (Exactly what you describe) While I don’t disagree with this narrative, I suspect that often the forces of booming business outweigh the forces of rising interest rates. Just depends how those two balance out. Inflation with little to no rising rates is probably good for stocks. Small amounts of inflation with rapidly rising interest rates would probably be pretty bad for stocks.
And looking at all the recent times data indicating we are entering a period of inflation has been release, if there has been a fall in stocks it has been temporary and quickly recovered from.
Anonymous
July 14, 2021 @
8:41 AM
XBoxBoy wrote:Reality [quote=XBoxBoy][quote=Reality]
Explain to me how stocks are inflation resistant. Inflation goes up, interest rates are raised in response (one would think), which causes stocks to go down.[/quote]
If inflation is caused by an overheated economy that is good for stocks. Business is booming, people are buying things, companies are making profits. When the economy is in a deep recession, inflation is likely to be non-existent. Maybe even deflation is present. Times like that are bad for stocks.
Currently we are hearing talk in the news that if inflation goes up, the fed will allow rates to go up and that is bad for companies that need to borrow money which means falling stock prices. (Exactly what you describe) While I don’t disagree with this narrative, I suspect that often the forces of booming business outweigh the forces of rising interest rates. Just depends how those two balance out. Inflation with little to no rising rates is probably good for stocks. Small amounts of inflation with rapidly rising interest rates would probably be pretty bad for stocks.
And looking at all the recent times data indicating we are entering a period of inflation has been release, if there has been a fall in stocks it has been temporary and quickly recovered from.[/quote]
Of course higher interest rates will crush the stock market (and ultimately housing market). However, the Fed is in control with the printing press. Powell and the Fed have made no indication that they are going to take their foot off the gas. In fact it is quite the opposite. As long as they deny inflation, call it transitory, they will not stop. I’m not sure they will ever stop, they’ve been doing QE non-stop since 2009.
sdrealtor
July 14, 2021 @
9:24 AM
If you truly believe what you If you truly believe what you said why don’t you buy the best hedge out there?
Anonymous
July 14, 2021 @
10:04 AM
sdrealtor wrote:If you truly [quote=sdrealtor]If you truly believe what you said why don’t you buy the best hedge out there?[/quote]
Not sure if this is question to me. I’m not predicting the Fed keeps the foot on the gas forever, or if they will be forced to stop QE but it sure looks possible they will keep this up for a long time. Obviously the big money investment firms are buying up a lot of real estate, even now with it at all time highs, so this clearly indicates they believe the Fed is not going to stop.
For sure RE is a great inflation hedge. But at these prices? Serious question to sdr, if you just inherited say 5 million bucks, would you invest it all in RE at today’s prices? Or some portion? There is serious risk at these prices. Yes if inflation goes ballistic it would work out. If there is a market crash you could lose your shirt. In my mind it is about 50/50 between those two scenarios.
sdrealtor
July 14, 2021 @
11:32 AM
deadzone wrote:sdrealtor [quote=deadzone][quote=sdrealtor]If you truly believe what you said why don’t you buy the best hedge out there?[/quote]
Not sure if this is question to me. I’m not predicting the Fed keeps the foot on the gas forever, or if they will be forced to stop QE but it sure looks possible they will keep this up for a long time. Obviously the big money investment firms are buying up a lot of real estate, even now with it at all time highs, so this clearly indicates they believe the Fed is not going to stop.
For sure RE is a great inflation hedge. But at these prices? Serious question to sdr, if you just inherited say 5 million bucks, would you invest it all in RE at today’s prices? Or some portion? There is serious risk at these prices. Yes if inflation goes ballistic it would work out. If there is a market crash you could lose your shirt. In my mind it is about 50/50 between those two scenarios.[/quote]
You don’t have to invest here. There are plenty of places where it’s not nearly as crazy. To answer your question I would invest a good portion in income producing real estate. Rents will follow inflation. I’m actually in the early stages of a rather larger investment along these lines. I’d rather play golf and drink wine then work.
XBoxBoy
July 14, 2021 @
7:45 AM
gzz wrote:Boy I wish I did [quote=gzz]Boy I wish I did live in the inflationista fantasy world. I think sustained 4% to 5% inflation would be a wonderful thing for economic growth and reducing inequality.
[/quote]
Gzz, can you explain why you think high inflation would cause reducing inequality?
The-Shoveler
July 14, 2021 @
10:18 AM
IMO the FED is kind of IMO the FED is kind of trapped with “pedal to the metal”.
Having a long term stock market crash would put most pension plans into BK.
And probably end a lot of 401K millionaires dreams.
(not that a million will go very far in 5-10 years IMO).
Anonymous
July 14, 2021 @
10:29 AM
The-Shoveler wrote:IMO the [quote=The-Shoveler]IMO the FED is kind of trapped with “pedal to the metal”.
Having a long term stock market crash would put most pension plans into BK.
And probably end a lot of 401K millionaires dreams.
(not that a million will go very far in 5-10 years IMO).[/quote]
Exactly, they are definitely trapped and I think that is the biggest reason RE is going ape-shit right now. Everyone is desperate for inflation hedge. But on the other hand, our Fed controlled Fiat financial system by definition results in booms and busts. You can’t have a perpetual boom. At some point there needs to be a bust so you can re-inflate another bubble in the future for a new boom.
sdrealtor
July 14, 2021 @
11:36 AM
deadzone wrote:The-Shoveler [quote=deadzone][quote=The-Shoveler]IMO the FED is kind of trapped with “pedal to the metal”.
Having a long term stock market crash would put most pension plans into BK.
And probably end a lot of 401K millionaires dreams.
(not that a million will go very far in 5-10 years IMO).[/quote]
Exactly, they are definitely trapped and I think that is the biggest reason RE is going ape-shit right now. Everyone is desperate for inflation hedge. But on the other hand, our Fed controlled Fiat financial system by definition results in booms and busts. You can’t have a perpetual boom. At some point there needs to be a bust so you can re-inflate another bubble in the future for a new boom.[/quote]
The smartest guy in the room doesn’t dictate the real estate market, the stupidest one with a lot of money does. You remind me of a lot of smart people I’ve run into who think real estate prices don’t make sense and miss opportunities they talk themselves out of. The most successful real estate investors I see look at current math and don’t over think things.
Anonymous
July 14, 2021 @
11:49 AM
sdrealtor wrote:deadzone [quote=sdrealtor][quote=deadzone][quote=The-Shoveler]IMO the FED is kind of trapped with “pedal to the metal”.
Having a long term stock market crash would put most pension plans into BK.
And probably end a lot of 401K millionaires dreams.
(not that a million will go very far in 5-10 years IMO).[/quote]
Exactly, they are definitely trapped and I think that is the biggest reason RE is going ape-shit right now. Everyone is desperate for inflation hedge. But on the other hand, our Fed controlled Fiat financial system by definition results in booms and busts. You can’t have a perpetual boom. At some point there needs to be a bust so you can re-inflate another bubble in the future for a new boom.[/quote]
The smartest guy in the room doesn’t dictate the real estate market, the stupidest one with a lot of money does. You remind me of a lot of smart people I’ve run into who think real estate prices don’t make sense and miss opportunities they talk themselves out of. The most successful real estate investors I see look at current math and don’t over think things.[/quote]
You are right about that. But then again I have also been burned by market crashes in the past and understand that history usually repeats itself.
Obviously SD RE at these prices there is no way you could be anywhere close to cash flow positive by renting. I take it there are other parts of the Country you like for income producing RE?
I so own some rentals South of the border, thinking about expanding down there if anything.
sdrealtor
July 14, 2021 @
12:50 PM
deadzone wrote:sdrealtor [quote=deadzone][quote=sdrealtor][quote=deadzone][quote=The-Shoveler]IMO the FED is kind of trapped with “pedal to the metal”.
Having a long term stock market crash would put most pension plans into BK.
And probably end a lot of 401K millionaires dreams.
(not that a million will go very far in 5-10 years IMO).[/quote]
Exactly, they are definitely trapped and I think that is the biggest reason RE is going ape-shit right now. Everyone is desperate for inflation hedge. But on the other hand, our Fed controlled Fiat financial system by definition results in booms and busts. You can’t have a perpetual boom. At some point there needs to be a bust so you can re-inflate another bubble in the future for a new boom.[/quote]
The smartest guy in the room doesn’t dictate the real estate market, the stupidest one with a lot of money does. You remind me of a lot of smart people I’ve run into who think real estate prices don’t make sense and miss opportunities they talk themselves out of. The most successful real estate investors I see look at current math and don’t over think things.[/quote]
You are right about that. But then again I have also been burned by market crashes in the past and understand that history usually repeats itself.
Obviously SD RE at these prices there is no way you could be anywhere close to cash flow positive by renting. I take it there are other parts of the Country you like for income producing RE?
I so own some rentals South of the border, thinking about expanding down there if anything.[/quote]
property is in San Diego and rent more than covers the carrying cost. However the upside is the lot and it’s zoning which is developable into multiunit in a gentrifying area with a great future over the next 5 to 10 years.That’s as much as I’ll say
Just went back and had an OMG moment. You think investing here is crazy but you invest south of the border? Thats a serious wtf for me
gzz
July 14, 2021 @
12:23 PM
I think that is the biggest
I think that is the biggest reason RE is going ape-shit right now. Everyone is desperate for inflation hedge.
That’s not what the bond market shows.
Relative TIPS pricing does not show any “desperation” for inflation hedges. Nor does the classic hedge of gold.
Moreover, most investments are fairly protected from inflation. it isn’t just RE. The main ones that are not are fixed rate long term debt instruments themselves and companies that hold a lot of them, such as mortgage REITs.
Obviously SD RE at these prices there is no way you could be anywhere close to cash flow positive by renting.
Depends on your cost of funds. If you have a lot of cash sitting around making 1.35% in ten year treasuries and then taxed, your money would certainly do better in RE.
Moreover, “cash flow positive” is certainly nice, but also arbitrary. An investment that qualifies with a 30 year mortgage may not with a 15.
Nominal RE prices and rents both tend to go up, and even very slow appreciation of 1% nominal produces large equity gains, even if there is no “cash flow positive” benefit in the first year.
Frankly if you require a RE investment to immediately cash flow out, maybe you shouldn’t be investing so aggressively.
Anonymous
July 14, 2021 @
1:13 PM
How can you take the bond How can you take the bond market seriously when the Fed is buying nearly half of all treasuries issued in the last yaer? This market is totally manipulated.
gzz
July 14, 2021 @
12:32 PM
On the cash flow point, take On the cash flow point, take this recent closing:
I know this market, this would rent for about $2400/mo to a long term renter. If it can be AirBNBed much more but let’s put that aside.
HOA + tax + ins would be $827/mo. So net rent would be $1573, or $18876 a year.
That’s an immediate return of 3.97% on the purchase price, and far better than bonds. And in my view about as safe, if not as liquid. And RE is far more tax advantaged.
Assume only a 1% appreciation, however, and the 3.97% becomes 4.97%. Add in 1% rent growth and it goes up to 5.03%. And 1% increase in price and rent is being IMO unreasonably conservative if you are doing long term planning, though of course it could be that low for a few years.
Anonymous
July 14, 2021 @
1:23 PM
gzz wrote:On the cash flow [quote=gzz]On the cash flow point, take this recent closing:
I know this market, this would rent for about $2400/mo to a long term renter. If it can be AirBNBed much more but let’s put that aside.
HOA + tax + ins would be $827/mo. So net rent would be $1573, or $18876 a year.
That’s an immediate return of 3.97% on the purchase price, and far better than bonds. And in my view about as safe, if not as liquid. And RE is far more tax advantaged.
Assume only a 1% appreciation, however, and the 3.97% becomes 4.97%. Add in 1% rent growth and it goes up to 5.03%. And 1% increase in price and rent is being IMO unreasonably conservative if you are doing long term planning, though of course it could be that low for a few years.[/quote]
Seriously there are people paying $2400 for 1 bed 1 bath long term? I guess I’ll take your word for it.
sdrealtor
July 14, 2021 @
4:23 PM
A 1 br place in La Costa is A 1 br place in La Costa is $2k. A lot more in Carmel Valley
Anonymous
July 15, 2021 @
8:43 AM
sdrealtor wrote:A 1 br place [quote=sdrealtor]A 1 br place in La Costa is $2k. A lot more in Carmel Valley[/quote]
But who would rent that long term at that price? What is your definition of long term? May as well buy the place but 1/1 condos are about the worst/riskiest investment to make at all time market highs.
an
July 15, 2021 @
9:14 AM
If I win a $5m lottery today, If I win a $5m lottery today, I’d spend about 80% of it in SD RE right now.
Anonymous
July 15, 2021 @
11:00 AM
an wrote:If I win a $5m [quote=an]If I win a $5m lottery today, I’d spend about 80% of it in SD RE right now.[/quote]
Obviously a lot of people share your sentiment which is why the market is going ape-shit right now. That’s what super low interest rates and expectation for endless Fed support will do. As long as everyone thinks prices will go up in perpetuity, there is no perceived risk. For now at least, the Fed has taken risk out of the equation since they have been and continue to buy everything (including mortgage backed securities).
an
July 15, 2021 @
11:21 AM
deadzone wrote:an wrote:If I [quote=deadzone][quote=an]If I win a $5m lottery today, I’d spend about 80% of it in SD RE right now.[/quote]
Obviously a lot of people share your sentiment which is why the market is going ape-shit right now. That’s what super low interest rates and expectation for endless Fed support will do. As long as everyone thinks prices will go up in perpetuity, there is no perceived risk. For now at least, the Fed has taken risk out of the equation since they have been and continue to buy everything (including mortgage backed securities).[/quote]
I don’t buy investment properties with expectation that it will always go up in perpetuity. The reasons why I would buy today is the same reasons I bought between 2008-2018.
Anonymous
July 15, 2021 @
12:05 PM
an wrote:deadzone wrote:an [quote=an][quote=deadzone][quote=an]If I win a $5m lottery today, I’d spend about 80% of it in SD RE right now.[/quote]
Obviously a lot of people share your sentiment which is why the market is going ape-shit right now. That’s what super low interest rates and expectation for endless Fed support will do. As long as everyone thinks prices will go up in perpetuity, there is no perceived risk. For now at least, the Fed has taken risk out of the equation since they have been and continue to buy everything (including mortgage backed securities).[/quote]
I don’t buy investment properties with expectation that it will always go up in perpetuity. The reasons why I would buy today is the same reasons I bought between 2008-2018.[/quote]
Yes but today you’ve reaped the benefits of monumental RE price boom from 2008-2018. Not realistic to expect similar gains from current pricing. Even more so since current pricing is even more distorted due to Covid phenomena which is not likely to continue.
sdrealtor
July 15, 2021 @
12:36 PM
deadzone wrote:an [quote=deadzone][quote=an][quote=deadzone][quote=an]If I win a $5m lottery today, I’d spend about 80% of it in SD RE right now.[/quote]
Obviously a lot of people share your sentiment which is why the market is going ape-shit right now. That’s what super low interest rates and expectation for endless Fed support will do. As long as everyone thinks prices will go up in perpetuity, there is no perceived risk. For now at least, the Fed has taken risk out of the equation since they have been and continue to buy everything (including mortgage backed securities).[/quote]
I don’t buy investment properties with expectation that it will always go up in perpetuity. The reasons why I would buy today is the same reasons I bought between 2008-2018.[/quote]
Yes but today you’ve reaped the benefits of monumental RE price boom from 2008-2018. Not realistic to expect similar gains from current pricing. Even more so since current pricing is even more distorted due to Covid phenomena which is not likely to continue.[/quote] You were saying the same thing back going back to beginninng of the recorvery and through it. You always have an answer why its a bad idea
an
July 15, 2021 @
12:55 PM
deadzone wrote:Yes but today [quote=deadzone]Yes but today you’ve reaped the benefits of monumental RE price boom from 2008-2018. Not realistic to expect similar gains from current pricing. Even more so since current pricing is even more distorted due to Covid phenomena which is not likely to continue.[/quote]
When I bought in 2008-2018, I wasn’t expecting a monumental RE price boom. It wasn’t part of the calculation/reason why I bought. It’s still not part of the calculation/reason why I am buying today. Price appreciation is the cherry on top but not the cake.
Also, how can you be sure we won’t see even faster price increase?
Anonymous
July 15, 2021 @
3:14 PM
an wrote:deadzone wrote:Yes [quote=an][quote=deadzone]Yes but today you’ve reaped the benefits of monumental RE price boom from 2008-2018. Not realistic to expect similar gains from current pricing. Even more so since current pricing is even more distorted due to Covid phenomena which is not likely to continue.[/quote]
When I bought in 2008-2018, I wasn’t expecting a monumental RE price boom. It wasn’t part of the calculation/reason why I bought. It’s still not part of the calculation/reason why I am buying today. Price appreciation is the cherry on top but not the cake.
Also, how can you be sure we won’t see even faster price increase?[/quote]
Yes, just wanted to make sure you understood that these price gains were one hell of a cherry on top. Nobody predicted this, particularly the pandemic related RE craze. even if sdr claims to have been nostradamus.
We are in unprecedented times. Common sense and basic math say price gains and bubbles in financial markets cannot go parabolic forever. They always crash or have some major correction at some point. But the Fed has kept this up pretty consistently since 2009, using this massive asset purchase program (QE) that has never been done before in the history of the U.S. The only comparable example where this has been done before is Japan and that is a much smaller scale.
The main thing you have going for you even when purchasing at today’s massively inflated prices is you know the Fed has your back. They REALLY want home prices to be high, stay high and go higher. Why else would they continue to print money to buy mortgage securities? This made sense in 2009 with the collapse of the mortgage markets, but why didn’t they ever stop and why are they still doing it in 2021???
The-Shoveler
July 15, 2021 @
3:19 PM
IMO the FED and PTB are IMO the FED and PTB are trying to copy China in this regard.
What’s it been 35 years or more LOL.
But maybe I am wrong.
sdrealtor
July 15, 2021 @
4:22 PM
No one predicted this. Im the No one predicted this. Im the first to admit I didn’t see this coming
an
July 16, 2021 @
7:56 AM
deadzone wrote:
Yes, just [quote=deadzone]
Yes, just wanted to make sure you understood that these price gains were one hell of a cherry on top. Nobody predicted this, particularly the pandemic related RE craze. even if sdr claims to have been nostradamus. [/quote] Let me repeat again, appreciation was never the main part of my calculation on whether I should buy a rental or not. Not between 2008-2018 and it’s still not today. So, I’m not sure what you’re getting at here.
[quote=deadzone]We are in unprecedented times. Common sense and basic math say price gains and bubbles in financial markets cannot go parabolic forever. They always crash or have some major correction at some point. But the Fed has kept this up pretty consistently since 2009, using this massive asset purchase program (QE) that has never been done before in the history of the U.S. The only comparable example where this has been done before is Japan and that is a much smaller scale.
The main thing you have going for you even when purchasing at today’s massively inflated prices is you know the Fed has your back. They REALLY want home prices to be high, stay high and go higher. Why else would they continue to print money to buy mortgage securities? This made sense in 2009 with the collapse of the mortgage markets, but why didn’t they ever stop and why are they still doing it in 2021???[/quote]The Fed have been around for a long time now, so, it’s nothing new. Also, let me repeat again since you don’t quite get it, appreciation is not part of the main reason why I buy rentals. As long as rents are increasing, that’s all that matter. So, it matter less to me if the Fed really want home prices to be high or not. I don’t intend to sell, so price appreciation only hurt me from buying more rental if rent doesn’t keep up.
Anonymous
July 16, 2021 @
8:48 AM
an wrote:deadzone wrote:
Yes, [quote=an][quote=deadzone]
Yes, just wanted to make sure you understood that these price gains were one hell of a cherry on top. Nobody predicted this, particularly the pandemic related RE craze. even if sdr claims to have been nostradamus. [/quote] Let me repeat again, appreciation was never the main part of my calculation on whether I should buy a rental or not. Not between 2008-2018 and it’s still not today. So, I’m not sure what you’re getting at here.
[quote=deadzone]We are in unprecedented times. Common sense and basic math say price gains and bubbles in financial markets cannot go parabolic forever. They always crash or have some major correction at some point. But the Fed has kept this up pretty consistently since 2009, using this massive asset purchase program (QE) that has never been done before in the history of the U.S. The only comparable example where this has been done before is Japan and that is a much smaller scale.
The main thing you have going for you even when purchasing at today’s massively inflated prices is you know the Fed has your back. They REALLY want home prices to be high, stay high and go higher. Why else would they continue to print money to buy mortgage securities? This made sense in 2009 with the collapse of the mortgage markets, but why didn’t they ever stop and why are they still doing it in 2021???[/quote]The Fed have been around for a long time now, so, it’s nothing new. Also, let me repeat again since you don’t quite get it, appreciation is not part of the main reason why I buy rentals. As long as rents are increasing, that’s all that matter. So, it matter less to me if the Fed really want home prices to be high or not. I don’t intend to sell, so price appreciation only hurt me from buying more rental if rent doesn’t keep up.[/quote]
Understood. But, you are wrong about Fed. This IS something new. The QE program (i.e. Fed artificially inflating markets by purchasing treasuries and MBS) has only been happening since 2009, and is on hyper overdrive during pandemic. This is the primary driver for the economy and asset prices and is unprecedented in history.
So you are relying on continued Rent increases to justify RE purchase at today’s prices. Rent has ballooned in the last few years, is that realistic to think it will continue to appreciate? Perhaps but again only due to Fed induced inflation in my opinion.
an
July 16, 2021 @
9:11 AM
deadzone wrote:Understood. [quote=deadzone]Understood. But, you are wrong about Fed. This IS something new. The QE program (i.e. Fed artificially inflating markets by purchasing treasuries and MBS) has only been happening since 2009, and is on hyper overdrive during pandemic. This is the primary driver for the economy and asset prices and is unprecedented in history.
So you are relying on continued Rent increases to justify RE purchase at today’s prices. Rent has ballooned in the last few years, is that realistic to think it will continue to appreciate? Perhaps but again only due to Fed induced inflation in my opinion.[/quote]
QE might be new but Fed manipulation isn’t new. That’s what they’re there for. So, QE is just one weapon w/in their arsenal.
As for relying on continued rent increase, rent has been increasing for decades. What make you think it’ll be different this time? Also, I’m not relying on continued rent increase. I’m relying on good renters paying rent. Rent increase is cherry on top too. I don’t make decision on buying rentals based on some assumption about rent increase. I buy rentals based on the current market rent. So, unless I have data to persuade me that rent will decline over the medium to long term, I don’t use rent projection as part of my calculation.
Anonymous
July 16, 2021 @
11:22 AM
an wrote: So, QE is just one [quote=an] So, QE is just one weapon w/in their arsenal.
[/quote]
Well it is a mighty powerful weapon. QE was first utilized as an unprecedented and extreme measure in 2009 in response to the frozen debt markets and the cratering economy. Now all these years later they never stopped doing it. Makes you realize that in reality the economy never recovered and it is 100% reliant on Fed support. There is no other logical reason why they would continue this if not for that reality.
Look what happened when Powell first came in. He started “tapering” fed purchases in 2018 and when the stock market started dropping towards the end of the year, he immediately pulled a 180 and said no we aren’t going to taper. This just in response to 10% drop in the stock market. This is all the proof you need to see what the Fed’s real mandate is.
an
July 16, 2021 @
11:44 AM
deadzone wrote:Makes you [quote=deadzone]Makes you realize that in reality the economy never recovered and it is 100% reliant on Fed support.[/quote]
How many years have to past before the current reality become a reality for you? The Fed is not going away and they will not stand back and do nothing.
Anonymous
July 16, 2021 @
12:49 PM
an wrote:deadzone wrote:Makes [quote=an][quote=deadzone]Makes you realize that in reality the economy never recovered and it is 100% reliant on Fed support.[/quote]
How many years have to past before the current reality become a reality for you? The Fed is not going away and they will not stand back and do nothing.[/quote]
It has become a reality for me that Fed will stop at nothing to “try” to prop up markets, and up till now that has been successful. I don’t have confidence they will be able to keep this charade up forever. But that is the clear case for going all in on RE today, that the Fed support (and ultimate inflation) will never stop. I’m not arguing that this is not going to happen.
Coronita
July 15, 2021 @
4:47 PM
an wrote:deadzone wrote:an [quote=an][quote=deadzone][quote=an]If I win a $5m lottery today, I’d spend about 80% of it in SD RE right now.[/quote]
Obviously a lot of people share your sentiment which is why the market is going ape-shit right now. That’s what super low interest rates and expectation for endless Fed support will do. As long as everyone thinks prices will go up in perpetuity, there is no perceived risk. For now at least, the Fed has taken risk out of the equation since they have been and continue to buy everything (including mortgage backed securities).[/quote]
I don’t buy investment properties with expectation that it will always go up in perpetuity. The reasons why I would buy today is the same reasons I bought between 2008-2018.[/quote]
Cashflow baby!
gzz
July 15, 2021 @
5:45 PM
DZ and SDR have a rare moment DZ and SDR have a rare moment of agreement, and as in the prior time they are wrong.
“Nobody predicted this”
I didn’t exactly phrase it “ I predict” but I said a lot of times here 2014-2019 that while fundamentals point to 5-10% price gains, there was a very good chance of a new bubble and it was prudent to buy in and take advantage. And I think I was speaking what a lot of others were thinking.
From Aug 2019:
“ In terms of psychology and momentum, all the bulls from the past 5-10 years who will be doing refis will suddenly see their already profitable investments become more so as they cut their monthly payments.
Are you opposed to riding the next bubble up on principle? I am a bear at heart, I am net short US equities. But I have shorted enough bubbles the past 15 years to know that another RE bubble is a-brewin’. ”
sdrealtor
July 15, 2021 @
9:31 PM
C’mon man! You didn’t come C’mon man! You didn’t come close to predicting this. No one did! This ? This was 30%+ gains
Put down the crack pipe
Anonymous
July 15, 2021 @
9:59 PM
sdrealtor wrote:C’mon man! [quote=sdrealtor]C’mon man! You didn’t come close to predicting this. No one did! This ? This was 30%+ gains
Put down the crack pipe[/quote]
But on that point, you have to consider that as Covid (and related policies) roll back, these unnatural RE and asset gains are going to reverse. Between the massive QE, mortgage and rent moratorium, stimulus, PPP loans, unemployment, etc. etc. those are all driving this craziness.
Plus if the “work at home” paradigm is a significant factor, I hate to break it to the entitle millenials but the majority of you are going to get called back to the office this year. The permanent remote work might be okay for a few niche tech and programming jobs but not for the majority of jobs. And I’m still very skeptical about how productive these folks are even in Tech. With all the government handouts, massive stock gains and share buybacks, it’s not like most companies even have to be productive or efficient to make money.
sdrealtor
July 15, 2021 @
10:23 PM
Don’t assume they are going Don’t assume they are going to roll back. They will some places but not all. The pandemic has re shuffled many people’s priorities
Anonymous
July 16, 2021 @
8:43 AM
sdrealtor wrote:Don’t assume [quote=sdrealtor]Don’t assume they are going to roll back. They will some places but not all. The pandemic has re shuffled many people’s priorities[/quote]
Perhaps but I don’t believe the work at home thing will be permanent for most folks. Covid caused a giant 1+ year of people getting paid to sit at home and in most cases do nothing. Not sustainable.
sdrealtor
July 16, 2021 @
9:38 AM
deadzone wrote:sdrealtor [quote=deadzone][quote=sdrealtor]Don’t assume they are going to roll back. They will some places but not all. The pandemic has re shuffled many people’s priorities[/quote]
Perhaps but I don’t believe the work at home thing will be permanent for most folks. Covid caused a giant 1+ year of people getting paid to sit at home and in most cases do nothing. Not sustainable.[/quote]
Your glass is always half empty
Anonymous
July 16, 2021 @
10:49 AM
sdrealtor wrote:deadzone [quote=sdrealtor][quote=deadzone][quote=sdrealtor]Don’t assume they are going to roll back. They will some places but not all. The pandemic has re shuffled many people’s priorities[/quote]
Perhaps but I don’t believe the work at home thing will be permanent for most folks. Covid caused a giant 1+ year of people getting paid to sit at home and in most cases do nothing. Not sustainable.[/quote]
Your glass is always half empty[/quote]
What is half empty about that comment? I personally don’t like that American’s have been getting paid to sit on their asses for over a year doing almost nothing. But whether or not I like it doesn’t change the fact that it happened. Perhaps you have never held a real job so cannot relate but I don’t believe most folks are equipped to work at home and freelance all the time like a realtor.
scaredyclassic
July 16, 2021 @
10:52 AM
Have you guys heard of David Have you guys heard of David Graeter’s book BULLSHIT JOBS, which argues that most jobs are just unnecessary unproductive useless bullshit that could disappear without any problem. He’s a pretty smart economist, so…maybe people are embracing the message?
Anonymous
July 16, 2021 @
11:03 AM
scaredyclassic wrote:Have you [quote=scaredyclassic]Have you guys heard of David Graeter’s book BULLSHIT JOBS, which argues that most jobs are just unnecessary unproductive useless bullshit that could disappear without any problem. He’s a pretty smart economist, so…maybe people are embracing the message?[/quote]
Yes I think there is a lot of truth to that. But if anything what work at home might be uncovering is the reality that half of the people in the office aren’t even needed. This would argue that there should be mass layoffs if companies were actually worried about profit and productivity. But with all the government aid during pandemic they were encouraged to keep the “stiffs” on the payroll. So once all the Pandemic policies go away (if they ever do), and companies actually need to be efficient, there should be less jobs available.
sdrealtor
July 16, 2021 @
1:19 PM
deadzone wrote:sdrealtor [quote=deadzone][quote=sdrealtor][quote=deadzone][quote=sdrealtor]Don’t assume they are going to roll back. They will some places but not all. The pandemic has re shuffled many people’s priorities[/quote]
Perhaps but I don’t believe the work at home thing will be permanent for most folks. Covid caused a giant 1+ year of people getting paid to sit at home and in most cases do nothing. Not sustainable.[/quote]
Your glass is always half empty[/quote]
What is half empty about that comment? I personally don’t like that American’s have been getting paid to sit on their asses for over a year doing almost nothing. But whether or not I like it doesn’t change the fact that it happened. Perhaps you have never held a real job so cannot relate but I don’t believe most folks are equipped to work at home and freelance all the time like a realtor.[/quote]
Spent 15 years in corporate America including a stint in the World Trade Center. Lots of people were productive.
Anonymous
July 16, 2021 @
2:39 PM
sdrealtor wrote:
Spent 15 [quote=sdrealtor]
Spent 15 years in corporate America including a stint in the World Trade Center. Lots of people were productive.[/quote]
I’m talking about the lack of productivity specifically throughout pandemic and with people “working” from home, getting paid to do virtually nothing.
sdrealtor
July 16, 2021 @
2:48 PM
I should have separated the I should have separated the comments. I knew what you meant
gzz
July 16, 2021 @
11:25 AM
C’mon man! You didn’t come
C’mon man! You didn’t come close to predicting this. No one did! This ? This was 30%+ gains
I literally said less than 2 years ago “another RE bubble is a-brewin’”
I also put my $ into it. When I purchased property #3 in 2016 it took me from about 155% of my net worth in SD RE to about 200%. That’s as wildly bullish as my conservative disposition permits.
My view the whole time was that SD RE (1) was highly undervalued for a variety of reasons, the largest of which was that the interest rate decline was permanent (2) the biggest reason increases were not even larger was conservative appraisals based on outdated comps (3) there was a very good chance steady large returns would cause a new irrational speculative bubble.
sdrealtor
July 16, 2021 @
1:24 PM
gzz wrote:
C’mon man! You [quote=gzz]
C’mon man! You didn’t come close to predicting this. No one did! This ? This was 30%+ gains
I literally said less than 2 years ago “another RE bubble is a-brewin’”
I also put my $ into it. When I purchased property #3 in 2016 it took me from about 155% of my net worth in SD RE to about 200%. That’s as wildly bullish as my conservative disposition permits.
My view the whole time was that SD RE (1) was highly undervalued for a variety of reasons, the largest of which was that the interest rate decline was permanent (2) the biggest reason increases were not even larger was conservative appraisals based on outdated comps (3) there was a very good chance steady large returns would cause a new irrational speculative bubble.[/quote]
That’s not even in the same universe of what happened and there is a good case this is not a bubble so there’s that as well. A few months ago you didn’t believe me when I said prices were up over 30%. No one came close to predicting what happened. No one
gzz
July 16, 2021 @
1:39 PM
That’s not even in the same
That’s not even in the same universe of what happened
sdrealtor
July 16, 2021 @
3:12 PM
gzz wrote:
That’s not even in [quote=gzz]
That’s not even in the same universe of what happened
[/quote]
Just to be clear I expected rising prices as did many also. Nobody expected a 30- 40% y-o-y price gain which is around what we are looking at. And again calling for a bubble isnt correct either as the metrics do not bear out this being one
If we’re in a bubble, then If we’re in a bubble, then when will the bubble pop?
The-Shoveler
July 17, 2021 @
9:52 AM
IMO Either it’s a bubble or IMO Either it’s a bubble or the start of some serious inflation.
pick your poison.
As said earlier IMO TPTB cannot afford another major economic downturn and will do almost anything to avoid it.
They’re trying to emulate China in this regard (no major downturn in over 35 years).
Just my opinion.
sdrealtor
July 17, 2021 @
11:54 AM
I dont think either. Passage I dont think either. Passage of time. Prices roughly level off for 3 to 5 years, say +/- 10% and they will be completely normalized. Time heals all wounds
Anonymous
July 18, 2021 @
1:55 PM
sdrealtor wrote:I dont think [quote=sdrealtor]I dont think either. Passage of time. Prices roughly level off for 3 to 5 years, say +/- 10% and they will be completely normalized. Time heals all wounds[/quote]
No way. Bubbles this big don’t just “normalize”. When has that ever happened before? Of course what you are predicting is exactly what the Fed are trying to convince everyone (even themselves?) will happen. That is basically the MMT, that governments can print and deficit spend way beyond traditional bounds and not have to worry about consequences.
sdrealtor
July 18, 2021 @
4:31 PM
I need to dig up some threads I need to dig up some threads from 5-10 years ago. You were singing the same tune
Anonymous
July 19, 2021 @
10:05 AM
sdrealtor wrote:I need to dig [quote=sdrealtor]I need to dig up some threads from 5-10 years ago. You were singing the same tune[/quote]
Probably, doesn’t mean I was wrong then. I never predicted when this bubble was going to pop. This bubble has been going on for a while, Fed started QE in 2009 and never stopped. That is the bubble. But since Pandemic they went into super hyper overdrive and so did the bubble.
sdrealtor
July 19, 2021 @
10:31 AM
deadzone wrote:sdrealtor [quote=deadzone][quote=sdrealtor]I need to dig up some threads from 5-10 years ago. You were singing the same tune[/quote]
Probably, doesn’t mean I was wrong then.[/quote]
Keep repeating after yourself. Doesnt mean I was wrong. Doesnt mean I was wrong. Doesnt mean I was wrong.
Timing is everything! Dont forget what they say about a broken clock
Anonymous
July 19, 2021 @
10:58 AM
sdrealtor wrote:deadzone [quote=sdrealtor][quote=deadzone][quote=sdrealtor]I need to dig up some threads from 5-10 years ago. You were singing the same tune[/quote]
Probably, doesn’t mean I was wrong then.[/quote]
Keep repeating after yourself. Doesnt mean I was wrong. Doesnt mean I was wrong. Doesnt mean I was wrong.
Timing is everything! Dont forget what they say about a broken clock[/quote]
Again, I never predicted when said bubble will pop. So timing has nothing to do with it.
sdrealtor
July 19, 2021 @
2:18 PM
I predict at some point in I predict at some point in the future real estate prices will decrease. I also predict at some point they will increase. I’m going out on a limb!!
I think you may be too invested in being right. I’d rather be rich
an
July 19, 2021 @
2:48 PM
sdrealtor wrote:I predict at [quote=sdrealtor]I predict at some point in the future real estate prices will decrease. I also predict at some point they will increase. I’m going out on a limb!!
I think you may be too invested in being right. I’d rather be rich[/quote]
I’ll one up you. I predict RE will 10X from here.
XBoxBoy
July 18, 2021 @
6:38 PM
deadzone wrote:[
No way. [quote=deadzone][
No way. Bubbles this big don’t just “normalize”. When has that ever happened before? [/quote]
But that “bubble” didn’t pop per se. Instead it mostly got eaten up by inflation. I think this result is entirely possible this time as well.[/quote]
I’m not talking about just housing here, I’m talking about the everything bubble. Stock market is easiest thing to see. Look at long term chart of S&P, the recent price appreciation is insane if you compare this to any other time in history. Particularly since 2009. This all makes sense if you just look at Fed balance sheet since 2009, nearly all of this is caused by Fed QE. There was no such thing as QE prior to 2009.
Now as it relates to housing. Yes there is debate whether we are in a housing bubble based on various metrics as Rich pointed out. Certainly the conditions now are very different than 2005. However, given we are clearly in an “everything bubble” and housing is part of everything, you will never convince me we are not also in a housing bubble.
sdrealtor
July 15, 2021 @
10:08 AM
deadzone wrote:sdrealtor [quote=deadzone][quote=sdrealtor]A 1 br place in La Costa is $2k. A lot more in Carmel Valley[/quote]
But who would rent that long term at that price? What is your definition of long term? May as well buy the place but 1/1 condos are about the worst/riskiest investment to make at all time market highs.[/quote]
To the contrary they are like government backed bonds. They are the cheapest thing for a person who just wants to live alone and they stay for years. My clients own some in La Costa. They have never had a tenant stay less than 3 years. There are lots of older folks, working away at the median income with stable jobs who just want a nice safe place to live by themselves.
Anonymous
July 15, 2021 @
10:57 AM
sdrealtor wrote:deadzone [quote=sdrealtor][quote=deadzone][quote=sdrealtor]A 1 br place in La Costa is $2k. A lot more in Carmel Valley[/quote]
But who would rent that long term at that price? What is your definition of long term? May as well buy the place but 1/1 condos are about the worst/riskiest investment to make at all time market highs.[/quote]
To the contrary they are like government backed bonds. They are the cheapest thing for a person who just wants to live alone and they stay for years. My clients own some in La Costa. They have never had a tenant stay less than 3 years. There are lots of older folks, working away at the median income with stable jobs who just want a nice safe place to live by themselves.[/quote]
I assume your clients purchased those 1/1 after the housing crash so of course they are doing good.
sdrealtor
July 15, 2021 @
11:22 AM
deadzone wrote:sdrealtor [quote=deadzone][quote=sdrealtor][quote=deadzone][quote=sdrealtor]A 1 br place in La Costa is $2k. A lot more in Carmel Valley[/quote]
But who would rent that long term at that price? What is your definition of long term? May as well buy the place but 1/1 condos are about the worst/riskiest investment to make at all time market highs.[/quote]
To the contrary they are like government backed bonds. They are the cheapest thing for a person who just wants to live alone and they stay for years. My clients own some in La Costa. They have never had a tenant stay less than 3 years. There are lots of older folks, working away at the median income with stable jobs who just want a nice safe place to live by themselves.[/quote]
I assume your clients purchased those 1/1 after the housing crash so of course they are doing good.[/quote]
Around 2015. Paid cash. Bought for retirement income. Property has appreciated but the rent gains is what really benefits them
You say of course they are doing well as if it was obvious. If it was obvious why didn’t you?
Also interested on the south of border investments and how you justify that risk?
Anonymous
July 15, 2021 @
12:06 PM
sdrealtor wrote:
You say of [quote=sdrealtor]
You say of course they are doing well as if it was obvious. If it was obvious why didn’t you?
[/quote]
I say of course they are doing well because with the benefit of hindsight we know RE appreciated big time in recent years. If I had a time machine I would go back and make all kinds of different investment decisions. Wouldn’t necessarily be real estate. Perhaps stocks and crypto. That is a stupid comment.
If they had owned that property during the crash/recession not as likely they would have had stable, long term tenants.
sdrealtor
July 15, 2021 @
1:29 PM
deadzone wrote:sdrealtor [quote=deadzone][quote=sdrealtor]
You say of course they are doing well as if it was obvious. If it was obvious why didn’t you?
[/quote]
I say of course they are doing well because with the benefit of hindsight we know RE appreciated big time in recent years. If I had a time machine I would go back and make all kinds of different investment decisions. Wouldn’t necessarily be real estate. Perhaps stocks and crypto. That is a stupid comment.
If they had owned that property during the crash/recession not as likely they would have had stable, long term tenants.[/quote]
It was obvious back then to those with eyes open. Thats why they and guys like coronita and an were buying units like this also. Those units have always been great rentals in the La Costa complex. Never an issue to rent. Many have tenants over a decade
gzz
July 15, 2021 @
12:41 PM
DZ: 2400 is if anything an DZ: 2400 is if anything an underestimate. It’s not a little 1 bed in a apartment complex, it’s a big 1-bed in a high amenity condo complex with pool on an ocean block. The average list for an OB 1 bed is 2100 and that includes listings without parking spots.
As for “long term,” I would be quite happy if my long term tenants left. I’m a softee and have never raised their rents, both are about 15% under market.
Hard to aay on the house rental as it’s a unique property, 5/3 on a large non-shared lot near the beach, 3+ parking spots non-tandum, but with deferred issues that I don’t fix because it is a tear-down. I potentially could get 5500/mo for it, but it would be either a wealthy complainer who wants premium everything or a group of five 20-something party dudes plus their multiple dogs and rotating house guests. I know this for a fact because these were most of my potential renters when I first listed it!
The-Shoveler
July 16, 2021 @
10:57 AM
I like hitchhikers guide to I like hitchhikers guide to the galaxy moral story about the phone sanitizers LOL.
You never know.
gzz
July 16, 2021 @
11:51 AM
The first thread I started The first thread I started here back in 2012 was called “Dear people considered about rising rates”
“Ultimately I think I may not hold it that long as I think we will have another bubble and I will sell it then.”
The only time I wasn’t hyperbullish was the first couple months of covid.
gzz
July 17, 2021 @
2:28 PM
How about we’re at a point How about we’re at a point where valuations make perfect sense, but we’re likely headed for a bubble?
That’s not quite my “base case” but I think it’s awfully likely.
Why is it so hard to believe? Fake online coins and NFTs are now worth, technically speaking, $1 trillion+. Unprofitable tech stocks are trading for 30x sales. Uber loses billions and billions every year, but people can’t wait to shovel their money into it, as well as its even more risky and unprofitable Chinese clone.
We had one RE bubble, and conditions now strike me as reasonably close 2003-2004.
Now that I think about it, SD and Phoenix being the two top markets is very 2004y.
I’m not even sure we’re using the term the same way. Is a massive bull market that eventually has crazy valuations only a bubble when certain valuation ratios exceed certain arbitrary constants?
What’s one of the final ingredients missing the round that was present in 2004-2006?
Answer: less wealthy and unsophisticated first time buyers coming in without downpayments. And here we go:
The 180% of median income in high cost areas is a nice touch!
The chance of some version of this passing is high IMO. The parties hate each other, but here you have a bank-friendly Dem, once known as the Senator from MBNA, proposing something the GOP in general supports: subsidizing homeownership and banks and the very GOP FIRE economy. Now the GOP would prefer it go to REITs, PE partnerships, shadowy Cayman Island organizations, and S-Corps of All-Sorts, sure, but those groups are already pretty loaded up and wouldn’t mind offloading a bit, now would they?
SD Median Household income is about 90k. 180% of that is $162,000. Basically every middle to upper middle class renter who isn’t able to save money too well gets free 20k for their down payment!
gzz
July 17, 2021 @
3:25 PM
Thinking about the new Thinking about the new BidenBux plan, why wouldn’t it keep us running 15%+ or perhaps ++++++ for another year or more?
Last time we had free money for buying a house was during the bust, and it was only 7500 or 9500 as I recall.
Yet, despite being smaller than what Biden proposes, it caused a giant bear market rally, and when it ended we had the second part of the double-bottom, 2009 and 2011.
Now make it 20k not 7.5K, and in a white-hot ultra-low-inventory market, what’s the likely result?
