stock market

[JHZR2]

See, I’m not sure the 150k it rose isn’t hurting him. I mean, yes, the guy makes probably over $300 grand a year and can afford a loss, BUT if he needs to buy a house NOW, compared to last year? He’ll need to bring an extra $150,000 to the table with him.

Of course I don’t think this market is sustainable. It rose too fast and it’ll either settle or drop (depending on demand, inventory and interest rates, I think more so than the actual economy and money the government gave away). IMO.

I think something interesting is the stock market, with so many invested in 401k’s, 403b’s, etc. With companies and even public sectors ridding themselves of pension plans, so many places are investing into these type of retirement avenues. So much money is always now pouring in. I’m not saying the market won’t drop or even crash, but someone said to me the other day...what else are people going to put their money into? What is an average person to do besides invest in their 401k? And I think he had a point. Then again, I don’t know the actual figures/percentages of people investing in 401k’s but it’s got to be up compared to 20 years ago, I’d think.

Agree on the issue of price increases. We had talked briefly about moving to a larger house in a fancier town, because values have gone crazy here. But they’ve gone crazy there too, so it’s a zero sum game, with a much higher liability for mortgage and tax.

That’s what interests me. Salaries haven’t gone up much. House prices have. Everywhere, which means that it’s hard to shuffle major gains into lower price values elsewhere. Sure, people are moving into places that have lower taxes, but they’ll probably vote them up to get the schools and services they were used to… then what? I don’t see it as sustainable. Even with cheap money, salaries haven’t kept up with the increases in home prices so folks are trading money in one place for another.

Agree that with the removal of pensions, more money flowing into stocks (granted, pensions also invested in equities too, to get growth and income). If lots of money are flowing into index funds, the weighting will be a self fulfilling prophecy for the heavier weighted companies, and based upon money flow, not fundamentals. That’s why so much of the current market is wacky. When the top 6 companies make or break the market, and the rest are showing relatively poor results, you know something is not right.

 

[Rmay635703]

Agree on the issue of price increase

That’s what interests me. Salaries haven’t gone up much. House prices have. Everywhere, more money flowing into stocks (granted, pensions also invested in equities too, to get growth and income). If lots of money are flowing into index funds, the weighting will be a self fulfilling prophecy for the heavier weighted companies, and based upon money flow, not fundamentals. That’s why so much of the current market is wacky. When the top 6 companies make or break the market, and the rest are showing relatively poor results, you know something is not right.

The stock market is just a metric of the monetary pool, inflation is driving it up and since there is no other game in town all money ends up in the monetary pool called the stock market

If a crash were to occur it would be a hard drop
The central bank is stuck in a rock and a hard place, we need to inflate to minimalize central debt loads but major failures will occur any direction they move

 

[doublebase]

Agree on the issue of price increases. We had talked briefly about moving to a larger house in a fancier town, because values have gone crazy here. But they’ve gone crazy there too, so it’s a zero sum game, with a much higher liability for mortgage and tax.

That’s what interests me. Salaries haven’t gone up much. House prices have. Everywhere, which means that it’s hard to shuffle major gains into lower price values elsewhere. Sure, people are moving into places that have lower taxes, but they’ll probably vote them up to get the schools and services they were used to… then what? I don’t see it as sustainable. Even with cheap money, salaries haven’t kept up with the increases in home prices so folks are trading money in one place for another.

Agree that with the removal of pensions, more money flowing into stocks (granted, pensions also invested in equities too, to get growth and income). If lots of money are flowing into index funds, the weighting will be a self fulfilling prophecy for the heavier weighted companies, and based upon money flow, not fundamentals. That’s why so much of the current market is wacky. When the top 6 companies make or break the market, and the rest are showing relatively poor results, you know something is not right.

I don’t see house prices dropping until one of two things happen...interest rates rise, or people start actually putting their houses on the market. But you’re absolutely right, fancier towns, bigger better housing areas have also climbed. Big time.

I don’t get why people aren’t selling their homes the last two years. Maybe I can see last year...as people were afraid of having people come into their homes during the start of the pandemic. But this year?? There’s even LESS inventory.

The question I have is, why? Are people afraid they’re going to lose their jobs and don’t want to move? Are they laid off (because all I hear is people that are laid off are collecting more than they did when they were working). It’s not the stock market, it’s up 16% this year...14-15% last year...24% the year before!

