Market/Financial Thread

[Soxbadger]

31 minutes ago, BrianAnderson said:

in regards to mortgage rate. im saying the underwriting process is a complete joke. i was pre approved for a number, let's just say in that $700k-1mm range. I bought a house in the $275-315k range. I'm paying the same mortgage rate as friends who i very well know are in debt, have zero dollars to their name. the system is a sham. The risk on me defaulting against my friends are off the spectrum. But it doesn't really matter - these mortgage shops just want to get you in the door & then package your loan into a bundle with others to a bank, who then offload to the Fed. 

 

In regards to Redfin, look at Carvana. I'm saying that millennials will not care about an agent. they just wont. good agent vs. bad? meh. there's truth in there, but at same time I did 100% of the legwork on my own - i found the houses & then had my agent line up the showings. You can say the buyer doesn't pay ... but as you said it's baked in there via the seller. Also i'm not saying only virtually. i do think you can see most of it via a walk through via video, but then also coordinate showing in person via key in a lock box. Hell, you can have a narrated showing virtually. what I'm saying is there will be a changing of the guard. Going to open houses from 11am-2pm after church on Sundays is the past. There's certainly value to an agent, but 5% -- so let's call it $20k? hardly. my point is real estate is due for disruption from technology and millennials embrace technology. millennials are also finally getting to the age where assets are switching hands to them. 

Right now, real estate lobby's the government more than pharmaceuticals. they have outdated legislature in place because they're lining the pockets. it's the only thing keeping this thing from turning over. 

 

I also disagree with Redfin not being a lender. it's not that hard to get into that business. and the banks don't care at all. they just want to get them & bundle to sell off as well. these mortgage shops are sweatshops of underwriting. mortgages are a number to them on a warehouse line that needs to be sold off to pay down the warehouse line so they can open up room on that lending line. its a numbers game to them. 

You still are failing to address the main issue, which is it is the seller, not the buyer who has to pay the commission. You keep talking about when you purchased your house. 

If the buyer has no agent, the seller's agent keeps the 5%. You could try and under the table negotiate the seller's agent to reduce their commission by 1-2% as the buyer, but most agents wont go for it because they dont want to set the precedent in the future.

I am not a real estate agent, I dont have a vested interest. I am just explaining to you based on my experience. I represent a significant number of millieanials in real estate transactions. Every one used a realtor. If a client came to me as a buyer and asked should I use a realtor, I would tell them yes. If they asked should they use a redfin realtor, I would tell them its their choice but my experience is that they are not as good as other realtors.

Right now anyone can sell their house "by owner." The problem is that you arent going to get nearly as many looks because realtors who represent buyer's are going to be more hesitant to work with you. They also are going to want their 2.5%. So you would be saving 2.5% by not using an agent. 

Maybe that will all change. But the millenial buyers I have worked with likely would not have been able to negotiate the purchase of their own home. Many require an extreme amount of hand holding through the entire transaction. 

[Two-Gun Pete]

1 hour ago, BrianAnderson said:

in regards to mortgage rate. im saying the underwriting process is a complete joke. i was pre approved for a number, let's just say in that $700k-1mm range. I bought a house in the $275-315k range. I'm paying the same mortgage rate as friends who i very well know are in debt, have zero dollars to their name. the system is a sham. The risk on me defaulting against my friends are off the spectrum. But it doesn't really matter - these mortgage shops just want to get you in the door & then package your loan into a bundle with others to a bank, who then offload to the Fed. 

 

 

I also disagree with Redfin not being a lender. it's not that hard to get into that business. and the banks don't care at all. they just want to get them & bundle to sell off as well. these mortgage shops are sweatshops of underwriting. mortgages are a number to them on a warehouse line that needs to be sold off to pay down the warehouse line so they can open up room on that lending line. its a numbers game to them. 

Lenders only sell MBS when the market is not actively buying them, so as to keep the lending market relatively healthy.

Your rate depends on the day you applied, your lender, AND the individual borrowers' characteristics. Without knowing all of that, one can't call it a sham. Your buddies might have gotten a better deal (relatively speaking) than others. 

 

Insofar as redfin being a lender, there are a fair amount of regs that can keep realtors from being lenders at the same time. (IOW, why wouldnt realtors avoid "outsourcing" any aspect of the transaction to outside lenders right now?)

