So ummm... that stock market thing. WTF?!

[Jimmy Higgins]

The economy is doing alright, pretty much status quo with the last several years.

So umm... why is the stock market up nearly 20% since the start of November?

The Fed increased its lending rate (and said it'd continue to do so this year), which was really giving the Dow the schittz during the Obama years whenever they suggested it was possible. There is talk of a potential recession. Budget cuts are threatened in many states as the tax cuts in Republican run states aren't generating the tax revenue that they projected. Most recently, thousands of box stores are closing across the nation big league both due to overexpansion and the change of how Americans are do their shopping (online). We bombed Syria. Rattling sabres with North Korea.

Market just keeps going up like it can't go down.

 

[Nice Squirrel]

Mortgaged backed securities. But this time it is different.

 

[funinspace]

The economy is doing alright, pretty much status quo with the last several years.

So umm... why is the stock market up nearly 20% since the start of November?

Besides US steal of course, as today they pretty much big time crashed out of the “Trump affect”. Uhmm…20% so what? Maybe you need to broaden your date range in whatever website you are looking at and see the last decade. In 2013 and 2014, the markets were on quite a tear.

The Fed increased its lending rate (and said it'd continue to do so this year), which was really giving the Dow the schittz during the Obama years whenever they suggested it was possible.

Yeah, the over the last 2 years, the unemployment rate has gotten pretty low. So the markets have probably calmed down partly for that reason regarding these tiny hikes.

There is talk of a potential recession.

Perhaps, but the markets are a really crappy early warning indicator of such. One thing is that unemployment chart bottoms (or 4-Week Moving Average of Initial Claims ) rarely last more than 2 years.

Budget cuts are threatened in many states as the tax cuts in Republican run states aren't generating the tax revenue that they projected. Most recently, thousands of box stores are closing across the nation big league both due to overexpansion and the change of how Americans are do their shopping (online). We bombed Syria. Rattling sabres with North Korea.

Lots of random shit… Not sure how state budget cuts would be that significant for the stock markets. On box stores, I hear paper newspaper sales are down too. US markets won’t care about Syria. NK sabre rattling is so old, that I grew up hearing about it. I think the NK issue will have to go prime time crazy before the markets would notice.

Retail sales may be plateauing, though it could be just a down blimp as well:
https://fred.stlouisfed.org/series/RRSFS

Market just keeps going up like it can't go down.

I heard that in the later 1990’s too…

 

[Valjean]

It's a bubble. Just wait.

 

[Elixir]

It's a bubble. Just wait.

It will endure a bit longer if Cheato's tax package looks to pass...
Stocks are priced on anticipated value, not actual value. Trump made grandiose promises to let big Companies run roughshod over the entire economy, and that's a big part of what drove post-election prices up.

 

[repoman]

I know little about the stock market, but are the big companies with overseas profits waiting for a tax repatriation holiday and that is already accounted for in some of the stock prices?

 

[Opoponax]

I'm too afraid to buy stocks right now. Not that I know dick about them except that they're historically a good investment, but it just seems like the thing's about to come down. I have no evidence to base that notion on either.

 

[LordKiran]

I'm too afraid to buy stocks right now. Not that I know dick about them except that they're historically a good investment, but it just seems like the thing's about to come down. I have no evidence to base that notion on either.

Historically speaking, stocks aren't that good an investment, given there's a major recession or depression every one-to-two decades.

 

[TV and credit cards]

The assumption is, one way or another, or maybe six ways to Sunday, Trump is going to hook the billionaires up.

 

[funinspace]

I'm too afraid to buy stocks right now. Not that I know dick about them except that they're historically a good investment, but it just seems like the thing's about to come down. I have no evidence to base that notion on either.

Historically speaking, stocks aren't that good an investment, given there's a major recession or depression every one-to-two decades.

Can you name a better long term investment on average? The main problem most people have is that that buy high and sell low. Most people don't know enough to target individual companies for investment. They should simply invest long and broad. Yeah, if someone inherited $250,000 last month, I wouldn't suggest to just plop it all in SPY or such all at once...

 

[LordKiran]

Historically speaking, stocks aren't that good an investment, given there's a major recession or depression every one-to-two decades.

Can you name a better long term investment on average? The main problem most people have is that that buy high and sell low. Most people don't know enough to target individual companies for investment. They should simply invest long and broad. Yeah, if someone inherited $250,000 last month, I wouldn't suggest to just plop it all in SPY or such all at once...

