Wall Street F*cked it up...again

[JustAskBenWhy]

http://fortune.com/2015/09/25/housing-wall-street-investment/

Is it just me, or does everything they do turn to shit...? How long can they go on 3% returns before CapEx do you think...incredible!

I remember some joker on LinkedIn posted on my article that institutional investors were buying at 7% CAP, and therefore it should be good enough for me. To which I answered that stupid is as stupid does, and most stupid is institutionalized...

Never heard from him again

Leave it to wall street to give us operational efficiency. These idiots are taking it up the a$$ in a big way right now... I love it!

 

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[SteveO]

Is it just wall street? Or, are there many others doing the same thing, the same way. People don't tend to calculate the capital required to manage a rental. Buying for a discount is still the main way to make money on RE.

 

[Bouncing Soul]

Storm's a comin'...sure wish I had more fresh powder.

 

[hellolin]

I saw some people around me here in southern Cali that are with shit jobs are buying up houses that they can not afford again...hint hint, another bust is coming!

 

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[JustAskBenWhy]

When wall street starts unloading there will be a bust. The million dollar question - when??!

 

[jon.a]

When wall street starts unloading there will be a bust. The million dollar question - when??!

When the baby-boomers need their money?

 

[100k]

 

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[Bouncing Soul]

Kiyosaki is a Doomer.

The Boomers are already retiring, and have been for years. Most 401(k) and other asset wealth is concentrated among about 10% of Boomers. The behavior will not look like that of a distributed population slowly pulling chips off the table. Question is, what do you think it will look like? You can find any model/prediction you want from fancy sounding economists.

 

[JustAskBenWhy]

Listen - all I can tell you is this:

I underwrite apartments all day long. I cannot find a deal worth my time because someone else wants to pay more.
As a child, one of the first lessons I learned is that masses are almost never right. When everybody zigs you've got to zag...

Everyone is all in with RE right now. Big money is coming out of paper and chasing yield, and they are willing to settle for much lower delta than I can or think is prudent. To me, all signs are pointing toward RE being overheated again. The FED will do what they must to keep the bubble, but that can't be forever.

I don't know when, but wall street is loosing money even with 0% cost of money - how the hell are we supposed to last at this rate...?!

 

[hellolin]

Listen - all I can tell you is this:

I underwrite apartments all day long. I cannot find a deal worth my time because someone else wants to pay more.
As a child, one of the first lessons I learned is that masses are almost never right. When everybody zigs you've got to zag...

Everyone is all in with RE right now. Big money is coming out of paper and chasing yield, and they are willing to settle for much lower delta than I can or think is prudent. To me, all signs are pointing toward RE being overheated again. The FED will do what they must to keep the bubble, but that can't be forever.

I don't know when, but wall street is loosing money even with 0% cost of money - how the hell are we supposed to last at this rate...?!

We don't, and if it's true that only 10% of the retiring baby boomers are having 401ks, what's the other 90% going to do with another downturn upcoming? I think it's an opportunity to sell out other things that poor old people will need.

 

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[hellolin]

Kiyosaki is a Doomer.

The Boomers are already retiring, and have been for years. Most 401(k) and other asset wealth is concentrated among about 10% of Boomers. The behavior will not look like that of a distributed population slowly pulling chips off the table. Question is, what do you think it will look like? You can find any model/prediction you want from fancy sounding economists.

Hey man, can you please post any evidence of this? If true, I want to be able to show this to my family and friends, and to remind me that I can't never just settle for a job. I think if this is a true stat, its the ultimate evidence of a slow lane death story. Holy F*ck, what's gonna happen to the rest of the 90%? Think how much entitlement our country has to dish out to the 90%?

 

[CommonCents]

Hey man, can you please post any evidence of this? If true, I want to be able to show this to my family and friends, and to remind me that I can't never just settle for a job. I think if this is a true stat, its the ultimate evidence of a slow lane death story. Holy F*ck, what's gonna happen to the rest of the 90%? Think how much entitlement our country has to dish out to the 90%?

just search for average retirement savings for the stats, the numbers are UGLY. We'll have a crapload of govt dependents growing and growing, relying on small savings and social security, meanwhile being a big draw on healthcare. "Welcome to our walmart....."

 

[hellolin]

just search for average retirement savings for the stats, the numbers are UGLY. We'll have a crapload of govt dependents growing and growing, relying on small savings and social security, meanwhile being a big draw on healthcare. "Welcome to our walmart....."

