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How This Ends

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Re: How This Ends

#571

Post by kelnos »

PaulDavisThe1st wrote: post #522
lazide wrote: post #510

Earlier quoted context omitted.

The only reason there is a housing shortage is because there is an excess of jobs and money in that place. Which is changing. Houses in sunnyvale went from 750k-1m and impossible to find one for sale to 350k (yes really!) and on the market for years around ‘08.

> "an excess of jobs and money in that place" Nope. For one thing, there's the largest generation of the 20th century at peak retirement, cashing out of family houses that have gained huge amounts of value, and looking to move to amenity-rich locations. For another thing, the investment industry, short of other options, has started buying houses to rent them (short or long term), squeezing supply and driving up price…

> cashing out of family houses that have gained huge amounts of value, and looking to move to amenity-rich locations.

They can only cash out if people are willing to buy. And fewer people will be willing to buy (at least at the prices the retirees want) with interest rates going up.

So the retirees will either put off their plans for a while in the hopes that things will recover, or will accept lower prices for their homes.

> For another thing, short term rentals (AirBnb, VRBO etc.) have had profound impacts on the availability of property in heavily visited areas

Is this true? Last I was reading about this (a few months ago), the number of housing units in San Francisco listed on Airbnb was around 8k, which is around 2%. Meanwhile, a report from this February estimated that over 40,000 residential units (10% of total) in SF were sitting empty in 2019 (and that number has likely been growing over the past 3 years, as it has been since 2013). Why are we all upset about short-term rentals when so many real estate speculators are sitting on more than 4x as many vacant properties?

Re: How This Ends

#572

Post by robotresearcher »

thechao wrote: post #343
spicyusername wrote: post #238

Earlier quoted context omitted.

I think this is probably the most useful wisdom for the average person: > do not invest money you need within 5-10 years and do not make rash decisions; it is better to ride this train down and then hopefully back up than jump randomly. Gaming the market successfully requires a ton of skill and knowledge, and even then you are not guaranteed success. Most people are better off focusing on asset-class diversification…

Right; so my plan of having 60% of my wealth tied up in unvested stocks in a single company is really coming to fruition!

Unvested stocks are not your wealth. Try not to think of them that way. You own them the same way you own next year's paychecks, i.e. not at all.

Re: How This Ends

#573

Post by quickthrower2 »

fny wrote: post #431
soared wrote: post #216

Earlier quoted context omitted.

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…

Microsoft has gone up 7% a year since .com peak. SP500 has gone up 5%.

Re: How This Ends

#574

Post by Thorrez »

credit_guy wrote: post #446
zby wrote: post #409

Earlier quoted context omitted.

If they hike the rates too much then debt servicing would be costly. This is different from 1980, because back then US gov debt was about 30% of GDP and now it is 120% of GDP ( https://fred.stlouisfed.org/series/GFDEGDQ188S#0 ) What are the realistic values here? I have no clue, but a good analysis should cover this.

> If they hike the rates too much then debt servicing would be costly. The Fed doesn't care about the cost of servicing the debt. That's the US Treasury's job. By law, the Fed has the dual mandate to keep both inflation and unemployment low. That's it. Nothing to do with the cost of servicing the Government debt. If the interest on the Government debt becomes too high, nobody will point the finger at the Fed. If howe…

If the US government can't service its debt, wouldn't that cause problems for inflation and unemployment?

Re: How This Ends

#575

Post by comex »

YZF wrote: post #566
vintagedave wrote: post #171

Earlier quoted context omitted.

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.)

Long term your best bet is still stocks. Stocks naturally resist inflation- when inflation goes up earnings will go up with them. The current P/E is high but it's not insanely high. Sure, stocks can still go down 10% or 20% (or 30% or 40% though less likely) but your cash is also going to get eroded by that much over the next few years and at least you have a productive investment. Whether real estate is worthwhile d…

> Sure, stocks can still go down 10% or 20% (or 30% or 40% though less likely) but your cash is also going to get eroded by that much over the next few years and at least you have a productive investment.

The current trend is that stocks are going down in dollar value, not just in real value after adjusting for inflation. Are you saying you expect that to reverse?

Re: How This Ends

#576

Post by harpratap »

sebmellen wrote: post #405
ripper1138 wrote: post #247

Earlier quoted context omitted.

That could be true but the impact would still be limited compared to 2008. Credit/bank failures are far worse for the general economy than some tech startups failing.

I'm not 100% sure of that. Think of how many services depend on tech, and how much of that tech is built by companies operating at a loss. For example, if Cloudflare were to do mass layoffs, and potentially fail/go bankrupt, what would the ripple effects be on enterprises throughout the US?

Negligible. Cloudflare is tiny compared to AWS, which itself is a fraction of total computer infrastructure. On-prem is still big, reason why cloud companies keep showing massive growth.

Re: How This Ends

#577

Post by lazide »

kortilla wrote: post #524
lazide wrote: post #511

Earlier quoted context omitted.

In another 10 years most of the boomers will be dead.

That’s not how life expectancy works.

It is how actuarial tables work. Baby boomers in 2032 will be between 68 and 86 years old, and mortality increases rapidly up to and including those years.

[https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1464018/]

Re: How This Ends

#578

Post by quickthrower2 »

boppo1 wrote: post #505
vintagedave wrote: post #171

Earlier quoted context omitted.

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.)

Have useful, rare skills. Preferably in a more tangible field (doctors will get through this better than VR graphics programmers).

I am bullish for software developers. Since 2001 I have not been fired or laid off. I have been able to get a job within 4 weeks the whole time. (Probably 1 week if not fussy and just need money). Software is still eating the world, it just might have a bit of constipation during this period.

Developers can save companies money - handy in a recession. Developers can sell their skills globally (that has negatives too though...). And if a software company is still running it needs developers to fix the bugs, support the system.

Re: How This Ends

#579

Post by jdkee »

shrimpx wrote: post #346
fny wrote: post #24

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…

> there is a risk free alternative to stocks Really? 2.5% bonds in a 7% inflation environment is an attractive bargain? This part didn’t compute: > Bonds will be wrecked […] because it's actually a really good deal to buy bonds when they yield north of 10% (if we get there).

I-bonds.

See https://www.wsj.com/articles/series-i-savings-bonds-what-you...

Re: How This Ends

#580

Post by majormajor »

comex wrote: post #575
YZF wrote: post #566

Earlier quoted context omitted.

Long term your best bet is still stocks. Stocks naturally resist inflation- when inflation goes up earnings will go up with them. The current P/E is high but it's not insanely high. Sure, stocks can still go down 10% or 20% (or 30% or 40% though less likely) but your cash is also going to get eroded by that much over the next few years and at least you have a productive investment. Whether real estate is worthwhile d…

> Sure, stocks can still go down 10% or 20% (or 30% or 40% though less likely) but your cash is also going to get eroded by that much over the next few years and at least you have a productive investment. The current trend is that stocks are going down in dollar value, not just in real value after adjusting for inflation. Are you saying you expect that to reverse?

I'm not convinced the current trend is going to go particularly negative from a 2+ year perspective. Things got super overheated in 2020-2021 but demand is still strong, so I wouldn't be surprised if things level back off after the steam is let out.
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