He was one of the "short the S&P500" club members during the great US bull market. That was in 1993. Commodity junkies are bringing this guy back into the spotlight especially goldbugs. There are guru's that are interesting, this one is not one of them.
Real Estate is dying? Investment-wise what is the next Asset Class Du Jour?
- Thread starter lrm21
- Start date
CB,
I grew up in Orange County and some family still there. I know it very well. The whole LA Basin is a unique situation. Great weather, nice homes, jobs. It is a great place or at least it all was at one time or another. Lots of orange groves in my childhood.
I agree with you 100%. Current costs of PITI don't encourage investment in rental units. Then the upkeep and other rental costs. Makes no sense unless you have gobs of $ you want to get rid of and take a loss. Could one launder $ that way? Hmmm.
I think real smart guys call it sector rotation.? Just keep moving your money into the new money makers. Eventually, you end up back in RE when it is at a low. Makes sense to me. I have to admit I learned this in the Broad Market and not from RE.
Too bad you can't short RE. We used to be able to buy foreclosures and flip them with no qual. FHA loans. They shut that down.
My money is in Energy, Energy alternatives, Base metals (for now), precious metals. And some fertilizer plays in China cause of their bad soil. I'd get into currencies, like the loonie, but I'm not good in that field.
I hope you all cash in some RE equity and have a nest egg so you can be flexible.
I grew up in Orange County and some family still there. I know it very well. The whole LA Basin is a unique situation. Great weather, nice homes, jobs. It is a great place or at least it all was at one time or another. Lots of orange groves in my childhood.
I agree with you 100%. Current costs of PITI don't encourage investment in rental units. Then the upkeep and other rental costs. Makes no sense unless you have gobs of $ you want to get rid of and take a loss. Could one launder $ that way? Hmmm.
I think real smart guys call it sector rotation.? Just keep moving your money into the new money makers. Eventually, you end up back in RE when it is at a low. Makes sense to me. I have to admit I learned this in the Broad Market and not from RE.
Too bad you can't short RE. We used to be able to buy foreclosures and flip them with no qual. FHA loans. They shut that down.
My money is in Energy, Energy alternatives, Base metals (for now), precious metals. And some fertilizer plays in China cause of their bad soil. I'd get into currencies, like the loonie, but I'm not good in that field.
I hope you all cash in some RE equity and have a nest egg so you can be flexible.
Billbuild thank you for the great insight that you provided, I hope people can benefit from your wisdom.
I bought my house March 2000 and sold it this May and now I can sleep better.
I am still very young and rents are extremely cheap vs. buying now.
What I see is, US is running huge deficits, average incomes are not rising enough to keep up w/the inflation and the real inflation rate is way higher than it has been declared. I believe those are the signals that honeymoon in the real estate market will not last forever.
So what made the real estate market so hot in the last 4 years?
I think the artificial low rate environment fueled a buying and financing spree in the real estate market, people who have been waiting for years for the prices to come in, could not resist anymore and they had to step into the plate and start buying their homes, also some people like Nasdaq in early 2000, jumped on the bandwagon to buy investment properties.
Every market is cyclical,
The downturn in the real estate market will be very ugly, also the latest mortgage data and the recent bad earnings from Washington Mutual and CFC are the warning signals.
Also I recommend you start tracking the foreclosure data.
I am looking forward to buy my new house in 3-5 years, once the prices come back to reasonable levels.
I bought my house March 2000 and sold it this May and now I can sleep better.
I am still very young and rents are extremely cheap vs. buying now.
What I see is, US is running huge deficits, average incomes are not rising enough to keep up w/the inflation and the real inflation rate is way higher than it has been declared. I believe those are the signals that honeymoon in the real estate market will not last forever.
So what made the real estate market so hot in the last 4 years?
I think the artificial low rate environment fueled a buying and financing spree in the real estate market, people who have been waiting for years for the prices to come in, could not resist anymore and they had to step into the plate and start buying their homes, also some people like Nasdaq in early 2000, jumped on the bandwagon to buy investment properties.
Every market is cyclical,
The downturn in the real estate market will be very ugly, also the latest mortgage data and the recent bad earnings from Washington Mutual and CFC are the warning signals.
Also I recommend you start tracking the foreclosure data.
I am looking forward to buy my new house in 3-5 years, once the prices come back to reasonable levels.
TraderB,
Thanks for the compliment.
You are like the people who exited the dot. com craze at the top. Smart.
I don't think that RE investors who can afford to lower their rents substantially, and still make money, need to sell. Tax wise, it would probably be dumb.
But I can't see myself avoiding a roaring bull market in energy. Gold or Silver would be great if the USG does not cap the price. There are some shorts in serious trouble from what I read. I've read that Clinton sold the US silver storeage in the 90s. Back then it probably looked like a good idea. Now we are short on supply. This could easily be a 5-10 bagger. Buffet and Gates bought a lot of it yrs ago waiting for this shortage to hit.
