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There’s Nothing to Do Except Gamble

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Re: There’s Nothing to Do Except Gamble

#381

Post by solosoyokaze »

clpm4j wrote: post #315
solosoyokaze wrote: post #297

Earlier quoted context omitted.

They compared it to the appreciation of real estate, which is wildly divorced from real value. Real-estate prices in say, the Bay Area are driven by legislation and speculation. Not actual value. The move to remote works accelerates the discrepancy.

Isn't the value of a house what someone is willing to pay for it? There are still a lot of people buying homes in the Bay Area to live in. There are just a lot of rich people in the area, so they're willing to pay the price that the market is setting.

> Isn't the value of a house what someone is willing to pay for it?

This is why it's being compared to crypto currency. The parent comment I was responding to said it's not a fair comparison but "it's worth what someone is willing to pay for it" describes both.

Re: There’s Nothing to Do Except Gamble

#382

Post by toss1 »

owenversteeg wrote: post #365
mariojv wrote: post #361

Earlier quoted context omitted.

Do you have a source on the housing statistics (people per house, house size, square foot per person)? I'm curious how this trend holds up internationally; maybe a US source would help. We have problems, but I intuitively agree with this narrative of progress and want to see good data to back it up. I do wish there were more choice - the ability to buy 1950s-70s grade housing, medical care, etc., for a lower price -…

People per household: https://www.bloomberg.com/news/articles/2020-02-10/the-shrin... Square foot per household: https://www.newser.com/story/225645/average-size-of-us-homes... (annoyingly, this data comes from the US Census but I can't seem to find it on their site - but it does match up with every other source) Interesting, semi-related: https://ourworldindata.org/urbanization Very interesting, about older housing:…

That teardown analysis site is very interesting indeed!

My main takeaway is that it is actually a reasonable and healthy market, keeping the value of building roughly proportion to the value of the land/location.

Cool stuff, thanks!

Re: There’s Nothing to Do Except Gamble

#383

Post by LargeWu »

Tenoke wrote: post #272
LargeWu wrote: post #167

Earlier quoted context omitted.

Fair enough, although one can make a reasonable argument that arbitrage is not a value creating activity either, if the market is already reasonably efficient.

If the market is reasonably efficient there'd be no room for arbitrage in the first place.

Room to exploit arbitrage does not necessarily imply meaningful market inefficiencies. HFT only works because people with deep pockets can build huge fiber lines directly connected to the stock exchange. It's a model where milliseconds matter in order to trade on differences of fractions of pennies. The market would operate just fine in the absence of HFT operators.

Re: There’s Nothing to Do Except Gamble

#384

Post by groone »

m3ta4a wrote: post #311
solosoyokaze wrote: post #295

Earlier quoted context omitted.

It's not universal. I'd rather see someone "freeload" in a system of wild wealth inequality than further enrich those who already have runaway gains via the power law. In fact, I'd say it's quite an ethical position to take. Put another way, I'll worry about a million people not "adding value" when there ceases to exist individuals who have captured enough wealth to support a million people. The latter is the real pr…

Exactly, thank you. I struggled for the right words but you captured my sentiment perfectly. I think the perspective that we have a "duty to contribute" might be a valid one in a philosophical sense, but I resent being told as by a parent scolding their child that I have some duty or other. I have no such thing. I am debt free and live the way I want. I live alone. I have no children or spouse to support. I owe nothi…

Hate to break it to you but even if you owe nothing to anybody you probably owe taxes every year. Thank you for your forced contribution to society!

Re: There’s Nothing to Do Except Gamble

#385

Post by m3ta4a »

groone wrote: post #384
m3ta4a wrote: post #311

Earlier quoted context omitted.

Exactly, thank you. I struggled for the right words but you captured my sentiment perfectly. I think the perspective that we have a "duty to contribute" might be a valid one in a philosophical sense, but I resent being told as by a parent scolding their child that I have some duty or other. I have no such thing. I am debt free and live the way I want. I live alone. I have no children or spouse to support. I owe nothi…

Hate to break it to you but even if you owe nothing to anybody you probably owe taxes every year. Thank you for your forced contribution to society!

Ok ok. I owe somebody something.

I won't name names, but I do know people who have simply not filed nor paid taxes in a decade. They even got stimulus checks.

Re: There’s Nothing to Do Except Gamble

#386

Post by mariojv »

owenversteeg wrote: post #365
mariojv wrote: post #361

Earlier quoted context omitted.

Do you have a source on the housing statistics (people per house, house size, square foot per person)? I'm curious how this trend holds up internationally; maybe a US source would help. We have problems, but I intuitively agree with this narrative of progress and want to see good data to back it up. I do wish there were more choice - the ability to buy 1950s-70s grade housing, medical care, etc., for a lower price -…

People per household: https://www.bloomberg.com/news/articles/2020-02-10/the-shrin... Square foot per household: https://www.newser.com/story/225645/average-size-of-us-homes... (annoyingly, this data comes from the US Census but I can't seem to find it on their site - but it does match up with every other source) Interesting, semi-related: https://ourworldindata.org/urbanization Very interesting, about older housing:…

Thanks! These look like good reads.

