Dow 50k

[superdog]

Originally Posted by enjoythemusic

Am truly hoping kids learn math and how to apply it for practical living. Imho it's not difficult at all, though teachers should be more focussed.... imho.

BTW, simple math applied:

Attachment 1425994
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Bonus Question: Did average wages go up during this time period to EQUAL the increased 'cost of living'?
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Yes sir. While the math is simple, the example has a flaw. And not what the quote was referring to.

That same And costs more money. Not because the value of the house went up. But because the value of the money went down.

[studioal]

[SDGT3]

Originally Posted by Krash

Wages aren’t surpassing inflation, unless you work in Silicon Valley.
:).
Statistically it might in 2024 but that doesn’t take into account the inflation of the last 3 years.

Wages are way behind. The problem with inflation is that it never goes backwards. The price increases we recently saw are here to say.

So wages are way behind what they were a few years ago relative to inflation.

Sent from my iPhone using Tapatalk

Owning the average home in 2024 now requires an income of $106,000, according to Zillow.

Just 4 years ago, you needed just $59,000 in income to afford the average home.

That's a $47,000, or 80%, increase in income from 2020 while wages are up just 23% over that time.

Currently, the median HOUSEHOLD income in the US is ~$75,000.

In other words, the median household income used to be 27% ABOVE the income needed to afford a home

Now, the median household income is 41% BELOW the income needed to afford a home.

[Moondoggy]

Is this a Homer D oh or just pronounced the same way?

[brandrea]

Originally Posted by 77T

I searched for a chart to illustrate what has been said regarding devalued dollar and inflation dilution using the same 100+ years of DJI. It is at the end of my comments.

We should remember that the Dow is an actively managed index. So the components (equities) in 1900, 1950, 2000, and even today are different.



The 14 year trend is a point worth considering. If past performance holds, then a dip may delay the Dow50K.


Sent from my iPhone using Tapatalk Pro

Up and to the right

[Moondoggy]

Originally Posted by enjoythemusic

Am truly hoping kids learn math and how to apply it for practical living. Imho it's not difficult at all, though teachers should be more focussed.... imho.

BTW, simple math applied:

Attachment 1425994
.
.
Bonus Question: Did average wages go up during this time period to EQUAL the increased 'cost of living'?
.
.

These are just statistics based off the masses a few chose not to be part of such.

[BraveBold]

I remember back in 89 a Ford Tempo was about $10k. Median HHI about $30k. For 1/3 your median household income you could have a car with cheap seats, few safety features, barely audible FM radio, manual everything (including roll up windows) and a rust guarantee. Guaranteed to rust.

Today, median US HH income is just over $70k. For one third your HH income you get safety systems out the wazoo, an infotainment system, automatic everything, 2x+ the power, the same or better mileage, and a reasonably reliable car.

Computing technology is even more dramatic, of course, with people walking around with phones more powerful than servers that were about 100x the cost.

The thing many people are missing in these devaluation narratives (and equally uninformative charts) is that productivity matters AND that there are opportunities to invest and earn returns in excess of inflation (real returns). Sure there are major issues - housing prices, but this reflects an expectation that as wealth grows (and populations) fixed production items will inflate more rapidly.

As for bubbles today, I have little doubt there are many. Crypto ponzi hype, AI bandwagon, and Tesla are three obvious ones. Tesla is slowly deflating and will eventually price to reality. The others - well, my logic is to focus on smart diversification because irrationality can last a long time…

[BraveBold]

Btw, to me the shocking thing about this market is the typical consumer’s appetite to spend past their means. This is (for 75%+ of the population) a decision. Conscious decision? Not sure. But discretionary spend is out of control… compared to my personal view of risk.

But that is by choice. People choosing the $40k or $50k car over the $25k car. Or the branded everything… sure, paycheck to paycheck is real. But largely decision driven for a vast majority when you look at spending patterns.

