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    From: Daily Digest 9/14 – The Rich Live Longer Than The Poor, CA Real Estate Boom Is Over – What Now?
  • Sat, Sep 14, 2019 - 3:43pm

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    Nate

    Nate

    Status Silver Member (Offline)

    Joined: May 05 2009

    Posts: 324

    1+

    Grantham 7 7ear forcast

    One of my favorites is Grantham Mayo Van Otterloo, or GMO. Here are their latest 7-year asset class forecasts, as of July 31, 2019.


    Source: GMO

    https://www.mauldineconomics.com/frontlinethoughts/black-hole-investing

     

     

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  • From: Daily Digest 9/14 – The Rich Live Longer Than The Poor, CA Real Estate Boom Is Over – What Now?
  • Sat, Sep 14, 2019 - 2:54pm

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    sand_puppy

    Status Platinum Member (Offline)

    Joined: Apr 13 2011

    Posts: 1942

    3+

    The Real Battle is Between the Oligarchy and the Embattled Working Class

    Despite the media’s obsession on gender, race and sexual orientation, the real and determining divide in America and other advanced countries lies in the growing conflict between the ascendant upper class and the vast, and increasingly embattled, middle and working classes.

    The First Estate, once the province of the Catholic Church, has morphed into what Samuel Coleridge in the 1830s called “the Clerisy,” a group that extends beyond organized religion to the universities, media, cultural tastemakers and upper echelons of the bureaucracy.

    The role of the Second Estate is now being played by a rising Oligarchy, notably in tech but also Wall Street, that is consolidating control of most of the economy.

    …. the country’s richest classes has gobbled up an astonishing 58.7% of all new wealth in the U.S., and 41.8 percent of total income growth during 2009-2015 alone.

    In this period, the Oligarchy has benefited from the financialization of the economy and the refusal of the political class in both parties to maintain competitive markets. As a result, American industry has become increasingly concentrated. For example, the five largest banks now account for close to 50 percent of all banking assets, up from barely 30 percent just 20 years ago.

     

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  • From: Home Prices: Downhill From Here
  • Sat, Sep 14, 2019 - 1:31pm

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    Locksmithuk

    Status Bronze Member (Offline)

    Joined: Dec 19 2011

    Posts: 105

    4+

    Real estate investments in a crisis

    MKI said -:

    real estate is the best of all worlds …. that generates cash via rent

    Whenever I’ve had the same thought the one unanswered question which has popped up in my mind is: if the next recession is as bad as what we’re expecting i.e. jobs are shredded and personal asset bases are destroyed, then where’s rental income for landlords going to come from? Sure, I can find a tenant, but is this tenant going to have the means to pay rent, and how easy will it be to find a reliable tenant if wide scale unemployment – or low-paying employment prevails? Who’s going to guarantee that rent for me? The government? Unlikely. Or maybe they’ll subsidise 20%, 30% of it. Maybe. That’s if there’s money left over after servicing its debt mountain and unfunded liabilities.

    The scenario above would probably need examination in very localised markets i.e. country A’s property market may not suffer to the same extent as country B. However, if property investors get shaken out and we move more toward a higher proportion of owner-occupiers then the dynamics of the real estate market could change substantially.

    If a critical mass of the tenant population can’t afford its rent then holding multiple real estate assets may just become a millstone for landlords.

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  • From: Home Prices: Downhill From Here
  • Sat, Sep 14, 2019 - 1:26pm

    Reply to #
    aball1035

    aball1035

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    Joined: Dec 19 2014

    Posts: 11

    1+

    Policies vs. Cycles

    You write “The FED won’t let anything deflate, and they have proven they have the power, political cover, and will to act.” This assumes the Fed’s policies have more power than natural cycles do. I don’t know if they do or not, but I don’t think the answer is obvious (I’d be interested to hear arguments from both sides). My knee jerk reaction is that the Fed doesn’t have the power to conquer the natural cycle. Over time, more stimulus is needed for markets to rise the same amount. This is problematic. Will there ever be a time when markets do not react to Fed stimulus at all? I’m not sure.

