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‘Housing in ‘07 wasn’t a bubble” is a true statement that almost no one believes

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Re: ‘Housing in ‘07 wasn’t a bubble” is a true statement that almost no one believes

#121

Post by throwawaycities »

dragonwriter wrote: post #111
throwawaycities wrote: post #38

There is no doubt that the entire housing market was exploited to float the US economy and covered up a recession dating from 2000-2001 until the housing market could no longer be sustained resulting in a complete collapse of the financial markets and banking. The housing market didn’t “snap back” rather two unprecedented tax payer stimulus packages totaling just shy of $2T were given to the banks to finance millions…

> There is no doubt that the entire housing market was exploited to float the US economy and covered up a recession dating from 2000-2001 This is false. There is no doubt that, while there was a short recession in early-mid 2001, there was a general economic expansion, not a recession, after that; to the extent that housing market was exploited to paper over something, it was the unusually top-loaded distribution of…

> there was a general economic expansion… with the gains concentrated in a fair small segment at the top, which it covered by (non-sustainably) paying for continued debt-fueled lifestyle improvements for groups that weren't seeing real income gains.

That’s one long sentence.

The thing is it’s impossible to decouple any economic expansion from 2000-2008 from the trillions of dollars that flooded into the economy during that period as a direct result of the artificial housing prices and newly available debt.

I agree with you though to the extent that any actual wealth that was generated was concentrated to the top, it always is. There hasn’t been real income gains for the working class in about 50 years, but the explosion in household and consumer debt in that time is incontrovertible from about $300B in 1970 to $11.5T in 2010.

Re: ‘Housing in ‘07 wasn’t a bubble” is a true statement that almost no one believes

#122

Post by throwawaycities »

long_time_gone wrote: post #110
throwawaycities wrote: post #38

There is no doubt that the entire housing market was exploited to float the US economy and covered up a recession dating from 2000-2001 until the housing market could no longer be sustained resulting in a complete collapse of the financial markets and banking. The housing market didn’t “snap back” rather two unprecedented tax payer stimulus packages totaling just shy of $2T were given to the banks to finance millions…

> One of my favorite things to highlight was that following the Fed receiving taxpayer funds to prop up the stock market Disney had their greatest single day stock gains in history all while every single theme park, hotel and cruise ship were indefinitely shutdown and every single movie production was indefinitely suspended. Probably because of their massively successful streaming service that was perfectly placed to…

> To drive it home, Disney had record revenue in 4Q2021, driven by streaming and parks revenue [1]. Maybe it’s you who had it wrong?

You are cherry picking an article from Q42021 that references park revenue, whereas I gave a very specific example of their record single day gains in company history which occurred while the parks were closed in 2020.

As to Disney+ streaming service it launched in 2020 but the Disney+ lost $2.8B in fiscal 2020, the same period of time it’s parks were closed and park losses total about $7B, and yet during this period it saw it’s record single day stock price gains in history. That record day was a direct result of the Fed and taxpayer money, not record theme park revenue (it was record losses) nor Disney+ which was a brand new division and recording its own multibillion dollar losses.

Re: ‘Housing in ‘07 wasn’t a bubble” is a true statement that almost no one believes

#123

Post by refurb »

monkeywork wrote: post #114
refurb wrote: post #60

Earlier quoted context omitted.

A few thoughts: Prior to the 2008 crash, the US' "fundamentals of supply and demand" were still firmly in place as well. It's just that demand was massively juiced by easy money and an expectation that "housing only goes up" (speculation). Clearly not all of Canada is in a bubble (Toronto, but even more, Vancouver, has always been expensive), but when a house in Brampton, Ontario (50 km from downtown Toronto, 45 to 7…

See in the case of Brampton (and to a lesser extent Barrie) they are actually considered essentially suburbs of Toronto. Someone commuting from Brampton is a regular everyday occurrence that no one would bat an eyelid at here, Barrie is less common but still happens all the time (it's a 90 minute commute via train). The places where people are really going to take a hit in Canada is in places like the Maritimes or sm…

I don't think we broadly disagree, and sure Brampton is a Toronto commuter 'burb, but a 2.5x increase in housing prices in 20 months is based on sound economics at all. $1M houses? Sure. $2.5M? Even the bay area isn't that much and the jobs pay way more.

Re: ‘Housing in ‘07 wasn’t a bubble” is a true statement that almost no one believes

#124

Post by eurasiantiger »

vl wrote: post #19
eurasiantiger wrote: post #15

Earlier quoted context omitted.

Money laundering explains Vegas and New York.

