stock market

[doublebase]

The S&P 500 is at a new high. Are people buying more stocks, selling or staying put?

I just think it’s always dangerous to get out of the market (or real estate). Be great if you could time both, but if you screw that up, it can take years in the grand scheme of things to get it back.

Last year we sold our house (Last June during the pandemic) and we bought our new house in July. I felt very nervous doing that, but because I never really was getting out of the market it lowered my anxiety. But the whole time I kept thinking...market is going to CRASH big time. If only I could rent a place for a year, this time next year we’ll be golden. Thank god I didn’t listen to myself.

Meanwhile the people that sold our house to us were not buying anything...they were going to live on their boat until they figured things out. These people were LOADED. And they were also jerks. But I figured...here’s another example of the rich getting richer. This guy sells me his house, he sits on his boat for 6 months, market crashes and he buys another one at much lower prices. Wrong. Market exploded like it hasn’t in 30 years! In one years time, the housing market in our area went up $150,000. I couldn’t be happier, because these people were the absolute worst people I have ever dealt with in my life. But this guy makes so much money that it probably isn’t going to hurt him much anyway, but it does feel pretty good.

 

[JHZR2]

The S&P 500 is at a new high. Are people buying more stocks, selling or staying put?

The issue to me is that the S&P is an index. And a weighted one at that. IT is what, 30%ish? When you remove the top 5 or 6 IT companies, how well is the S&P 495 doing? Is the S&P truly diversified if all gains are localized in specific businesses? What happens when the rest of the economy starts to really turn down, and money flows out of indices become out of kilter?

Not saying that indicies are bad, they have their place. And the S&P has done well. But that isn’t necessarily always the case if it’s held up by a small number of companies.

 

[ecotourist]

We need to differentiate between trading and investing.

Investing is buying something (in this discussion a stock, an ETF or a mutual fund) with the intention of holding it for some time, potentially for decades, or even "forever".

Trading is buying something (again a stock, or an ETF, but not usually a mutual fund) with the idea of 'flipping it' in hours, days, or perhaps months.

I'm an investor. I never buy anything I don't plan to keep. I still have shares in the first mutual fund I bought over 40 years ago. And it's still a pretty good fund - though admittedly not the best. I try to keep the different components of my investment portfolio in balance, by buying and (yes) occasionally selling stocks, shares and mutual funds. I currently have 1/3 in cash, bond ETFs and bond mutual funds, 2/3 in stocks, equity ETFs and equity mutual funds.

With my balanced portfolio I hardly ever make much more than 10% a year, and usually less than that, but I hardly ever lose money either. I often make investment decisions with an eye on the tax consequences. I hate to sell something that has doubled or tripled in value because I'll have to pay income taxes on the capital gain. In Canada, capital gains are taxed at 50% of the rate for salary or interest income. Dividends receive a complicated but also favourable tax treatment. Interest is taxed the same as a salary. Gains through trading are taxed the same as salary or interest income.

None of this sounds very exciting (and it isn't intended to be), but it works for me.

 

[JHZR2]

I just think it’s always dangerous to get out of the market (or real estate). Be great if you could time both, but if you screw that up, it can take years in the grand scheme of things to get it back.

Last year we sold our house (Last June during the pandemic) and we bought our new house in July. I felt very nervous doing that, but because I never really was getting out of the market it lowered my anxiety. But the whole time I kept thinking...market is going to CRASH big time. If only I could rent a place for a year, this time next year we’ll be golden. Thank god I didn’t listen to myself.

Meanwhile the people that sold our house to us were not buying anything...they were going to live on their boat until they figured things out. These people were LOADED. And they were also jerks. But I figured...here’s another example of the rich getting richer. This guy sells me his house, he sits on his boat for 6 months, market crashes and he buys another one at much lower prices. Wrong. Market exploded like it hasn’t in 30 years! In one years time, the housing market in our area went up $150,000. I couldn’t be happier, because these people were the absolute worst people I have ever dealt with in my life. But this guy makes so much money that it probably isn’t going to hurt him much anyway, but it does feel pretty good.

Good story, but IMO the $150k it rose after isn’t hurting this guy. Most areas that have seen huge gains aren’t even necessarily places that have lots of reasons to draw. It’s often people who voted in horrid policies, ruined their home states, and are escaping the destruction they did - just to go on like locusts to ruin the next place they go. But the places they go aren’t necessarily the economic or population centers of where theyve been. Time will tell if the “efficiencies” of long term remote work really benefit businesses, in terms of lower cost of brick and mortar versus employee productivity and enhanced outcomes. It may work for some but not others.

IMO the $150k increase cited is funny money. More and more people will regret being house rich, everything else poor, as they realize the true effect that expensive home prices have on everything else in terms of their buying power. Especially in a few years as new locale taxes like on to accommodate these folks.

Be ready for a bumpy ride, and lots of overstretched folks who made poor decisions based upon printed money have to get out.

