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If the Economy Is So Strong, Why Are Consumer Stocks Tanking?

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Re: If the Economy Is So Strong, Why Are Consumer Stocks Tanking?

#51

Post by quickthrower2 »

KittenInABox wrote: post #29
cma wrote: post #19

Earlier quoted context omitted.

>with less built than is necessary for multiple decades of time. I thought there was more housing sqft per capita in the US than just about anywhere else? If so it seems more like a distribution problem.

The US contains also huge mcmansion-style houses that are actually only classified to hold a single family. I think if you speculated more for the average person, housing is less and less available to them all the time... Although the above poster attributes it to a lack of housing, the actual cause of housing shortage is likely far more complicated. The crash in real estate in 2008 froze construction for over a deca…

Sweet spot is houses go up by wage inflation. Paying the mortgage off being a big source of the benefit.

Re: If the Economy Is So Strong, Why Are Consumer Stocks Tanking?

#52

Post by Loughla »

KittenInABox wrote: post #29
cma wrote: post #19

Earlier quoted context omitted.

>with less built than is necessary for multiple decades of time. I thought there was more housing sqft per capita in the US than just about anywhere else? If so it seems more like a distribution problem.

The US contains also huge mcmansion-style houses that are actually only classified to hold a single family. I think if you speculated more for the average person, housing is less and less available to them all the time... Although the above poster attributes it to a lack of housing, the actual cause of housing shortage is likely far more complicated. The crash in real estate in 2008 froze construction for over a deca…

The section about housing being an investment in your comment can't be stressed enough.

We were turned down for a mortgage at the first bank we tried because we refused to finance enough to improve the landscaping. The bank wanted to see what the ROI on the home was. We were buying a forever home. Increase in value is someone else's problem after I'm dead.

It was. Well. Fascinating.

Re: If the Economy Is So Strong, Why Are Consumer Stocks Tanking?

#53

Post by zeroCalories »

zelon88 wrote: post #41
ramraj07 wrote: post #27

Earlier quoted context omitted.

I came to the same conclusion from another place: the nth time seeing news about some block finding it cheaper to live in a cruise ship than in a retirement home anywhere in the US. This is only possible if all land value is inherently overinflated beyond measure that a floating coal burning ship all expenses paid is cheaper than a retirement home that should have 5x less overhead.

This is because the American home buyer isn't competing with other American home buyers anymore. They're competing with VCs trying to build developments and companies trying to turn a profit. Gone are the days of the "Fixer Upper" that Tim Taylor would buy, drop a reasonable amount in repairs, preform the repairs themselves, and then turn a modest profit. Everyone who buys a house today wants the value to go up. Nobo…

This fundamentally misses the problem. Investors are only able to speculate because there is a shortage of housing. They are betting that in the future even more people will want that housing, and they are probably right. The only real solution is to crash the housing market by building more houses in places that people want them. Banning speculation won't solve the problem, and it might actually make the problem worse because we will have even less development that people need. We need to heavily update construction regulations to be more sensible like Tokyo, and we probably need massive amount of direct and indirect public housing investments.

Re: If the Economy Is So Strong, Why Are Consumer Stocks Tanking?

#54

Post by chunk_waffle »

lame-robot-hoax wrote: post #9
cable2600 wrote: post #2

Inflation and cost of living index. The economy is in a recession.

Under what definition is the US economy in a recession? People can keep clamoring for it, but the only recession the US is possibly in is a “vibes based” recession.

The vibes are off though

Re: If the Economy Is So Strong, Why Are Consumer Stocks Tanking?

#55

Post by [deleted] »

epolanski wrote: post #4
paulpauper wrote: post #3

I think it's the amazon/meta/google/walmart effect...all$ going to those. The realization setting in that the US economy is increasingly going to be dominated those handful of firms, among others. Unless you own those, you will miss out, hence selling. This is why so many people recommend index funds in order to minizine the likelihood of missing out. Also, retail losing business to Walmart + Amazon and maybe Shopify…

Fun fact, dividend adjusted, over the last 5 years only Google has outperformed something like say, McDonald's.

[deleted]

Re: If the Economy Is So Strong, Why Are Consumer Stocks Tanking?

#56

Post by cs702 »

Here's an interesting, and I think relevant, comparison:

From 1964 to 1981 (17 years), the US stock market went nowhere. From 1981 to 1998 (the next 17 years), it went up ~10x:

  Date         DJIA
  12/31/1964    874  
  12/31/1981    875
  12/31/1998  9,181
During the first 17 years, US GDP went up almost 5x. During the second 17 years, GDP went up less than 3x.