But I think we are certainly due for a downturn in everything. Historically you just don’t see year after year after year, of gains. Both in real estate and housing. Without a lot to sustaining it but stimulus packages and interest rates. Something is going to give. And when it does?? I mean, if you’re young enough it’ll be just another downturn, but if you’re 70 and debating on how to arrange your 401k? I think maybe you might want to consider going conservative. My dad would be one of those guys, but then again three years ago he was being told the same thing...and three years before that. And if he had listened he would have lost 100’s of thousands of dollars.

And I have a close friend that sold his rental property three years ago. He was tired of it, but he also said he was going to sell, wait for the market to drop and now he’s waiting to get back in. He easily lost $150,000 of net worth since then. Plus he also was crushed on capital gain taxes. And now he can’t get back in. Never mind the rental income he also lost.

 

[Wolf359]

I don’t see house prices dropping until one of two things happen...interest rates rise, or people start actually putting their houses on the market. But you’re absolutely right, fancier towns, bigger better housing areas have also climbed. Big time.

I don’t get why people aren’t selling their homes the last two years. Maybe I can see last year...as people were afraid of having people come into their homes during the start of the pandemic. But this year?? There’s even LESS inventory.

The question I have is, why? Are people afraid they’re going to lose their jobs and don’t want to move? Are they laid off (because all I hear is people that are laid off are collecting more than they did when they were working). It’s not the stock market, it’s up 16% this year...14-15% last year...24% the year before!

But I think we are certainly due for a downturn in everything. Historically you just don’t see year after year after year, of gains. Both in real estate and housing. Without a lot to sustaining it but stimulus packages and interest rates. Something is going to give. And when it does?? I mean, if you’re young enough it’ll be just another downturn, but if you’re 70 and debating on how to arrange your 401k? I think maybe you might want to consider going conservative. My dad would be one of those guys, but then again three years ago he was being told the same thing...and three years before that. And if he had listened he would have lost 100’s of thousands of dollars.

And I have a close friend that sold his rental property three years ago. He was tired of it, but he also said he was going to sell, wait for the market to drop and now he’s waiting to get back in. He easily lost $150,000 of net worth since then. Plus he also was crushed on capital gain taxes. And now he can’t get back in. Never mind the rental income he also lost.

The major problem with selling your home is that you need to move into another home. If there's no inventory or you can't find a home that you want to move to, then you don't even put your home on the market. The standard advice was to put your home on the market, then once it sold, go buy another home. But people are looking now and don't see anything they want to buy so they're not going to put their home on the market. So you get this cascade effect of low inventory. Plus new construction isn't what it was in the past.

For me, I don't really see prices dropping much, wages are still up and even the lower end are still up which keeps the prices up along with low inventory. Even though high prices forces many people out, there is still more demand than supply so prices will of course keep going up. Interest rates might slow it down a little though as a 3% 30 year mortgage makes a mortgage payment much more affordable. Plus income is also up. I looked it up, minimum wage was about $6.75 when I first bought rental property. Now it's $13.50 and going to $15 in a couple years. Haven't had to evict anyone in a couple years.

 

[Dave Hess]

Wolf,

You know what you are doing and more picky when weeding out possible problems and bad renters.

Some landlords are on the verge of bankruptcy with the CDC rent moratoriums killing their cash flow.

Ive heard of some mom & pop landlords now offering non paying renters ‘Cash 4 Keys’ just to get them out of their property. Imagine having a renter not pay for 14 months, yet the property owner has all the financial liabilities, taxes, maintenance, insurance, association fees, etc....

 

[Dogman]

My strategy? Sptm & vigi bought every Monday automatically.

 

[doublebase]

The major problem with selling your home is that you need to move into another home. If there's no inventory or you can't find a home that you want to move to, then you don't even put your home on the market. The standard advice was to put your home on the market, then once it sold, go buy another home. But people are looking now and don't see anything they want to buy so they're not going to put their home on the market. So you get this cascade effect of low inventory. Plus new construction isn't what it was in the past.