 

[Dave Hess]

Market exploded because they pumped Trillions $$$ into our economy. Government had no other choice than to artificially prop things up during the _____ illness.

I agree with JHZR2 that some folks are in for a rude awakening in the near future.

 

[cjcride]

The S&P 500 is at a new high. Are people buying more stocks, selling or staying put?

Staying put.

 

[JeffKeryk]

The issue to me is that the S&P is an index. And a weighted one at that. IT is what, 30%ish? When you remove the top 5 or 6 IT companies, how well is the S&P 495 doing? Is the S&P truly diversified if all gains are localized in specific businesses? What happens when the rest of the economy starts to really turn down, and money flows out of indices become out of kilter?

Not saying that indicies are bad, they have their place. And the S&P has done well. But that isn’t necessarily always the case if it’s held up by a small number of companies.

FAANGM

 

[PandaBear]

The issue to me is that the S&P is an index. And a weighted one at that. IT is what, 30%ish? When you remove the top 5 or 6 IT companies, how well is the S&P 495 doing? Is the S&P truly diversified if all gains are localized in specific businesses? What happens when the rest of the economy starts to really turn down, and money flows out of indices become out of kilter?

Not saying that indicies are bad, they have their place. And the S&P has done well. But that isn’t necessarily always the case if it’s held up by a small number of companies.

There's a diversification on how representative the market is, and how hedged your portfolio is. Maybe the economy is really growing mainly because of the top 5-6 companies, maybe they make most of the profit, maybe we are entering the world of winner takes all. It doesn't mean they will stay at the top forever and there is no way to know if you want a representative of the whole economy, other than buying something even more diversified at the expense of less focused on the bigger companies and going mid to small cap (which also may lead to lower return).

To be honest I think if S&P500 is too big to be manipulated, or if it has a good representation and low cost (you don't need to hire a big shot manager, just a few algorithm to run the portfolio), then it is doing its job over the long term. If you want a particular coverage of sectors, or a hedged portfolio that would make money in all market by hedging bets, then you should look for something else other than an index fund anyways (at a higher expense and higher risk), those are really hedge fund instead of index fund.

 

[KneeGrinder]

Copper is a good indicator.

Copper is a leading economic indicator. The prices have set all time records recently.

I have longer term investments, but I'm not afraid to sell to capture/protect my profits. The trick is to Identify stocks that trade within a trading channel. Hold a core position, but trade in 25% increments when those stocks get out of their trading range on the way up and buy them in 25% increments when they retreat back to an over sold condition on the way down provided there is no bad news that has caused the stock to trade down.

If you never sell any portion of your positions when they are over bought, you are not going to ever reap the profits when stocks trade up 5/10% then back down.

Think of it as taking bites of profit out of the market rather than the market taking bites out of you. Always buy into a position in increments over several weeks, maybe a month or more at a minimum. Never be greedy, never think I should have kept XXX stock for 2 more days I would have XXX amount more $$$. Make your profits and be satisfied because not that many somewhat inexperienced investors can manage their own portfolio's successfully. It's not easy and most are not disciplined enough to succeed.


This is what "seasoned" traders do, Call Options, Call spreads, Sell out of the money Calls for income against your Call spreads, And I don't do it, but some buy Put's for protection on stock they own, or sell Puts against their Calls or Call spreads for income. The worst thing you can possibly do is sell naked Put's...Don't ever do it!

2 Trades of mine from Thursday 06/24. Held Thursday, Friday, Sold first thing Monday morning Today. This is Rare! But this stock is an Animal and I have been playing with it for many months now! I will buy it when it pulls back!

NVidia, 2 contracts, $725.00 strike price, bought 06/24, Expiration 07/30, paid $38.60 X 200=$7720.
NVidia, 2 contracts, $725.00 strike price Sold 06/28, Sold $85.2 X 200 = $17040.

NVidia, 2 contracts, $755.00 strike price, bought 06/24, Expiration 07/30, paid $43.50 X 200=$8700.
NVidia, 2 contracts, $755.00 strike price Sold 06/28, Sold $62.45 X 200=$12490.

"Beware" Sharks swimming in waters

 

[KneeGrinder]

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.

 

[alarmguy]

Housing is what the market will bear. Yes, its nice to feel like your home is worth $150,000 more. I get it, everyone does, including me and my wife but doesnt mean much if you are staying there AND if you weren't, you have to pay $150,000 more if you move someplace else then you did last year.
Its all relative.

We just came out of a pandemic with artificially low interest rates, people staying put (no homes for sale), sky high lumber prices for new construction (which is already coming down).
Someday, who knows when, interest rates will creep up, homes on the market will quadruple or more, forcing home prices lower. Even then, you still dont lose because if you move, you will pay less for your next home.

All in all, home prices are what the public can afford to pay, nothing more or less. Right now, limited homes on the market so the ones that can buy are only those who can pay more, throw in low interest rates and its very easy to do.

One day, when people start moving again, when builders start building again, when lumber inventory keeps building up to a point of over supply, when interest rates start to really go up we will be at a normal market again. Right now we are in a government induced fantasy land.

