“A lot of iron in the sky.” That’s how one real estate mogul last night described to me the huge apartment complexes going up in Queens, just across the water from Manhattan.
His implied prediction:
By the time they’re completed, the New York apartment market will be overbuilt. The developers will go bust. and the banks will get left holding the bag.
Booms and busts go in cycles. Our government is not good at managing them.
When we have busts, our government responds by dropping interest rates. This has three affects:
1. It encourages speculative real estate development, because loans are ultra-cheap.
2. It hurts people on fixed incomes — like retirees.
3. It pushes investors and retirees into (gambling on?) the stockmarket.
Every few years, this is recognized for what it is — a bubble. And prices crash. Only to start another cycle.
We’re probably at the end of our present stock bubble, which began in March, 2009.
Professor Robert Shiller suggested this morning that the volatility we’ve seen recently may be a sign of another big downdraft — a continuation of the one you see at the right of these two charts, which simply show the S&P500 from two different time frames.
.
From CNBC:
Fears of a bear market for U.S stock markets came back to the fore Monday with Nobel Prize-winning economist Robert Shiller warning of rock-bottom investor sentiment in his latest research.
The Yale University economist told the Financial Times over the weekend that his confidence surveys were signaling investors were currently at their most fearful of an overvalued market than they have been since the dot-com bubble in 2000.
“It looks to me a bit like a bubble again with essentially a tripling of stock prices since 2009 in just six years and at the same time people losing confidence in the valuation of the market,” he told the newspaper in an article published Sunday.
For the full story, click here
I am shorting commodity stocks — so far BHP and HAL. Two more tempt me: XOM and KMI (Kinder Morgan). CAT looks interesting also. Who wants its equipment when the minerals it hauls have lost so much value? I wish I had thought to short these earlier. Look at KMI this year:
It may not a bad idea to loosen up on your richly-valued stock. Kinder Morgan’s P/E is 43.28. SBUX is 31.71. Google is 29.50.
Secret to successful marketing. From a New Yorker profile of Donald Trump:
Behind the brash, self-aggrandizing, and occasionally obnoxious exterior that Donald Trump presents to the world lurks a not entirely inconsequential level of intelligence and self-awareness. “I play to people’s fantasies,” he has said in explaining his business success, which is based, to a large extent, on the often blatantly false idea that anything with his name on it is bigger, better, more exclusive, and more glamorous than rival products. “I call it truthful hyperbole.”
Useful stuff:
+ When cleaning anything, don’t use chemicals — especially the specialty stuff they sell at supermarkets or hardware stores. The chemicals are abrasive and often destroy what they’re “cleaning.” As evidence, I can show you floors and desks hurt by zealous cleaners. Green Palmolive is my magic, non-abrasive cleaner. Trust me on this one. A tiny drop of Palmolive in warm water will clean anything. Remember what Mark Twain wrote, “”To a man with a hammer, everything looks like a nail.”
+ Checklists land planes safely. I’ve been a fan of them for eons.I use them on everything from what to pack to how to close our weekend house.
+ I’m in favor of “promotion” — emails from vendors I like. Yet the ones I like ignore me. While the ones I dislike inundate.
+ Many websites now offer two-factor authentication. In addition to entering your password, you also enter a single-use code, often sent to your mobile phone. Or you may simply enter your username and different password twice. I put two-factor authentication on this web site. It killed hacking attempts stone dead. Facebook, Google and Twitter already offer two-factor authentication for free.
+ Book airline flights as early as possible. They’re cheaper a long way out. Ditto for redeeming your miles.
Today is the second day of Rosh Hashanah.
A woman goes to the post office to buy stamps for her Rosh Hashanah “Happy New Year” cards.
She says to the clerk “May I have 50 Rosh Hashanah stamps please.”
“What denomination?” says the clerk.
The woman says “Oy vey … my God, has it come to this? Okay, give me six orthodox, twelve conservative and thirty-two reform!”
Harry Newton. Joko won 147 points. Federer won 145. Amazingly close final. Novak gets to more shots than anyone I’ve ever seen on a tennis court. He just keeps getting them back until you, his opponent, makes a mistake. Roberta Vinci beat Serena. After the match Roberta said:
The best moment of my life.
Don’t think about Serena. Play. Enjoy. I did not expect to win.
Put the ball on the court. Don’t think. Run.
Interesting short on HAL. Talk is this Baker Hughes deal is going to go through which could lead to a significant increase in HAL’s valuation. Care to expand on reasons for the short?
You’re asking Harry for a rational explanation? This is a man who refused to buy the Facebook IPO at $36 because it was overpriced.
The tax code is the DNA of the U.S. economy
and it favors debt and punishes production (income, savings and
investment). It is production that
creates wealth, improves the standard of living and builds a stronger tax
base. Production works best when people
and markets have freedom and the natural laws of economics are not disrupted by
government and political actions. Free
markets do result in lower prices and higher quality. Taxing production and favoring debt leads to
economic suicide.
The tax reform solution is to move the tax base from
production to consumption. End the
income tax, capital gains tax, self employment tax, payroll taxes (taxes of
jobs), estate tax and gift tax along with the IRS and tax withholding. End trying to game the federal tax code.
Collect the same tax revenue total with a national
progressive sale/consumption tax plan that has only one tax break that helps
most the impoverished and lower incomes.
This plan is called the FAIRtax and is a bill in Congress, HR 25/S155
with 79 sponsors. Learn more, join the
grassroots cause and contribute at http://www.fairtax.org.
The only part of the US economy that has grown under asshole Muslim Obama is the “underground economy”……..the Fair Tax is our only salvation.
Harry you and Robert Shiller deserve each other. How long has he been saying the market is overvalued? How many investors have missed out by listening to perma-bears like him and you? Jeremy Seigel thinks the market is nOT over valued, and so far of the dueling economists, he’s been right and Shiller wrong. I guess it makes losers like you with only 15% in the market feel better to think this may be a bubble and you’re not missing out. Now, I don’t think this is a great market by any means. But it’s OK to pretty good, and I’m waiting for a pullback of 10-15% to buy anything new.
I continue to find that New Yorker article you quoted to be slanted, odious, and obnoxious. I can’t imagine why you are so taken with it. The author uses gross stereotypes and offers no insight.
I DO believe the Trump quote “I play to people’s fantasies”.
Explaining Trump’s popularity is so easy that it escapes the high-brow “New Yorker”. It’s only three words: “Trump will fight!”
Okay, certainly it is a “play to people’s fantasies”. The fantasy is that someone will stand up to the incredibly destructive, mean, and underhanded politics of racism, cronyism, and extortion practiced by liberals inside the Beltway.
We have an entire Nation without heroes. Republicans were elected to the House and Senate and, except for a number counted on one hand, they are sniveling cowards led by corrupt boobs.
“Trump will fight”
You don’t need 1000 words of pseudo intellectual inspection in the New Yorker. It only takes three.
Anyone who gets their information from the NY Times /magazine, Steven Colbert, Jon Stewart, RollingStone, The Economist, The Financial Times, MSNBC, CNN or any other left wing outlet is going to do extremely stupid things such as vote for Obama and the rest of the dem’s. I can understand this if you’re an uninformed college kid, but if you’re a senior citizen and are still falling for the liberal lies than you are nothing but an “old fool”…….simple as that.
the economist is left wing?