There is a technical There is a technical definition for a bubble. I believe two standard deviations above fair value. Maybe Rich will pop in.
gzz
July 17, 2021 @
10:46 PM
As I noted, whatever you As I noted, whatever you decide is the definition of “fair value” is arbitrary.
To the extent you mean two SD above the historic mean of some valuation ratio, the choice of ratio is again going to be arbitrary. And any simple one like price/rent is going to be problematic. Rich’s mortgage payment chart is an improvement, but still leaves out a ton of indisputably relevant factors, such as expected income growth, cost of new construction, changing tax treatment of RE by both the state and federal government, and insurance costs.
In reality, bubble simply does not have some generally accepted definition that can be applied, rather it is like many concepts where you just know it when you see it, especially in hindsight.
John Locke refuted Aristotle’s definition of man as a “rational animal” by noting that a brilliant talking parrot is still a parrot but a severely mentally disabled man is a still a man. Locke’s better definition is a man is just something that physically looks like a man. So too with bubbles.
scaredyclassic
July 18, 2021 @
12:39 PM
Climate change panic buying? Climate change panic buying? The humans are getting a little freaked out and are trying to calm themselves by spending money?
XBoxBoy
November 10, 2021 @
10:58 AM
Thought it would be Thought it would be worthwhile to update this thread. Below are the CPI index values with monthly change and annual change since the beginning of 2020. (Pandemic begins in March 2020)
Month CPI Monthly Annual
Jan 2020 258.687 0.19% 2.49%
Feb 2020 258.824 0.05% 2.31%
Mar 2020 257.989 -0.32% 1.51%
Apr 2020 256.192 -0.70% 0.34%
May 2020 255.942 -0.10% 0.22%
Jun 2020 257.282 0.52% 0.73%
Jul 2020 258.604 0.51% 1.05%
Aug 2020 259.511 0.35% 1.32%
Sep 2020 260.149 0.25% 1.41%
Oct 2020 260.462 0.12% 1.19%
Nov 2020 260.927 0.18% 1.14%
Dec 2020 261.56 0.24% 1.30%
Jan 2021 262.231 0.26% 1.37%
Feb 2021 263.161 0.35% 1.68%
Mar 2021 264.793 0.62% 2.64%
Apr 2021 266.832 0.77% 4.15%
May 2021 268.551 0.64% 4.93%
Jun 2021 270.981 0.90% 5.32%
Jul 2021 272.265 0.47% 5.28%
Aug 2021 273.012 0.27% 5.20%
Sep 2021 274.138 0.41% 5.38%
Oct 2021 276.724 0.94% 6.24%
The above data is for Full CPI, not Core CPI.
I wonder if the Fed governors are still thinking inflation is transitory given the last five months of annual change.
gzz
November 10, 2021 @
11:40 AM
Ready for inflation here! Ready for inflation here! Bring it on!
Sic transit gloria fiat dollari!
These are my larger and older European silver coins. The community calls these large size silver coins on the left 2/3 of the picture “crown size” and this includes the US silver dollar.
Most of these 5 Franc size, slightly smaller than the actual British Crown, which was created during the French Revolution as a “standard” along with the metric system. At its peak, France, Italy, Belgium, French Africa, Spain, Romania, Latvia, Romania, Albania, and Switzerland used the French standard, allowing a wide amount of inter-changeability before the Euro was adopted.
The standard ended up surviving all the way until the 1960s, when the last Swiss silver francs made to the standard were minted.
sdrealtor
November 10, 2021 @
12:05 PM
Bring it on? Its been firing Bring it on? Its been firing on all cylinders
flyer
November 11, 2021 @
5:48 PM
Always a good idea to have Always a good idea to have multiple financial options to keep the lifeship afloat for the short time we’re all here, and, of course, to pass along to the kids.
Sadly, that’s not always possible for those who are suffering most from this inflationary period. Should be interesting to watch how it all plays out.
scaredyclassic
November 11, 2021 @
7:06 PM
I bought $300 worth of I bought $300 worth of almonds, perfect bars, almond butter, Gran free granola and pecans from Costco.
I bet it’ll be 600 in 9 months.
Better check expiration dates tho.
My strategy, as usual, is nuts.
sdrealtor
November 11, 2021 @
9:22 PM
Always a good idea to have Always a good idea to have multiple nut options to keep the lifeship afloat for the short time we’re all here, and, of course, to pass along to the kids. I think you are all set
flyer
November 11, 2021 @
10:51 PM
Scaredy, you can’t go wrong Scaredy, you can’t go wrong stocking up on things you’d buy anyway, as long as you know you’ll use them by the expiration dates. We do it all the time.
The-Shoveler
November 12, 2021 @
7:18 AM
scaredyclassic wrote:I bought [quote=scaredyclassic]I bought $300 worth of almonds, perfect bars, almond butter, Gran free granola and pecans from Costco.
I bet it’ll be 600 in 9 months.
Better check expiration dates tho.
My strategy, as usual, is nuts.[/quote]
Maybe buy a Nut tree, I saw Gates was buying up farmland.
scaredyclassic
November 12, 2021 @
8:21 AM
The-Shoveler [quote=The-Shoveler][quote=scaredyclassic]I bought $300 worth of almonds, perfect bars, almond butter, Gran free granola and pecans from Costco.
I bet it’ll be 600 in 9 months.
Better check expiration dates tho.
My strategy, as usual, is nuts.[/quote]
Maybe buy a Nut tree, I saw Gates was buying up farmland.[/quote]
Good idea. Fruit trees, nut trees.
I haven’t had a drink for 19 m and been vegetarian for several years now. The cost saving is pretty damn high. I think meat and booze was half the grocery bill.
Cost cutting is the best inflation strategy.
For the common folk, anyway.
Although I do buy sometimes some no alc. Beers, which cost the same as good reg. Beer. They’ve come a long way. Na IPA beers, esp. tastes like a decent IPA.
It feels wrong to pay off my 2.5 perc mortgage today, but it’s tempting when I’m somewhat ahead. No one ever went broke taking money off the table, but it…feels wrong.
No one in the poll on this thread saw the 6.2 perc Oct inflation rate. Pigs, me too, expect things to be more or less like they were.
But we are o l d….
Regarding Louis Vuitton coffins…washington now permits human composting…which is amazing in results…
This place turns you into a cubic yard of rich dirt in just a month in a special pod that maximizes the rate of decomposition. . My oldest said he’d get me up there to do this if I die before CA legalizes it. Said he’d make a nice garden bed and eat my veggies. I’m stoked. I’m not gonna be in the dirt. I’m gonna BE the dirt.
Coronita
November 12, 2021 @
4:17 AM
flyer wrote:Always a good [quote=flyer]Always a good idea to have multiple financial options to keep the lifeship afloat for the short time we’re all here, and, of course, to pass along to the kids.
Sadly, that’s not always possible for those who are suffering most from this inflationary period. Should be interesting to watch how it all plays out.[/quote]
Just stop. It’s really pathetic that as wealthy as you claim you are (which I suspect if that’s evenreally true), that you feel compelled to constantly try rub it in the dirt on a public blog about “sadly, those poor unfortunate people who are not as lucky as me”…Wrong audience and most people on this blog are not in the category that you are seeking to make yourself feel better with your messed up feudal overlord versus serfdom closet tendencies….Sorry to disappoint you… you were born in the wrong century if you were looking for that. Most of us are doing just fine, even if we are not as insanely as wealthy as you claim to be, and probably much happier and more content than you.
You’ll end up in the dirt the same way as everyone else eventually. And honestly when that happens, lights out game over, and it won’t matter what happened in the short 60-70-80 years that one was briefly here. So continue to feel good about yourself versus those people who are really less fortunate and continue to gloat about it on a public blog while you are briefly here on this earth. It won’t matter because eventually we are end up the same. Your expensive Louis Vuitton coffin will not be any different than some poor guy’s cheap Walmart coffin. Because both of you will be dead in the same dead way in the same dead dirt and your dead body will decompose the same way, unless you option for the cremation option or option to cryogenically preserve your head in the hopes that science can catch up and resurrect your brain with new physical body grown from stem cells one day. Ewe, no thank you, but if you have money to burn. Go for it. It might derail plans for an afterlife, if you believe in that. But that’s up to you. Speaking of afterlife, if you believe in it, you’ll also need to worry about if you were prick during this life. After all, if you believe in an afterlife, and the big G, you’ll also believe he’s all noticing, and remember every single time you were a prick during this life…including the times you felt compelled to rub poor people’s plight in the dirt on an internet blog why you sat on a lofty chair from the Ritz Carlton. If you’re Budhist, that might mean, you’ll be reborn as an ant, that gets stepped on or fried by a magnifying glass by a rich kid spoiled brat in Rancho Santa Fe, that has nothing better to do in life. Karma. Who knows.
There’s nothing wrong if you’ve done well in this world relative to everyone else, and certainly not something one needs to be ashamed or embarrassed of despite what some leading progressives might make people think. But seriously, poor people don’t need your fake southern california shallow sympathy. In fact, many less than stellar financially successful people are perfectly happy with their life they have. They aren’t the ones camping on this blog trying to personally trying to find meaning and purposem and trying to one-up others to make themselves feel better. I’d say, despite them having 10x less wealth, they are 100x happier because they are doing something meaningful in their life besides just trying to find ways to one-up others on a blog..And many of them, if they believe in an afterlife, at least won’t have a guilty conscience of being prick while being here shortly.
Personally, if it was me, the closer I’m getting to end-game, the less prickish I’d try to be..Just in case….
….just saying…
flyer
November 12, 2021 @
8:14 AM
My comments have never been My comments have never been intended as you described. Sorry if they came across that way.
As you said, life on earth is short for all of us, and it’s my hope that everyone is as happy with their lives, and the promise of eternity, as we are.
Finally, per your request, which I am extremely glad to accommodate, I will “just stop.” Enjoy!
The-Shoveler
November 12, 2021 @
8:15 AM
Personally I would like to Personally I would like to see 5% money market and FDIC CD’s but not likely IMO as that would crash just about everything (stocks, housing etc…).
IMO After 2008/9 fed found out it could not afford a real crash to ever happen ever again (at least one that last several years).
But that’s just my opinion.
scaredyclassic
November 12, 2021 @
8:20 AM
The-Shoveler wrote:Personally [quote=The-Shoveler]Personally I would like to see 5% money market and FDIC CD’s but not likely IMO as that would crash just about everything (stocks, housing etc…).
IMO After 2008/9 fed found out it could not afford a real crash to ever happen ever again (at least one that last several years).
But that’s just my opinion.[/quote]
If your mortgage is 3.5 perc or over, you’d essentially be getting a 5 perc return after taxes for every dollar you pay it down…but it’s not as satisfying…and less liquid…
sdrealtor
November 12, 2021 @
2:31 PM
Here’s a real data point. I Here’s a real data point. I play at a local golf course most weekends with friends. I dont know if others realize but golf was dying until COVID and the pandemic rescued the sport. When everything else was shut down, it was one of the only recreational activities you could do. Courses have been packed around the country for the last 18 months. Club manufacturers have been killing it with record sales.
A year ago this course offered a package deal
5 rounds good anytime with 5 buckets of range balls and we could book tee times an extra day ahead of general public for $250
6 months ago price went to $300
3 months later range balls gone and no booking an extra day ahead of general public
Last week email goes out and its now $350
1 year ago it was $250.
Now its $350 + $40 for 5 buckets of range balls = $390
Exact same product is 56% more today and tougher to get a good time on weekends
Thats what inflation looks like
scaredyclassic
November 12, 2021 @
3:02 PM
sdrealtor wrote:Here’s a real [quote=sdrealtor]Here’s a real data point. I play at a local golf course most weekends with friends. I dont know if others realize but golf was dying until COVID and the pandemic rescued the sport. When everything else was shut down, it was one of the only recreational activities you could do. Courses have been packed around the country for the last 18 months. Club manufacturers have been killing it with record sales.
A year ago this course offered a package deal
5 rounds good anytime with 5 buckets of range balls and we could book tee times an extra day ahead of general public for $250
6 months ago price went to $300
3 months later range balls gone and no booking an extra day ahead of general public
Last week email goes out and its now $350
1 year ago it was $250.
Now its $350 + $40 for 5 buckets of range balls = $390
Exact same product is 56% more today and tougher to get a good time on weekends
Thats what inflation looks like[/quote]
i will sell you a hackysack for $10.00 that will keep you and your friends busy for weeks on end.
Anonymous
November 12, 2021 @
3:32 PM
sdrealtor wrote:Here’s a real [quote=sdrealtor]Here’s a real data point. I play at a local golf course most weekends with friends. I dont know if others realize but golf was dying until COVID and the pandemic rescued the sport. When everything else was shut down, it was one of the only recreational activities you could do. Courses have been packed around the country for the last 18 months. Club manufacturers have been killing it with record sales.
A year ago this course offered a package deal
5 rounds good anytime with 5 buckets of range balls and we could book tee times an extra day ahead of general public for $250
6 months ago price went to $300
3 months later range balls gone and no booking an extra day ahead of general public
Last week email goes out and its now $350
1 year ago it was $250.
Now its $350 + $40 for 5 buckets of range balls = $390
Exact same product is 56% more today and tougher to get a good time on weekends
Thats what inflation looks like[/quote]
I agree that inflation is going nuts right now. But I think golf courses in san diego is about the worst possible example. For one thing, like you said, a lot of the demand is due to Covid. This is likely a temporary thing when these new players realize golfing is hard, frustrating, time consuming and expensive. This bump in # rounds played is probably temporary. Furthermore, prices are going to go up more in san diego and west coast states due to the fact that WE HAVE NO WATER! Many of the public courses I used to play closed pre pandemic due to this fact. So there are far fewer public courses in San Diego now, compared to 5-10 years ago. So that is going to drive up prices.
sdrealtor
November 12, 2021 @
3:51 PM
I never said it was the best I never said it was the best example just an example. I dont think its the worst example either. I actually know the GM well and was drinking wine with him on tuesday. Their big issue is course maintenance workers and the cost of them.
I dont think a lot of the demand is new players either. I think a lot of people that stopped playing have come back. Im hearing more and more people retiring earlier than planned which will keep the courses busy also. Im not seeing an uptick on hacks on the courses
This morning I grabbed myself a Machaca burrito and enjoyed it at the Moonlight Beach Overlook. A year or so ago that was $7 with tax. Its about $9 now.
And lets not get started on rents. Good luck finding a 1BR under $2K up here
sdrealtor
November 12, 2021 @
4:19 PM
With all this inflation, at With all this inflation, at least one thing is finally free!
BRITNEY!!!
So which call was worse? The “sell everything now” or “inflation isnt real”?
scaredyclassic
November 13, 2021 @
6:55 AM
sdrealtor wrote:With all this [quote=sdrealtor]With all this inflation, at least one thing is finally free!
BRITNEY!!!
So which call was worse? The “sell everything now” or “inflation isnt real”?[/quote]
Maybe she will pump up the economy with some wild spending
The-Shoveler
November 12, 2021 @
3:25 PM
hmmm seems more a hmmm seems more a supply/demand thing to me, but maybe that’s how it starts, throw in a few free checks from the feds and minimum wage increases and….
Coronita
November 13, 2021 @
8:47 AM
Wage inflation.
I just gave Wage inflation.
I just gave one of my engineers a raise. My out of touch boss was gone on vacation. My android engineer said he was approached by a company based in San Diego that offered a base pay of $160k + 20k stock options shares and healthplan benefits fully paid by employer for individual + 5% 401k match. Fully remote.
I talked to my cool senior VP.
We jumped through the bureaucracy and did a out of cycle “market adjustment”. And increased base pay to by $18k to $162k, there’s a unofficial bonus around 15% I think given the unexpected, good business, 401k match and health benefits about the same. And theres about an additional $25k RSU stock grants that are all or nothing vesting in 3 years.with a promise to start.his green card within 6 months.
Guy currently works remotely out of…Utah…closed on a $400k sfh that he put 50% down on….he’s stoked.
I don’t need to find a replacement. So I’m stoked.
There’s 2 other guys that will need a market adjustments that we will need to do within 5 weeks….
I recently poached a QA engineer that has maybe 1 year of experience out of school from UCSD from a big company. He’s pretty good. Have him a better comp package but also path to moving from QA to mobile development in 6 months. Old company wanted him to remain in QA role for 2 years… what a waste of talent…good luck with that one.
Pretty tough job market right now for tech employers ..first need to sort through the pool to find the good ones in the sea of not-so-good ones…then need to be competitive… thankfully I’m not running my own business.
If only my boss would quit or get fired or move out of the way, I’d be super stoked. Hopefully the latest dumpster fire he sort of created that I wasn’t part of will have him move aside. I like my bosses boss. Much easier to work with.
sdrealtor
November 13, 2021 @
9:51 AM
Super breakfast burrito at El Super breakfast burrito at El Pueblo La Costa up $0.50. Next move will put it over $10 with tax
Anonymous
November 13, 2021 @
11:35 AM
My neighborhood donut shop My neighborhood donut shop just raised the price of standard donut from 1.50 to 1.75 since last week. A year or two ago I’m pretty sure they were closer to 1.00.
sdrealtor
November 13, 2021 @
8:18 PM
Let’s call it 3. That’s 75% Let’s call it 3. That’s 75% in 3 years
svelte
November 13, 2021 @
9:21 PM
deadzone wrote:My [quote=deadzone]My neighborhood donut shop just raised the price of standard donut from 1.50 to 1.75 since last week. A year or two ago I’m pretty sure they were closer to 1.00.[/quote]
In 1984-85 I worked the graveyard shift at 7-11 in norcal. That’s how I put myself through college. The donuts would be delivered, put on display by my register, and go up for sale on my shift.
I’m pretty sure the prices were 40 and 50 cents depending on the donut. Standard donut was probably 40. Wonder what 7-11 charges now.
Seems like bear claws were 75.
Anonymous
November 14, 2021 @
6:14 PM
Well this particular donut Well this particular donut shop is family owned/operated and bake their own donuts. So wage inflation is not necessarily going to directly impact them like other businesses. But it did make me raise my eyebrow when I picked up donuts the other day and noticed the charge was more than normal. Just reinforces the reality that everything is going up right now, at a much higher rate than most of our salaries. Thanks Fed!
scaredyclassic
November 14, 2021 @
8:36 PM
Dammit. Now we can’t say
Dammit. Now we can’t say dollars to donuts anymore. Stupid inflation
“Take the saying “dollars to doughnuts.” It’s what we say when we’re really sure of ourselves. We’re so confident that we’re making a bet, and we’re betting something valuable against something that’s worth less. If I’m wrong, I’ll pay you money. If you’re wrong, just give me pastry.
An array of wordsmiths trace “dollars to doughnuts” back to the 19th century. The first recorded usage was a newspaper article in Nevada in 1876. “Dollars to doughnuts” was used matter-of-factly and without definition, suggesting it was a common saying of the day.
Betting cash against something of relatively little value wound its way into other expressions, such as “dollars to buttons” and “dollars to cobwebs.” Chances are “doughnuts” took hold because of our avid appreciation for alliteration. Other examples include “dollars to dumplings” and “dollars to dimes.”
Taken literally, “dollars to doughnuts” does not have the weight it once carried as a sign of self-assurance.
Consider that the classic Dunkin’ Donut doughnut costs 99 cents. So, literally to bet someone a dollar to a doughnut, is like saying, “I could be right, or I could be wrong. Either give me a doughnut, or I’ll give you money to buy one.” Include the sales tax, and you would be better off losing the bet because the doughnut is worth more than the dollar.”
The Springdale, The Springdale, Arkansas-based Tyson, the biggest U.S. meat company by sales, said chicken prices rose 19% during its fiscal fourth quarter while beef and pork prices jumped 33% and 38%, respectively. Signals more coming
gzz
November 15, 2021 @
4:36 PM
I like Flyer’s posts. Brian’s I like Flyer’s posts. Brian’s too.
More undisguised inflation hype scare tactics from the MSM, owned and controlled by anti-inflation elites who hate the idea of the real value of the fixed rate debt they hold over the 99% being eroded by inflation:
gzz wrote:I like Flyer’s [quote=gzz]I like Flyer’s posts. Brian’s too.
More undisguised inflation hype scare tactics from the MSM, owned and controlled by anti-inflation elites who hate the idea of the real value of the fixed rate debt they hold over the 99% being eroded by inflation:
Did you actually read that article which showed nutritionally void foods are flat but sources of nutrition skyrocketed in price. Yay spaghetti, flour, snacks, ice cream, cheddar cheese, soda, potatoes, white bread , hot dogs and lettuce! And cookies!!
Escoguy
November 15, 2021 @
9:29 PM
sdrealtor wrote:gzz wrote:I [quote=sdrealtor][quote=gzz]I like Flyer’s posts. Brian’s too.
More undisguised inflation hype scare tactics from the MSM, owned and controlled by anti-inflation elites who hate the idea of the real value of the fixed rate debt they hold over the 99% being eroded by inflation:
Did you actually read that article which showed nutritionally void foods are flat but sources of nutrition skyrocketed in price. Yay spaghetti, flour, snacks, ice cream, cheddar cheese, soda, potatoes, white bread , hot dogs and lettuce! And cookies!![/quote]
Usually I need more than one reason to do something but for the moment my thinking is that processed grains are bad for:
1. sleep
2. mental clarity
3. the waistline/weight loss
4. long term brain health
So it makes sense that products which have adverse effects would have less demand. Imagine though if they taxed empty carbs and subsidized leafy greens.
This knowledge is coming from multiple sources within short period of time.
The-Shoveler
November 16, 2021 @
7:11 AM
I stocked up on Haagen and I stocked up on Haagen and Dazs at Costco when they were 3 dollars off 15-cnt box last month.
Being happy is worth something
Coronita
November 16, 2021 @
8:15 AM
The-Shoveler wrote:I stocked [quote=The-Shoveler]I stocked up on Haagen and Dazs at Costco when they were 3 dollars off 15-cnt box last month.
Being happy is worth something[/quote]
Make.your own ice cream and sherbet. Before it wasn’t cost effective. Now it probably is. And sometimes DIY can be fun.
Take auto repair. My stupid BMW X5 needed a new car battery… $1110 quoted from the stealarship, $550 for battery and $600 for labor. Because BMWs have a special thing like the new battery needs to be registered with the ECU so the alternator can charge correctly.
1. NAPA battery was $198 with the AAA discount.
2. odb2 dongle to scan and program bmw was $12 (if I didn’t break my old one, it wouldn’t have been needed)
3. BimmerLink phone software to register battery $49
4. FRM computer module reprogramming from eBay repairer $60
Someone forgot to warn me that when you change a BMW battery never let the electronics have 0 volts. Doing so, if you are unlucky, you will brick some of the computer modules. Shitty bmw design..So always leave a battery charger or trickle charger connected when changing the battery… So I did end up bricking the FRM module. New one would have been $500 but fortunately there are eBay repair geeks that can reflash the brickedmodules for like $50-60 so BMW doesn’t do a cash grab on you for their shitty design.
anyway battery replacement was $370 out of pocket instead of $1100 from stealerhip…. Suck it BMW stealers.
Car is pretty reliable if you dont let stealers molest them
gzz
November 16, 2021 @
9:27 AM
My last car battery was $66, My last car battery was $66, the cheapest I have ever paid. This guy but on sale:
They didn’t ask me to pay the deposit because they kept the old battery.[/quote]
Not surprising as you bought a super cheap economy one with a 3 month warranty. I’ve never even heard of that before. Your old dead one was probably more valuable
Coronita
November 16, 2021 @
11:15 AM
gzz wrote:My last car battery [quote=gzz]My last car battery was $66, the cheapest I have ever paid. This guy but on sale:
They didn’t ask me to pay the deposit because they kept the old battery.[/quote]
Umm. No offense. That’s a pretty shitty battery….The stuff you would put into a car you are selling or getting rid off. It’s right up there with the cheap made in china no name brand tires and the $10 economy brake rotors you can find on ebay.
The warranty on the battery is 3 months. Most decent battery at least are warrantied for 24 months at least. 36 months is standard.
And for what it’s worth, that battery is expensive for a low end battery. $66 is how much I paid for a Interstate battery from Costco for one of my cars for a battery with a much larger capacity and better warranty…If you can find your battery through costco, that would be the cheapest and best place to get a battery with the best warranty… For the longest time, costco had a 4 year NON-prorated warranty. Which means if was bad at 3 year 11 months, you took it back to costco, and they would exchange it for another battery and restart the 4 year NON-prorated warranty. They changed their policy since then, but if you were grandfathered in, old policy still applies even with new battery is only 3 years/non-prorated. Unfortunately, Costco doesn’t sell the correct battery for late model BMW’s, Group 49…
Autozone and Oreilly batteries are generally way overpriced. The equivalent battery for the Econcraft you bought is the everstart battery from Walmart which is probably slightly cheaper for the same quality… Actually ,edit. I just looked it up. The walmart battery is roughly the same price and better because at least it’s warrantied for 1 year, not 3 months. https://www.walmart.com/ip/EverStart-Value-Lead-Acid-Automotive-Battery-Group-Size-26R-12-Volt-540-CCA/47308800
And you won’t find a BMW Group 49 AGM battery with at least 90AH less than $200, which is the bare minimum most BMWs require these days. Almost all BMW’s use the Group 49 battery, 3 series, 5 series, and SUV. The only difference is the AH, which is 90AH for the smaller cars and cars with lower electronics, to 105AH for the larger cars with the V8’s with the heavy electronics.
You can change to a larger capacity battery, but then you have to recode the ECU to take the larger capacity battery with a different software so the alternator charges correctly AND then you need to register a new battery….
NAPA Legend AGM battery has a 75 months prorated warranty. and is cheaper than just about everywhere else.
sdrealtor
November 16, 2021 @
11:27 AM
I think he bought a lawn I think he bought a lawn tractor battery
gzz
November 18, 2021 @
12:36 PM
Did you actually read that
Did you actually read that article which showed nutritionally void foods are flat but sources of nutrition skyrocketed in price. Yay spaghetti, flour, snacks, ice cream, cheddar cheese, soda, potatoes, white bread , hot dogs and lettuce! And cookies!!
Actually it was more mixed than that. Sugar went up 12.5%, cheddar cheese went down 3%.
Your statement is however more example of inflationista cognitive bias and motivated reasoning. Inflation is a general increase in the price level. That’s it.
The price of higher quality things going up and lower quality things not suggests an increase in income levels is causing demand for the higher quality good to substitute for the lower quality goods.
Such changes can be interesting to track, but do not mean inflation is somehow being understated.
Overall, the widely reported CPI inflation is badly overstated because hedonic adjustments are too conservative and substitutions in actual consumer baskets were not accounted for. The alternative chained CPI fixes the second issue.
Suggestion. When you step out Suggestion. When you step out and its raining grab an umbrella
gzz
November 18, 2021 @
3:14 PM
The media and inflationistas The media and inflationistas of course ignore the superior measure chained CPI because it is lower and they always hype inflation.
an
November 19, 2021 @
12:18 AM
I wonder how much prices has I wonder how much prices has changed for Kool-Aid.
Coronita
November 19, 2021 @
3:09 AM
an wrote:I wonder how much [quote=an]I wonder how much prices has changed for Kool-Aid.[/quote]
When it first came out, it was $1 per packet
During the great depression,price was reduced to 50 cents per packet
Today, you can buy a packet at Vons for 39 cents
See, no such thing as inflation
flyer
November 15, 2021 @
7:28 PM
Thanks, gzz. Find your posts Thanks, gzz. Find your posts interesting as well. I really enjoy reading the posts of some who post here, and, as I’ve said before, the information Rich has provided over the years has been very helpful to us in making some major real estate decisions.
There have always been a few really interesting and insightful people who post here, whose opinion I value, so I’ll stop by once in awhile to see if there is anything of interest. Good luck with all of your projects.
gzz
November 16, 2021 @
12:50 PM
I am selling the car, I got a I am selling the car, I got a new one in September. But I like the old one so have been slow to do it. I also like to haul wood, cement bags, manure compost etc in the old one.
It takes 2 mins to change my battery, so if it lasts 65% as long as $130 battery, I am ahead. My old “baby” is hard to value because it is a 2011 with under 40k miles. It makes sense I think to clean it up a bit before selling it.
A battery warranty is worthless because my time is too valuable to screw around with the forms for a warranty service.
Same reason I get high deductible insurance. I’m not going to deal with Nationwide over a $400 repair if I can get a lower rate and self insure.
Flu: I test drove a couple BMWs in 2014 (X3 and 335) and wasn’t too impressed. This round I didn’t include them in the test drive mix, I did Hyundai/Kia, then Subaru, and Mazda which is what I settled on. In 2020 I test drove a VW GTI and liked the driving a lot, but the interior was cheap for the price and too small.
sdrealtor
November 16, 2021 @
1:21 PM
gzz wrote:I am selling the [quote=gzz]I am selling the car, I got a new one in September. But I like the old one so have been slow to do it. I also like to haul wood, cement bags, manure compost etc in the old one.
It takes 2 mins to change my battery, so if it lasts 65% as long as $130 battery, I am ahead. My old “baby” is hard to value because it is a 2011 with under 40k miles. It makes sense I think to clean it up a bit before selling it.
A battery warranty is worthless because my time is too valuable to screw around with the forms for a warranty service.
Same reason I get high deductible insurance. I’m not going to deal with Nationwide over a $400 repair if I can get a lower rate and self insure.
Flu: I test drove a couple BMWs in 2014 (X3 and 335) and wasn’t too impressed. This round I didn’t include them in the test drive mix, I did Hyundai/Kia, then Subaru, and Mazda which is what I settled on. In 2020 I test drove a VW GTI and liked the driving a lot, but the interior was cheap for the price and too small.[/quote]
The battery warranty is not simply hopes and dreams. It is a projection of how long it should last. Buying a battery with a short warranty is buying a shorter life for your lawn tractor battery and an earlier replacement hence taking more of your valuable time away sooner
Coronita
November 16, 2021 @
2:52 PM
gzz wrote:I am selling the [quote=gzz]I am selling the car, I got a new one in September. But I like the old one so have been slow to do it. I also like to haul wood, cement bags, manure compost etc in the old one.
It takes 2 mins to change my battery, so if it lasts 65% as long as $130 battery, I am ahead. My old “baby” is hard to value because it is a 2011 with under 40k miles. It makes sense I think to clean it up a bit before selling it.
A battery warranty is worthless because my time is too valuable to screw around with the forms for a warranty service.
Same reason I get high deductible insurance. I’m not going to deal with Nationwide over a $400 repair if I can get a lower rate and self insure.
Flu: I test drove a couple BMWs in 2014 (X3 and 335) and wasn’t too impressed. This round I didn’t include them in the test drive mix, I did Hyundai/Kia, then Subaru, and Mazda which is what I settled on. In 2020 I test drove a VW GTI and liked the driving a lot, but the interior was cheap for the price and too small.[/quote]
There is no screwing around with costco. Battery fails within 3 years (previously 4), you get a new battery full replacement. Other places do some prorated return, but costco is the full 3 years. If it dies at 2 years 11 month, you get a new battery and the 3 years resets.
Also, you need to pay attention to the type of battery. For cars that have the battery in a sealed compartment instead of an open engine bay (like all BMWs, which is in the trunk), you have to go AGM. It’s not worth going with non-AGM for various reasons…unless you do what I do with my track car and use Lithium Iron Phosphate, which is relatively stable. But it’s expensive. $250 for roughly 400cca. But the weigh savings is huge. 2.5 lbs, versus 40-60lbs for a standard battery. It’s not practical for a street car, but for a track car, that weight savings is huge.And I wouldn’t use a LifeP0 battery on a street car because of all the electronics drawing on it. If the battery is completely drain, it is dead and cannot be recharged…Forget and leave the light on overnight, you’re screwed.
As far as cars.
Rule #1: you should never buy a used german car that isn’t CPO.
Rule #2: you should never buy a used german car isn’t CPO.
Rule #3: if you are thinking about buying a used german car, you should never buy a used german car isn’t CPO.
Why? Simple, they are complex machines, and most people that had them previously lease them, go cheap on maintenance, and is a disaster for the used car owner, especially when most of BMW’s are all turbo charged…
Buying a used 2014 BMW is just asking for trouble. If you want to get a BMW either buy it new and work on them your self. Or lease them and turn them back in after 3 years….
I bought my X5 around 2011, and the only reason was back then, gas prices were high, and the car market was weird. Because my AWD X5 ended up costing about the same price as a FWD Ford edge, which comes in useful for those occasional trips to the local skiing. Also, I specifically bought the car with most bells and whistles stripped out.. Just so fewer things can break. It worked. Meanwhile my sister’s 2014/15 335 already had all fuel injectors replaced… $6000 total.
Did I mention don’t buy a used BMW unless it’s CPO???
I’m sorry, there’s definitely a noticeabledifference in handling between a Mazda and a German car. It’s not even close between a 335 and a Mazda 3 or a Mazda 6. Approximately 120hp of difference. Dont get me wrong Mazda are great cars and I have 2, but you’re kidding yourself if your comparing performance…Mazdas aren’t know for their speed, unless you put a turbo or supercharger in it, and then it’s just ok….Their handling is ok but not quite as tuned as bmw,unless you go aftermarket (did that too)…they probably are more reliable than bmw, though my newer Mazda I’ve already blown 2 transmissions and am on the third one, it literally grenaded….versus bmw has 2x more miles and much older ..
If I were to get a new car? I’d just bite the bullet and get a tesla.
About self insuring auto-insurance. If I understand you correctly, are you saying you don’t carry liability and just provide proof that you are self-insured? If so, that seems to be a pretty big gamble in sue-happy SoCal for just saving a few bucks per month. I mean, it’s different if you have no assets to lose, sure. But you’re saving a few dollars per week and exposing yourself to considerable risk.
I don’t skimp on insurance. I buy the maximum liability I can get $250k/500k and on top of that I get a $5 million umbrella because imho there certain things not meant to go cheap on, even though fundamentally I’m cheap. Safety features such as brakes battery tires I won’t skimp on, nor will I skimp on insurance. Plus insuring 2 of my cars through Costco isn’t that much for the maximum coverage: $600/6 month. And insuring the older cars through Hagerty classic car insurance is like $300 year.
Less than the sets of tires I burn through in 6 months.
sdrealtor
November 16, 2021 @
4:13 PM
I bought a used BMW 335. It I bought a used BMW 335. It was a CPO. AS soon as it got close to the end of the warranty I got rid of it thanks to you and spared myself untold pain and suffering. Then I leased a BMW 328 for 3 years until I was confident the kinks were out of the Tesla Model 3. Then I listened to you again and bought one. 18 months in I got an a bad front end collision, the car saved me and definitely the idiot that pulled out in front me. Insurance paid full cost of replacement (i.e. what I paid for it new as it had not depreciated at all even with 21k miles). Then I bought another and here I sit. Coronita is the auto advice guru
sdrealtor
November 16, 2021 @
7:25 PM
Another data point. I pick up Another data point. I pick up from a handful of fast/quick serve places that use apps so I can go back and see order history. The kids always get the same thing
Chik Fil A spicy chicken sandwich meal is 7.5% more than this time last year
Habit Charburger with cheese meal is up 11% since this time last year
The-Shoveler
November 16, 2021 @
2:04 PM
I was reading an article that I was reading an article that said the high inflation will cause many retired workers to have to re-enter the work force.
Seems likely to happen IMO.
Escoguy
November 16, 2021 @
7:29 PM
I hope so, one tenant retired I hope so, one tenant retired and I’m afraid she will run out of money in less than a decade.
She is only 53, now working part time.
Coronita
November 17, 2021 @
8:08 AM
Escoguy wrote:I hope so, one [quote=Escoguy]I hope so, one tenant retired and I’m afraid she will run out of money in less than a decade.
She is only 53, now working part time.[/quote]
Got to invest. Wages alone will never keep up with inflation. Many people need to learn this here in the US.
Coronita
November 17, 2021 @
7:53 AM
Score!!!
Speaking of Score!!!
Speaking of unreliable BMWs.. Just discussing them made me look at the TSB catalog for BMWs
BMW issued a TSB and the FRM modules bricking is a known issue and they’ve extended the warranty to 10 years/156,000 miles.
I’m submitting a warranty reimbursement for a new FRM module that I’ll buy from FCP Euro for $500, because “repairing” a FRM module via eBay repairer is not a valid remediation process. Never hurt to have a spare FRM module in case it bricks again and need to send one back….
While searching, I also found there’s a bunch of TSBs about leaking fuel injectors on the 3 series that also have their warranties extended. Gonna tell my sis that, maybe she gets $6500 back from BMW too.
Reminds me of the time sdr that your old 335 started to have a turbo issue and coincidentally they were also in the middle of the Takata airbag recall and advised people to stop driving their cars and there was a stop-sales order on all CPO and used cars with the Takata airbag…and you were able to ditch the 335 with the failing turbo with a large incentive from BMW due to the Takata airbag stop-sales order…lol…
sdrealtor
November 17, 2021 @
8:09 AM
Surprised you remembered that Surprised you remembered that but that’s what went down. Was able to wrangle an extra $3k out of BMW due to the airbag recall making my vehicle unsaleable at the moment
Coronita
November 17, 2021 @
9:53 AM
sdrealtor wrote:Surprised you [quote=sdrealtor]Surprised you remembered that but that’s what went down. Was able to wrangle an extra $3k out of BMW due to the airbag recall making my vehicle unsaleable at the moment[/quote]
I don’t forget details about cars. Thankfully this is a hobby, and not because I really need to save money.
Be wary of BMW stealerships. They totally try to rip people off who are otherwise ignorant… When my X5 had their takata airbags recalled, it was also info for voluntary recall to replace VANOS bolts that were breaking…The stealership had part of the top engine disassembled for warranty work…AND on top of that, tried to con me into telling me that they my oil filter cooler “gasket” was leaking and should be replaced with part of the intake and engine apart, it would be cheaper to do it now…
Part was $25 for the gasket. Labor to change the gasket was $1200. I was like WTF? If $1200 was the “cheaper” price to have the gasket replaced when things were supposedly already partly disassembled, I was truly curious how much it would have been if I just went in to replace the gasket. I was arguing with the service guy that was saying is this gasket needed to be replaced at 50kmiles, that was ridiculous crappy parts quality on BMW… The service guy insisted it was a “normal maintenance” item for a BMW with 50kmiles…with all 6 cylinder N54 and N55 engines…
Bullshit….That ended up being a total farce…The reason why the oil filter gasket looked like it was leaking because when I replaced the oil filter, I made a mess and dripped some oil into the oil area. If they actually wiped it down, they would have easily been able to tell. It’s been 80kmiles..Still no leak…Fvckers…
My BMW is actually pretty reliable (knock on wood), ever since I stopped letting dealership service hands molest it.
It turns out that for some models the oil filter gasket leak is a common problem though. And for some cars, like the 3 series, you need to take apart part of the top end intake just to be able to take off the oil filter cooler to replace a $12 gasket…. Brilliant, BMW…But plenty you youtube videos to teach you how.Like this video from FCP Euro about the N52 engine. https://www.youtube.com/watch?v=IiYHPnWF-jY
FCP Euro is awesome… Great parts, great prices, great how to videos. And every part you buy from them have their own lifetime warranty. If you send back the part (you pay shipping), they will replace it for free…Already done it a few times on the more expensive stuff.
It even applies to wear and tear items like Brake Rotors and Pads, though I don’t do that with those, because the cost of shipping those back is almost the same price as just getting new stuff.
[quote]
Yes, our lifetime replacement covers every single part we sell, including wear-and-tear items like brake pads, spark plugs, gaskets, rotors, filters, belts, wiper blades, etc. This covers every part across every brand, including OE, OEM, genuine, performance, aftermarket, and re-manufactured parts.
The lifetime guarantee is non-transferable and only applies to parts you buy from FCP Euro. You must be both the current owner of the car and the original purchaser of the parts. Additionally, as stated above, we do not cover empty containers with contents that can not be physically returned. Such examples include aerosol spray cleaners, liquid gaskets, and additives that have been discharged or emptied.
[/quote]
This is why I generally never buy parts from Autozone or Oreilly, unless it’s an emergency, or from Amazon unless it’s much much cheaper…
Autozone and Oreilly is really expensive for parts and the quality you don’t know, it’s hit or miss. Autozone slightly better than Oreilly.
Places like FCP Euro sell OEM or OE parts much less than what Autozone/Oreilly charges for their offbrand aftermarket parts. Shipping is free on orders over $50, and there’s a true lifetime replacement warranty even on wear and tear items.
If something FCP Euro doesn’t sell, I then check RMEuropean.com, which does 1-2 day shipping from Colorado, and they warranty their parts for 2 years… Also a good place to buy parts.
If they don’t have it…Third place is ECSTuning…Which usually has a much larger parts selection and pricing is the same or better than FCP Euro, but they don’t have any special warranty….
I hate people that buy a german car, then go cheap on parts an maintenance. I mean, you bought a german car, and you are trying to stick the shittiest oil, shittiest made in china parts into it, or do the shittiest oil change at JiffyLube which probably ends up putting transmission fluid accidentally as engine oil…. and then you wonder why an already wonky questionably reliable german car is even less reliable??? It’s right up there with buying a new car, and then going cheap on auto insurance with the shittiest coverage from a cheap insurance company that is known to not pay out claims well… Makes no sense.
Coronita
November 19, 2021 @
8:23 AM
Actually, really old packets Actually, really old packets of Kool-aid are collector’s items. So not only is it inflation free. It’s actually a potential investment. People pay $100-400 for old packets of Kool-aid…
I’m gonna go buy a pallet of I’m gonna go buy a pallet of Kool-aid as a hedge against inflation
Coronita
November 19, 2021 @
8:26 AM
sdrealtor wrote:I’m gonna go [quote=sdrealtor]I’m gonna go buy a pallet of Kool-aid as a hedge against inflation[/quote]
That’s wrong. It’s a speculative investment. Just like bitcoin.
You’re not buying a hedge against inflation. You’re buying something like a stock option into the future hoping for incredible gain… The only difference is … unlike stock options… Kool-aid packets don’t really have an expiration date… And they don’t exactly go to worthless, since you could always use one to make a drink anytime…
Ha ha
gzz
November 19, 2021 @
9:39 AM
I like getting ancient unused I like getting ancient unused things from ebay too. I have some new and sealed Hanes t-shirts from the 1960s for example. I opened and wore some while keeping some pristine.
Tip for dating old things: UPCs became big very fast around 1982.
I don’t have any deadstock food, but I have some Ivory soap from the 1940s and hair tonic from about 1920. The soap was indistinguishable from new soap.
scaredyclassic
November 19, 2021 @
9:40 AM
gzz wrote:I like getting [quote=gzz]I like getting ancient unused things from ebay too. I have some new and sealed Hanes t-shirts from the 1960s for example. I opened and wore some while keeping some pristine.
Tip for dating old things: UPCs became big very fast around 1982.
I don’t have any deadstock food, but I have some Ivory soap from the 1940s and hair tonic from about 1920. The soap was indistinguishable from new soap.[/quote]
Old sweatshirts very valuable. Loopwheeled v. Knitted. Interesting. Things were much slower to produce in the old days.
gzz
November 19, 2021 @
9:44 AM
I don’t wear sweatshirts. I don’t wear sweatshirts.
Thermal clothing is one of the cheaper items to find new in package from before 1970. A lot of people would buy it, throw in in the closet, and then never open it up.
Baby clothes can be cheap too because they can outgrow them before they ever get opened, and then take up little room in storage. This was a great deal I purchased a month ago:
The other things that seems The other things that seems to be inflation proof are
Costco Rotisserie Chicken.
Still $4.99 after all these years. But we know Costco sells these as loss leaders.
However, contrary to popular belief, Costco crossants are NOT inflation proof….Along time ago there were $2.99 for 24… Then they were $3.99 for 24… Then they were $3.99 for 18… Now they are $4.99 for 18.
Also a carton of orange juice has also gone up in price.
It use to be $2.50-3 for half gallon (64 fl oz).
OJ no longer comes in the half gallon. It’s comes in 52 fl oz for roughly $3…
sdrealtor
November 19, 2021 @
8:47 AM
Oh yeah! Oh yeah!
flyer
November 19, 2021 @
5:53 PM
gzz and scaredy, check gzz and scaredy, check everything you have that might now be a “collectible.” You might find you or older family members have things you never imagined would be valuable.