I get that you like Redfin. And, their future value lies in being a cheaper, virtual realtor than a live person, which is very promising. But, becoming a mortgage lender at the same time as being a real estate agency, even a virtual one, is harder to do.

Edited September 3, 2020 by Two-Gun Pete

[he gone.]

3 hours ago, Soxbadger said:

You still are failing to address the main issue, which is it is the seller, not the buyer who has to pay the commission. You keep talking about when you purchased your house. 

If the buyer has no agent, the seller's agent keeps the 5%. You could try and under the table negotiate the seller's agent to reduce their commission by 1-2% as the buyer, but most agents wont go for it because they dont want to set the precedent in the future.

I am not a real estate agent, I dont have a vested interest. I am just explaining to you based on my experience. I represent a significant number of millieanials in real estate transactions. Every one used a realtor. If a client came to me as a buyer and asked should I use a realtor, I would tell them yes. If they asked should they use a redfin realtor, I would tell them its their choice but my experience is that they are not as good as other realtors.

Right now anyone can sell their house "by owner." The problem is that you arent going to get nearly as many looks because realtors who represent buyer's are going to be more hesitant to work with you. They also are going to want their 2.5%. So you would be saving 2.5% by not using an agent. 

Maybe that will all change. But the millenial buyers I have worked with likely would not have been able to negotiate the purchase of their own home. Many require an extreme amount of hand holding through the entire transaction. 

That's the part I disagree with. Looks are driven by price/comps/pictures/house, not agent. Agents dont add the value that they charge.  From the buyers perspective i think the norm is finding your house online via these sites and then telling your agent this is what i want. I have so many friends that all found their home via Zillow and Redfin, contacted their agent to set up a showing, and then bought. I think the idea of going to an agent blind and asking them to drive you around and look is declining each year. 

From the sellers perspective: you like an agent to set the comps, indication of the market, etc. However all the data is going through Zillow and Redfin. They can build comps as strong as anyone. For sale by owner and for sale by Redfin will morph into the same thing. Right now it's i guess ..."scary" to buy direct from owner, but that's because the process seems complicated. There will be easier processes created that take the pain points out, especially when Redfin is representing both sides but only taking 2-3%. Redfin will play a volume game. You'll lose some of the niceties of the process, but it's not as efficient as it can be. 

 

That's my guess at least. 

 

[ron883]

Ouch. I have a decent amount in QQQ. Still up, but took an absolute beating

Edited September 3, 2020 by Yearnin' for Yermin

[southsider2k5]

6 minutes ago, Yearnin' for Yermin said:

Ouch. I have a decent amount in QQQ. Still up, but took an absolute beating

We haven't had a good down day in a while.  Honestly if the Biden leading at the polls stuff keeps up, we have probably seen the highs for a while.

[he gone.]

14 hours ago, Tony said:

This isn’t true, at all. Zillow simply uses data, and no one even knows where 100% of it comes from. But what it can’t do is give a true estimate based on overall condition, updates, style and specific market conditions. Housing will always be somewhat based on emotion and taste. Zillow and Redfin aren’t taking into account a basement that hasn’t been updated since 1964. Or a roof that is in dire need of repair. Or the two neighbors next to you that don’t take care of their house. Or that kitchens with updated cabinets can increase the value X amount. It also can give the owner a false sense of worth based on incomplete data. 
 

Zillow is the equivalent of trying to evaluate a hitter, but only having 6 random stats to go off of, and they are two years old. Probably would help to have a scout give you the most up to date information. Doesn’t make the scout 100% right either, but I’d much rather go with the scout with the good reputation rather than outdated material 

That's that TWTW. the will to win. 

Data wins. Sorry.

"Sears has the reputation, it has the friendly people, they really have great customer service, I just don't believe Amazon, a website, can replace commerce."

 

That's what you sound like. Find me a sector of business that has been digitized and goes back to the old school way. Digitization and efficiency comes through like a train, it's not slowing down. 

 

 

[he gone.]

37 minutes ago, Yearnin' for Yermin said:

Ouch. I have a decent amount in QQQ. Still up, but took an absolute beating

It's frothy out there. As much as i think the market is due for a correction like this 5X over, there's powers that be that will keep this thing running. Also doesn't hurt that money is free for the foreseeable future. Will end up fueling another half decade of PE deals. 

[he gone.]

Also, i'm not sure why Redfin is such a hot topic/button issue. Simply put the agent doesn't add as much value as they charge & the process is wildly inefficient. Technology will win. 