These things can continue for longer than someone more conservative might expect. Entire countries have spend patterns that defy prudent behavior (Canada is a great example). Timing the demise of something that is rooted in psychology, amplified and reinforced… is extremely difficult absent a clear catalyst.

Sometimes identifying those catalysts can be tricky because data is ambiguous. I remember making the call that US banks were likely to face distress… back in 2006. A couple years early (nearly an eternity in trading terms). That was with clear and convincing data. Data today around if and when the likely catalyst (depleted savings imho) brings a reckoning… well, it is extremely murky. Everything is dynamic as well - every action has a reaction. A decline in spending will have pronounced impacts on inflation (down) and therefore rates (down). Lots of money is indeed on the sidelines now too… the net effects are impossible to completely understand a priori.

Finally, anyone not extremely well versed in using options theory to make investment decisions… I highly recommend getting smart in that area.

My 5 cents (inflation-adjusted).

[V25V]

Originally Posted by superdog

I am not shy about saying it, but I believe fully a catastrophic hit is coming.

I feel like we have been saying this for about 3 years now.

[BraveBold]

Originally Posted by V25V

I feel like we have been saying this for about 3 years now.

What I’m unclear on is the catastrophic part.

Even people who are stretched thin have a lot of “stuff” already. Sure, much of what they own is on credit, but there is also a decent equity cushion too. Lower income wage growth has risen sharply.

The biggest mitigating factor is we finally have a reset in rates to higher levels. There is now a real lever to pull should we need to - this mitigated the near and medium term catastrophe risk substantially. Nevermind the higher income and net worth groups that have tremendous assets.

Consider how so many of us have allocations into fixed income products now - as hedges to risk. Consider now if there is a large market correction, how that will be re-allocated…

The real risks are more government / fiscal in nature. Even there we see situations where greater overall debt (consumer plus governmental) with far less productive assets / weaker capitalist frameworks, manage to avoid reasonable definitions of outright catastrophe…

So I see a correction coming but timing remains uncertain, duration unlikely to be sustained and magnitude limited. Of course in some bubble segments a bigger drop is probable, but generally speaking I’m not worried about doomsday economic outcomes.

[V25V]

Originally Posted by BraveBold

What I’m unclear on is the catastrophic part.

Even people who are stretched thin have a lot of “stuff” already. Sure, much of what they own is on credit, but there is also a decent equity cushion too. Lower income wage growth has risen sharply.

The biggest mitigating factor is we finally have a reset in rates to higher levels. There is now a real lever to pull should we need to - this mitigated the near and medium term catastrophe risk substantially. Nevermind the higher income and net worth groups that have tremendous assets.

Consider how so many of us have allocations into fixed income products now - as hedges to risk. Consider now if there is a large market correction, how that will be re-allocated…

The real risks are more government / fiscal in nature. Even there we see situations where greater overall debt (consumer plus governmental) with far less productive assets / weaker capitalist frameworks, manage to avoid reasonable definitions of outright catastrophe…

So I see a correction coming but timing remains uncertain, duration unlikely to be sustained and magnitude limited. Of course in some bubble segments a bigger drop is probable, but generally speaking I’m not worried about doomsday economic outcomes.

I am not an economist or have a great level of finance competency. But all I know is we have had people talk about some big fallout for years now and nothing big has happened. Part of me thinks something has to give and adjust the markets but I dont know, just been hearing it for so long that ive become numb to it. Someone else posted the graph showing the tech crisis, sub prime loans debacle, black monday and such, they are really just blips on the radar in the grand scheme of things. So I just keep investing as I normally would and know the storm will pass if one does come.

[superdog]

Originally Posted by V25V

I feel like we have been saying this for about 3 years now.

Lmao. You are not wrong.

Maybe I’m just a pessimist. But I think it’s just been a long burn and a lot of moves to avoid the inevitable.