My wife has been into this for years in every possible form, and it’s extremely interesting. She says “the hunt” is what makes it exciting. Personally, I’ve been into cars since I was a teenager.
gzz
November 22, 2021 @
1:29 PM
About 15 years ago my About 15 years ago my grandmother let me have a random box of unopened expired OTC medication from the 1950s that fell behind her bathroom counter. It went for $65 on eBay.
San Diego as a newer city isn’t a great place for hunting for collectables. When I am in the Detroit area for Thanksgiving, there will be fatter pickings. I have a good eye for electronics/video games from 1975-1989.
flyer
November 24, 2021 @
12:01 AM
gzz wrote:About 15 years ago [quote=gzz]About 15 years ago my grandmother let me have a random box of unopened expired OTC medication from the 1950s that fell behind her bathroom counter. It went for $65 on eBay.
San Diego as a newer city isn’t a great place for hunting for collectables. When I am in the Detroit area for Thanksgiving, there will be fatter pickings. I have a good eye for electronics/video games from 1975-1989.[/quote]
Interesting gzz. Yes, you’re right–this is one of those rare situations in life where older IS generally better. My wife is more into art, coins, books, gems, wine etc., along with her other projects. She’s made some amazing finds at flea markets when we travel–she had one find in Paris that would blow your mind.
Happy hunting on your trip!
Coronita
November 22, 2021 @
10:18 PM
Meh. I have better things to Meh. I have better things to do than go on a scavenger hunt.
sdrealtor
November 23, 2021 @
8:39 AM
Dollar Tree is becoming Dollar Tree is becoming Dollar and a Quarter Tree. Prices will now be $1.25. The change is not transitory. #gameover
teaboy
November 23, 2021 @
8:51 AM
surely we all think inflation surely we all think inflation is transitory, since most none of us believe inflation will continue to be high (say, >5%) from now until eternity.
tb
#mikedrop
sdrealtor
November 23, 2021 @
9:37 AM
Eternity is a long time. In Eternity is a long time. In the long run we’re all dead
flyer
November 23, 2021 @
11:47 PM
Love it, sdr–so true–but Love it, sdr–so true–but it’s still great that we all have such fantastic lives while we’re here:)
Happy Thanksgiving to All!
sdrealtor
November 24, 2021 @
10:06 AM
flyer wrote:Love it, sdr–so [quote=flyer]Love it, sdr–so true–but it’s still great that we all have such fantastic lives while we’re here:)
Happy Thanksgiving to All![/quote]
You’re the best!
carlsbadworker
November 30, 2021 @
1:06 PM
“We tend to use [the word “We tend to use [the word transitory] to mean that it won’t leave a permanent mark in the form of higher inflation,” Fed Chairman Jerome Powell told Congress on Tuesday. “I think it’s probably a good time to retire that word and try to explain more clearly what we mean.”
an
November 30, 2021 @
1:39 PM
carlsbadworker wrote:“We tend [quote=carlsbadworker]“We tend to use [the word transitory] to mean that it won’t leave a permanent mark in the form of higher inflation,” Fed Chairman Jerome Powell told Congress on Tuesday. “I think it’s probably a good time to retire that word and try to explain more clearly what we mean.”[/quote]
Nothing in life is permanent. So, everything is transitory.
All high inflation period in the past ended, so this time is not any different.
The-Shoveler
November 30, 2021 @
4:22 PM
At least in the 70’s/80’s you At least in the 70’s/80’s you could get a 5-8% maybe even 11% FDIC cd LOL.
Now you just get screwed
Sarcasm on: I mean We just want to reduce your wealth by 25-50%
XBoxBoy
December 1, 2021 @
1:13 PM
The-Shoveler wrote:At least [quote=The-Shoveler]At least in the 70’s/80’s you could get a 5-8% maybe even 11% FDIC cd LOL.
Now you just get screwed
[/quote]
Because it has happened so slowly, I think a lot of us fail to understand the magnitude of the war on savers that the fed has fought over the years. It’s no wonder stocks are so high, investments like crypto currencies and NFTs are all the rage. Who the heck wants to buy a 10yr note paying 1.5%?
sdrealtor
December 14, 2021 @
10:20 AM
INFLATION IS TRANSITORY
July INFLATION IS TRANSITORY
July 6, 2021 – December 14, 2021
Rest In Peace
The-Shoveler
December 15, 2021 @
9:01 AM
I guess the big question now I guess the big question now is will the fed raise rates and kill the economy/housing market or let inflation run.
Interesting times.
Coronita
December 15, 2021 @
10:57 AM
The-Shoveler wrote:I guess [quote=The-Shoveler]I guess the big question now is will the fed raise rates and kill the economy/housing market or let inflation run.
Interesting times.[/quote]
A little of both.
gzz
December 15, 2021 @
3:05 PM
There is no Fed “war on There is no Fed “war on savers.”
I have read the US Constitution several times. Nothing in it promises an unalienable right to high APR insured bank accounts.
The Fed’s ability to set interest rates is very limited, and essentially no power when it comes to long term real rates, which are a function of supply and demand for loanable funds, which in turn are governed mainly by demographics, taxes, and technological progress.
The-Shoveler
December 15, 2021 @
4:05 PM
duplicate duplicate
The-Shoveler
December 15, 2021 @
4:07 PM
So I guess the fed does not So I guess the fed does not manipulate rates with bond buying etc…
They absolutely control short term rates.
Anonymous
December 17, 2021 @
8:38 AM
gzz wrote:
The Fed’s ability [quote=gzz]
The Fed’s ability to set interest rates is very limited, and essentially no power when it comes to long term real rates, which are a function of supply and demand for loanable funds, which in turn are governed mainly by demographics, taxes, and technological progress.[/quote]
Wow, that is about the most clueless statement I’ve seen in a while.
Why does the Fed “own” 8 trillion dollars worth of debt (Treasury, MBS, etc)? Why does the Fed own any debt for that matter?
They literally control interest rates and have since QE began in 2008. There is no free market in any way, shape or form.
sdrealtor
February 10, 2022 @
7:43 AM
More new highs. 7.5% I’d More new highs. 7.5% I’d gladly take that on a CD
The-Shoveler
February 10, 2022 @
7:54 AM
sdrealtor wrote:More new [quote=sdrealtor]More new highs. 7.5% I’d gladly take that on a CD[/quote]
+1
IMO the whole world is just flush with cash chasing too few resources.
Escoguy
February 10, 2022 @
8:49 PM
The-Shoveler wrote:sdrealtor [quote=The-Shoveler][quote=sdrealtor]More new highs. 7.5% I’d gladly take that on a CD[/quote]
+1
IMO the whole world is just flush with cash chasing too few resources.[/quote]
I bonds my friend.
Now about 7%.
My ibonds from 2001 are at 10.3%.
XBoxBoy
February 10, 2022 @
3:01 PM
Barry Ritholtz had a great Barry Ritholtz had a great headline today:
“Transitory is taking longer than expected”
svelte
February 12, 2022 @
9:08 AM
Here’s something I don’t Here’s something I don’t understand.
I’ve been reading that when inflation is high, stocks don’t do well.
If you look back to the last period of high inflation – late 1970s, early 1980s – that appears to be true.
But if inflation is high, the value of products is higher and therefore income to companies should be higher and their value, it would follow, should be higher. Right?
Why is that not the case?
The-Shoveler
February 12, 2022 @
9:56 AM
No expert, but IMO its No expert, but IMO its complex.
Also depends on type of inflation and how long it lasts IMO.
Quick list of biz con’s IMO
1) Cost more to get a loan (well it used to maybe not anymore if the fed keeps printing regardless of anything)
2) Cost more for employee’s
3) Cost more for materials and equipment.
4) People try to buy less (Well after maybe exhausting their extra cash)
5) Bonds become a safer maybe better investment (well if the fed actually lets rates rise anyway)
svelte
February 14, 2022 @
6:52 AM
The-Shoveler wrote:No expert, [quote=The-Shoveler]No expert, but IMO its complex.
Also depends on type of inflation and how long it lasts IMO.
Quick list of biz con’s IMO
1) Cost more to get a loan (well it used to maybe not anymore if the fed keeps printing regardless of anything)
2) Cost more for employee’s
3) Cost more for materials and equipment.
4) People try to buy less (Well after maybe exhausting their extra cash)
5) Bonds become a safer maybe better investment (well if the fed actually lets rates rise anyway)[/quote]
I guess this makes sense. Bonds become a better choice, and people may have less $ to spend because wage increases may lag price increases.
svelte
February 17, 2022 @
2:14 PM
svelte wrote:The-Shoveler [quote=svelte][quote=The-Shoveler]No expert, but IMO its complex.
Also depends on type of inflation and how long it lasts IMO.
Quick list of biz con’s IMO
1) Cost more to get a loan (well it used to maybe not anymore if the fed keeps printing regardless of anything)
2) Cost more for employee’s
3) Cost more for materials and equipment.
4) People try to buy less (Well after maybe exhausting their extra cash)
5) Bonds become a safer maybe better investment (well if the fed actually lets rates rise anyway)[/quote]
I guess this makes sense. Bonds become a better choice, and people may have less $ to spend because wage increases may lag price increases.[/quote]
Reading more articles on what is going on now, I think it is a chain reaction that causes stocks to be less favorable during high inflation periods:
1) transportation and material costs rise which are passed on to manufacturers
2) manufacturers are slow to raise prices which impacts their profit margin (thus making their stock less appealing)
3) consumers must pay for for items before they see their wages increase, giving them less money to spend on purchases which in turn
4) reduces the amount consumers buy from manufacturers further depressing company stock values
Looks like it can become a vicious circle.
And with gas (of all types) prices rising, this could very well be a repeat of the 1970s.
gzz
February 17, 2022 @
3:13 PM
Svelte, your “vicious cycle” Svelte, your “vicious cycle” seems to assume everyone pays higher prices before charging higher prices. You have manufacturers paying more first before rising prices, and consumers paying more first before getting higher wages.
The 1970s inflation was exceptional in that oil was 6% of the economy, much larger than now, and the higher energy prices were shipped to foreign oil exporters.
I’ll say again, inflation makes stocks more attractive, high interest rates makes them less attractive. While I don’t think it will happen, if 7.5% inflation and 2% interest persists, that would be absolutely amazing for the stock market, most especially companies with a lot of fixed rate debt.
My last example was XOM. How about YUM, the fast food company. $11 billion in long term debt, about 0.5b in operating profit per quarter. If costs and prices go up at the same rate, inflation drastically increases shareholder value by eroding their long term debt. On top of the pure financial benefit, their pricing power also operates as an inflation insurance policy, like with TIPs. And their quarterly profit goes up because while other costs may increase, interest costs as a percentage of revenue will drop.
I don’t think a lot of inflation is coming, so I don’t own YUM. But I’d certainly be a buyer if it did. I use YUM as an example because it is really heavy in debt, though it easily services it because it is growing and profitable.
Rich Toscano
February 17, 2022 @
3:13 PM
svelte wrote:
Reading more [quote=svelte]
Reading more articles on what is going on now, I think it is a chain reaction that causes stocks to be less favorable during high inflation periods:
1) transportation and material costs rise which are passed on to manufacturers
2) manufacturers are slow to raise prices which impacts their profit margin (thus making their stock less appealing)
3) consumers must pay for for items before they see their wages increase, giving them less money to spend on purchases which in turn
4) reduces the amount consumers buy from manufacturers further depressing company stock values
[/quote]
Earlier I commented that it mostly comes down to valuation, which you dismissed as stating the obvious… now you’ve posted 4 theories none of which involve valuation. Which is it?
scaredyclassic
February 17, 2022 @
3:19 PM
Gold showing signs of life. I Gold showing signs of life. I have no idea if it means anything.
svelte
February 20, 2022 @
7:16 PM
Rich Toscano wrote:svelte [quote=Rich Toscano][quote=svelte]
Reading more articles on what is going on now, I think it is a chain reaction that causes stocks to be less favorable during high inflation periods:
1) transportation and material costs rise which are passed on to manufacturers
2) manufacturers are slow to raise prices which impacts their profit margin (thus making their stock less appealing)
3) consumers must pay for for items before they see their wages increase, giving them less money to spend on purchases which in turn
4) reduces the amount consumers buy from manufacturers further depressing company stock values
[/quote]
Earlier I commented that it mostly comes down to valuation, which you dismissed as stating the obvious… now you’ve posted 4 theories none of which involve valuation. Which is it?[/quote]
You said it comes down to valuation. But you didn’t say why they might be valued lower. I’m giving reasons why a company might be valued lower:
1) a company might be valued lower because their expenses are higher (transportation and material costs) which would affect their profit margin
2) a company might be valued lower because they can’t pass on the higher transportation and material costs to consumers, meaning the company profit will be lower
3) a company might be valued lower because they aren’t selling as many of their widgets because consumers have less spending money because their wages haven’t caught up to the higher widget costs
4) just a repeat of 3, actually
Rich Toscano
February 20, 2022 @
8:08 PM
svelte wrote:Rich Toscano [quote=svelte][quote=Rich Toscano][quote=svelte]
Reading more articles on what is going on now, I think it is a chain reaction that causes stocks to be less favorable during high inflation periods:
1) transportation and material costs rise which are passed on to manufacturers
2) manufacturers are slow to raise prices which impacts their profit margin (thus making their stock less appealing)
3) consumers must pay for for items before they see their wages increase, giving them less money to spend on purchases which in turn
4) reduces the amount consumers buy from manufacturers further depressing company stock values
[/quote]
Earlier I commented that it mostly comes down to valuation, which you dismissed as stating the obvious… now you’ve posted 4 theories none of which involve valuation. Which is it?[/quote]
You said it comes down to valuation. But you didn’t say why they might be valued lower. I’m giving reasons why a company might be valued lower:
1) a company might be valued lower because their expenses are higher (transportation and material costs) which would affect their profit margin
2) a company might be valued lower because they can’t pass on the higher transportation and material costs to consumers, meaning the company profit will be lower
3) a company might be valued lower because they aren’t selling as many of their widgets because consumers have less spending money because their wages haven’t caught up to the higher widget costs
4) just a repeat of 3, actually[/quote]
No, you gave reasons why their earnings would be lower.
I think you are conflating price and valuation here. Valuation is how much investors are willing to pay for a given amount of earnings. Price is the product of valuation and earnings.
My claim was that the issue is on the valuation side of the equation, not the earnings side. IE, company earnings do fine in inflationary times; investors are just not willing to pay as much for those earnings.
Now, you could ask why investors are not willing to pay as much for the same dollar of earnings. This is not totally clear cut, and in some ways I think this is more explanatory than causal (ie, just because investors DO behave that way doesn’t mean they SHOULD). But with that said, I think a major part is: with inflation comes higher rates, and if you can get a higher rate on fixed income, stocks need to offer a higher prospective return to compensate for their volatility/uncertainty, and this higher prospective return is achieved via lower valuations for stocks.
svelte
February 24, 2022 @
9:12 AM
Rich Toscano wrote:
No, you [quote=Rich Toscano]
No, you gave reasons why their earnings would be lower.
[/quote]
Sort of. I’m stating that earnings will be lower and thus the valuation is lower – potential stock purchasers apparently give the company a lower valuation if the earnings are lower. Makes sense to me.
[quote=Rich Toscano]
I think you are conflating price and valuation here. Valuation is how much investors are willing to pay for a given amount of earnings. Price is the product of valuation and earnings.
[/quote]
It appears you and I are using different definitions for “valuation”. I’m using Method #1 (Market Valuation) as given under “Methods of Valuation” at this link:
It looks to me like you are using something similar to Method #3 (Earnings Multiplier)
Two different ways of looking at it, that’s all.
Rich Toscano
February 24, 2022 @
5:30 PM
“Valuation” can (confusingly,
“Valuation” can (confusingly, I admit) be used describe what an individual company’s is worth, ie price. But when talking about asset classes (“stocks” being an example of such), valuation and price are two different concepts.
sdrealtor wrote:Hope it’s [quote=sdrealtor][img_assist|nid=27526|title=Hope it’s transitory!!!|desc=|link=node|align=left|width=100|height=99][/quote]
Of course it is. Housing will go back to pre-COVID, same goes for rent, income, gas, etc. ALL of it will just revert to pre-COVID. The only thing that won’t is time. We just lost 2 years of our lives.
sdrealtor
February 25, 2022 @
1:06 PM
And 2 chicken nuggets! And 2 chicken nuggets!
sdrealtor
March 4, 2022 @
10:03 AM
Inflation forecasts on the Inflation forecasts on the rise again
XBoxBoy
March 4, 2022 @
11:05 AM
sdrealtor wrote:Inflation [quote=sdrealtor]Inflation forecasts on the rise again[/quote]
Have you seen lumber prices (LBS) lately? Back up above $1300! Given that prior to this run up in inflation LBS was consistently below $500 that’s more than double.
I realize this is just one thing. (Lumber) But wow, just wow!
sdrealtor
March 4, 2022 @
2:21 PM
I paid $27 for a large cheese I paid $27 for a large cheese pizza this week. It was great but still…$27
Yep, it’s definitely transitory. 6%+ seem too broad now. I see 7%, do I see 8%? How about 9%? lol
scaredyclassic
March 10, 2022 @
7:44 AM
an [quote=an]https://abcnews.go.com/Business/wireStory/decade-inflation-high-expected-february-83358259
Yep, it’s definitely transitory. 6%+ seem too broad now. I see 7%, do I see 8%? How about 9%? lol[/quote]
I think we are all poorer than we thought.
an
September 13, 2022 @
12:05 PM
an [quote=an]https://abcnews.go.com/Business/wireStory/decade-inflation-high-expected-february-83358259
Yep, it’s definitely transitory. 6%+ seem too broad now. I see 7%, do I see 8%? How about 9%? lol[/quote]
6 months later… here we are
Rich Toscano
February 12, 2022 @
11:41 AM
svelte wrote:Here’s something [quote=svelte]Here’s something I don’t understand.
I’ve been reading that when inflation is high, stocks don’t do well.
If you look back to the last period of high inflation – late 1970s, early 1980s – that appears to be true.
But if inflation is high, the value of products is higher and therefore income to companies should be higher and their value, it would follow, should be higher. Right?
Why is that not the case?[/quote]
The main issue is valuation: investors aren’t (or haven’t been, historically) willing to pay as much for stocks during times of high inflation. The poor performance in the 70s/early 80s resulted from valuations moving from somewhat high in the early 70s to ridiculously low in the early 80s.
svelte
February 14, 2022 @
6:56 AM
Rich Toscano wrote:
The main [quote=Rich Toscano]
The main issue is valuation: investors aren’t (or haven’t been, historically) willing to pay as much for stocks during times of high inflation. The poor performance in the 70s/early 80s resulted from valuations moving from somewhat high in the early 70s to ridiculously low in the early 80s.[/quote]
Since stock prices tend to do poorly in high inflation environments, it stands to reason investors aren’t willing to pay as much for stocks. That’s implied by saying stock prices do poorly in high inflation environments.
The question is – why aren’t investors willing to pay as much for stocks in times of high inflation?
gzz
February 14, 2022 @
2:18 PM
Yawn, core inflation still Yawn, core inflation still well below the 2% trendline.
Rich: “Since stock prices tend to do poorly in high inflation environments”
(1) In prior “high” inflation periods market expectations were for sustained inflation. In 2022, the hard money elite inflation scaremongers have complete dominance of MSM discourse which they own. However, large investors are still all on Team Transitory.
(2) the next big difference is the 7.5% headline rate reflects a ton of dispersion in price changes, which reflect the pandemic shortages and the dumb subsidies we had encouraging low wage workers to leave the labor force. So used cars are up 40% while medical inflation is the lowest in decades. This just isn’t the classic inflation caused by expansionary policy which was last seen in the mid 1980s.
(3) inflation is positive for stocks in general since public companies tend to have fixed rate debt, partly fixed costs, plus pricing power. If XOM’s labor costs double and oil prices double, it will be far ahead due to its debt being the same.
This isn’t the past when inflation was accompanied by high yields in assets other than stocks. Why lock on a gain of 2.05% buying treasuries? So many great companies with 4% yields and solid earnings.
XBoxBoy
February 14, 2022 @
4:36 PM
gzz wrote:Yawn, core [quote=gzz]Yawn, core inflation still well below the 2% trendline.
That’s a whole lot different that saying we are not currently in a high inflation environment.
[quote=gzz] In 2022, the hard money elite inflation scaremongers have complete dominance of MSM discourse which they own.[/quote]
Not positive who specifically you mean when you refer to MSM. But, I would assume sites like Marketwatch, or finance.yahoo.com, or other market sites or finance cable. Here’s a bit of free advice, Never, ever pay any attention to these sites or channels. These sites (and channels) are driven completely by ad revenue and so are little more than click bait. They include fear mongering of all ideologies and you should avoid that nonsense completely.
Which leads me to a second point. Using references to what clickbait sites are saying completely robs your argument of credibility. It’s sorta like saying, “Hey the crazy nut standing on the street corner screaming obscenities thinks…” and then using that to make a point.
gzz
February 14, 2022 @
9:51 PM
“ Not positive who “ Not positive who specifically you mean when you refer to MSM. ”
Everything from clickbait sites to the TV news to prestige newspapers.
NYT and Washington Post are supposed to be liberal, and are on most issues. But the idea that sustained inflation at 6% would be a positive thing for most Americans will never appear there. Instead, we get inflation scare stories and unrepresentative anecdotes about the categories with the largest increases.
I would live to make a big bet against inflation staying 6%+, which is certainly the impression both the MSM and the huge right wing counter MSM both give, in their own styles and spins of course.
But I can’t do it. Because actual money managers with billions to invest collectively and correctly see the current inflation is transitory, so there’s nobody taking the other side of the bet.
sdrealtor
February 15, 2022 @
9:16 AM
So now you changed the So now you changed the benchmark of sustained inflation to being 6% or more? From the beginning (check OP) the benchmark has been the sub 2% inflation we’ve been seeing a long time. Anything over that is quite a bit more and it’s already been going on for a lot longer than most expected. Your horse left the barn long ago
an
February 16, 2022 @
3:31 PM
Right, so it’s transitory. Right, so it’s transitory. Care to put a date on when it’ll be back below 2%?
svelte
February 17, 2022 @
9:19 AM
gzz wrote:
Rich: “Since stock [quote=gzz]
Rich: “Since stock prices tend to do poorly in high inflation environments”
[/quote]
You quoted the wrong person. Rich didn’t say that, I did.
The-Shoveler
February 17, 2022 @
9:13 AM
This could turn into 70’s This could turn into 70’s style stagflation in a heartbeat complete with gas lines if the Russian invasion happens.
anxvariety
February 17, 2022 @
9:30 AM
IMO yes, about to be IMO yes, about to be unprecedented deflation. Just picture when that 15 something trillion spigot shuts off and all the easy money in real estate over the last 12 years has been leading the lambs to the corral. When 75% of the inventory opens up because it’s not possible to hit a bulls eye with every blind decision to take on more risk, we’ll get to see who they had mind to hold the bag all along. What kind of sentence do you got 15 or 30 years?
anxvariety
February 17, 2022 @
9:37 AM
IMO yes, about to be IMO yes, about to be unprecedented deflation. Just picture when that 15 something trillion spigot shuts off and all the easy money in real estate over the last 12 years has been leading the lambs to the corral. When 75% of the inventory opens up because it’s not possible to hit a bulls eye with every blind decision to take on more risk, we’ll get to see who they had mind to hold the bag all along. What kind of sentence do you got 15 or 30 years? Assume pay of 15-20$ to find out what affordability/prices will look like. How many properties will you be able to hold on to at that pay rate?
In our consulting business we have 5 people doing the work with relative ease of what normally be a 20+ person IT department. As costs goes up more will be paying attention to that IMO. If someone’s a slacker(look around at your place of employment) they’ll be moved into the rote hustler economy rate, 15-20$/hr.
gzz
February 17, 2022 @
12:34 PM
“IMO yes, about to be “IMO yes, about to be unprecedented deflation. Just picture when that 15 something trillion spigot shuts off and all the easy money in real estate over the last 12 years has been leading the lambs to the corral.”
Well it won’t be shut off completely and suddenly. We just had the smaller of the two big spending plans pass (BIB), but the larger one (BBB) fail. A very scaled down version might pass later however.
While we might scrape below 0% into deflation for a month or two, I think the fed will helicopter drop money before we have sustained deflation.
Here’s some data, fed spending the past three months. Starting with Nov 21 to Jan 22:
472,543
508,041
346,380
—-
1,326,964
Now the same three months, Nov 20 to Jan 21:
364,819
489,682
547,483
—–
1,401,984
So a pretty big reduction in nominal federal spending, especially in Jan 2022. And the spending reductions are hitting working to middle class Americans the most, who are the ones who spend the money.
Once again, I wish there were some nice way to bet against inflation. But the market already agrees with me. 10 years yield 2%, there’s obviously no expectation of sustained 4%+ inflation. If there were, investors would decamp to inflation protected assets. So how are, say, oil stocks doing? Not too great.
The-Shoveler
February 17, 2022 @
1:53 PM
I would argue maybe no-one I would argue maybe no-one actually believes the FED will really raise rates much especially once the economy starts tanking regardless of inflation.
Anonymous
February 17, 2022 @
7:27 PM
The-Shoveler wrote:I would [quote=The-Shoveler]I would argue maybe no-one actually believes the FED will really raise rates much especially once the economy starts tanking regardless of inflation.[/quote]
Really? No one believes it? Have you noticed the stock market since the Fed first publicly announced their plans to begin easing? Nasdaq already down 15% off its highs. In the same timeframe 30yr mortgage rates have increased a full percent (3 to 4) for about 30% increase in a matter of 3 months.
I would say the “market” certainly believes it.
This inflation problem is real and everyone, regardless of political affiliation, knows it is real (with the exception of gzz, he is in his own world)
scaredyclassic
February 18, 2022 @
6:26 AM
deadzone wrote:The-Shoveler [quote=deadzone][quote=The-Shoveler]I would argue maybe no-one actually believes the FED will really raise rates much especially once the economy starts tanking regardless of inflation.[/quote]
Really? No one believes it? Have you noticed the stock market since the Fed first publicly announced their plans to begin easing? Nasdaq already down 15% off its highs. In the same timeframe 30yr mortgage rates have increased a full percent (3 to 4) for about 30% increase in a matter of 3 months.
I would say the “market” certainly believes it.
This inflation problem is real and everyone, regardless of political affiliation, knows it is real (with the exception of gzz, he is in his own world)[/quote]
15 perc is nothing after this run up and these valuations.
I’d say I also don’t believe the fed will raise rates in a meaningful way to combat inflation, if it really isn’t transitory. There will be a lot of talk, and a little raising, but not commensurate with what might actually be effective.
I could be very wrong.
I have no idea what the right move is even if this were right which I’m not sure of. Say, 60 perc. Sure.
Basically, I do nothing. But occasionally fret.
Anonymous
February 18, 2022 @
10:07 AM
The Fed balance sheet more The Fed balance sheet more than doubled in just the last two years. Of course this is going to cause massive inflation and is the direct cause of the current madness in the housing market, stock market, etc. The Fed money printing machine is literally our economy and has been for years.
But capital markets are already realizing the party is over. Housing stocks are getting hammered, Redfin is down 25% today. Zillow has been getting destroyed. They quickly exited their house flipping business a few months ago because they knew the party was over and they didn’t want to be caught when the music stopped.
Fed has no choice but to “taper”, there is too much political pressure now to tame inflation. The only way to control it is to let the markets crash. The big question is how far can they or will they let it crash?
The Fed has to raises rates significantly in order for them to come back later and “rescue” the markets again. Rinse and repeat.
sdrealtor
February 19, 2022 @
8:30 AM
deadzone wrote:The Fed [quote=deadzone]The Fed balance sheet more than doubled in just the last two years. Of course this is going to cause massive inflation and is the direct cause of the current madness in the housing market, stock market, etc. The Fed money printing machine is literally our economy and has been for years.
But capital markets are already realizing the party is over. Housing stocks are getting hammered, Redfin is down 25% today. Zillow has been getting destroyed. They quickly exited their house flipping business a few months ago because they knew the party was over and they didn’t want to be caught when the music stopped.
Fed has no choice but to “taper”, there is too much political pressure now to tame inflation. The only way to control it is to let the markets crash. The big question is how far can they or will they let it crash?
The Fed has to raises rates significantly in order for them to come back later and “rescue” the markets again. Rinse and repeat.[/quote]
FWIW Zillow travails Had nothing to do with the markets and everything to do with ego, incompetence and mismanagement. They over paid grossly for houses that they bought, bought many flawed properties at premium property prices and have no idea how to cheaply add value to them.
In this market it’s astonishing they didn’t make money and an indication of how badly they blow it operationally. Had they asked me I would’ve set up their business very very differently and am confident they could’ve made a killing if they had done things how I would’ve. The first thing I would’ve done before hiring a single realtor is buy a good solid home remodeling company in every market before I entered it.
I would have set up local business units in each market led by an experienced local realtors who understood how to differentiate home values based upon lot , location and layout as compared with the comparables it was using to set a price.
They were simply desperate to buy as many houses as they could as quickly as they could to build market share and shut out other ibuyer companies . It was a mess and I know people who sold their houses to them and made out like bandits. It’s hard to imagine how they could’ve done it any worse
FWIW I am not disagreeing with your overarching point. You just chose very bad examples. Zillow got killed while the market was still raging and now that it’s falling Zillow is recovering over the last month.
Anonymous
February 19, 2022 @
8:32 AM
Sorry not buying that for one Sorry not buying that for one second, just the mainstream narrative to hide the fact that this was a giant red flag for the housing market. No chance Zillow didn’t have the smartest folks and best algorithms available given their deep pockets. They bailed because they saw a top in the housing market. Flipping and I-buying only works when the prices are perpetually going up, which has been working like a champ due to Fed balance sheet perpetually going up.
So if this was just a failure in Zillow strategy, not the market, why is Redfin stock crapping the bed? OPEN and OPAD not doing much better. When Zillow failed I fully expected that in due time, Redfin would soon follow, and here we are.
sdrealtor
February 19, 2022 @
8:46 AM
I know a senior finance guy I know a senior finance guy at Zillow. If he’s the best and brightest I’m Tinkerbell. I don’t care if you buy it. That’s what happened! They bought crappy homes, grossly over paid and didn’t know what to do with them. They bought homes here last Spring and lost tons of money on most of them. You know how much prices soared here. How could anyone but an idiot lose money. In hindsight it was shooting fish in a barrel and they missed.
Redfin is a very different case. Real estate brokerage is not a profitable business and never was. I saw the financials of the #1 office in SD back in 04 when things were going bonkers and they barely turned a profit when 6% listing was the rule. They are investing heavily in growth now entering new markets and sales volume is tanking in most markets because no one wants to sell. Just got back from annual Florida trip. Prices spiked there also though nowhere near like here. I spent time in three friends golf course country club communities in Palm Beach County. There was barely anything for sale in the three of them and in past years there were signs everywhere. If people aren’t moving a company like redfin will have a much more difficult time selling a story of growth to institutional investors
sdrealtor
February 19, 2022 @
8:47 AM
Again I’m not disagreeing Again I’m not disagreeing with your overarching point. You just chose the wrong examples for it
Anonymous
February 19, 2022 @
3:15 PM
Regardless, companies like Regardless, companies like Zillow and Redfin, completely jettisoning and/or losing significant money on I-buying (flipping) is a very ominous sign for the market.
sdrealtor
February 19, 2022 @
5:55 PM
deadzone wrote:Regardless, [quote=deadzone]Regardless, companies like Zillow and Redfin, completely jettisoning and/or losing significant money on I-buying (flipping) is a very ominous sign for the market.[/quote]
It is an ominous sign for iBuying not the market. Flippers continue to make a killing. It’s best done locally
XBoxBoy
February 19, 2022 @
4:17 PM
deadzone wrote:No chance [quote=deadzone]No chance Zillow didn’t have the smartest folks and best algorithms available given their deep pockets.[/quote]
Have you never worked for a company?
Anonymous
February 19, 2022 @
7:00 PM
XBoxBoy wrote:deadzone [quote=XBoxBoy][quote=deadzone]No chance Zillow didn’t have the smartest folks and best algorithms available given their deep pockets.[/quote]
Have you never worked for a company?[/quote]
Zillow has a lot of money. They can buy expertise. To suggest they do not understand the real estate market is extraordinarily naive. With all due respect I think the brain trust of Zillow has more understanding of the market than sdr or anybody on this site.
If the Fed actually tapers, all flippers are going to get destroyed, ibuyer or local. Flipping only works in an expansionary environment. Perhaps that’s why Zillow cut bait, they didn’t want to be a bag holder when the Fed takes away the punch bowl.
sdrealtor
February 19, 2022 @
7:28 PM
Zillow has zero expertise Zillow has zero expertise buying and selling real estate or operating a brokerage. The have zero experience as a general contractor. Zillow has a ton of money and can buy expertise. They did not. Why they did not boggles my mind.
I have flipped homes. You do not understand flipping. Flipping is profitable in flat markets also. You make money flipping by buying well (i.e. below market) and adding value cheaply (paint, flooring, throwing in new kitchen cabinets/counters that look good but are cheap quality etc). This is where most of the flippers in SD buy materials. They bring in materials by the container from China. http://www.granitencabinet.com/about/ Go check this place out sometime. You will walk out laughing because you’ll see all the materials you have seen for years in the listings for flipped houses.
Zillow bought poorly (i.e. far above market) and did not have the manpower to add value.
A rising market is the icing on the cake and good flippers do not count on it. They make money buying well and adding value. That Zillow could not make money in a rapidly rising market only speaks more to how incompetent they were
They cut bait because they realized the business was not what they thought it was
Nice place in the ukraine,pretty cheap. I’d probably try a low-ball offer on Monday. Still, the place is practically free, $7300. Wonder if it’ll flip profitably once the shelling stops. House is a cozy 400 sq ft, but comes with a nice veggie garden.
Nice place in the ukraine,pretty cheap. I’d probably try a low-ball offer on Monday. Still, the place is practically free, $7300. Wonder if it’ll flip profitably once the shelling stops. House is a cozy 400 sq ft, but comes with a nice veggie garden.[/quote]
That’s the kind of house my wife grew up in, her father lives further north of Kiev.
She’s in Moscow now, renovating the townhouse.
Yeah, great times.
Yes, you are reading this correctly.
I think his house is with about 10K.
Escoguy
February 21, 2022 @
8:10 PM
XBoxBoy wrote:deadzone [quote=XBoxBoy][quote=deadzone]No chance Zillow didn’t have the smartest folks and best algorithms available given their deep pockets.[/quote]
Have you never worked for a company?[/quote]
When I worked at Siemens, the engineers had an expression “they all cook with water”.
No one has any ‘real’ special sauce, either the company is disciplined or it’s not.
Good controls, processes, management, realistic compensation and budgets.
It’s not hard but yes amazing that Zillow could mess this one up.
Admittedly, my wife does manage many of our contractors and paints the interiors herself but sometimes sweat equity is the edge you need.
The-Shoveler
February 18, 2022 @
10:51 AM
scaredyclassic wrote:
15 perc [quote=scaredyclassic]
15 perc is nothing after this run up and these valuations.
[/quote]
LOL kind of the way I feel too.
Anonymous
February 18, 2022 @
11:21 AM
The-Shoveler [quote=The-Shoveler][quote=scaredyclassic]
15 perc is nothing after this run up and these valuations.
[/quote]
LOL kind of the way I feel too.[/quote]
Well keep watching, it’s starting to get interesting.
The-Shoveler
February 17, 2022 @
4:37 PM
IMO Russia invades and we end IMO Russia invades and we end up with $7 – $10 dollar Gas it’s going to leave a mark.
Worse if we end up with real shortages (even for a few months), it could get real ugly quick. I think we are still a lot more depended on Oil than most may think.
Plastic does not fall from the sky, stuff really does not magically show up at your door (even from china).
My Opinion only.
The-Shoveler
February 22, 2022 @
10:20 AM
Interesting
Russian invasion Interesting
Russian invasion seems like a big yawn for the market so far, either no ones really paying attention or it really is no big deal.
The-Shoveler
March 4, 2022 @
10:21 AM
This is not the fed or the This is not the fed or the congress of yesteryear IMO.
IMO I think there is little will to do what would be necessary to fight inflation.
But just my Opinion.
Coronita
March 10, 2022 @
8:27 AM
All you folks that ended up All you folks that ended up refinancing or cash out equaity refinancing with a 3% or lower 30 year fixed mortgage must be laughing your asses off right now with the probably once in a lifetime lowest rates ever. Let the banks eat the cost of inflation….
I know I am…Congrats, and high-5.
sdrealtor
March 10, 2022 @
9:13 AM
I feel so fortunate to have a I feel so fortunate to have a 2.625% mortgage as an inflation hedge. The benefits will last for my lifetime. Glad to have had the opportunity
an
March 10, 2022 @
9:43 AM
Coronita wrote:All you folks [quote=Coronita]All you folks that ended up refinancing or cash out equaity refinancing with a 3% or lower 30 year fixed mortgage must be laughing your asses off right now with the probably once in a lifetime lowest rates ever. Let the banks eat the cost of inflation….
I know I am…Congrats, and high-5.[/quote]
High 5 to you too Coronita! I pulled out as much cash as I could on my primary. Was going to do the same for my rentals but was so busy with other stuff that I put that off for early this year, only to miss the boat on those. Oh well, you win some and you lose some.
Coronita
March 10, 2022 @
10:19 AM
an wrote:Coronita wrote:All [quote=an][quote=Coronita]All you folks that ended up refinancing or cash out equaity refinancing with a 3% or lower 30 year fixed mortgage must be laughing your asses off right now with the probably once in a lifetime lowest rates ever. Let the banks eat the cost of inflation….
I know I am…Congrats, and high-5.[/quote]
High 5 to you too Coronita! I pulled out as much cash as I could on my primary. Was going to do the same for my rentals but was so busy with other stuff that I put that off for early this year, only to miss the boat on those. Oh well, you win some and you lose some.[/quote]
Life is not about absolutes. It’s about “close enough”… At least some of you folks have been telling me that… lol…
I feel like I’m in rest and vest retirement mood…lol….I’m really surprised I survived in tech for so long. I thought I would have been finished and burned out when I turned 40 and that was 7 years ago….lol.
When am I going to get my AARP membership application in the mail and start collecting social security again? lol
The-Shoveler
March 10, 2022 @
4:53 PM
So much for transitory , So much for transitory , Treasury secretary predicts whole year of ‘very uncomfortably high’ inflation
Coronita
March 14, 2022 @
7:41 PM
I so glad I bough my 5 qt I so glad I bough my 5 qt jugs of oil last week and have 3 years worth of supply for 6 cars. This week, it’s $10/more per 5 qt jug. 40% price increase. lol.
JPJones
March 14, 2022 @
11:29 PM
dangit…how do I tell how I dangit…how do I tell how I voted? I’m definitely sure I was wrong.
The-Shoveler
March 18, 2022 @
1:59 PM
Food seems like about to get Food seems like about to get a lot more expensive (at least in Europe).
Get your import beer now.
Anonymous
April 5, 2022 @
5:50 PM
Damn my Amazon music Damn my Amazon music subscription just went up from $4 to $5 a month. That’s 25% increase! Even worse I didn’t even realize I had an Amazon music subscription, need to do a better job checking my credit card bill.
I really really feel sorry for folks that haven’t taken steps to cap as much of their day to day living cost as possible.
Food, transportation, housing…
You guys eat out lately. It’s really really expensive.
Fortunately, I don’t have to commute to work anymore and all my driving is leisure. But, geesh, even then, I sort of regret canceling a Tesla last year thinking there would be better discounts and or choices next year.
I don’t think the fed’s policy can really fix this unless they really do something extreme and bring the economy to a halt. It seems like the problems are
1) energy/fuel shortage due to the war
2) supply chain issues from abroad due to covid
Maybe now that china is emerging from a lockdown (2) is going to get slightly better.
But the bigger problem, especially for things like chips, there’s not enough capacity at the select few semi fab facilities right now in the world, and it will take a few years at least to build more capacity. The problem is in the availability of supply of goods and services.
I think this inflation level I think this inflation level is wonderful. It erodes the real value of the national debt, student loans, credit card debt, and my mortgages.
There’s too much debt in America IMO. Inflation is a jubilee for our middle class.
Anonymous
June 10, 2022 @
7:21 AM
gzz wrote:I think this [quote=gzz]I think this inflation level is wonderful. It erodes the real value of the national debt, student loans, credit card debt, and my mortgages.
There’s too much debt in America IMO. Inflation is a jubilee for our middle class.[/quote]
But this inflation is very bad for the majority of people, particularly of lower economic means. If the government doesn’t do something there will be major civil unrest before long.
It is fairly obvious they have no choice but to pop the bubble. which the Fed totally has the ability to do. But up till now they are raising interest rates at a snails pace and haven’t even begun QT yet.
Coronita
June 10, 2022 @
7:26 AM
gzz wrote:I think this [quote=gzz]I think this inflation level is wonderful. It erodes the real value of the national debt, student loans, credit card debt, and my mortgages.
There’s too much debt in America IMO. Inflation is a jubilee for our middle class.[/quote]
for folks like probably you and me that own our house outright or have a fixed rate mortgage 30 years where that interest payment is going to erode from inflation, this is lesser of an issue and in a lot of way makes the debt owed worth a lot less in the future. And for people that make decent money or have other sources of cash flow besides a job income, that’s probably ok.
But folks that have not fixed their housing costs, have to commute to work, have to raise a family, and their paycheck is already pretty close to tapped out for day-day living expenses (and is not nearly growing as fast as inflation), this got to hurt. It hurts also people trying to “save” money to invest if they are already tapped out.
Not good overall.
sdrealtor
June 10, 2022 @
7:39 AM
Amazing to see narrative Amazing to see narrative shift to inflation is wonderful. I see “wealthy” older folks on fixed incomes getting hit harder than the younger generation saddled with student loans who will be net beneficiaries over time with their debt devalued.
an
June 10, 2022 @
8:18 AM
sdrealtor wrote:Amazing to [quote=sdrealtor]Amazing to see narrative shift to inflation is wonderful. I see “wealthy” older folks on fixed incomes getting hit harder than the younger generation saddled with student loans who will be net beneficiaries over time with their debt devalued.[/quote]
100% agree, older folks on fixed income will be hit the hardest in high inflation scenario. I feel sorry for them, since there’s not much that they can do.
gzz
June 10, 2022 @
8:25 AM
People on fixed income get People on fixed income get social security which rises with CPI.
People on nominal dollar pensions (mostly local gov retirees, though CA I believe is most inflation adjusted) benefited by the large disinflation that started in the 1980s, and while they are losing, these are unearned gains they are losing. And public pension funds are going to be more stable and secure now.
sdrealtor
June 10, 2022 @
8:30 AM
El Pueblo super breakfast El Pueblo super breakfast burrito now over 11 bucks with tax. It was under 8 when the pandemic started. This older guy wants to know where his Promised deflation is?
gzz
June 10, 2022 @
8:21 AM
Flu your properties are paid Flu your properties are paid off so inflation is more neutral. Your property values and rents will tend to rise with inflation.
As for the people paying rent, their wages will generally rise with inflation.
People gripe about inflation because they view their higher wages (and businessmen their higher prices) as earned and deserved by their personal merit, but when they pay higher prices as an undeserved increased cost.
Coronita
June 10, 2022 @
9:05 AM
gzz wrote:Flu your properties [quote=gzz]Flu your properties are paid off so inflation is more neutral. Your property values and rents will tend to rise with inflation.
As for the people paying rent, their wages will generally rise with inflation.
People gripe about inflation because they view their higher wages (and businessmen their higher prices) as earned and deserved by their personal merit, but when they pay higher prices as an undeserved increased cost.[/quote]
I think that’s from your perspective because you are more or less well off.
Someone who doesn’t own a primary home, is not in tech, is not being paid top dollars, have limited number of income streams beyond their job, and their salary does not track inflation (which many wages do not, especially in the mid to low tier), it’s not that great.