Gold Bugs. BUGS means basket of unhedged gold stocks. A good way to discredit investment in gold as "buggy". Only in the Western cultures are we in love with paper money. The rest of the world sure likes gold and silver. If it is in demand, why fight it? Why fight any trend?
Thanks for the compliment.
You are like the people who exited the dot. com craze at the top. Smart.
I don't think that RE investors who can afford to lower their rents substantially, and still make money, need to sell. Tax wise, it would probably be dumb.
But I can't see myself avoiding a roaring bull market in energy. Gold or Silver would be great if the USG does not cap the price. There are some shorts in serious trouble from what I read. I've read that Clinton sold the US silver storeage in the 90s. Back then it probably looked like a good idea. Now we are short on supply. This could easily be a 5-10 bagger. Buffet and Gates bought a lot of it yrs ago waiting for this shortage to hit.
Gold Bugs. BUGS means basket of unhedged gold stocks. A good way to discredit investment in gold as "buggy". Only in the Western cultures are we in love with paper money. The rest of the world sure likes gold and silver. If it is in demand, why fight it? Why fight any trend?
Pull a chart of stocks, bonds and gold over the past 200 years and you'll how "great" gold has performed. Its a waste.
I still can't believe any would post such nonsense that John Templeton says US real estate will fall 90% in some areas. Such fictitiousness cheapens the thread.
Billbuild,
I sold my home in 2002, early in the upswing, no regrets. Been making a really decent living off the tax free profit ever since.
As others have mention, inflation is understated by the talking heads to keep the sheep pacified. When appliance manufacturers state they are going to raise prices in this environment from 5-10%, that says a lot for the pressures they are under regarding cost containment and profit margins. no inflation in that industry. Funny the inflation numbers are sans food and energy, which, outside of housing, are my 2 greatest monthly expenses. I buy a washing machine every other f'ing week.... LOL
RE has been blown up by artificially low rates. I love seeing homes sit on the market for 3-6 months, real hot market right......
Have a good one.
Cracked
I sold my home in 2002, early in the upswing, no regrets. Been making a really decent living off the tax free profit ever since.
As others have mention, inflation is understated by the talking heads to keep the sheep pacified. When appliance manufacturers state they are going to raise prices in this environment from 5-10%, that says a lot for the pressures they are under regarding cost containment and profit margins. no inflation in that industry. Funny the inflation numbers are sans food and energy, which, outside of housing, are my 2 greatest monthly expenses. I buy a washing machine every other f'ing week.... LOL
RE has been blown up by artificially low rates. I love seeing homes sit on the market for 3-6 months, real hot market right......
Have a good one.
Cracked
Convert,
Interesting how your handle shortens. Words are sometimes very interesting in their other meanings.
I sure understand where you're at emotionally. To criticize you would be hypocritical of me. I was (and afraid I still am) very stubborn. I try to remember pride goeth before a fall. But for me it is very hard. If only I didn't equate stubborness with tenacity. Now I'm in my 50s and can listen a lot better, but not by nature.
I know, a 90% fall can't happen. No need to argue. But I have seen property in some neighborhoods fall further. I have not been the buyer, but I have seen property fall to 0. Many times. These are distressed neighborhoods in down times. Some guys I know have picked up whole blocks of 2 story houses for nothing, but the promise to fix them up and find section 8 tennants.
It's an example. I know you won't listen, but it happens. I saw a group of doctors pick up 40 townhomes for $11K ea. They sold for $85K new and had risen to about $95K before a bad fall. The docs. got a bulk discount. We bought some too, but had to pay $19K for 1 and 2 at a time.
My Dad would gently (way too respectfully) try to get it thru my thick skull that there were very extreme price cycles in RE. I didn't listen at first. I had to see it and lose $ because I was too stubborn and green. I try really hard to listen to others now, whether I disagree or not. It has cost me too much $ staying with my preconceived notions. I listen for selfish reasons. Not so I can be a nice guy.
That is what I have been guilty of. I can't see around corners. I'm only telling everyone of what I've seen. Not much theory.
All of us need to find our own way in our own time. We'll each hear what we can accept. I think that is good. We don't want to be swayed by anyone who comes along.
I do promise that these are things I've seen. I don't have any need to feel like I am right. Just trying to help. Losing $ can hurt. And if I've helped some people look more closely, I'm glad.
I've been real appreciative when stock traders have helped me with trading tips. It speeds up my trading ability. It's a better world when we share, IMO.
Interesting how your handle shortens. Words are sometimes very interesting in their other meanings.
I sure understand where you're at emotionally. To criticize you would be hypocritical of me. I was (and afraid I still am) very stubborn. I try to remember pride goeth before a fall. But for me it is very hard. If only I didn't equate stubborness with tenacity. Now I'm in my 50s and can listen a lot better, but not by nature.
