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Fed Reserve and Interest Rates
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PostPosted: Wed May 02, 2018 2:54 pm GMT    Post subject: Reply with quote

Agreed. It's not a good time time acquire capital assets. Yields in commodities will be under 10%, but you're right, it's better than buying high and selling low Smile....or buying high and sitting sideways for a decade or two.
I like the debt idea. What a shame America has allowed itself to be controlled by private bankers. Look what they've done to the economy. It's Fake! It's so manipulated it's beyond obvious. These actions have over priced everything. Wow, I don't know what would be worse: a major correction, or to continue living under the lie and bullshit being perpetrated by banks to keep siphoning our money slowing while we continue on like zombies? I'm hoping for the former.
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bsg61
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PostPosted: Fri May 04, 2018 6:52 pm GMT    Post subject: Reply with quote

Real Estate Guy wrote:
Quote:
h Were's a good place to invest? I'd like to get out of dollars


That's a really good question. Real estate is good if it's income producing, but you can't buy right now, the numbers are too inflated. If you have older purchases you could refinance and add some debt to hedge the inflation they're putting us through. I'd stay away from financial assets right now. Stocks, bonds and real estate are inflated from years of free money. They will stat flat or retreat and if you read this thread you know my opinion. So, if you own old investment real estate add debt, consider precious metals and definitely add commodities in your mix. Personally, I keep very little of my wealth right now in dollars, except for real estate because my longer hold properties aren't really like being in the dollar because they're income producing and debt reducing so I consider it a little bit of a hedge.


For the average Joe, or Jane in my case, trying to figure out where to put one's hard earned dollars is difficult. I am no economist, like most average Joe/Janes. I have a lot of money saved in cash (earning between 1.5% and 1.75%) because I am afraid to lose it but then I'm told sternly that I'm losing money to inflation. If I put in a bond fund, I lose money because reportedly bonds go down when interest rates go up. If I put in stocks/mutual funds, I risk losing half of it if there is a correction. If I put in a CD, I lock it up for a potentially long period of time for maybe 2%. (if I choose).

And as RealEstateGuy pointed out, R.E prices are too high to make that purchase worthwhile.

Might be time to consult a professional which I'm loath to do as they take 1%. Perhaps it is worth it though, as me Jane has no idea how to buy precious metals, commodities, etc. Any detailed advice would be appreciated!
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Guest






PostPosted: Fri May 04, 2018 10:46 pm GMT    Post subject: Reply with quote

bsg61 wrote:
Real Estate Guy wrote:
Quote:
h Were's a good place to invest? I'd like to get out of dollars


That's a really good question. Real estate is good if it's income producing, but you can't buy right now, the numbers are too inflated. If you have older purchases you could refinance and add some debt to hedge the inflation they're putting us through. I'd stay away from financial assets right now. Stocks, bonds and real estate are inflated from years of free money. They will stat flat or retreat and if you read this thread you know my opinion. So, if you own old investment real estate add debt, consider precious metals and definitely add commodities in your mix. Personally, I keep very little of my wealth right now in dollars, except for real estate because my longer hold properties aren't really like being in the dollar because they're income producing and debt reducing so I consider it a little bit of a hedge.


For the average Joe, or Jane in my case, trying to figure out where to put one's hard earned dollars is difficult. I am no economist, like most average Joe/Janes. I have a lot of money saved in cash (earning between 1.5% and 1.75%) because I am afraid to lose it but then I'm told sternly that I'm losing money to inflation. If I put in a bond fund, I lose money because reportedly bonds go down when interest rates go up. If I put in stocks/mutual funds, I risk losing half of it if there is a correction. If I put in a CD, I lock it up for a potentially long period of time for maybe 2%. (if I choose).

And as RealEstateGuy pointed out, R.E prices are too high to make that purchase worthwhile.

Might be time to consult a professional which I'm loath to do as they take 1%. Perhaps it is worth it though, as me Jane has no idea how to buy precious metals, commodities, etc. Any detailed advice would be appreciated!


It depends on your tax bracket.and time horizon. If you are paying over 30%, you can't park everything in cash if you are under 50. You need to maximize your deductions. 10 years in cash and you will have lost 30%.
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Real Estate Guy
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PostPosted: Mon May 07, 2018 1:10 pm GMT    Post subject: Reply with quote

Quote:
average Joe, or Jane in my case, trying to figure out where to put one's hard earned dollars is difficult. I am no economist, like most average Joe/Janes. I have a lot of money saved in cash (earning between 1.5% and 1.75%) because I am afraid to lose it but then I'm told sternly that I'm losing money to inflation. If I put in a bond fund, I lose money because reportedly bonds go down when interest rates go up. If I put in stocks/mutual funds, I risk losing half of it if there is a correction. If I put in a CD, I lock it up for a potentially long period of time for maybe 2%. (if I choose).