Also, side note, our tax codes are not inflation adjusted right, right? Someone making $100k+ is not in low end of the tax brackets. But $100k isn’t wealthy by CA standards.
an
June 10, 2022 @
8:15 AM
gzz wrote:I think this [quote=gzz]I think this inflation level is wonderful. It erodes the real value of the national debt, student loans, credit card debt, and my mortgages.
There’s too much debt in America IMO. Inflation is a jubilee for our middle class.[/quote]
100% agree. Inflation is amazing when you have a 30 years fixed rate mortgage. This will help the younger middle class the most IMHO. Those who were stretching to buy their home and are in their prime earning years. The salary will go up while their housing cost stay flat.
Anonymous
June 10, 2022 @
9:43 AM
an wrote:gzz wrote:I think [quote=an][quote=gzz]I think this inflation level is wonderful. It erodes the real value of the national debt, student loans, credit card debt, and my mortgages.
There’s too much debt in America IMO. Inflation is a jubilee for our middle class.[/quote]
100% agree. Inflation is amazing when you have a 30 years fixed rate mortgage. This will help the younger middle class the most IMHO. Those who were stretching to buy their home and are in their prime earning years. The salary will go up while their housing cost stay flat.[/quote]
Perhaps this inflation is okay for a small subset of middle class home-owners. Unfortunately there is a much larger class of people that are lower on the economic ladder who are getting crushed, this will lead to major social unrest if the government doesn’t do something.
The only thing the government can do is raise interest rates and QT which will destroy home values and 401K portfolios of the same middle class folks you are talking about that are benefiting from inflation.
an
June 10, 2022 @
9:50 AM
deadzone wrote:Perhaps this [quote=deadzone]Perhaps this inflation is okay for a small subset of middle class home-owners. Unfortunately there is a much larger class of people that are lower on the economic ladder who are getting crushed, this will lead to major social unrest if the government doesn’t do something.[/quote]
How small is this subset? Can you provide data?
How large is the larger class?
[quote=deadzone]The only thing the government can do is raise interest rates and QT which will destroy home values and 401K portfolios of the same middle class folks you are talking about that are benefiting from inflation.[/quote]Got data from history to back that up? What happened the last time we saw this kind of inflation and fed have to raise interest rate? Provide data please.
As for being the only two think the government can do, I call BS on that one. Government can do a lot more.
Anonymous
June 10, 2022 @
11:01 AM
an wrote: What happened the [quote=an] What happened the last time we saw this kind of inflation and fed have to raise interest rate? Provide data please.
As for being the only two think the government can do, I call BS on that one. Government can do a lot more.[/quote]
The more appropriate question is what happened the last time we were in a bubble? Fed raised interest rates which crashed stock and RE markets in 2008. Last bubble before that? Fed raised interest rates which popped the .com bubble.
What more can the government do? You say BS so give some examples, specifically examples that won’t lead to more inflation.
sdrealtor
June 10, 2022 @
11:04 AM
deadzone wrote:an wrote:gzz [quote=deadzone][quote=an][quote=gzz]I think this inflation level is wonderful. It erodes the real value of the national debt, student loans, credit card debt, and my mortgages.
There’s too much debt in America IMO. Inflation is a jubilee for our middle class.[/quote]
100% agree. Inflation is amazing when you have a 30 years fixed rate mortgage. This will help the younger middle class the most IMHO. Those who were stretching to buy their home and are in their prime earning years. The salary will go up while their housing cost stay flat.[/quote]
Perhaps this inflation is okay for a small subset of middle class home-owners. Unfortunately there is a much larger class of people that are lower on the economic ladder who are getting crushed, this will lead to major social unrest if the government doesn’t do something.
The only thing the government can do is raise interest rates and QT which will destroy home values and 401K portfolios of the same middle class folks you are talking about that are benefiting from inflation.[/quote]
Wont inflation help the debt burdened lower class by devaluing the debt especially student loans? That would help all the young folks you want to be able to buy homes
Anonymous
June 10, 2022 @
11:21 AM
sdrealtor wrote:
Wont [quote=sdrealtor]
Wont inflation help the debt burdened lower class by devaluing the debt especially student loans? That would help all the young folks you want to be able to buy homes[/quote]
Yes that is true, but in recent years RE and rent has appreciated at a higher rate than inflation (at least USG inflation number), and both of those have appreciated at a higher rate than wages. So after all that, anyone that does not own a home already is still screwed, i.e. most of the younger generation.
Wont inflation help the debt burdened lower class by devaluing the debt especially student loans? That would help all the young folks you want to be able to buy homes[/quote]
Yes that is true, but in recent years RE and rent has appreciated at a higher rate than inflation (at least USG inflation number), and both of those have appreciated at a higher rate than wages. So after all that, anyone that does not own a home already is still screwed, i.e. most of the younger generation.[/quote]
Student loans are at higher rates and there is no current utility like a place to live from them. Paying them off frees up purchasing power and there is career advancement for those not in dead end jobs. Over any extended period its a net positive in this regard. My friends kids around the country dont seem to have issues buying homes
an
June 10, 2022 @
2:15 PM
There will always be people There will always be people who will never be able to buy a house, regardless of inflation number.
Anonymous
June 10, 2022 @
4:13 PM
sdrealtor wrote: My friends [quote=sdrealtor] My friends kids around the country dont seem to have issues buying homes[/quote]
So I guess student debt isn’t really a hindrance after all.
Coronita
June 10, 2022 @
4:15 PM
deadzone wrote:sdrealtor [quote=deadzone][quote=sdrealtor] My friends kids around the country dont seem to have issues buying homes[/quote]
So I guess student debt isn’t really a hindrance after all.[/quote]
I think he meant his friends kids do not have student debt and have no issue buying a house themselves.
sdrealtor
June 10, 2022 @
4:31 PM
deadzone wrote:sdrealtor [quote=deadzone][quote=sdrealtor] My friends kids around the country dont seem to have issues buying homes[/quote]
So I guess student debt isn’t really a hindrance after all.[/quote]
Not when you have parents that paid for your college. My daughter is taking out loans so learns about borrowing and being responsible to do well so she can pay them back. After graduation at dinner I’ll hand her an envelope and tell her to tear it up. Once she does and asks what it was I’ll let her know they were paid off for her. Part of the process
Coronita
June 10, 2022 @
5:05 PM
sdrealtor wrote:deadzone [quote=sdrealtor][quote=deadzone][quote=sdrealtor] My friends kids around the country dont seem to have issues buying homes[/quote]
So I guess student debt isn’t really a hindrance after all.[/quote]
Not when you have parents that paid for your college. My daughter is taking out loans so learns about borrowing and being responsible to do well so she can pay them back. After graduation at dinner I’ll hand her an envelope and tell her to tear it up. Once she does and asks what it was I’ll let her know they were paid off for her. Part of the process[/quote]
Shit, you are a genius. I think I’ll do the same thing….
sdrealtor
June 11, 2022 @
2:56 PM
Coronita wrote:sdrealtor [quote=Coronita][quote=sdrealtor][quote=deadzone][quote=sdrealtor] My friends kids around the country dont seem to have issues buying homes[/quote]
So I guess student debt isn’t really a hindrance after all.[/quote]
Not when you have parents that paid for your college. My daughter is taking out loans so learns about borrowing and being responsible to do well so she can pay them back. After graduation at dinner I’ll hand her an envelope and tell her to tear it up. Once she does and asks what it was I’ll let her know they were paid off for her. Part of the process[/quote]
Shit, you are a genius. I think I’ll do the same thing….[/quote]
I think its important they learn about borrowing early and feel invested int he process of their education. I also cant wait to see her face when I tell her what she just tore up:)
scaredyclassic
June 10, 2022 @
9:11 AM
as a moderately well off as a moderately well off person almost 60, inflation has sucked out all my confidence about retiring or working much less and makes me want to keep grinding away as long as I can. Not that i was supercofident before, but it seemed like a not too ridiculous option.Now, it seems like I could get caught in a shitstorm.
Coronita
June 10, 2022 @
11:01 AM
The way I look at this, what The way I look at this, what is causing inflation?
Energy costs and supply chain shortage.
Energy costs were cheap until all the sudden Russia’s energy sources were cut off from the world.
Supply chain shortage was due to a shutdown abroad from covid.
With that in mind, what can the fed really do to “fix” those issues in the short to mid term? I’d say nothing, without something really drastic. If so, is it willing to do it?
Raising rates isn’t going to be enough to fix rising prices of energy and shortage in the supply chain for various goods, unless demand simply falls off a cliff.
gzz
June 10, 2022 @
4:41 PM
“their salary does not track “their salary does not track inflation”
I think the burden of proof that the labor market is inefficient in this unusual way is on the person making the assertions.
From what I can tell, around here lower skill jobs have rapidly increasing wages.
(former)FormerSanDiegan
June 10, 2022 @
7:57 PM
Inflation is always Inflation is always transitory.
The only question is: what is the duration .
3 years…. 5 years. …longer ?
Anonymous
June 10, 2022 @
10:09 PM
Meanwhile the bond market got Meanwhile the bond market got crushed today thanks to that inflation report, 30 year up to 5.85%. This market collapse is really starting to kick into gear.
Coronita
June 10, 2022 @
11:12 PM
deadzone wrote:Meanwhile the [quote=deadzone]Meanwhile the bond market got crushed today thanks to that inflation report, 30 year up to 5.85%. This market collapse is really starting to kick into gear.[/quote]
Huh????
Today,
Vanguard’s total bond market ETF which supposedly tracks the entire bond market (sort of), is down… a whopping 0.85% https://finance.yahoo.com/quote/BND
Vanguard’s short term bond index etf BSV is down 0.6%
and so forth….
How is this “getting crushed?”
Anonymous
June 11, 2022 @
8:40 AM
Read Mortgage News Daily, Read Mortgage News Daily, maybe you’ll learn something about the MBS market. Friday was brutal.
“The average lender increased 30yr fixed rates by at least a quarter of a point (0.25%). That’s only happened 4 other times since our daily record keeping began in 2009, and 3 of those were during the once-in-a-lifetime volatility that followed the onset of the pandemic. That made this the 4th worst week since 2009 as well.”
Coronita
June 11, 2022 @
9:42 AM
deadzone wrote:Read Mortgage [quote=deadzone]Read Mortgage News Daily, maybe you’ll learn something about the MBS market. Friday was brutal.
“The average lender increased 30yr fixed rates by at least a quarter of a point (0.25%). That’s only happened 4 other times since our daily record keeping began in 2009, and 3 of those were during the once-in-a-lifetime volatility that followed the onset of the pandemic. That made this the 4th worst week since 2009 as well.”[/quote]
Yes , so? And how is this affect my bottom line or yours?
Seems to me you have a lot to read more so than me. Basic things such as 401k accounts retirement accounts and how they eork. ya know things that actually affect your financial future or not. I guess that’s why financially , there a gap between …oh never mind…
Anonymous
June 11, 2022 @
6:25 PM
Coronita wrote:deadzone [quote=Coronita][quote=deadzone]Read Mortgage News Daily, maybe you’ll learn something about the MBS market. Friday was brutal.
“The average lender increased 30yr fixed rates by at least a quarter of a point (0.25%). That’s only happened 4 other times since our daily record keeping began in 2009, and 3 of those were during the once-in-a-lifetime volatility that followed the onset of the pandemic. That made this the 4th worst week since 2009 as well.”[/quote]
Yes , so? And how is this affect my bottom line or yours?
[/quote]
Why does it always have to be about you, or me? There is an entire world out there, and it doesn’t revolve around you!
Mortgage market tanking, interest rates going up at a faster rate than any time in history, obviously is a pre-cursor to a housing crash. You own a lot of real estate so this will affect you whether you want to accept it or not. The corresponding equities crash will definitely affect your 401K in a negative way too. Or just ignore it and keep dollar cost averaging. I don’t care if it affects you or not, but stop trying to argue that it isn’t going to affect a lot of other people.
sdrealtor
September 13, 2022 @
11:33 AM
Maybe not so transitory after Maybe not so transitory after all. Original poll was right. We may get 1% increase by fed
The-Shoveler
September 22, 2022 @
2:25 PM
Wow 2 year treasuries Wow 2 year treasuries printing 4.07%
IMO At some point (next year most likely) the fed going to have to pivot and that will make long dated treasuries one of the best (almost risk-free ) investments for a about a decade.
Thoughts anyone?
The-Shoveler
September 26, 2022 @
2:58 PM
KING DOLLAR LOL
I would KING DOLLAR LOL
I would think at some point that would look like deflation for a lot of imported goods.
1 USD = 0.933336 GBP
1 USD = 1.04 Euro
1 USD = 7.15 Chinese Yuan
1 USD = 144 yen
an
September 26, 2022 @
4:22 PM
Great time to travel abroad. Great time to travel abroad.
July 6, 2021 @ 10:43 AM
I’ve been wondering this
I’ve been wondering this question a lot lately, and wonder what others think.
The thing that gets me is that I hear so much about how employers are having a hard time hiring and having to raise wages. Wages are a big part of company costs these days and any boost in wages is not likely to be transitory. (Once you raise someone’s pay it’s really tough to convince them to take a pay cut.)
In the past I’ve heard arguments that there have been pretty big structural changes that have driven inflation down. (ie. Globalization being a huge influence on driving down labor costs) So, I wonder if these structural changes are still going to be sufficient to keep inflation low.
At the same time, long term bond yields remain stubbornly low, so there must a be a lot of investors thinking inflation is just not going to be an issue. Or maybe the low bond yields are totally the result of the fed’s quantitative easing?
Just wondering what others think and why?
July 6, 2021 @ 11:36 AM
I voted for 4-5% but I’m
I voted for 4-5% but I’m hoping for 6%. Like what you said XBoxBoy, once you give someone a raise, it’s almost impossible to take it back without the risk of them leaving. So, unless the entire corporate world decide to give everyone a pay cut, I don’t see wage going down.
July 8, 2021 @ 10:40 PM
an wrote:once you give
[quote=an]once you give someone a raise, it’s almost impossible to take it back without the risk of them leaving[/quote]
if everyone gets a 5% raise, you’ll have 5% inflation. if everyone gets a 5% raise this year, and a 2% raise next year, inflation is back down to 2%. that’s the very definition of transitory inflation.
you don’t need wages to fall for it to be transitory. the underlying factors driving lower inflation – an aging population and rising savings rates – hasn’t changed during the covid crisis. in fact, it’s made it worse. workers saw how quickly jobs can disappear, and the saving rate has gone up, even after adjusting for the stimulus. meanwhile, on the demographic front, births just fell to their lowest levels ever, deaths have increased (hopefully just a one-year event due to covid), and immigration stagnated as a result of the pandemic and government policy.
the move in the 10 year bond yield from 1.7 to 1.3 has been driven by a realization that the fed is right and inflation is transitory, along with slower growth prospects as we move back to trend 2-ish% real gdp growth in 2022 and beyond.
July 8, 2021 @ 10:58 PM
brg654 wrote:if everyone gets
[quote=brg654]if everyone gets a 5% raise, you’ll have 5% inflation. if everyone gets a 5% raise this year, and a 2% raise next year, inflation is back down to 2%. that’s the very definition of transitory inflation.[/quote]
I understand that if it goes back to 2%, then that’s transitory. However, I don’t see that happening. We’ll revisit in a year to see if it’s transitory or not.
September 13, 2022 @ 11:55 AM
an wrote:brg654 wrote:if
[quote=an][quote=brg654]if everyone gets a 5% raise, you’ll have 5% inflation. if everyone gets a 5% raise this year, and a 2% raise next year, inflation is back down to 2%. that’s the very definition of transitory inflation.[/quote]
I understand that if it goes back to 2%, then that’s transitory. However, I don’t see that happening. We’ll revisit in a year to see if it’s transitory or not.[/quote]
1 year and 2 months…
September 13, 2022 @ 12:07 PM
an wrote:I voted for 4-5% but
[quote=an]I voted for 4-5% but I’m hoping for 6%. Like what you said XBoxBoy, once you give someone a raise, it’s almost impossible to take it back without the risk of them leaving. So, unless the entire corporate world decide to give everyone a pay cut, I don’t see wage going down.[/quote]
My hope came true. Although last July, I voted for 4-5%, I changed my vote late last year to 6%+.
CA is talking about $22/hr for fast food workers being the law, I doubt wage will ever go down.
July 6, 2021 @ 1:11 PM
IMO Wages/Rents etc… are
IMO Wages/Rents etc… are sticky FED is way behind (maybe on purpose).
At this point I hope I am wrong, But IMO a million dollar 401K is not going to last you too long in 5 years.
July 6, 2021 @ 2:04 PM
It will in Arkansas.
It will in Arkansas. Everything is relative
July 6, 2021 @ 2:35 PM
Have a look at the
Have a look at the composition of the Fed. Lots of elites and people who represent financial elites.
As long as this is the case, any hint of inflation will be stamped out.
Are there serious signs that the overall price level is higher than the 2016-2019 trendline? Not really. Just anecdotes about perennially volatile commodity prices and comparisons with the unusual 2020 baseline.
I think keeping inflation below a 2% is bad policy, but not one that will be ending anytime soon.
July 6, 2021 @ 3:28 PM
gzz wrote:
Are there serious
[quote=gzz]
Are there serious signs that the overall price level is higher than the 2016-2019 trendline? Not really. Just anecdotes about perennially volatile commodity prices and comparisons with the unusual 2020 baseline.
[/quote]
Yes, there are. Here are the month-to-month changes in core CPI over the past 3 months:
Mar: .62% = 7.4% annualized
Apr: .77% = 9.2% annualized
May: .64% = 7.7% annualized
This is Core CPI, so commodities don’t come into it, and these are monthly changes, so there are no base effects from last year.
We’ve rarely seen changes at this level since the early 1980s, and never in the 2016-19 period you cited. Now, whether this is transitory is a whole other (difficult, imo) question. But for now, there absolutely are signs of higher than normal inflationary pressure.
July 6, 2021 @ 6:02 PM
Yes, there are. Here are the
Now let’s do the same months in 2020:
-0.3 = -3.6% annualized
-0.7 = -8.2% annualized
-0.1 = -1.2 annualized
Where you worried about runaway deflation then? I don’t remember anyone at the time with that concern. Rather, there’s a common and irrational cognitive bias deep within our society fearing inflation, instilled on us by economic elites who own and dominate the media and demonize the booming and egalitarian 1970s.
At the moment we have catch-up inflation after a deep deflationary recession. That is a good thing.
CPI increase between May 2017 and May 2019: 4.63% over two years.
CPI increase between May 2019 and May 2021: 5.15% over two years.
Given that CPI overstates inflation compared to other measures, doesn’t seem to be very high to me.
July 6, 2021 @ 8:22 PM
gzz wrote:
Yes, there are.
[quote=gzz]
Now let’s do the same months in 2020:
-0.3 = -3.6% annualized
-0.7 = -8.2% annualized
-0.1 = -1.2 annualized
Where you worried about runaway deflation then?[/quote]
Nice strawman. I said nothing about “runaway” inflation. I just cited data to show that your claim (“Are there serious signs that the overall price level is higher than the 2016-2019 trendline? Not really”) was wrong.
As for this “Given that CPI overstates inflation compared to other measures, doesn’t seem to be very high to me” — the question wasn’t whether inflation seems high to you. It was whether there is non-anecdotal evidence of above 2016-19 trend inflation. And the answer (when comparing core CPI to itself, btw) is yes.
July 6, 2021 @ 8:46 PM
BTW the non-strawman version
BTW the non-strawman version would have been this:
If you had said in Mar-May 2020 that there is “no sign of inflation BELOW 2016-19 trend,” would I have disagreed? And the answer is, yes, very much so.
July 13, 2021 @ 6:51 AM
Rich Toscano wrote:
Here are
[quote=Rich Toscano]
Here are the month-to-month changes in core CPI over the past 3 months:
Mar: .62% = 7.4% annualized
Apr: .77% = 9.2% annualized
May: .64% = 7.7% annualized
This is Core CPI, so commodities don’t come into it, and these are monthly changes, so there are no base effects from last year.
[/quote]
The trend continues or maybe even accelerates:
June: 0.9% = 10.8% annualized
July 13, 2021 @ 8:31 AM
XBoxBoy wrote:Rich Toscano
[quote=XBoxBoy][quote=Rich Toscano]
Here are the month-to-month changes in core CPI over the past 3 months:
Mar: .62% = 7.4% annualized
Apr: .77% = 9.2% annualized
May: .64% = 7.7% annualized
This is Core CPI, so commodities don’t come into it, and these are monthly changes, so there are no base effects from last year.
[/quote]
The trend continues or maybe even accelerates:
June: 0.9% = 10.8% annualized[/quote]
Amazing. At what point, if ever, will the USG recognize this inflation? You gotta feel bad for the retirees living of SS and other fixed income continuing to get their 2% COLA increase throughout all this, what a joke!
July 13, 2021 @ 8:35 AM
Current projections are in
Current projections are in the 4% range similar to what government and public sector employees see.
July 13, 2021 @ 9:01 AM
sdrealtor wrote:Current
[quote=sdrealtor]Current projections are in the 4% range similar to what government and public sector employees see.[/quote]
What government employee has seen a 4% COLA raise, can you give one example? Just saw military is estimating a 2.7% increase for 2022. SS got only 1.3% in 2021, way below any reasonable estimate for inflation. Let’s see what happens next year but up till now the USG has not been willing to recognize or admit the inflation reality.
July 13, 2021 @ 11:56 AM
deadzone wrote:sdrealtor
[quote=deadzone][quote=sdrealtor]Current projections are in the 4% range similar to what government and public sector employees see.[/quote]
What government employee has seen a 4% COLA raise, can you give one example? Just saw military is estimating a 2.7% increase for 2022. SS got only 1.3% in 2021, way below any reasonable estimate for inflation. Let’s see what happens next year but up till now the USG has not been willing to recognize or admit the inflation reality.[/quote]
Here is one example.
The San Diego Unified School District on Friday agreed to teacher salary and staffing increases as part of a plan to accelerate learning following unprecedented school closures brought on by COVID-19.
The proposal is part of a tentative agreement between San Diego Unified and the San Diego Education Association, effective through June 30, 2022 pending ratification by both parties.
To help retain teachers, the agreement calls for a 4% on-schedule salary increase effective July 1, 2021 . The district said some 86 teachers will be assigned to help reduce elementary school class sizes, as well as 12 school psychologist positions.
https://timesofsandiego.com/education/2021/06/27/san-diego-unified-agrees-to-teacher-salary-staffing-increases-to-accelerate-learning/
July 13, 2021 @ 12:59 PM
yes good point, I did read
yes good point, I did read about generous raises going for San Diego teachers and firefighters I believe. Will wait to see if anything like this happens on the Federal level, I tend to doubt it.
of course inflation is way higher in San Diego county relative to the rest of the country. So 4% is certainly less than actual local inflation.
July 6, 2021 @ 4:09 PM
gzz wrote:Just anecdotes
[quote=gzz]Just anecdotes about perennially volatile commodity prices[/quote]
Ok, my response is no where near as good as Rich’s, but here’s an anecdote. I went to industrial metal supply today to buy a piece of aluminum that would have cost me $40 at the most prepandemic. I paid $81 today! Whole smokes, now that’s inflation!
Part of this is undoubtedly supply chain. But I can’t help but think lots of companies are thinking, “Hmmm… bet I can get away with raising prices, everyone else is.”
July 6, 2021 @ 5:03 PM
Got to McDonalds for another
Got to McDonalds for another anecdote and order a basic combo meal. Its almost $10 now with tax
July 6, 2021 @ 6:17 PM
I purchased a desktop
I purchased a desktop computer in both 2021 and 2011.
The 2011 was $1462 all in with tax and ship and had a slow first gen SSD of 120GB, 2GB of ram, and a first gen i7.
The one I purchased this year was $550 all-in and has 16gb of much faster ram, a faster m2 1TB SSD, a CPU I imagine is 2 to 20 times faster depending on the task, and uses much less electricity.
Adjusting for quality, inflation was about -15% a year for 10 years. Even valuing them the same, it was about -67% over ten years.
July 6, 2021 @ 9:17 PM
gzz wrote:I purchased a
[quote=gzz]I purchased a desktop computer in both 2021 and 2011.
The 2011 was $1462 all in with tax and ship and had a slow first gen SSD of 120GB, 2GB of ram, and a first gen i7.
The one I purchased this year was $550 all-in and has 16gb of much faster ram, a faster m2 1TB SSD, a CPU I imagine is 2 to 20 times faster depending on the task, and uses much less electricity.
Adjusting for quality, inflation was about -15% a year for 10 years. Even valuing them the same, it was about -67% over ten years.[/quote]wonder what the cost of a mainframe was in the early 70s and the cost of a pc was in mid 80s.
July 6, 2021 @ 10:57 PM
https://m.youtube.com/watch?v
https://m.youtube.com/watch?v=HdMaBtPfY_Q
Having used extensively when I was a kid a C64, an 80s IBM PC, and an Apple IIe, the C64 was my favorite. The family C64 was used regularly until about 1995 when we got a $2000 75mhz Pentium with Win95 and AOL. Probably 200MB HDD and CD reader but not burner, which would have added another $500.
July 7, 2021 @ 9:25 AM
In the late 80’s I paid $1000
In the late 80’s I paid $1000 for a 31″ Toshiba TV that weighed as much as a house. Now you can buy a bigger better flat LCD TV for not much more than $100. This isnt deflation its tech advancement. My $10 Happy meal was under $2 then. Thats inflation
July 7, 2021 @ 11:43 AM
SDR, that is literally the
SDR, that is literally the definition of deflation: the price of things decline.
There are a lot of reasons it may happen, including progress in technology.
Relatedly: people pointing to commodity prices going up need to explain how the officially inflation stats in the 1980s of ~5% inflation was wrong, because commodity prices were declining.
You never see that happen though, because anecdotes about higher prices are always about impending doom, but not falling prices.
July 7, 2021 @ 1:49 PM
Price increase & decrease all
Price increase & decrease all based on supply vs demand (econ 101). As new product gets introduced to the market, demand for older product goes to 0, hence declining prices. You get constant new product in tech hardware. However, you don’t get any anywhere else. It’s not like there are new kind of milk where demand for older kind of milk goes to 0. The only similar analogy you can give is expired milk cost $0 since no one want it. It’ll get discounted over time till it gets to $0.
July 7, 2021 @ 2:11 PM
“It’s only tech” seeing
“It’s only tech” seeing deflation is not true.
Milk, your example, has been generally on a price downtrend. In 2008 milk averaged $3.80 a gallon, in $3.30 in 2020.
Also, “tech” as a catagory would need to include more and more things like cars, solar panels, pet toys, smart light bulbs.
Sometimes. On the other hand, a Samsung Galaxy 7 was something like $800 when introduced, $600 a year later, and now off-brand phones with basically the same specs are about $50-100 and still sell to the US poor and developing nations.
July 7, 2021 @ 2:08 PM
That’s not deflation. It’s an
That’s not deflation. It’s an entirely different product and technology. It’s not the same thing. Inflation is best measured across the same item like a commodity or a happy meal
July 7, 2021 @ 2:23 PM
That’s not deflation.
There’s
There’s not much point in debating the meaning of a word with someone who has a non-standard definition.
So measure inflation by looking at goods whose price tends to rise, while ignoring those where it tends to fall?
Are the official stats wrong from the 1980s, and instead massive deflation in the 1980s during the long commodity bust?
July 7, 2021 @ 3:34 PM
Another strawman. You are
Another strawman. You are getting good at that. You need to meausre inflation across the same thing. The rent for a 1 BR apt, an apple, a happy meal, a gallon of gas. A 30″ crt tv is not the same thing as an lcd flat panel tv. It has the same general functionality but it is not the same. Its not unlike comparing a battery operated sex toy to a hooker. Same output but its just not the same thing
July 7, 2021 @ 3:55 PM
gzz wrote:I purchased a
[quote=gzz]I purchased a desktop computer in both 2021 and 2011.
The 2011 was $1462 all in with tax and ship and had a slow first gen SSD of 120GB, 2GB of ram, and a first gen i7.
The one I purchased this year was $550 all-in and has 16gb of much faster ram, a faster m2 1TB SSD, a CPU I imagine is 2 to 20 times faster depending on the task, and uses much less electricity.
Adjusting for quality, inflation was about -15% a year for 10 years. Even valuing them the same, it was about -67% over ten years.[/quote]
The price of tech gear, computers, tv, etc are a bad example of proving/disproving inflation or deflation.
Computers and tvs in particular will always get faster and cheaper over time, and that’s independent of how everything else is doing. It’s not a great marker of whether we have inflation or not, and it’s more of an exception than the rule, because the cost of a brand new tech of costs significantly more due to R&D costs and costs of making that new tech, but over time, cost of manufacturing and making it more readily available gets cheaper..Partly also as more of the manufacturing is moved overseas to cheaper cost areas, which keeps prices low…
That’s like saying back in the 80ies one pays $1000 for a 300 baud modem but in 2021 you’re paying $80 for a cable modem that’s several X faster than the modem…Technology advances, cheaper manufacturing costs,etc…
Cars … not sure if it’s a good indicator of inflation right now. Car prices are moving up, but I think that has more to do with a parts shortage that’s putting a supply constraint on new cars, and that’s spilling over to the used car markets, which is why a lot of used cars bought in 2017-19 can now sell for about the same price now…Maybe more of supply constraint? Also, it’s hard to compare a likewise car model this year to something similar that was sold 20-30 years ago, because car manufacturers are packing more and more bells and whistles to mark up the car prices.
For example, a 3 series BMW would be in obtainble in the low 30ies but the entry 3 series reach close to mid-40ies to low 50ies now, because of all the bloatware tech they are putting into the cars. And they do this intentionally because most people lease these days…
What I thought was interesting was seeing the prices of simple non-tech things, like plumbing fixtures. I just had 3 moen faucets repaired, and the replacement faucet cartridge were almost $50/each. Last year, they were around $25…
And other things like price of food, price of eating out, seems to have gone up quite a bit.
July 7, 2021 @ 3:56 PM
Exactly. Comparing the same
Exactly. Comparing the same thing over time is where you see true measures of inflation. Is gzz’s billing rate the same today as it was 5 years ago? You’re getting the same thing
July 6, 2021 @ 7:52 PM
I’d guess 6% for this
I’d guess 6% for this calendar year and perhaps 8% next year. Since Rich has documented about an 8% rate, annualized, for March, April, and May, this may prove to be conservative, for several reasons:
The government tracks the price of a “basket of goods” (and services) monthly to describe inflation. I’m guessing that there must be a time lag between the sampling and actual reporting that is giving us understated inflation numbers now. We’ve all heard about the tripling of lumber prices, and big jumps in copper, oil, silver, etc. These ingredients, or input prices, will eventually be reflected in the prices of final goods.
In addition, rental housing costs make up over 1/4 of the CPI, and rents are poised to jump given the scarcity of rentals–another lagging indicator. Given the Fed’s rapid increase in the money supply combined with massive deficit spending, inflation will clobber middle and lower income groups. Landlords not so much.
July 7, 2021 @ 5:09 PM
Inflation is insane right
Inflation is insane right now. Biggest problem is housing and rent on national level. Was on vacation in Montana recently. Talked to a girl working in a bike shop in Helena. She moved there from Bay Area during beginning of Pandemic. Said her rent has doubled in the past year. Was hearing similar stories from many people over there.
Problem is, although wages are also going up in many places like this, there is no way salaries are keeping pace with these housing costs. Something has to give.
Thank you Federal Reserve!
July 7, 2021 @ 6:08 PM
deadzone wrote:Inflation is
[quote=deadzone]Inflation is insane right now. Biggest problem is housing and rent on national level. Was on vacation in Montana recently. Talked to a girl working in a bike shop in Helena. She moved there from Bay Area during beginning of Pandemic. Said her rent has doubled in the past year. Was hearing similar stories from many people over there.
Problem is, although wages are also going up in many places like this, there is no way salaries are keeping pace with these housing costs. Something has to give.
Thank you Federal Reserve![/quote]
Wages never keep up with cost of living and a lot of assets. This should be one of the lessons everyone learns sooner versus later. That’s always how it’s been and always how it will be.
If one stays working at the same place forever, you get maybe a 2-3% raise per year. While the rest of the world’s cost is moving much faster.
So one either fix one’s living/operating expenses as soon as it’s financially possible …or the longer one whats, the great the chances one runs into not being able to keep up, assuming that net income coming in from a job does not really materially change.
https://www.marketwatch.com/story/more-people-are-job-hopping-tempted-by-better-salaries-and-the-highest-number-of-openings-since-2000-2019-08-08
This 29-year-old just boosted her salary by $22,000 — here’s how she did it
Jordan Bradford graduated college in 2012 with a degree in psychology. After deciding she didn’t want to pursue further education in the field, she got hired at an association-management firm in her home state of Georgia.
“I had this job for five years, but I wanted something new and believed I was being underpaid,” Bradford told MarketWatch.
She looked to Washington, DC, for new opportunities and found a job as a manager at another association-management firm this past November. Soon after taking on the new role in DC, she realized she was being underpaid there as well. She began actively looking for a new job in April and officially switched companies three weeks ago.
“I now have the same role and same title, but I’m making $22,000 more,” Bradford said. “My original company in D.C. was surprised that I was leaving, but they understood my reasoning.”
This is actually a pretty decent article… The one part that hits home and describes exactly what many of us already knew several years (decades) ago….
Moving around can boost your salary
Moving jobs quickly can be beneficial to your salary, and that’s typically the main reason people do it. Consistently remaining employed at a company for longer than two years will decrease your lifetime earnings by 50%, according to CPA and tax expert Cameron Keng.
While employees who stick at the same company can generally expect a 3% annual raise, changing jobs will generally get you a 10% to 20% increase in your salary, Keng estimates.
“The biggest benefit you often get from changing jobs is a pay increase you wouldn’t have gotten otherwise,” Lee said.
“It’s easier to get your compensation in line with market levels if you move jobs often,” Sutton said. “It’s essentially the only way to do it.
July 7, 2021 @ 6:22 PM
In the long run most skilled
In the long run most skilled professional workers are compensated based on their experience and skill set. Sure you can job skip around to get large bump in your salary and it can put you ahead of your peers. But at a certain point, you risk promoting yourself out of a job. Your theory only holds water during long periods of economic growth in certain industries perhaps. But if there is a recession, such as Defense in the 90s or .Com in the 2000s, guess who is going to get laid off first? The mid-manager or Senior Engineer making 200K a year, that’s who. And now when they start looking for another job and they are telling the recruiter they make 200K, good luck with that.
July 7, 2021 @ 7:48 PM
.
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July 7, 2021 @ 11:18 PM
deadzone wrote:In the long
[quote=deadzone]In the long run most skilled professional workers are compensated based on their experience and skill set. Sure you can job skip around to get large bump in your salary and it can put you ahead of your peers. But at a certain point, you risk promoting yourself out of a job. Your theory only holds water during long periods of economic growth in certain industries perhaps. But if there is a recession, such as Defense in the 90s or .Com in the 2000s, guess who is going to get laid off first? The mid-manager or Senior Engineer making 200K a year, that’s who. And now when they start looking for another job and they are telling the recruiter they make 200K, good luck with that.[/quote]
My best friend was that guy. He is a commercial real estate finance guy. About the most susceptible to downturns as can be. Youre view of the world had him getting laid off first. Here is what actually happened.
He had spent the last 30 years job hopping and was not attached to a single employer or job. As soon as things started turning south his experience job hopping helped him see what was coming. He went to his employer and told them to lay him off and hire him back as a consultant. He had the guts and confidence to do that. One by one everyone else with his skills got laid off. They kept him on because he was flexible and could take on as much or as litle as they needed him. He picked up a few side projects along the way through his network developed from his 30 years of job hopping. When things got tougher he lowered his billing rate but he never went a week without some work.
Then things started coming back and his rate went back up even higher. Then they hired people back but with his billing rate he was making a ton more. He was making as much as the top level guys. Last year they hired him back at a salary almost double plus bonus and full benefits.
He never got attached or too comfortable with any one job. He bought a home when the numbers made sense and didnt worry about prices dropping more which they did in Newport Beach.
He made a ton more than he would have had he chosen the safe comfortable long term skilled professional route you just espoused. He played golf at least 3 times a week through it all and still does. He traveled extensively, lived a great life and still does. He didnt spend his life talking himself out of opportunties. He finds them, does the math and moves forward when they make sense. Without catching any bottom or top, he has gotten far ahead of people who devoted the last 30 years to a single company. There isnt one path in life
July 8, 2021 @ 8:27 AM
deadzone wrote:In the long
[quote=deadzone]In the long run most skilled professional workers are compensated based on their experience and skill set. Sure you can job skip around to get large bump in your salary and it can put you ahead of your peers. But at a certain point, you risk promoting yourself out of a job. Your theory only holds water during long periods of economic growth in certain industries perhaps. But if there is a recession, such as Defense in the 90s or .Com in the 2000s, guess who is going to get laid off first? The mid-manager or Senior Engineer making 200K a year, that’s who. And now when they start looking for another job and they are telling the recruiter they make 200K, good luck with that.[/quote]
I didn’t originally want to comment on this because this thread was about inflation. But you know you are totally wrong about this in many ways.
1. Many people who move for higher pay don’t make a lateral move. They usually move for higher pay AND a higher position. And provided you are perceived competent in that higher position, if a layoff happens, it’s not necessarily that you will be laid off. For instance, if you moved into a leadership position, chances are (again if you are perceived competent), you’ll probably be the one making the decisions on who to layoff.
2.Also, layoffs aren’t strictly based on cost and how much someone makes. Layoffs often times are done to cull perceived under-performers or negative performers..without having to go through the red tape of firing people with cause by putting them on a performance plan and PIPing them out. There are two kinds of people that are undesirable on a team
a. Negatively productive performers. These are people who by their presence makes the team less efficient and worse off by being there.
b. Under-performers. Those are people that while not be a team detractor, aren’t as effective as someone else could be if you replaced them.
You generally what to get rid of (a) people right away, or get them off your team and have someone else deal with them where as (b) people you aren’t in as much as a hurry and you can keep them around until the next round of layoffs in the future (they might have some historical knowledge that is useful, so you want to keep them around long enough so they can transfer their knowledge to someone else).
While some managers and company insist on using a performance improvement plan as the primary way to get rid of a perceived underperformer, many managers and companies avoid it because especially in CA, it takes too long, and the longer someone you want out hangs around, the greater the chances are that person will bring down work morale for everyone else while they have to go through the 1-2 month PIP process. Layoffs on the other hand dont drag this out. they are silent, and planned, and executed pretty quickly. People don’t get to linger around to drag down morale, and generally you let the person leave on better terms than if you PIP them out. It’s more humane and less likely to receive blowback, because it’s not perceived as personal… You eliminate the position/responsibility because for example the technology/product direction has changed, and since those underperformers didnt try to pick up new skills and new responsibilities, they are no longer needed and can get RIFed in an annual bottom performing layoff. You give them a nice departing package as a condition of not coming back around a sue the company, and since you eliminated the project and job responsibilities with that project, you are covered by all the “at-will” employment clauses in CA. lots of tech companies in the Bay Area do this to weed out the bottom performing 20%…Other companies have no problem and directly firing them… But the end goal is the same…
https://www.crn.com/news/channel-programs/accenture-layoffs-target-up-to-25-000-low-performers-report
https://www.inc.com/suzanne-lucas/tesla-fires-hundreds-of-workers-for-poor-performance.html
https://www.businessinsider.in/finance/news/internal-documents-leaked-audio-and-19-insiders-reveal-exxon-made-managers-dub-more-employees-poor-performers-as-the-oil-giant-sought-to-quietly-cut-staff/articleshow/77265874.cms
https://en.wikipedia.org/wiki/Vitality_curve
Obviously, i oversimplified how this works in practice, as there are many rules you have to follow or youll get in trouble, for instance, you can’t have a job opening for the exact same role/position while you are also eliminating that position/role…so often times companies promote someone they want to get rid of into a role/title they don’t plan on keeping…It can be viewed as a “move up” and feels good, but the real purpose isn’t a promotion, but a way to isolate and eliminate a job at a company. Its an alternative way to get rid of people you dont want on the team: “promote out”
(fwiw There are other ways you can get rid of people you dont want, and that involves reassigning them to “death march” projects with an impossible deadline and impossible to complete that is totally boring and tedious..with the intention of making their life so miserable that they quit on their own. Imho thats cruel to do, and if the person really is a “lifer” that doesnt give a rats ass and is there just collecting a paycheck, they might not care, and you are still stuck with them. So it might not work, and which point you have go back to the original 2 options of either PIPing them out or lay them off by eliminating the death march project. I would never do this, but many people do. This is all covered in that book I suggested people read awhile ago:
21 Dirty Tricks at Work: How to Beat the Game of Office Politics so you learn to spot when these sort of games are being played, especially if you work at a big bureaucratic US company that tend to all be the same in the games that are played, despite what leadership tells you how much they care about you (they dont)…you dont have play win… you learn so avoid getting played.
https://www.amazon.com/dp/1841126578/ref=cm_sw_r_cp_apa_glt_fabc_JYMHZ89MVEBPAK2QEZZ2 )
This book is also good at explaining at how managers are so good at selling workers to work on a “death march” project and get people really excited about a 3% annual raise for going “above and beyond” when in reality someone that is average performing gets 2%… It’s kinda of a joke, because an effective manager can sell this sort of bullshit to people when the bottomline is that 1% difference for being a star performer, after taxes, translates into a few extra cups of starbucks coffee, where as the 2% performer probably is better off using his spare time doing a “side hustle” as these millenials call and, do be financially better off, not to mention be better healthwise.
It happened awhile ago when i was in a pure technical and a realatively new principal engineer in the group. Although I had not been around long enough, my VP had a short list of engineers who he wanted out. They kept all the principal engineers and leads who were the highest paid, and some of them were pretty new. The axe fell on the several mid and senior engineers who were perceived as old timers that while not paid as well…people had the perception weren’t really that productive and/or difficult to work with. That’s how layoffs typically happen. Almost all managers have a list of employees ranked from top to bottom in their mind and IF there ever was a layoff, they would cull from the list starting with the bottom performers and keep culling until a target cost savings is met.its rare that you would simply get rid of someone because they earned the most. After all, there probably was a reason why you authorized to pay them more when you hired them. Some of my new engineers are a lot more dedicated than some of my old engineers I inherited that i would consider slightly as dead weight. Even if they cost less than my new engineeers, they still cost money, if there are layoffs in the future, theyd be the first to go. And there’s also something to be said if you’re are building a team, you want to staff it with people you pick, not inherit people from the previous team. Often times, those people that stuck around have a lot of baggage and negativity you won’t find in new people and while they might have a slight advantage of having the historical know-how of how things work, their knowledge is only good as far as how willing they are willing to work without being a pain in the ass… Too much baggage and PITA factor, and pretty soon the new guy that costs more willing to do more will catch up, and do a better overall job then a deadweight that only shows up to collect a paycheck.
3. Layoffs also happen a lot that are age/time based, even if it’s an illegal practice. It happens a lot particularly in companies that offer a pension or large stock grant, when an evil management tries to layoff people that have been there a long time…They do this because they don’t want to pay the old timer’s pension or stock benefits for those years of service…or often the perception is that they can find someone that is in their late 20ies early 30ies who would do more work more efficiently… So it’s not unheard of that at these evil companies, out of nowhere some of thes old timers will suddently get PIP’d out , because usually those evil companies use the PIP process to justify firing with cause (hence no unemployment benefits and pension, etc)… So evil management will often just make impossible goals for an individual they want to get rid of just to make sure they fail and have cause to get fired. I’ve seen this happen so many times to people, particular in the defense industry and the public sectors where jobs are not union protected. It’s the only way to get rid of people that would otherwise be a “lifer” at that company. I would never do something like that and if I was asked to do something like that, I think I would quit my job because I wouldn’t want to be part of a company that rolls that way, but that’s just that’s me. Other managers/directors would have no problem throwing someone else under the bus for no reason if it means they get a larger bonus.I saw it happen a few times at Intuit too. A few folks that were otherwise great performers were PIPed out and they came back and sued intuit. I think some of them settled outside of court. One in particular was a really talented woman, and when I heard what they did to her, I was like “what the hell were you thinking?” No matter, because I think the settlement made her whole, and she’s now a director at another company, way better position than she had before.
