Race from $2M to $4M...and Beyond!

[rmorris50]

When the bubble bursts, where are all those trillions created by the powers at be to go?  Will they help finance infrastructure projects in Southeast Asia?  Will they flood to the drug lords in Central and South America? Will they be hidden under thousands of mattresses in middle America?  This stuff is hard to really understand.

I thought the top 10 percent households hold like 87 percent of all US stocks. Can’t imagine middle America having money to stuff under a mattress.

Anyone watch Selling Sunset on Netflix?  Makes me feel very poor. The ultra rich buying multi-million dollar homes in cash.


Sent from my iPhone using Tapatalk

[JoJoP]

I think we are in the middle of a chasm that is splitting.  Those of us in this cohort have a resilience that is insulated by our finances.   We are the rich that are getting richer, even if we aren't the ultra rich, we are not losing our minimum wage job with a few kids that now need an at home education and care.  My heart goes out to the people who have limited options.

My politics are moderate, always in the middle, which usually means I don't like anybody.  I find the outspoken opposition to Trump within the Republican Party to be incredibly alarming.  The Lincoln Project and this group of ex-National Security advisors are Republicans and supporting Biden.   Supporting him publicly and imploring other Republicans to do the same.  When this many high ups take a public stand opposing their elected party president, red alert bells sound off in my mind.

https://www.defendingdemocracytogether.org/national-security/
https://lincolnproject.us/news/the-urgency-of-defeating-trump-falls-to-all-of-us/

[SwordGuy]

I think we are in the middle of a chasm that is splitting.  Those of us in this cohort have a resilience that is insulated by our finances.   We are the rich that are getting richer, even if we aren't the ultra rich, we are not losing our minimum wage job with a few kids that now need an at home education and care.  My heart goes out to the people who have limited options.

My politics are moderate, always in the middle, which usually means I don't like anybody.  I find the outspoken opposition to Trump within the Republican Party to be incredibly alarming.  The Lincoln Project and this group of ex-National Security advisors are Republicans and supporting Biden.   Supporting him publicly and imploring other Republicans to do the same.  When this many high ups take a public stand opposing their elected party president, red alert bells sound off in my mind.

https://www.defendingdemocracytogether.org/national-security/
https://lincolnproject.us/news/the-urgency-of-defeating-trump-falls-to-all-of-us/

You should find it incredibly alarming.    Trump is bat-shit crazy and evil to boot.   

And at least 25% of the electorate can't see that. 

[Taran Wanderer]

Even his sister (a former federal judge) is now saying he has no principles, cheated on the SAT, and is damaged.

[Buffaloski Boris]

Well, a huge mea culpa to y’all. I hadn’t intended to hijack the thread into a discussion of partisan politics. Gad, I’d sooner eat a cooked slug then go down that road. In any case my profuse apologies.

A question. I’m looking to do “passive” income soon or during my retirement but not-retirement. Possibly getting into rental properties. I’m listening to the standard fare such as bigger pockets which reminds me of a lot of the FI stuff out there; very positive and light on the reality checks. For those of you who took the real estate route, what has been your experience? Any books you would recommend?  Would I be too late to the game?

[LWYRUP]

- SNIP -

2.  I don't know if the USA is becoming a "failed state."  I think we are definitely in decline.  But things have looked rough at various points in history (was just reading about a miner's riot in WV that turned basically into a real gun battle between 6,000 miners and 2,000 mercenaries with federal troops monitoring, etc., let's not even get into historical instabilities in Europe).  So I'm hoping this is mostly sound and fury but I don't have a crystal ball. 

-SNIP-

Battle of Blair Mountain.  It kinda makes some proud to be rednecks.  The spirit of those miners is still out there.  The US will pull out of the current muck and mire.

Interestingly, even though my parents are immigrants from Europe, we do have some historical roots in the USA.  One of my great-grandparents came over to work the mines and was going to bring his family but died in a cave-in before he had enough money saved.  Somewhere in PA, location unknown.  One of the countless victims of the industrial revolution.

