Investing Thread

[MuggsyB]

Muggs, nobody forces anybody to sell anything. (Well, at least not until RMDs; but even then an investor has choices.) If you don't want to take profits, don't want to sell, don't sell.

I am a very reluctant seller. Among the stocks I own that I have never sold a single share of: MSFT, AAPL, JNJ, PEP, PM, HD, LMT, HON, V, MA, NEE, and others. These are sizable positions.

If you don't sell, there are no taxable capital gains.

That's exactly the point I was trying to make and it's one of the stocks you own.  If I sell, and pay the cap-gains, I would look to invest the profit somewhere in lieu of letting it sit with crap interest.  Therefore, I don't see much advantage dumping it and giving the taxes to the govt at this juncture. 

[MU82]

That's exactly the point I was trying to make and it's one of the stocks you own.  If I sell, and pay the cap-gains, I would look to invest the profit somewhere in lieu of letting it sit with crap interest.  Therefore, I don't see much advantage dumping it and giving the taxes to the govt at this juncture.

Remember, capital gains tax rates actually are historically low now. For a couple earning a little more than $100K, capital gains rates are 0%. (Actually 80,800, but it's really 105,600 minus the 25,600 standard deduction). And the cap gains tax rate is only 15% all the way up to $500K.

But yes, if you like the stock and believe it is one you'll want to own for decades, indeed, why would you dump it? We've all made investing mistakes; for me, the biggest ones by far have come on the selling end.

[MuggsyB]

Remember, capital gains tax rates actually are historically low now. For a couple earning a little more than $100K, capital gains rates are 0%. (Actually 80,800, but it's really 105,600 minus the 25,600 standard deduction). And the cap gains tax rate is only 15% all the way up to $500K.

But yes, if you like the stock and believe it is one you'll want to own for decades, indeed, why would you dump it? We've all made investing mistakes; for me, the biggest ones by far have come on the selling end.

They are relatively low for me and most people.  But for those making 1m or more, and have to pay close to 40%,  I'm just wondering if it will change their investment strategies and impact the average investor?  After thinking about it I'm  not sure it will have an enormous effect although I'm no expert.

[jesmu84]

They are relatively low for me and most people.  But for those making 1m or more, and have to pay close to 40%,  I'm just wondering if it will change their investment strategies and impact the average investor?  After thinking about it I'm  not sure it will have an enormous effect although I'm no expert.

You think most people make more than $100k?

[MU82]

They are relatively low for me and most people.  But for those making 1m or more, and have to pay close to 40%,  I'm just wondering if it will change their investment strategies and impact the average investor?  After thinking about it I'm  not sure it will have an enormous effect although I'm no expert.

History would suggest a raise back to the rates of only 4 years ago would have little to no long-term effect on the market. Given that we have no idea what, if any, legislation will emerge from all the talk going on right now, it's too early to know much of anything today.

A majority of stocks is held by the top 1%, and the vast majority is held by the top 5%. And yes, that includes stock held in mutual funds by "regular workers" in their 401k plans. Just under half of Americans own zero stock at all.

[MuggsyB]

You think most people make more than $100k?

No.  I shouldn't have written most people.

[Hards Alumni]

History would suggest a raise back to the rates of only 4 years ago would have little to no long-term effect on the market. Given that we have no idea what, if any, legislation will emerge from all the talk going on right now, it's too early to know much of anything today.

A majority of stocks is held by the top 1%, and the vast majority is held by the top 5%. And yes, that includes stock held in mutual funds by "regular workers" in their 401k plans. Just under half of Americans own zero stock at all.

yup

[Goose]

I believe a pull back or correction is starting today-Friday of this week.

[Hards Alumni]

I believe a pull back or correction is starting today-Friday of this week.

fed rates?

