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The Rate of Return on Everything, 1870–2015 (2019)

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Re: The Rate of Return on Everything, 1870–2015 (2019)

#81

Post by creer »

ggm wrote: post #74
JumpCrisscross wrote: post #71

Earlier quoted context omitted.

> since that sucks capital out of the rest of the economy, we're kind of fucked overall because companies making tinned peaches and medicine actually need capita What's constraining the latter is rates. There is zero evidence tech companies are causing the inflation that is pushing up rates. (If anything, it's broadly deflating.) (And to my knowledge, getting financing for tinning peaches or medicines is plentiful. I…

As a non-economist, I ask: do you think their above-grade returns can persist into the future for decades, without becoming a concern, or altering this 7% rate? My example of why it is bad is a hypothetical. If it's a stupid hypothetical I accept that, but my underlying belief that you cannot really have identified, "the same" companies continue to return 2-3x market average over 50 years without some concern remains…

There is a problem of perception. Apple, telsa, Nvidia, Google are in the news a lot - currently.

Apple has been amazing for the past 20 years. Even during that period, its PE has varied a lot - the amount of money people were willing to pay compared to profits: at times it's very popular, at times not.

Coca Cola is not in your list. But its result during the 1980s, 1990s was less but comparable to Apple these past years.

Google is only 25 years old.

Nvidia stock market price has been amazing only the past 10 years.

Tesla is only 21 years old as a whole. Its stock price is too chaotic to be even described by a single return rate!

Walmart did amazing 1975-1993. Nearly 20 years, then not so good.

IBM, GE, several others had times of glorious stock market return.

But, to return to the way you phrased it, more or less there have always been some companies that seemed to return a lot. Perhaps too much. That's more or less a normal of the stock market. None of them has lasted indefinitely or somehow taken over all of finance. Keeping a large company growing at this pace is, erm, hard. Note that this is not Apple's strategy currently: Apple produces a lot of profit and it is returned to the shareholders rather than desperately trying to grow the company with that money.

Re: The Rate of Return on Everything, 1870–2015 (2019)

#82

Post by Retric »

PostOnce wrote: post #56
Retric wrote: post #48

Earlier quoted context omitted.

People get much larger houses today because they can afford much larger houses. This comes from both increased prosperity and having fewer kids. 1950s: The average new home sold for $82,098. It had 983 square feet of floor space and a household size of 3.37 people, or 292 square feet per person. 2010s: The average new home ($292,700) offers 924 square feet per person (2.59 people per household, 2,392 total square fee…

Around here, they're building bigger houses, but also on much smaller plots without gardens or dogs or tree-houses or places for kids to play outdoors. I suspect it's the same in a lot of places. Maybe these square-foot-per-person calculations should also include square feet of land.

Most people today don’t want a large back yard.

It’s like an outdoor pool, there’s definitely a market but adding a pool can lower your property’s value. Land doesn’t decrease the value of a property, but it can dramatically lower the number of buyers.

Re: The Rate of Return on Everything, 1870–2015 (2019)

#83

Post by cmrdporcupine »

pessimizer wrote: post #52
_yb2s wrote: post #18

I don't understand how housing can increase in cost in a stable steady manner, as a fraction of household income over long periods of time like more than 100 years. It seems to defy logic, so it makes me suspect how it is being calculated when people claim that housing costs have gone up by massive amounts. Since only a small increase would price a large number of people out of the market- it seems logical that housi…

> I don't understand how housing can increase in cost in a stable steady manner, as a fraction of household income over long periods of time like more than 100 years. It hasn't. House prices have been stable for hundreds of years. They're currently being used as financial vehicles, and as another government asset inflation to ward off that pesky balance of accounts reckoning, but they'll be back down eventually. Rent…

I'd like to see that same chart but for places like here in Canada that did not have a housing price correction in the 2008 era.

It just went up up up, and the lines would show divergence.

And of course if that chart continued into 2022...

Re: The Rate of Return on Everything, 1870–2015 (2019)

#84

Post by martincmartin »

Retric wrote: post #48
_yb2s wrote: post #18

I don't understand how housing can increase in cost in a stable steady manner, as a fraction of household income over long periods of time like more than 100 years. It seems to defy logic, so it makes me suspect how it is being calculated when people claim that housing costs have gone up by massive amounts. Since only a small increase would price a large number of people out of the market- it seems logical that housi…

People get much larger houses today because they can afford much larger houses. This comes from both increased prosperity and having fewer kids. 1950s: The average new home sold for $82,098. It had 983 square feet of floor space and a household size of 3.37 people, or 292 square feet per person. 2010s: The average new home ($292,700) offers 924 square feet per person (2.59 people per household, 2,392 total square fee…

$82,098 in 1955, adjusted for inflation, was worth $727,502.05[1]. So homes were actually much more expensive back then.

[1] https://data.bls.gov/cgi-bin/cpicalc.pl?cost1=82098&year1=19...

Re: The Rate of Return on Everything, 1870–2015 (2019)

#85

Post by Seanambers »

gamepsys wrote: post #62
georgeecollins wrote: post #25

Earlier quoted context omitted.

