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HOT TOPIC Is a market crash coming? Or massive hyper-inflation?

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Timmy C

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Yeah no, since most of them are not investors, the real reason real estate is going up is from a couple of factors that all spell disaster:
1. Cheap debt. Unsophisticated homebuyers see low interest rates and get in bidding wars for houses that aren't worth what they are paying for them.
2. Stimulus checks, PPP loans, big spending, and other forms of inflation: all of that money finds a home somewhere, and when it's done trading hands, it finds the home in assets (real estate, stocks, bonds, commodities, etc)

Both are bad for the economy. At least, for average people who will probably all get burned hard - and for businesspeople later, when we get blamed for it all even though it was mostly government policy.
Property won't crash in Australia.

People have said this for 10 plus years.

Governments have basically made it illegal for property to crash.

They will do anything and everything to prevent that from happening.
 

thechosen1

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Property won't crash in Australia.

People have said this for 10 plus years.

Governments have basically made it illegal for property to crash.

They will do anything and everything to prevent that from happening.
That's also a problem.

The US Federal Reserve already has massive power over the US (and thus, the world) economy. Recently they have started buying corporate debt (buying bonds).

That means in a worst case scenario, they would be the creditor for those companies...

Governments are manipulating economies in new and bizarre ways, and where it leads is yet to be seen because it hasn't happened yet...

Here is the (heavily PC and spun up / biased) summary: The Fed starts buying corporate bonds

Good article on what happens to bondholders when a company goes under: What Happens to Bondholders When a Company Goes Bankrupt?

Think about it. Connect the dots. I don't like what I see.

edit: also, "people have said this for 10 plus years" - uh yeah, 2008 was only 13 years ago
 
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Timmy C

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That's also a problem.

The US Federal Reserve already has massive power over the US (and thus, the world) economy. Recently they have started buying corporate debt (buying bonds).

That means in a worst case scenario, they would be the creditor for those companies...

Governments are manipulating economies in new and bizarre ways, and where it leads is yet to be seen because it hasn't happened yet...

Here is the (heavily PC and spun up / biased) summary: The Fed starts buying corporate bonds

Good article on what happens to bondholders when a company goes under: What Happens to Bondholders When a Company Goes Bankrupt?

Think about it. Connect the dots. I don't like what I see.

edit: also, "people have said this for 10 plus years" - uh yeah, 2008 was only 13 years ago

2008 financial crisis didn't really effect Australia at all.

We where unscathed and nothing changed so I cant relate.

For my lifetime of 30 years I've only seen property go up and up.
 

Envision

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Yeah no, since most of them are not investors, the real reason real estate is going up is from a couple of factors that all spell disaster:
1. Cheap debt. Unsophisticated homebuyers see low interest rates and get in bidding wars for houses that aren't worth what they are paying for them.
2. Stimulus checks, PPP loans, big spending, and other forms of inflation: all of that money finds a home somewhere, and when it's done trading hands, it finds the home in assets (real estate, stocks, bonds, commodities, etc)

Both are bad for the economy. At least, for average people who will probably all get burned hard - and for businesspeople later, when we get blamed for it all even though it was mostly government policy.

I agree sure, these are factors but you also need to look at how ruined the global supply chain is and that the costs of goods to make a house have skyrocketed. We actually have a massive housing shortage here in the US, there is not an abundance of people buying 6 houses like there was 12 years ago... What's happening is a mixture of low interest rates, no underlying product, and a massive increase in cost to produce which bottlenecks an industry and skyrockets cost.

Real estate, Id say is one decent place to put your money. The only factor I see genuinely being terminal to interest rates is if the cap gains/1031/tax laws are actually passed.. Which I dont think they will simply because most of these politicians own real estate investments. Or if interest rates start to go up, but that would tank the economy and the fed/govt is too scared to do that for the time being.

Taking on debt and owning real estate is honestly one of the best hedges against this crazy inflation we're seeing.
 

socaldude

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Inflation numbers come out tomorrow and they are gonna look great. LOL

Spot on with the target rate. LOL

:cool:
 

Timmy C

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Inflation numbers come out tomorrow and they are gonna look great. LOL

Spot on with the target rate. LOL

:cool:
Of course, they are!!
Haven't you heard?
Inflation is only 0.0000013 %
See, CPI is right on track.

''Everything you need for your day-to-day life is not included in the CPI, and these basket of items have not gone up, therefore.