[Goose]

I think State of the Union address/policy announcements may end up creating some serious profit takers. That said, 50% of me believes the government will never allow a real correction to happen ever again. Uncle Sam has helped create a lot of on paper millionaires over the past year with the housing and stock market gold rush. A lot of ill prepared baby boomers became a lot more prepared for retirement since the pandemic struck and they should be thanking Uncle Sam.

[Skatastrophy]

I believe a pull back or correction is starting today-Friday of this week.

This is the bull signal I needed. Fade Goose.

[Hards Alumni]

I think State of the Union address/policy announcements may end up creating some serious profit takers. That said, 50% of me believes the government will never allow a real correction to happen ever again. Uncle Sam has helped create a lot of on paper millionaires over the past year with the housing and stock market gold rush. A lot of ill prepared baby boomers became a lot more prepared for retirement since the pandemic struck and they should be thanking Uncle Sam.

I'm pretty sure its the false market we've been living in for a few years.  cmbs, stock gambling, housing situation.  In regards to housing firmly believe that new housing builds are being held back by developers basically creating the bubble that we are in.  Material costs are high, land costs are high, but interest rates are low...  So logically, it's sort of expensive to build a new house, but existing houses don't require materials or new land... but the prices are absurd currently.   And when the fed raises interest rates, new housing is going to become even more expensive... rates + materials + land.  And we already know housing supply is very sparse currently.  This forces all but the most affluent folks to wait to purchase until prices lower because there are more houses available or a market crash scenario.  What all of this means is that a lot of people who WANT to buy into the housing market cannot.  They'll be forced to continue renting.  Which... I am not sure how many of you around here still rent... is obscenely priced and ever increasing.  People are unable to gain equity or build long term savings because of the housing situation.  Which can lead to a dangerous cycle of spending savings (it's what our culture demands anyway).

Either this is the true rise of Neo-feudalism or we are headed for a major market downturn.  Probably both, honestly.  We need to have a solution for affordable housing one way or another.

I apologize if none of this is well thought out or easily refutable.  I'm no expert, just guessing at what I see... plus I stayed at a Holiday Inn Express last night.

TLDR: sorry for the strange rant.  I think we're in a bad place, and another market downturn is coming sooner rather than later.

[Goose]

hards

I have thought long and hard about the current economic environment and half believe the government will keep blowing up the bubble and half believe there is going to be a serious economic setback in the USA.  I have my theories on this and will keep them to myself, but I am happy that I gave Skats the bull signal he has been waiting for.

[thebigjake]

I'm pretty sure its the false market we've been living in for a few years.  cmbs, stock gambling, housing situation.  In regards to housing firmly believe that new housing builds are being held back by developers basically creating the bubble that we are in.  Material costs are high, land costs are high, but interest rates are low...  So logically, it's sort of expensive to build a new house, but existing houses don't require materials or new land... but the prices are absurd currently.   And when the fed raises interest rates, new housing is going to become even more expensive... rates + materials + land.  And we already know housing supply is very sparse currently.  This forces all but the most affluent folks to wait to purchase until prices lower because there are more houses available or a market crash scenario.  What all of this means is that a lot of people who WANT to buy into the housing market cannot.  They'll be forced to continue renting.  Which... I am not sure how many of you around here still rent... is obscenely priced and ever increasing.  People are unable to gain equity or build long term savings because of the housing situation.  Which can lead to a dangerous cycle of spending savings (it's what our culture demands anyway).

Either this is the true rise of Neo-feudalism or we are headed for a major market downturn.  Probably both, honestly.  We need to have a solution for affordable housing one way or another.

I apologize if none of this is well thought out or easily refutable.  I'm no expert, just guessing at what I see... plus I stayed at a Holiday Inn Express last night.

TLDR: sorry for the strange rant.  I think we're in a bad place, and another market downturn is coming sooner rather than later.

How exactly are developers the ones holding back the supply?  Believe me, if it were entirely up to developers the single family and multifamily markets would get overbuilt very quickly and prices would come down dramatically.  Developers aren't the problem, they don't control materials prices, interest rates, zoning laws, real estate taxes, land prices and labor prices. Pick one, or really all of those factors and you've got the answer to high housing prices.  All developers do is put all those inputs together and try to come up with products that they can sell or rent for enough profit to justify the risk.