But how exactly can you launder money through buying a house? If you buy, essentially you declare you have the money, thus question can be asked where you got it from.

It’s typically done at the construction stage, with high-rise buildings and other assets more valuable than a family home. Banks or other lenders are typically involved. Here’s one example.

https://newrepublic.com/article/143586/trumps-russian-laundr...

Re: ‘Housing in ‘07 wasn’t a bubble” is a true statement that almost no one believes

#125

Post by long_time_gone »

throwawaycities wrote: post #122
long_time_gone wrote: post #110

Earlier quoted context omitted.

> One of my favorite things to highlight was that following the Fed receiving taxpayer funds to prop up the stock market Disney had their greatest single day stock gains in history all while every single theme park, hotel and cruise ship were indefinitely shutdown and every single movie production was indefinitely suspended. Probably because of their massively successful streaming service that was perfectly placed to…

> To drive it home, Disney had record revenue in 4Q2021, driven by streaming and parks revenue [1]. Maybe it’s you who had it wrong? You are cherry picking an article from Q42021 that references park revenue, whereas I gave a very specific example of their record single day gains in company history which occurred while the parks were closed in 2020. As to Disney+ streaming service it launched in 2020 but the Disney+…

The article is proof that investors were correct. Stock prices are a present value of future earnings. In 2020, after the stock price had already tanked due to COVID and the bailout was announced, investors thought future earnings would increase. They bid up the stock price to acknowledge that belief.

At the time Disney+ was losing money, but the pandemic and the bailout were indicators that the steaming business would take off (it did). Their huge content backlog had them perfectly placed to manage a production shutdown. There’s also the 21st Century Fox acquisition that was Closed in 2019 and gave them more content.

If investors expected future earnings to grow more than current losses (which were already priced in by the market), then it isn’t wild for the stock to bounce. A year later, their earnings pretty much prove it.

We could also go into the calculations of why the value of recurring revenue (streaming subscribers) is much higher than the value of non-recurring revenue (park visits).

Re: ‘Housing in ‘07 wasn’t a bubble” is a true statement that almost no one believes

#126

Post by throwawaycities »

long_time_gone wrote: post #125
throwawaycities wrote: post #122

Earlier quoted context omitted.

> To drive it home, Disney had record revenue in 4Q2021, driven by streaming and parks revenue [1]. Maybe it’s you who had it wrong? You are cherry picking an article from Q42021 that references park revenue, whereas I gave a very specific example of their record single day gains in company history which occurred while the parks were closed in 2020. As to Disney+ streaming service it launched in 2020 but the Disney+…

The article is proof that investors were correct. Stock prices are a present value of future earnings. In 2020, after the stock price had already tanked due to COVID and the bailout was announced, investors thought future earnings would increase. They bid up the stock price to acknowledge that belief. At the time Disney+ was losing money, but the pandemic and the bailout were indicators that the steaming business wou…

> If investors expected future earnings to grow more than current losses

Well of course Disney future theme park earnings were going to increase from zero. You aren’t considering the actual E/P ratio.

Pre-Covid Disney both stock price was a at all time high and their E/P ratio was at an all time high (about 22, where usually an 18 is considered over priced).

Those “investors” you suggest were the Fed using taxpayer money buy and prop up the stock price. With the Fed money Disney stock price once again reached a new all time high price and a P/E ratio over 90, meaning the Fed was bailing out shareholders at a historic high of $90+ to $1 earned, where an average publicly traded company should be closer to 13-14.

Re: ‘Housing in ‘07 wasn’t a bubble” is a true statement that almost no one believes

#127

Post by long_time_gone »

throwawaycities wrote: post #126
long_time_gone wrote: post #125

Earlier quoted context omitted.

The article is proof that investors were correct. Stock prices are a present value of future earnings. In 2020, after the stock price had already tanked due to COVID and the bailout was announced, investors thought future earnings would increase. They bid up the stock price to acknowledge that belief. At the time Disney+ was losing money, but the pandemic and the bailout were indicators that the steaming business wou…

> If investors expected future earnings to grow more than current losses Well of course Disney future theme park earnings were going to increase from zero. You aren’t considering the actual E/P ratio. Pre-Covid Disney both stock price was a at all time high and their E/P ratio was at an all time high (about 22, where usually an 18 is considered over priced). Those “investors” you suggest were the Fed using taxpayer m…

> Well of course Disney future theme park earnings were going to increase from zero. You aren’t considering the actual E/P ratio.