4. Lastly, often times, moving around, getting those 20+% bumps helps you amass your income much earlier during your career. That larger income upfront potentially enables people to buy/obtain things to fix their living costs earlier. It often enables people, for instance. to purchase a house earlier and/or pay down a house earlier and/or have sufficient money to invest in something that generates passive income sooner. And the sooner that happens, the less likely those individuals will need continue to count on their wage income all the way to 60+. (if they want to continue working, that’s a different story).
I think that’s really ultimate end goal for all what we do, whether we work at a job or have a “side hustle” as some of these millenials call it.
And it’s important to keep that in mind because especially in tech, I don’t think you see many pure engineers still continue to do what they do all the way until they are 60+…..
July 8, 2021 @ 10:34 PM
Coronita wrote:I didn’t
[quote=Coronita]I didn’t originally want to comment on this because this thread was about inflation. But you know you are totally wrong about this in many ways.[/quote]
as a mid-level manager in a large company, i can say your entire comment is spot-on.
July 7, 2021 @ 6:20 PM
also, using the montana relo
also, using the montana relo person…thats why im not really sure people who move to a lower cost area are really better off in the long run id they still count on a job to pay for living expenses. yes the cost of rent is lower relative to CA but so is their wages and opportunities maybe…
July 7, 2021 @ 6:27 PM
Coronita wrote:also, using
[quote=Coronita]also, using the montana relo person…thats why im not really sure people who move to a lower cost area are really better off in the long run id they still count on a job to pay for living expenses. yes the cost of rent is lower relative to CA but so is their wages and opportunities maybe…[/quote]
Well, in the case of low wage work like in a bike shop, they may make as much in Mt as in Santa Cruz so even with rent doubling it would still be far lower cost of living.
But keep in mind people aren’t necessarily relocating out of Ca just for financial reasons. For many I think it is lifestyle reasons.
July 7, 2021 @ 8:59 PM
In California, you don’t have
In California, you don’t have to tell them what you made. So the company can just offer you what the market rate is when there’s a recession.
July 7, 2021 @ 9:55 PM
an wrote:In California, you
[quote=an]In California, you don’t have to tell them what you made. So the company can just offer you what the market rate is when there’s a recession.[/quote]
Exactly my point. So if you were overpaid previously you will have to be willing to take a major pay cut at your next job.
July 7, 2021 @ 11:01 PM
deadzone wrote:an wrote:In
[quote=deadzone][quote=an]In California, you don’t have to tell them what you made. So the company can just offer you what the market rate is when there’s a recession.[/quote]
Exactly my point. So if you were overpaid previously you will have to be willing to take a major pay cut at your next job.[/quote]
You’d still make more than if you never moved.
July 8, 2021 @ 2:47 PM
I was just looking at a stat
I was just looking at a stat (percentage of US population worth over 1 Million), what surprised me is over 10% of the US population has over 1M socked away (and that is not including the value of your primary).
(if everyone’s a Millionaire no one is)
So if you just socked away your millionth Dollar, get ready, you’re basically just average (OK maybe a little above).
July 8, 2021 @ 3:04 PM
If inflation is running at 5%
If inflation is running at 5% and you’re lending long term money at 2.5%.
Hmmm this could get interesting.
July 8, 2021 @ 4:35 PM
The-Shoveler wrote:If
[quote=The-Shoveler]If inflation is running at 5% and you’re lending long term money at 2.5%.
Hmmm this could get interesting.[/quote]
In a sense this is already happening. 10yr treasuries closed at 1.29 today but were at 1.25 overnight last night. Of course that’s investors lending to the government. If it gets turned around so that investors can borrow at 1.25 with inflation at 5% I would expect the price of assets (think housing and stocks) to continue their frenzied path up.
I’m not sure we can claim inflation is running at 5%, but it seems clear to me that it is running at more than 1.25% so return to investors on treasuries seems to me to be a losing investment. But, what do I know. There must be enough investors interested in the 1.25% return or the bonds wouldn’t be being bought and rates would be rising instead of falling.
July 8, 2021 @ 9:01 PM
XBoxBoy wrote:The-Shoveler
[quote=XBoxBoy][quote=The-Shoveler]If inflation is running at 5% and you’re lending long term money at 2.5%.
Hmmm this could get interesting.[/quote]
In a sense this is already happening. 10yr treasuries closed at 1.29 today but were at 1.25 overnight last night. Of course that’s investors lending to the government. If it gets turned around so that investors can borrow at 1.25 with inflation at 5% I would expect the price of assets (think housing and stocks) to continue their frenzied path up.
I’m not sure we can claim inflation is running at 5%, but it seems clear to me that it is running at more than 1.25% so return to investors on treasuries seems to me to be a losing investment. But, what do I know. There must be enough investors interested in the 1.25% return or the bonds wouldn’t be being bought and rates would be rising instead of falling.[/quote]
Investors aren’t buying 10yr at 1.25%. The Fed is doing most of the buying.
July 9, 2021 @ 8:32 AM
deadzone wrote:Investors
[quote=deadzone]Investors aren’t buying 10yr at 1.25%. The Fed is doing most of the buying.[/quote]
While I know the fed is buying a lot of treasuries, are they buying more than half? (Which would be my definition of “most”) Do you have any data to back up that claim?
July 9, 2021 @ 10:04 AM
XBoxBoy wrote:deadzone
[quote=XBoxBoy][quote=deadzone]Investors aren’t buying 10yr at 1.25%. The Fed is doing most of the buying.[/quote]
While I know the fed is buying a lot of treasuries, are they buying more than half? (Which would be my definition of “most”) Do you have any data to back up that claim?[/quote]
I will never understand treasuries and bonds. I just haven’t been able to get them to work in my portfolio. I buy a little, not sure why, because they usually make up the negative portion of my long term account.
People were predicting it’s a great time to buy bonds and treasuries back in march. not really that great.
https://www.cnbc.com/2021/03/22/now-is-the-best-time-to-buy-government-bonds-since-2015-fund-manager-says.html
July 9, 2021 @ 12:49 PM
I just haven’t been able to
I have an unrealized gain of 40% in the international junk bond fund EHI from 1/2016 purchase, and it paid out another 40% or so in income, though the income was taxed at full ordinary income rate, so my pretax gain of 80% is not as good as a stock going up that much with lower tax rate that can be deferred forever.
I purchased taxable muni fund GBAB in March 2020 which is up 26%, and paid out about 10% in income.
In general, however, people with large fix rate debt secured by RE should not be buying longer bonds, since they are correlated assets. I couldn’t help myself, because the risk/reward during my entry seemed too good to pass up. I am steadily selling them off as they go up and the correlation with my RE becomes a bigger issue as the RE goes up and dominates my portfolio.
July 9, 2021 @ 12:11 PM
XBoxBoy wrote:deadzone
[quote=XBoxBoy][quote=deadzone]Investors aren’t buying 10yr at 1.25%. The Fed is doing most of the buying.[/quote]
While I know the fed is buying a lot of treasuries, are they buying more than half? (Which would be my definition of “most”) Do you have any data to back up that claim?[/quote]
Excellent questions.
So for the period since the pandemic started, which is what we are talking about, Fed has purchased approx 2.1 Trillion in treasuries as of April 29th (certainly much higher now).
https://www.pgpf.org/blog/2021/04/the-federal-reserve-holds-more-treasury-notes-and-bonds-than-ever-before
Meanwhile total US Debt increased approx 4.9 trillion over that period.
https://fred.stlouisfed.org/series/GFDEBTN
So not quite 50% but damn close and certainly enough to totally control the interest rates. This is a totally manipulated market. What do you think interest rates would be in a free market with out the Fed’s quantitative easing?
July 9, 2021 @ 12:41 PM
I disagree on the potency of
I disagree on the potency of the Fed’s bond purchases on interest rates.
Absent those purchases, the economy would be more depressed, in turn reducing private sector demand for funds, in turn shifting demand to government bonds because of the lack of private offerings. So same rate, but in a different recessionary equilibrium.
Further, non-Fed buyers still purchased $1 trillion+ of treasuries. They would not have done so at such a low rate if they expected rates to spike up because of Fed cession of purchases or inflation.
July 9, 2021 @ 12:50 PM
gzz wrote:I disagree on the
[quote=gzz]I disagree on the potency of the Fed’s bond purchases on interest rates.
Absent those purchases, the economy would be more depressed, in turn reducing private sector demand for funds, in turn shifting demand to government bonds because of the lack of private offerings. So same rate, but in a different recessionary equilibrium.
Further, non-Fed buyers still purchased $1 trillion+ of treasuries. They would not have done so at such a low rate if they expected rates to spike up because of Fed cession of purchases or inflation.[/quote]
If it weren’t for the Fed, the US Government couldn’t be spending money like a drunken sailor.
The net effect of this policy is to enrich the upper 10% and particularly upper 1%. Whether this is a good policy or not depends on your position.
In other words, if you have a lot of money in stock market or RE, then you love this policy. Everyone else is pretty much being F’d in the rear.
July 9, 2021 @ 1:00 PM
deadzone wrote:
If it weren’t
[quote=deadzone]
If it weren’t for the Fed, the US Government couldn’t be spending money like a drunken sailor. [/quote]
Sure, in turn depressing the economy and causing the market interest to decline. That’s my point. The Fed purchases stimulated the economy to a higher level but at the same basic interest rate.
[quote=deadzone]The net effect of this policy is to enrich the upper 10% and particularly upper 1%. Whether this is a good policy or not depends on your position.
In other words, if you have a lot of money in stock market or RE, then you love this policy. Everyone else is pretty much being F’d in the rear.[/quote]
We’ll have full stats later, but the stimmy checks and extended and enlarged unemployment caused the fastest and largest decline in both total and childhood poverty in our records. That’s what happens when there’s a firehose of free money that includes the poor. Here’s some details on this topic:
https://www.taxpolicycenter.org/publications/how-additional-cash-payments-would-reduce-poverty/full
PPP, on the other hand, increased wealth inequality.
Whatever the net effect, it will primarily be the result of tax and spending decisions of Congress, not the monetary policy of the Fed. The President’s proposed tax plan will reduce inequality and be borne by the 1%.
July 9, 2021 @ 1:18 PM
The spending decisions of the
The spending decisions of the USG are reliant on Fed support. Again, without the Fed and the manipulated low interest rates the USG could not service their debt. They are painted in a corner.
The stimmy checks were not intended to “help” the poor. They were to induce consumer spending. People making up to 200K were getting checks. My retired parents got checks. Basically a ridiculous amount of money was wasted by giving it to folks who didn’t need it. You are a fool if you truly believe these checks were intended to help poor people.
July 9, 2021 @ 2:52 PM
Again, without the Fed and
Wrong. In fiscal year 2020, net outlays for interest were $345 billion, 1.6 percent of GDP.
You could double the interest rate, and it would still be the pittance of 3.2% of GDP. Oh wait it is fixed rate, so you can’t double the interest rate except on new debt, so it would be maybe 1.7% of GDP.
There’s just no evidence Fed purchases of debt caused long rates to decline. Nations with less aggressive monetary policy also saw rates fall.
All the Fed does is swap actual dollars for dollar-like bonds denominated in dollars. The effect is marginal compared to the bigger factors of demographics and business cycles and fiscal policy.
All the things people say about our monetary policy was said about Japan’s 10-20 years ago, and proved wrong.
July 9, 2021 @ 5:00 PM
gzz wrote:
Again, without the
[quote=gzz]
Wrong. In fiscal year 2020, net outlays for interest were $345 billion, 1.6 percent of GDP.
You could double the interest rate, and it would still be the pittance of 3.2% of GDP. Oh wait it is fixed rate, so you can’t double the interest rate except on new debt, so it would be maybe 1.7% of GDP.
There’s just no evidence Fed purchases of debt caused long rates to decline. Nations with less aggressive monetary policy also saw rates fall.
All the Fed does is swap actual dollars for dollar-like bonds denominated in dollars. The effect is marginal compared to the bigger factors of demographics and business cycles and fiscal policy.
All the things people say about our monetary policy was said about Japan’s 10-20 years ago, and proved wrong.[/quote]
If you say so. So why then is the Federal Reserve buying all this debt? To manipulate the interest rates and the ultimate goal obviously is to blow up the stock market, RE and other asset bubbles to create the wealth effect. When you say the economy is so great, well no it isn’t. The economy is the Fed. The economy is the Stock Market and housing market. Just like the 2000s, the wealth effect is the only thing driving the economy. If the economy was truly great, or even healthy, you wouldn’t need the Fed to keep printing money to buy debt. Fact is there is no organic market for this debt. Just like how the Fed bailed out all of their banking buddies in 2009 by printing money to purchase garbage mortgage securities. It is truly disgusting.
July 9, 2021 @ 3:00 PM
deadzone wrote:
The stimmy
[quote=deadzone]
The stimmy checks were not intended to “help” the poor. They were to induce consumer spending. People making up to 200K were getting checks. My retired parents got checks. Basically a ridiculous amount of money was wasted by giving it to folks who didn’t need it. You are a fool if you truly believe these checks were intended to help poor people.[/quote]
Um. How were people making 200k+ getting checks? Please explain. I definitely would like to know.
The only stimmy I got was for a few months, I worked for 4 days, furloughed for the 5th, but was paid UI benefits from both the fed and state that ended up being more than how much if I worked that day…
July 9, 2021 @ 4:54 PM
Coronita wrote:deadzone
[quote=Coronita][quote=deadzone]
The stimmy checks were not intended to “help” the poor. They were to induce consumer spending. People making up to 200K were getting checks. My retired parents got checks. Basically a ridiculous amount of money was wasted by giving it to folks who didn’t need it. You are a fool if you truly believe these checks were intended to help poor people.[/quote]
Um. How were people making 200k+ getting checks? Please explain. I definitely would like to know.
The only stimmy I got was for a few months, I worked for 4 days, furloughed for the 5th, but was paid UI benefits from both the fed and state that ended up being more than how much if I worked that day…[/quote]
Up to 150K income per family got 100% stimmy, gradually reduced amounts up to 200K
July 9, 2021 @ 4:59 PM
deadzone wrote:Coronita
[quote=deadzone][quote=Coronita][quote=deadzone]
The stimmy checks were not intended to “help” the poor. They were to induce consumer spending. People making up to 200K were getting checks. My retired parents got checks. Basically a ridiculous amount of money was wasted by giving it to folks who didn’t need it. You are a fool if you truly believe these checks were intended to help poor people.[/quote]
Um. How were people making 200k+ getting checks? Please explain. I definitely would like to know.
The only stimmy I got was for a few months, I worked for 4 days, furloughed for the 5th, but was paid UI benefits from both the fed and state that ended up being more than how much if I worked that day…[/quote]
Up to 150K income per family got 100% stimmy, gradually reduced amounts up to 200K[/quote]
Ah, you are talking about the first round of stimmy.
July 9, 2021 @ 5:01 PM
Coronita wrote:deadzone
[quote=Coronita][quote=deadzone][quote=Coronita][quote=deadzone]
The stimmy checks were not intended to “help” the poor. They were to induce consumer spending. People making up to 200K were getting checks. My retired parents got checks. Basically a ridiculous amount of money was wasted by giving it to folks who didn’t need it. You are a fool if you truly believe these checks were intended to help poor people.[/quote]
Um. How were people making 200k+ getting checks? Please explain. I definitely would like to know.
The only stimmy I got was for a few months, I worked for 4 days, furloughed for the 5th, but was paid UI benefits from both the fed and state that ended up being more than how much if I worked that day…[/quote]
Up to 150K income per family got 100% stimmy, gradually reduced amounts up to 200K[/quote]
Ah, you are talking about the first round of stimmy.[/quote]
two rounds of stimmys had same rules as i recall and now there is another thing coming out for folks with children.
July 9, 2021 @ 12:42 PM
deadzone wrote:What do you
[quote=deadzone]What do you think interest rates would be in a free market with out the Fed’s quantitative easing?[/quote]
Really no idea, but certainly wouldn’t be as low as they are. But many other things would be very different too. I doubt if the economy would be growing like it is for one.
But don’t get me wrong, I don’t disagree that the fed has been very aggressive in holding down rates. While that has caused some bad things, I’m not convinced that on whole it has been worse then if they did nothing to interfere.
July 11, 2021 @ 8:17 PM
another datapoint of
another datapoint of inflation….
Back in August 2019, i bought a whirpool dishwasher model WDF520PADM from home depot for a rental for $277
(i added $95 for a 5 year extended warranty and $25 haul away for a total of $399 before tax.)
Today, the same dishwasher, that my parents want to buy for a rental, before extended warranty and haulway cost is….
https://www.homedepot.com/p/Whirlpool-24-in-Monochromatic-Stainless-Steel-Front-Control-Built-in-Tall-Tub-Dishwasher-with-1-Hour-Wash-Cycle-55-dBA-WDF520PADM/205506225?MERCH=REC-_-NavPLPHorizontal1_rr-_-NA-_-205506225-_-N
$566
less than 2 years…
July 11, 2021 @ 9:01 PM
Coronita wrote:another
[quote=Coronita]another datapoint of inflation….
Back in August 2019, i bought a whirpool dishwasher model WDF520PADM from home depot for a rental for $277
(i added $95 for a 5 year extended warranty and $25 haul away for a total of $399 before tax.)
Today, the same dishwasher, that my parents want to buy for a rental, before extended warranty and haulway cost is….
https://www.homedepot.com/p/Whirlpool-24-in-Monochromatic-Stainless-Steel-Front-Control-Built-in-Tall-Tub-Dishwasher-with-1-Hour-Wash-Cycle-55-dBA-WDF520PADM/205506225?MERCH=REC-_-NavPLPHorizontal1_rr-_-NA-_-205506225-_-N
$566
less than 2 years…[/quote]
There are clearly tons of examples of price appreciation in recent years.
I’m curious if there are any examples of anything that has gone down in price in the last two years. I can’t think of any.
July 12, 2021 @ 6:34 AM
deadzone wrote:
There are
[quote=deadzone]
There are clearly tons of examples of price appreciation in recent years.
I’m curious if there are any examples of anything that has gone down in price in the last two years. I can’t think of any.[/quote]
Mobil 1 0w40 synthetic motor oil
2017
$22.88
[img_assist|nid=27419|title=motor oil|desc=|link=node|align=left|width=400|height=300]
2021
$22.37
https://www.amazon.com/Mobil-120760-Synthetic-Motor-0W-40/dp/B00HG76A9A/ref=sr_1_1_sspa
i use to stock several gallons of motor oil. But at these prices, i don’t bother and free up a lot of shelf space.
Also, Bridgestone RE-71R 215/45/17 tires.
$594 for 4 in 2017
$569 for 4 in 2018
$459 for 4 in 2021
To be fair, beidgestone discontinued the tire this year so it could be more to do with a clearance sale
[img_assist|nid=27421|title=tires|desc=|link=node|align=left|width=462|height=600]
[img_assist|nid=27422|title=tires|desc=|link=node|align=left|width=600|height=600]
July 13, 2021 @ 10:46 AM
1. When people report
1. When people report uncritically 2020-2021 inflation figures, they are biased or uninformed. It is trivial to just report 2019-2021 figures to filter out the pandemic effect.
2. About a third of June’s inflation is from used car prices.
3. The media and sheeple love inflation stories. Not much evidence of expected long inflation when looking at TIPS v regular bonds. Today implied expectations is 2.33%. OMG!!!!!
https://fred.stlouisfed.org/series/T10YIE
July 13, 2021 @ 10:57 AM
gzz wrote:1. When people
[quote=gzz]1. When people report uncritically 2020-2021 inflation figures, they are biased or uninformed. It is trivial to just report 2019-2021 figures to filter out the pandemic effect.
2. About a third of June’s inflation is from used car prices.
3. The media and sheeple love inflation stories. Not much evidence of expected long inflation when looking at TIPS v regular bonds. Today implied expectations is 2.33%. OMG!!!!!
https://fred.stlouisfed.org/series/T10YIE%5B/quote%5D
Do you get out much? I see it everywhere. I’m sipping a coffee right now that went up 10% this year.
I’d love deflating building prices. Working on plans for a multi unit development right now. Would love to see costs drop in couple years when we are ready to go
July 13, 2021 @ 11:37 AM
SDR, I am also drinking
SDR, I am also drinking coffee now, an iced Nespresso. The capsules direct from Nestle are the same base 70c each they were 10 years ago. However, my most recent purchase was the best promo the entire time, and worked out to about 54c per capsule. Normally the promos are more like 10% off.
They have free overnight (to my address at least) shipping when you buy $50 worth.
We have the BLS so we don’t have to rely on such anecdotes.
While I am having it black, if I wanted to add milk to it, the price would be about the same as it was when I first purchased it in the 1990s.
July 13, 2021 @ 1:18 PM
gzz wrote:SDR, I am also
[quote=gzz]SDR, I am also drinking coffee now, an iced Nespresso. The capsules direct from Nestle are the same base 70c each they were 10 years ago. However, my most recent purchase was the best promo the entire time, and worked out to about 54c per capsule. Normally the promos are more like 10% off.
They have free overnight (to my address at least) shipping when you buy $50 worth.
We have the BLS so we don’t have to rely on such anecdotes.
While I am having it black, if I wanted to add milk to it, the price would be about the same as it was when I first purchased it in the 1990s.[/quote]
Nespresso was a novelty premium product when it first came out and had premium pricing. Now its a commodity. The market for it has fundamentally changed. Not a good example
July 13, 2021 @ 4:05 PM
Nespresso was a novelty
The type of coffee you buy goes up in price is a good example of inflation, the type of coffee I buy goes down but is “not a good example”?!?
I am not sure what you mean by “not a good example.”
I think it is another example of someone saying the decline in the market price of something “doesn’t count” as inflation “because reasons.” And in general, of the bizarre cognitive bias people have of thinking inflation is higher than it really is and always accelerating.
Are there any items whose price has declined that is a “good example” of deflation? Clothing? TVs? Furniture? Long distance calls? Computers? Flash drives?
The fact there are reasons prices decline, such as they go from luxury to commodity, doesn’t mean it isn’t deflation. Also I don’t actually agree that Nespresso was a premium item in 2011 and isn’t now. Both years you could buy generic pods for less that were not quite as good as Nestle’s, but fine if you mixed with milk or a chocolate protein shake.
July 13, 2021 @ 8:51 PM
gzz wrote:
Nespresso was a
[quote=gzz]
The type of coffee you buy goes up in price is a good example of inflation, the type of coffee I buy goes down but is “not a good example”?!?
I am not sure what you mean by “not a good example.”
I think it is another example of someone saying the decline in the market price of something “doesn’t count” as inflation “because reasons.” And in general, of the bizarre cognitive bias people have of thinking inflation is higher than it really is and always accelerating.
Are there any items whose price has declined that is a “good example” of deflation? Clothing? TVs? Furniture? Long distance calls? Computers? Flash drives?
The fact there are reasons prices decline, such as they go from luxury to commodity, doesn’t mean it isn’t deflation. Also I don’t actually agree that Nespresso was a premium item in 2011 and isn’t now. Both years you could buy generic pods for less that were not quite as good as Nestle’s, but fine if you mixed with milk or a chocolate protein shake.[/quote]
You are too funny. My cup of brewed coffee goes up but because you find a way to buy a product with discounts (which by the way may not continue to be available) my example of inflation doesn’t count. You just did exactly what you accused me of.
April 5, 2022 @ 10:06 AM
sdrealtor wrote:gzz wrote:1.
[quote=sdrealtor][quote=gzz]1. When people report uncritically 2020-2021 inflation figures, they are biased or uninformed. It is trivial to just report 2019-2021 figures to filter out the pandemic effect.
2. About a third of June’s inflation is from used car prices.
3. The media and sheeple love inflation stories. Not much evidence of expected long inflation when looking at TIPS v regular bonds. Today implied expectations is 2.33%. OMG!!!!!
https://fred.stlouisfed.org/series/T10YIE%5B/quote%5D
Do you get out much? I see it everywhere. I’m sipping a coffee right now that went up 10% this year.
I’d love deflating building prices. Working on plans for a multi unit development right now. Would love to see costs drop in couple years when we are ready to go[/quote]
Update
In July my morning coffee went up 10% from 2.40 to 2.65. Just went up another 10%+ to $2.95. That’s 23% in less than a year
Not transitory. Very persistent
April 5, 2022 @ 2:12 PM
sdrealtor wrote:sdrealtor
[quote=sdrealtor][quote=sdrealtor][quote=gzz]1. When people report uncritically 2020-2021 inflation figures, they are biased or uninformed. It is trivial to just report 2019-2021 figures to filter out the pandemic effect.
2. About a third of June’s inflation is from used car prices.
3. The media and sheeple love inflation stories. Not much evidence of expected long inflation when looking at TIPS v regular bonds. Today implied expectations is 2.33%. OMG!!!!!
https://fred.stlouisfed.org/series/T10YIE%5B/quote%5D
Do you get out much? I see it everywhere. I’m sipping a coffee right now that went up 10% this year.
I’d love deflating building prices. Working on plans for a multi unit development right now. Would love to see costs drop in couple years when we are ready to go[/quote]
Update
In July my morning coffee went up 10% from 2.40 to 2.65. Just went up another 10%+ to $2.95. That’s 23% in less than a year
Not transitory. Very persistent[/quote]
I got a good deal on a thermos. I’m bringing my hot drinks with me.
July 13, 2021 @ 3:28 PM
gzz wrote:About a third of
[quote=gzz]About a third of June’s inflation is from used car prices[/quote]
not only that, but when you exclude pandemic-related services (travel, event admission) and vehicles (new, used, parts, rentals), core inflation was .22% in june, a deceleration from .28% in may and .31% in april.
http://econbrowser.com/archives/2021/07/inflation
.22% for 1 month is a 2.67% annualized rate. looking more and more transitory with every data release.
July 13, 2021 @ 3:51 PM
BRG – thanks, I learned
BRG – thanks, I learned something from your link.
TIPS spread overstates expected inflation, because it includes three things: inflation expectation, inflation risk premium, and TIPS liquidity premium.
TIPS doesn’t just pay you the inflation measure, it also insures you against inflation, moving the risk from the bond buyer to the bond issuer. That insurance has economic value on top of the expected payment for inflation.
Two market inflation expectation measures that do not have this problem are the an adjusted TIPS measure and a separate measure by the Cleveland Fed. The latter says expected inflation is about 1.6%.
https://www.clevelandfed.org/our-research/indicators-and-data/inflation-expectations.aspx
The second measure is 1.7% and based on TIPS and stated here:
http://econbrowser.com/archives/2021/07/inflation-expectations-5-year-horizon
July 13, 2021 @ 10:49 AM
Lumber prices erase all of
Lumber prices erase all of 2021 gain, and also are up far less than CPI over 25 years.
https://www.kitco.com/news/2021-07-13/Lumber-erases-all-2021-gains-here-s-why-deflation-is-the-risk-to-watch-says-Bloomberg-Intelligence.html
July 13, 2021 @ 4:12 PM
Boy I wish I did live in the
Boy I wish I did live in the inflationista fantasy world. I think sustained 4% to 5% inflation would be a wonderful thing for economic growth and reducing inequality.
It would be great for me too! I also have $1M+ of fixed rate debt and more than 100% of my net worth is in inflation-resistant assets (mainly RE, secondarily stocks, plus some pretty 19th century gold coins).
Even my bond-ish high dividend value stocks like KHC would really benefit from inflation because they tend to have a ton of fixed rate long debt and pretty good pricing power.
Alas, my dream and the inflationista nightmare of 5% inflation will only sweeten and haunt our sleeping nights, never to see dawn’s early light.
July 13, 2021 @ 8:54 PM
gzz wrote:Boy I wish I did
[quote=gzz]Boy I wish I did live in the inflationista fantasy world. I think sustained 4% to 5% inflation would be a wonderful thing for economic growth and reducing inequality.
It would be great for me too! I also have $1M+ of fixed rate debt and more than 100% of my net worth is in inflation-resistant assets (mainly RE, secondarily stocks, plus some pretty 19th century gold coins).
Even my bond-ish high dividend value stocks like KHC would really benefit from inflation because they tend to have a ton of fixed rate long debt and pretty good pricing power.
Alas, my dream and the inflationista nightmare of 5% inflation will only sweeten and haunt our sleeping nights, never to see dawn’s early light.[/quote]
So just there you admitted that basically your entire net worth is invested in hedges against inflation yet you wonder why you don’t feel or see inflation. Of course you don’t
July 13, 2021 @ 9:16 PM
Shitty motel room was $200,
Shitty motel room was $200, think it was 140 ish not long ago.
200?
Jeeeeeeeez
July 13, 2021 @ 9:48 PM
gzz wrote:
It would be great
[quote=gzz]
It would be great for me too! I also have $1M+ of fixed rate debt and more than 100% of my net worth is in inflation-resistant assets (mainly RE, secondarily stocks, plus some pretty 19th century gold coins).
[/quote]
Explain to me how stocks are inflation resistant. Inflation goes up, interest rates are raised in response (one would think), which causes stocks to go down.
July 14, 2021 @ 7:43 AM
Reality wrote:
Explain to me
[quote=Reality]
Explain to me how stocks are inflation resistant. Inflation goes up, interest rates are raised in response (one would think), which causes stocks to go down.[/quote]
If inflation is caused by an overheated economy that is good for stocks. Business is booming, people are buying things, companies are making profits. When the economy is in a deep recession, inflation is likely to be non-existent. Maybe even deflation is present. Times like that are bad for stocks.
Currently we are hearing talk in the news that if inflation goes up, the fed will allow rates to go up and that is bad for companies that need to borrow money which means falling stock prices. (Exactly what you describe) While I don’t disagree with this narrative, I suspect that often the forces of booming business outweigh the forces of rising interest rates. Just depends how those two balance out. Inflation with little to no rising rates is probably good for stocks. Small amounts of inflation with rapidly rising interest rates would probably be pretty bad for stocks.
And looking at all the recent times data indicating we are entering a period of inflation has been release, if there has been a fall in stocks it has been temporary and quickly recovered from.
July 14, 2021 @ 8:41 AM
XBoxBoy wrote:Reality
[quote=XBoxBoy][quote=Reality]
Explain to me how stocks are inflation resistant. Inflation goes up, interest rates are raised in response (one would think), which causes stocks to go down.[/quote]
If inflation is caused by an overheated economy that is good for stocks. Business is booming, people are buying things, companies are making profits. When the economy is in a deep recession, inflation is likely to be non-existent. Maybe even deflation is present. Times like that are bad for stocks.
Currently we are hearing talk in the news that if inflation goes up, the fed will allow rates to go up and that is bad for companies that need to borrow money which means falling stock prices. (Exactly what you describe) While I don’t disagree with this narrative, I suspect that often the forces of booming business outweigh the forces of rising interest rates. Just depends how those two balance out. Inflation with little to no rising rates is probably good for stocks. Small amounts of inflation with rapidly rising interest rates would probably be pretty bad for stocks.
And looking at all the recent times data indicating we are entering a period of inflation has been release, if there has been a fall in stocks it has been temporary and quickly recovered from.[/quote]
Of course higher interest rates will crush the stock market (and ultimately housing market). However, the Fed is in control with the printing press. Powell and the Fed have made no indication that they are going to take their foot off the gas. In fact it is quite the opposite. As long as they deny inflation, call it transitory, they will not stop. I’m not sure they will ever stop, they’ve been doing QE non-stop since 2009.
July 14, 2021 @ 9:24 AM
If you truly believe what you
If you truly believe what you said why don’t you buy the best hedge out there?
July 14, 2021 @ 10:04 AM
sdrealtor wrote:If you truly
[quote=sdrealtor]If you truly believe what you said why don’t you buy the best hedge out there?[/quote]
Not sure if this is question to me. I’m not predicting the Fed keeps the foot on the gas forever, or if they will be forced to stop QE but it sure looks possible they will keep this up for a long time. Obviously the big money investment firms are buying up a lot of real estate, even now with it at all time highs, so this clearly indicates they believe the Fed is not going to stop.
For sure RE is a great inflation hedge. But at these prices? Serious question to sdr, if you just inherited say 5 million bucks, would you invest it all in RE at today’s prices? Or some portion? There is serious risk at these prices. Yes if inflation goes ballistic it would work out. If there is a market crash you could lose your shirt. In my mind it is about 50/50 between those two scenarios.
July 14, 2021 @ 11:32 AM
deadzone wrote:sdrealtor
[quote=deadzone][quote=sdrealtor]If you truly believe what you said why don’t you buy the best hedge out there?[/quote]
Not sure if this is question to me. I’m not predicting the Fed keeps the foot on the gas forever, or if they will be forced to stop QE but it sure looks possible they will keep this up for a long time. Obviously the big money investment firms are buying up a lot of real estate, even now with it at all time highs, so this clearly indicates they believe the Fed is not going to stop.
For sure RE is a great inflation hedge. But at these prices? Serious question to sdr, if you just inherited say 5 million bucks, would you invest it all in RE at today’s prices? Or some portion? There is serious risk at these prices. Yes if inflation goes ballistic it would work out. If there is a market crash you could lose your shirt. In my mind it is about 50/50 between those two scenarios.[/quote]
You don’t have to invest here. There are plenty of places where it’s not nearly as crazy. To answer your question I would invest a good portion in income producing real estate. Rents will follow inflation. I’m actually in the early stages of a rather larger investment along these lines. I’d rather play golf and drink wine then work.
July 14, 2021 @ 7:45 AM
gzz wrote:Boy I wish I did
[quote=gzz]Boy I wish I did live in the inflationista fantasy world. I think sustained 4% to 5% inflation would be a wonderful thing for economic growth and reducing inequality.
[/quote]
Gzz, can you explain why you think high inflation would cause reducing inequality?
July 14, 2021 @ 10:18 AM
IMO the FED is kind of
IMO the FED is kind of trapped with “pedal to the metal”.
Having a long term stock market crash would put most pension plans into BK.
And probably end a lot of 401K millionaires dreams.
(not that a million will go very far in 5-10 years IMO).
July 14, 2021 @ 10:29 AM
The-Shoveler wrote:IMO the
[quote=The-Shoveler]IMO the FED is kind of trapped with “pedal to the metal”.
Having a long term stock market crash would put most pension plans into BK.
And probably end a lot of 401K millionaires dreams.
(not that a million will go very far in 5-10 years IMO).[/quote]
Exactly, they are definitely trapped and I think that is the biggest reason RE is going ape-shit right now. Everyone is desperate for inflation hedge. But on the other hand, our Fed controlled Fiat financial system by definition results in booms and busts. You can’t have a perpetual boom. At some point there needs to be a bust so you can re-inflate another bubble in the future for a new boom.
July 14, 2021 @ 11:36 AM
deadzone wrote:The-Shoveler
[quote=deadzone][quote=The-Shoveler]IMO the FED is kind of trapped with “pedal to the metal”.
Having a long term stock market crash would put most pension plans into BK.
And probably end a lot of 401K millionaires dreams.
(not that a million will go very far in 5-10 years IMO).[/quote]
Exactly, they are definitely trapped and I think that is the biggest reason RE is going ape-shit right now. Everyone is desperate for inflation hedge. But on the other hand, our Fed controlled Fiat financial system by definition results in booms and busts. You can’t have a perpetual boom. At some point there needs to be a bust so you can re-inflate another bubble in the future for a new boom.[/quote]
The smartest guy in the room doesn’t dictate the real estate market, the stupidest one with a lot of money does. You remind me of a lot of smart people I’ve run into who think real estate prices don’t make sense and miss opportunities they talk themselves out of. The most successful real estate investors I see look at current math and don’t over think things.
July 14, 2021 @ 11:49 AM
sdrealtor wrote:deadzone
[quote=sdrealtor][quote=deadzone][quote=The-Shoveler]IMO the FED is kind of trapped with “pedal to the metal”.
Having a long term stock market crash would put most pension plans into BK.
And probably end a lot of 401K millionaires dreams.
(not that a million will go very far in 5-10 years IMO).[/quote]
Exactly, they are definitely trapped and I think that is the biggest reason RE is going ape-shit right now. Everyone is desperate for inflation hedge. But on the other hand, our Fed controlled Fiat financial system by definition results in booms and busts. You can’t have a perpetual boom. At some point there needs to be a bust so you can re-inflate another bubble in the future for a new boom.[/quote]
The smartest guy in the room doesn’t dictate the real estate market, the stupidest one with a lot of money does. You remind me of a lot of smart people I’ve run into who think real estate prices don’t make sense and miss opportunities they talk themselves out of. The most successful real estate investors I see look at current math and don’t over think things.[/quote]
You are right about that. But then again I have also been burned by market crashes in the past and understand that history usually repeats itself.
Obviously SD RE at these prices there is no way you could be anywhere close to cash flow positive by renting. I take it there are other parts of the Country you like for income producing RE?
I so own some rentals South of the border, thinking about expanding down there if anything.
July 14, 2021 @ 12:50 PM
deadzone wrote:sdrealtor
[quote=deadzone][quote=sdrealtor][quote=deadzone][quote=The-Shoveler]IMO the FED is kind of trapped with “pedal to the metal”.
Having a long term stock market crash would put most pension plans into BK.
And probably end a lot of 401K millionaires dreams.
(not that a million will go very far in 5-10 years IMO).[/quote]
Exactly, they are definitely trapped and I think that is the biggest reason RE is going ape-shit right now. Everyone is desperate for inflation hedge. But on the other hand, our Fed controlled Fiat financial system by definition results in booms and busts. You can’t have a perpetual boom. At some point there needs to be a bust so you can re-inflate another bubble in the future for a new boom.[/quote]
The smartest guy in the room doesn’t dictate the real estate market, the stupidest one with a lot of money does. You remind me of a lot of smart people I’ve run into who think real estate prices don’t make sense and miss opportunities they talk themselves out of. The most successful real estate investors I see look at current math and don’t over think things.[/quote]
You are right about that. But then again I have also been burned by market crashes in the past and understand that history usually repeats itself.
Obviously SD RE at these prices there is no way you could be anywhere close to cash flow positive by renting. I take it there are other parts of the Country you like for income producing RE?
I so own some rentals South of the border, thinking about expanding down there if anything.[/quote]
property is in San Diego and rent more than covers the carrying cost. However the upside is the lot and it’s zoning which is developable into multiunit in a gentrifying area with a great future over the next 5 to 10 years.That’s as much as I’ll say
Just went back and had an OMG moment. You think investing here is crazy but you invest south of the border? Thats a serious wtf for me
July 14, 2021 @ 12:23 PM
I think that is the biggest
That’s not what the bond market shows.
Relative TIPS pricing does not show any “desperation” for inflation hedges. Nor does the classic hedge of gold.
Moreover, most investments are fairly protected from inflation. it isn’t just RE. The main ones that are not are fixed rate long term debt instruments themselves and companies that hold a lot of them, such as mortgage REITs.
Depends on your cost of funds. If you have a lot of cash sitting around making 1.35% in ten year treasuries and then taxed, your money would certainly do better in RE.
Moreover, “cash flow positive” is certainly nice, but also arbitrary. An investment that qualifies with a 30 year mortgage may not with a 15.
Nominal RE prices and rents both tend to go up, and even very slow appreciation of 1% nominal produces large equity gains, even if there is no “cash flow positive” benefit in the first year.
Frankly if you require a RE investment to immediately cash flow out, maybe you shouldn’t be investing so aggressively.
July 14, 2021 @ 1:13 PM
How can you take the bond
How can you take the bond market seriously when the Fed is buying nearly half of all treasuries issued in the last yaer? This market is totally manipulated.
July 14, 2021 @ 12:32 PM
On the cash flow point, take
On the cash flow point, take this recent closing:
https://www.sdlookup.com/MLS-210007626-4930-Del-Mar-Ave-106-San-Diego-CA-92107
I know this market, this would rent for about $2400/mo to a long term renter. If it can be AirBNBed much more but let’s put that aside.
HOA + tax + ins would be $827/mo. So net rent would be $1573, or $18876 a year.
That’s an immediate return of 3.97% on the purchase price, and far better than bonds. And in my view about as safe, if not as liquid. And RE is far more tax advantaged.
Assume only a 1% appreciation, however, and the 3.97% becomes 4.97%. Add in 1% rent growth and it goes up to 5.03%. And 1% increase in price and rent is being IMO unreasonably conservative if you are doing long term planning, though of course it could be that low for a few years.
July 14, 2021 @ 1:23 PM
gzz wrote:On the cash flow
[quote=gzz]On the cash flow point, take this recent closing:
https://www.sdlookup.com/MLS-210007626-4930-Del-Mar-Ave-106-San-Diego-CA-92107
I know this market, this would rent for about $2400/mo to a long term renter. If it can be AirBNBed much more but let’s put that aside.
HOA + tax + ins would be $827/mo. So net rent would be $1573, or $18876 a year.
That’s an immediate return of 3.97% on the purchase price, and far better than bonds. And in my view about as safe, if not as liquid. And RE is far more tax advantaged.
Assume only a 1% appreciation, however, and the 3.97% becomes 4.97%. Add in 1% rent growth and it goes up to 5.03%. And 1% increase in price and rent is being IMO unreasonably conservative if you are doing long term planning, though of course it could be that low for a few years.[/quote]
Seriously there are people paying $2400 for 1 bed 1 bath long term? I guess I’ll take your word for it.
July 14, 2021 @ 4:23 PM
A 1 br place in La Costa is
A 1 br place in La Costa is $2k. A lot more in Carmel Valley
July 15, 2021 @ 8:43 AM
sdrealtor wrote:A 1 br place
[quote=sdrealtor]A 1 br place in La Costa is $2k. A lot more in Carmel Valley[/quote]
But who would rent that long term at that price? What is your definition of long term? May as well buy the place but 1/1 condos are about the worst/riskiest investment to make at all time market highs.
July 15, 2021 @ 9:14 AM
If I win a $5m lottery today,
If I win a $5m lottery today, I’d spend about 80% of it in SD RE right now.
July 15, 2021 @ 11:00 AM
an wrote:If I win a $5m
[quote=an]If I win a $5m lottery today, I’d spend about 80% of it in SD RE right now.[/quote]
Obviously a lot of people share your sentiment which is why the market is going ape-shit right now. That’s what super low interest rates and expectation for endless Fed support will do. As long as everyone thinks prices will go up in perpetuity, there is no perceived risk. For now at least, the Fed has taken risk out of the equation since they have been and continue to buy everything (including mortgage backed securities).
July 15, 2021 @ 11:21 AM
deadzone wrote:an wrote:If I
[quote=deadzone][quote=an]If I win a $5m lottery today, I’d spend about 80% of it in SD RE right now.[/quote]
Obviously a lot of people share your sentiment which is why the market is going ape-shit right now. That’s what super low interest rates and expectation for endless Fed support will do. As long as everyone thinks prices will go up in perpetuity, there is no perceived risk. For now at least, the Fed has taken risk out of the equation since they have been and continue to buy everything (including mortgage backed securities).[/quote]
I don’t buy investment properties with expectation that it will always go up in perpetuity. The reasons why I would buy today is the same reasons I bought between 2008-2018.
July 15, 2021 @ 12:05 PM
an wrote:deadzone wrote:an
[quote=an][quote=deadzone][quote=an]If I win a $5m lottery today, I’d spend about 80% of it in SD RE right now.[/quote]
Obviously a lot of people share your sentiment which is why the market is going ape-shit right now. That’s what super low interest rates and expectation for endless Fed support will do. As long as everyone thinks prices will go up in perpetuity, there is no perceived risk. For now at least, the Fed has taken risk out of the equation since they have been and continue to buy everything (including mortgage backed securities).[/quote]
I don’t buy investment properties with expectation that it will always go up in perpetuity. The reasons why I would buy today is the same reasons I bought between 2008-2018.[/quote]
Yes but today you’ve reaped the benefits of monumental RE price boom from 2008-2018. Not realistic to expect similar gains from current pricing. Even more so since current pricing is even more distorted due to Covid phenomena which is not likely to continue.