To help you conceptualize how that is possible: 100 years ago the world population was 2 billion, and now it is 8 billion. While the housing stock is also increasing with that population growth, the actual amount of desirable land does not grow as fast. That's why -- for example-- the US gov't in the 1850s could just hand out 40 acre plots of land to people. They can still do that, but it has to be way out in Alaska…

> So the wealth of everyone is going up faster than the supply of desirable land We are also slowing down the rate we are making land desirable. During the 50s-70s we had massive success by creating suburbs that were connected to city centers. Due to how geography works, new suburbs are further from city centers and inherently less desirable. We have developed most of the geographically appealing regions of the US. T…

Compared to Europe the US has an unimaginable amount of land. Europeans don't know this really - no one has told them, because they never went to the US, the ones who did went for some coastal city. On the other side Americans don't realize the reasons why Europeans live in cities. Europe is much much smaller and with less desirable land to begin with and then there is the entire "walkable cities" which is utopia reasoning...

God damn you US ppl dont know how good you got it.

Re: The Rate of Return on Everything, 1870–2015 (2019)

#86

Post by cmrdporcupine »

mensetmanusman wrote: post #37
bombcar wrote: post #17

Earlier quoted context omitted.

Housing is only a true investment vehicle if you count all the costs. Even bare land has to be maintained somewhat. You can't just subtract purchase price from sale price and call it done.

Yeah, it would be interesting to have more transparent costs, especially with inflation. New siding every 20 years is $40k, a new roof might be $30k every 25 years, a new driveway, etc.

I just shudder to think about all my trips to Home Depot over the last 20 years of owning a home.

I never did those when I was renting. Yes, I didn't get to renovate or pick my paint colours. And yes my money paid down someone else's mortgage. But I suspect if you add it all up...

Re: The Rate of Return on Everything, 1870–2015 (2019)

#87

Post by [deleted] »

martincmartin wrote: post #84
Retric wrote: post #48

Earlier quoted context omitted.

People get much larger houses today because they can afford much larger houses. This comes from both increased prosperity and having fewer kids. 1950s: The average new home sold for $82,098. It had 983 square feet of floor space and a household size of 3.37 people, or 292 square feet per person. 2010s: The average new home ($292,700) offers 924 square feet per person (2.59 people per household, 2,392 total square fee…

$82,098 in 1955, adjusted for inflation, was worth $727,502.05[1]. So homes were actually much more expensive back then. [1] https://data.bls.gov/cgi-bin/cpicalc.pl?cost1=82098&year1=19...

[deleted]

Re: The Rate of Return on Everything, 1870–2015 (2019)

#88

Post by ffsm8 »

martincmartin wrote: post #84
Retric wrote: post #48

Earlier quoted context omitted.

People get much larger houses today because they can afford much larger houses. This comes from both increased prosperity and having fewer kids. 1950s: The average new home sold for $82,098. It had 983 square feet of floor space and a household size of 3.37 people, or 292 square feet per person. 2010s: The average new home ($292,700) offers 924 square feet per person (2.59 people per household, 2,392 total square fee…

$82,098 in 1955, adjusted for inflation, was worth $727,502.05[1]. So homes were actually much more expensive back then. [1] https://data.bls.gov/cgi-bin/cpicalc.pl?cost1=82098&year1=19...

I wish I new how that article got to 80k for a house in 1955.. I couldn't find a link to trust "interactive visualisation" they're citing and Google didn't help me either.

I wasn't born then, so no personal experience and everything I could find pointed more towards 5-10k, i.e. this advertisement

https://i.redd.it/75sc90f58qsa1.jpg

That'd be safely below 100k, inflation adjusted... Actually, maybe that 80k is already inflation adjusted? The number is pretty close

Re: The Rate of Return on Everything, 1870–2015 (2019)

#89

Post by m463 »

cyberax wrote: post #68
_yb2s wrote: post #18

I don't understand how housing can increase in cost in a stable steady manner, as a fraction of household income over long periods of time like more than 100 years. It seems to defy logic, so it makes me suspect how it is being calculated when people claim that housing costs have gone up by massive amounts. Since only a small increase would price a large number of people out of the market- it seems logical that housi…

> I don't understand how housing can increase in cost in a stable steady manner It's the density death spiral. Dense housing gets more expensive (yes, dense housing IS more expensive!), that in turn drives even more density. The only way to fix it? Promote suburbs and smaller cities. There is literally _no_ other fix.

I sort of think there are other things still at work here.

People still live near infrastructure (although requirements change)

Maybe 1000 years ago, they probably lived near a port, water source and source of food.

Nowadays we have efficient transport with semis and container ships, but I would imagine that there are still things like say power infrastructure, sources of commerce and schools and even internet that make living practical and affordable.

I'll bet as we can do distributed living practically (PV+batteries, wells/septic , starlink and amazon) that maybe more things are possible.

Re: The Rate of Return on Everything, 1870–2015 (2019)

#90

Post by derf_ »

Seanambers wrote: post #85
gamepsys wrote: post #62

Earlier quoted context omitted.

> So the wealth of everyone is going up faster than the supply of desirable land We are also slowing down the rate we are making land desirable. During the 50s-70s we had massive success by creating suburbs that were connected to city centers. Due to how geography works, new suburbs are further from city centers and inherently less desirable. We have developed most of the geographically appealing regions of the US. T…

Compared to Europe the US has an unimaginable amount of land. Europeans don't know this really - no one has told them , because they never went to the US, the ones who did went for some coastal city. On the other side Americans don't realize the reasons why Europeans live in cities. Europe is much much smaller and with less desirable land to begin with and then there is the entire "walkable cities" which is utopia re…

The continental US is 8.08 million km^2 [0], while Europe is 10.18 million km^2 [1], almost 26% larger. Even adding the non-contiguous regions does not make the US bigger (still just 9.83 million km^2) [2].

[0] https://en.wikipedia.org/wiki/Contiguous_United_States

[1] https://en.wikipedia.org/wiki/Europe

[2] https://en.wikipedia.org/wiki/United_States

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