This isn't how investors think. If you know that future earnings are going to increase from zero due to outside circumstances (COVID, in this case), why would you base your analysis on past earnings? The past earnings don't matter, especially when you admit that they were heavily influenced by COVID.

$1 of recurring revenue from subscriptions (Disney+) is worth more than $1 spent at a Disney theme park. The recurring revenue costs less to service and is more predictable going forward. This is why businesses (like Adobe, Apple, Disney, etc.) have been working to shift revenue towards subscriptions over one-time purchases.

> Those “investors” you suggest were the Fed using taxpayer money buy and prop up the stock price. With the Fed money Disney stock price once again reached a new all time high price and a P/E ratio over 90, meaning the Fed was bailing out shareholders at a historic high of $90+ to $1 earned, where an average publicly traded company should be closer to 13-14.

It feels like you are working backwards to try and find the nefarious actions you are so positive about. The Fed deciding to bailout companies and consumers obviously helped businesses (especially consumer facing businesses, like Disney). The entire stock market exploded when it was announced.

The P/E ratio of the entire S&P 500 spiked from around 20-25x to 40-45x due to Fed and Congressional actions [1]. Average publicly traded companies do not trade at 13-14x P/E, and low interest rates for decades have made that a fact. That said, Disney isn't a traditional company because their investments and growth in streaming make them look more like a growth stock. Which is, again, reinforced by their record revenue numbers.

[1] https://www.multpl.com/s-p-500-pe-ratio

Re: ‘Housing in ‘07 wasn’t a bubble” is a true statement that almost no one believes

#128

Post by parkingrift »

modeless wrote: post #120
parkingrift wrote: post #116

Earlier quoted context omitted.

An economic bubble, by definition, is a scenario where asset prices are significantly divorced from underlying fundamentals. It is not possible to have a thirty year bubble. A thirty year "bubble" means the fundamentals were wrong and we were never actually in a bubble.

You don't think it's possible for underlying fundamentals to be defied for 30 years, huh? Depends how you define fundamentals I guess. If your definition of fundamentals is "something that lasts 30 years or more" then you'd be tautologically correct.

I don't know how something could be "fundamental" if it's wrong for thirty years.

Re: ‘Housing in ‘07 wasn’t a bubble” is a true statement that almost no one believes

#129

Post by throwawaycities »

long_time_gone wrote: post #127
throwawaycities wrote: post #126

Earlier quoted context omitted.

> If investors expected future earnings to grow more than current losses Well of course Disney future theme park earnings were going to increase from zero. You aren’t considering the actual E/P ratio. Pre-Covid Disney both stock price was a at all time high and their E/P ratio was at an all time high (about 22, where usually an 18 is considered over priced). Those “investors” you suggest were the Fed using taxpayer m…

> Well of course Disney future theme park earnings were going to increase from zero. You aren’t considering the actual E/P ratio. This isn't how investors think. If you know that future earnings are going to increase from zero due to outside circumstances (COVID, in this case), why would you base your analysis on past earnings? The past earnings don't matter, especially when you admit that they were heavily influence…

> The P/E ratio of the entire S&P 500 spiked from around 20-25x to 40-45x due to Fed and Congressional actions

Again Disney was double that at 90 after the FED began buying Disney stock/bonds using taxpayer funds and pumped it to an ATH.

> It feels like you are working backwards to try and find the nefarious actions you are so positive about.

It’s all public record, the stock was tanking, after the FED began to directly prop up Disney the stock price reached a new ATH in 2021 at which point executives/insiders, including the Chairman, began to sell sending the price downward from ATH and leaving the FED holding the bag. Despite your claims of Disney behind a growth stock the Chairman liquidated something like 50% of his holdings.

Anyway I’m not here to debate the merits of the Disney stock price. The FED shouldn’t be getting taxpayer funds much less buying Disney stock/bonds, it’s corporate welfare, and when the stock price is propped up to an ATH with taxpayer funds and the Chairman and other executives sell out it’s a golden parachute. Like I said people look back on 2008 and think taxpayers should thank the banks, and similarly people (presumably like you) will think taxpayers should thank companies like Disney that were bailed out by taxpayers.

Re: ‘Housing in ‘07 wasn’t a bubble” is a true statement that almost no one believes

#130

Post by [deleted] »

sofixa wrote: post #77
alasdair_ wrote: post #47

Earlier quoted context omitted.

> When you win a nobel prize in economics, I will listen to you more. Henry Kissinger won the Nobel peace prize. Sometimes they get it wrong.

So did Obama for withdrawing troops from Iraq and sending them to Afghanistan. Sometimes they get it really wrong.

[deleted]
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