Source: https://finance.yahoo.com/news/mr-buffett-stock-market-fortu...

Re: If the Economy Is So Strong, Why Are Consumer Stocks Tanking?

#57

Post by mapmap »

allears wrote: post #35

I just glanced at the S&P 500, and it doesn't look like it's down by much. Are stocks really tanking, or is this just another attempt by conservatives to spread FUD about the economy?

No, stocks are not tanking, but there has been a correction in consumer staples. For example, Vanguard Consumer Staples (VDC) is down over 10% from its high. Investors generally buy into consumer staples as a defensive move in the business cycle. But risk free money markets are paying over 5%...

Re: If the Economy Is So Strong, Why Are Consumer Stocks Tanking?

#58

Post by zelon88 »

zeroCalories wrote: post #53
zelon88 wrote: post #41

Earlier quoted context omitted.

This is because the American home buyer isn't competing with other American home buyers anymore. They're competing with VCs trying to build developments and companies trying to turn a profit. Gone are the days of the "Fixer Upper" that Tim Taylor would buy, drop a reasonable amount in repairs, preform the repairs themselves, and then turn a modest profit. Everyone who buys a house today wants the value to go up. Nobo…

This fundamentally misses the problem. Investors are only able to speculate because there is a shortage of housing. They are betting that in the future even more people will want that housing, and they are probably right. The only real solution is to crash the housing market by building more houses in places that people want them. Banning speculation won't solve the problem, and it might actually make the problem wor…

I would argue we need to put limitations on what entities can purchase residential property. There is no reason a corp needs to own a 2 bedroom house. It is manipulating a critical market and destabilizing everything. Push them out of the market. They should have have no skin in this game.

You want to increase the supply. I want to tank the demand. Your method won't work because if regular people could afford to compete, they would be already. The players in the market manipulated the prices once to give themselves an advantage. You're just giving them an opportunity to do it again. Only now they have the market cap to do it right.

The price will come down when the demand shifts from mcmansions to regular, affordable housing. It will be funny to see all those $1m+houses sit on the market as the correction unfolds. Nobody asked for them in most places. They were added by developers seeking to gentrify small towns like Rowley MA.

And taxes will come down too because towns will have no choice but to tax property owners more reasonably.

Re: If the Economy Is So Strong, Why Are Consumer Stocks Tanking?

#59

Post by lotsofpulp »

onlyrealcuzzo wrote: post #24
EstesPark wrote: post #18

Earlier quoted context omitted.

Does anyone have an actual breakdown of how much the younger generations are placing away in a 401k - if that's even possible?

401ks are like ~10% of the stock market: https://theirrelevantinvestor.com/2020/10/25/who-owns-the-st... Boomer 401ks are probably The idea that boomer 401k withdrawals is going to crash the stock market or tamp out future growth is pretty strange. Defined benefit & defined contribution pension plans are both larger chunks of the stock market than 401ks. And all of those together are a smaller chunk than foreigner ho…

> Defined benefit & defined contribution pension plans are both larger chunks of the stock market than 401ks.

401k are a type of defined contribution retirement plan.

https://en.wikipedia.org/wiki/Defined_contribution_plan

Re: If the Economy Is So Strong, Why Are Consumer Stocks Tanking?

#60

Post by zelon88 »

zeroCalories wrote: post #53
zelon88 wrote: post #41

Earlier quoted context omitted.

This is because the American home buyer isn't competing with other American home buyers anymore. They're competing with VCs trying to build developments and companies trying to turn a profit. Gone are the days of the "Fixer Upper" that Tim Taylor would buy, drop a reasonable amount in repairs, preform the repairs themselves, and then turn a modest profit. Everyone who buys a house today wants the value to go up. Nobo…

This fundamentally misses the problem. Investors are only able to speculate because there is a shortage of housing. They are betting that in the future even more people will want that housing, and they are probably right. The only real solution is to crash the housing market by building more houses in places that people want them. Banning speculation won't solve the problem, and it might actually make the problem wor…

If we do that you'll have two social classes. You'll have the price fixed low income housing that looks like it belongs in a Command & Conquer game and you'll have the corporate owned HOAs that are just out of control expensive. Oh, and plenty of tent cities.
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