Renting property, if you have the money to invest in estates. There's always a market for affordable renting space and it does well in just about any economy.

 

[funinspace]

Can you name a better long term investment on average? The main problem most people have is that that buy high and sell low. Most people don't know enough to target individual companies for investment. They should simply invest long and broad. Yeah, if someone inherited $250,000 last month, I wouldn't suggest to just plop it all in SPY or such all at once...

Renting property, if you have the money to invest in estates. There's always a market for affordable renting space and it does well in just about any economy.

First, I'm not arguing that rental properties are a bad investment. but I'm not sure it could be argued as a better long term investment. I might add it to the mix as part of partially retiring in a few years myself. But they come with their own factors that are different than broad stock and lots of other fund instruments. Rental properties come with personal time to manage (or loose much of that profit with a management company). Are you going to keep the rental property (or 2 or 3) up yourself and your own house; or are you going to pay someone to do all those repairs/upgrades? They do have many tax benefits, but would hardly keep up with a matching 401k (if available). If you can save for both, then great. And rental properties can and do have long term (5-10 years) negative valuations at times. Also, in many parts of the country one is most certainly not assured appreciation. So where you live can matter.

http://michaelbluejay.com/house/appreciation.html

National Association of Realtors
The price of existing homes increased by 5.4% annually from 1968 to 2009, on average. (Natl. Assoc. of Realtors, p.1, p.2) Notice that this is the same figure as new homes by the Census Bureau for a similar period. Once we adjust for the fact that homes get bigger over time, the annual rate is 3.7%. The general rate of inflation during this time was 4.5%. So here again, homes didn't appreciate faster than inflation.

Case-Schiller Index
The price of existing homes increased by 3.4% annually from 1987 to 2009, on average. (Wikipedia) We don't adjust for houses getting bigger, because the Case-Schiller Index tracks repeat sales of the same homes. (They might get a little bigger from remodeling, but so few of them will get bigger, and by such a small amount, that we can safely ignore that.) The general rate of inflation during this time was 2.9%. So again, the appreciation rate for homes was very similar to the general inflation rate.

 

[LordKiran]

Renting property, if you have the money to invest in estates. There's always a market for affordable renting space and it does well in just about any economy.

First, I'm not arguing that rental properties are a bad investment. but I'm not sure it could be argued as a better long term investment. I might add it to the mix as part of partially retiring in a few years myself. But they come with their own factors that are different than broad stock and lots of other fund instruments. Rental properties come with personal time to manage (or loose much of that profit with a management company). Are you going to keep the rental property (or 2 or 3) up yourself and your own house; or are you going to pay someone to do all those repairs/upgrades? They do have many tax benefits, but would hardly keep up with a matching 401k (if available). If you can save for both, then great. And rental properties can and do have long term (5-10 years) negative valuations at times. Also, in many parts of the country one is most certainly not assured appreciation. So where you live can matter.

http://michaelbluejay.com/house/appreciation.html

National Association of Realtors
The price of existing homes increased by 5.4% annually from 1968 to 2009, on average. (Natl. Assoc. of Realtors, p.1, p.2) Notice that this is the same figure as new homes by the Census Bureau for a similar period. Once we adjust for the fact that homes get bigger over time, the annual rate is 3.7%. The general rate of inflation during this time was 4.5%. So here again, homes didn't appreciate faster than inflation.

Case-Schiller Index
The price of existing homes increased by 3.4% annually from 1987 to 2009, on average. (Wikipedia) We don't adjust for houses getting bigger, because the Case-Schiller Index tracks repeat sales of the same homes. (They might get a little bigger from remodeling, but so few of them will get bigger, and by such a small amount, that we can safely ignore that.) The general rate of inflation during this time was 2.9%. So again, the appreciation rate for homes was very similar to the general inflation rate.

I just mean in the sense that renting properties has never really hit a recession the same way the market does with predictable regularity. Sure you had that housing market collapse but that was more the problem of speculators and homeowners and not really a problem for landlords. (If anything, the housing crash would have been a boon and an excellent time to buy up cheap properties flooding the market and rent out to the newly homeless.)

As to the amount of work required, I can really only speak as an observer but my landlord owns almost the entire block and is in his 70s-80s. He still has to work as his children had other plans than running the business for him but the amount of actual work he does is seemingly minimal. This probably comes from a lifetime in the business which accrued lots of connections and reliable contractors though.