Again, its nice to see the value of my home go so high, amazing, thing is, if we wanted to move to northern Florida which was a thought for a while, they are up about $150,000+ for a home like we have here so we are staying. Anyone who puts a home on the market here, sells in days, not weeks, terrible times if you are a real estate agent because there are no homes to sell. One day, there will be again, need to keep in mind, we just experienced something the modern world has never dealt with before, it will take more then a year to unwind it.

 

[Dave Hess]

What about big companies buying thousands of homes and turning them into rentals causing a tighter housing market ?


https://www.theatlantic.com/technology/archive/2019/02/single-family-landlords-wall-street/582394/


.

 

[KneeGrinder]

What about big companies buying thousands of homes and turning them into rentals causing a tighter housing market ?


https://www.theatlantic.com/technology/archive/2019/02/single-family-landlords-wall-street/582394/


.

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.

 

[Dave Hess]

Zero possibility that I would ever own a rental property.
I‘ve made a little money on this manipulated stock market over the past 25 years without the hassles of being a landlord.

With rent moratoriums killing mom & pop landlords.... many will now be trying to sell their property and exiting the rental business after the government took control of their property with the stroke of a pen.

Not getting political, just being truthful when I hear people with zero landlord experience thinking they will make big $$$ with their rental properties and have zero problems or headaches. Their dream of being the next Grant Cardone is silly.

 

[KneeGrinder]

alarmguy, Your Quote, We just came out of a pandemic with artificially low interest rates.

This is a debate, not anything else so don't take it personal. Can you relate low interest rates to said pandemic? Are we talking about mortgage lending specific? Because you can't keep up with inflation investing in T bills, C D's, Corporate bonds that are investment grade are hard to come by, most are low grade investment quality or worse.

T bills and C D's have been below 1% unless your willing to go out 5/10/30 years and then they are just a little over 1%. Interest rates have been manipulated since the meltdown 2007/2008 and they have been artificially low ever since.

It is my belief that "careful" wording used here. The debit can not be paid back, they are having a hard enough time paying the interest on said debit. We will never see rates of the 2000 to 2008 era. Banks will make money from interest rates, but we won't.

 

[KneeGrinder]

Zero possibility that I would ever own a rental property.
I‘ve made a little money on this manipulated stock market over the past 25 years without the hassles of being a landlord.

With rent moratoriums killing mom & pop landlords.... many will now be trying to sell their property and exiting the rental business after the government took control of their property with the stroke of a pen.

Not getting political, just being truthful when I hear people with zero landlord experience thinking they will make big $$$ with their rental properties and have zero problems or headaches. Their dream of being the next Grant Cardone is silly.

I was very lucky, I closed on my 6 plex 12/05/2019. 1 of the happiest days of my life!

 

[Warstud]

If your a Buy and Hold person then what is there to discuss ?

 

[JHZR2]

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.

I thought the write offs only went against the rental income, not other earned income? So you can’t drop your AGI by the amount of the depreciation of you don’t bring in that much rental.

 

[KneeGrinder]

I thought the write offs only went against the rental income, not other earned income? So you can’t drop your AGI by the amount of the depreciation of you don’t bring in that much rental.

The 100% Depreciation over 27.5 years is solely based on the building and property it's self, has nothing to do with income or anything else. The building could remain vacant and you would still receive the 27.5 year 100% deduction on the property as a tax deduction. The 27.5 year 100% deduction is not based on income.

You will pay taxes on any income from rents paid at the end of the year, thats why I stated wealthy people don't buy rentals for income, they really don't want income from it. Thats why they pay for management, landscape, ect.

There are other write off's or cost of upkeep and maintenance, city water, sewer, insurance ect, and you get a "Cough Cough" slush fund...All of that cost goes against the the gross income of the building.

Cost of everything it takes to run the building= 20K, Rental income 35K, You pay income taxes on 15K. And get the 27.5 year 100% depreciation on the building.

So, I guess you could classify 2 groups of write off's. But 1 has nothing to do with the other.

 

[doublebase]

Good story, but IMO the $150k it rose after isn’t hurting this guy. Most areas that have seen huge gains aren’t even necessarily places that have lots of reasons to draw. It’s often people who voted in horrid policies, ruined their home states, and are escaping the destruction they did - just to go on like locusts to ruin the next place they go. But the places they go aren’t necessarily the economic or population centers of where theyve been. Time will tell if the “efficiencies” of long term remote work really benefit businesses, in terms of lower cost of brick and mortar versus employee productivity and enhanced outcomes. It may work for some but not others.

IMO the $150k increase cited is funny money. More and more people will regret being house rich, everything else poor, as they realize the true effect that expensive home prices have on everything else in terms of their buying power. Especially in a few years as new locale taxes like on to accommodate these folks.

Be ready for a bumpy ride, and lots of overstretched folks who made poor decisions based upon printed money have to get out.

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.