patrick.net

So when PE drops below 15 there might be value to be had in buying it seems?

ForcedTQ says

So when PE drops below 15 there might be value to be had in buying it seems?

I would say there is very little downside risk if it eventually reaches 15 from here.

.

What is interesting is that the S&P 500 dropped about 33% back in March and April 2020. It is as if this may be a continuation of that bear market.

So all the Federal Reserve and federal government stimulus market gains from May 2020 to May 2022 are essentially wiped out.

,,,

Real Estate is going to be fun to pop. It's going to be a bloodbath.

I am bummed a little bit.
I felt pretty flush in January.

clambo says

I am bummed a little bit.
I felt pretty flush in January.

Yeah, all that 'smartness' I felt from passive fiat luck is beginning to feel like the same ole stupid again. I need to start running filthy lie tapes from the Biden Actor stable to cheer me up.

1337irr says

Real Estate is going to be fun to pop. It's going to be a bloodbath.

Some areas gone up out of proportion, they needed to get normalized. 1978 prop 13 Ponzi scheme is the real culprit that should go asap to bring back the prices.

Blue says

1337irr says

Real Estate is going to be fun to pop. It's going to be a bloodbath.

Some areas gone up out of proportion, they needed to get normalized. 1978 prop 13 Ponzi scheme is the real culprit that should go asap to bring back the prices.

I love and I hate prop 13. It's a good idea, but fast forward 40 years from 1978 and California exported house appreciations to other parts of the US. The median length of home ownership in CA is about 25 years vs 7 years in TX.

1337irr says

Real Estate is going to be fun to pop. It's going to be a bloodbath.

It all comes down to metrics like affordability such as home price to household income ratio.

Housing costs whether rent or ownership (mortgage/property tax/property insurance/HOA fee) should not be more than 38% of household income.

If I am a landlord investor I want to make a reliable annual return on investment of 7% or more. That means 4% profit from the lease and 3% from the appreciation of the property.

.

ad says

and 3% from the appreciation of the property

After you correct for the extra taxes you'll pay due to the depreciation you've taken. Oh, and I think maybe there is still some obummer care tax on house sales?

That's how I track mine anyway.

1337irr says

Real Estate is going to be fun to pop. It's going to be a bloodbath.

2006-2008

https://finance.yahoo.com/news/why-shopifys-stock-is-down-76-this-year-184154949.html

Why Shopify’s stock is down 76% this year

Addendum to my comment above:
Except for the various silly stocks like Peloton, Tesla and others, stocks will get back up there, however it will take some time.
20 years ago a few years wait wasn’t a big deal to me, now it seems like a long time.
I’m trying to imagine if anyone who has a 401K or IRA would ever vote for a loser like Biden or his ilk again. The dead Biden voters don’t notice so they don’t count.

The S&P is only down 20%. There have been no major companies declaring bankruptcy yet.

Given the credit profiles of many US corporations, we should expect about 25%of them to fail.

Some of these companies will be considered "too big to fail" and will require bailouts by the Federal government. The prime culprits here are the large life insurance companies. Their policies are guaranteed by their respective States. Since they have over $1 trillion in client assets...well that dwarfs the ability of the State they are in to manage.Car companies will also need a bailout because of the number of people they employ and employment at their complimentary businesses.

Banks also aren't in the best shape with commercial loans, HELOCS and credit cards in the hundreds of billions that just ain;t gonna be paid and will be needed to be written off.

State pension funds. Those monies just don't exist anywhere near their projected payout amounts.

We may end up nationalizing everything. Who gets what and why will be the question of the day.

Misc says

The S&P is only down 20%. There have been no major companies declaring bankruptcy yet.

Given the credit profiles of many US corporations, we should expect about 25%of them to fail.

Some of these companies will be considered "too big to fail" and will require bailouts by the Federal government. The prime culprits here are the large life insurance companies. Their policies are guaranteed by their respective States. Since they have over $1 trillion in client assets...well that dwarfs the ability of the State they are in to manage.Car companies will also need a bailout because of the number of people they employ and employment at their complimentary businesses.

Banks also aren't in the best shape with commercial loans, HELOCS and credit cards in the hundreds of billions that just ain;t gonna be paid and will be needed to be written off.

State pension funds. Those monies just don't exist anywhere near their projected payout amounts.

Do you have info or data you can share on what you stated above? Thanks.

ad says

1337irr says

Real Estate is going to be fun to pop. It's going to be a bloodbath.

It all comes down to metrics like affordability such as home price to household income ratio.

Housing costs whether rent or ownership (mortgage/property tax/property insurance/HOA fee) should not be more than 38% of household income.

If I am a landlord investor I want to make a reliable annual return on investment of 7% or more. That means 4% profit from the lease and 3% from the appreciation of the property.

.

Landlord here so I can relate to what you’re saying. I get about 2% ROE (return on equity) + 2% in principal pay down + whatever Bay Area appreciation has to offer. Most, if not all, of the equity equity is forced through value-add so I can rinse and repeat the process using OPM (other people’s money aka banks).

ad says

The S&P 500 closed today at 3749. Its all time high and 52 week high is 4818. The S&P 500 is officially in a bear market since it is now 20% or more below 4818.

The PE ratio for the S&P 500 is at 18.9. That is near fair market value. https://www.multpl.com/s-p-500-pe-ratio

The PE last peaked to around 37 about 12 months ago.

From a historical perspective, there’s a 70% chance the stock market will be higher in a year. Staying the course may not be a bad idea from a probability point of view.

Misc says

The S&P is only down 20%. There have been no major companies declaring bankruptcy yet.

Given the credit profiles of many US corporations, we should expect about 25%of them to fail.

Some of these companies will be considered "too big to fail" and will require bailouts by the Federal government. The prime culprits here are the large life insurance companies. Their policies are guaranteed by their respective States. Since they have over $1 trillion in client assets...well that dwarfs the ability of the State they are in to manage.Car companies will also need a bailout because of the number of people they employ and employment at their complimentary businesses.

Banks also aren't in the best shape with commercial loans, HELOCS and credit cards in the hundreds of billions that just ain;t gonna be paid and will be needed to be written ...

Here;s some light reading

https://www.nysscpa.org/news/publications/the-trusted-professional/article/20-percent-of-largest-public-firms-now-zombies-111720

For the particular dollar amounts you can parse the Fed's Z-1 .... https://www.federalreserve.gov/releases/z1/default.htm

Look at the amount of life insurance assets owned by households then figure they are also in charge of many pension programs. They are the largest backers of commercial real estate and the vacancy rates are gonna sky.

For public pensions ... https://www.pewtrusts.org/en/research-and-analysis/issue-briefs/2022/05/state-public-pension-fund-returns-expected-to-decline