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Few people get rich because of their houses. The homes of the truly rich are usually not the primary source of their wealth.
Yes, though they can be a good "forced savings" plan for poorly disciplined middle class folks who would otherwise fritter away any savings they might get by renting.
The last 30 years weren't a monolithic whole. On the contrary, the last 15 years were starkly different from the 15 years preceding them. If we're currently in a 30-year slump, then that slump is already halfway over. If we're on the threshold of new 30-year slump, then in total that slump will have been 45 years.
And over said 30 prior years, interest rates were decidedly NOT lower. Taxes, by and large, weren't lower either. Population increase is currently higher (in the US) than it was in the 1970s, no? There's a reason why Gen-X is the smallest generation. It's true that we have an increased ratio of retirees to workers, but that's not identical to saying that overall population growth has slowed. Our big demographic problem is that there's too few Gen-X people - people in early middle-age. But in another 30 years, when Gen-X has receded into quiet dotage, the retirement-wave will have ebbed.
You're right about the paucity of corporate earnings growth. This ultimately is what's wrong with the stock market. It's not the Fed, or Congress, or oil, or trade imbalances, or immigration. It's corporate earnings. Why are they in decline? I see neither demographics, nor taxes nor interest rates are explanatory factors; if anything, those factors all point in the reverse.
I think decline of corporate earnings is about competition.
Just like labor market.
Now American workers are competing with Mexico, China, Europe and emerging markets.
anything can happen at any time over the 30-40 years we typically accumulate money .
don't forget us boomers started saving or trying to save in some of the worst conditions since the great depression .
20 years of flat markets , double digit inflation and worse unemployment then we had now .
so yeah it was all well and good the greatest bull market in history came but few of us working folk had much money saved to take advantage .
it took us a long long time to develop a meaningful balance and by the time that happened we hit a brick wall with all that money in 2000 where anything prior saw a 1.80% real return up until today .
so the grass always look greener somewhere else but no time frame stands alone and the time periods before and after are crucial too but not reflected in the averages .
1987 to 2003 saw 14% returns cagr on average for 17 years , but because the time frame going in was so crappy few of us had money saved to really grow .
on the other hand with full fuel tanks today even a 7% drop which is small represents 9 years of maxing out my 401k at catch up . so the future returns count the most .
while based on valuations going out about 8-15 years indicates we are likely to average below the norm returns but after that anything is possible and with full fuel tanks you youngin's may do better then we did since our money saw the reverse .
the big growth years were prior to us having much accumulated .
Don't I know it! I still remember the pain of watching the Dow sink to 600 and not having enough money to buy stock. I learned my lesson, and the next time there was a crash I was able to take advantage of it. A crash is where you get ahead. The 9/11 stock market death spiral on top of the dotcom bust was a boon to me.
Yes, though they can be a good "forced savings" plan for poorly disciplined middle class folks who would otherwise fritter away any savings they might get by renting.
If I hadn't been busy with grad school and trying to find a job in 2009-2010, I'd have bought 3-4 houses out west. They've pretty much doubled in price since the housing crash. Everyone knew it would happen. $80K foreclosure houses now selling for $180K. And the stock market.... Darn it. I never have money when I really need it.
Now I just pay out 5% into my employer's matching 401(k) plan, investing most into growth and index funds, and hoping the economy and stock market will generally grow over the next 10-15 years. That's all that most of us can do.
You can't rely on these anecdotes of people who bought at exactly the right time. They're just as dumb as we are, but luckier. Toss of the dice.
That's not true. You just need to have a pretty good pile of cash to be able to take advantage of windfall opportunities. Guarantee, there will be another crash in the next 15 years, if not two. There was a big one in 2001-2002, and another in 2007-2008. You don't have to be a genius or lucky to notice there is a crash and buy in while everyone else is jumping out of windows. All it requires is patience. Also, don't get greedy. I'm sure that by now you wish you had moved your growth funds into money markets last year. Bear markets don't last forever, and part of "buy low, sell high" is remembering to sell high.
Yes but home ownership is at a 48 year low. The number of people who own their homes decreased by 400,000 since last year. What we see is wealthy millennials and retirees buying houses and hardly anyone else.
What you see is foreign investment funds buying US real estate because they have to find someplace to put our $1.5 billion a day trade deficit. Every time you buy something made in another country you run up the price of US housing. You are being bilked out of your land for shiny trinkets. Nothing could be more American. It's how we got Manhattan Island.
That's not true. You just need to have a pretty good pile of cash to be able to take advantage of windfall opportunities. Guarantee, there will be another crash in the next 15 years, if not two. There was a big one in 2001-2002, and another in 2007-2008. You don't have to be a genius or lucky to notice there is a crash and buy in while everyone else is jumping out of windows. All it requires is patience. Also, don't get greedy. I'm sure that by now you wish you had moved your growth funds into money markets last year. Bear markets don't last forever, and part of "buy low, sell high" is remembering to sell high.
and the problem with buying low is you dont know when it will shoot up again. people sell at wrong times or dont get back into the market until after it bull market.
best odds are to stay in the market, sell what you need but leave the rest there. dont play around with timing market because it is a losing bet
At least you're not being drafted, yanked out of your life and forced to serve in a foreign war you don't understand. Whether or not you can buy a house is a poor measure of economic temperature. Rent now if that makes sense and buy when it makes sense. The "American dream" of owning a house is the most successful marketing (brain-washing) campaign of the last 50 years. Opportunity exists if you're willing.
Oh boo hoo. Vietnam was not that bad a deal for those who came back in one piece. GI home loans were the cheapest on the market. The GI Bill paid my rent while I was in college. Vietnam veterans were given preferential hiring treatment for both government and private industry jobs. More than once I put my serial number on a job app. Not many, though, because I almost always got hired right away. Student health insurance cost me $16 a term.
Yeah, interest rates sucked if you were in debt, but in the '80s, 3 month bank CDs paid more than my mortgage was costing me.
The ones that got the shaft were the ones who came back in a body bag, or who came back crippled or twisted from the war. Most of us had it pretty good. I agree that an 18 year old today is facing a much grimmer future than I was 50 years ago.
and the problem with buying low is you dont know when it will shoot up again. people sell at wrong times or dont get back into the market until after it bull market.
best odds are to stay in the market, sell what you need but leave the rest there. dont play around with timing market because it is a losing bet
I did say, "don't get greedy." It's unusual to make the absolute maximum possible return, so don't worry about it. It's easy to see trends. When gasoline went over $4/gallon I figured it would suck the life out of the economy, so I moved my 401k stock funds into money markets. As it turned out, I should have picked bond funds, because interest rates took a dive too. In any case, I sat there making essentially nothing for six months while stocks kept going up. When things turned around they did it quick. When the banking crisis surfaced, I set a 50% market drop as my buy target, and made out very well at that point. 50% is about the biggest historical drop. If the banks hadn't been going belly up I would have set something like 30% as the buy target.
No, you are not going to hit the top of the market, or the bottom of the market. There is no "timing" to it, just obvious trends. If you buy back in before the market bottom, you will see yourself losing paper. Psychologically that can be rough, but it's irrelevant. If you bought a good value stock, it will be back, and you will make a very nice profit. If I had bought back in when the Dow was at 8000 instead of 7000 I would still have done very well. There are a couple really basic principles that investment advisors won't tell you:
1. Buying stocks when the market is soaring is really stupid.
2. Buying bonds when interest rates are the lowest in history is really stupid.
You also need to hold enough cash that you can't be forced to sell undervalued assets. Using that cash to buy undervalued assets can be a great move.
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