[superdog]

Originally Posted by V25V

I am not an economist or have a great level of finance competency. But all I know is we have had people talk about some big fallout for years now and nothing big has happened. Part of me thinks something has to give and adjust the markets but I dont know, just been hearing it for so long that ive become numb to it. Someone else posted the graph showing the tech crisis, sub prime loans debacle, black monday and such, they are really just blips on the radar in the grand scheme of things. So I just keep investing as I normally would and know the storm will pass if one does come.

Im actually starting to feel the same.

And doing the same in regard to investing new funds. But the funds I have already are safe. Keeping it that way.

[V25V]

Originally Posted by superdog

Lmao. You are not wrong.

Maybe I’m just a pessimist. But I think it’s just been a long burn and a lot of moves to avoid the inevitable.

I do not disagree. I think we all for the most part feel like something has to give but geesh.....

[ButtButt]

All I know is I grew up in a typical middle class family in LA: father worked an office job, mom took care of the house and kids. On a salary well below 6 figures (remember when that used to be the benchmark? It doesn't even sound like much these days), we were able to own a nice house, eat out often, buy toys, and go on multiple vacations per year. Good luck trying to do that now.

I don't envy the generation just starting out now nor their kids.

[BraveBold]

Originally Posted by V25V

I am not an economist or have a great level of finance competency. But all I know is we have had people talk about some big fallout for years now and nothing big has happened. Part of me thinks something has to give and adjust the markets but I dont know, just been hearing it for so long that ive become numb to it. Someone else posted the graph showing the tech crisis, sub prime loans debacle, black monday and such, they are really just blips on the radar in the grand scheme of things. So I just keep investing as I normally would and know the storm will pass if one does come.

It is interesting but in my experience most economists do a lousy job of understanding markets. They fail to understand how markets react to information and how valuation fundamentally works. There are exceptions, of course, and they are noteworthy in my opinion. I will put one name out there - Jeremy Siegel. Some call him a perma-bull but he clearly isn’t. He just recognizes that over longer periods of time, equities tend to do well. This is similar to Buffett, who is rather conservative in some ways and yet aggressive at the same time. I tune out the perma-bears or the cheerleaders (eg Cathy Wood, Tom Lee, virtually any crypto evangelist).

Michael Burry is worth listening to. Often wrong in conclusions but sound analysis - one of those whose views are worth my attention, even if I ultimately disagree.

As for staying the course, I think over most extended (but reasonable) modern periods this is the right strategy. There is also the value of matching strategy to your own psychology. Being constantly stressed over risks, even if rationally the risks are well considered and balanced, is not a good way to live life. The purpose of wealth (my opinion) is to enhance enjoyment / happiness. If the path to get there is miserable, it is pretty irrational…

[enjoythemusic]

Originally Posted by superdog

Yes sir. While the math is simple, the example has a flaw. And not what the quote was referring to.

Apolgies, you are correct i provided the incorrect example / answer.

Since the Fed is still targeting 2% annual currency devaluation (a.k.a. "inflation"), which is a staggering ~25% currency devaluation every 10 years.... Time itself will sort this all out, eventually.

That same and costs more money. Not because the value of the house went up. But because the value of the money went down.

Agreed. Too bad there is no stable central bank currency, one which is truly stable and does not gain or lose purchasing power / value. That is the USA's Fed Res central banking system mandate oer congress, and wit the Fed not adhered to it is many decades it is time Congress acts, but we know how these things go (and want to avoid getting into things TRF prefers we not discuss).

Originally Posted by V25V

I do not disagree. I think we all for the most part feel like something has to give but geesh.....

Give it time. Currency war or real war, it'll sort itself out... eventually. This is why the truly wealthy ensure they have items of intrinsic value (rare paintings, cars, historical items of value, etc).

