Down goes the Dow

I took a look at Boulder house prices recently...insanity. it's getting close to NYC and SF levels.

Must be pretty dang awesome to live there.

Rising home prices encourage taking on HELOCs and buying of stuff, including vacations, crypto, NFTs, stocks and bonds. YOLO. Until that home value goes upside down, then just walk away.

That couldn’t possibly happen.

Think again.

Managing dilution? Not buying it. There were no stock-based awards over all the years in which they didn’t do any buybacks? Or they only now discovered dilution management?

Not buying it, it doesn’t make sense.

As far as fake government numbers and conspiracy theories go, check this out, from none other than Jim Rogers, about the national debt:

https://www.rt.com/business/548463-us-debt-young-americans/

I’m way past Maser, I don’t believe anything out of the US anymore. Only I don’t know what to do about it.

Of course the debt can never be paid back. A piece I posted recently proposed inflation as purposeful plan to deal with the debt. I doubt whether the Fed or Treasury really have a handle on the problem. Winging it as they go, praying it does not blow up in their face. Congress seems equally adrift.

Ghost of Igloi wrote:

Of course the debt can never be paid back. A piece I posted recently proposed inflation as purposeful plan to deal with the debt. I doubt whether the Fed or Treasury really have a handle on the problem. Winging it as they go, praying it does not blow up in their face. Congress seems equally adrift.

The debt never needs to be paid back - that would be silly to do.

Interest payments as a percent of gdp are low historically. The debt put much more of a stress on the economy in the past than today.

As long as the regime of low interest rates continues, we’re fine.

Ghost of Igloi wrote:

Rising home prices encourage taking on HELOCs and buying of stuff, including vacations, crypto, NFTs, stocks and bonds. YOLO. Until that home value goes upside down, then just walk away.

That couldn’t possibly happen.

Think again.

They've been saying this since 2003. The houses here have never gone upside down since then, not even during the 2008 crash.

People are buying these homes with cash... No mortgages involved. There are a lot of rich people with money now. It's not like 2008 when people who had no business getting a loan were buying.

Bigus Dickus wrote:

Managing dilution? Not buying it. There were no stock-based awards over all the years in which they didn’t do any buybacks? Or they only now discovered dilution management?

Not buying it, it doesn’t make sense.

As far as fake government numbers and conspiracy theories go, check this out, from none other than Jim Rogers, about the national debt:

https://www.rt.com/business/548463-us-debt-young-americans/

I’m way past Maser, I don’t believe anything out of the US anymore. Only I don’t know what to do about it.

I take it you couldn't find your "smoking gun".

AMZN has added over 400,000 employees the past 2 years.

Stock-based compensation

2017 $4.215 Bil

2018 $5.418 Bil

2019 $6.864 Bil

2020 $9.208 Bil

2021 $12.757 Bil

I just found a good new source of basic data - the factset twitter feed.

Some nuggets:

Forward PE is 19.7

10 year average 16.7

Trailing PE 23.7

10 year average: 20.0

25% earnings growth for four quarters in a row.

I'd say two or three things:

Yes, market expensive but it is getting cheaper every day because the E is soaring and the P is down or stalled.

And compared to previous recent years....it's not embarrassingly bubbly expensive.

Market just isn't nutso expensive given the earnings growth we've been getting. Which is probably why signs of economic growth like that jobs report are considered good not bad. We need to continue this growth to grow into those PEs.

Maser wrote:

Prof. Racket wrote:

"Oh but Racket, can't your feeble mind see the truth! ITS all mADe Up BuLLsH!t"

Spare me

Racket you disappoint me.

You’ve really been going off half-cocked lately.

If people are just lazy, then that’s forgivable...but if they’re bunkerized and bellicose, that’s another thing entirely.

What is up with posters lately? This place is becoming a sort of zoo, quickly becoming not worth the time.

If you don’t want to do the work yourself, you can find web sources explaining how the jobs report is a joke:

https://slate.com/business/2022/02/jobs-report-2021-economy-wrong-explained.htmlhttps://www.zerohedge.com/markets/here-whats-behind-todays-stunning-payrolls-beat

If you don’t understand that government agencies and the Fed work together to both articulate and effect policy, then I don’t know what to say to you.

k

agip wrote:

come on all - we have a thin but nicely moving pack here - let's not foul it up with meaningless personality conflicts

water off a duck's back

water off a duck's back

Faster together.

I got a new chainsaw recently (Stihl, always go with quality on these things) and cut down a dead tree that was uncomfortably close to my house over the weekend and then split a bunch of wood.

Something about splitting wood is so therapeutic I swear.

Ghost of Igloi wrote:

jamin wrote:

A month? In some metro areas, most houses will stay on the market for a matter of hours. And the house listed at 1.15M will sell for 1.7M.

Perfectly normal behavior, for the greatest asset bubble in history.

It's not really a traditional "bubble." Everyone realized the value of owning a home and having your own space and a yard during the pandemic, and piled into an already stressed housing market. The supply is just not even close to matching demand.

In 2006, real estate was actually treated as a speculative get-rich-quick scheme. Everyone wanted to flip houses and anyone with a pulse was given a loan (and sometimes you didn't even need a pulse lol).

Nowadays it's different. No one is trying to get rich quick off their house, they're trying to get a place to own and to start a family. Buyers know they can charge a premium, so they do. I think the only way prices come down appreciably is if demand drops considerably, but you would need a really powerful anti-home ownership event to change the current aesthetic

Prof. Racket wrote:Something about splitting wood is so therapeutic I swear.

Agreed. One of many zen-instilling labor activities, which also includes shoveling snow. Maybe also house-painting, vacuuming and mowing the lawn, although splitting wood and shoveling snow easily top the list.

agip wrote:

Yes, market expensive but it is getting cheaper every day because the E is soaring and the P is down or stalled.

And compared to previous recent years....it's not embarrassingly bubbly expensive.

Correct. The air has been slowly leaking out of Igy’s bubble.

Prof. Racket wrote:I think the only way prices come down appreciably is if demand drops considerably, but you would need a really powerful anti-home ownership event to change the current aesthetic

Housing prices are entirely determined by supply and demand. You can tune the average housing price by changing either of those. Supply is harder to tweak; it takes time to build new houses. Demand is a function of many things, some of which can change more quickly. Somebody suggested that interest rates don't matter; that's utter nonsense. Higher interest rates reduce demand because mortgages become more costly. Lower interest rates reduce the cost of money and make people more willing to borrow to buy houses, among other things. The 2008 housing crisis was entirely fueled by the availability of easy money, and once the fuse was lit, the housing market caught fire like Dresden, and eventually burned to the ground the same way.

I would say interest rates don't matter to an extent. Higher interest rates will reduce demand for vacation and secondary homes, but primary homes are pretty much always in demand in the US regardless. Home ownership didn't grind to a halt in the 1980s when rates were like 8% on mortgages or whatever they were.

Prof. Racket wrote:Home ownership didn't grind to a halt in the 1980s when rates were like 8% on mortgages or whatever they were.

Au contraire:

It didn't take me much time to find and plot those data. Median housing prices across the US slid for more than 3 years after the US Fed rate passed upward through 10% in the late 70s, and didn't start rising again until interest rates had dropped back to about 10%.

ARKK up around 9% from its Friday lows.

that thing rising would catch a lot of shorts back on their heels.

which is something the AI knows, and the meme stonk traders know.

could have some kindling under it.