Gregmal

Except, everyone puts on the brakes with building with financing so expensive. Only exception is the national builders. Which crushes local and regional builders. Which further dampens competitive dynamics. These cycles take 5-10 years normally. Which I think is wayyyy too long for academics pushing textbook theories and justifying economy crushing policies. The easier answer is the let these guys do what they do and lower rates so they overbuild.

Value investors often cite this. Then they tell you they own gold….

This is a new fad. Not the weight loss, but the AI like market obsession occurring where we extrapolate all these massively disruptive things that are supposedly gonna happen.

In order to get 20% price corrections in let’s call it a B level or better MSA, you’d need GFC level job losses. Having a government related entity purposely be the direct cause of that would be unconscionable and warrant things that probably shouldn’t be said. We re really at a point where it’s like ok what are they doing? They can’t possibly be this dumb. And if they aren’t, they can’t possibly be this corrupt. Anyone care to quantify the life cost of 6-8m job losses? That’s really what is needed cuz we’re at 3 instead of 2 lol?

Yes but with the existing Chinese finger trap type situation you have, created by lack of supply and high rates, that just isn’t going to happen in any sort of decent MSA anytime soon.

Common sense should always be the mandate. School teachers and government employees are the only ones who need formal guidelines because they never have skin in the game and dont generally care about the outcome and are more concerned with their own security than taking risks, even if such perceived “risks” aren’t risks but actually sensible actions.

Plenty of places, most notably Canada have run on stupid expensive housing markets for decades and life went on. At this point it is only housing influencing this dumb crusade based on a fabricated number. Recently, there seems to be some pain in Canada, but driven by decades of expensive housing reinforcing certain behaviors and the variable rate mortgage situation. We have none of that here. There’s just no really way these guys can expect raising rates to have any impact on housing, for a really long time. While not apples to apples, maybe ten years ago I was shocked when looking for office space how normal it was for offices in suburban NY/NJ area to run standard at 75-80% occupancy in order to hold price. With residential, you have that element going for you, but with actual rental demand through the roof. At current rates no one is building. The only way Fed gets the core housing down is by wiping out so many jobs people literally just can’t afford anything, even at 70-80% of income going to housing. In that situation they’d fully be deserving of a terrorist organization designation.

I can’t really say. I just think it’s become clear that they are doing something because the textbook told them to, but also doing something that common sense tells you doesn’t make any sense and perhaps ends up being disastrous. I even think you maybe see some modest weakness in home prices if rates do fall too fast. They’ve made it impossible for people who are in a home and want to move to do so. They’ve made it impossible for non cash buyers in the starter home market. It’s hard to get a totally clear picture and it’ll likely be bifurcated but I can totally see prices of older homes dropping a bit and new build holding once rates make mortgages more accessible. Raising taxes above a certain threshold, say $10m annually, makes tons of sense, regardless of inflation or housing pressures.

This issue is that the Fed is the cause of it being elevated lol. It’s the only remaining thing between that and this manufactured fairy dust 2% figure. We all know how to kill housing. And it’s not by excluding 85% of the population from accessing it.

Weird. Almost like the easiest way to call tops and bottoms is by not trying to and just gauging sentiment.

We’ve had these rates and higher before so shouldn’t be impossible to model real stuff

Even Kashkari, who's made some pretty out of touch remarks, today made some very interesting comments with regards to rates. One part basically saying it was totally perplexing that people would be selling off 10y+ treasuries under the assumption that the Fed is going to be more aggressive from here. "head scratcher" think was another term he used. May have to check out some of those Pupil2066 Floaters.....not joking.

Like do people all forget how many pieces were out last summer and into fall about record put option activity, and hugest jumps in short interest since GFC? The bulk of people were kind of prepared and I’d say there’s clear evidence much of the decline was artificial and driven by suit wearing weasels rather than anything of substance. Which isn’t to say the garbage companies; shitcos, and ponzis didn’t deserve to come down, but the widespread stuff was not driven by anything other than sensationalism.