For me, I don't really see prices dropping much, wages are still up and even the lower end are still up which keeps the prices up along with low inventory. Even though high prices forces many people out, there is still more demand than supply so prices will of course keep going up. Interest rates might slow it down a little though as a 3% 30 year mortgage makes a mortgage payment much more affordable. Plus income is also up. I looked it up, minimum wage was about $6.75 when I first bought rental property. Now it's $13.50 and going to $15 in a couple years. Haven't had to evict anyone in a couple years.

That’s a good point...about inventory and not bothering listing a house, knowing there is nothing else to move into/purchase.

That was our problem last year: we sold our house with a contingency (that we needed to find suitable housing before closing on our home). Normally that would scare people off, but not in today’s market.

And honestly last year we had tremendous trouble finding another house that we liked - although the market then wasn’t as crazy as it is now - there still was a very limited supply of inventory. We almost didn’t move.

Our realtors began putting pressure on us to buy something, but there were only two houses we were interested in and both were overpriced. We agreed on one, but I really wasn’t happy with the price of the house (of course our realtors pressured us to go high)...during home inspection we found $35,000 in needed repairs and walked. It made our realtors furious. Then we moved on the other house. These people were very difficult to deal with, and we couldn’t agree on price. The realtors again pressured us. I wouldn’t budge, the home owner wouldn’t budge. The realtors ate the difference because they stood to lose a ton of money. And the first house we walked from - the one our realtor pressured us to go up in our offer (higher than I wanted to go), ended up selling for $20,000 dollars less, after our home inspection, to another couple. Let’s just say that I don’t trust realtors. (And I apologize to all who are realtors, I’m sure it’s a very stressful job).

 

[Wolf359]

That’s a good point...about inventory and not bothering listing a house, knowing there is nothing else to move into/purchase.

That was our problem last year: we sold our house with a contingency (that we needed to find suitable housing before closing on our home). Normally that would scare people off, but not in today’s market.

And honestly last year we had tremendous trouble finding another house that we liked - although the market then wasn’t as crazy as it is now - there still was a very limited supply of inventory. We almost didn’t move.

Our realtors began putting pressure on us to buy something, but there were only two houses we were interested in and both were overpriced. We agreed on one, but I really wasn’t happy with the price of the house (of course our realtors pressured us to go high)...during home inspection we found $35,000 in needed repairs and walked. It made our realtors furious. Then we moved on the other house. These people were very difficult to deal with, and we couldn’t agree on price. The realtors again pressured us. I wouldn’t budge, the home owner wouldn’t budge. The realtors ate the difference because they stood to lose a ton of money. And the first house we walked from - the one our realtor pressured us to go up in our offer (higher than I wanted to go), ended up selling for $20,000 dollars less, after our home inspection, to another couple. Let’s just say that I don’t trust realtors. (And I apologize to all who are realtors, I’m sure it’s a very stressful job).

The real problem with the contingency is that it reduces demand. So you scare off some, but not all buyers. But it probably reduced what you could have gotten on the home. But you'll never know. I see bidding wars that happen on properties where it can go 50-100k over asking. Would that happen on a home with a sale contingency?

Renegotiation after the home inspection is pretty common.

 

[KrisZ]

Nobody has a crystal ball for sure. The market is crazy and we are due for a correction, that’s how much I know.
We had a mainly housing market crash last time, this time it may be the stock market.

 

[Wolf359]

Nobody has a crystal ball for sure. The market is crazy and we are due for a correction, that’s how much I know.
We had a mainly housing market crash last time, this time it may be the stock market.

Right, no one knows where it will go. Seems like every time someone has a prediction, it goes the opposite direction. Remember last year when it fell but then ended up for the year? If there's a housing market collapse, it will probably be in slow motion maybe due to higher interest rates, but that may be years away. Or maybe rents going down. FHA appraisals are sometimes based on the rent that a property generates, lower rents can't justify the higher prices. But if incomes go up, rents can still go up. Rental market is starting to recover in a few areas.

It's easier to be right by doing nothing for now. Everyone who says to do something now so far has been wrong. But they'll probably be right at some point, it's just a big unknown where that point will be.

 

[PandaBear]

I used to own a 6 plex, trust me, it isn't worth it! I owned it free and clear= no loan. The only real benefit is the 100% depreciation you get over 27.5 years. So, it's actually a tax loop hole for the rich. The higher your tax bracket the more write off's you would like to have to lower you tax liability. The very wealthy don't even care if their rentals are flat line for income. They have a Manager and service companies that do everything, they never even go to their rentals if they can avoid it!