July 15, 2021 @ 12:36 PM
deadzone wrote:an
[quote=deadzone][quote=an][quote=deadzone][quote=an]If I win a $5m lottery today, I’d spend about 80% of it in SD RE right now.[/quote]
Obviously a lot of people share your sentiment which is why the market is going ape-shit right now. That’s what super low interest rates and expectation for endless Fed support will do. As long as everyone thinks prices will go up in perpetuity, there is no perceived risk. For now at least, the Fed has taken risk out of the equation since they have been and continue to buy everything (including mortgage backed securities).[/quote]
I don’t buy investment properties with expectation that it will always go up in perpetuity. The reasons why I would buy today is the same reasons I bought between 2008-2018.[/quote]
Yes but today you’ve reaped the benefits of monumental RE price boom from 2008-2018. Not realistic to expect similar gains from current pricing. Even more so since current pricing is even more distorted due to Covid phenomena which is not likely to continue.[/quote] You were saying the same thing back going back to beginninng of the recorvery and through it. You always have an answer why its a bad idea
July 15, 2021 @ 12:55 PM
deadzone wrote:Yes but today
[quote=deadzone]Yes but today you’ve reaped the benefits of monumental RE price boom from 2008-2018. Not realistic to expect similar gains from current pricing. Even more so since current pricing is even more distorted due to Covid phenomena which is not likely to continue.[/quote]
When I bought in 2008-2018, I wasn’t expecting a monumental RE price boom. It wasn’t part of the calculation/reason why I bought. It’s still not part of the calculation/reason why I am buying today. Price appreciation is the cherry on top but not the cake.
Also, how can you be sure we won’t see even faster price increase?
July 15, 2021 @ 3:14 PM
an wrote:deadzone wrote:Yes
[quote=an][quote=deadzone]Yes but today you’ve reaped the benefits of monumental RE price boom from 2008-2018. Not realistic to expect similar gains from current pricing. Even more so since current pricing is even more distorted due to Covid phenomena which is not likely to continue.[/quote]
When I bought in 2008-2018, I wasn’t expecting a monumental RE price boom. It wasn’t part of the calculation/reason why I bought. It’s still not part of the calculation/reason why I am buying today. Price appreciation is the cherry on top but not the cake.
Also, how can you be sure we won’t see even faster price increase?[/quote]
Yes, just wanted to make sure you understood that these price gains were one hell of a cherry on top. Nobody predicted this, particularly the pandemic related RE craze. even if sdr claims to have been nostradamus.
We are in unprecedented times. Common sense and basic math say price gains and bubbles in financial markets cannot go parabolic forever. They always crash or have some major correction at some point. But the Fed has kept this up pretty consistently since 2009, using this massive asset purchase program (QE) that has never been done before in the history of the U.S. The only comparable example where this has been done before is Japan and that is a much smaller scale.
The main thing you have going for you even when purchasing at today’s massively inflated prices is you know the Fed has your back. They REALLY want home prices to be high, stay high and go higher. Why else would they continue to print money to buy mortgage securities? This made sense in 2009 with the collapse of the mortgage markets, but why didn’t they ever stop and why are they still doing it in 2021???
July 15, 2021 @ 3:19 PM
IMO the FED and PTB are
IMO the FED and PTB are trying to copy China in this regard.
What’s it been 35 years or more LOL.
But maybe I am wrong.
July 15, 2021 @ 4:22 PM
No one predicted this. Im the
No one predicted this. Im the first to admit I didn’t see this coming
July 16, 2021 @ 7:56 AM
deadzone wrote:
Yes, just
[quote=deadzone]
Yes, just wanted to make sure you understood that these price gains were one hell of a cherry on top. Nobody predicted this, particularly the pandemic related RE craze. even if sdr claims to have been nostradamus. [/quote] Let me repeat again, appreciation was never the main part of my calculation on whether I should buy a rental or not. Not between 2008-2018 and it’s still not today. So, I’m not sure what you’re getting at here.
[quote=deadzone]We are in unprecedented times. Common sense and basic math say price gains and bubbles in financial markets cannot go parabolic forever. They always crash or have some major correction at some point. But the Fed has kept this up pretty consistently since 2009, using this massive asset purchase program (QE) that has never been done before in the history of the U.S. The only comparable example where this has been done before is Japan and that is a much smaller scale.
The main thing you have going for you even when purchasing at today’s massively inflated prices is you know the Fed has your back. They REALLY want home prices to be high, stay high and go higher. Why else would they continue to print money to buy mortgage securities? This made sense in 2009 with the collapse of the mortgage markets, but why didn’t they ever stop and why are they still doing it in 2021???[/quote]The Fed have been around for a long time now, so, it’s nothing new. Also, let me repeat again since you don’t quite get it, appreciation is not part of the main reason why I buy rentals. As long as rents are increasing, that’s all that matter. So, it matter less to me if the Fed really want home prices to be high or not. I don’t intend to sell, so price appreciation only hurt me from buying more rental if rent doesn’t keep up.
July 16, 2021 @ 8:48 AM
an wrote:deadzone wrote:
Yes,
[quote=an][quote=deadzone]
Yes, just wanted to make sure you understood that these price gains were one hell of a cherry on top. Nobody predicted this, particularly the pandemic related RE craze. even if sdr claims to have been nostradamus. [/quote] Let me repeat again, appreciation was never the main part of my calculation on whether I should buy a rental or not. Not between 2008-2018 and it’s still not today. So, I’m not sure what you’re getting at here.
[quote=deadzone]We are in unprecedented times. Common sense and basic math say price gains and bubbles in financial markets cannot go parabolic forever. They always crash or have some major correction at some point. But the Fed has kept this up pretty consistently since 2009, using this massive asset purchase program (QE) that has never been done before in the history of the U.S. The only comparable example where this has been done before is Japan and that is a much smaller scale.
The main thing you have going for you even when purchasing at today’s massively inflated prices is you know the Fed has your back. They REALLY want home prices to be high, stay high and go higher. Why else would they continue to print money to buy mortgage securities? This made sense in 2009 with the collapse of the mortgage markets, but why didn’t they ever stop and why are they still doing it in 2021???[/quote]The Fed have been around for a long time now, so, it’s nothing new. Also, let me repeat again since you don’t quite get it, appreciation is not part of the main reason why I buy rentals. As long as rents are increasing, that’s all that matter. So, it matter less to me if the Fed really want home prices to be high or not. I don’t intend to sell, so price appreciation only hurt me from buying more rental if rent doesn’t keep up.[/quote]
Understood. But, you are wrong about Fed. This IS something new. The QE program (i.e. Fed artificially inflating markets by purchasing treasuries and MBS) has only been happening since 2009, and is on hyper overdrive during pandemic. This is the primary driver for the economy and asset prices and is unprecedented in history.
So you are relying on continued Rent increases to justify RE purchase at today’s prices. Rent has ballooned in the last few years, is that realistic to think it will continue to appreciate? Perhaps but again only due to Fed induced inflation in my opinion.
July 16, 2021 @ 9:11 AM
deadzone wrote:Understood.
[quote=deadzone]Understood. But, you are wrong about Fed. This IS something new. The QE program (i.e. Fed artificially inflating markets by purchasing treasuries and MBS) has only been happening since 2009, and is on hyper overdrive during pandemic. This is the primary driver for the economy and asset prices and is unprecedented in history.
So you are relying on continued Rent increases to justify RE purchase at today’s prices. Rent has ballooned in the last few years, is that realistic to think it will continue to appreciate? Perhaps but again only due to Fed induced inflation in my opinion.[/quote]
QE might be new but Fed manipulation isn’t new. That’s what they’re there for. So, QE is just one weapon w/in their arsenal.
As for relying on continued rent increase, rent has been increasing for decades. What make you think it’ll be different this time? Also, I’m not relying on continued rent increase. I’m relying on good renters paying rent. Rent increase is cherry on top too. I don’t make decision on buying rentals based on some assumption about rent increase. I buy rentals based on the current market rent. So, unless I have data to persuade me that rent will decline over the medium to long term, I don’t use rent projection as part of my calculation.
July 16, 2021 @ 11:22 AM
an wrote: So, QE is just one
[quote=an] So, QE is just one weapon w/in their arsenal.
[/quote]
Well it is a mighty powerful weapon. QE was first utilized as an unprecedented and extreme measure in 2009 in response to the frozen debt markets and the cratering economy. Now all these years later they never stopped doing it. Makes you realize that in reality the economy never recovered and it is 100% reliant on Fed support. There is no other logical reason why they would continue this if not for that reality.
Look what happened when Powell first came in. He started “tapering” fed purchases in 2018 and when the stock market started dropping towards the end of the year, he immediately pulled a 180 and said no we aren’t going to taper. This just in response to 10% drop in the stock market. This is all the proof you need to see what the Fed’s real mandate is.
July 16, 2021 @ 11:44 AM
deadzone wrote:Makes you
[quote=deadzone]Makes you realize that in reality the economy never recovered and it is 100% reliant on Fed support.[/quote]
How many years have to past before the current reality become a reality for you? The Fed is not going away and they will not stand back and do nothing.
July 16, 2021 @ 12:49 PM
an wrote:deadzone wrote:Makes
[quote=an][quote=deadzone]Makes you realize that in reality the economy never recovered and it is 100% reliant on Fed support.[/quote]
How many years have to past before the current reality become a reality for you? The Fed is not going away and they will not stand back and do nothing.[/quote]
It has become a reality for me that Fed will stop at nothing to “try” to prop up markets, and up till now that has been successful. I don’t have confidence they will be able to keep this charade up forever. But that is the clear case for going all in on RE today, that the Fed support (and ultimate inflation) will never stop. I’m not arguing that this is not going to happen.
July 15, 2021 @ 4:47 PM
an wrote:deadzone wrote:an
[quote=an][quote=deadzone][quote=an]If I win a $5m lottery today, I’d spend about 80% of it in SD RE right now.[/quote]
Obviously a lot of people share your sentiment which is why the market is going ape-shit right now. That’s what super low interest rates and expectation for endless Fed support will do. As long as everyone thinks prices will go up in perpetuity, there is no perceived risk. For now at least, the Fed has taken risk out of the equation since they have been and continue to buy everything (including mortgage backed securities).[/quote]
I don’t buy investment properties with expectation that it will always go up in perpetuity. The reasons why I would buy today is the same reasons I bought between 2008-2018.[/quote]
Cashflow baby!
July 15, 2021 @ 5:45 PM
DZ and SDR have a rare moment
DZ and SDR have a rare moment of agreement, and as in the prior time they are wrong.
“Nobody predicted this”
I didn’t exactly phrase it “ I predict” but I said a lot of times here 2014-2019 that while fundamentals point to 5-10% price gains, there was a very good chance of a new bubble and it was prudent to buy in and take advantage. And I think I was speaking what a lot of others were thinking.
From Aug 2019:
“ In terms of psychology and momentum, all the bulls from the past 5-10 years who will be doing refis will suddenly see their already profitable investments become more so as they cut their monthly payments.
Are you opposed to riding the next bubble up on principle? I am a bear at heart, I am net short US equities. But I have shorted enough bubbles the past 15 years to know that another RE bubble is a-brewin’. ”
July 15, 2021 @ 9:31 PM
C’mon man! You didn’t come
C’mon man! You didn’t come close to predicting this. No one did! This ? This was 30%+ gains
Put down the crack pipe
July 15, 2021 @ 9:59 PM
sdrealtor wrote:C’mon man!
[quote=sdrealtor]C’mon man! You didn’t come close to predicting this. No one did! This ? This was 30%+ gains
Put down the crack pipe[/quote]
But on that point, you have to consider that as Covid (and related policies) roll back, these unnatural RE and asset gains are going to reverse. Between the massive QE, mortgage and rent moratorium, stimulus, PPP loans, unemployment, etc. etc. those are all driving this craziness.
Plus if the “work at home” paradigm is a significant factor, I hate to break it to the entitle millenials but the majority of you are going to get called back to the office this year. The permanent remote work might be okay for a few niche tech and programming jobs but not for the majority of jobs. And I’m still very skeptical about how productive these folks are even in Tech. With all the government handouts, massive stock gains and share buybacks, it’s not like most companies even have to be productive or efficient to make money.
July 15, 2021 @ 10:23 PM
Don’t assume they are going
Don’t assume they are going to roll back. They will some places but not all. The pandemic has re shuffled many people’s priorities
July 16, 2021 @ 8:43 AM
sdrealtor wrote:Don’t assume
[quote=sdrealtor]Don’t assume they are going to roll back. They will some places but not all. The pandemic has re shuffled many people’s priorities[/quote]
Perhaps but I don’t believe the work at home thing will be permanent for most folks. Covid caused a giant 1+ year of people getting paid to sit at home and in most cases do nothing. Not sustainable.
July 16, 2021 @ 9:38 AM
deadzone wrote:sdrealtor
[quote=deadzone][quote=sdrealtor]Don’t assume they are going to roll back. They will some places but not all. The pandemic has re shuffled many people’s priorities[/quote]
Perhaps but I don’t believe the work at home thing will be permanent for most folks. Covid caused a giant 1+ year of people getting paid to sit at home and in most cases do nothing. Not sustainable.[/quote]
Your glass is always half empty
July 16, 2021 @ 10:49 AM
sdrealtor wrote:deadzone
[quote=sdrealtor][quote=deadzone][quote=sdrealtor]Don’t assume they are going to roll back. They will some places but not all. The pandemic has re shuffled many people’s priorities[/quote]
Perhaps but I don’t believe the work at home thing will be permanent for most folks. Covid caused a giant 1+ year of people getting paid to sit at home and in most cases do nothing. Not sustainable.[/quote]
Your glass is always half empty[/quote]
What is half empty about that comment? I personally don’t like that American’s have been getting paid to sit on their asses for over a year doing almost nothing. But whether or not I like it doesn’t change the fact that it happened. Perhaps you have never held a real job so cannot relate but I don’t believe most folks are equipped to work at home and freelance all the time like a realtor.
July 16, 2021 @ 10:52 AM
Have you guys heard of David
Have you guys heard of David Graeter’s book BULLSHIT JOBS, which argues that most jobs are just unnecessary unproductive useless bullshit that could disappear without any problem. He’s a pretty smart economist, so…maybe people are embracing the message?
July 16, 2021 @ 11:03 AM
scaredyclassic wrote:Have you
[quote=scaredyclassic]Have you guys heard of David Graeter’s book BULLSHIT JOBS, which argues that most jobs are just unnecessary unproductive useless bullshit that could disappear without any problem. He’s a pretty smart economist, so…maybe people are embracing the message?[/quote]
Yes I think there is a lot of truth to that. But if anything what work at home might be uncovering is the reality that half of the people in the office aren’t even needed. This would argue that there should be mass layoffs if companies were actually worried about profit and productivity. But with all the government aid during pandemic they were encouraged to keep the “stiffs” on the payroll. So once all the Pandemic policies go away (if they ever do), and companies actually need to be efficient, there should be less jobs available.
July 16, 2021 @ 1:19 PM
deadzone wrote:sdrealtor
[quote=deadzone][quote=sdrealtor][quote=deadzone][quote=sdrealtor]Don’t assume they are going to roll back. They will some places but not all. The pandemic has re shuffled many people’s priorities[/quote]
Perhaps but I don’t believe the work at home thing will be permanent for most folks. Covid caused a giant 1+ year of people getting paid to sit at home and in most cases do nothing. Not sustainable.[/quote]
Your glass is always half empty[/quote]
What is half empty about that comment? I personally don’t like that American’s have been getting paid to sit on their asses for over a year doing almost nothing. But whether or not I like it doesn’t change the fact that it happened. Perhaps you have never held a real job so cannot relate but I don’t believe most folks are equipped to work at home and freelance all the time like a realtor.[/quote]
Spent 15 years in corporate America including a stint in the World Trade Center. Lots of people were productive.
July 16, 2021 @ 2:39 PM
sdrealtor wrote:
Spent 15
[quote=sdrealtor]
Spent 15 years in corporate America including a stint in the World Trade Center. Lots of people were productive.[/quote]
I’m talking about the lack of productivity specifically throughout pandemic and with people “working” from home, getting paid to do virtually nothing.
July 16, 2021 @ 2:48 PM
I should have separated the
I should have separated the comments. I knew what you meant
July 16, 2021 @ 11:25 AM
C’mon man! You didn’t come
I literally said less than 2 years ago “another RE bubble is a-brewin’”
I also put my $ into it. When I purchased property #3 in 2016 it took me from about 155% of my net worth in SD RE to about 200%. That’s as wildly bullish as my conservative disposition permits.
My view the whole time was that SD RE (1) was highly undervalued for a variety of reasons, the largest of which was that the interest rate decline was permanent (2) the biggest reason increases were not even larger was conservative appraisals based on outdated comps (3) there was a very good chance steady large returns would cause a new irrational speculative bubble.
July 16, 2021 @ 1:24 PM
gzz wrote:
C’mon man! You
[quote=gzz]
I literally said less than 2 years ago “another RE bubble is a-brewin’”
I also put my $ into it. When I purchased property #3 in 2016 it took me from about 155% of my net worth in SD RE to about 200%. That’s as wildly bullish as my conservative disposition permits.
My view the whole time was that SD RE (1) was highly undervalued for a variety of reasons, the largest of which was that the interest rate decline was permanent (2) the biggest reason increases were not even larger was conservative appraisals based on outdated comps (3) there was a very good chance steady large returns would cause a new irrational speculative bubble.[/quote]
That’s not even in the same universe of what happened and there is a good case this is not a bubble so there’s that as well. A few months ago you didn’t believe me when I said prices were up over 30%. No one came close to predicting what happened. No one
July 16, 2021 @ 1:39 PM
That’s not even in the same
July 16, 2021 @ 3:12 PM
gzz wrote:
That’s not even in
[quote=gzz]
Just to be clear I expected rising prices as did many also. Nobody expected a 30- 40% y-o-y price gain which is around what we are looking at. And again calling for a bubble isnt correct either as the metrics do not bear out this being one
https://www.piggington.com/valuation_update
Not a bubble
July 16, 2021 @ 5:44 PM
If we’re in a bubble, then
If we’re in a bubble, then when will the bubble pop?
July 17, 2021 @ 9:52 AM
IMO Either it’s a bubble or
IMO Either it’s a bubble or the start of some serious inflation.
pick your poison.
As said earlier IMO TPTB cannot afford another major economic downturn and will do almost anything to avoid it.
They’re trying to emulate China in this regard (no major downturn in over 35 years).
Just my opinion.
July 17, 2021 @ 11:54 AM
I dont think either. Passage
I dont think either. Passage of time. Prices roughly level off for 3 to 5 years, say +/- 10% and they will be completely normalized. Time heals all wounds
July 18, 2021 @ 1:55 PM
sdrealtor wrote:I dont think
[quote=sdrealtor]I dont think either. Passage of time. Prices roughly level off for 3 to 5 years, say +/- 10% and they will be completely normalized. Time heals all wounds[/quote]
No way. Bubbles this big don’t just “normalize”. When has that ever happened before? Of course what you are predicting is exactly what the Fed are trying to convince everyone (even themselves?) will happen. That is basically the MMT, that governments can print and deficit spend way beyond traditional bounds and not have to worry about consequences.
July 18, 2021 @ 4:31 PM
I need to dig up some threads
I need to dig up some threads from 5-10 years ago. You were singing the same tune
July 19, 2021 @ 10:05 AM
sdrealtor wrote:I need to dig
[quote=sdrealtor]I need to dig up some threads from 5-10 years ago. You were singing the same tune[/quote]
Probably, doesn’t mean I was wrong then. I never predicted when this bubble was going to pop. This bubble has been going on for a while, Fed started QE in 2009 and never stopped. That is the bubble. But since Pandemic they went into super hyper overdrive and so did the bubble.
July 19, 2021 @ 10:31 AM
deadzone wrote:sdrealtor
[quote=deadzone][quote=sdrealtor]I need to dig up some threads from 5-10 years ago. You were singing the same tune[/quote]
Probably, doesn’t mean I was wrong then.[/quote]
Keep repeating after yourself. Doesnt mean I was wrong. Doesnt mean I was wrong. Doesnt mean I was wrong.
Timing is everything! Dont forget what they say about a broken clock
July 19, 2021 @ 10:58 AM
sdrealtor wrote:deadzone
[quote=sdrealtor][quote=deadzone][quote=sdrealtor]I need to dig up some threads from 5-10 years ago. You were singing the same tune[/quote]
Probably, doesn’t mean I was wrong then.[/quote]
Keep repeating after yourself. Doesnt mean I was wrong. Doesnt mean I was wrong. Doesnt mean I was wrong.
Timing is everything! Dont forget what they say about a broken clock[/quote]
Again, I never predicted when said bubble will pop. So timing has nothing to do with it.
July 19, 2021 @ 2:18 PM
I predict at some point in
I predict at some point in the future real estate prices will decrease. I also predict at some point they will increase. I’m going out on a limb!!
I think you may be too invested in being right. I’d rather be rich
July 19, 2021 @ 2:48 PM
sdrealtor wrote:I predict at
[quote=sdrealtor]I predict at some point in the future real estate prices will decrease. I also predict at some point they will increase. I’m going out on a limb!!
I think you may be too invested in being right. I’d rather be rich[/quote]
I’ll one up you. I predict RE will 10X from here.
July 18, 2021 @ 6:38 PM
deadzone wrote:[
No way.
[quote=deadzone][
No way. Bubbles this big don’t just “normalize”. When has that ever happened before? [/quote]
We might end up disagree about this, but I think that the late seventies early eighties were a bubble about the size of what we currently are in. (there are a couple charts in https://www.piggington.com/interest_rates_inflation_and_home_prices that illustrate this)
But that “bubble” didn’t pop per se. Instead it mostly got eaten up by inflation. I think this result is entirely possible this time as well.
July 19, 2021 @ 10:05 AM
XBoxBoy wrote:deadzone
[quote=XBoxBoy][quote=deadzone][
No way. Bubbles this big don’t just “normalize”. When has that ever happened before? [/quote]
We might end up disagree about this, but I think that the late seventies early eighties were a bubble about the size of what we currently are in. (there are a couple charts in https://www.piggington.com/interest_rates_inflation_and_home_prices that illustrate this)
But that “bubble” didn’t pop per se. Instead it mostly got eaten up by inflation. I think this result is entirely possible this time as well.[/quote]
I’m not talking about just housing here, I’m talking about the everything bubble. Stock market is easiest thing to see. Look at long term chart of S&P, the recent price appreciation is insane if you compare this to any other time in history. Particularly since 2009. This all makes sense if you just look at Fed balance sheet since 2009, nearly all of this is caused by Fed QE. There was no such thing as QE prior to 2009.
Now as it relates to housing. Yes there is debate whether we are in a housing bubble based on various metrics as Rich pointed out. Certainly the conditions now are very different than 2005. However, given we are clearly in an “everything bubble” and housing is part of everything, you will never convince me we are not also in a housing bubble.
July 15, 2021 @ 10:08 AM
deadzone wrote:sdrealtor
[quote=deadzone][quote=sdrealtor]A 1 br place in La Costa is $2k. A lot more in Carmel Valley[/quote]
But who would rent that long term at that price? What is your definition of long term? May as well buy the place but 1/1 condos are about the worst/riskiest investment to make at all time market highs.[/quote]
To the contrary they are like government backed bonds. They are the cheapest thing for a person who just wants to live alone and they stay for years. My clients own some in La Costa. They have never had a tenant stay less than 3 years. There are lots of older folks, working away at the median income with stable jobs who just want a nice safe place to live by themselves.
July 15, 2021 @ 10:57 AM
sdrealtor wrote:deadzone
[quote=sdrealtor][quote=deadzone][quote=sdrealtor]A 1 br place in La Costa is $2k. A lot more in Carmel Valley[/quote]
But who would rent that long term at that price? What is your definition of long term? May as well buy the place but 1/1 condos are about the worst/riskiest investment to make at all time market highs.[/quote]
To the contrary they are like government backed bonds. They are the cheapest thing for a person who just wants to live alone and they stay for years. My clients own some in La Costa. They have never had a tenant stay less than 3 years. There are lots of older folks, working away at the median income with stable jobs who just want a nice safe place to live by themselves.[/quote]
I assume your clients purchased those 1/1 after the housing crash so of course they are doing good.
July 15, 2021 @ 11:22 AM
deadzone wrote:sdrealtor
[quote=deadzone][quote=sdrealtor][quote=deadzone][quote=sdrealtor]A 1 br place in La Costa is $2k. A lot more in Carmel Valley[/quote]
But who would rent that long term at that price? What is your definition of long term? May as well buy the place but 1/1 condos are about the worst/riskiest investment to make at all time market highs.[/quote]
To the contrary they are like government backed bonds. They are the cheapest thing for a person who just wants to live alone and they stay for years. My clients own some in La Costa. They have never had a tenant stay less than 3 years. There are lots of older folks, working away at the median income with stable jobs who just want a nice safe place to live by themselves.[/quote]
I assume your clients purchased those 1/1 after the housing crash so of course they are doing good.[/quote]
Around 2015. Paid cash. Bought for retirement income. Property has appreciated but the rent gains is what really benefits them
You say of course they are doing well as if it was obvious. If it was obvious why didn’t you?
Also interested on the south of border investments and how you justify that risk?
July 15, 2021 @ 12:06 PM
sdrealtor wrote:
You say of
[quote=sdrealtor]
You say of course they are doing well as if it was obvious. If it was obvious why didn’t you?
[/quote]
I say of course they are doing well because with the benefit of hindsight we know RE appreciated big time in recent years. If I had a time machine I would go back and make all kinds of different investment decisions. Wouldn’t necessarily be real estate. Perhaps stocks and crypto. That is a stupid comment.
If they had owned that property during the crash/recession not as likely they would have had stable, long term tenants.
July 15, 2021 @ 1:29 PM
deadzone wrote:sdrealtor
[quote=deadzone][quote=sdrealtor]
You say of course they are doing well as if it was obvious. If it was obvious why didn’t you?
[/quote]
I say of course they are doing well because with the benefit of hindsight we know RE appreciated big time in recent years. If I had a time machine I would go back and make all kinds of different investment decisions. Wouldn’t necessarily be real estate. Perhaps stocks and crypto. That is a stupid comment.
If they had owned that property during the crash/recession not as likely they would have had stable, long term tenants.[/quote]
It was obvious back then to those with eyes open. Thats why they and guys like coronita and an were buying units like this also. Those units have always been great rentals in the La Costa complex. Never an issue to rent. Many have tenants over a decade
July 15, 2021 @ 12:41 PM
DZ: 2400 is if anything an
DZ: 2400 is if anything an underestimate. It’s not a little 1 bed in a apartment complex, it’s a big 1-bed in a high amenity condo complex with pool on an ocean block. The average list for an OB 1 bed is 2100 and that includes listings without parking spots.
As for “long term,” I would be quite happy if my long term tenants left. I’m a softee and have never raised their rents, both are about 15% under market.
Hard to aay on the house rental as it’s a unique property, 5/3 on a large non-shared lot near the beach, 3+ parking spots non-tandum, but with deferred issues that I don’t fix because it is a tear-down. I potentially could get 5500/mo for it, but it would be either a wealthy complainer who wants premium everything or a group of five 20-something party dudes plus their multiple dogs and rotating house guests. I know this for a fact because these were most of my potential renters when I first listed it!
July 16, 2021 @ 10:57 AM
I like hitchhikers guide to
I like hitchhikers guide to the galaxy moral story about the phone sanitizers LOL.
You never know.
July 16, 2021 @ 11:51 AM
The first thread I started
The first thread I started here back in 2012 was called “Dear people considered about rising rates”
https://www.piggington.com/dear_people_considered_about_rising_rates
Then there was this:
https://www.piggington.com/price_spike_coming
And talking about the 2016 condo buy I said:
“Ultimately I think I may not hold it that long as I think we will have another bubble and I will sell it then.”
The only time I wasn’t hyperbullish was the first couple months of covid.
July 17, 2021 @ 2:28 PM
How about we’re at a point
How about we’re at a point where valuations make perfect sense, but we’re likely headed for a bubble?
That’s not quite my “base case” but I think it’s awfully likely.
Why is it so hard to believe? Fake online coins and NFTs are now worth, technically speaking, $1 trillion+. Unprofitable tech stocks are trading for 30x sales. Uber loses billions and billions every year, but people can’t wait to shovel their money into it, as well as its even more risky and unprofitable Chinese clone.
We had one RE bubble, and conditions now strike me as reasonably close 2003-2004.
Now that I think about it, SD and Phoenix being the two top markets is very 2004y.
I’m not even sure we’re using the term the same way. Is a massive bull market that eventually has crazy valuations only a bubble when certain valuation ratios exceed certain arbitrary constants?
What’s one of the final ingredients missing the round that was present in 2004-2006?
Answer: less wealthy and unsophisticated first time buyers coming in without downpayments. And here we go:
https://www.directmortgageloans.com/news/what-is-bidens-downpayment-toward-equity-act/
The 180% of median income in high cost areas is a nice touch!
The chance of some version of this passing is high IMO. The parties hate each other, but here you have a bank-friendly Dem, once known as the Senator from MBNA, proposing something the GOP in general supports: subsidizing homeownership and banks and the very GOP FIRE economy. Now the GOP would prefer it go to REITs, PE partnerships, shadowy Cayman Island organizations, and S-Corps of All-Sorts, sure, but those groups are already pretty loaded up and wouldn’t mind offloading a bit, now would they?
SD Median Household income is about 90k. 180% of that is $162,000. Basically every middle to upper middle class renter who isn’t able to save money too well gets free 20k for their down payment!
July 17, 2021 @ 3:25 PM
Thinking about the new
Thinking about the new BidenBux plan, why wouldn’t it keep us running 15%+ or perhaps ++++++ for another year or more?
Last time we had free money for buying a house was during the bust, and it was only 7500 or 9500 as I recall.
Yet, despite being smaller than what Biden proposes, it caused a giant bear market rally, and when it ended we had the second part of the double-bottom, 2009 and 2011.
Now make it 20k not 7.5K, and in a white-hot ultra-low-inventory market, what’s the likely result?
https://archive.org/details/arcade_bubbles
July 17, 2021 @ 5:25 PM
There is a technical
There is a technical definition for a bubble. I believe two standard deviations above fair value. Maybe Rich will pop in.
July 17, 2021 @ 10:46 PM
As I noted, whatever you
As I noted, whatever you decide is the definition of “fair value” is arbitrary.
To the extent you mean two SD above the historic mean of some valuation ratio, the choice of ratio is again going to be arbitrary. And any simple one like price/rent is going to be problematic. Rich’s mortgage payment chart is an improvement, but still leaves out a ton of indisputably relevant factors, such as expected income growth, cost of new construction, changing tax treatment of RE by both the state and federal government, and insurance costs.
In reality, bubble simply does not have some generally accepted definition that can be applied, rather it is like many concepts where you just know it when you see it, especially in hindsight.
John Locke refuted Aristotle’s definition of man as a “rational animal” by noting that a brilliant talking parrot is still a parrot but a severely mentally disabled man is a still a man. Locke’s better definition is a man is just something that physically looks like a man. So too with bubbles.
July 18, 2021 @ 12:39 PM
Climate change panic buying?
Climate change panic buying? The humans are getting a little freaked out and are trying to calm themselves by spending money?
November 10, 2021 @ 10:58 AM
Thought it would be
Thought it would be worthwhile to update this thread. Below are the CPI index values with monthly change and annual change since the beginning of 2020. (Pandemic begins in March 2020)
Month CPI Monthly Annual
Jan 2020 258.687 0.19% 2.49%
Feb 2020 258.824 0.05% 2.31%
Mar 2020 257.989 -0.32% 1.51%
Apr 2020 256.192 -0.70% 0.34%
May 2020 255.942 -0.10% 0.22%
Jun 2020 257.282 0.52% 0.73%
Jul 2020 258.604 0.51% 1.05%
Aug 2020 259.511 0.35% 1.32%
Sep 2020 260.149 0.25% 1.41%
Oct 2020 260.462 0.12% 1.19%
Nov 2020 260.927 0.18% 1.14%
Dec 2020 261.56 0.24% 1.30%
Jan 2021 262.231 0.26% 1.37%
Feb 2021 263.161 0.35% 1.68%
Mar 2021 264.793 0.62% 2.64%
Apr 2021 266.832 0.77% 4.15%
May 2021 268.551 0.64% 4.93%
Jun 2021 270.981 0.90% 5.32%
Jul 2021 272.265 0.47% 5.28%
Aug 2021 273.012 0.27% 5.20%
Sep 2021 274.138 0.41% 5.38%
Oct 2021 276.724 0.94% 6.24%
The above data is for Full CPI, not Core CPI.
I wonder if the Fed governors are still thinking inflation is transitory given the last five months of annual change.
November 10, 2021 @ 11:40 AM
Ready for inflation here!
Ready for inflation here! Bring it on!
Sic transit gloria fiat dollari!
These are my larger and older European silver coins. The community calls these large size silver coins on the left 2/3 of the picture “crown size” and this includes the US silver dollar.
Most of these 5 Franc size, slightly smaller than the actual British Crown, which was created during the French Revolution as a “standard” along with the metric system. At its peak, France, Italy, Belgium, French Africa, Spain, Romania, Latvia, Romania, Albania, and Switzerland used the French standard, allowing a wide amount of inter-changeability before the Euro was adopted.
The standard ended up surviving all the way until the 1960s, when the last Swiss silver francs made to the standard were minted.
November 10, 2021 @ 12:05 PM
Bring it on? Its been firing
Bring it on? Its been firing on all cylinders
November 11, 2021 @ 5:48 PM
Always a good idea to have
Always a good idea to have multiple financial options to keep the lifeship afloat for the short time we’re all here, and, of course, to pass along to the kids.
Sadly, that’s not always possible for those who are suffering most from this inflationary period. Should be interesting to watch how it all plays out.
November 11, 2021 @ 7:06 PM
I bought $300 worth of
I bought $300 worth of almonds, perfect bars, almond butter, Gran free granola and pecans from Costco.
I bet it’ll be 600 in 9 months.
Better check expiration dates tho.
My strategy, as usual, is nuts.
November 11, 2021 @ 9:22 PM
Always a good idea to have
Always a good idea to have multiple nut options to keep the lifeship afloat for the short time we’re all here, and, of course, to pass along to the kids. I think you are all set
November 11, 2021 @ 10:51 PM
Scaredy, you can’t go wrong
Scaredy, you can’t go wrong stocking up on things you’d buy anyway, as long as you know you’ll use them by the expiration dates. We do it all the time.
November 12, 2021 @ 7:18 AM
scaredyclassic wrote:I bought
[quote=scaredyclassic]I bought $300 worth of almonds, perfect bars, almond butter, Gran free granola and pecans from Costco.
I bet it’ll be 600 in 9 months.
Better check expiration dates tho.
My strategy, as usual, is nuts.[/quote]
Maybe buy a Nut tree, I saw Gates was buying up farmland.
November 12, 2021 @ 8:21 AM
The-Shoveler
[quote=The-Shoveler][quote=scaredyclassic]I bought $300 worth of almonds, perfect bars, almond butter, Gran free granola and pecans from Costco.
I bet it’ll be 600 in 9 months.
Better check expiration dates tho.
My strategy, as usual, is nuts.[/quote]
Maybe buy a Nut tree, I saw Gates was buying up farmland.[/quote]
Good idea. Fruit trees, nut trees.
I haven’t had a drink for 19 m and been vegetarian for several years now. The cost saving is pretty damn high. I think meat and booze was half the grocery bill.
Cost cutting is the best inflation strategy.
For the common folk, anyway.
Although I do buy sometimes some no alc. Beers, which cost the same as good reg. Beer. They’ve come a long way. Na IPA beers, esp. tastes like a decent IPA.
It feels wrong to pay off my 2.5 perc mortgage today, but it’s tempting when I’m somewhat ahead. No one ever went broke taking money off the table, but it…feels wrong.
No one in the poll on this thread saw the 6.2 perc Oct inflation rate. Pigs, me too, expect things to be more or less like they were.
But we are o l d….
Regarding Louis Vuitton coffins…washington now permits human composting…which is amazing in results…
https://recompose.life/our-model/
This place turns you into a cubic yard of rich dirt in just a month in a special pod that maximizes the rate of decomposition. . My oldest said he’d get me up there to do this if I die before CA legalizes it. Said he’d make a nice garden bed and eat my veggies. I’m stoked. I’m not gonna be in the dirt. I’m gonna BE the dirt.
November 12, 2021 @ 4:17 AM
flyer wrote:Always a good
[quote=flyer]Always a good idea to have multiple financial options to keep the lifeship afloat for the short time we’re all here, and, of course, to pass along to the kids.
Sadly, that’s not always possible for those who are suffering most from this inflationary period. Should be interesting to watch how it all plays out.[/quote]
Just stop. It’s really pathetic that as wealthy as you claim you are (which I suspect if that’s evenreally true), that you feel compelled to constantly try rub it in the dirt on a public blog about “sadly, those poor unfortunate people who are not as lucky as me”…Wrong audience and most people on this blog are not in the category that you are seeking to make yourself feel better with your messed up feudal overlord versus serfdom closet tendencies….Sorry to disappoint you… you were born in the wrong century if you were looking for that. Most of us are doing just fine, even if we are not as insanely as wealthy as you claim to be, and probably much happier and more content than you.
You’ll end up in the dirt the same way as everyone else eventually. And honestly when that happens, lights out game over, and it won’t matter what happened in the short 60-70-80 years that one was briefly here. So continue to feel good about yourself versus those people who are really less fortunate and continue to gloat about it on a public blog while you are briefly here on this earth. It won’t matter because eventually we are end up the same. Your expensive Louis Vuitton coffin will not be any different than some poor guy’s cheap Walmart coffin. Because both of you will be dead in the same dead way in the same dead dirt and your dead body will decompose the same way, unless you option for the cremation option or option to cryogenically preserve your head in the hopes that science can catch up and resurrect your brain with new physical body grown from stem cells one day. Ewe, no thank you, but if you have money to burn. Go for it. It might derail plans for an afterlife, if you believe in that. But that’s up to you. Speaking of afterlife, if you believe in it, you’ll also need to worry about if you were prick during this life. After all, if you believe in an afterlife, and the big G, you’ll also believe he’s all noticing, and remember every single time you were a prick during this life…including the times you felt compelled to rub poor people’s plight in the dirt on an internet blog why you sat on a lofty chair from the Ritz Carlton. If you’re Budhist, that might mean, you’ll be reborn as an ant, that gets stepped on or fried by a magnifying glass by a rich kid spoiled brat in Rancho Santa Fe, that has nothing better to do in life. Karma. Who knows.
There’s nothing wrong if you’ve done well in this world relative to everyone else, and certainly not something one needs to be ashamed or embarrassed of despite what some leading progressives might make people think. But seriously, poor people don’t need your fake southern california shallow sympathy. In fact, many less than stellar financially successful people are perfectly happy with their life they have. They aren’t the ones camping on this blog trying to personally trying to find meaning and purposem and trying to one-up others to make themselves feel better. I’d say, despite them having 10x less wealth, they are 100x happier because they are doing something meaningful in their life besides just trying to find ways to one-up others on a blog..And many of them, if they believe in an afterlife, at least won’t have a guilty conscience of being prick while being here shortly.
Personally, if it was me, the closer I’m getting to end-game, the less prickish I’d try to be..Just in case….
….just saying…
November 12, 2021 @ 8:14 AM
My comments have never been
My comments have never been intended as you described. Sorry if they came across that way.
As you said, life on earth is short for all of us, and it’s my hope that everyone is as happy with their lives, and the promise of eternity, as we are.
Finally, per your request, which I am extremely glad to accommodate, I will “just stop.” Enjoy!
November 12, 2021 @ 8:15 AM
Personally I would like to
Personally I would like to see 5% money market and FDIC CD’s but not likely IMO as that would crash just about everything (stocks, housing etc…).
IMO After 2008/9 fed found out it could not afford a real crash to ever happen ever again (at least one that last several years).
But that’s just my opinion.
November 12, 2021 @ 8:20 AM
The-Shoveler wrote:Personally
[quote=The-Shoveler]Personally I would like to see 5% money market and FDIC CD’s but not likely IMO as that would crash just about everything (stocks, housing etc…).
IMO After 2008/9 fed found out it could not afford a real crash to ever happen ever again (at least one that last several years).
But that’s just my opinion.[/quote]
If your mortgage is 3.5 perc or over, you’d essentially be getting a 5 perc return after taxes for every dollar you pay it down…but it’s not as satisfying…and less liquid…
November 12, 2021 @ 2:31 PM
Here’s a real data point. I
Here’s a real data point. I play at a local golf course most weekends with friends. I dont know if others realize but golf was dying until COVID and the pandemic rescued the sport. When everything else was shut down, it was one of the only recreational activities you could do. Courses have been packed around the country for the last 18 months. Club manufacturers have been killing it with record sales.
A year ago this course offered a package deal
5 rounds good anytime with 5 buckets of range balls and we could book tee times an extra day ahead of general public for $250
6 months ago price went to $300
3 months later range balls gone and no booking an extra day ahead of general public
Last week email goes out and its now $350
1 year ago it was $250.
Now its $350 + $40 for 5 buckets of range balls = $390
Exact same product is 56% more today and tougher to get a good time on weekends
Thats what inflation looks like
November 12, 2021 @ 3:02 PM
sdrealtor wrote:Here’s a real
[quote=sdrealtor]Here’s a real data point. I play at a local golf course most weekends with friends. I dont know if others realize but golf was dying until COVID and the pandemic rescued the sport. When everything else was shut down, it was one of the only recreational activities you could do. Courses have been packed around the country for the last 18 months. Club manufacturers have been killing it with record sales.
A year ago this course offered a package deal
5 rounds good anytime with 5 buckets of range balls and we could book tee times an extra day ahead of general public for $250
6 months ago price went to $300
3 months later range balls gone and no booking an extra day ahead of general public
Last week email goes out and its now $350
1 year ago it was $250.
Now its $350 + $40 for 5 buckets of range balls = $390
Exact same product is 56% more today and tougher to get a good time on weekends
Thats what inflation looks like[/quote]
i will sell you a hackysack for $10.00 that will keep you and your friends busy for weeks on end.
November 12, 2021 @ 3:32 PM
sdrealtor wrote:Here’s a real
[quote=sdrealtor]Here’s a real data point. I play at a local golf course most weekends with friends. I dont know if others realize but golf was dying until COVID and the pandemic rescued the sport. When everything else was shut down, it was one of the only recreational activities you could do. Courses have been packed around the country for the last 18 months. Club manufacturers have been killing it with record sales.
A year ago this course offered a package deal
5 rounds good anytime with 5 buckets of range balls and we could book tee times an extra day ahead of general public for $250
6 months ago price went to $300
3 months later range balls gone and no booking an extra day ahead of general public
Last week email goes out and its now $350
1 year ago it was $250.
Now its $350 + $40 for 5 buckets of range balls = $390
Exact same product is 56% more today and tougher to get a good time on weekends
Thats what inflation looks like[/quote]
I agree that inflation is going nuts right now. But I think golf courses in san diego is about the worst possible example. For one thing, like you said, a lot of the demand is due to Covid. This is likely a temporary thing when these new players realize golfing is hard, frustrating, time consuming and expensive. This bump in # rounds played is probably temporary. Furthermore, prices are going to go up more in san diego and west coast states due to the fact that WE HAVE NO WATER! Many of the public courses I used to play closed pre pandemic due to this fact. So there are far fewer public courses in San Diego now, compared to 5-10 years ago. So that is going to drive up prices.
November 12, 2021 @ 3:51 PM
I never said it was the best
I never said it was the best example just an example. I dont think its the worst example either. I actually know the GM well and was drinking wine with him on tuesday. Their big issue is course maintenance workers and the cost of them.
I dont think a lot of the demand is new players either. I think a lot of people that stopped playing have come back. Im hearing more and more people retiring earlier than planned which will keep the courses busy also. Im not seeing an uptick on hacks on the courses
This morning I grabbed myself a Machaca burrito and enjoyed it at the Moonlight Beach Overlook. A year or so ago that was $7 with tax. Its about $9 now.
And lets not get started on rents. Good luck finding a 1BR under $2K up here
November 12, 2021 @ 4:19 PM
With all this inflation, at
With all this inflation, at least one thing is finally free!
BRITNEY!!!
So which call was worse? The “sell everything now” or “inflation isnt real”?