I know the state of the savings of the average american retiree, but I want the exact article that supports those words, so I can print it out and show it to people, specially the stat that most 401ks of the boomers are tied to only 10% of them. Meanwhile I am not surprised because thinking about the lifestyle of their youth, all that anti-social movement with no jobs and advancement in society. I read the federal budget for the year, while military spending is a lot of money and cap at 16% of the total spending, entitlements are at 33%! Yes I have no doubt that by the time my retirement comes SSN will be fully bankrupt.

 

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[JustAskBenWhy]

CNBC ran an article yesterday titled Nearly half of Americans have no savings: survey
I freaking believe it!
And they define "savings" as $1,000 in the bank.

This is not even the sidewalk. I don't know what this is. These people are my tenants, MJ's tenants, Steve's tenants...next crash will be fun

 

[OscarDeuce]

Most 401(k) and other asset wealth is concentrated among about 10% of Boomers.

Of course. Back when I started working, practically everyone who didn't work at a fast food joint or a gas station had something called a pension. I know there's a few of us older guys and gals here who remember those. When I was a lineman, I used to get a statement every month telling me how much I would get when I retired based on my present earnings and projected future earnings.

Sometime in the 1980s companies started phasing out pensions in favor of 401ks. No shit. Now, instead of the company funding the pension plan, workers had to "save for retirement." Note however, the money companies saved by eliminating their pension funds didn't show up as a wage increase in the employee's paycheck to help them save for retirement. No, in fact when adjusted for inflation, real wages have gone down over the last 40 years. And against that backdrop, folks who are trying to raise a family on a diminishing paycheck are expected to save a million dollars or more for retirement. Yea, right.

Now, besides relieving companies of the obligation to fund employee pensions, the move to 401ks was a boon to the Wall Street elite because it essentially forced virtually everyone to become customers of the financial services industry. In my childhood, it was usually only weird uncle Bob who had a brokerage account. The rest of the family would talking about him as if he had a gambling addiction - because he did! That's right boys and girls - strip away the thin veneer of respectability and "investing" in the financial markets in nothing more than another form of gambling, and I say this as a former futures trader. I know people who have saved for retirement and then lost half of it in a market "correction."

Maybe a bit off topic, but since the last recovery was all smoke and mirrors another crash is inevitable so maybe not - the only way to protect yourself is to develop a stream of income that is independent of the markets and if at all possible, independent of the need for your daily involvement, given we all get older. Alternatively, an income stream derived from something you can do that involves primarily mental effort - writing, certain types of consulting, etc. Particularly if your ultimate products do fulfill the needs of poor people, cause we're going to have a lot more of them (payday loans, anybody?).

Anyway, rant mode off - I just see red when people (not that anyone in the previous posts here did, but our financial overlords do) criticizes Joe Sixpack for not saving for retirement.

Cheers,
O-2-

 

[JustAskBenWhy]

Of course. Back when I started working, practically everyone who didn't work at a fast food joint or a gas station had something called a pension. I know there's a few of us older guys and gals here who remember those. When I was a lineman, I used to get a statement every month telling me how much I would get when I retired based on my present earnings and projected future earnings.

Sometime in the 1980s companies started phasing out pensions in favor of 401ks. No shit. Now, instead of the company funding the pension plan, workers had to "save for retirement." Note however, the money companies saved by eliminating their pension funds didn't show up as a wage increase in the employee's paycheck to help them save for retirement. No, in fact when adjusted for inflation, real wages have gone down over the last 40 years. And against that backdrop, folks who are trying to raise a family on a diminishing paycheck are expected to save a million dollars or more for retirement. Yea, right.

Now, besides relieving companies of the obligation to fund employee pensions, the move to 401ks was a boon to the Wall Street elite because it essentially forced virtually everyone to become customers of the financial services industry. In my childhood, it was usually only weird uncle Bob who had a brokerage account. The rest of the family would talking about him as if he had a gambling addiction - because he did! That's right boys and girls - strip away the thin veneer of respectability and "investing" in the financial markets in nothing more than another form of gambling, and I say this as a former futures trader. I know people who have saved for retirement and then lost half of it in a market "correction."

Maybe a bit off topic, but since the last recovery was all smoke and mirrors another crash is inevitable so maybe not - the only way to protect yourself is to develop a stream of income that is independent of the markets and if at all possible, independent of the need for your daily involvement, given we all get older. Alternatively, an income stream derived from something you can do that involves primarily mental effort - writing, certain types of consulting, etc. Particularly if your ultimate products do fulfill the needs of poor people, cause we're going to have a lot more of them (payday loans, anybody?).

Anyway, rant mode off - I just see red when people (not that anyone in the previous posts here did, but our financial overlords do) criticizes Joe Sixpack for not saving for retirement.

