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jaykimf
Joined: 24 Apr 2004
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 Posted: Sat Mar 13, 2010 11:14 am Post subject: |
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| mises wrote: |
| Yes. The mainstream media will say that. Do you know why? You are the target. Sad to say, but it's true. The insiders are selling like mad, the institutions are trading momentum (and have a red phone to the Fed for when to get out). Do you have a direct line to the Fed? |
No, I don't have a direct line to the Fed, but I don't believe institutions are going to get a call from the Fed telling them when to get out either. Your conspiracy speculation is unconvincing. Professor Harvey's explanation quoted above makes more sense to me. As for your suggestion that the smart move would be to invest in complex derivatives, that was a joke wasn't it? By the way, I did my taxes yesterday and thanks mainly to the house, interest and all that, we're getting back over $5600. Divide that by 12 months and it looks like buying is actually cheaper than renting. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Sat Mar 13, 2010 5:42 pm Post subject: |
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| No, I don't have a direct line to the Fed, but I don't believe institutions are going to get a call from the Fed telling them when to get out either. Your conspiracy speculation is unconvincing. |
The Fed board of directors is the financial services industry and other captains of industry. They are the Fed.
http://www.federalreserve.gov/generalinfo/listdirectors/default.cfm
Do you think the board of directors at the Fed are unaware of what the Fed is doing and likely to do? You think this is a conspiracy theory? How silly. How incredibly naive.
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| As for your suggestion that the smart move would be to invest in complex derivatives, that was a joke wasn't it? |
No. It isn't.
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| By the way, I did my taxes yesterday and thanks mainly to the house, interest and all that, we're getting back over $5600. Divide that by 12 months and it looks like buying is actually cheaper than renting. |
No. It isn't. The house is a depreciating asset on top of an asset -land- that is very likely to depreciate for many, many years, but has historically appreciated about in line with inflation. The loan appreciates. You'll pay double, or thereabouts. |
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Adam Carolla
Joined: 26 Feb 2010
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| Posted: Sat Mar 13, 2010 9:26 pm Post subject: |
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As someone who is quite interested in the rent vs. buying debate, I give you this: Rent vs. buy calculator
So, the verdict, much like having sex with a senior citizen, depends.
I will say, though, that were I currently living in the U.S., I'd take advantage of the FHA's first time homebuyer assistance (3.5% down payment) to pick up a 4-plex and rent out the other 3 units. The rent would essentially cover your ownership costs (mortgage, property taxes, etc.) while you provide a roof over your family's collective heads for nothing a month. That's some smart money right there folks.
Moving back on topic, I used to (mental note: re-subscribe soon) to a podcast called the Disciplined Investor. It's a bit technical, but the guy knows what he's talking about, and he totally backs up Mises point about the mid-afternoon pump-n-dump that happens almost every day. The market simply is not behaving according to fundamentals. (That shouldn't stop anyone from capitalizing on the gains it's making, but be very aware that the supposed gains are mostly smoke and mirrors right now.) |
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jaykimf
Joined: 24 Apr 2004
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| Posted: Sat Jan 01, 2011 10:37 am Post subject: |
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| bucheon bum wrote: |
| jaykimf wrote: |
| mises wrote: |
The headline on Drudge was "Obama to the rescue!". At least in idiocy, they're consistent.
The market will lose these gains in short order. |
Great call.
"The S&P 500 index, the barometer favored by professional investors, rose 1.95, or 0.2 percent, to 1,140.45. The index is up 68.6 percent in the past year. Including dividends, it's up about 72 percent." http://news.yahoo.com/s/ap/20100309/ap_on_bi_st_ma_re/us_wall_street |
jay, your hard-on for mises is touching. And if the Dow is 11,000+ by years end I'll send you 50 bucks via paypal. promise. |
I said I would remind you but that you didn't have to pay.(and you don't.) But how about making it interesting and going double or nothing? I bet you the market hits its all time high before the end of the year, measured by either the Dow, SP500 or NASDAQ. What do you say? |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Sat Jan 01, 2011 11:12 am Post subject: |
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| How's that house price holding up? Ready to lose another 20%? |
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jaykimf
Joined: 24 Apr 2004
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| Posted: Sat Jan 01, 2011 1:32 pm Post subject: |
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| mises wrote: |
| How's that house price holding up? Ready to lose another 20%? |
Since you asked, I just checked the current listings in our area.Looking at the comparables it seems that our house price has held up very well considering the market situation. In the further out areas that were booming and overbuilt a few years ago, prices have dropped considerably more. Our house was built on an infill lot in an established city neighborhood. In this area, listing prices are just about where they were when we bought the house. Of course listing prices don't necessarily translate into sales prices, but all things considered, I very satisfied with our decision and results. We can't lose another 20% until we lose our first 20 %. Even if the price has gone down somewhat, I don't care. I don't expect to be able to time market bottoms perfectly. I'm confident in the long run. Obviously you don't know squat about the real estate market in my neighborhood. Frankly, I don't think your predictions for the real estate market are any more accurate than your predictions for the stock market. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Sat Jan 01, 2011 1:54 pm Post subject: |
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You're confident in what? You think prices will meaningfully appreciate during your life?
