So for non-finance-experts, what should we be doing with our money? Investing in what? Keeping in the bank? It sounds from your comment like there is _nothing_ that won't be devalued, even gold. Is real estate worthwhile? (Note: I am in the EU not US.)
I would be very scared to hold Euros. Either CHF or USD, or a mix. It is paradoxically better to hold cash than to invest in equity, bonds or real estate.
This is interesting. Can you elaborate a bit:
- What do you expect to happen with EUR?
- Why do you think USD or CHF are safer to hold than say, gold?
I'm going to explain what has happened so far. What happens next entirely depends on how inflation continues and the feds reaction. 1. We had zero percent interest rates. This causes the value of assets with cash flows out into the future (think speculative tech, Tesla) to accelerate. 2. We had massive herding in megacap tech. These valuations are high in part because for a decade you would not have beat the index wi…
"If inflation continues and the fed becomes aggressive with hiking, all assets are dead." This sounds incredibly short-term-oriented and alarmist. Dead is a word to describe the end of something's existence. Market turbulence is not a novel occurrence, nor are unsustainably inflated economies driven by cheap money and speculation.
Aside from the leverage issues other point out in RE, you have to consider the political risk. How safe do you feel that a piece of paper saying that plot of land is yours will hold up when there's a raging mob threatening politicians to do something about homelessness/housing prices/AirBnB/Asset managers holding all the properties? The political risk in the West is at Emerging Markets levels. We've seen G7 nations d…
I can’t tell you how much I hope they crack down on people owning multiple houses. It’s just criminal. Not only do they own two houses but instead of renting it at market rate they put it on Airbnb an inflated price three or four fold. The truth is under capitalism everyone cannot be a Capitalist. Please, I need you to think deeply about that last sentence. It’s not as simplistic as it sounds. Until we treat housing…
I look forward to this. Atm there are benefits to owning multiple houses... [alef] [bet]
> Markets have already corrected and I think that public tech stocks have already seen most of the damage they are going to see. but then (and in the very next sentence no less): > I don’t know if we have hit bottom
I'm not seeing the contradiction there? "Most of the damage" suggests some still to come.
Unless you’re retiring in the next 10 years, or planning on purchasing a house in the next few years, then just make your emergency fund a little bigger and hold on to your job. Follow your normal financial planning. You’re not going to outplay market trends, and if you’re young/middle aged then it doesn’t matter any way.
Yes it does. If you invested near the dot com peak or the japan peak, you still haven't made your money back. This notion of passive investing that has been pounded into peoples heads for years is complete bullshit and has only worked because there was always someone else ready to pay more for the same asset and because rates were perpetually held low. Some points to consider: (1) You have fewer millennials than baby…
The obvious issue with the obvious plan is that you can only tell what's "high" and what's "low" in retrospect, and if you time your lump sum investment wrong (dot com peak, Japan peak etc), you end up negative for a long, long time. Whereas DCA or equivalent guarantees that you capture the ups as well as the downs.
I'm going to explain what has happened so far. What happens next entirely depends on how inflation continues and the feds reaction. 1. We had zero percent interest rates. This causes the value of assets with cash flows out into the future (think speculative tech, Tesla) to accelerate. 2. We had massive herding in megacap tech. These valuations are high in part because for a decade you would not have beat the index wi…
So for non-finance-experts, what should we be doing with our money? Investing in what? Keeping in the bank? It sounds from your comment like there is _nothing_ that won't be devalued, even gold. Is real estate worthwhile? (Note: I am in the EU not US.)
Real estate is going to be gutted - increasing mortgage rates (already have been happening) will decimate qualified buyers. Decreasing prices will further decimate those willing to Hail Mary with cash offers hoping to get something after years of frustration.
RE is at massive peak levels already though that buyers cannot shell out those prices, esp as mortgage prices go up.
Worst part is the utterly absurd shortage means RE is never going to meaningfully dip for any period of time without serious structural reforms. The focus on interest rates as the main RE driver is almost completely cope and I wish I could believe it. Low-rate mortgages certainly aren't helping, but they're "not helping" in the same way that hucking an armload of kindling into an already-raging house fire is "not hel…
The only reason there is a shortage is because money has been so cheap.
Just watch, in a few years things will have changed quite a bit.
The more desirable areas will still have demand of course, but what counts as desirable is shifting.