Cheers,
O-2-

What do you mean "last recovery was all smoke and mirrors"? It worked exactly as it was intended - it re-capitalized the banks and reflate the financial markets! This never had anything to do with employees, the middle class, or any of that nonsense. Your post illustrates why employee status, unless it is of your own company, is absolutely detrimental to financial well-being...

 

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[Bouncing Soul]

What do you mean "last recovery was all smoke and mirrors"? It worked exactly as it was intended - it re-capitalized the banks and reflate the financial markets! This never had anything to do with employees, the middle class, or any of that nonsense. Your post illustrates why employee status, unless it is of your own company, is absolutely detrimental to financial well-being...

TMF does describe a special case employee that can be fastlane, but I both agree with what you are saying and even more. Pensions SUCK. They are indentured servitude. The tearing down of that system was not a bad thing, the bad thing was the population didn't know what to do with their freedom.

 

[jon.a]

TMF does describe a special case employee that can be fastlane, but I both agree with what you are saying and even more. Pensions SUCK. They are indentured servitude. The tearing down of that system was not a bad thing, the bad thing was the population didn't know what to do with their freedom.

Also to go just a little more off track, remember we need customers and employees. The world needs slowlaners.

 

[JustAskBenWhy]

Also to go just a little more off track, remember we need customers and employees. The world needs slowlaners.

You mean I need tenants
Yep!

 

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[Bouncing Soul]

Also to go just a little more off track, remember we need customers and employees. The world needs slowlaners.

I think this could be a really interesting conversation. If we all get our tix to the Summit we can do it there.

 

[JustAskBenWhy]

I think this could be a really interesting conversation. If we all get our tix to the Summit we can do it there.

OK - I'm the new guy here. When is the summit, and where. What's the deal with it? Any links to previous events?

 

[jon.a]

You mean I need tenants
Yep!

Yup, tenants are our customers. Mine are hardcore slowlane. I smile when I see them buy a shiny new truck. They're not buying a house and moving out any time soon.

 

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[Bouncing Soul]

Back on track, we actively were searching for our first rental this year and the numbers were stupid in our mountain west market too. Real estate easily destroys you if bought too expensively. We'll wait.

 

[jon.a]

OK - I'm the new guy here. When is the summit, and where. What's the deal with it? Any links to previous events?

Prior to this year it was called Beer and Pancakes...
https://www.thefastlaneforum.com/community/search/2203957/?q=beer+and+pancakes&o=date

 

[Bouncing Soul]

No, in fact when adjusted for inflation, real wages have gone down over the last 40 years. And against that backdrop, folks who are trying to raise a family on a diminishing paycheck are expected to save a million dollars or more for retirement. Yea, right.

Over that same period, 6% of the middle class left and became rich, 4% became poor. The United States has had the greatest growth in rich people arguably in the history of the world in the last couple of decades.

The rest of the middle class in aggregate has stalled in growth, but that's a more complicated, and borderline political discussion when you start looking at what's happening there.

Interesting demographic things to watch when looking at how to allocate your investments.

 

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[jon.a]

Over that same period, 6% of the middle class left and became rich, 4% became poor. The United States has had the greatest growth in rich people arguably in the history of the world in the last couple of decades.

The rest of the middle class in aggregate has stalled in growth, but that's a more complicated, and borderline political discussion when you start looking at what's happening there.

Interesting demographic things to watch when looking at how to allocate your investments.

NO!

It's not political. It's social. Not everything has to be political. I get more than a little annoyed with folks worrying about if somethings is political here. Most of us are capable of intelligent conversation.

 

[Bouncing Soul]

OK then- non-whites and women in the middle class have all seen their standard of living improve. White males have not stalled but in fact fallen.

 

[jon.a]

OK then- non-whites and women in the middle class have all seen their standard of living improve. White males have not stalled but in fact fallen.

Not what I expected. But, when I think about that, that was a social statement. At least in my not so humble opinion. A good reference would be nice though.

 

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[jon.a]

Anyways, to really get back on point. When I saw the funds going into RE, I was certain that they would F*ck it up. I couldn't figure a way to play so I just watched from the sideline.

 

[Bouncing Soul]

Not what I expected. But, when I think about that, that was a social statement. At least in my not so humble opinion. A good reference would be nice though.

Unfortunately you really have to dig because what I'm saying here doesn't fit the populist narrative.

Great graphic here, look at men and women separately in the graph- http://www.epi.org/blog/real-hourly-wage-growth-last-generation/

The CNBC summary of the Pew report discussing middle class movement- http://www.cnbc.com/id/48754974

EDIT- I realize I didn't get the race stuff in there, but it's out there as well, it's a project to do this right.