    If the Fed does have that perpetual power to keep markets inflated, the sky high asset scenario is correct. If they do not, everything must crash sometime.

    Thoughts from the crowd?

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  • From: Home Prices: Downhill From Here
  • Sat, Sep 14, 2019 - 10:32am

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    MKI

    MKI

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    Joined: Jan 12 2009

    Posts: 72

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    Great Post

    This was a very thought-provoking article. Thank you. Thoughts:

    1. I anticipated and prepared for your scenario back in 2007-8 (fully in cash) yet never saw my local housing market twitch. Why? Because the FED & TARP. The government killed a great free-market investing opportunity. So in the end, I just bought stocks in their trough & accepted the government was going to keep the flow of cash going. And politically, I can’t see this changing. Why can’t we keep this money injection going at every downturn? Does anyone think Trump (or whomever replaces him) will be encouraging a recession? No, the FED has no brakes.

    2. I concur with Eannao’s comment asking why won’t real estate just inflate along with gold and oil? Immigration is driving this equation so I can’t see real estate going down unless the FED allows a deflationary event, which they have the full and absolute power to stop since they don’t fear inflation at all. To me, real estate is the best of all worlds in this environs – not a paper asset, but a real-world, limited resource, that generates cash via rent, unlike gold, which costs storage fees.

    I 2X my NW in 2008 when stocks fell but I don’t see much opportunity in this coming downturn. Why? Housing is up, stocks are up, bonds are up. The FED won’t let anything deflate, and they have proven they have the power, political cover, and will to act. And since the economy uses fiat, we are their captive audience.

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  • From: Home Prices: Downhill From Here
  • Sat, Sep 14, 2019 - 10:10am

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    asgordon123

    asgordon123

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    Joined: Aug 05 2018

    Posts: 3

    access

    do pay members have access to the full series of Real Estate videos? i’m assuming so, but can’t find them anywhere?

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  • From: It’s The Pace Of Change That Kills You
  • Sat, Sep 14, 2019 - 8:08am

    Reply to #

    newsbuoy

    Status Bronze Member (Offline)

    Joined: Dec 10 2013

    Posts: 138

    Usury Schmusury

    We are so past usury it ain’t funny no’mo. Might as well ban Bad People while we’re at it, oh wait that didn’t work either. What a predicament!

    Below please find current status as real estate tycoon.

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  • From: Home Prices: Downhill From Here
  • Sat, Sep 14, 2019 - 7:53am

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    Eannao

    Status Bronze Member (Offline)

    Joined: Feb 28 2015

    Posts: 153

    1+

    Real Estate queries

    Hi Adam, just a few points:

    • If a housing downturn is starting, why are house builders not suffering? Their stock prices aren’t signalling any problem.
    • I’d like to get more context on the Robert Shiller quote, but can’t find the interview online. Would you happen to have a link?
    • Real estate was at the epicentre of the last financial crisis, but is unlikely to be at the centre of the next. Don’t you think there’s a chance you’re ‘fighting the last war’? What if real estate prices stay strong and rise alongside gold? (Being a real asset that can produce cashflow). Do you have a plan B for entry or are your plans contingent on a price drop? I have no real estate and have been waiting for a correction to provide some value, but fear it may never come. I’m thinking maybe to invest in something that’s cash flow neutral, and hope for capital appreciation. A more risky strategy I know, but at least then the money printers are working in my favour.

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  • From: Firearms Training: Oct 18-21, 2019
  • Sat, Sep 14, 2019 - 6:19am

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    sand_puppy

    Status Platinum Member (Offline)

    Joined: Apr 13 2011

    Posts: 1942

    6+

    "The Terrorists Are Coming --- Turn in your weapons and get to the gun free zones!"

    Paul Revere’s famous ride directs the impotent and gullible people on how to stay safe.

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  • From: Binyamin Appelbaum: The Problem With Modern Economics
  • Fri, Sep 13, 2019 - 9:48pm

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    MGRS

    MGRS

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    Posts: 23

    5+

    Really enjoyed this one – will give it a second listen.  I’d love to hear this conversation continued in a longer format, or perhaps over multiple podcasts.  So many interesting thoughts that I’d like to hear explored in more depth.

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