In times of economic upheaval/resets, labour does not find bargains, capital does.
Housing prices might take a hit, but by the time they pop up on the open market, you won't be buying from a distressed seller, but rather a numbered corporation domiciled in Delaware that's picked up all those properties in cash, cheap.
Echoing rchaud’s comment, it takes longer to buy houses if you need to get a mortgage with a serious assessment because banks suddenly rediscover diligence in a down market, and there are always stories about having a deal fall through because the buyer’s loan didn’t get approved. If the property would need work to clean up for showing, people might also figure that they’re not getting so much less if they don’t have to pay a realtor, handyman, or cleanup crew.
If you weren’t old enough or in the right neighborhoods to see it in the last bubble, there were shady companies mailing postcards to every house and plastering neighborhoods with poorer / older people with fliers. They appeared to be looking for people with medical bills, old people who needed money for assisted living, etc. who needed money right now and might be swayed by a quick transaction. I noticed how you could cross into a less affluent neighborhood and suddenly it was like every pole had a “ca$h for ugly homes” sign on it.
People who need cash asap and can't wait 30 days minimum to pay agents and lawyers and wait for the cheque to clear. A lot of people have medical bills, school loans, credit card debt etc that will take precedence in their decision making .
Plenty of companies are out there offering quiet cash deals, they will find these properties much faster than agents with their paperwork and fees can swoop.
Depends on how soon you are planning to buy. The usual rule of thumb for a big purchase (house, car, etc) is that if you’re planning on it occurring in 3-5 years, put money in a savings account. Otherwise, yeah you should probably invest it.
I agree there is a time and place for it. 5 years is a bit long IMO. The S&P500 is up 250% in the last 5 years, while savings would have netted maybe 10% growth in that time. I imagine some sort of hedge would be appropriate, but have definitely been burnt by taking money out of the market too soon.
Im just shocked that some people think stock is some SV alternate reality. I grew up in a rural community before the internet, and even then, nobody I knew was long term saving for houses or retirement with a savings account.
Yeah agree, I think it's really about personal risk tolerance.
I do agree 5 years is a while, but it's also easy to say that right now based on the last 5 years. It's not terribly difficult to find 5 year periods where returns aren't very good or flat out bad (e.g. starting investing in 2000).
I thought about saying something snarky, but suffice to say I don't think that socks are a silicon valley invention, and I think you are at a major disadvantage to more flexible/savvy investors.
">60% of Americans own stock" does not tell the whole story.
First, how many Americans only own stock as part of their 401(k) or IRA and can't liquidate it without affecting their retirement?
Second, how many Americans own stock portfolios with sufficient value that they could liquidate them and purchase a house for cash, as the initial response implied? I guarantee you it's less than 60%.
Your loss. They are a good pre-tax investment vehicle. Last I checked you could take $10K out of ira and $50k out of a 401(k) for home down payment or new builds.
You have to pay back with interest, but the interest goes to you.
The problem is, with automated trades set up by many institutional firms, any dip in the market will trigger automatic buys keeping the market artificially up even when the underlying securities might be inflated. It'll take more downward momentum on S&P stocks to really push the market down.
if everyone's expecting a market crash and prepared for it (that means it should already be priced in), how can there still end up being a crash? seems counter intuitive.
Yes and no. If everyone who expects a crash has sold already, and there wasn't a crash yet, how could it trigger one?
The stock market has been found to behave completely randomly, even when taking into account all available information.
Yes, there was a crash at the beginning of COVID-19, and the market recovered disproportionately to the amount of pandemic-related destruction. There are also many really bad things that happened and did not cause crashes. And there are crashes that happen out of nowhere.
They say that esteemed economists have predicted 92 of the last 5 recessions.
Not everyone. The options markets are much thinner than the stock market as a whole; it takes fewer people to move them.
Also, it costs much less to buy an out-of-the-money option than the value of the option. You can buy cheap insurance against catastrophe, and not unwind your main position. This leaves you protected against a crash while still able to make money on the upside.
You know how risk is "priced in" right? It's an art, not a science. They buy/sell financial instruments to hedge that risk, like collateralized bonds or credit default swaps. Plenty of people lose big money when these bets don't work out.
I will respond to this by posting a shitpost from reddit. In reality the market can never be perfectly efficient or their would be no room for profit.
Don't even ask the question. The answer is yes, it's priced in. Think Amazon will beat the next earnings? That's already been priced in. You work at the drive thru for Mickey D's and found out that the burgers are made of human meat? Priced in. You think insiders don't already know that? The market is an all powerful, all encompassing being that knows the very inner workings of your subconscious before you were even born. Your very existence was priced in decades ago when the market was valuing Standard Oil's expected future earnings based on population growth that would lead to your birth, what age you would get a car, how many times you would drive your car every week, how many times you take the bus/train, etc. Anything you can think of has already been priced in, even the things you aren't thinking of. You have no original thoughts. Your consciousness is just an illusion, a product of the omniscent market. Free will is a myth. The market sees all, knows all and will be there from the beginning of time until the end of the universe (the market has already priced in the heat death of the universe). So please, before you make a post on wsb asking whether AAPL has priced in earpods 11 sales or whatever, know that it has already been priced in and don't ask such a dumb fucking question again.