[Soxbadger]

29 minutes ago, BrianAnderson said:

That's that TWTW. the will to win. 

Data wins. Sorry.

"Sears has the reputation, it has the friendly people, they really have great customer service, I just don't believe Amazon, a website, can replace commerce."

 

That's what you sound like. Find me a sector of business that has been digitized and goes back to the old school way. Digitization and efficiency comes through like a train, it's not slowing down. 

 

 

 

22 minutes ago, BrianAnderson said:

Also, i'm not sure why Redfin is such a hot topic/button issue. Simply put the agent doesn't add as much value as they charge & the process is wildly inefficient. Technology will win. 

You were giving stock tips and imo you had faulty information. As someone who has been on this board for a long time, I felt I had an obligation to other members to provide the facts as I know them.

Still to this moment you are basing your argument on faulty information. Redfin gets their information from the MLS, which is the same information that the broker has. All Redfin is doing is making the information public and then slapping bad data on it.  The information about housing prices on Redfin/Zillow is wildly inaccurate and is completely unreliable. Even worse, they change their own information over time making it completely useless.

For fun I check the Redfin value of my house monthly if not weekly. I noticed a strange trend where in month A it shows its value as 100. Then 6 months later when you look back at month A it shows it as 150. I have no idea why this happens, but at minimum it proves that their estimates are unreliable.

That being said, yes you can run redfin/zillow and see the properties that have been sold in the last 6 months, do your own comparison and then price out your own house and try and negotiate.

If you think that is similar to buying a $10 shirt at sears versus amazon made by the same company, then there is no point in this discussion. But the majority of people I work with are not that comfortable doing their own negotiation, especially when it comes to the largest purchase in their life.

Im not a realtor, I dont care one way or the other.

[Chisoxfn]

29 minutes ago, BrianAnderson said:

Also, i'm not sure why Redfin is such a hot topic/button issue. Simply put the agent doesn't add as much value as they charge & the process is wildly inefficient. Technology will win. 

Redfin could drive down agent compensation and bend the realtor model - but redfin itself isn't going to be the won who wins that war. They have more overhead than any agent will ever pretend and these are large sizeable, chunky assets.  Digital purchases of real estate (as in true digital) is make believe land and Redfin already runs extremely razor thin margins and nearly was shuttered earlier this year.  

When someone is selling a $500K home and I'm paying $20-25K in commission - the cost might come down, sure, but RedFin isn't going to do it for $1000 so the real question is the differential in value between a red fin agent and someone else. And I can absolutely tell you a good agent will maximize your value, they will make the transaction more smooth, etc.  Most real estate transactions have hiccups - in a fully digital era, ill prepared agents aren't capable of handling those items and a real estate purchase is literally about as stressful of a purchase any family/person will make.  

You might still make money on redfin - not getting into a construct on the valuation of the stock as I don't follow the stock closely - but your broad based generalizations will prove flat wrong.  That said - that is the beauty of these types of conversations - I also could be flat wrong  

[he gone.]

A) regardless how these conversations go, I'm glad to have financial discussions going on this board. 

B) I will disagree, and as you said one of could be flat wrong, the truth is probably somewhere in the middle

C) I don't think any company today will be the same as it is in 10 years. Companies continue to develop and innovate. I think that Redfin will do so as well. That's part of my bet. 

D) So their business plan of taking 3-4% commisssion instead of 5% may be what they're doing now, but I don't necessarily think that's the horse their riding to success

E) I think it's insane to pay $25k on a $500k sale. I don't think the agent brings even close to that value. 

F) I think it still remains true, even for someone like SoxBadger, traffic is being driven to these websites at very high volume and I don't see that trend reversing. Brand recognition leads to brand loyalty. 

G) So now you say, who is going to own that market - and at this point it's Zillow and Redfin. And how do you monetize the traffic? And i think that's the key. My bet is monetizing an inefficient process. Right now it may be a point of the commission, but what is it 5 years from now? 10 years from now? 

As an investment i think it has all the keys -- an inefficient and costly industry, that has not really had much innovation for decades, which has traffic/captive market, and also has a new generation (millennials) who are purchasing their first home and/or upgrading their homes. My bet is the amount of young people who will see the value in saving $5k (1% on a $500k sale) or possibly more will continue to grow. And then the second part is Redfin innovating and building their business model. 