[Hards Alumni]

hards

I have thought long and hard about the current economic environment and half believe the government will keep blowing up the bubble and half believe there is going to be a serious economic setback in the USA.  I have my theories on this and will keep them to myself, but I am happy that I gave Skats the bull signal he has been waiting for.

Thing is, they're going to run out of ways to blow up the bubble eventually... and I think we're much closer to that than we think.  A lot of younger boomers and older gen Xers are going to have a rough retirement... If they get one at all.

[Hards Alumni]

How exactly are developers the ones holding back the supply?  Believe me, if it were entirely up to developers the single family and multifamily markets would get overbuilt very quickly and prices would come down dramatically.  Developers aren't the problem, they don't control materials prices, interest rates, zoning laws, real estate taxes, land prices and labor prices. Pick one, or really all of those factors and you've got the answer to high housing prices.  All developers do is put all those inputs together and try to come up with products that they can sell or rent for enough profit to justify the risk.

Sorry, I wasn't clear (as I expected) with my rant.  Of course they're in the business of building and selling new property.  The things you mentioned are what I mean when I said 'held back'.  Not that they're doing it on purpose, but those factors are making it difficult to create homes for people at reasonable prices.  Also, I think there are a lot of buyers who have unrealistic expectations of what 'their house' should be and when they're met with the price of the things they want they cannot afford it.  Developers are not to blame, but they are stuck in the situation alongside potential homeowners as well.

[MU82]

Sounds like it's time to sell everything, including the house!

[thebigjake]

Sorry, I wasn't clear (as I expected) with my rant.  Of course they're in the business of building and selling new property.  The things you mentioned are what I mean when I said 'held back'.  Not that they're doing it on purpose, but those factors are making it difficult to create homes for people at reasonable prices.  Also, I think there are a lot of buyers who have unrealistic expectations of what 'their house' should be and when they're met with the price of the things they want they cannot afford it.  Developers are not to blame, but they are stuck in the situation alongside potential homeowners as well.

No worries, you can probably guess what line of work I'm in....

[Hards Alumni]

No worries, you can probably guess what line of work I'm in....

Lol, yeah it was pretty clear!  What is your opinion on the housing situation?  I have a friend who is currently looking (WI), and is overbidding by 20% and including all sorts of riders to try to get into a home.  I have another friend who recently sold in PA for 65k over asking.  I have a pair of friends who bought last year and had to way overbid 15% for what was essentially a starter home in the area.

I think the market is absolutely nuts right now.  As more of an expert, what to you think?

[thebigjake]

Lol, yeah it was pretty clear!  What is your opinion on the housing situation?  I have a friend who is currently looking (WI), and is overbidding by 20% and including all sorts of riders to try to get into a home.  I have another friend who recently sold in PA for 65k over asking.  I have a pair of friends who bought last year and had to way overbid 15% for what was essentially a starter home in the area.

I think the market is absolutely nuts right now.  As more of an expert, what to you think?

I'm not a single family guy, I'm an apartment developer. But single family markets vary greatly by location. Some places homes are dirt cheap compared to what they used to be. Big Chicago suburban homes got destroyed in value until Covid flipped the script and city folk ran back outward.  But before last year you could get a really big, really nice SF home for 60-70% of what they traded for 5-10 years earlier.

Generally the first answer to any question about macro market trends like this is always demographics, obviously.  If you are in a location where the population of home buying aged people is growing faster than others, prices ain't going down anytime soon.

Then go to interest rates.  I've been saying that interest rates are going up for about 10 years now, and they keep going down. But the way we are printing money inflation has to be right around the corner-which will push interest rates up. If we keep issuing new Treasuries at the current pace the demand will have to slow at some point, and that will push rates up too.