During the 2007/08 banking / financial scam, Evelyn de Rothschild said during a CNBC interview that for safety you hold on to gold bars. It is interesting to know that Central Banks are still purchasing gold bars too

[BraveBold]

Originally Posted by ButtButt

All I know is I grew up in a typical middle class family in LA: father worked an office job, mom took care of the house and kids. On a salary well below 6 figures (remember when that used to be the benchmark? It doesn't even sound like much these days), we were able to own a nice house, eat out often, buy toys, and go on multiple vacations per year. Good luck trying to do that now.

I don't envy the generation just starting out now nor their kids.

Interesting you say that. I don’t think data supports this anecdote. I don’t know the time frame you’re referencing, however, so I may be mistaken.

I think the typical home size has increased by much more than 50% since the 80s. Home ownership over that period is virtually unchanged.

Luxury vehicle market share (based on brands/types) has increased dramatically as well. I think Mercedes and BMW share today is a multiple of what it was 30-40 years ago.

Nevermind other consumption items.

Maybe people can just consume a bit less and enjoy things a bit more? Housing today IS expensive in many parts of the world - not unique to the US and in fact much worse in most developed countries. But comparing apples to apples for home size, I think we’d find a different answer overall.

Of course if you’re talking Newport Beach or something, there are pockets that are outliers… but as a whole I am not sure the data supports the idea people are financially worse off.

Perhaps psychologically / other aspects? Maybe…

[V25V]

Originally Posted by enjoythemusic

During the 2007/08 banking / financial scam, Evelyn de Rothschild said during a CNBC interview that for safety you hold on to gold bars. It is interesting to know that Central Banks are still purchasing gold bars too

Im not buying gold bars......

[enjoythemusic]

Originally Posted by V25V

Im not buying gold bars......

BTC?

With a probable War Economy coming, what would you suggest?

[V25V]

Originally Posted by enjoythemusic

BTC?

With a probable War Economy coming, what would you suggest?

I am not suggesting anything but know Im not gonna be keeping bars of gold.

[Dan Pierce]

Originally Posted by V25V

I am not an economist or have a great level of finance competency. But all I know is we have had people talk about some big fallout for years now and nothing big has happened. Part of me thinks something has to give and adjust the markets but I dont know, just been hearing it for so long that ive become numb to it. Someone else posted the graph showing the tech crisis, sub prime loans debacle, black monday and such, they are really just blips on the radar in the grand scheme of things. So I just keep investing as I normally would and know the storm will pass if one does come.

My philosophy as well.
dP

[ButtButt]

Originally Posted by BraveBold

Interesting you say that. I don’t think data supports this anecdote. I don’t know the time frame you’re referencing, however, so I may be mistaken.

I think the typical home size has increased by much more than 50% since the 80s. Home ownership over that period is virtually unchanged.

Luxury vehicle market share (based on brands/types) has increased dramatically as well. I think Mercedes and BMW share today is a multiple of what it was 30-40 years ago.

Nevermind other consumption items.

Maybe people can just consume a bit less and enjoy things a bit more? Housing today IS expensive in many parts of the world - not unique to the US and in fact much worse in most developed countries. But comparing apples to apples for home size, I think we’d find a different answer overall.

Of course if you’re talking Newport Beach or something, there are pockets that are outliers… but as a whole I am not sure the data supports the idea people are financially worse off.

Perhaps psychologically / other aspects? Maybe…

I'm referencing the 80s mainly. It's possible my perception is skewed since I haven't been back to the US in maybe 15-20 years, so I'm just going on what my friends tell me and what I see around me. I assumed most major cities have pretty high costs of living.

A lot of the people I still keep in touch with in the US have good careers (ie. doctors lawyers tech etc.) and they all say there is no way their kids can afford to buy a house unless they help them out with the down payment. That is maybe even more true here in Singapore where people starting out can barely even afford to rent let alone save up for a house. You either have to continue living with your parents and try to save up or hope you are lucky enough to have parents with the means to help you out.

