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The ACD Method
- Thread starter sbrowne126
- Start date
I don't know....all this talk about doomsday...Zerohedge has been calling the top for years and been consistently wrong. Will they be right some day? Sure.
There is no doomsday talk. Most people, myself included, believe a housing crash would be bullish not bearish. But most people, myself included, believe this is years away. These are not trades you are going to put on next week. So there is no consistently wrong. Or consistently right. Nor is there a "will they be right some day".
To this part time trader, it's more about debt than housing.
It's more complicated then that. Debt is fine if it's used for growth. The housing sector historically has offered no growth beyond inflation so increasing debt to put into housing is not sustainable long term. Debt used for productive purposes that offers return on the margin is good.
I would agree. It just seems that there's more sources of debt excess than there used to be, not just housing. Conversely, we have insurance companies and pension funds starving for yield. Low growth and lots of debt. Strange world.
When you are starving for yield you are sending a price signal to the market to "create more debt". Go back to 2007. When the MBS market became over subscribed, they had to manufacture the synthetic CDO's to meet market demand. There was no underlying mortgage attached to those CDO's, it was just a derivative. So as yields approach zero, you have to find more and more risky debt to bundle and structure to meet the demands of the market which is why debt is exploding. Hell, even junk bonds now only pay 3%. So knowing that information, that should signal to you to find even more junk because it's being bid. Again, this debt is completely counterproductive as there is no possibility of growth to justify the debt. This is where the danger lies. This is also why the student loan market, while definitely out of control, has some hope of redemption. Education has a high payoff and huge growth rates.
Well put. There's just a lot of anecdotal evidence lately of students who have graduated and seem hopelessly in debt. A law graduate in Cal. sued her alma mater over not being able to find a job after graduation. And we have countries on the ropes. Greece, Spain, Portugal, now Italy. Not new news, but where does it end?
I keep thinking there's an obvious trade in here somewhere, one that you look back years layer and say, "It was so apparent I can't believe I didn't buy or sell (xyz)." Gold maybe. Sometimes I feel like the character David from "An American Werewolf in London" who is slowly transitioning from being human. By this time next year I'll look like a huge bug, and my reply to every post will be "Gold!"
I keep thinking there's an obvious trade in here somewhere, one that you look back years layer and say, "It was so apparent I can't believe I didn't buy or sell (xyz)." Gold maybe. Sometimes I feel like the character David from "An American Werewolf in London" who is slowly transitioning from being human. By this time next year I'll look like a huge bug, and my reply to every post will be "Gold!"
Damn, how old are you? I love that movie but that is going back a few years...lol. Here is my issue with the college whiners. Go to Europe and become an engineer, you will make 30k Euros a year. Sure, no debt but you get healthcare and good retirement but its still 30k Euros. Go to school here and borrow 150k but make 100k a year at graduation. Get out a spreadsheet and look at the difference. The NPV of a young educated American is light years ahead of the the NPV of an educated European. Now...having said that, the real issue is many kids are going to school that shouldn't and taking on the debt. Or they are going to school and majoring in pottery. That is a problem. Yes, paying back loans suck but the return on that investment for "most" careers sure as hell beats the return you would get in treasuries or stocks. The last data I saw on this showed a real yield of about 12% on education dollars. That beats gold, real estate, stocks, everything. Of course the millennials are so damn spoiled they want to retire when they are 30 and they don't like the fact that they have to "wait" for the long term returns.
Damn, how old are you? I love that movie but that is going back a few years...lol. Here is my issue with the college whiners. Go to Europe and become an engineer, you will make 30k Euros a year. Sure, no debt but you get healthcare and good retirement but its still 30k Euros. Go to school here and borrow 150k but make 100k a year at graduation. Get out a spreadsheet and look at the difference. The NPV of a young educated American is light years ahead of the the NPV of an educated European. Now...having said that, the real issue is many kids are going to school that shouldn't and taking on the debt. Or they are going to school and majoring in pottery. That is a problem. Yes, paying back loans suck but the return on that investment for "most" careers sure as hell beats the return you would get in treasuries or stocks. The last data I saw on this showed a real yield of about 12% on education dollars. That beats gold, real estate, stocks, everything. Of course the millennials are so damn spoiled they want to retire when they are 30 and they don't like the fact that they have to "wait" for the long term returns.
And it's low risk and has optionality. A decent education not only gets you a better starting salary but more oportunities down the road.