Market in the toilet who’s buying?

Varmint

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Ok I have a question. Let’s say there another credit cycle crash in the markets in the next few months predicated upon huge debt defaults of homes to student loans.

What would that do to home prices and more specifically land prices in the aftermath?

Rates are already near zero. There are no such things as balloon loans with high variable interest rates lensed with zero money down. I’m curious what you guys think may happen because I am currently looking at land and a new build. One thing I am sure of is that materials may very well cost more and more making a new build unattractive. If we face a deflationary collapse commodities will also crash. If inflations takes off then things could surely increase with a weaker dollar.
I think you just have to look at the corporate bond bubble - which started to deflate during Covid - so the Fed just bought corporate junk bonds.

They'll do the same whatever begins to crash - student loans can't really default so they don't have to do anything there, but if you get a wave of mortgage defaults, they'll just protect Wall St. by buying MBSs, so the contagion will be contained. In normal times you'd get a real estate correction or crash, but that won't happen with the stock market at record highs - there's so much money in the system, that any real estate on the market that's desirable gets bought up before it can drop in price.

Now if the stock market were to crash like in March, that would be a problem - if that happens, the Fed will just buy S&P500 ETFs and stop the crash. People might say that's not legal - well, so is buying corporate junk bonds, but nobody in Washington is complaining.

This is why I decided to go all in on gold and silver miners 3 years ago - because all roads lead to massive Fed printing, and one way or another, more dollars means gold goes up.

So to answer your question, I don't think real estate can crash, and it is at risk of going way up as the printing machine goes into high gear, so I wouldn't wait if you want to buy.
 

djbradles

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Hmm, an interesting question. It's the big concern -- the fact that the fed has essentially been mag dumping with the balance sheet expansion/QE infinity, and if things really go sideways, what is left for them to do? I suppose they could print harder and faster, and this could come in various forms. Maybe they guarantee purchase of all MBSs or just buy the damn things outright after they are originated? I'm not really familiar with how it all works under the hood. Either way, my best guess is that it would be deflationary across the board in real terms, but nominally, perhaps the printing gets us a bump, or even just a hyper-inflation rocket ship type scenario. Without heavy intervention I would think that it would almost certainly be deflationary in a big way. Especially since a mass default on debt obligations would be preceded by... ??? further massive shock to the economy and GDP contraction? Simply money moving around with less speed, i.e., less available to be spent.

edited to add:

Kinda just started rambling, but TL;DR: Probably deflationary imo. Maybe a few distortions here and there, but ultimately deflationary.
It is appearing that way. Deflationary. Stagflation. I can’t imagine what would happen when everyone just up and defaulted.

During the GR of 2008 home prices sunk. I’m not sure about land but maybe real estate in general trended down. It was better to just default on your mortgage back then when what you “owned” was worth far less than your debt obligation and you would be in better shape doing so.

But and it’s a big but. Let’s say inflation sets in like a rocket ship and all assets across the board increase phenomenally. No one would be able to afford a house, or land, or a patch of grass. It would ultimately bring in a new currency I think.....backed by gold 😆
 

Varmint

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It is appearing that way. Deflationary. Stagflation. I can’t imagine what would happen when everyone just up and defaulted.

During the GR of 2008 home prices sunk. I’m not sure about land but maybe real estate in general trended down. It was better to just default on your mortgage back then when what you “owned” was worth far less than your debt obligation and you would be in better shape doing so.

But and it’s a big but. Let’s say inflation sets in like a rocket ship and all assets across the board increase phenomenally. No one would be able to afford a house, or land, or a patch of grass. It would ultimately bring in a new currency I think.....backed by gold 😆
I think what we're seeing right now is certainly inflation, but it's not the traditional inflation - which is basically when people decide they should spend their fiat currency cause everything will cost more next year. That isn't what's driving demand right now - it's simply the massive supply of cash from both QE and the record stock market.

So down the road we may see traditional inflation, where people think their dollars are losing value and they should buy goods, but I think that's not what's going on yet. And both the Fed and Congress are not currently printing (or the printing is slowing in Fed's case) - so this trend is probably slowing or reversing right now. It could resume at any point, if Congress dumps a couple trillion on the economy (seems unlikely before the election), or if the Fed sees disaster coming and goes with another new QE program.
 

Broccoli Iglesias

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Ok I have a question. Let’s say there another credit cycle crash in the markets in the next few months predicated upon huge debt defaults of homes to student loans.

What would that do to home prices and more specifically land prices in the aftermath?

Rates are already near zero. There are no such things as balloon loans with high variable interest rates lensed with zero money down. I’m curious what you guys think may happen because I am currently looking at land and a new build. One thing I am sure of is that materials may very well cost more and more making a new build unattractive. If we face a deflationary collapse commodities will also crash. If inflations takes off then things could surely increase with a weaker dollar.
1. There will be a crash.
2. Depends on area and supply. In places like all the towns around Tampa, FL, prices are already crashing. Look at a realtor app, you see nothing but down arrows and thousands of properties on sale. A place like Dedham, MA, probably will barely feel it.