The stock market is held up by the government. House prices are held up by the government. |
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jaykimf
Joined: 24 Apr 2004
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| Posted: Sat Jan 01, 2011 2:36 pm Post subject: |
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| mises wrote: |
| You're confident in what? You think prices will meaningfully appreciate during your life? |
I'm confident buying a house will prove to have been a wise decision.
| mises wrote: |
The stock market is held up by the government. House prices are held up by the government. |
So what? The more inflation there is, the wiser my decision to buy a house will prove to be. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Sat Jan 01, 2011 3:03 pm Post subject: |
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http://www.zerohedge.com/article/trimtabs-no-amount-qe-will-be-able-keep-current-stock-market-bubble-bursting-eventually
http://dallasfed.org/research/eclett/2010/el1014.html
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| With nearly half of total bank assets backed by residential real estate, both homeowners on the cusp of negative equity and the banking system as a whole remain concerned amid the resumption of home price declines.[8] This unease highlights the housing market�s fragility and suggests there may be no pain-free path to the eventual righting of the market. No perfect solution to the housing crisis exists. The latest price declines will undoubtedly cause more economic dislocation. As the crisis enters its fifth year, uncertainty is as prevalent as ever and continues to hinder a more robust economic recovery. Given that time has not proven beneficial in rendering pricing clarity, allowing the market to clear may be the path of least distress. |
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bucheon bum
Joined: 16 Jan 2003
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| Posted: Sat Jan 01, 2011 5:27 pm Post subject: |
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| jaykimf wrote: |
| bucheon bum wrote: |
| jaykimf wrote: |
| mises wrote: |
The headline on Drudge was "Obama to the rescue!". At least in idiocy, they're consistent.
The market will lose these gains in short order. |
Great call.
"The S&P 500 index, the barometer favored by professional investors, rose 1.95, or 0.2 percent, to 1,140.45. The index is up 68.6 percent in the past year. Including dividends, it's up about 72 percent." http://news.yahoo.com/s/ap/20100309/ap_on_bi_st_ma_re/us_wall_street |
jay, your hard-on for mises is touching. And if the Dow is 11,000+ by years end I'll send you 50 bucks via paypal. promise. |
I said I would remind you but that you didn't have to pay.(and you don't.) But how about making it interesting and going double or nothing? I bet you the market hits its all time high before the end of the year, measured by either the Dow, SP500 or NASDAQ. What do you say? |
Ha, I was wondering if you'd remember this. So you think the Dow will go past 14,000 this year huh? Ha, well that's a lot of faith you have in the stock market. Sure, I'll take double or nothing on that one.
| Quote: |
| The stock market is held up by the government. House prices are held up by the government. |
Sorry mises, I'd disagree with you on that one. At least the stock market (and minus the financial companies). Corporations have done a good job of cutting costs, expanding operations overseas, and are less dependent on the US consumer than I thought. That and the fact that US consumers lost their minds this holiday season. Unemployment is still very high, incomes are stagnant yet the Christmas shopping season did surprisingly well. Bizarre. |
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itistime
Joined: 23 Jul 2010
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| Posted: Sun Jan 02, 2011 3:19 am Post subject: |
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Home prices are held up by the govt.
...or big banks, which were bailed out by the govt.
Lower prices = banks lose big time.
Home prices are held up by the govt.