I know, a 90% fall can't happen. No need to argue. But I have seen property in some neighborhoods fall further. I have not been the buyer, but I have seen property fall to 0. Many times. These are distressed neighborhoods in down times. Some guys I know have picked up whole blocks of 2 story houses for nothing, but the promise to fix them up and find section 8 tennants.
It's an example. I know you won't listen, but it happens. I saw a group of doctors pick up 40 townhomes for $11K ea. They sold for $85K new and had risen to about $95K before a bad fall. The docs. got a bulk discount. We bought some too, but had to pay $19K for 1 and 2 at a time.
My Dad would gently (way too respectfully) try to get it thru my thick skull that there were very extreme price cycles in RE. I didn't listen at first. I had to see it and lose $ because I was too stubborn and green. I try really hard to listen to others now, whether I disagree or not. It has cost me too much $ staying with my preconceived notions. I listen for selfish reasons. Not so I can be a nice guy.
That is what I have been guilty of. I can't see around corners. I'm only telling everyone of what I've seen. Not much theory.
All of us need to find our own way in our own time. We'll each hear what we can accept. I think that is good. We don't want to be swayed by anyone who comes along.
I do promise that these are things I've seen. I don't have any need to feel like I am right. Just trying to help. Losing $ can hurt. And if I've helped some people look more closely, I'm glad.
I've been real appreciative when stock traders have helped me with trading tips. It speeds up my trading ability. It's a better world when we share, IMO.
The market is big enough and opinionated enough that sharing information on this small scale won't really affect anything. And out of the limited (~300) number of people who have actually read what billbuild said, how many do you think will follow it? No real market impact... just friends sharing opinions.
I'm here because the discussion helps me to form my views, and accept or discard them. While I'd like for you all to say, wow, that drsteph is sure a smart guy and I'd love to have him over to my house for a cocktail party, it doesn't really matter. The discussion is what is important to me, not the swaying of opinion. Simply because, no matter how smart I am, there is invariably either 1) news that I haven't obtained or 2) factors that in my own limited point of view I haven't considered. That's why it is worth my time to be here.
I, for one, thank billbuild for his opinions, and have inquired directly for them. Next, you'll need to help me time the market bottom!
I'm here because the discussion helps me to form my views, and accept or discard them. While I'd like for you all to say, wow, that drsteph is sure a smart guy and I'd love to have him over to my house for a cocktail party, it doesn't really matter. The discussion is what is important to me, not the swaying of opinion. Simply because, no matter how smart I am, there is invariably either 1) news that I haven't obtained or 2) factors that in my own limited point of view I haven't considered. That's why it is worth my time to be here.
I, for one, thank billbuild for his opinions, and have inquired directly for them. Next, you'll need to help me time the market bottom!
Please state where and when all of this carnage took place in the real estate market.
Me thinks you are lumping "junk property" (BB stocks) in with the stable neighborhood (Dow 30) and trying to compare the two as like kind events. I saw some reference to Sec. 8??? That is low rent subsidized housing for the poor.
Using S. Calif as an example is simply silly at best. Very small geographical area with very unique situation.. Lots of new people and very limited amount of buildable land. Pacific ocean and mountain range, and don't forget Camp Pendelton takes up an enormous amount of land right in the middle of the area.
US could probably pay off debt if it sold Pendelton since apparently Japanese are not going to invade. Any body have any idea what it is worth on open market? Let Marines move to Kansas or Nebraska.
Jim Rogers used to be on CNBC and was so wrong so long they finally dumped him. Never has been right that I am aware of on any specific "call".
Greenspan raised rates because of the old rule that if unemployment dropped below 6% we would have automatic wage pressure that would drive up inflation. Both Greenspan and Rogers totally missed huge "productivity gains".
Just my two cents
SteveD
Me thinks you are lumping "junk property" (BB stocks) in with the stable neighborhood (Dow 30) and trying to compare the two as like kind events. I saw some reference to Sec. 8??? That is low rent subsidized housing for the poor.
Using S. Calif as an example is simply silly at best. Very small geographical area with very unique situation.. Lots of new people and very limited amount of buildable land. Pacific ocean and mountain range, and don't forget Camp Pendelton takes up an enormous amount of land right in the middle of the area.
US could probably pay off debt if it sold Pendelton since apparently Japanese are not going to invade. Any body have any idea what it is worth on open market? Let Marines move to Kansas or Nebraska.
Jim Rogers used to be on CNBC and was so wrong so long they finally dumped him. Never has been right that I am aware of on any specific "call".
Greenspan raised rates because of the old rule that if unemployment dropped below 6% we would have automatic wage pressure that would drive up inflation. Both Greenspan and Rogers totally missed huge "productivity gains".
Just my two cents
SteveD