3. What makes you think there aren't stupid loans out there? Have you tried getting approved for a loan recently? If your credit score is above 750, guaranteed you will get approved for something you can't realistically afford long term.

I dont know about land. Where? How much land?

The U.S is a big place, not everywhere will be the same.
 

pewpewpew

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It is appearing that way. Deflationary. Stagflation. I can’t imagine what would happen when everyone just up and defaulted.

During the GR of 2008 home prices sunk. I’m not sure about land but maybe real estate in general trended down. It was better to just default on your mortgage back then when what you “owned” was worth far less than your debt obligation and you would be in better shape doing so.

But and it’s a big but. Let’s say inflation sets in like a rocket ship and all assets across the board increase phenomenally. No one would be able to afford a house, or land, or a patch of grass. It would ultimately bring in a new currency I think.....backed by gold 😆
I suspect, and maybe I am wrong, that even if we see (massive, sustained) inflation, you will not necessarily see real estate keep up. Real estate has already seen massive rises in prices all over, and some might consider it a bubble. Meanwhile loan officers are casually taking about 50% debt to income like that's normal. Will it go higher, especially if there is a massive credit shock? Doubtful, imo. I think for many, inflation is another tax, a transfer from the have-nots to the haves, so they will be the ones buying up property that becomes too expensive for normal folk,. FWIW, I see a lot of pending/contingent properties around here, and they seem to be in that state for longer than usual. Just a thumb-to-the-wind type of observation, maybe worth nothing. Just my $0.02 🤷‍♂️
 
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djbradles

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1. There will be a crash.
2. Depends on area and supply. In places like all the towns around Tampa, FL, prices are already crashing. Look at a realtor app, you see nothing but down arrows and thousands of properties on sale. A place like Dedham, MA, probably will barely feel it.

3. What makes you think there aren't stupid loans out there? Have you tried getting approved for a loan recently? If your credit score is above 750, guaranteed you will get approved for something you can't realistically afford long term.

I dont know about land. Where? How much land?

The U.S is a big place, not everywhere will be the same.
This is central Ma, Worcester County. It’s been cushioned from any crashes as real estate really doesn’t move here price wise but many people are moving to this area because the prices are already cheap compared to anywhere in the Boston area. This is why the prices have recently been increasing.

Sure there probably are stupid loans since banks are now not required to keep much liquidity.

Land? They’re not making any more of it. Either large lots go to DCR or developers and towns don’t want developers so it’s good for a person who wants room and privacy with natural resources.
 

Varmint

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Stocks and gold going up in anticipation of tomorrow's Fed speak. Hope is since Congress won't print money the Fed will announce something. I don't think the Fed will let Congress off the hook, so watch for a continuation of the slide in stocks and gold after tomorrow.
 

djbradles

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I’m pretty scared of banks right now. Like keeping all-my-money-out-of-them scared. There is about $120 billion in commercial real estate in limbo due to the wildfires out west. Not to mention the commercial real estate empty in Covid-no-go zones in big cities. Banks are holding that debt.
 

Broccoli Iglesias

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I’m pretty scared of banks right now. Like keeping all-my-money-out-of-them scared. There is about $120 billion in commercial real estate in limbo due to the wildfires out west. Not to mention the commercial real estate empty in Covid-no-go zones in big cities. Banks are holding that debt.
Remember all the residential foreclosures, Thousands every week, and banks pulled through.

The big guys never lose.
 

Broccoli Iglesias

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The Fed has their six. Couple commercial and residential together though?
I dont know much about commercial. But I doubt the big corporations stopped paying and most have leases for years. Maybe someone can educate me on commercial real estate.

Maybe the smaller commercial buildings will be a problem.
 

djbradles

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I dont know much about commercial. But I doubt the big corporations stopped paying and most have leases for years. Maybe someone can educate me on commercial real estate.

Maybe the smaller commercial buildings will be a problem.
I’m thinking about small businesses under $400 mil market cap. I don’t think the big guys will have much of problem. But I need education on this matter too.

I’m twiddling my thumbs until 2pm.
 

pewpewpew

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I’m pretty scared of banks right now. Like keeping all-my-money-out-of-them scared. There is about $120 billion in commercial real estate in limbo due to the wildfires out west. Not to mention the commercial real estate empty in Covid-no-go zones in big cities. Banks are holding that debt.
FDIC has got you covered... in theory anyways. And ultimately, it means that you (me, and everyone we know) have got ourselves covered, since the FDIC funds come from the banks (passed along to us as transaction costs etc.) and borrowing ability with that bottomless well of money that is the US Treasury!

Anyone in here trading tech, industrials, etc. or is everyone just focusing on gold (and other commodities?)
 

Broccoli Iglesias

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FDIC has got you covered... in theory anyways. And ultimately, it means that you (me, and everyone we know) have got ourselves covered, since the FDIC funds come from the banks (passed along to us as transaction costs etc.) and borrowing ability with that bottomless well of money that is the US Treasury!