And as RealEstateGuy pointed out, R.E prices are too high to make that purchase worthwhile.

Might be time to consult a professional which I'm loath to do as they take 1%. Perhaps it is worth it though, as me Jane has no idea how to buy precious metals, commodities, etc. Any detailed advice would be appreciated


Hi Guest. I understand how you're feeling completely. It shouldn't be this way. This is the direct result of the privately owned Fed Bank intervention. Money was printed to bail out fellow banks and rates dropped to "stimulate the economy". The real reason was to prop out house values because the Fed and other private banks were on the hook with mortgage backed securities(MBS). Now, we're in the beginning of the inflationary stage(as will increase from all the money printing and over heating of the economy they have allowed). I feel like a broken record but it gets my ass how we have let this slime do this(and continuing to do this) and the average American is powerless to stop them and their corruption and interference in our "no longer" free markets.
I don't claim to be an expert in all investing, but if hiring a professional makes you at ease then go for it. Regardless, listen to your instincts. You're definitely correct in that stocks and real estate are not good investments right now. As the Fed continues to tighten and reverse this asset inflation program they made up, prices will drop or stagnate for a long time. Precious metals are good. Silver is a great buy right now IMO. You could try local dealers or "APMEX". They are reputable if you decide to put some money there. I wish you all the best and I hope you, and other fellow Americans truly come together and fine a way to eliminate the Fed Reserve and the corruption of our monetary system. Without true reform this will only get worse for the middle class. Much worse.
If anyone has other investment advice or ideas about how Americans might unite in exposing the Fed Reserve and gaining control of our country again, I would love to hear from you.
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Guest






PostPosted: Thu May 17, 2018 1:03 pm GMT    Post subject: Reply with quote

I am thinking about certain specific high dividend paying stocks. Stocks with dividends 7-8%+ that have anti-collapse characteristics. Tough to pinpoint, but can't trade high yield for a correction for face value. As for these pro real estate people on this board:😂😂😂😂😂
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Real Estate Guy
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PostPosted: Sun May 20, 2018 12:21 pm GMT    Post subject: Reply with quote

Can't hurt to sign the petition. Personally I hope a real movement develops in my lifetime. America can truly be great again if we rid ourselves of this filth:

https://youtu.be/4AoiC4kw9TE
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Guest






PostPosted: Wed May 23, 2018 12:00 am GMT    Post subject: Reply with quote

Question - Mortgage rates have gone up 40% in the past 2 years, but why have Boston prices gone up 15%? Shouldn't prices have dropped by 40% instead?
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admin
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Joined: 14 Jul 2005
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PostPosted: Wed May 23, 2018 1:28 am GMT    Post subject: Reply with quote

Anonymous wrote:
Question - Mortgage rates have gone up 40% in the past 2 years, but why have Boston prices gone up 15%? Shouldn't prices have dropped by 40% instead?


There are a few problems with that math. I'll try to illustrate with a reductio ad absurdum example. Let's say mortgage rates were 0.000000001%. If they increased to 0.000000002%, your phrasing would be that this was a 100% increase. Would prices fall 100% and houses be free? They wouldn't, and prices wouldn't really be affected because the cost of borrowing is essentially free in both cases. Percentage increases don't equal percentage decreases in general, you're referring to percents of percents, and the cost of principal is a lot more important when borrowing is cheap.

That's the main point, but a lot less importantly I don't think the increase has been 40% judging from https://fred.stlouisfed.org/graph/?g=NUh It looks like you're comparing a brief dip in off-peak-time 2016 with a very recent, brief (so far) spike right now, also off-peak-time. Spring to spring (peak buying time) was more in the ballpark of 17%. Any spike in rates that you see right now is too recent to be reflected in prices, if it ends up being obviously reflected at all.

- admin
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Real Estate Guy
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PostPosted: Wed May 23, 2018 12:29 pm GMT    Post subject: Reply with quote

Quote:
There are a few problems with that math. I'll try to illustrate with a reductio ad absurdum example. Let's say mortgage rates were 0.000000001%. If they increased to 0.000000002%, your phrasing would be that this was a 100% increase. Would prices fall 100% and houses be free? They wouldn't, and prices wouldn't really be affected because the cost of borrowing is essentially free in both cases. Percentage increases don't equal percentage decreases in general, you're referring to percents of percents, and the cost of principal is a lot more important when borrowing is cheap.