November 13, 2021 @ 6:55 AM
sdrealtor wrote:With all this
[quote=sdrealtor]With all this inflation, at least one thing is finally free!
BRITNEY!!!
So which call was worse? The “sell everything now” or “inflation isnt real”?[/quote]
Maybe she will pump up the economy with some wild spending
November 12, 2021 @ 3:25 PM
hmmm seems more a
hmmm seems more a supply/demand thing to me, but maybe that’s how it starts, throw in a few free checks from the feds and minimum wage increases and….
November 13, 2021 @ 8:47 AM
Wage inflation.
I just gave
Wage inflation.
I just gave one of my engineers a raise. My out of touch boss was gone on vacation. My android engineer said he was approached by a company based in San Diego that offered a base pay of $160k + 20k stock options shares and healthplan benefits fully paid by employer for individual + 5% 401k match. Fully remote.
I talked to my cool senior VP.
We jumped through the bureaucracy and did a out of cycle “market adjustment”. And increased base pay to by $18k to $162k, there’s a unofficial bonus around 15% I think given the unexpected, good business, 401k match and health benefits about the same. And theres about an additional $25k RSU stock grants that are all or nothing vesting in 3 years.with a promise to start.his green card within 6 months.
Guy currently works remotely out of…Utah…closed on a $400k sfh that he put 50% down on….he’s stoked.
I don’t need to find a replacement. So I’m stoked.
There’s 2 other guys that will need a market adjustments that we will need to do within 5 weeks….
I recently poached a QA engineer that has maybe 1 year of experience out of school from UCSD from a big company. He’s pretty good. Have him a better comp package but also path to moving from QA to mobile development in 6 months. Old company wanted him to remain in QA role for 2 years… what a waste of talent…good luck with that one.
Pretty tough job market right now for tech employers ..first need to sort through the pool to find the good ones in the sea of not-so-good ones…then need to be competitive… thankfully I’m not running my own business.
If only my boss would quit or get fired or move out of the way, I’d be super stoked. Hopefully the latest dumpster fire he sort of created that I wasn’t part of will have him move aside. I like my bosses boss. Much easier to work with.
November 13, 2021 @ 9:51 AM
Super breakfast burrito at El
Super breakfast burrito at El Pueblo La Costa up $0.50. Next move will put it over $10 with tax
November 13, 2021 @ 11:35 AM
My neighborhood donut shop
My neighborhood donut shop just raised the price of standard donut from 1.50 to 1.75 since last week. A year or two ago I’m pretty sure they were closer to 1.00.
November 13, 2021 @ 8:18 PM
Let’s call it 3. That’s 75%
Let’s call it 3. That’s 75% in 3 years
November 13, 2021 @ 9:21 PM
deadzone wrote:My
[quote=deadzone]My neighborhood donut shop just raised the price of standard donut from 1.50 to 1.75 since last week. A year or two ago I’m pretty sure they were closer to 1.00.[/quote]
In 1984-85 I worked the graveyard shift at 7-11 in norcal. That’s how I put myself through college. The donuts would be delivered, put on display by my register, and go up for sale on my shift.
I’m pretty sure the prices were 40 and 50 cents depending on the donut. Standard donut was probably 40. Wonder what 7-11 charges now.
Seems like bear claws were 75.
November 14, 2021 @ 6:14 PM
Well this particular donut
Well this particular donut shop is family owned/operated and bake their own donuts. So wage inflation is not necessarily going to directly impact them like other businesses. But it did make me raise my eyebrow when I picked up donuts the other day and noticed the charge was more than normal. Just reinforces the reality that everything is going up right now, at a much higher rate than most of our salaries. Thanks Fed!
November 14, 2021 @ 8:36 PM
Dammit. Now we can’t say
Dammit. Now we can’t say dollars to donuts anymore. Stupid inflation
“Take the saying “dollars to doughnuts.” It’s what we say when we’re really sure of ourselves. We’re so confident that we’re making a bet, and we’re betting something valuable against something that’s worth less. If I’m wrong, I’ll pay you money. If you’re wrong, just give me pastry.
An array of wordsmiths trace “dollars to doughnuts” back to the 19th century. The first recorded usage was a newspaper article in Nevada in 1876. “Dollars to doughnuts” was used matter-of-factly and without definition, suggesting it was a common saying of the day.
Betting cash against something of relatively little value wound its way into other expressions, such as “dollars to buttons” and “dollars to cobwebs.” Chances are “doughnuts” took hold because of our avid appreciation for alliteration. Other examples include “dollars to dumplings” and “dollars to dimes.”
Taken literally, “dollars to doughnuts” does not have the weight it once carried as a sign of self-assurance.
Consider that the classic Dunkin’ Donut doughnut costs 99 cents. So, literally to bet someone a dollar to a doughnut, is like saying, “I could be right, or I could be wrong. Either give me a doughnut, or I’ll give you money to buy one.” Include the sales tax, and you would be better off losing the bet because the doughnut is worth more than the dollar.”
November 15, 2021 @ 11:20 AM
https://www.theonion.com/high
https://www.theonion.com/higher-prices-may-force-americans-to-eat-reasonable-por-1848041822
November 15, 2021 @ 12:38 PM
The Springdale,
The Springdale, Arkansas-based Tyson, the biggest U.S. meat company by sales, said chicken prices rose 19% during its fiscal fourth quarter while beef and pork prices jumped 33% and 38%, respectively. Signals more coming
November 15, 2021 @ 4:36 PM
I like Flyer’s posts. Brian’s
I like Flyer’s posts. Brian’s too.
More undisguised inflation hype scare tactics from the MSM, owned and controlled by anti-inflation elites who hate the idea of the real value of the fixed rate debt they hold over the 99% being eroded by inflation:
https://jabberwocking.com/yet-another-tedious-gripe-about-food-inflation-reporting/
November 15, 2021 @ 7:41 PM
gzz wrote:I like Flyer’s
[quote=gzz]I like Flyer’s posts. Brian’s too.
More undisguised inflation hype scare tactics from the MSM, owned and controlled by anti-inflation elites who hate the idea of the real value of the fixed rate debt they hold over the 99% being eroded by inflation:
https://jabberwocking.com/yet-another-tedious-gripe-about-food-inflation-reporting/%5B/quote%5D
Did you actually read that article which showed nutritionally void foods are flat but sources of nutrition skyrocketed in price. Yay spaghetti, flour, snacks, ice cream, cheddar cheese, soda, potatoes, white bread , hot dogs and lettuce! And cookies!!
November 15, 2021 @ 9:29 PM
sdrealtor wrote:gzz wrote:I
[quote=sdrealtor][quote=gzz]I like Flyer’s posts. Brian’s too.
More undisguised inflation hype scare tactics from the MSM, owned and controlled by anti-inflation elites who hate the idea of the real value of the fixed rate debt they hold over the 99% being eroded by inflation:
https://jabberwocking.com/yet-another-tedious-gripe-about-food-inflation-reporting/%5B/quote%5D
Did you actually read that article which showed nutritionally void foods are flat but sources of nutrition skyrocketed in price. Yay spaghetti, flour, snacks, ice cream, cheddar cheese, soda, potatoes, white bread , hot dogs and lettuce! And cookies!![/quote]
Usually I need more than one reason to do something but for the moment my thinking is that processed grains are bad for:
1. sleep
2. mental clarity
3. the waistline/weight loss
4. long term brain health
So it makes sense that products which have adverse effects would have less demand. Imagine though if they taxed empty carbs and subsidized leafy greens.
This knowledge is coming from multiple sources within short period of time.
November 16, 2021 @ 7:11 AM
I stocked up on Haagen and
I stocked up on Haagen and Dazs at Costco when they were 3 dollars off 15-cnt box last month.
Being happy is worth something
November 16, 2021 @ 8:15 AM
The-Shoveler wrote:I stocked
[quote=The-Shoveler]I stocked up on Haagen and Dazs at Costco when they were 3 dollars off 15-cnt box last month.
Being happy is worth something[/quote]
Make.your own ice cream and sherbet. Before it wasn’t cost effective. Now it probably is. And sometimes DIY can be fun.
Take auto repair. My stupid BMW X5 needed a new car battery… $1110 quoted from the stealarship, $550 for battery and $600 for labor. Because BMWs have a special thing like the new battery needs to be registered with the ECU so the alternator can charge correctly.
1. NAPA battery was $198 with the AAA discount.
2. odb2 dongle to scan and program bmw was $12 (if I didn’t break my old one, it wouldn’t have been needed)
3. BimmerLink phone software to register battery $49
4. FRM computer module reprogramming from eBay repairer $60
Someone forgot to warn me that when you change a BMW battery never let the electronics have 0 volts. Doing so, if you are unlucky, you will brick some of the computer modules. Shitty bmw design..So always leave a battery charger or trickle charger connected when changing the battery… So I did end up bricking the FRM module. New one would have been $500 but fortunately there are eBay repair geeks that can reflash the brickedmodules for like $50-60 so BMW doesn’t do a cash grab on you for their shitty design.
anyway battery replacement was $370 out of pocket instead of $1100 from stealerhip…. Suck it BMW stealers.
Car is pretty reliable if you dont let stealers molest them
November 16, 2021 @ 9:27 AM
My last car battery was $66,
My last car battery was $66, the cheapest I have ever paid. This guy but on sale:
https://www.autozone.com/batteries-starting-and-charging/battery/p/econocraft-battery-26r-e-group-size-26r-510-cca/98810_0_0
They didn’t ask me to pay the deposit because they kept the old battery.
November 16, 2021 @ 10:49 AM
gzz wrote:My last car battery
[quote=gzz]My last car battery was $66, the cheapest I have ever paid. This guy but on sale:
https://www.autozone.com/batteries-starting-and-charging/battery/p/econocraft-battery-26r-e-group-size-26r-510-cca/98810_0_0
They didn’t ask me to pay the deposit because they kept the old battery.[/quote]
Not surprising as you bought a super cheap economy one with a 3 month warranty. I’ve never even heard of that before. Your old dead one was probably more valuable
November 16, 2021 @ 11:15 AM
gzz wrote:My last car battery
[quote=gzz]My last car battery was $66, the cheapest I have ever paid. This guy but on sale:
https://www.autozone.com/batteries-starting-and-charging/battery/p/econocraft-battery-26r-e-group-size-26r-510-cca/98810_0_0
They didn’t ask me to pay the deposit because they kept the old battery.[/quote]
Umm. No offense. That’s a pretty shitty battery….The stuff you would put into a car you are selling or getting rid off. It’s right up there with the cheap made in china no name brand tires and the $10 economy brake rotors you can find on ebay.
The warranty on the battery is 3 months. Most decent battery at least are warrantied for 24 months at least. 36 months is standard.
And for what it’s worth, that battery is expensive for a low end battery. $66 is how much I paid for a Interstate battery from Costco for one of my cars for a battery with a much larger capacity and better warranty…If you can find your battery through costco, that would be the cheapest and best place to get a battery with the best warranty… For the longest time, costco had a 4 year NON-prorated warranty. Which means if was bad at 3 year 11 months, you took it back to costco, and they would exchange it for another battery and restart the 4 year NON-prorated warranty. They changed their policy since then, but if you were grandfathered in, old policy still applies even with new battery is only 3 years/non-prorated. Unfortunately, Costco doesn’t sell the correct battery for late model BMW’s, Group 49…
Autozone and Oreilly batteries are generally way overpriced. The equivalent battery for the Econcraft you bought is the everstart battery from Walmart which is probably slightly cheaper for the same quality… Actually ,edit. I just looked it up. The walmart battery is roughly the same price and better because at least it’s warrantied for 1 year, not 3 months.
https://www.walmart.com/ip/EverStart-Value-Lead-Acid-Automotive-Battery-Group-Size-26R-12-Volt-540-CCA/47308800
And you won’t find a BMW Group 49 AGM battery with at least 90AH less than $200, which is the bare minimum most BMWs require these days. Almost all BMW’s use the Group 49 battery, 3 series, 5 series, and SUV. The only difference is the AH, which is 90AH for the smaller cars and cars with lower electronics, to 105AH for the larger cars with the V8’s with the heavy electronics.
You can change to a larger capacity battery, but then you have to recode the ECU to take the larger capacity battery with a different software so the alternator charges correctly AND then you need to register a new battery….
NAPA Legend AGM battery has a 75 months prorated warranty. and is cheaper than just about everywhere else.
November 16, 2021 @ 11:27 AM
I think he bought a lawn
I think he bought a lawn tractor battery
November 18, 2021 @ 12:36 PM
Did you actually read that
Actually it was more mixed than that. Sugar went up 12.5%, cheddar cheese went down 3%.
Your statement is however more example of inflationista cognitive bias and motivated reasoning. Inflation is a general increase in the price level. That’s it.
The price of higher quality things going up and lower quality things not suggests an increase in income levels is causing demand for the higher quality good to substitute for the lower quality goods.
Such changes can be interesting to track, but do not mean inflation is somehow being understated.
Overall, the widely reported CPI inflation is badly overstated because hedonic adjustments are too conservative and substitutions in actual consumer baskets were not accounted for. The alternative chained CPI fixes the second issue.
https://en.wikipedia.org/wiki/United_States_Chained_Consumer_Price_Index
https://www.brookings.edu/blog/up-front/2017/12/07/the-hutchins-center-explains-the-chained-cpi/
November 18, 2021 @ 1:35 PM
Suggestion. When you step out
Suggestion. When you step out and its raining grab an umbrella
November 18, 2021 @ 3:14 PM
The media and inflationistas
The media and inflationistas of course ignore the superior measure chained CPI because it is lower and they always hype inflation.
November 19, 2021 @ 12:18 AM
I wonder how much prices has
I wonder how much prices has changed for Kool-Aid.
November 19, 2021 @ 3:09 AM
an wrote:I wonder how much
[quote=an]I wonder how much prices has changed for Kool-Aid.[/quote]
When it first came out, it was $1 per packet
During the great depression,price was reduced to 50 cents per packet
Today, you can buy a packet at Vons for 39 cents
See, no such thing as inflation
November 15, 2021 @ 7:28 PM
Thanks, gzz. Find your posts
Thanks, gzz. Find your posts interesting as well. I really enjoy reading the posts of some who post here, and, as I’ve said before, the information Rich has provided over the years has been very helpful to us in making some major real estate decisions.
There have always been a few really interesting and insightful people who post here, whose opinion I value, so I’ll stop by once in awhile to see if there is anything of interest. Good luck with all of your projects.
November 16, 2021 @ 12:50 PM
I am selling the car, I got a
I am selling the car, I got a new one in September. But I like the old one so have been slow to do it. I also like to haul wood, cement bags, manure compost etc in the old one.
It takes 2 mins to change my battery, so if it lasts 65% as long as $130 battery, I am ahead. My old “baby” is hard to value because it is a 2011 with under 40k miles. It makes sense I think to clean it up a bit before selling it.
A battery warranty is worthless because my time is too valuable to screw around with the forms for a warranty service.
Same reason I get high deductible insurance. I’m not going to deal with Nationwide over a $400 repair if I can get a lower rate and self insure.
Flu: I test drove a couple BMWs in 2014 (X3 and 335) and wasn’t too impressed. This round I didn’t include them in the test drive mix, I did Hyundai/Kia, then Subaru, and Mazda which is what I settled on. In 2020 I test drove a VW GTI and liked the driving a lot, but the interior was cheap for the price and too small.
November 16, 2021 @ 1:21 PM
gzz wrote:I am selling the
[quote=gzz]I am selling the car, I got a new one in September. But I like the old one so have been slow to do it. I also like to haul wood, cement bags, manure compost etc in the old one.
It takes 2 mins to change my battery, so if it lasts 65% as long as $130 battery, I am ahead. My old “baby” is hard to value because it is a 2011 with under 40k miles. It makes sense I think to clean it up a bit before selling it.
A battery warranty is worthless because my time is too valuable to screw around with the forms for a warranty service.
Same reason I get high deductible insurance. I’m not going to deal with Nationwide over a $400 repair if I can get a lower rate and self insure.
Flu: I test drove a couple BMWs in 2014 (X3 and 335) and wasn’t too impressed. This round I didn’t include them in the test drive mix, I did Hyundai/Kia, then Subaru, and Mazda which is what I settled on. In 2020 I test drove a VW GTI and liked the driving a lot, but the interior was cheap for the price and too small.[/quote]
The battery warranty is not simply hopes and dreams. It is a projection of how long it should last. Buying a battery with a short warranty is buying a shorter life for your lawn tractor battery and an earlier replacement hence taking more of your valuable time away sooner
November 16, 2021 @ 2:52 PM
gzz wrote:I am selling the
[quote=gzz]I am selling the car, I got a new one in September. But I like the old one so have been slow to do it. I also like to haul wood, cement bags, manure compost etc in the old one.
It takes 2 mins to change my battery, so if it lasts 65% as long as $130 battery, I am ahead. My old “baby” is hard to value because it is a 2011 with under 40k miles. It makes sense I think to clean it up a bit before selling it.
A battery warranty is worthless because my time is too valuable to screw around with the forms for a warranty service.
Same reason I get high deductible insurance. I’m not going to deal with Nationwide over a $400 repair if I can get a lower rate and self insure.
Flu: I test drove a couple BMWs in 2014 (X3 and 335) and wasn’t too impressed. This round I didn’t include them in the test drive mix, I did Hyundai/Kia, then Subaru, and Mazda which is what I settled on. In 2020 I test drove a VW GTI and liked the driving a lot, but the interior was cheap for the price and too small.[/quote]
There is no screwing around with costco. Battery fails within 3 years (previously 4), you get a new battery full replacement. Other places do some prorated return, but costco is the full 3 years. If it dies at 2 years 11 month, you get a new battery and the 3 years resets.
Also, you need to pay attention to the type of battery. For cars that have the battery in a sealed compartment instead of an open engine bay (like all BMWs, which is in the trunk), you have to go AGM. It’s not worth going with non-AGM for various reasons…unless you do what I do with my track car and use Lithium Iron Phosphate, which is relatively stable. But it’s expensive. $250 for roughly 400cca. But the weigh savings is huge. 2.5 lbs, versus 40-60lbs for a standard battery. It’s not practical for a street car, but for a track car, that weight savings is huge.And I wouldn’t use a LifeP0 battery on a street car because of all the electronics drawing on it. If the battery is completely drain, it is dead and cannot be recharged…Forget and leave the light on overnight, you’re screwed.
As far as cars.
Rule #1: you should never buy a used german car that isn’t CPO.
Rule #2: you should never buy a used german car isn’t CPO.
Rule #3: if you are thinking about buying a used german car, you should never buy a used german car isn’t CPO.
Why? Simple, they are complex machines, and most people that had them previously lease them, go cheap on maintenance, and is a disaster for the used car owner, especially when most of BMW’s are all turbo charged…
Buying a used 2014 BMW is just asking for trouble. If you want to get a BMW either buy it new and work on them your self. Or lease them and turn them back in after 3 years….
I bought my X5 around 2011, and the only reason was back then, gas prices were high, and the car market was weird. Because my AWD X5 ended up costing about the same price as a FWD Ford edge, which comes in useful for those occasional trips to the local skiing. Also, I specifically bought the car with most bells and whistles stripped out.. Just so fewer things can break. It worked. Meanwhile my sister’s 2014/15 335 already had all fuel injectors replaced… $6000 total.
Did I mention don’t buy a used BMW unless it’s CPO???
I’m sorry, there’s definitely a noticeabledifference in handling between a Mazda and a German car. It’s not even close between a 335 and a Mazda 3 or a Mazda 6. Approximately 120hp of difference. Dont get me wrong Mazda are great cars and I have 2, but you’re kidding yourself if your comparing performance…Mazdas aren’t know for their speed, unless you put a turbo or supercharger in it, and then it’s just ok….Their handling is ok but not quite as tuned as bmw,unless you go aftermarket (did that too)…they probably are more reliable than bmw, though my newer Mazda I’ve already blown 2 transmissions and am on the third one, it literally grenaded….versus bmw has 2x more miles and much older ..
If I were to get a new car? I’d just bite the bullet and get a tesla.
About self insuring auto-insurance. If I understand you correctly, are you saying you don’t carry liability and just provide proof that you are self-insured? If so, that seems to be a pretty big gamble in sue-happy SoCal for just saving a few bucks per month. I mean, it’s different if you have no assets to lose, sure. But you’re saving a few dollars per week and exposing yourself to considerable risk.
I don’t skimp on insurance. I buy the maximum liability I can get $250k/500k and on top of that I get a $5 million umbrella because imho there certain things not meant to go cheap on, even though fundamentally I’m cheap. Safety features such as brakes battery tires I won’t skimp on, nor will I skimp on insurance. Plus insuring 2 of my cars through Costco isn’t that much for the maximum coverage: $600/6 month. And insuring the older cars through Hagerty classic car insurance is like $300 year.
Less than the sets of tires I burn through in 6 months.
November 16, 2021 @ 4:13 PM
I bought a used BMW 335. It
I bought a used BMW 335. It was a CPO. AS soon as it got close to the end of the warranty I got rid of it thanks to you and spared myself untold pain and suffering. Then I leased a BMW 328 for 3 years until I was confident the kinks were out of the Tesla Model 3. Then I listened to you again and bought one. 18 months in I got an a bad front end collision, the car saved me and definitely the idiot that pulled out in front me. Insurance paid full cost of replacement (i.e. what I paid for it new as it had not depreciated at all even with 21k miles). Then I bought another and here I sit. Coronita is the auto advice guru
November 16, 2021 @ 7:25 PM
Another data point. I pick up
Another data point. I pick up from a handful of fast/quick serve places that use apps so I can go back and see order history. The kids always get the same thing
Chik Fil A spicy chicken sandwich meal is 7.5% more than this time last year
Habit Charburger with cheese meal is up 11% since this time last year
November 16, 2021 @ 2:04 PM
I was reading an article that
I was reading an article that said the high inflation will cause many retired workers to have to re-enter the work force.
Seems likely to happen IMO.
November 16, 2021 @ 7:29 PM
I hope so, one tenant retired
I hope so, one tenant retired and I’m afraid she will run out of money in less than a decade.
She is only 53, now working part time.
November 17, 2021 @ 8:08 AM
Escoguy wrote:I hope so, one
[quote=Escoguy]I hope so, one tenant retired and I’m afraid she will run out of money in less than a decade.
She is only 53, now working part time.[/quote]
Got to invest. Wages alone will never keep up with inflation. Many people need to learn this here in the US.
November 17, 2021 @ 7:53 AM
Score!!!
Speaking of
Score!!!
Speaking of unreliable BMWs.. Just discussing them made me look at the TSB catalog for BMWs
https://bimmerscan.com/wp-content/uploads/2018/09/B012016-1.pdf
BMW issued a TSB and the FRM modules bricking is a known issue and they’ve extended the warranty to 10 years/156,000 miles.
I’m submitting a warranty reimbursement for a new FRM module that I’ll buy from FCP Euro for $500, because “repairing” a FRM module via eBay repairer is not a valid remediation process. Never hurt to have a spare FRM module in case it bricks again and need to send one back….
While searching, I also found there’s a bunch of TSBs about leaking fuel injectors on the 3 series that also have their warranties extended. Gonna tell my sis that, maybe she gets $6500 back from BMW too.
http://www.bmw-rp.com/production/bmw/reimbursement_bmw_portal.nsf
Reminds me of the time sdr that your old 335 started to have a turbo issue and coincidentally they were also in the middle of the Takata airbag recall and advised people to stop driving their cars and there was a stop-sales order on all CPO and used cars with the Takata airbag…and you were able to ditch the 335 with the failing turbo with a large incentive from BMW due to the Takata airbag stop-sales order…lol…
November 17, 2021 @ 8:09 AM
Surprised you remembered that
Surprised you remembered that but that’s what went down. Was able to wrangle an extra $3k out of BMW due to the airbag recall making my vehicle unsaleable at the moment
November 17, 2021 @ 9:53 AM
sdrealtor wrote:Surprised you
[quote=sdrealtor]Surprised you remembered that but that’s what went down. Was able to wrangle an extra $3k out of BMW due to the airbag recall making my vehicle unsaleable at the moment[/quote]
I don’t forget details about cars. Thankfully this is a hobby, and not because I really need to save money.
Be wary of BMW stealerships. They totally try to rip people off who are otherwise ignorant… When my X5 had their takata airbags recalled, it was also info for voluntary recall to replace VANOS bolts that were breaking…The stealership had part of the top engine disassembled for warranty work…AND on top of that, tried to con me into telling me that they my oil filter cooler “gasket” was leaking and should be replaced with part of the intake and engine apart, it would be cheaper to do it now…
Part was $25 for the gasket. Labor to change the gasket was $1200. I was like WTF? If $1200 was the “cheaper” price to have the gasket replaced when things were supposedly already partly disassembled, I was truly curious how much it would have been if I just went in to replace the gasket. I was arguing with the service guy that was saying is this gasket needed to be replaced at 50kmiles, that was ridiculous crappy parts quality on BMW… The service guy insisted it was a “normal maintenance” item for a BMW with 50kmiles…with all 6 cylinder N54 and N55 engines…
Bullshit….That ended up being a total farce…The reason why the oil filter gasket looked like it was leaking because when I replaced the oil filter, I made a mess and dripped some oil into the oil area. If they actually wiped it down, they would have easily been able to tell. It’s been 80kmiles..Still no leak…Fvckers…
My BMW is actually pretty reliable (knock on wood), ever since I stopped letting dealership service hands molest it.
It turns out that for some models the oil filter gasket leak is a common problem though. And for some cars, like the 3 series, you need to take apart part of the top end intake just to be able to take off the oil filter cooler to replace a $12 gasket…. Brilliant, BMW…But plenty you youtube videos to teach you how.Like this video from FCP Euro about the N52 engine.
https://www.youtube.com/watch?v=IiYHPnWF-jY
FCP Euro is awesome… Great parts, great prices, great how to videos. And every part you buy from them have their own lifetime warranty. If you send back the part (you pay shipping), they will replace it for free…Already done it a few times on the more expensive stuff.
It even applies to wear and tear items like Brake Rotors and Pads, though I don’t do that with those, because the cost of shipping those back is almost the same price as just getting new stuff.
https://www.fcpeuro.com/page/lifetime-guarantee
[quote]
Yes, our lifetime replacement covers every single part we sell, including wear-and-tear items like brake pads, spark plugs, gaskets, rotors, filters, belts, wiper blades, etc. This covers every part across every brand, including OE, OEM, genuine, performance, aftermarket, and re-manufactured parts.
The lifetime guarantee is non-transferable and only applies to parts you buy from FCP Euro. You must be both the current owner of the car and the original purchaser of the parts. Additionally, as stated above, we do not cover empty containers with contents that can not be physically returned. Such examples include aerosol spray cleaners, liquid gaskets, and additives that have been discharged or emptied.
[/quote]
This is why I generally never buy parts from Autozone or Oreilly, unless it’s an emergency, or from Amazon unless it’s much much cheaper…
Autozone and Oreilly is really expensive for parts and the quality you don’t know, it’s hit or miss. Autozone slightly better than Oreilly.
Places like FCP Euro sell OEM or OE parts much less than what Autozone/Oreilly charges for their offbrand aftermarket parts. Shipping is free on orders over $50, and there’s a true lifetime replacement warranty even on wear and tear items.
If something FCP Euro doesn’t sell, I then check RMEuropean.com, which does 1-2 day shipping from Colorado, and they warranty their parts for 2 years… Also a good place to buy parts.
If they don’t have it…Third place is ECSTuning…Which usually has a much larger parts selection and pricing is the same or better than FCP Euro, but they don’t have any special warranty….
I hate people that buy a german car, then go cheap on parts an maintenance. I mean, you bought a german car, and you are trying to stick the shittiest oil, shittiest made in china parts into it, or do the shittiest oil change at JiffyLube which probably ends up putting transmission fluid accidentally as engine oil…. and then you wonder why an already wonky questionably reliable german car is even less reliable??? It’s right up there with buying a new car, and then going cheap on auto insurance with the shittiest coverage from a cheap insurance company that is known to not pay out claims well… Makes no sense.
November 19, 2021 @ 8:23 AM
Actually, really old packets
Actually, really old packets of Kool-aid are collector’s items. So not only is it inflation free. It’s actually a potential investment. People pay $100-400 for old packets of Kool-aid…
https://thetakeout.com/inside-black-market-vintage-kool-aid-packet-collectors-1835123510
November 19, 2021 @ 8:24 AM
I’m gonna go buy a pallet of
I’m gonna go buy a pallet of Kool-aid as a hedge against inflation
November 19, 2021 @ 8:26 AM
sdrealtor wrote:I’m gonna go
[quote=sdrealtor]I’m gonna go buy a pallet of Kool-aid as a hedge against inflation[/quote]
That’s wrong. It’s a speculative investment. Just like bitcoin.
You’re not buying a hedge against inflation. You’re buying something like a stock option into the future hoping for incredible gain… The only difference is … unlike stock options… Kool-aid packets don’t really have an expiration date… And they don’t exactly go to worthless, since you could always use one to make a drink anytime…
Ha ha
November 19, 2021 @ 9:39 AM
I like getting ancient unused
I like getting ancient unused things from ebay too. I have some new and sealed Hanes t-shirts from the 1960s for example. I opened and wore some while keeping some pristine.
Tip for dating old things: UPCs became big very fast around 1982.
I don’t have any deadstock food, but I have some Ivory soap from the 1940s and hair tonic from about 1920. The soap was indistinguishable from new soap.
November 19, 2021 @ 9:40 AM
gzz wrote:I like getting
[quote=gzz]I like getting ancient unused things from ebay too. I have some new and sealed Hanes t-shirts from the 1960s for example. I opened and wore some while keeping some pristine.
Tip for dating old things: UPCs became big very fast around 1982.
I don’t have any deadstock food, but I have some Ivory soap from the 1940s and hair tonic from about 1920. The soap was indistinguishable from new soap.[/quote]
Old sweatshirts very valuable. Loopwheeled v. Knitted. Interesting. Things were much slower to produce in the old days.
November 19, 2021 @ 9:44 AM
I don’t wear sweatshirts.
I don’t wear sweatshirts.
Thermal clothing is one of the cheaper items to find new in package from before 1970. A lot of people would buy it, throw in in the closet, and then never open it up.
Baby clothes can be cheap too because they can outgrow them before they ever get opened, and then take up little room in storage. This was a great deal I purchased a month ago:
https://www.ebay.com/itm/123164972363
November 19, 2021 @ 8:34 AM
The other things that seems
The other things that seems to be inflation proof are
Costco Rotisserie Chicken.
Still $4.99 after all these years. But we know Costco sells these as loss leaders.
However, contrary to popular belief, Costco crossants are NOT inflation proof….Along time ago there were $2.99 for 24… Then they were $3.99 for 24… Then they were $3.99 for 18… Now they are $4.99 for 18.
Also a carton of orange juice has also gone up in price.
It use to be $2.50-3 for half gallon (64 fl oz).
OJ no longer comes in the half gallon. It’s comes in 52 fl oz for roughly $3…
November 19, 2021 @ 8:47 AM
Oh yeah!
Oh yeah!
November 19, 2021 @ 5:53 PM
gzz and scaredy, check
gzz and scaredy, check everything you have that might now be a “collectible.” You might find you or older family members have things you never imagined would be valuable.
My wife has been into this for years in every possible form, and it’s extremely interesting. She says “the hunt” is what makes it exciting. Personally, I’ve been into cars since I was a teenager.
November 22, 2021 @ 1:29 PM
About 15 years ago my
About 15 years ago my grandmother let me have a random box of unopened expired OTC medication from the 1950s that fell behind her bathroom counter. It went for $65 on eBay.
San Diego as a newer city isn’t a great place for hunting for collectables. When I am in the Detroit area for Thanksgiving, there will be fatter pickings. I have a good eye for electronics/video games from 1975-1989.
November 24, 2021 @ 12:01 AM
gzz wrote:About 15 years ago
[quote=gzz]About 15 years ago my grandmother let me have a random box of unopened expired OTC medication from the 1950s that fell behind her bathroom counter. It went for $65 on eBay.
San Diego as a newer city isn’t a great place for hunting for collectables. When I am in the Detroit area for Thanksgiving, there will be fatter pickings. I have a good eye for electronics/video games from 1975-1989.[/quote]
Interesting gzz. Yes, you’re right–this is one of those rare situations in life where older IS generally better. My wife is more into art, coins, books, gems, wine etc., along with her other projects. She’s made some amazing finds at flea markets when we travel–she had one find in Paris that would blow your mind.
Happy hunting on your trip!
November 22, 2021 @ 10:18 PM
Meh. I have better things to
Meh. I have better things to do than go on a scavenger hunt.
November 23, 2021 @ 8:39 AM
Dollar Tree is becoming
Dollar Tree is becoming Dollar and a Quarter Tree. Prices will now be $1.25. The change is not transitory. #gameover
November 23, 2021 @ 8:51 AM
surely we all think inflation
surely we all think inflation is transitory, since most none of us believe inflation will continue to be high (say, >5%) from now until eternity.
tb
#mikedrop
November 23, 2021 @ 9:37 AM
Eternity is a long time. In
Eternity is a long time. In the long run we’re all dead
November 23, 2021 @ 11:47 PM
Love it, sdr–so true–but
Love it, sdr–so true–but it’s still great that we all have such fantastic lives while we’re here:)
Happy Thanksgiving to All!
November 24, 2021 @ 10:06 AM
flyer wrote:Love it, sdr–so
[quote=flyer]Love it, sdr–so true–but it’s still great that we all have such fantastic lives while we’re here:)
Happy Thanksgiving to All![/quote]
You’re the best!
November 30, 2021 @ 1:06 PM
“We tend to use [the word
“We tend to use [the word transitory] to mean that it won’t leave a permanent mark in the form of higher inflation,” Fed Chairman Jerome Powell told Congress on Tuesday. “I think it’s probably a good time to retire that word and try to explain more clearly what we mean.”
November 30, 2021 @ 1:39 PM
carlsbadworker wrote:“We tend
[quote=carlsbadworker]“We tend to use [the word transitory] to mean that it won’t leave a permanent mark in the form of higher inflation,” Fed Chairman Jerome Powell told Congress on Tuesday. “I think it’s probably a good time to retire that word and try to explain more clearly what we mean.”[/quote]
Nothing in life is permanent. So, everything is transitory.
All high inflation period in the past ended, so this time is not any different.
November 30, 2021 @ 4:22 PM
At least in the 70’s/80’s you
At least in the 70’s/80’s you could get a 5-8% maybe even 11% FDIC cd LOL.
Now you just get screwed
Sarcasm on: I mean We just want to reduce your wealth by 25-50%
December 1, 2021 @ 1:13 PM
The-Shoveler wrote:At least
[quote=The-Shoveler]At least in the 70’s/80’s you could get a 5-8% maybe even 11% FDIC cd LOL.
Now you just get screwed
[/quote]
Because it has happened so slowly, I think a lot of us fail to understand the magnitude of the war on savers that the fed has fought over the years. It’s no wonder stocks are so high, investments like crypto currencies and NFTs are all the rage. Who the heck wants to buy a 10yr note paying 1.5%?
December 14, 2021 @ 10:20 AM
INFLATION IS TRANSITORY
July
INFLATION IS TRANSITORY
July 6, 2021 – December 14, 2021
Rest In Peace
December 15, 2021 @ 9:01 AM
I guess the big question now
I guess the big question now is will the fed raise rates and kill the economy/housing market or let inflation run.
Interesting times.
December 15, 2021 @ 10:57 AM
The-Shoveler wrote:I guess
[quote=The-Shoveler]I guess the big question now is will the fed raise rates and kill the economy/housing market or let inflation run.
Interesting times.[/quote]
A little of both.
December 15, 2021 @ 3:05 PM
There is no Fed “war on
There is no Fed “war on savers.”
I have read the US Constitution several times. Nothing in it promises an unalienable right to high APR insured bank accounts.
The Fed’s ability to set interest rates is very limited, and essentially no power when it comes to long term real rates, which are a function of supply and demand for loanable funds, which in turn are governed mainly by demographics, taxes, and technological progress.
December 15, 2021 @ 4:05 PM
duplicate
duplicate
December 15, 2021 @ 4:07 PM
So I guess the fed does not
So I guess the fed does not manipulate rates with bond buying etc…
They absolutely control short term rates.
December 17, 2021 @ 8:38 AM
gzz wrote:
The Fed’s ability
[quote=gzz]
The Fed’s ability to set interest rates is very limited, and essentially no power when it comes to long term real rates, which are a function of supply and demand for loanable funds, which in turn are governed mainly by demographics, taxes, and technological progress.[/quote]
Wow, that is about the most clueless statement I’ve seen in a while.
Why does the Fed “own” 8 trillion dollars worth of debt (Treasury, MBS, etc)? Why does the Fed own any debt for that matter?
They literally control interest rates and have since QE began in 2008. There is no free market in any way, shape or form.
February 10, 2022 @ 7:43 AM
More new highs. 7.5% I’d
More new highs. 7.5% I’d gladly take that on a CD
February 10, 2022 @ 7:54 AM
sdrealtor wrote:More new
[quote=sdrealtor]More new highs. 7.5% I’d gladly take that on a CD[/quote]
+1
IMO the whole world is just flush with cash chasing too few resources.
February 10, 2022 @ 8:49 PM
The-Shoveler wrote:sdrealtor
[quote=The-Shoveler][quote=sdrealtor]More new highs. 7.5% I’d gladly take that on a CD[/quote]
+1
IMO the whole world is just flush with cash chasing too few resources.[/quote]
I bonds my friend.
Now about 7%.
My ibonds from 2001 are at 10.3%.
February 10, 2022 @ 3:01 PM
Barry Ritholtz had a great
Barry Ritholtz had a great headline today:
“Transitory is taking longer than expected”
February 12, 2022 @ 9:08 AM
Here’s something I don’t
Here’s something I don’t understand.
I’ve been reading that when inflation is high, stocks don’t do well.
If you look back to the last period of high inflation – late 1970s, early 1980s – that appears to be true.
But if inflation is high, the value of products is higher and therefore income to companies should be higher and their value, it would follow, should be higher. Right?
Why is that not the case?
February 12, 2022 @ 9:56 AM
No expert, but IMO its
No expert, but IMO its complex.
Also depends on type of inflation and how long it lasts IMO.
Quick list of biz con’s IMO
1) Cost more to get a loan (well it used to maybe not anymore if the fed keeps printing regardless of anything)
2) Cost more for employee’s
3) Cost more for materials and equipment.
4) People try to buy less (Well after maybe exhausting their extra cash)
5) Bonds become a safer maybe better investment (well if the fed actually lets rates rise anyway)
February 14, 2022 @ 6:52 AM
The-Shoveler wrote:No expert,
[quote=The-Shoveler]No expert, but IMO its complex.
Also depends on type of inflation and how long it lasts IMO.
Quick list of biz con’s IMO
1) Cost more to get a loan (well it used to maybe not anymore if the fed keeps printing regardless of anything)
2) Cost more for employee’s
3) Cost more for materials and equipment.
4) People try to buy less (Well after maybe exhausting their extra cash)
5) Bonds become a safer maybe better investment (well if the fed actually lets rates rise anyway)[/quote]
I guess this makes sense. Bonds become a better choice, and people may have less $ to spend because wage increases may lag price increases.
February 17, 2022 @ 2:14 PM
svelte wrote:The-Shoveler
[quote=svelte][quote=The-Shoveler]No expert, but IMO its complex.
Also depends on type of inflation and how long it lasts IMO.
Quick list of biz con’s IMO
1) Cost more to get a loan (well it used to maybe not anymore if the fed keeps printing regardless of anything)
2) Cost more for employee’s
3) Cost more for materials and equipment.
4) People try to buy less (Well after maybe exhausting their extra cash)
5) Bonds become a safer maybe better investment (well if the fed actually lets rates rise anyway)[/quote]
I guess this makes sense. Bonds become a better choice, and people may have less $ to spend because wage increases may lag price increases.[/quote]
Reading more articles on what is going on now, I think it is a chain reaction that causes stocks to be less favorable during high inflation periods:
1) transportation and material costs rise which are passed on to manufacturers
2) manufacturers are slow to raise prices which impacts their profit margin (thus making their stock less appealing)
3) consumers must pay for for items before they see their wages increase, giving them less money to spend on purchases which in turn
4) reduces the amount consumers buy from manufacturers further depressing company stock values
Looks like it can become a vicious circle.
And with gas (of all types) prices rising, this could very well be a repeat of the 1970s.
February 17, 2022 @ 3:13 PM
Svelte, your “vicious cycle”
Svelte, your “vicious cycle” seems to assume everyone pays higher prices before charging higher prices. You have manufacturers paying more first before rising prices, and consumers paying more first before getting higher wages.
The 1970s inflation was exceptional in that oil was 6% of the economy, much larger than now, and the higher energy prices were shipped to foreign oil exporters.
I’ll say again, inflation makes stocks more attractive, high interest rates makes them less attractive. While I don’t think it will happen, if 7.5% inflation and 2% interest persists, that would be absolutely amazing for the stock market, most especially companies with a lot of fixed rate debt.
My last example was XOM. How about YUM, the fast food company. $11 billion in long term debt, about 0.5b in operating profit per quarter. If costs and prices go up at the same rate, inflation drastically increases shareholder value by eroding their long term debt. On top of the pure financial benefit, their pricing power also operates as an inflation insurance policy, like with TIPs. And their quarterly profit goes up because while other costs may increase, interest costs as a percentage of revenue will drop.
I don’t think a lot of inflation is coming, so I don’t own YUM. But I’d certainly be a buyer if it did. I use YUM as an example because it is really heavy in debt, though it easily services it because it is growing and profitable.
February 17, 2022 @ 3:13 PM
svelte wrote:
Reading more
[quote=svelte]
Reading more articles on what is going on now, I think it is a chain reaction that causes stocks to be less favorable during high inflation periods:
1) transportation and material costs rise which are passed on to manufacturers
2) manufacturers are slow to raise prices which impacts their profit margin (thus making their stock less appealing)
3) consumers must pay for for items before they see their wages increase, giving them less money to spend on purchases which in turn
4) reduces the amount consumers buy from manufacturers further depressing company stock values
[/quote]
Earlier I commented that it mostly comes down to valuation, which you dismissed as stating the obvious… now you’ve posted 4 theories none of which involve valuation. Which is it?
February 17, 2022 @ 3:19 PM
Gold showing signs of life. I
Gold showing signs of life. I have no idea if it means anything.
February 20, 2022 @ 7:16 PM
Rich Toscano wrote:svelte
[quote=Rich Toscano][quote=svelte]
Reading more articles on what is going on now, I think it is a chain reaction that causes stocks to be less favorable during high inflation periods:
1) transportation and material costs rise which are passed on to manufacturers
2) manufacturers are slow to raise prices which impacts their profit margin (thus making their stock less appealing)
3) consumers must pay for for items before they see their wages increase, giving them less money to spend on purchases which in turn
4) reduces the amount consumers buy from manufacturers further depressing company stock values
[/quote]
Earlier I commented that it mostly comes down to valuation, which you dismissed as stating the obvious… now you’ve posted 4 theories none of which involve valuation. Which is it?[/quote]
You said it comes down to valuation. But you didn’t say why they might be valued lower. I’m giving reasons why a company might be valued lower:
1) a company might be valued lower because their expenses are higher (transportation and material costs) which would affect their profit margin
2) a company might be valued lower because they can’t pass on the higher transportation and material costs to consumers, meaning the company profit will be lower
3) a company might be valued lower because they aren’t selling as many of their widgets because consumers have less spending money because their wages haven’t caught up to the higher widget costs
4) just a repeat of 3, actually
February 20, 2022 @ 8:08 PM
svelte wrote:Rich Toscano
[quote=svelte][quote=Rich Toscano][quote=svelte]
Reading more articles on what is going on now, I think it is a chain reaction that causes stocks to be less favorable during high inflation periods:
1) transportation and material costs rise which are passed on to manufacturers
2) manufacturers are slow to raise prices which impacts their profit margin (thus making their stock less appealing)
3) consumers must pay for for items before they see their wages increase, giving them less money to spend on purchases which in turn
4) reduces the amount consumers buy from manufacturers further depressing company stock values
[/quote]
Earlier I commented that it mostly comes down to valuation, which you dismissed as stating the obvious… now you’ve posted 4 theories none of which involve valuation. Which is it?[/quote]
You said it comes down to valuation. But you didn’t say why they might be valued lower. I’m giving reasons why a company might be valued lower:
1) a company might be valued lower because their expenses are higher (transportation and material costs) which would affect their profit margin
2) a company might be valued lower because they can’t pass on the higher transportation and material costs to consumers, meaning the company profit will be lower
3) a company might be valued lower because they aren’t selling as many of their widgets because consumers have less spending money because their wages haven’t caught up to the higher widget costs
4) just a repeat of 3, actually[/quote]
No, you gave reasons why their earnings would be lower.