Anyone in here trading tech, industrials, etc. or is everyone just focusing on gold (and other commodities?)
I trade tech and anything I see long term value. I am a long term person.
 

Varmint

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FDIC has got you covered... in theory anyways. And ultimately, it means that you (me, and everyone we know) have got ourselves covered, since the FDIC funds come from the banks (passed along to us as transaction costs etc.) and borrowing ability with that bottomless well of money that is the US Treasury!

Anyone in here trading tech, industrials, etc. or is everyone just focusing on gold (and other commodities?)
Yeah, I've no doubt we'll get our money back, it'll just be in worthless US dollars.
 
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Anyone in here trading tech, industrials, etc. or is everyone just focusing on gold (and other commodities?)
The recent forum talk is primarily gold mining related, but I doubt anyone is 100% into Au, Ag and mining stocks alone.
I won't get into specifics, but I've been trading F, TEN, FCEL, NIO, SWBI, GEVO, and TRNF, among others. Generally, I stick to stock in companies with options to generate additional premiums while holding these shares.
As demonstrated in previous posts, I tend to concentrate on "covered call writing" and "cash-secured put writing".
Happy trading.
 

Spanz

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i bought some stocks related to the supply chain for coronavirus vaccine. It has to be super refrigerated as they transport it all over the world. Thermofisher TMO, air products APD, cryoport CYRX. So far thermofisher is up, air products is about neutral, and cryoport is down....so i can not say for sure if it is a good idea or not yet.

This market has had me baffled for months now....
 

Broccoli Iglesias

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i bought some stocks related to the supply chain for coronavirus vaccine. It has to be super refrigerated as they transport it all over the world. Thermofisher TMO, air products APD, cryoport CYRX. So far thermofisher is up, air products is about neutral, and cryoport is down....so i can not say for sure if it is a good idea or not yet.

This market has had me baffled for months now....
Are you buying ONLY on the thought that they might be providing transportation related products/logistics?
 

Spanz

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Are you buying ONLY on the thought that they might be providing transportation related products/logistics?
Pretty much. It is going to be a logistics nightmare. Thermo fisher makes -70 F refrigerators. Air products makes liquid nitrogen and dry ice. Cryoport is one if the few companies that already has a business shipping vaccines cryogenically

I am trying to get in front of one of those “we just gave a twenty billion dollar contract to company X” Trump announcements
 
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FWIW, General Electric's (GE) Unit Receives Wind Turbine Contract :

Yes, you're no doubt tired of these posts, but here's a cash-secured put for those that would consider buying GE below $6 a share in the next 43 days.
With $6000 in your account, sell 10 GE 10/30/2020 6.00 P at $0.31 (~ $310.00).
If GE is above $6 at expiration, your option expires worthless. You netted $310.00 in premium.
If GE is below $6.00 at expiration and you're still holding this position, you will be obligated to purchase those 1000 shares for $6 a share (adjusted cost is $5690 or $5.69 a share).
If GE soars to $30 by expiration, you'll be mad, but that's the breaks. If you didn't buy it today at $6.30 or so, you'd still have missed the boat.
If you expect GE to soar or be in Chapter 11/7 within the next 43 days, you wouldn't sell this position in the first place.
Cheers!
 
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pewpewpew

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As demonstrated in previous posts, I tend to concentrate on "covered call writing" and "cash-secured put writing".
Awesome. I do covered calls and cash-secured puts as well when it makes sense to me. AMD has been great to me in this way.

I have fooled around a bit with futures, and that is where I would really like to focus my attention over the next year or so, to find a strat that works.
 
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Sound the trumpets, please!

I just got confirmation that my GE calls sold at my price. GE will now skyrocket in order to humiliate me. Get in now!
It simply wouldn't be unusual for me make a few crumbs, only to have the stock move higher, so I can miss out on a triple or more in the next ten minutes!

BTW, post #1375 is outdated now. GE has moved a bit higher since posting that and the option is now bid around $0.24.
 
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djbradles

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FWIW, General Electric's (GE) Unit Receives Wind Turbine Contract :

Yes, you're no doubt tired of these posts, but here's a cash-secured put for those that would consider buying GE below $6 a share in the next 43 days.
With $6000 in your account, sell 10 GE 10/30/2020 6.00 P at $0.31 (~ $310.00).
If GE is above $6 at expiration, your option expires worthless. You netted $310.00 in premium.
If GE is below $6.00 at expiration and you're still holding this position, you will be obligated to purchase those 1000 shares for $6 a share (adjusted cost is $5690 or $5.69 a share).
If GE soars to $30 by expiration, you'll be mad, but that's the breaks. If you didn't buy it today at $6.30 or so, you'd still have missed the boat.
If you expect GE to soar or be in Chapter 11/7 within the next 43 days, you wouldn't sell this position in the first place.
Cheers!
As @richc said about my micro cap miners earlier, that’s gambling right there. 😁
 
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