THERE IS NO INFLATION''

- Central Bank.
 

thechosen1

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I agree sure, these are factors but you also need to look at how ruined the global supply chain is and that the costs of goods to make a house have skyrocketed. We actually have a massive housing shortage here in the US, there is not an abundance of people buying 6 houses like there was 12 years ago... What's happening is a mixture of low interest rates, no underlying product, and a massive increase in cost to produce which bottlenecks an industry and skyrockets cost.

Real estate, Id say is one decent place to put your money. The only factor I see genuinely being terminal to interest rates is if the cap gains/1031/tax laws are actually passed.. Which I dont think they will simply because most of these politicians own real estate investments. Or if interest rates start to go up, but that would tank the economy and the fed/govt is too scared to do that for the time being.

Taking on debt and owning real estate is honestly one of the best hedges against this crazy inflation we're seeing.
Great to see you chime in. Yes, I agree, with caution.

I do think that where interest rates are now, they can and will only go up. So that will be a rough ride when it finally happens...
 
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Inflation was 4.2% in April, according to CNBC.

From here on, we have three options.

Option A: Nothing changes, they let the deficit, the money printer, and inflation run ----> this will slow the economy, and prices will come back down. The stock market bubble will explode due to grim economic outlook.

Option B: They rise interest rates and stop giving free money----> this will slow the economy, and prices will come back down. The stock market bubble will explode due to grim economic outlook.

Option C: A coup happens, the president is now a comrade, and prices are dictated by the state. The stock market is abolished before it crashes.

Consequence: sell your overvalued stocks and shitty altcoins.

What to invest in now?

- Real estate is overpriced
- Stocks are overpriced
- Who is still buying gold (besides Peter Shiff)?
- Crypto will tank due to margin calls, although it remains one of the safest investment right now (BTC and ETH)
- Bond's value will be crushed when they raise rates

IMO alternative assets look great: fancy cars, art, champagne. Maybe a small-town supermarket is the best investment right now.
 

MJ DeMarco

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Is today the start of something? Or just a minor correction?
 

Mike Ronin

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Is today the start of something? Or just a minor correction?
Likely a correction today, but I do think we will see a trend of the market going down long-term as long as the Biden admin is in office. They are about as anti-business as we have seen in many, many years. The long-term prognosis is likely down, but I hope I am wrong.
 

Andreas Thiel

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Is today the start of something? Or just a minor correction?
Do you see anything out of the ordinary, today specifically?

From what I have seen today fits nicely into a current rise and fall cycle.
When you look at the 6 months NASDAQ Composite chart it still looks like there are short but strong declines within an overall upward trend. Anything in particular that you think could be different?

Reverse Repo Rate is also well within the "new normal parameters".
I'm not saying this new normal is not unsettling btw.

Ahhh ... now I know, Barron's to the rescue:

Stocks Are Down Because Monday Is a Lousy Day for the Market

Thanks Barron's. Got it! :rofl:
 
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thechosen1

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Do you see anything out of the ordinary, today specifically?

From what I have seen today fits nicely into a current rise and fall cycle.
When you look at the 6 months NASDAQ Composite chart it still looks like there are short but strong declines within an overall upward trend. Anything in particular that you think could be different?

Reverse Repo Rate is also well within the "new normal parameters".
I'm not saying this new normal is not unsettling btw.

Ahhh ... now I know, Barron's to the rescue:

Stocks Are Down Because Monday Is a Lousy Day for the Market

Thanks Barron's. Got it! :rofl:
You really can't believe any media source on stuff like that.

Still, that was a good laugh (the Barron's thing).
 

MaxKhalus

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The crash most likely has no date. It's just gonna happen gradually, problem after problem. Taking advantage of any bad event to "justify it."

Slow decay also implies that there's plenty of time to prepare, thankfully.
 

socaldude

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He always has good insight!

I appreciate the comment but I actually have no idea.

I just try to ask myself simple questions while im trying to figure out what is happening "beyond" our senses and a computer monitor.

What assumptions is the market making? Can I see what they are seeing then see something they can't?

Can low rates really drive growth? Are we really growing economically? Why havent wages budged but the cost of living has? Is all this money really driving productivity and innovation?
 

Kak

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Property won't crash in Australia.

People have said this for 10 plus years.

Governments have basically made it illegal for property to crash.

They will do anything and everything to prevent that from happening.

That just makes it crash all the harder once or twice a generation.
 

Kak

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Is today the start of something? Or just a minor correction?
I am still betting melt up conditions.

The markets are the path of least resistance for buying something of value while we maintain easy money and inflationary central banking policies.

Having the value of something with actual productivity behind it crash, when our means of exchange is being plundered, I’m not betting on it. When they all sell, they are essentially buying dollars. Why buy dollars?