 

[Elixir]

First, I'm not arguing that rental properties are a bad investment. but I'm not sure it could be argued as a better long term investment. I might add it to the mix as part of partially retiring in a few years myself. But they come with their own factors that are different than broad stock and lots of other fund instruments. Rental properties come with personal time to manage (or loose much of that profit with a management company). Are you going to keep the rental property (or 2 or 3) up yourself and your own house; or are you going to pay someone to do all those repairs/upgrades? They do have many tax benefits, but would hardly keep up with a matching 401k (if available). If you can save for both, then great. And rental properties can and do have long term (5-10 years) negative valuations at times. Also, in many parts of the country one is most certainly not assured appreciation. So where you live can matter.

http://michaelbluejay.com/house/appreciation.html

National Association of Realtors
The price of existing homes increased by 5.4% annually from 1968 to 2009, on average. (Natl. Assoc. of Realtors, p.1, p.2) Notice that this is the same figure as new homes by the Census Bureau for a similar period. Once we adjust for the fact that homes get bigger over time, the annual rate is 3.7%. The general rate of inflation during this time was 4.5%. So here again, homes didn't appreciate faster than inflation.

Case-Schiller Index
The price of existing homes increased by 3.4% annually from 1987 to 2009, on average. (Wikipedia) We don't adjust for houses getting bigger, because the Case-Schiller Index tracks repeat sales of the same homes. (They might get a little bigger from remodeling, but so few of them will get bigger, and by such a small amount, that we can safely ignore that.) The general rate of inflation during this time was 2.9%. So again, the appreciation rate for homes was very similar to the general inflation rate.

I just mean in the sense that renting properties has never really hit a recession the same way the market does with predictable regularity. Sure you had that housing market collapse but that was more the problem of speculators and homeowners and not really a problem for landlords. (If anything, the housing crash would have been a boon and an excellent time to buy up cheap properties flooding the market and rent out to the newly homeless.)

As to the amount of work required, I can really only speak as an observer but my landlord owns almost the entire block and is in his 70s-80s. He still has to work as his children had other plans than running the business for him but the amount of actual work he does is seemingly minimal. This probably comes from a lifetime in the business which accrued lots of connections and reliable contractors though.

You don't necessarily have to go that big... I have owned at least one rental for a lot of years. Down to one now - a house that I bought about ten years ago. It came with a tenant who is still there. He's never late with the rent, and the time-suck factor is negligible. Charging low rent, but it still returns about 5% per year on the investment plus appreciation. I have visited the property exactly once. The tenant takes care of it. The only problem I've had in ten years is replacing the well pump. When I let the tenant know it was going to cost $1200-1500, he said he could get it done cheaper, and actually found a rebuilt pump and put it in himself, so it cost me $800. These folks are a dream tenant - I've had nightmare tenants in the past, and a great one makes ALL the difference.

Not exactly a get-rich-quick scheme, but it has outperfomed any other financial vehicle that I know about.

 

[Horatio Parker]

How about depreciation?

I've read that that's the big advantage to RE.

 

[funinspace]

First, I'm not arguing that rental properties are a bad investment. but I'm not sure it could be argued as a better long term investment. I might add it to the mix as part of partially retiring in a few years myself. But they come with their own factors that are different than broad stock and lots of other fund instruments. Rental properties come with personal time to manage (or loose much of that profit with a management company). Are you going to keep the rental property (or 2 or 3) up yourself and your own house; or are you going to pay someone to do all those repairs/upgrades? They do have many tax benefits, but would hardly keep up with a matching 401k (if available). If you can save for both, then great. And rental properties can and do have long term (5-10 years) negative valuations at times. Also, in many parts of the country one is most certainly not assured appreciation. So where you live can matter.

http://michaelbluejay.com/house/appreciation.html

National Association of Realtors
The price of existing homes increased by 5.4% annually from 1968 to 2009, on average. (Natl. Assoc. of Realtors, p.1, p.2) Notice that this is the same figure as new homes by the Census Bureau for a similar period. Once we adjust for the fact that homes get bigger over time, the annual rate is 3.7%. The general rate of inflation during this time was 4.5%. So here again, homes didn't appreciate faster than inflation.

