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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?

#61

Post by [deleted] »

taeric wrote: post #21
anthonyskipper wrote: post #10

Earlier quoted context omitted.

Something about that doesn't seem right. What about Apple or literally any of the other mega corps that have passed or closed to approach the 1T market cap?

I take the factoid as not about the companies doing better, it was about investments in the companies. It has become incredibly common for stocks to not pay dividends nowadays, so that the only way you make money from investing in them is by exiting that investment. (Well, if you are ultra rich, you could leverage it.) Edit: This also means that much of the money you would make from owning something like McDonald's c…

[deleted]

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

#62

Post by lotsofpulp »

anthonyskipper wrote: post #10
epolanski wrote: post #4

Earlier quoted context omitted.

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

Something about that doesn't seem right. What about Apple or literally any of the other mega corps that have passed or closed to approach the 1T market cap?

The claim is nowhere near true.

https://dqydj.com/stock-return-calculator/

MCD is 11.29% per year for the last 5 years. AAPL is 28.2%, MSFT is 26.49%, GOOG is 20.91%.

Even a riskless SP500 investment earned 11.139%

https://dqydj.com/sp-500-return-calculator/

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

#63

Post by xphos »

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…

I think this is flipped. VC's wouldn't compete here if the the supply was much bigger because than the price globally would dip they wouldn't have a leverage advantage. If there was no shortfall in constructions for multiple decades that VC see houses as an opportunity.

I think if we allowed house densities to increase and changed zoning laws to allow houses to be built. The cost of housing would fall significantly especially if VC saw a wave a new house they would be prompted to sell before the wave (at a lower prices) or risk significant loses.

Whether you could actually build enough houses to fix the supply inversion is another question. However, without changing zoning laws I don't see how you'd even be able to try catch supply at this point because the places where houses need to be sold prevent multi family units which are much more efficient at soaking up demand per unit than single family houses

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

#64

Post by lotsofpulp »

taeric wrote: post #21
anthonyskipper wrote: post #10

Earlier quoted context omitted.

Something about that doesn't seem right. What about Apple or literally any of the other mega corps that have passed or closed to approach the 1T market cap?

I take the factoid as not about the companies doing better, it was about investments in the companies. It has become incredibly common for stocks to not pay dividends nowadays, so that the only way you make money from investing in them is by exiting that investment. (Well, if you are ultra rich, you could leverage it.) Edit: This also means that much of the money you would make from owning something like McDonald's c…

>This also means that much of the money you would make from owning something like McDonald's can't be seen by just charting the growth in stock price. You have to also look at the money you could make by taking the dividends and putting that somewhere.

What about the money you could lose by taking the dividends and putting that somewhere?

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

#65

Post by lotsofpulp »

Loughla wrote: post #52
KittenInABox wrote: post #29

Earlier quoted context omitted.

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.

This is in the USA? I have never heard of anything like that.

The bank would just be tasked with handling the paperwork (underwriting) of ensuring it is a conforming loan by getting an appraisal done and verifying your income/assets so they can get paid by the US government (fannie mae/freddie mac/ginnie mae/etc).

Not to mention that a lender does not get a piece of the collateral's sale price, so why would they care what improved landscaping would do to the price of the home if and when a homeowner wants to sell it?

Your scenario only makes sense if the lender was also getting a piece of the equity.

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

#66

Post by frumper »

cs702 wrote: post #56

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...

1962 652.10

1985 1,546.67

2008 8,776.39

What years you pick changes impressions. The 70s were an economic mess though.

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

#67

Post by neogodless »

bryanlarsen wrote: post #42
thegrim33 wrote: post #40

The market is: - Down 1.x% the last month - Up 2.x% YTD - About equal over 6months - Up 13% over last year That's "tanking"? The article talks about 52-week lows. The market is up nearly 13% over that 52 week period. How is this even newsworthy? Yes, the market goes up and down. The next time the market goes up 1.X% will they post an article about how much the market is "surging" and how strong the market is?

The article is talking about consumer stocks, not the overall market.

Is this the right list?

https://www.morningstar.com/consumer-cyclical-stocks

Looking at the biggest ones, I see a lot of double and triple growth YTD with some single digit negative growth.

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

#68

Post by zeroCalories »

zelon88 wrote: post #58
zeroCalories wrote: post #53

Earlier quoted context omitted.

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 comp…

Rentals make up a small percentage of single family homes. Around 5% depending on where you are. Not letting black rock buy a home won't save you from the overpaid tech worker or nurse-account power couple from dropping 1.5x the listing price in cash. We know flooding supply works because we've seen it play out. Tokyo is the biggest metro area in the world, with a growing population, and reasonable rents because the government took serious measures to increase supply. Restricting demand by banning corporate investors probably won't help, but even if they did it did the effects would be minor. Focus on the solutions we know will work.

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

#69

Post by pphysch »

cma wrote: post #19
mjevans wrote: post #8

This article strongly covers a major SYMPTOM of the problem. https://www.buzzfeed.com/suzystrutner/how-much-you-need-for-... Housing / land valuation is wildly off from the needs of the people. For more than literally my entire life there has been a chronic shortage of housing, with less built than is necessary for multiple decades of time. The issue has compounded. We are at the point where the solution is to litera…

>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.

It is quite common to have 1-2 retirees living part-time on a quarter acre of urban land in a premium location.

Not saying we should evict random people, but it is objectively a terribly inefficient allocation of societal resources. There's no easy answer.

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

#70

Post by zeroCalories »

zelon88 wrote: post #60
zeroCalories wrote: post #53

Earlier quoted context omitted.

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.

You don't need low income housing. Just make government housing at market rate. If you really want to be kind, offer it at maintenance cost. Even if housing prices don't fall(they probably will), they won't rise faster than inflation if the market is sufficiently flooded. Eventually wages will catch up to prices. Yes it will take a long time, but that's why we need to do it now. No. Twenty years ago.
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