Rotation, sure, but from what into what?


This chart considers buying power return, not dollar over dollar return, so it’s better IMO.

Now, this was a 10 year period… 73% gains in energy stocks is not much. Growing buying power is pretty tough with inflation, but it can be done.

Funny thing, I just started my son’s trust fund. I bought a shit load of OKE and BABA for him. I’ll probably never sell anything I buy for him, just leave it all unrealized for 20 years.
 
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thechosen1

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The FED will keep propping it up.

Bear markets are now illegal.
Political optics > all other considerations

Graph. Must. Look. Pretty.
 

Timmy C

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That just makes it crash all the harder once or twice a generation.

Time will tell, but there are similar parallels between the Irish property bubble 2000-2007 and the Australian property bubble right now.

You can argue that this will continue to increase in price as more stimulus and currency devaluation continues worldwide.
 

GIlman

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Investments must beat inflation by a significant amount, otherwise taxes will leave you with a negative real yield. Gold for instance has very bad tax treatment.
Like everything it depends. There are ways to deal with anything. If you hold gold in a vault you can always take a low interest loan against with the gold as collateral instead of cashing it in. This allows you to avoid the capital gains since loans are not taxed, maintain ownership with a lien on your gold, and get cash to deploy in other areas. If gold continues to rise you have the benefit of your gold appreciating and the value of the cash investment you made from the loan.

If you don't want to deal with physical gold, there are leveraged plays you can do that will appreciate in multiples to the gold price. You can do an index of gold miners, junior or senior miners. Or even better a gold royalty and streaming company can offer massive returns if gold spikes. Royalty companies buy a small stake right to gold mines and land with high potential for gold discovery. They pay a small price for the perpetual right to receive a percentage of revenue (royalty) or a percentage of actual metal mined (stream). They typically diversify across many geographic areas with both developed mines and potential future mines.

The biggest royalty streaming company is Frano-Nevada (FNV). There are others including a newcomer Mettalla (MTA) that looks interesting.

In the case of both, imagine that the cost to mine 1 oz of gold was $1500 and the selling price was $1700. Then profits per ounce of gold are $200. Now imagine if gold jumped to $2700, assuming production cost was still $1500 then profits per ounce of gold would be $1200, 6X the profits. Of course production costs can go up but you can see how a big run on gold can cause a huge spike.

Also realize that at the moment, there are massive massive paper gold contracts and trading going on, but there is not the physical gold to back up these transactions. So there is a significant potential for a run if people actually want delivery instead of trading futures and paper gold. Lastly, look up Basal III, which are new banking regulations about to hit that change how banks accounting for gold will have to be.
 
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thechosen1

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Interesting how most in this thread largely ignore gold as a solution
it's a nice hedge to make sure you own something when the world burns, but it doesn't pay the bills in the meantime.

I would still recommend owning some though, if you have any net worth at all.

...unfortunately all of mine was lost in a boating accident ;)
 

Schonox

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it's a nice hedge to make sure you own something when the world burns, but it doesn't pay the bills in the meantime.

I would still recommend owning some though, if you have any net worth at all.

...unfortunately all of mine was lost in a boating accident ;)

Pray do tell me kind Sir where this boat you speak of may be located? ;)
 

hellolin

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Tell me a time when someone in the US who is in the nationally top 10% in income, and can't afford to buy even a basic condo outside of a suburb in a metro area that is NOT NY or SF, I will let you know if hyper inflation is already here or not.

Ridiculous if anyone think it hasn't, the young are paying the price, wake up.
 

thechosen1

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Pray do tell me kind Sir where this boat you speak of may be located? ;)
Beats me, but it's probably got some AR-15s too!
 

biophase

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Tell me a time when someone in the US who is in the nationally top 10% in income, and can't afford to buy even a basic condo outside of a suburb in a metro area that is NOT NY or SF, I will let you know if hyper inflation is already here or not.

Ridiculous if anyone think it hasn't, the young are paying the price, wake up.
So I just looked up top 10% for people 25-35 and it was $100k. With $100k salary you can borrow about $400k. If you put down 20%, you can buy a $500,000 home. I’m sure you can afford a condo in any city at that price.

Curious as to what you are talking about.
 

hellolin

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So I just looked up top 10% for people 25-35 and it was $100k. With $100k salary you can borrow about $400k. If you put down 20%, you can buy a $500,000 home. I’m sure you can afford a condo in any city at that price.

Curious as to what you are talking about.


Coastal Cali outside of LA, that is not enough as of today for a 3 bed 2 bath condo in my area. No I am not talking about city proper either. And yes I have a six figure income.
 

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