 

 

[he gone.]

Also in regards to stocks, tech in particular I read something from one of my favorite investors - Chamath Palihapitiya

"Some people scratch their heads when they see valuations of stocks justified by 2024E or 2025E numbers. Their instinctive reaction is to be dismissive but that's lazy thinking. Her's a secret hiding in plain sight .. Everything in the public markets are valued against a "risk free rate". This risk-free rate is the safest way to make money and is what the government pays you via US bonds or other securities that have "zero default risk". This is in quotes for a reason. When you buy something (a stock, a bond, a house) you are implicitly or explicity deciding to sign up for the return that it will give you vs. the risk free rate which you could otherwise get. In 2000, when the 10-yr risk free rate was 6%, we had a top of the Tech Bubble. The bubble burst, in part, because you could get 6% from Uncle Sam. Many companies with hi flying stock prices back then had revenue growth but no near term cash flow. This drove analysts nuts. So at some point enough people said "Why buy these stocks when the US Government will pay me 6%" That became a better and better question. And when enough people asked this question they sold their stocks (bubble burst) and bought bonds. Now think about the similarities and differences with today. The similarities are, to some, that we are again focused on long term growth and no near term cash flow. The big difference though is that our risk free rate in 2020 is now 0.66% v 6% 20 years ago. Huge. If you sell an "expensive" stock today what do you do? Buy bonds? But they no longer give you near term cash flow. So for many it's better to own a stock  (all stocks have an embedded option for future cash flow) v. a zero cash flow bond today with zero option value in the future. But what about "zero default risk" Isn't that worth something? In part, the Fed's policies have eroded people's trust that it is worth anything. It's more likely that AAPL or AMZN are zero default risk today than the USG. When you put all this together it creates two trends: people become open to looking further in the future for a company to deliver cash flows - hence pricing stocks on 2024/25 models today v. when rates were 6% (those models were 2-3 years max). 2. Investors, frustrated wtih a worthless risk free rate become increasingly biased to equities. All of this can change quickly, especially if rates rise but we've just been told by the Fed that they will be more permissive with low rates for the time being. Summary: Risk free rates are important. Currently they are zero. As rates go down, people tend to model equity returns over a LONGER periods of time. As rates go up, people tend to model equity returns over a shorter period of time. Because of this, investors will likely own equities by justifying them using 2/4/5+ year models"

 

Personally I think PE ratios are insane, but people want to put their money somewhere. Sitting in the banks or in bonds doesn't return anything. As much as I don't want my personal portfolio to be skewed as heavily into stocks, I think there is truth to what he says. Maybe not in RDFN (haha), but in AMZN. I've been doing it for some time, but I don't keep much of a bank balance at all, i basically just dollar cost average my paycheck into AMZN. It's about as risk free as you'll get in the market nowadays and for the foreseeable future. Now did i think it'd return 100%+ over the last 3 years, not at all, But to Chamath's point I don't think that trend is going to slow anytime soon. Got to play the game to win the game. 

[soxfan49]

6 hours ago, southsider2k5 said:

We haven't had a good down day in a while.  Honestly if the Biden leading at the polls stuff keeps up, we have probably seen the highs for a while.

In 2016 nobody thought Trump was good for the market. Initially nobody thought Biden would be either but suddenly the opinions are starting to shift. Biden's been leading for a bit now and today was the first bad day in months

[he gone.]

13 hours ago, Tony said:

You clearly have a strong opinion (one that is also clearly wrong) but I'm unsure if you are being purposely obtuse, or just want to fight to fight. 

You're going off the notion that real estate agents use an abacus to to generate their appraisals. For example, Compass is a large real estate firm that has invested hundreds of millions in tech.....for their agents, and homeowners to use. 

https://techcrunch.com/2018/09/27/safe-as-houses-compass-400m-real-estate-unicorn/ 

I know your "story" helps your argument, but acting like major real estate firms aren't using "technology" is 10000% false. The point is their tech is BETTER than the likes of Zillow or Redfin, and so are their agents. 

Can opinions be wrong? 

Investing isn't about the value today, it's about the value into the future. There's a reason revenues have almost doubled over the past year at Redfin. Disruptions happen in industries & I am saying the trend will continue as younger people buy homes. 

 

Answer me this:

paying $25k in commission for a theoretical $500k home - do you think you're getting $25k of service? Or do you think the process & price can be improved?