So, if my math is correct, if you have a rental that cost you 1 million, you would get a write off of approximately $36350.00 per year for 27.5 years. So, if you made $ 136350.00 per year your rental depreciation would reduce your taxable income to $ 100000.00 without any other write off's you may have. "Get it"

Another point, if you live long enough and still wish to own rentals for write off's, you can sell that rental and buy another within 30 days and start the 27.5 year depreciation all over again. Does not matter that you have already wrote off the million on the other building. There is an IRS form 1031 for this transaction.

Depreciation is only for the building, not the land. When you sell it all the 27.5 years worth of depreciation will then turn into a long term capital gain. So if you have high standard income and you don't mind a windfall long term capital gain then it is fine.

If however the tax law change and you are taxed long term capital gain the same as short term, then you can get into some tax bracket that hurt you real bad.

My schedule E typically has the rental income deduct the expense including depreciation before entering my 1040, typically it is a net positive, but once in a while if you only have 1 unit then vacancy can turn it negative, it is very unlikely that you will end up with a negative. However you may not get much return from rental especially in today's eviction ban situation.

The bigger problem with rental is the stress. If you want reasonable return you cannot just let the managers do everything for you, and end up with barely any return or high overhead cost. Lawsuits from ridiculous tenants if you don't screen well and vacancy can hurt too. I'd say buying stocks is the better long term investment with less stress. Of course everyone has different preference, like my parents aren't great with anything like stocks but they are good with home maintenance and real estates. Most young people would be the opposite, so YMMV.

 

[Wolf359]

The bigger problem with rental is the stress. If you want reasonable return you cannot just let the managers do everything for you, and end up with barely any return or high overhead cost. Lawsuits from ridiculous tenants if you don't screen well and vacancy can hurt too. I'd say buying stocks is the better long term investment with less stress. Of course everyone has different preference, like my parents aren't great with anything like stocks but they are good with home maintenance and real estates. Most young people would be the opposite, so YMMV.

I know many landlords with up to 20 properties and sometimes more that basically do their own management. I think the ones that use a manager are ones that just have one or two rentals. You end up with high returns after 5-10 years plus. The rents go up and the mortgage stays the same although a few things like repair costs and taxes/insurance also go up, but the rent increases lately have been greater than those expenses. Still stocks aren't for everybody either. My mother still freaks out every time she hears the news that the market has dropped but doesn't seem to realize that it's way up over the long term. Looked like the market was taking a dump today but then it mostly came back, S&P 500 just down two tenths and the Nasdaq is up.

 

[KneeGrinder]

PandaBear, I believe you would only owe capital gains on long term profit when you sell a rental. I bought my 6 plex for 520k, sold for 590k, after realtor fee's and such I received close to 550k. Paid capital gains on less than 20k due to depreciation. If you own property for the full 27.5 term and roll it over into another rental on a 1031 no capital gains if you invest the full amount you received from the rental you just sold.

 

[Wolf359]

PandaBear, I believe you would only owe capital gains on long term profit when you sell a rental. I bought my 6 plex for 520k, sold for 590k, after realtor fee's and such I received close to 550k. Paid capital gains on less than 20k due to depreciation. If you own property for the full 27.5 term and roll it over into another rental on a 1031 no capital gains if you invest the full amount you received from the rental you just sold.

I think you're forgetting about depreciation recapture.

https://en.wikipedia.org/wiki/Depreciation_recapture_(United_States)

 

[KneeGrinder]

I think you're forgetting about depreciation recapture.

https://en.wikipedia.org/wiki/Depreciation_recapture_(United_States)

Correct, but rentals have a fairly low recapture rate. And the 1031 pretty much fixes it if you wish to continue owning rentals. I do not.

https://en.wikipedia.org/wiki/Internal_Revenue_Code_section_1031

 

[KneeGrinder]

Lets put this back on track,

Crowdstrike has been doing very well, own 80 shares for about 4 weeks now.