You're right, they're a little scarce in my city but there are at least a few homes in the $75K range that don't seem uninhabitable:

https://www.zillow.com/homedetails/1010-Lombrano-St-San-Anto... https://www.zillow.com/homedetails/139-Prelude-Pl-San-Antoni...

That is really interesting to me, as the local market seems to have totally exploded in price recently. A few of my friends are paying prices that would have seemed ridiculous in January 2020 when we were looking at houses. Maybe it's mostly housing in the middle of the price spectrum that's inflating.

Re: There’s Nothing to Do Except Gamble

#387

Post by lamontcg »

arcticbull wrote: post #368
lamontcg wrote: post #364

Earlier quoted context omitted.

Housing prices spiraling out of control, bubbles in the stock market and crypto, this crazy V-L recovery we just had out of the covid recession, insane art prices, bubbles in baseball cards, the declining tax burden on the wealthy. The people who are rich and "close to the king" are able to capture all the effects of monetary stimulus. That is leading to asset bubbles and dramatic increases in prices of the things th…

> Housing prices spiraling out of control Housing prices on average across the US, on an inflation adjusted basis cost the same exact amount per square foot as they did in the 1970s. They're twice as big now. And in areas where they are more expensive, it's driven by cities refusing to allow new construction to match demand. Simply a supply and demand issue, and a zoning issue. Why do you think the others are specifi…

The housing prices that are spiraling out of control are those which are being driven up by the increasing wealth of the upper-1% to 10%. The price of housing in Krupp, WA isn't inflating at all. The price of housing where software developers and people in finance and business and industry, and the places where people like to buy second homes is inflating.

And it is just supply and demand, and you've addressed supply but what is driving so much demand, and why do participants in that market have so much more money to be bidding up prices.

And looking at inflation in different targets of money is something that economists do all the time when they divide inflation up between CPI and core CPI ex-volatile commodities. This is just looking at the things that rich people buy and the inflation in those things versus the inflation in the broader economy. We know the rich are getting richer, the gini coefficient keeps on getting more skewed, and the things that rich people buy are getting more and more expensive. You can't call this "inflation" though because economists object because they invented that term and they'd prefer to call it asset bubbles. But cantillon effects describes it a bit better. They're capturing more of the gold and prices are rising in the things that they use it on creating skewed effects in the rise of prices in the economy.

Re: There’s Nothing to Do Except Gamble

#388

Post by nybble41 »

noxer wrote: post #373
nybble41 wrote: post #319

Earlier quoted context omitted.

> Profit and risk must be in balance. Risk is one factor, but not the only one. The main factor in low-risk investment returns is time preference . In essence: People are willing to pay rent (interest) in exchange for access to money now rather than later. Those with savings can earn a profit by renting out their accumulated savings even in a risk-free scenario where return of principle is 100% guaranteed.

There is no such thing as risk-free renting out your accumulated money.

Nothing in life is completely without risk, but you can get arbitrarily close. Treasury bills are commonly used as an example of an approximately "risk-free" loan since the probability of the federal government repudiating its debts is considered extremely low. Bonds with the lowest investment-grade rating, BBB, have a 1% one-year default rate, with higher grades being significantly less (0% for AAA)[1]. The vast majority of the interest on such a loan is a result of time preference (rent), not risk-taking.

[1] https://corporatefinanceinstitute.com/resources/knowledge/tr...

Re: There’s Nothing to Do Except Gamble

#389

Post by alert0 »

andrepd wrote: post #375
alert0 wrote: post #285

Earlier quoted context omitted.

Comparing cryptocurrency to real estate is laughable. With real estate you have either a place to live, reducing a real world expense (rent), or an income producing property. No matter how much you dress up cryptocurrencies as stocks, by using terms like market cap, you are not buying a share of an income producing asset. You're speculating on a digital collectible. You can speculate on real estate and stocks, but yo…

> If you buy an income producing property that's good because it is an income producing property. Not sure I understand your reasoning there. > You're speculating on a digital collectible. And if you buy properties not for self-use you're speculating on a physical collectible. So?

First quote isn't exact, so I'm not sure what you're addressing.

If you buy properties not for self use, you can hold them indefinitely and have an income stream. If you buy a share of a company and hold it indefinitely you can have an income stream. There is no equivalent in cryptocurrencies. You buy it and hope you can sell at a later date for a higher price.

Investing versus speculation.

Re: There’s Nothing to Do Except Gamble

#390

Post by heartbeats »

Animats wrote: post #367
heartbeats wrote: post #342

Earlier quoted context omitted.

The Commodity Futures Trading Commission does not regulate commodities, only commodity futures (and swaps, and options, and other derivatives).

That is not entirely correct.[1] The CFTC has authority to investigate frauds which affect commodity markets in which futures trading exists, and they have used this with regard to Bitcoin. "Examples of Prohibited Activities: Price manipulation of a virtual currency traded in interstate commerce.", writes the CFTC. One could, for example, trade some art object at a grossly inflated price between two parties that are…

Art is not a commodity; there is no futures trading on art.
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