I agree about the luxury items though. I remember growing up my parents had some station wagon with wooden panels all around lol. We were never able to afford any fancy cars but life was still awesome and we were comfortable.

I guess to me it just doesn't feel the same as it used to. Everyone throws around 3-5% inflation numbers but when you go out to eat or buy groceries now it's never just a 3-5% increase in prices since Covid... it's more like 30-50% or more.

Maybe the internet amplified things since it made information so much more accessible and people are more likely to complain than to say how good they have it. It makes me feel really lucky and grateful for what I have today. I think if I were to start out now vs. 20 something years ago I probably wouldn't be in the same place.

[enjoythemusic]

Originally Posted by V25V

I am not suggesting anything but know Im not gonna be keeping bars of gold.

All good and truly do hope the best for all.

So.... go long Hooser / Hankook R compound tire 'futures' ;)



...and i really should bow out of this thread / threads like this. It's not you/TRF... it's me.

[904VT]

Originally Posted by enjoythemusic

All good and truly do hope the best for all.

So.... go long Hooser / Hankook R compound tire 'futures' ;)



...and i really should bow out of this thread / threads like this. It's not you/TRF... it's me.

Stick around. This thread can get pretty boring sometimes. I’ve been loading up on hard/real assets for years. Imo financial assets as a whole aka beta and duration is expensive. Low interest rates for too long, proliferation of index products, have caused a dislocation from fundamental valuation. Today it’s based on supply and demand basket trades. Buy high sell low capitalization weight. For myself I like individual names not sectors or geographic areas. Bottom up for me. Though top down approach for value cycles. None of that is advice just where my interest falls.

[904VT]

Originally Posted by enjoythemusic

BTC?

With a probable War Economy coming, what would you suggest?

We’ve been in a war economy now for about 15 years. Ever since rates have been manipulated artificially low. Probably was going on late in the real estate boom. The market just hasn’t noticed. This isn’t WW2 style kinetic. The new war economy has been positioning technology for years. Microchips, lithium ion batteries/rare earths, real estate management, strategic inflation.

[brandrea]

Originally Posted by V25V

I am not an economist or have a great level of finance competency. But all I know is we have had people talk about some big fallout for years now and nothing big has happened. Part of me thinks something has to give and adjust the markets but I dont know, just been hearing it for so long that ive become numb to it. Someone else posted the graph showing the tech crisis, sub prime loans debacle, black monday and such, they are really just blips on the radar in the grand scheme of things. So I just keep investing as I normally would and know the storm will pass if one does come.

That was me

Originally Posted by Dan Pierce

My philosophy as well.
dP

Same

If you believe in the capital markets, the trend is your friend, and the chart doesn’t lie.

Obviously there will be a correction at some point I have no doubt. Could be 10% could be 20%, I have no idea. There have been many over the years, but they appear as blips in time. The market will digest whatever the bad news is and eventually it will continue its upward trajectory. If it doesn’t then we all have bigger things to worry about.

There are a lot of smart people out there and some folks say they know how to outsmart the market by selling to avoid the dips and buying back in when the market is at a low. Just tune into any business news channel and listen to the talking heads … they know best

[BraveBold]

Originally Posted by ButtButt

I'm referencing the 80s mainly. It's possible my perception is skewed since I haven't been back to the US in maybe 15-20 years, so I'm just going on what my friends tell me and what I see around me. I assumed most major cities have pretty high costs of living.

A lot of the people I still keep in touch with in the US have good careers (ie. doctors lawyers tech etc.) and they all say there is no way their kids can afford to buy a house unless they help them out with the down payment. That is maybe even more true here in Singapore where people starting out can barely even afford to rent let alone save up for a house. You either have to continue living with your parents and try to save up or hope you are lucky enough to have parents with the means to help you out.

I agree about the luxury items though. I remember growing up my parents had some station wagon with wooden panels all around lol. We were never able to afford any fancy cars but life was still awesome and we were comfortable.