You don't have to over analyze it. |
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jaykimf
Joined: 24 Apr 2004
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| Posted: Sun Jan 02, 2011 9:06 am Post subject: |
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| mises wrote: |
http://www.zerohedge.com/article/trimtabs-no-amount-qe-will-be-able-keep-current-stock-market-bubble-bursting-eventually
http://dallasfed.org/research/eclett/2010/el1014.html
| Quote: |
| With nearly half of total bank assets backed by residential real estate, both homeowners on the cusp of negative equity and the banking system as a whole remain concerned amid the resumption of home price declines.[8] This unease highlights the housing market�s fragility and suggests there may be no pain-free path to the eventual righting of the market. No perfect solution to the housing crisis exists. The latest price declines will undoubtedly cause more economic dislocation. As the crisis enters its fifth year, uncertainty is as prevalent as ever and continues to hinder a more robust economic recovery. Given that time has not proven beneficial in rendering pricing clarity, allowing the market to clear may be the path of least distress. |
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OK, so somebody at the Dallas Fed says that house prices must drop another 23% to return to the long term mean. Obviously that is some sort of average since price movements have varied widely according to locality. But assuming that my home value decreased by another 23% over the next 2 years, that would give me a 4 year loss in the range of $ 70-90,000. So if we had waited 4 years before buying we could have got our house for maybe $90,000 less. But if we hadn't bought the house, we would have been paying at least $1500/month for a comparable place. That's $18,000 a year and $72,000 over 4 years. Adding the $8000 tax credit we got totals $80,000. In addition, due to the deductions for Mortgage interest and property taxes, our federal income tax liability is $0. Over 4 years I'm guessing that saves us well over$10,000, bringing our total savings to $90,000. So IF our house value declines by another 23% in the next 2 years ( and I'm not so sure it will) , we more or less break even. After the market has cleared, I really don't expect any price appreciation in my lifetime in real dollar terms. I do expect increased nominal price increases when at some point inflation kicks in. When that happens, my house payment will remain fixed, while your rent payments go up. |
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jaykimf
Joined: 24 Apr 2004
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| Posted: Sun Jan 02, 2011 9:29 am Post subject: |
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| bucheon bum wrote: |
Ha, I was wondering if you'd remember this. So you think the Dow will go past 14,000 this year huh? Ha, well that's a lot of faith you have in the stock market. Sure, I'll take double or nothing on that one.
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I do expect a good year for the stock market, but honestly, I'm not at all confident that the Dow will hit a new high. That would be a return of around 23%. I think that is possible but a real stretch. Realistically 10-15% seems more likely. But since it's double or nothing, I really can't lose anything and I don't mind giving you a real good chance to win your money back. If the Dow actually does hit its high, well that's another story. |
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Space Bar
Joined: 20 Oct 2010
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| Posted: Sun Jan 02, 2011 9:34 pm Post subject: |
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| jaykimf wrote: |
| OK, so somebody at the Dallas Fed says that house prices must drop another 23% to return to the long term mean. Obviously that is some sort of average since price movements have varied widely according to locality. But assuming that my home value decreased by another 23% over the next 2 years, that would give me a 4 year loss in the range of $ 70-90,000. So if we had waited 4 years before buying we could have got our house for maybe $90,000 less. But if we hadn't bought the house, we would have been paying at least $1500/month for a comparable place. That's $18,000 a year and $72,000 over 4 years. Adding the $8000 tax credit we got totals $80,000. In addition, due to the deductions for Mortgage interest and property taxes, our federal income tax liability is $0. Over 4 years I'm guessing that saves us well over$10,000, bringing our total savings to $90,000. So IF our house value declines by another 23% in the next 2 years ( and I'm not so sure it will) , we more or less break even. After the market has cleared, I really don't expect any price appreciation in my lifetime in real dollar terms. I do expect increased nominal price increases when at some point inflation kicks in. When that happens, my house payment will remain fixed, while your rent payments go up. |
Aren't you neglecting the opportunity cost of buying your home? I am estimating your home may have cost over $300,000. Instead of buying it, had you modestly invested it in something giving you merely a 5% return, over four years that would be $60,000 you are not earning buy owning your home. Am I missing something here? |
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TheUrbanMyth
Joined: 28 Jan 2003
Location: Retired
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| Posted: Sun Jan 02, 2011 10:20 pm Post subject: |
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| Space Bar wrote: |
| jaykimf wrote: |
| OK, so somebody at the Dallas Fed says that house prices must drop another 23% to return to the long term mean. Obviously that is some sort of average since price movements have varied widely according to locality. But assuming that my home value decreased by another 23% over the next 2 years, that would give me a 4 year loss in the range of $ 70-90,000. So if we had waited 4 years before buying we could have got our house for maybe $90,000 less. But if we hadn't bought the house, we would have been paying at least $1500/month for a comparable place. That's $18,000 a year and $72,000 over 4 years. Adding the $8000 tax credit we got totals $80,000. In addition, due to the deductions for Mortgage interest and property taxes, our federal income tax liability is $0. Over 4 years I'm guessing that saves us well over$10,000, bringing our total savings to $90,000. So IF our house value declines by another 23% in the next 2 years ( and I'm not so sure it will) , we more or less break even. After the market has cleared, I really don't expect any price appreciation in my lifetime in real dollar terms. I do expect increased nominal price increases when at some point inflation kicks in. When that happens, my house payment will remain fixed, while your rent payments go up. |
Aren't you neglecting the opportunity cost of buying your home? I am estimating your home may have cost over $300,000. Instead of buying it, had you modestly invested it in something giving you merely a 5% return, over four years that would be $60,000 you are not earning buy owning your home. Am I missing something here? |
He took out a mortgage...that cash wasn't his to invest. He's making house payments. |
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