That's the main point, but a lot less importantly I don't think the increase has been 40% judging from https://fred.stlouisfed.org/graph/?g=NUh It looks like you're comparing a brief dip in off-peak-time 2016 with a very recent, brief (so far) spike right now, also off-peak-time. Spring to spring (peak buying time) was more in the ballpark of 17%. Any spike in rates that you see right now is too recent to be reflected in prices, if it ends up being obviously reflected at all.



Although I generally agree with this, I think it should be noted that interest rates most certainly have an inverse correlation to real estate prices(if we had free markets which we don't). If all else was equal and the Fed Reserve wasn't buying bonds back and dropping rates so low, real estate would have never advanced in price to where it is today. Now that the manipulation has turned over to the fiscal side(government tax cuts) we are seeing distortions from that as they try and ease off the other distortion of QE and ZIRP. Thus, it is correct that the inverse correlation between interest rates is not exact with prices, it is also correct there should be and inverse correlation to some degree. Interest rate adjustments usually lag the price in markets by about 6 months. If they continue rising, and once the effects of the tax cuts is over, there is no way these prices are sustainable in my opinion. The question perhaps is whether and to what degree they'll manipulate again. My bet is that further future stimulus will be less than since 2008, setting up a long path of correction and flat line in prices over a very long period of time
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admin
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PostPosted: Wed May 23, 2018 12:42 pm GMT    Post subject: Reply with quote

Yes, I do agree that there should be an inverse correlation. I was only saying that the correlation would not be calculated the way Guest just posted, even if the market were perfectly free, liquid, and instantaneous.

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PostPosted: Wed May 23, 2018 1:55 pm GMT    Post subject: Reply with quote

Only certain areas of the country are experiencing these crazy RE prices (Boston, LA, Bay Area, NYC area, DC, etc), and we all have the same interest rates. Most of the country has what we would consider reasonable and affordable home prices.
Don't local economies and wages determine what people can afford?
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Real Esate Guy
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PostPosted: Wed May 23, 2018 2:57 pm GMT    Post subject: Reply with quote

Quote:
Only certain areas of the country are experiencing these crazy RE prices (Boston, LA, Bay Area, NYC area, DC, etc), and we all have the same interest rates. Most of the country has what we would consider reasonable and affordable home prices.
Don't local economies and wages determine what people can afford?


You are correct in that those areas you mention are the ones more powerfully being blown out of proportion. I believe you are also correct in that wages and local economies drive prices, hence the areas you mentioned. However market manipulation via ZIRP and QE transform and distort these factors by a very large multiple, in my opinion. As prices are driven to all time highs by these policies(and by the strong local economies) all could be argued that this is a good thing, and maybe it is. However, I see the other side in that at some point the stimulus(intervention into free markets) is removed(such is happening now). This in and of itself should soften prices because purchasing power becomes eroded at some point as rates rise and credit tightens. This may not hurt someone that has a good job and locked in a 30 year good rate within the last year or two, but it will push prices lower as new buyers can afford less. The real problem could come when the tax cut effects wear off and if/when we see a recession. It's no fun to learn your real estate is worth less than you paid for it, whether you still have a job, or certainly worse if you lost one. My point is that salaries are at all time highs around here. Interest rates and easy credit coming off at all time easy levels. Both of them have the possibility of correcting and either one or both should negatively affect prices over the longer term. If rates rise and credit gets tight prices drop. If salaries stay flat, or jobs contract, prices drop. If both happen, watch out. I believe that to be the case starting now gently in the short run but accelerating and continuing in the longer term. In my opinion.
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Real Estate Guy
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PostPosted: Wed May 23, 2018 3:01 pm GMT    Post subject: Reply with quote

Quote:
Yes, I do agree that there should be an inverse correlation. I was only saying that the correlation would not be calculated the way Guest just posted, even if the market were perfectly free, liquid, and instantaneous.

- admin


Admin:
What's your opinion on the real estate prices around here? Where they are now? Where you think they are going?
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admin
Site Admin


Joined: 14 Jul 2005
Posts: 1826
Location: Greater Boston

PostPosted: Wed May 23, 2018 5:23 pm GMT    Post subject: Reply with quote

Real Estate Guy wrote:

Admin:
What's your opinion on the real estate prices around here? Where they are now? Where you think they are going?


I haven't really been paying enough attention to make a judgment right now. I'd probably want to update my payment-to-income chart before doing that: http://www.bostonbubble.com/forums/viewtopic.php?p=13324#13324 The futures market is predicting about 0 real appreciation in 2020: http://www.bostonbubble.com/forums/viewtopic.php?p=20248#20248

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PostPosted: Sun May 27, 2018 4:23 pm GMT    Post subject: Reply with quote

I sure hope prices cone down. It's beyond ridiculous. It's obvious it's severely over inflated. I'm amazed it's holding on this long.
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