My own answer:

I found my own home. I called an agent and saw the house and bought it. We saw two homes in total. (and before we get to the argument "the seller pays the commission" shhhhh.... you're dumb. The cost is baked in. It's like saying buy one get one sales are netting you something for free. $25k for what? Unlocking a door, throwing a listing online and onto the MLS, and drawing up boilerplate paperwork? If you don't see how that process can be improved? I dont know what to tell you

[he gone.]

3 minutes ago, Tony said:

1. Yes, opinions can absolutely be wrong. If your opinion is all gay people are bad....your opinion would be wrong. Don’t know what else to tell you. 
 

You just boiled down your entire argument. You had a situation where you saw two homes, and bought one of them, simple experience. Thinking that somehow everyone shares that experience is naive at best, but whatever, you’re not going to budge and me changing your opinion on this topic is so far down the list of things I actually care about, I’m going to bow out saying you’re entirely uneducated on this topic and enjoy your house.  

I saw two homes because I, myself spent probably 40+ hours looking for homes, neighborhoods, school districts, taxes online. AKA, you dont need an agent like you did in 1980 when you bought your home.  Yes, back then you needed an agent and the difference between a good and bad agent was worth the pound of flesh. They had the access to the MLS. They had their rolodex of other agent contacts. 

As a home buyer You had the Chicago Tribune and you searched for homes via the Sunday paper via a picture of the home from the outside. or those real estate magazines. You'd call your local agent, who had contacts in Hinsdale or whatever neighborhood and knew an agent there and could do the leg work for you in regards to the taxes, the schools, have pictures of the house mailed or faxed over. You needed a good agent, because they could get market your house in the Sun Times, the Trib, local newspapers, and local events. Their reach was the difference between your house sitting or moving. As a purchaser you couldn't go online and look at comps, you couldn't see pictures of your house, the neighbors house, what sold in the last few months/years. 

The difference is now you can. And we're still paying the same commission although the leg work is now being done via computers and in a lot of cases the purchasers.

 

But you're right Tony. My opinion is wrong. 

[Soxbadger]

12 minutes ago, BrianAnderson said:

I saw two homes because I, myself spent probably 40+ hours looking for homes, neighborhoods, school districts, taxes online. AKA, you dont need an agent like you did in 1980 when you bought your home.  Yes, back then you needed an agent and the difference between a good and bad agent was worth the pound of flesh. They had the access to the MLS. They had their rolodex of other agent contacts. 

As a home buyer You had the Chicago Tribune and you searched for homes via the Sunday paper via a picture of the home from the outside. or those real estate magazines. You'd call your local agent, who had contacts in Hinsdale or whatever neighborhood and knew an agent there and could do the leg work for you in regards to the taxes, the schools, have pictures of the house mailed or faxed over. You needed a good agent, because they could get market your house in the Sun Times, the Trib, local newspapers, and local events. Their reach was the difference between your house sitting or moving. As a purchaser you couldn't go online and look at comps, you couldn't see pictures of your house, the neighbors house, what sold in the last few months/years. 

The difference is now you can. And we're still paying the same commission although the leg work is now being done via computers and in a lot of cases the purchasers.

 

But you're right Tony. My opinion is wrong. 

The buyer isnt paying the commission. I dont know how many times that needs to be explained to you. Even when Redfin represents the buyer they merely offer the buyer a discount because they have no ability to negotiate down the seller's realtor's commission. 

https://www.redfin.com/home-buying-guide/buying-a-home

Quote

 

The Redfin Refund

When all is said and done, Redfin shares a portion of the commission we receive from the seller with you.** The amount of the refund is based on the home’s asking price. You can see the exact refund amount for any home on the home’s detail page. Here’s how it works:

The seller typically pays Redfin 2%–3% of the home price for representing you as a buyer.

Redfin contributes part of that money to your closing costs.

When the savings are larger than your closing costs, we typically give you a check for the rest.

 

 

The reason people keep questioning you is because the company you are pitching, Redfin, doesnt even support the model you are suggesting. They are merely trying to become volume realtors by offering their clients lower commission rates.

Edited September 4, 2020 by Soxbadger

[he gone.]

6 minutes ago, Soxbadger said:

The buyer isnt paying the commission. I dont know how many times that needs to be explained to you. Even when Redfin represents the buyer they merely offer the buyer a discount because they have no ability to negotiate down the seller's realtor's commission. 

my gosh ... i don't know how many times i have to say it either. You walk into Shoe Carnival and it's buy one get one free. Do you think the second pair is actually free? 