Price today $264.98, Share gain today $12.39, Price paid $231.48, Today gain $991.20, Total gain $2,679.40

Bought today, 2 ADBE Jul 30 '21 $595 Call(ADBE) @ $13.80 -2,761.03 Worth $16.825 end of day. $603.97

Bought last week: SalesForce.com

1 CRM Aug 20 '21 $240 Call(CRM) @ $10.25, -1,025.51 Price end of today, $14.775, Worth $407.

1 CRM Aug 20 '21 $240 Call(CRM) @ $11.15, -1,115.51 Price end of today, $14.775, Worth $407.

 

[Wolf359]

Lets put this back on track,

Crowdstrike has been doing very well, own 80 shares for about 4 weeks now.

Price today $264.98, Share gain today $12.39, Price paid $231.48, Today gain $991.20, Total gain $2,679.40

Bought today, 2 ADBE Jul 30 '21 $595 Call(ADBE) @ $13.80 -2,761.03 Worth $16.825 end of day. $603.97

Bought last week: SalesForce.com

1 CRM Aug 20 '21 $240 Call(CRM) @ $10.25, -1,025.51 Price end of today, $14.775, Worth $407.

1 CRM Aug 20 '21 $240 Call(CRM) @ $11.15, -1,115.51 Price end of today, $14.775, Worth $407.

Very good, but what have you bought that were losers?

I basically have the S&P 500 index and some funds that tend to track the Nasdaq. Combined, today I'm up about 0.21% which isn't bad considering the Nasdaq is only up .17 and the S&P 500 is down .20. Sometimes it's the other way around. The only buying/selling I do is to stick in retirement money and switch around the portfolio once in a while.

 

[Zee09]

I'm going to invest in Kleenex because today I am taking it deep...........
Keeping it real... I'm doing my Houdini act to escape though via after hours trading...........

 

[PimTac]

PandaBear, 5/6 Companies in the S/P500 could buy the Dow 30 if they put Apple back into the S/P500.

Apple (AAPL) $2177 billion.
Alphabet (GOOG) $1649 billion.
Alphabet (GOOGL) $1642 billion.
Amazon (AMZN) $1759 billion.
Facebook (FB) $934.74 billion.
Berkshire Hathaway (BRK.B) $627.25 billion.
Tesla Motors (TSLA) $600.45 billion.
Microsoft (MSFT) $1954 billion.

When did AAPL leave the S&P500?

 

[KneeGrinder]

Very good, but what have you bought that were losers?

I basically have the S&P 500 index and some funds that tend to track the Nasdaq. Combined, today I'm up about 0.21% which isn't bad considering the Nasdaq is only up .17 and the S&P 500 is down .20. Sometimes it's the other way around. The only buying/selling I do is to stick in retirement money and switch around the portfolio once in a while.

My 3 account's hit an all time high 7/1/21. Today combined they are down 15K since 7/1/21, 3 or 4 trading days, that's 2%, but I'm sure that I'm well positioned for energy stocks to respond to the currant conditions. They have not responded accordingly yet to the currant conditions or maybe the big boy's are still suppressing the energy stocks to shake the weak hands out of the market. The last time I checked the "Hose" from the north is still stopped dead in its tracks, and I'm pretty sure Peace is not going to break out in the middle east. So, we will be looking at higher oil prices for some time to come, at least till end of summer unless OPEC opens up the pipes.

I do most of my "messing around" in my IRA accounts to avoid the tax man since I'm not of age yet= My Brokerage account is less traded and more dividend orientated yet still has stocks that have better than average appreciation.

I rarely touch ETF's, if I do it's only for a snap back rally. I do an extreme amount of reading from 2 advisory service management Co's that I pay for, and watch alot of commentary. I prefer to pick best of breed rather than own the whole basket of good and not so good, and bad. And I do that by investing in individually best of breed stocks. What I do is not for everyone, most of my friends, like all of them either use a money manager or buy mutual funds.
I have been doing this for 30 years. I took 15 years to learn how to do it with confidence.

When did AAPL leave the S&P500?

Lesson learned Pim Tac, I thought for a stock to be on the DOW 30 list it had to be listed on the NYSE exchange. I had read conflicting data stating it was listed on the NYSE yet still listed on the Nasdaq. I had to do a bit of digging and still came up with conflicting data, but I sorted it out. There are 3 or 4 DOW 30 stocks that are Nasdaq, the rest are NYSE. Apple is in fact still listed on the Nasdaq.

https://en.wikipedia.org/wiki/Dow_Jones_Industrial_Average

https://markets.businessinsider.com/index/components/dow_jones