I guess to me it just doesn't feel the same as it used to. Everyone throws around 3-5% inflation numbers but when you go out to eat or buy groceries now it's never just a 3-5% increase in prices since Covid... it's more like 30-50% or more.

Maybe the internet amplified things since it made information so much more accessible and people are more likely to complain than to say how good they have it. It makes me feel really lucky and grateful for what I have today. I think if I were to start out now vs. 20 something years ago I probably wouldn't be in the same place.

My father grew up during WW2. In his teens - 20s in the 50s. It was all “the good ‘ole days” and that generational mantra exists for a reason.

Expectations are not based on absolutes but instead things are relative and people re-anchor quickly and subconsciously. I grew up without cable TV. “Fox viewing positions” was a real thing in my house (yes, when watching Married… with Children). When I started making $$ getting cable TV was a big deal. Basic cable - nothing extravagant. But it was already below the “baseline” for everyone I knew. My family was about 15 years behind, even in our income bracket.

Fast forward a few years and I was an early adopter of streaming. Then added another service, and another. Total spend well below cable TV… having multiple streaming services is now the baseline. 99% market penetration in the US. The baseline has changed… you can still get local stations with a minimal one time cost (a digital antenna) with more stations and higher quality - free - vs what I had growing up.

But no-one opts to. Even the bottom 5% by income…

This is one example but there are countless. I raised median home size because it gets obscured by the median financial data (median prices). But if someone wants to buy or build smaller, the possibility exists.

I’m not an optimist or pessimist. I can be cynical - but I like to ground analysis in facts, and within the context of human psychology.

[SDGT3]

Originally Posted by ButtButt

I'm referencing the 80s mainly. It's possible my perception is skewed since I haven't been back to the US in maybe 15-20 years, so I'm just going on what my friends tell me and what I see around me. I assumed most major cities have pretty high costs of living.

A lot of the people I still keep in touch with in the US have good careers (ie. doctors lawyers tech etc.) and they all say there is no way their kids can afford to buy a house unless they help them out with the down payment. That is maybe even more true here in Singapore where people starting out can barely even afford to rent let alone save up for a house. You either have to continue living with your parents and try to save up or hope you are lucky enough to have parents with the means to help you out.

I agree about the luxury items though. I remember growing up my parents had some station wagon with wooden panels all around lol. We were never able to afford any fancy cars but life was still awesome and we were comfortable.

I guess to me it just doesn't feel the same as it used to. Everyone throws around 3-5% inflation numbers but when you go out to eat or buy groceries now it's never just a 3-5% increase in prices since Covid... it's more like 30-50% or more.

Maybe the internet amplified things since it made information so much more accessible and people are more likely to complain than to say how good they have it. It makes me feel really lucky and grateful for what I have today. I think if I were to start out now vs. 20 something years ago I probably wouldn't be in the same place.

Agree with your assessment 100%

Originally Posted by enjoythemusic

All good and truly do hope the best for all.

So.... go long Hooser / Hankook R compound tire 'futures' ;)



...and i really should bow out of this thread / threads like this. It's not you/TRF... it's me.

Hard to find Hankook Rs right now. Ordered some Maxxis Victra RC-1's and have another order in for Toyo RRs. We'll compare and contrast how they feel in the next few weeks. Have 3 track events in the next 5 weeks.

[enjoythemusic]

Originally Posted by SDGT3

Hard to find Hankook Rs right now. Ordered some Maxxis Victra RC-1's and have another order in for Toyo RRs. We'll compare and contrast how they feel in the next few weeks. Have 3 track events in the next 5 weeks.

May the God Of Almighty Grip smile upon you.


PS: Almost visited Sebring to see some of the F2k guys. Lemme know via DM if/when you go there.

PPS: Thx for the kind words, am bailing from the financial talk. Plus it's pretty obvious the direction and intentions. Wishing everyone the best