Do you really think that I'm that dumb? I mean, good lord man. 

[Soxbadger]

Just now, BrianAnderson said:

my gosh ... i don't know how many times i have to say it either. You walk into Shoe Carnival and it's buy one get one free. Do you think the second pair is actually free? 

Do you really think that I'm that dumb? I mean, good lord man. 

Because the comparison isnt very good. And even if we use your comparison, youre argument would be akin to saying that you are better off not getting the 2nd shoe free. Ive never been to shoe carnival, can you negotiate instead of a buy one get one, that you just want the first shoe at half price? I presume the answer is no, so why would you not get the 2nd shoe? Or are you arguing that you should go to a better shoe store with higher quality shoes because shoe carnival has poor quality shoes and artificially raises the prices to then sell at bogo?

 

[RichieZisk]

Buyer realtor's became a lot less useful when the MLS was made available to everyone on the web.   If I'm thinking of moving then I can go to realtor.com and get almost all the info that I need to know about a possible purchase even if it is in a different state.  I would still need to go to the see the house in person and get an inspection but there is not much else a realtor could do for me especially if I'm pre-qualified.  That said a buyers realtor did help when we sold our last house FSBO.   We had almost completed the whole process without using a realtor (paid $250 to get it listed on the MLS) but it was a 110 year old house and failed the inspection so the original buyers backed out.   We made the necessary repairs and put it back on the MLS with a 2.5% buyers realtor commission.  It sold within a week at full price and the buyers realtor totally greased the wheels to get the buyers onboard including getting them to lower the price on their contingency sale condo.   

I live in the burbs now and within the past few years two of my neighbors sold FSBO.  They both paid a small fee to get on the MLS.   Neither of the buyers used a realtor.  One buyer found their house on realtor.com and other found their house by driving around neighborhoods and saw the For Sale sign.   Seller agents are best used when you want a hands off approach and lots of guidance.  If not then there is not much to selling a house to a qualified buyer.  There are also plenty of discount  realtors like these guys who I would probably use if I was selling my house:

https://lincolnwayrealty.com/#

 

[he gone.]

6 minutes ago, Soxbadger said:

Because the comparison isnt very good. And even if we use your comparison, youre argument would be akin to saying that you are better off not getting the 2nd shoe free. Ive never been to shoe carnival, can you negotiate instead of a buy one get one, that you just want the first shoe at half price? I presume the answer is no, so why would you not get the 2nd shoe? Or are you arguing that you should go to a better shoe store with higher quality shoes because shoe carnival has poor quality shoes and artificially raises the prices to then sell at bogo?

 

I'm saying that it's not truly BOGO. I'm saying the sale side price is inflated to cover the buy side. When someone is selling an asset, specifically one as large as a house -- in their minds are taking home $500k. Tt's easier to work in/cover 2.5% on the "buy" side because it's coming out of a bigger basket.  It's not "free" for the buyer, it's psychology. 

 

The shoe analogy is saying BOGO is just marketing for a ___% off. But "free" sounds better, so that's what companies do. They take a $100 shoe, price it at $160, then give you the other $100 shoe and say it's free. You pay $160 for the 2 pairs. It's not really free, it's a 20% discount. 

I'm saying it's fudging numbers. No such thing as a free lunch. 

 

[gatnom]

44 minutes ago, BrianAnderson said:

I'm saying that it's not truly BOGO. I'm saying the sale side price is inflated to cover the buy side. When someone is selling an asset, specifically one as large as a house -- in their minds are taking home $500k. Tt's easier to work in/cover 2.5% on the "buy" side because it's coming out of a bigger basket.  It's not "free" for the buyer, it's psychology. 

 

The shoe analogy is saying BOGO is just marketing for a ___% off. But "free" sounds better, so that's what companies do. They take a $100 shoe, price it at $160, then give you the other $100 shoe and say it's free. You pay $160 for the 2 pairs. It's not really free, it's a 20% discount. 

I'm saying it's fudging numbers. No such thing as a free lunch. 

 

Credit card fees are probably a better comparison. Credit card processing fees are generally passed down to the consumer by selling goods at a higher price.