Exactly. But why be surprised? They announced and coordinated all this(the rate hikes) so far in advance I don’t know why we’d think that by and large people and corporations weren’t prepared? Which then leads us to ask…what is more likely? That the bulk of the stock market decline last year was driven by charlatans hogging headlines and verifiable data indicating short selling by knee jerk institutions? Or that the market was substantially overvalued and only recovered because the folks who we’ve claimed are tapped out on savings found enough shekels to take the market back to where it was before all the screaming in the movie theatre occurred? Personally I’ve always thought last year was a tad overboard.

I just have a hard time finding an actual metric that really portrays this though because the definition of “better off” is varying. Do you own a house. If yes, the answer will likely be vastly different than if you don’t. How old are you? Older, you’re probably way better off than if you’re younger. Over 3 years though, for most people, it just seems incredibly hard NOT to be substantially better off considering 1) more years of wages accumulating(even if not exactly the same in real terms), 2) mortgage and debt pay down, 3) closer to the retirement finish line and subsequent 401ks/pensions/whatever most have building up with tax advantage contribution and company match. From the ages 20-50 or so it should actually be incredibly difficult not to achieve positive annual net worth growth mainly because of the low base starting point, forced savings, company match, and then kicker if the investment vehicles do well. By this measure one would be way better off, especially after 3 years. We actually just had this sort of thing at an HOA meeting and the whiny residents complained about a 4% due increase. I then pointed out the dues are rising for the same reasons your home is, and asked if anyone thinks 4% due increase is a fair trade for (just an example) 4% home appreciation….lot of those grumps then felt stupid because obviously the home value is six figures and the monthly dues are 3. Which leads back to the “better off” thing. Are we really not better off just because the same brand of chips is $2 a bag more and our insurance went up $500 annually? Or say the home went up 30% in 2021, went down 5% in 2022, and is flat in 23 but the $350 monthly dues in 2020 are now $500? Maybe taxes went up 15% too…We really getting pinched there? Like come on.

I don’t really have a useful and comparative situation but amongst those I know that do, wages are 25-40% higher from 2019. Especially if it’s blue collar. Especially if it’s an entrepreneurial position. People I know in sales made multiples of their normal wages in 20/21 which then dropped in 2022 but still like with the stimulus payments, still gave them way more than they woulda had straight lining the precovid average. Net worth? Most people have majority in their house. Say you had a normal $500k home precovid with 20% equity…your home equity today is probably 3x that. So I just don’t get all this gloom. A couple years of stagnancy or modest negatives? Ok, so what. It’s not always linear. I don’t really see that as a problem or even something that’s indicative of anything bad. We ve had plenty of periods where things digest or consolidate. Even if your investments aren’t killing it, you’re still earning a wage and saving and paying down principal.

I’ve really come around to the idea that the biggest tech companies may eventually just be viewed as adequate for most investors given their ability to fend off inflation. They won’t grow much most likely, but they’re all clear inflation + names. Compare that to any bond 3-5 years or more out and it’s not crazy to see why people prefer high quality equity even at valuations that some portions of the market doesn’t understand. I mean shit I’ve been harping on Costco forever. So far, for two decades now, the market hasn’t really cared that some value investors don’t understand 25-35x.

Pretty much anything can occasionally have a decent “relative” stretch. I’ve followed gold my whole career and waited to really see the scenarios where it shines and it just doesn’t. Maybe you get a flare up with some war drama or temporary gov issue, but I think it’s largely a psychological investment and much of that has been displaced by other assets such as crypto.

Yup. Just like Kyle Bass saying short everything while going long Chargepoint post spac deal.

Elbit Systems

Reits in a nutshell for the next 3-5 years.

He’s a world class piece of shit. At your local pub, when you’ve been there too long, and sloppy/embarrassing yourself, they tell you to leave. On Wall Street they just keep giving you a podium. I mean where are all the gold bugs? Been hearing for the past decade, and especially the past 12-18 months about how obvious an investment it is. Totally wrong there too.

My rule of thumb is that the rental income needs to cover the mortgage payment and HOAs if applicable. That’ll tell you what your LTV should be, at a minimum.

Started AMRK

That dynamic is pretty much what Kuppy was referring to. The banks and Wall Street stuff, much of the tech world too slammed on the brakes last year and are cutting jobs. Even around the NYC area, the headhunters are all basically in famine mode as there is not much high end white collar hiring. Try firing a bartender or electrician though. Teacher, pilot, plumber? Best of luck.