The materials prices are in a major bubble right now, and they will definitely go down. New lumber mills are under construction all over the south.  That will relieve some pressure, and allow more development. But that takes time.  So I'd guess, short of some unexpected event that shocks everything and puts us in another recession, we are in for higher housing prices for the short term future.

[Goose]

82

It might time to sell everything or a time to buy everything. As you know, the housing market is insane and seeing that Steve Stricker sold his Naples pad on whim because "the market was too crazy not to sell" says a lot to me. Steve Stricker needs to make a quick million on a home sale about as much as we need another Perez thread on scoop. I had a very good friend make 40% on his place in Naples in a year and he has received a 30% upside offer on his new place that won't be completed until December. His first sale the couple from MI that bought his place without seeing it and the new offer is a couple from NY.

Cheap money is a great thing while it lasts and only time will tell how long it will last. Cheap money and the wealth factor is great for the economy and I hope it lasts a long, long time. My gut tells me that all great things eventually come to an end, but impossible to pick the top for most people(me). I am a reckless investor by nature and I am starting to keep a closer eye on things on a daily basis. Good news, the government has shown they no longer have the stomach to see big drops in asset values and have created safety nets.

My Dad told many a thousand times to never fall in love with an asset and that is advice I have always tried to follow. Sadly, the one asset I do love is my house and I likely will remain in our house until I am 90 years old. To steal Keefe's line, if I had a hair on my ass, I would sell my joint and rent for a couple of years.

[Goose]

thbigjake

We are helping a couple of large builders source a ton of product from SE Asia. If you ever need a new source for building materials let me know. We are working on virtually anything that is needed in apartment or commercial new construction.

[thebigjake]

Thanks Goose, I'll keep that in mind.  Can you get your materials off the ships yet? It's nuts at the ports.  I've got a bunch of refrigerators stuck in a port somewhere, and have to switch last minute in order to make a CO date.

[Goose]

jake

Our bigger clients are seeing minor improvements but are paying a ton of surcharges to make things happen. Our small to midsize clients are still struggling. Logistics is not our thing but we are spending a lot of time helping move things along. Our business model is cradle to grave on the supplier front. Normally our job ends once the goods are picked up at factory.

[MU82]

82

It might time to sell everything or a time to buy everything. As you know, the housing market is insane and seeing that Steve Stricker sold his Naples pad on whim because "the market was too crazy not to sell" says a lot to me. Steve Stricker needs to make a quick million on a home sale about as much as we need another Perez thread on scoop. I had a very good friend make 40% on his place in Naples in a year and he has received a 30% upside offer on his new place that won't be completed until December. His first sale the couple from MI that bought his place without seeing it and the new offer is a couple from NY.

Cheap money is a great thing while it lasts and only time will tell how long it will last. Cheap money and the wealth factor is great for the economy and I hope it lasts a long, long time. My gut tells me that all great things eventually come to an end, but impossible to pick the top for most people(me). I am a reckless investor by nature and I am starting to keep a closer eye on things on a daily basis. Good news, the government has shown they no longer have the stomach to see big drops in asset values and have created safety nets.

My Dad told many a thousand times to never fall in love with an asset and that is advice I have always tried to follow. Sadly, the one asset I do love is my house and I likely will remain in our house until I am 90 years old. To steal Keefe's line, if I had a hair on my ass, I would sell my joint and rent for a couple of years.

Wisely stated ... especially your first sentence. The only thing we know for sure about which way the market is headed is that we don’t know!

I don’t live in Naples and I won’t make a mil on my house, but I have said to Mrs. 82 a couple times lately that maybe it’s time to think about selling. But she doesn’t want to ... and it’s hard to blame her.

As for stocks, even if there’s a crash, they’ll eventually go up again. “Eventually” could mean very quickly as in last spring; or fairly quickly as in a couple years after the Great Recession; or several years as in the Great Depression.

Glad we have some cash these days, too. Lousy returns, but lots of peace of mind.

Be well.