[Balta1701]

Apparently it came out today that a lot of the tech stock surge has been driven by one Japanese company hedge fund that took out huge leveraged bets on a set of tech companies and the rest of the market followed until yesterday 

 

[he gone.]

Saw that.. from the producers that brought you WeWork, we present to you, 2020 market melt-up via whale positions. I think we can all tell it's super frothy out there. I've got my money on the sidelines with my last purchase in May. I'm not selling any of my positions either,  not trying to time any whales. I'll just keep my long positions, long. 

[he gone.]

On 8/29/2020 at 7:27 AM, RTC said:

Admitting I have a terrible lack of understanding on monetary policy, can someone give me a fed policy for dummies on:

- what exactly happened this week?

- what is the argument for it?

- what is the argument against it?

thanks

The bullet points are this:

The Fed has basically committed to printing money to get us out of the pandemic. 2 trillion, 6 trillion, 10 trillion? Who knows. And what does it even mean? What is the dollar?

They also committed to zero % interest rates for at least 3 years. 

Argument for it: basically it should spur short term spending and help get the economy get back on its feet. That it should smooth out the ups and downs of what would happen if we just let things play out naturally. That although it's a ridiculous amount of money, that it may not actually be inflationary because tech is inherently deflationary. Also that we are the world reserve currency and actually are okay to pull this move off, especially since the rest of the world is doing it to. So even playing ground. Printing this money is a good thing. We won't have a depression spurred by a pandemic, it will keep people off the streets, people will still be working, and life should carry on as it was before this. 

Argument against it: This is my argument mostly, others can chime in. Read a few of my other posts, but no such thing as free money, debt is just money we owe ourselves and comes at a cost to future generations and decades. That "free money" and cheap money really doesn't benefit the poor. It should, in theory, be inflationary to print infinite trillions of dollars which drive up the costs of grocery store bills, assets like houses, every day goods and needs, etc. When you do that you drive rent prices up, etc. The family of 4 that has parents working hourly jobs paying $11.50/hr now has less money left over because their everyday bills went up for rent, food, utilities, gas, etc. etc. I posted a graph of how much the dollar has been worth over time, take a look at that. It's worth less and less when their is more supply of dollars. But when pay doesn't go up step in step (usually at the hourly level), those people don't benefit. They actually lose out. It drives the gap even further. The people who win are the people who own the assets like houses, the people who have left over money to put into the stock market, the ones that can invest their excess cash, put it to work to make more money and stay ahead of the curve. Not to generalize, but that's generally rich white people. So what you get is a more lopsided society, a more classist society. In a society like that, in my opinion you get symptoms like you have now, racism, homelessness, drug problems, etc. etc.  to me, the whole system stems from the root of monetary policy & breaks off from there. Now that might be a little aggressive, but jsut my 2 cents. 

It's also not a short fix, nothing is. It has to play out over 20-30 years. You don't fix the Southside of chicago in a term of a mayor, you change it over 20 years with plans and outreaches to fix a systemically broke system. You fix it by getting money in the hands of the poor, by education, by math programs taught alongside financial planning - not teaching geometry, by teaching math that is applicable to every day life. You come up with plans to implement rent to own on the south side, west side. You build ownership of a community, of assets. You do trickle up economics instead of trickle down. You teach entrepreneurship classes, you teach trade school in high school. You give students tools to be successful. You fix the education system from sitting and listening and memorizing to actually doing things that can be utilized in life. Throwing money away in programs like TIF credits for developers to make a few affordable houses, or HUD, etc. doesn't change the system. It gives those people nicer digs to live in ... but they are still paying rent. They are still not owning assets. 

[Look at Ray Ray Run]

On 2/7/2020 at 10:40 AM, Look at Ray Ray Run said:

I don't give much public financial advice, but I realistically see Tesla with a 1 trillion dollar market cap within the next 6-8 years. I am pretty heavily invested into Tesla though. I am a firm believer in not only the social move towards renewable, but also a big believer in the battery technology and loved him moving much of the production in house. With further growth in the Chinese market, and his contracts in Germany for driverless cabs, the expansion is coming fast. Efficiencies on the production side need to increase, but I'm invested into Tesla for the battery technology - not for cars.

Whoever liked this, thanks for the reminder ha. 

Tesla has been about as good to me as any investment in my life but for being an early Bitcoin holder. Jumped in heavy at the end of last year, bought continually through March and have seen over a 100% return on nearly all my buys.