61–70 of 100 posts
capture a regulator and have them put your competitors out of business bribe politicians to use your countries armed forces in your companies interests get the government to cover any downsides of your product be the child of a politician and offer consulting services found a central bank there are lots more
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> You need a roof over your head so if your property goes up 10%, so has every property you’re likely to want to move to when it comes time to sell. I think this common argument massively overstates the case. I have friends whose parents left them their primary residence. Mine did not. "Where’s the huge upside though?" sounds to me like sort of an insane question, when viewed through that lens. But just to lay out th…
> I have friends whose parents left them their primary residence. Mine did not. I fail to see how that factors in to buying a property. You have friends who benefited from an inheritance. > Owning a house in San Francisco is like having a standing offer of a million dollars to move to the Midwest. Owning a house in the Midwest is like having an $xyz offer to move to . The offer exists whether you take it or not. You…
I mean, somebody had to decide to buy the house at some point in time. I would have told them to do it.
> Owning a house in the Midwest is like having an $xyz offer to move to .
Yes, that is correct. The argument generalizes.
> I don’t believe most people are willing to uproot their lives simply because they can get cheaper housing elsewhere.
If I offer you a million dollars to move, then you're free to turn that down. What you are not free to do is pretend that it's not a real offer that you have that other people don't have. It exists. It's real. And if you own a home in California, then you have that offer. And other people do not. What you choose to do with that offer is up to you.
> What equity? You advocated for putting as little as 5% down. You’re already going to have a higher than average interest rate and with such a small deposit it’ll be easy to tip into negative equity.
The house I bought in 2020 is worth $xxx more today than what I paid for it. Had that not happened, then I'd just live here, either way, and I'd be in no worse position than had I stayed in the apartment I left to move here. (As you yourself argued, I need a roof over my head, anyway.) Since it did happen, I get to keep every bit of the upside, tax free.
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The lottery seems like a really dumb thing.
Compare it to something like voting. There's a vanishingly small chance that your personal vote is going to sway any issue. The benefits of voting are only felt at a societal level rather than a personal one. Lotto also has societal benefits, like funding schools and keeping organized crime out of the casual gambling market. Plus it's fun, on the order of, say, eating a mini bag of Doritos while you're stuck for thre…
The government encouraging poor people to make a poor financial decision is really bad social policy IMO.
Buying a house in the United States. For as little as 5% down, and low-single-digit-fixed rates over a 30-year term, you can purchase an asset worth hundreds of thousands of dollars and you get to keep all the upside if its value goes up (which is historically quite likely, especially since housing policy in the U.S. deliberately keeps supply low). It's insane leverage, an excellent inflation hedge, and you get to de…
Leverage works both ways. Put $100k down on a $500k home. House drops 20% and you now have a 100% loss of your investment.
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> That’s huge upside. That’s a big gamble. I thought this was about asymmetric upsides but here there’s a pretty huge downside. Firstly, how do you realise the gain when you need somewhere to live? Primary residence != investment. Secondly, 20x leverage shouldn’t be a selling point. A tiny dip in prices leaves you in negative equity and unable to move home. Less of an investment and more of a prison. 95% LTV mortgage…
Your own argument is that you need a roof over your head, either way, so if the value doesn't increase, then you simply live there. If it does, then you keep all the profit, tax free.
Find yourself at a peak and you could be stuck for years to come.
Again, this was all about asymmetric upside. Being unable to move even as life circumstances change seems like a pretty sharp downside.
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Your own argument is that you need a roof over your head, either way, so if the value doesn't increase, then you simply live there. If it does, then you keep all the profit, tax free.
No, if the value doesn’t increase, you have to live there. You no longer have the option. Find yourself at a peak and you could be stuck for years to come. Again, this was all about asymmetric upside. Being unable to move even as life circumstances change seems like a pretty sharp downside.
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Leverage works both ways. Put $100k down on a $500k home. House drops 20% and you now have a 100% loss of your investment.
Unrealized losses. The risk, of course, is not zero, but you only really lose if you're forced to sell. In the meantime, you need a place to live, either way. Not a good gamble if your time horizon is less than 7-10 years, to be sure.
Look at Las Vegas. It only recovered to the 2008 peak last year. It's been a terrible investment.
> Investing in call options on AMD in 2014 or Tesla in 2019 also had huge asymmetric upside. It was clear that these stocks had massive risks, but while the upside wa potentially s huge, the downside was capped at -100%. This is a terrible example. No one knew that the stocks would skyrocket. So at the time it was asymmetric on the downside because the cost of options were ridiculously expensive.
I don't know where he gets the 2014 AMD thing from, but investing in AMD in 2016/2017 was the easiest money I've ever made. I think there is a massive information asymmetry[1] in this space. If you could interpret both the leaks and the news related to AMD Zen, and Intel process being mega fucked, it was an investment with the odds highly in your favor. So basically invest in things where there is a big information a…
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> I have friends whose parents left them their primary residence. Mine did not. I fail to see how that factors in to buying a property. You have friends who benefited from an inheritance. > Owning a house in San Francisco is like having a standing offer of a million dollars to move to the Midwest. Owning a house in the Midwest is like having an $xyz offer to move to . The offer exists whether you take it or not. You…
> I fail to see how that factors in to buying a property. You have friends who benefited from an inheritance. I mean, somebody had to decide to buy the house at some point in time. I would have told them to do it. > Owning a house in the Midwest is like having an $xyz offer to move to . Yes, that is correct. The argument generalizes. > I don’t believe most people are willing to uproot their lives simply because they…
You bought at just the right time. Would buying the same property at 95% LTV be a great decision today?
With potential for a major loss, where’s the asymmetric upside the OP asked about?
I bought 6 years ago and prices remained flat for the first 4 years. It wasn’t until the pandemic fuelled boom that I saw any meaningful growth.
Had I chosen to sell before 2020 it would have been a negative “investment” once costs had been factored in.
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Unrealized losses. The risk, of course, is not zero, but you only really lose if you're forced to sell. In the meantime, you need a place to live, either way. Not a good gamble if your time horizon is less than 7-10 years, to be sure.
I'm not sure why "unrealized losses" would make anyone feel better? People need to move, get divorced, lose their jobs. "Just stay in the house and keep paying the mortgage" is not an alternative available to everyone. Look at Las Vegas. It only recovered to the 2008 peak last year. It's been a terrible investment.