I think you are conflating price and valuation here. Valuation is how much investors are willing to pay for a given amount of earnings. Price is the product of valuation and earnings.
My claim was that the issue is on the valuation side of the equation, not the earnings side. IE, company earnings do fine in inflationary times; investors are just not willing to pay as much for those earnings.
Now, you could ask why investors are not willing to pay as much for the same dollar of earnings. This is not totally clear cut, and in some ways I think this is more explanatory than causal (ie, just because investors DO behave that way doesn’t mean they SHOULD). But with that said, I think a major part is: with inflation comes higher rates, and if you can get a higher rate on fixed income, stocks need to offer a higher prospective return to compensate for their volatility/uncertainty, and this higher prospective return is achieved via lower valuations for stocks.
February 24, 2022 @ 9:12 AM
Rich Toscano wrote:
No, you
[quote=Rich Toscano]
No, you gave reasons why their earnings would be lower.
[/quote]
Sort of. I’m stating that earnings will be lower and thus the valuation is lower – potential stock purchasers apparently give the company a lower valuation if the earnings are lower. Makes sense to me.
[quote=Rich Toscano]
I think you are conflating price and valuation here. Valuation is how much investors are willing to pay for a given amount of earnings. Price is the product of valuation and earnings.
[/quote]
It appears you and I are using different definitions for “valuation”. I’m using Method #1 (Market Valuation) as given under “Methods of Valuation” at this link:
https://www.investopedia.com/terms/b/business-valuation.asp
It looks to me like you are using something similar to Method #3 (Earnings Multiplier)
Two different ways of looking at it, that’s all.
February 24, 2022 @ 5:30 PM
“Valuation” can (confusingly,
“Valuation” can (confusingly, I admit) be used describe what an individual company’s is worth, ie price. But when talking about asset classes (“stocks” being an example of such), valuation and price are two different concepts.
February 25, 2022 @ 11:08 AM
Hope it’s transitory!!!
[img_assist|nid=27526|title=Hope it’s transitory!!!|desc=|link=node|align=left|width=100|height=99]
February 25, 2022 @ 11:44 AM
sdrealtor wrote:Hope it’s
[quote=sdrealtor][img_assist|nid=27526|title=Hope it’s transitory!!!|desc=|link=node|align=left|width=100|height=99][/quote]
Of course it is. Housing will go back to pre-COVID, same goes for rent, income, gas, etc. ALL of it will just revert to pre-COVID. The only thing that won’t is time. We just lost 2 years of our lives.
February 25, 2022 @ 1:06 PM
And 2 chicken nuggets!
And 2 chicken nuggets!
March 4, 2022 @ 10:03 AM
Inflation forecasts on the
Inflation forecasts on the rise again
March 4, 2022 @ 11:05 AM
sdrealtor wrote:Inflation
[quote=sdrealtor]Inflation forecasts on the rise again[/quote]
Have you seen lumber prices (LBS) lately? Back up above $1300! Given that prior to this run up in inflation LBS was consistently below $500 that’s more than double.
I realize this is just one thing. (Lumber) But wow, just wow!
March 4, 2022 @ 2:21 PM
I paid $27 for a large cheese
I paid $27 for a large cheese pizza this week. It was great but still…$27
March 10, 2022 @ 6:40 AM
https://abcnews.go.com/Busine
https://abcnews.go.com/Business/wireStory/decade-inflation-high-expected-february-83358259
Yep, it’s definitely transitory. 6%+ seem too broad now. I see 7%, do I see 8%? How about 9%? lol
March 10, 2022 @ 7:44 AM
an
[quote=an]https://abcnews.go.com/Business/wireStory/decade-inflation-high-expected-february-83358259
Yep, it’s definitely transitory. 6%+ seem too broad now. I see 7%, do I see 8%? How about 9%? lol[/quote]
I think we are all poorer than we thought.
September 13, 2022 @ 12:05 PM
an
[quote=an]https://abcnews.go.com/Business/wireStory/decade-inflation-high-expected-february-83358259
Yep, it’s definitely transitory. 6%+ seem too broad now. I see 7%, do I see 8%? How about 9%? lol[/quote]
6 months later… here we are
February 12, 2022 @ 11:41 AM
svelte wrote:Here’s something
[quote=svelte]Here’s something I don’t understand.
I’ve been reading that when inflation is high, stocks don’t do well.
If you look back to the last period of high inflation – late 1970s, early 1980s – that appears to be true.
But if inflation is high, the value of products is higher and therefore income to companies should be higher and their value, it would follow, should be higher. Right?
Why is that not the case?[/quote]
The main issue is valuation: investors aren’t (or haven’t been, historically) willing to pay as much for stocks during times of high inflation. The poor performance in the 70s/early 80s resulted from valuations moving from somewhat high in the early 70s to ridiculously low in the early 80s.
February 14, 2022 @ 6:56 AM
Rich Toscano wrote:
The main
[quote=Rich Toscano]
The main issue is valuation: investors aren’t (or haven’t been, historically) willing to pay as much for stocks during times of high inflation. The poor performance in the 70s/early 80s resulted from valuations moving from somewhat high in the early 70s to ridiculously low in the early 80s.[/quote]
Since stock prices tend to do poorly in high inflation environments, it stands to reason investors aren’t willing to pay as much for stocks. That’s implied by saying stock prices do poorly in high inflation environments.
The question is – why aren’t investors willing to pay as much for stocks in times of high inflation?
February 14, 2022 @ 2:18 PM
Yawn, core inflation still
Yawn, core inflation still well below the 2% trendline.
https://www.calculatedriskblog.com/2022/02/a-few-comments-on-inflation.html
Rich: “Since stock prices tend to do poorly in high inflation environments”
(1) In prior “high” inflation periods market expectations were for sustained inflation. In 2022, the hard money elite inflation scaremongers have complete dominance of MSM discourse which they own. However, large investors are still all on Team Transitory.
(2) the next big difference is the 7.5% headline rate reflects a ton of dispersion in price changes, which reflect the pandemic shortages and the dumb subsidies we had encouraging low wage workers to leave the labor force. So used cars are up 40% while medical inflation is the lowest in decades. This just isn’t the classic inflation caused by expansionary policy which was last seen in the mid 1980s.
(3) inflation is positive for stocks in general since public companies tend to have fixed rate debt, partly fixed costs, plus pricing power. If XOM’s labor costs double and oil prices double, it will be far ahead due to its debt being the same.
This isn’t the past when inflation was accompanied by high yields in assets other than stocks. Why lock on a gain of 2.05% buying treasuries? So many great companies with 4% yields and solid earnings.
February 14, 2022 @ 4:36 PM
gzz wrote:Yawn, core
[quote=gzz]Yawn, core inflation still well below the 2% trendline.
https://www.calculatedriskblog.com/2022/02/a-few-comments-on-inflation.html
[/quote]
That’s a whole lot different that saying we are not currently in a high inflation environment.
[quote=gzz] In 2022, the hard money elite inflation scaremongers have complete dominance of MSM discourse which they own.[/quote]
Not positive who specifically you mean when you refer to MSM. But, I would assume sites like Marketwatch, or finance.yahoo.com, or other market sites or finance cable. Here’s a bit of free advice, Never, ever pay any attention to these sites or channels. These sites (and channels) are driven completely by ad revenue and so are little more than click bait. They include fear mongering of all ideologies and you should avoid that nonsense completely.
Which leads me to a second point. Using references to what clickbait sites are saying completely robs your argument of credibility. It’s sorta like saying, “Hey the crazy nut standing on the street corner screaming obscenities thinks…” and then using that to make a point.
February 14, 2022 @ 9:51 PM
“ Not positive who
“ Not positive who specifically you mean when you refer to MSM. ”
Everything from clickbait sites to the TV news to prestige newspapers.
NYT and Washington Post are supposed to be liberal, and are on most issues. But the idea that sustained inflation at 6% would be a positive thing for most Americans will never appear there. Instead, we get inflation scare stories and unrepresentative anecdotes about the categories with the largest increases.
I would live to make a big bet against inflation staying 6%+, which is certainly the impression both the MSM and the huge right wing counter MSM both give, in their own styles and spins of course.
But I can’t do it. Because actual money managers with billions to invest collectively and correctly see the current inflation is transitory, so there’s nobody taking the other side of the bet.
February 15, 2022 @ 9:16 AM
So now you changed the
So now you changed the benchmark of sustained inflation to being 6% or more? From the beginning (check OP) the benchmark has been the sub 2% inflation we’ve been seeing a long time. Anything over that is quite a bit more and it’s already been going on for a lot longer than most expected. Your horse left the barn long ago
February 16, 2022 @ 3:31 PM
Right, so it’s transitory.
Right, so it’s transitory. Care to put a date on when it’ll be back below 2%?
February 17, 2022 @ 9:19 AM
gzz wrote:
Rich: “Since stock
[quote=gzz]
Rich: “Since stock prices tend to do poorly in high inflation environments”
[/quote]
You quoted the wrong person. Rich didn’t say that, I did.
February 17, 2022 @ 9:13 AM
This could turn into 70’s
This could turn into 70’s style stagflation in a heartbeat complete with gas lines if the Russian invasion happens.
February 17, 2022 @ 9:30 AM
IMO yes, about to be
IMO yes, about to be unprecedented deflation. Just picture when that 15 something trillion spigot shuts off and all the easy money in real estate over the last 12 years has been leading the lambs to the corral. When 75% of the inventory opens up because it’s not possible to hit a bulls eye with every blind decision to take on more risk, we’ll get to see who they had mind to hold the bag all along. What kind of sentence do you got 15 or 30 years?
February 17, 2022 @ 9:37 AM
IMO yes, about to be
IMO yes, about to be unprecedented deflation. Just picture when that 15 something trillion spigot shuts off and all the easy money in real estate over the last 12 years has been leading the lambs to the corral. When 75% of the inventory opens up because it’s not possible to hit a bulls eye with every blind decision to take on more risk, we’ll get to see who they had mind to hold the bag all along. What kind of sentence do you got 15 or 30 years? Assume pay of 15-20$ to find out what affordability/prices will look like. How many properties will you be able to hold on to at that pay rate?
In our consulting business we have 5 people doing the work with relative ease of what normally be a 20+ person IT department. As costs goes up more will be paying attention to that IMO. If someone’s a slacker(look around at your place of employment) they’ll be moved into the rote hustler economy rate, 15-20$/hr.
February 17, 2022 @ 12:34 PM
“IMO yes, about to be
“IMO yes, about to be unprecedented deflation. Just picture when that 15 something trillion spigot shuts off and all the easy money in real estate over the last 12 years has been leading the lambs to the corral.”
Well it won’t be shut off completely and suddenly. We just had the smaller of the two big spending plans pass (BIB), but the larger one (BBB) fail. A very scaled down version might pass later however.
While we might scrape below 0% into deflation for a month or two, I think the fed will helicopter drop money before we have sustained deflation.
Here’s some data, fed spending the past three months. Starting with Nov 21 to Jan 22:
472,543
508,041
346,380
—-
1,326,964
Now the same three months, Nov 20 to Jan 21:
364,819
489,682
547,483
—–
1,401,984
So a pretty big reduction in nominal federal spending, especially in Jan 2022. And the spending reductions are hitting working to middle class Americans the most, who are the ones who spend the money.
Once again, I wish there were some nice way to bet against inflation. But the market already agrees with me. 10 years yield 2%, there’s obviously no expectation of sustained 4%+ inflation. If there were, investors would decamp to inflation protected assets. So how are, say, oil stocks doing? Not too great.
February 17, 2022 @ 1:53 PM
I would argue maybe no-one
I would argue maybe no-one actually believes the FED will really raise rates much especially once the economy starts tanking regardless of inflation.
February 17, 2022 @ 7:27 PM
The-Shoveler wrote:I would
[quote=The-Shoveler]I would argue maybe no-one actually believes the FED will really raise rates much especially once the economy starts tanking regardless of inflation.[/quote]
Really? No one believes it? Have you noticed the stock market since the Fed first publicly announced their plans to begin easing? Nasdaq already down 15% off its highs. In the same timeframe 30yr mortgage rates have increased a full percent (3 to 4) for about 30% increase in a matter of 3 months.
I would say the “market” certainly believes it.
This inflation problem is real and everyone, regardless of political affiliation, knows it is real (with the exception of gzz, he is in his own world)
February 18, 2022 @ 6:26 AM
deadzone wrote:The-Shoveler
[quote=deadzone][quote=The-Shoveler]I would argue maybe no-one actually believes the FED will really raise rates much especially once the economy starts tanking regardless of inflation.[/quote]
Really? No one believes it? Have you noticed the stock market since the Fed first publicly announced their plans to begin easing? Nasdaq already down 15% off its highs. In the same timeframe 30yr mortgage rates have increased a full percent (3 to 4) for about 30% increase in a matter of 3 months.
I would say the “market” certainly believes it.
This inflation problem is real and everyone, regardless of political affiliation, knows it is real (with the exception of gzz, he is in his own world)[/quote]
15 perc is nothing after this run up and these valuations.
I’d say I also don’t believe the fed will raise rates in a meaningful way to combat inflation, if it really isn’t transitory. There will be a lot of talk, and a little raising, but not commensurate with what might actually be effective.
I could be very wrong.
I have no idea what the right move is even if this were right which I’m not sure of. Say, 60 perc. Sure.
Basically, I do nothing. But occasionally fret.
February 18, 2022 @ 10:07 AM
The Fed balance sheet more
The Fed balance sheet more than doubled in just the last two years. Of course this is going to cause massive inflation and is the direct cause of the current madness in the housing market, stock market, etc. The Fed money printing machine is literally our economy and has been for years.
But capital markets are already realizing the party is over. Housing stocks are getting hammered, Redfin is down 25% today. Zillow has been getting destroyed. They quickly exited their house flipping business a few months ago because they knew the party was over and they didn’t want to be caught when the music stopped.
Fed has no choice but to “taper”, there is too much political pressure now to tame inflation. The only way to control it is to let the markets crash. The big question is how far can they or will they let it crash?
The Fed has to raises rates significantly in order for them to come back later and “rescue” the markets again. Rinse and repeat.
February 19, 2022 @ 8:30 AM
deadzone wrote:The Fed
[quote=deadzone]The Fed balance sheet more than doubled in just the last two years. Of course this is going to cause massive inflation and is the direct cause of the current madness in the housing market, stock market, etc. The Fed money printing machine is literally our economy and has been for years.
But capital markets are already realizing the party is over. Housing stocks are getting hammered, Redfin is down 25% today. Zillow has been getting destroyed. They quickly exited their house flipping business a few months ago because they knew the party was over and they didn’t want to be caught when the music stopped.
Fed has no choice but to “taper”, there is too much political pressure now to tame inflation. The only way to control it is to let the markets crash. The big question is how far can they or will they let it crash?
The Fed has to raises rates significantly in order for them to come back later and “rescue” the markets again. Rinse and repeat.[/quote]
FWIW Zillow travails Had nothing to do with the markets and everything to do with ego, incompetence and mismanagement. They over paid grossly for houses that they bought, bought many flawed properties at premium property prices and have no idea how to cheaply add value to them.
In this market it’s astonishing they didn’t make money and an indication of how badly they blow it operationally. Had they asked me I would’ve set up their business very very differently and am confident they could’ve made a killing if they had done things how I would’ve. The first thing I would’ve done before hiring a single realtor is buy a good solid home remodeling company in every market before I entered it.
I would have set up local business units in each market led by an experienced local realtors who understood how to differentiate home values based upon lot , location and layout as compared with the comparables it was using to set a price.
They were simply desperate to buy as many houses as they could as quickly as they could to build market share and shut out other ibuyer companies . It was a mess and I know people who sold their houses to them and made out like bandits. It’s hard to imagine how they could’ve done it any worse
FWIW I am not disagreeing with your overarching point. You just chose very bad examples. Zillow got killed while the market was still raging and now that it’s falling Zillow is recovering over the last month.
February 19, 2022 @ 8:32 AM
Sorry not buying that for one
Sorry not buying that for one second, just the mainstream narrative to hide the fact that this was a giant red flag for the housing market. No chance Zillow didn’t have the smartest folks and best algorithms available given their deep pockets. They bailed because they saw a top in the housing market. Flipping and I-buying only works when the prices are perpetually going up, which has been working like a champ due to Fed balance sheet perpetually going up.
So if this was just a failure in Zillow strategy, not the market, why is Redfin stock crapping the bed? OPEN and OPAD not doing much better. When Zillow failed I fully expected that in due time, Redfin would soon follow, and here we are.
February 19, 2022 @ 8:46 AM
I know a senior finance guy
I know a senior finance guy at Zillow. If he’s the best and brightest I’m Tinkerbell. I don’t care if you buy it. That’s what happened! They bought crappy homes, grossly over paid and didn’t know what to do with them. They bought homes here last Spring and lost tons of money on most of them. You know how much prices soared here. How could anyone but an idiot lose money. In hindsight it was shooting fish in a barrel and they missed.
Redfin is a very different case. Real estate brokerage is not a profitable business and never was. I saw the financials of the #1 office in SD back in 04 when things were going bonkers and they barely turned a profit when 6% listing was the rule. They are investing heavily in growth now entering new markets and sales volume is tanking in most markets because no one wants to sell. Just got back from annual Florida trip. Prices spiked there also though nowhere near like here. I spent time in three friends golf course country club communities in Palm Beach County. There was barely anything for sale in the three of them and in past years there were signs everywhere. If people aren’t moving a company like redfin will have a much more difficult time selling a story of growth to institutional investors
February 19, 2022 @ 8:47 AM
Again I’m not disagreeing
Again I’m not disagreeing with your overarching point. You just chose the wrong examples for it
February 19, 2022 @ 3:15 PM
Regardless, companies like
Regardless, companies like Zillow and Redfin, completely jettisoning and/or losing significant money on I-buying (flipping) is a very ominous sign for the market.
February 19, 2022 @ 5:55 PM
deadzone wrote:Regardless,
[quote=deadzone]Regardless, companies like Zillow and Redfin, completely jettisoning and/or losing significant money on I-buying (flipping) is a very ominous sign for the market.[/quote]
It is an ominous sign for iBuying not the market. Flippers continue to make a killing. It’s best done locally
February 19, 2022 @ 4:17 PM
deadzone wrote:No chance
[quote=deadzone]No chance Zillow didn’t have the smartest folks and best algorithms available given their deep pockets.[/quote]
Have you never worked for a company?
February 19, 2022 @ 7:00 PM
XBoxBoy wrote:deadzone
[quote=XBoxBoy][quote=deadzone]No chance Zillow didn’t have the smartest folks and best algorithms available given their deep pockets.[/quote]
Have you never worked for a company?[/quote]
Zillow has a lot of money. They can buy expertise. To suggest they do not understand the real estate market is extraordinarily naive. With all due respect I think the brain trust of Zillow has more understanding of the market than sdr or anybody on this site.
If the Fed actually tapers, all flippers are going to get destroyed, ibuyer or local. Flipping only works in an expansionary environment. Perhaps that’s why Zillow cut bait, they didn’t want to be a bag holder when the Fed takes away the punch bowl.
February 19, 2022 @ 7:28 PM
Zillow has zero expertise
Zillow has zero expertise buying and selling real estate or operating a brokerage. The have zero experience as a general contractor. Zillow has a ton of money and can buy expertise. They did not. Why they did not boggles my mind.
I have flipped homes. You do not understand flipping. Flipping is profitable in flat markets also. You make money flipping by buying well (i.e. below market) and adding value cheaply (paint, flooring, throwing in new kitchen cabinets/counters that look good but are cheap quality etc). This is where most of the flippers in SD buy materials. They bring in materials by the container from China. http://www.granitencabinet.com/about/ Go check this place out sometime. You will walk out laughing because you’ll see all the materials you have seen for years in the listings for flipped houses.
Zillow bought poorly (i.e. far above market) and did not have the manpower to add value.
A rising market is the icing on the cake and good flippers do not count on it. They make money buying well and adding value. That Zillow could not make money in a rapidly rising market only speaks more to how incompetent they were
They cut bait because they realized the business was not what they thought it was
February 19, 2022 @ 8:16 PM
https://www.uaproperty.com/ua
https://www.uaproperty.com/ua-offers/c1579r/kiev/cheap-house-for-sale-in-ukraine-with-land/
Nice place in the ukraine,pretty cheap. I’d probably try a low-ball offer on Monday. Still, the place is practically free, $7300. Wonder if it’ll flip profitably once the shelling stops. House is a cozy 400 sq ft, but comes with a nice veggie garden.
February 21, 2022 @ 8:13 PM
scaredyclassic
[quote=scaredyclassic]https://www.uaproperty.com/ua-offers/c1579r/kiev/cheap-house-for-sale-in-ukraine-with-land/
Nice place in the ukraine,pretty cheap. I’d probably try a low-ball offer on Monday. Still, the place is practically free, $7300. Wonder if it’ll flip profitably once the shelling stops. House is a cozy 400 sq ft, but comes with a nice veggie garden.[/quote]
That’s the kind of house my wife grew up in, her father lives further north of Kiev.
She’s in Moscow now, renovating the townhouse.
Yeah, great times.
Yes, you are reading this correctly.
I think his house is with about 10K.
February 21, 2022 @ 8:10 PM
XBoxBoy wrote:deadzone
[quote=XBoxBoy][quote=deadzone]No chance Zillow didn’t have the smartest folks and best algorithms available given their deep pockets.[/quote]
Have you never worked for a company?[/quote]
When I worked at Siemens, the engineers had an expression “they all cook with water”.
No one has any ‘real’ special sauce, either the company is disciplined or it’s not.
Good controls, processes, management, realistic compensation and budgets.
It’s not hard but yes amazing that Zillow could mess this one up.
Admittedly, my wife does manage many of our contractors and paints the interiors herself but sometimes sweat equity is the edge you need.
February 18, 2022 @ 10:51 AM
scaredyclassic wrote:
15 perc
[quote=scaredyclassic]
15 perc is nothing after this run up and these valuations.
[/quote]
LOL kind of the way I feel too.
February 18, 2022 @ 11:21 AM
The-Shoveler
[quote=The-Shoveler][quote=scaredyclassic]
15 perc is nothing after this run up and these valuations.
[/quote]
LOL kind of the way I feel too.[/quote]
Well keep watching, it’s starting to get interesting.
February 17, 2022 @ 4:37 PM
IMO Russia invades and we end
IMO Russia invades and we end up with $7 – $10 dollar Gas it’s going to leave a mark.
Worse if we end up with real shortages (even for a few months), it could get real ugly quick. I think we are still a lot more depended on Oil than most may think.
Plastic does not fall from the sky, stuff really does not magically show up at your door (even from china).
My Opinion only.
February 22, 2022 @ 10:20 AM
Interesting
Russian invasion
Interesting
Russian invasion seems like a big yawn for the market so far, either no ones really paying attention or it really is no big deal.
March 4, 2022 @ 10:21 AM
This is not the fed or the
This is not the fed or the congress of yesteryear IMO.
IMO I think there is little will to do what would be necessary to fight inflation.
But just my Opinion.
March 10, 2022 @ 8:27 AM
All you folks that ended up
All you folks that ended up refinancing or cash out equaity refinancing with a 3% or lower 30 year fixed mortgage must be laughing your asses off right now with the probably once in a lifetime lowest rates ever. Let the banks eat the cost of inflation….
I know I am…Congrats, and high-5.
March 10, 2022 @ 9:13 AM
I feel so fortunate to have a
I feel so fortunate to have a 2.625% mortgage as an inflation hedge. The benefits will last for my lifetime. Glad to have had the opportunity
March 10, 2022 @ 9:43 AM
Coronita wrote:All you folks
[quote=Coronita]All you folks that ended up refinancing or cash out equaity refinancing with a 3% or lower 30 year fixed mortgage must be laughing your asses off right now with the probably once in a lifetime lowest rates ever. Let the banks eat the cost of inflation….
I know I am…Congrats, and high-5.[/quote]
High 5 to you too Coronita! I pulled out as much cash as I could on my primary. Was going to do the same for my rentals but was so busy with other stuff that I put that off for early this year, only to miss the boat on those. Oh well, you win some and you lose some.
March 10, 2022 @ 10:19 AM
an wrote:Coronita wrote:All
[quote=an][quote=Coronita]All you folks that ended up refinancing or cash out equaity refinancing with a 3% or lower 30 year fixed mortgage must be laughing your asses off right now with the probably once in a lifetime lowest rates ever. Let the banks eat the cost of inflation….
I know I am…Congrats, and high-5.[/quote]
High 5 to you too Coronita! I pulled out as much cash as I could on my primary. Was going to do the same for my rentals but was so busy with other stuff that I put that off for early this year, only to miss the boat on those. Oh well, you win some and you lose some.[/quote]
Life is not about absolutes. It’s about “close enough”… At least some of you folks have been telling me that… lol…
I feel like I’m in rest and vest retirement mood…lol….I’m really surprised I survived in tech for so long. I thought I would have been finished and burned out when I turned 40 and that was 7 years ago….lol.
When am I going to get my AARP membership application in the mail and start collecting social security again? lol
March 10, 2022 @ 4:53 PM
So much for transitory ,
So much for transitory , Treasury secretary predicts whole year of ‘very uncomfortably high’ inflation
March 14, 2022 @ 7:41 PM
I so glad I bough my 5 qt
I so glad I bough my 5 qt jugs of oil last week and have 3 years worth of supply for 6 cars. This week, it’s $10/more per 5 qt jug. 40% price increase. lol.
March 14, 2022 @ 11:29 PM
dangit…how do I tell how I
dangit…how do I tell how I voted? I’m definitely sure I was wrong.
March 18, 2022 @ 1:59 PM
Food seems like about to get
Food seems like about to get a lot more expensive (at least in Europe).
Get your import beer now.
April 5, 2022 @ 5:50 PM
Damn my Amazon music
Damn my Amazon music subscription just went up from $4 to $5 a month. That’s 25% increase! Even worse I didn’t even realize I had an Amazon music subscription, need to do a better job checking my credit card bill.
June 10, 2022 @ 6:20 AM
Inflation 8.6%.
Inflation 8.6%.
https://finance.yahoo.com/news/may-inflation-data-june-10-2022-212834308.html
I really really feel sorry for folks that haven’t taken steps to cap as much of their day to day living cost as possible.
Food, transportation, housing…
You guys eat out lately. It’s really really expensive.
Fortunately, I don’t have to commute to work anymore and all my driving is leisure. But, geesh, even then, I sort of regret canceling a Tesla last year thinking there would be better discounts and or choices next year.
I don’t think the fed’s policy can really fix this unless they really do something extreme and bring the economy to a halt. It seems like the problems are
1) energy/fuel shortage due to the war
2) supply chain issues from abroad due to covid
Maybe now that china is emerging from a lockdown (2) is going to get slightly better.
But the bigger problem, especially for things like chips, there’s not enough capacity at the select few semi fab facilities right now in the world, and it will take a few years at least to build more capacity. The problem is in the availability of supply of goods and services.
https://www.cnbc.com/2022/05/02/chip-shortage-hurts-apple-nokia-daimler-and-volvo.html
June 10, 2022 @ 6:40 AM
I think this inflation level
I think this inflation level is wonderful. It erodes the real value of the national debt, student loans, credit card debt, and my mortgages.
There’s too much debt in America IMO. Inflation is a jubilee for our middle class.
June 10, 2022 @ 7:21 AM
gzz wrote:I think this
[quote=gzz]I think this inflation level is wonderful. It erodes the real value of the national debt, student loans, credit card debt, and my mortgages.
There’s too much debt in America IMO. Inflation is a jubilee for our middle class.[/quote]
But this inflation is very bad for the majority of people, particularly of lower economic means. If the government doesn’t do something there will be major civil unrest before long.
It is fairly obvious they have no choice but to pop the bubble. which the Fed totally has the ability to do. But up till now they are raising interest rates at a snails pace and haven’t even begun QT yet.
June 10, 2022 @ 7:26 AM
gzz wrote:I think this
[quote=gzz]I think this inflation level is wonderful. It erodes the real value of the national debt, student loans, credit card debt, and my mortgages.
There’s too much debt in America IMO. Inflation is a jubilee for our middle class.[/quote]
for folks like probably you and me that own our house outright or have a fixed rate mortgage 30 years where that interest payment is going to erode from inflation, this is lesser of an issue and in a lot of way makes the debt owed worth a lot less in the future. And for people that make decent money or have other sources of cash flow besides a job income, that’s probably ok.
But folks that have not fixed their housing costs, have to commute to work, have to raise a family, and their paycheck is already pretty close to tapped out for day-day living expenses (and is not nearly growing as fast as inflation), this got to hurt. It hurts also people trying to “save” money to invest if they are already tapped out.
Not good overall.
June 10, 2022 @ 7:39 AM
Amazing to see narrative
Amazing to see narrative shift to inflation is wonderful. I see “wealthy” older folks on fixed incomes getting hit harder than the younger generation saddled with student loans who will be net beneficiaries over time with their debt devalued.
June 10, 2022 @ 8:18 AM
sdrealtor wrote:Amazing to
[quote=sdrealtor]Amazing to see narrative shift to inflation is wonderful. I see “wealthy” older folks on fixed incomes getting hit harder than the younger generation saddled with student loans who will be net beneficiaries over time with their debt devalued.[/quote]
100% agree, older folks on fixed income will be hit the hardest in high inflation scenario. I feel sorry for them, since there’s not much that they can do.
June 10, 2022 @ 8:25 AM
People on fixed income get
People on fixed income get social security which rises with CPI.
People on nominal dollar pensions (mostly local gov retirees, though CA I believe is most inflation adjusted) benefited by the large disinflation that started in the 1980s, and while they are losing, these are unearned gains they are losing. And public pension funds are going to be more stable and secure now.
June 10, 2022 @ 8:30 AM
El Pueblo super breakfast
El Pueblo super breakfast burrito now over 11 bucks with tax. It was under 8 when the pandemic started. This older guy wants to know where his Promised deflation is?
June 10, 2022 @ 8:21 AM
Flu your properties are paid
Flu your properties are paid off so inflation is more neutral. Your property values and rents will tend to rise with inflation.
As for the people paying rent, their wages will generally rise with inflation.
People gripe about inflation because they view their higher wages (and businessmen their higher prices) as earned and deserved by their personal merit, but when they pay higher prices as an undeserved increased cost.
June 10, 2022 @ 9:05 AM
gzz wrote:Flu your properties
[quote=gzz]Flu your properties are paid off so inflation is more neutral. Your property values and rents will tend to rise with inflation.
As for the people paying rent, their wages will generally rise with inflation.
People gripe about inflation because they view their higher wages (and businessmen their higher prices) as earned and deserved by their personal merit, but when they pay higher prices as an undeserved increased cost.[/quote]
I think that’s from your perspective because you are more or less well off.
Someone who doesn’t own a primary home, is not in tech, is not being paid top dollars, have limited number of income streams beyond their job, and their salary does not track inflation (which many wages do not, especially in the mid to low tier), it’s not that great.
Also, side note, our tax codes are not inflation adjusted right, right? Someone making $100k+ is not in low end of the tax brackets. But $100k isn’t wealthy by CA standards.
June 10, 2022 @ 8:15 AM
gzz wrote:I think this
[quote=gzz]I think this inflation level is wonderful. It erodes the real value of the national debt, student loans, credit card debt, and my mortgages.
There’s too much debt in America IMO. Inflation is a jubilee for our middle class.[/quote]
100% agree. Inflation is amazing when you have a 30 years fixed rate mortgage. This will help the younger middle class the most IMHO. Those who were stretching to buy their home and are in their prime earning years. The salary will go up while their housing cost stay flat.
June 10, 2022 @ 9:43 AM
an wrote:gzz wrote:I think
[quote=an][quote=gzz]I think this inflation level is wonderful. It erodes the real value of the national debt, student loans, credit card debt, and my mortgages.
There’s too much debt in America IMO. Inflation is a jubilee for our middle class.[/quote]
100% agree. Inflation is amazing when you have a 30 years fixed rate mortgage. This will help the younger middle class the most IMHO. Those who were stretching to buy their home and are in their prime earning years. The salary will go up while their housing cost stay flat.[/quote]
Perhaps this inflation is okay for a small subset of middle class home-owners. Unfortunately there is a much larger class of people that are lower on the economic ladder who are getting crushed, this will lead to major social unrest if the government doesn’t do something.
The only thing the government can do is raise interest rates and QT which will destroy home values and 401K portfolios of the same middle class folks you are talking about that are benefiting from inflation.
June 10, 2022 @ 9:50 AM
deadzone wrote:Perhaps this
[quote=deadzone]Perhaps this inflation is okay for a small subset of middle class home-owners. Unfortunately there is a much larger class of people that are lower on the economic ladder who are getting crushed, this will lead to major social unrest if the government doesn’t do something.[/quote]
How small is this subset? Can you provide data?
How large is the larger class?
[quote=deadzone]The only thing the government can do is raise interest rates and QT which will destroy home values and 401K portfolios of the same middle class folks you are talking about that are benefiting from inflation.[/quote]Got data from history to back that up? What happened the last time we saw this kind of inflation and fed have to raise interest rate? Provide data please.
As for being the only two think the government can do, I call BS on that one. Government can do a lot more.
June 10, 2022 @ 11:01 AM
an wrote: What happened the
[quote=an] What happened the last time we saw this kind of inflation and fed have to raise interest rate? Provide data please.
As for being the only two think the government can do, I call BS on that one. Government can do a lot more.[/quote]
The more appropriate question is what happened the last time we were in a bubble? Fed raised interest rates which crashed stock and RE markets in 2008. Last bubble before that? Fed raised interest rates which popped the .com bubble.
What more can the government do? You say BS so give some examples, specifically examples that won’t lead to more inflation.
June 10, 2022 @ 11:04 AM
deadzone wrote:an wrote:gzz
[quote=deadzone][quote=an][quote=gzz]I think this inflation level is wonderful. It erodes the real value of the national debt, student loans, credit card debt, and my mortgages.
There’s too much debt in America IMO. Inflation is a jubilee for our middle class.[/quote]
100% agree. Inflation is amazing when you have a 30 years fixed rate mortgage. This will help the younger middle class the most IMHO. Those who were stretching to buy their home and are in their prime earning years. The salary will go up while their housing cost stay flat.[/quote]
Perhaps this inflation is okay for a small subset of middle class home-owners. Unfortunately there is a much larger class of people that are lower on the economic ladder who are getting crushed, this will lead to major social unrest if the government doesn’t do something.
The only thing the government can do is raise interest rates and QT which will destroy home values and 401K portfolios of the same middle class folks you are talking about that are benefiting from inflation.[/quote]
Wont inflation help the debt burdened lower class by devaluing the debt especially student loans? That would help all the young folks you want to be able to buy homes
June 10, 2022 @ 11:21 AM
sdrealtor wrote:
Wont
[quote=sdrealtor]
Wont inflation help the debt burdened lower class by devaluing the debt especially student loans? That would help all the young folks you want to be able to buy homes[/quote]
Yes that is true, but in recent years RE and rent has appreciated at a higher rate than inflation (at least USG inflation number), and both of those have appreciated at a higher rate than wages. So after all that, anyone that does not own a home already is still screwed, i.e. most of the younger generation.
June 10, 2022 @ 2:05 PM
deadzone wrote:sdrealtor
[quote=deadzone][quote=sdrealtor]
Wont inflation help the debt burdened lower class by devaluing the debt especially student loans? That would help all the young folks you want to be able to buy homes[/quote]
Yes that is true, but in recent years RE and rent has appreciated at a higher rate than inflation (at least USG inflation number), and both of those have appreciated at a higher rate than wages. So after all that, anyone that does not own a home already is still screwed, i.e. most of the younger generation.[/quote]
Student loans are at higher rates and there is no current utility like a place to live from them. Paying them off frees up purchasing power and there is career advancement for those not in dead end jobs. Over any extended period its a net positive in this regard. My friends kids around the country dont seem to have issues buying homes
June 10, 2022 @ 2:15 PM
There will always be people
There will always be people who will never be able to buy a house, regardless of inflation number.
June 10, 2022 @ 4:13 PM
sdrealtor wrote: My friends
[quote=sdrealtor] My friends kids around the country dont seem to have issues buying homes[/quote]
So I guess student debt isn’t really a hindrance after all.
June 10, 2022 @ 4:15 PM
deadzone wrote:sdrealtor
[quote=deadzone][quote=sdrealtor] My friends kids around the country dont seem to have issues buying homes[/quote]
So I guess student debt isn’t really a hindrance after all.[/quote]
I think he meant his friends kids do not have student debt and have no issue buying a house themselves.
June 10, 2022 @ 4:31 PM
deadzone wrote:sdrealtor
[quote=deadzone][quote=sdrealtor] My friends kids around the country dont seem to have issues buying homes[/quote]
So I guess student debt isn’t really a hindrance after all.[/quote]
Not when you have parents that paid for your college. My daughter is taking out loans so learns about borrowing and being responsible to do well so she can pay them back. After graduation at dinner I’ll hand her an envelope and tell her to tear it up. Once she does and asks what it was I’ll let her know they were paid off for her. Part of the process
June 10, 2022 @ 5:05 PM
sdrealtor wrote:deadzone
[quote=sdrealtor][quote=deadzone][quote=sdrealtor] My friends kids around the country dont seem to have issues buying homes[/quote]
So I guess student debt isn’t really a hindrance after all.[/quote]
Not when you have parents that paid for your college. My daughter is taking out loans so learns about borrowing and being responsible to do well so she can pay them back. After graduation at dinner I’ll hand her an envelope and tell her to tear it up. Once she does and asks what it was I’ll let her know they were paid off for her. Part of the process[/quote]
Shit, you are a genius. I think I’ll do the same thing….
June 11, 2022 @ 2:56 PM
Coronita wrote:sdrealtor
[quote=Coronita][quote=sdrealtor][quote=deadzone][quote=sdrealtor] My friends kids around the country dont seem to have issues buying homes[/quote]
So I guess student debt isn’t really a hindrance after all.[/quote]
Not when you have parents that paid for your college. My daughter is taking out loans so learns about borrowing and being responsible to do well so she can pay them back. After graduation at dinner I’ll hand her an envelope and tell her to tear it up. Once she does and asks what it was I’ll let her know they were paid off for her. Part of the process[/quote]
Shit, you are a genius. I think I’ll do the same thing….[/quote]
I think its important they learn about borrowing early and feel invested int he process of their education. I also cant wait to see her face when I tell her what she just tore up:)
June 10, 2022 @ 9:11 AM
as a moderately well off
as a moderately well off person almost 60, inflation has sucked out all my confidence about retiring or working much less and makes me want to keep grinding away as long as I can. Not that i was supercofident before, but it seemed like a not too ridiculous option.Now, it seems like I could get caught in a shitstorm.
June 10, 2022 @ 11:01 AM
The way I look at this, what
The way I look at this, what is causing inflation?
Energy costs and supply chain shortage.
Energy costs were cheap until all the sudden Russia’s energy sources were cut off from the world.
Supply chain shortage was due to a shutdown abroad from covid.
With that in mind, what can the fed really do to “fix” those issues in the short to mid term? I’d say nothing, without something really drastic. If so, is it willing to do it?
Raising rates isn’t going to be enough to fix rising prices of energy and shortage in the supply chain for various goods, unless demand simply falls off a cliff.
June 10, 2022 @ 4:41 PM
“their salary does not track
“their salary does not track inflation”
I think the burden of proof that the labor market is inefficient in this unusual way is on the person making the assertions.
From what I can tell, around here lower skill jobs have rapidly increasing wages.
June 10, 2022 @ 7:57 PM
Inflation is always
Inflation is always transitory.
The only question is: what is the duration .
3 years…. 5 years. …longer ?
June 10, 2022 @ 10:09 PM
Meanwhile the bond market got
Meanwhile the bond market got crushed today thanks to that inflation report, 30 year up to 5.85%. This market collapse is really starting to kick into gear.
June 10, 2022 @ 11:12 PM
deadzone wrote:Meanwhile the
[quote=deadzone]Meanwhile the bond market got crushed today thanks to that inflation report, 30 year up to 5.85%. This market collapse is really starting to kick into gear.[/quote]
Huh????
Today,
Vanguard’s total bond market ETF which supposedly tracks the entire bond market (sort of), is down… a whopping 0.85%
https://finance.yahoo.com/quote/BND
Vanguard’s short term inflation protected securities ETF, is down a whopping 0.10%
https://finance.yahoo.com/quote/VTIP
Vanguard’s short term bond index etf BSV is down 0.6%
and so forth….
How is this “getting crushed?”
June 11, 2022 @ 8:40 AM
Read Mortgage News Daily,
Read Mortgage News Daily, maybe you’ll learn something about the MBS market. Friday was brutal.
“The average lender increased 30yr fixed rates by at least a quarter of a point (0.25%). That’s only happened 4 other times since our daily record keeping began in 2009, and 3 of those were during the once-in-a-lifetime volatility that followed the onset of the pandemic. That made this the 4th worst week since 2009 as well.”
June 11, 2022 @ 9:42 AM
deadzone wrote:Read Mortgage
[quote=deadzone]Read Mortgage News Daily, maybe you’ll learn something about the MBS market. Friday was brutal.
“The average lender increased 30yr fixed rates by at least a quarter of a point (0.25%). That’s only happened 4 other times since our daily record keeping began in 2009, and 3 of those were during the once-in-a-lifetime volatility that followed the onset of the pandemic. That made this the 4th worst week since 2009 as well.”[/quote]
Yes , so? And how is this affect my bottom line or yours?
Seems to me you have a lot to read more so than me. Basic things such as 401k accounts retirement accounts and how they eork. ya know things that actually affect your financial future or not. I guess that’s why financially , there a gap between …oh never mind…
June 11, 2022 @ 6:25 PM
Coronita wrote:deadzone
[quote=Coronita][quote=deadzone]Read Mortgage News Daily, maybe you’ll learn something about the MBS market. Friday was brutal.
“The average lender increased 30yr fixed rates by at least a quarter of a point (0.25%). That’s only happened 4 other times since our daily record keeping began in 2009, and 3 of those were during the once-in-a-lifetime volatility that followed the onset of the pandemic. That made this the 4th worst week since 2009 as well.”[/quote]
Yes , so? And how is this affect my bottom line or yours?
[/quote]
Why does it always have to be about you, or me? There is an entire world out there, and it doesn’t revolve around you!
Mortgage market tanking, interest rates going up at a faster rate than any time in history, obviously is a pre-cursor to a housing crash. You own a lot of real estate so this will affect you whether you want to accept it or not. The corresponding equities crash will definitely affect your 401K in a negative way too. Or just ignore it and keep dollar cost averaging. I don’t care if it affects you or not, but stop trying to argue that it isn’t going to affect a lot of other people.
September 13, 2022 @ 11:33 AM
Maybe not so transitory after
Maybe not so transitory after all. Original poll was right. We may get 1% increase by fed
September 22, 2022 @ 2:25 PM
Wow 2 year treasuries
Wow 2 year treasuries printing 4.07%
IMO At some point (next year most likely) the fed going to have to pivot and that will make long dated treasuries one of the best (almost risk-free ) investments for a about a decade.
Thoughts anyone?
September 26, 2022 @ 2:58 PM
KING DOLLAR LOL
I would
KING DOLLAR LOL
I would think at some point that would look like deflation for a lot of imported goods.
1 USD = 0.933336 GBP
1 USD = 1.04 Euro
1 USD = 7.15 Chinese Yuan
1 USD = 144 yen
September 26, 2022 @ 4:22 PM
Great time to travel abroad.
Great time to travel abroad.