Case-Schiller Index
The price of existing homes increased by 3.4% annually from 1987 to 2009, on average. (Wikipedia) We don't adjust for houses getting bigger, because the Case-Schiller Index tracks repeat sales of the same homes. (They might get a little bigger from remodeling, but so few of them will get bigger, and by such a small amount, that we can safely ignore that.) The general rate of inflation during this time was 2.9%. So again, the appreciation rate for homes was very similar to the general inflation rate.

I just mean in the sense that renting properties has never really hit a recession the same way the market does with predictable regularity. Sure you had that housing market collapse but that was more the problem of speculators and homeowners and not really a problem for landlords. (If anything, the housing crash would have been a boon and an excellent time to buy up cheap properties flooding the market and rent out to the newly homeless.)

As to the amount of work required, I can really only speak as an observer but my landlord owns almost the entire block and is in his 70s-80s. He still has to work as his children had other plans than running the business for him but the amount of actual work he does is seemingly minimal. This probably comes from a lifetime in the business which accrued lots of connections and reliable contractors though.

You don't necessarily have to go that big... I have owned at least one rental for a lot of years. Down to one now - a house that I bought about ten years ago. It came with a tenant who is still there. He's never late with the rent, and the time-suck factor is negligible. Charging low rent, but it still returns about 5% per year on the investment plus appreciation. I have visited the property exactly once. The tenant takes care of it. The only problem I've had in ten years is replacing the well pump. When I let the tenant know it was going to cost $1200-1500, he said he could get it done cheaper, and actually found a rebuilt pump and put it in himself, so it cost me $800. These folks are a dream tenant - I've had nightmare tenants in the past, and a great one makes ALL the difference.

Not exactly a get-rich-quick scheme, but it has outperfomed any other financial vehicle that I know about.

You are very lucky to have such a tenant.

Ok, a counter example: The SPDR S&P 500 Trust ETF (SPY) was initiated in 1993 with annualized returns of 9.2%. I helped my parents sell their Arizona house in 2015, and it sold for no more than 50% more than it was worth in 1993.

And FWIW, many regional housing markets have experienced a decade long period where values declined and it took that long to get back to where they started much like the broad stock markets. I lived thru one of those in California in the 1990's. I have distant family in the Midwest, where you could wait a lifetime for home prices to improve more than spit. Again, the point isn't that you can't make money, its that it isn't a 'sure thing' at least nationally.

 

[Alcoholic Actuary]

The economy is doing alright, pretty much status quo with the last several years.

So umm... why is the stock market up nearly 20% since the start of November?

The Fed increased its lending rate (and said it'd continue to do so this year), which was really giving the Dow the schittz during the Obama years whenever they suggested it was possible. There is talk of a potential recession. Budget cuts are threatened in many states as the tax cuts in Republican run states aren't generating the tax revenue that they projected. Most recently, thousands of box stores are closing across the nation big league both due to overexpansion and the change of how Americans are do their shopping (online). We bombed Syria. Rattling sabres with North Korea.

Market just keeps going up like it can't go down.

Because President (lord) Business is in the whitehouse. Generally shutting down the government is a source of uncertainty, which is not usually a good thing for business targets. However, this shutdown has nothing but upside risk to companies. Most of the analyst's targets are based on the current status quo, which is probably the worst case scenario for the current budget proposals. If the republicans can get any of their measures passed it will likely mean lower taxes and fewer regulations which will likely make targets easier to hit.

I think the market will settle down once we have a better handle on some of the budget's legislative measures that are going to be implemented.

aa

 

[tupac chopra]

The economy is doing alright, pretty much status quo with the last several years.

So umm... why is the stock market up nearly 20% since the start of November?

Well if not enough has changed then it must be market psychology. Market psychology is probably considered to be best explained by Elliot Wave Theory.
If so I'd say we are in wave 5.

Wave 5: Wave five is the final leg in the direction of the dominant trend. The news is almost universally positive and everyone is bullish. Unfortunately, this is when many average investors finally buy in, right before the top. Volume is often lower in wave five than in wave three, and many momentum indicators start to show divergences (prices reach a new high but the indicators do not reach a new peak). At the end of a major bull market, bears may very well be ridiculed (recall how forecasts for a top in the stock market during 2000 were received).

Here is a view from January this year by a couple of professionals



Seems to be what has happened so far.



I don't recommend anyone take this too seriously but it's fun to look at

 

[tupac chopra]

double post