That was totally unrelated to the point of my post.  I was just musing on how there were times in the past in the USA where things seemed really bad and we got through it.  Hopefully one day these last few years will just be a footnote in a history book. 

[SwordGuy]

Well, a huge mea culpa to y’all. I hadn’t intended to hijack the thread into a discussion of partisan politics. Gad, I’d sooner eat a cooked slug then go down that road. In any case my profuse apologies.

A question. I’m looking to do “passive” income soon or during my retirement but not-retirement. Possibly getting into rental properties. I’m listening to the standard fare such as bigger pockets which reminds me of a lot of the FI stuff out there; very positive and light on the reality checks. For those of you who took the real estate route, what has been your experience? Any books you would recommend?  Would I be too late to the game?

I really like Gallinelli's book on Cash Flow and other Measures.    Real estate is a numbers game and he teaches how to do the numbers.

After that, your public library probably has a ton of books on real estate investment.   Read a bunch.

Once covid allows meetings again, look for  REIA groups in your area.  (Real Estate Investment Association)   Lots of good knowledge and contacts to be made.

[Bateaux]

We are wealthy even if we don't feel that way.  This morning I filled three of our four vehicles with gasoline.  I also bought an additional 10 gallons to supplement the 25 gallons I already had stored.  We do have hurricanes inbound to the Louisiana coast so I plan to run our three generators when we lose power.  The boat is also gassed and ready for emergency evacuation.  If we lose the Louisiana house, we have a spare house high and dry in Florida.  Even if we lose all our vehicles to the storm, if we make it to dry land we can purchase at least one new vehicle with cash while waiting for the insurance to settle.  The Florida house is fully furnished and luxury.  We have food and clothing ready for us there.  It's almost unfair.

[Dicey]

Well, a huge mea culpa to y’all. I hadn’t intended to hijack the thread into a discussion of partisan politics. Gad, I’d sooner eat a cooked slug then go down that road. In any case my profuse apologies.

A question. I’m looking to do “passive” income soon or during my retirement but not-retirement. Possibly getting into rental properties. I’m listening to the standard fare such as bigger pockets which reminds me of a lot of the FI stuff out there; very positive and light on the reality checks. For those of you who took the real estate route, what has been your experience? Any books you would recommend?  Would I be too late to the game?

Most of my FIRE wealth is real estate related. It got me there, but I am positive it was not the most expedient path. I did it because I love fixing up houses, and I understand Real Estate better than stock derivatives (or whatever). I wouldn't change a thing, but I wouldn't advise others to follow my path. There are exceptions. arebelspy comes to mind, because he saw an opportunity and jumped on it. IIRC, most of his properties were purchased during the Great Recession.

Some people will recommend REITs as an easier path, but I have grave concerns about big chunks of that market. The retail sector is getting killed by Amazon et al, and the pandemic. It may never rebound. Commercial RE, particularly office space, is going to shift dramatically now that WFH has been proven to be effective and popular. Employers have realized that WFH costs them a lot less money, and employees are loving the lack of commute, among other things.

[Dicey]

We are wealthy even if we don't feel that way.  This morning I filled three of our four vehicles with gasoline.  I also bought an additional 10 gallons to supplement the 25 gallons I already had stored.  We do have hurricanes inbound to the Louisiana coast so I plan to run our three generators when we lose power.  The boat is also gassed and ready for emergency evacuation.  If we lose the Louisiana house, we have a spare house high and dry in Florida.  Even if we lose all our vehicles to the storm, if we make it to dry land we can purchase at least one new vehicle with cash while waiting for the insurance to settle.  The Florida house is fully furnished and luxury.  We have food and clothing ready for us there.  It's almost unfair.

Fortune favors the prepared. Dude, you're killin' it!

[Buffaloski Boris]

Well, a huge mea culpa to y’all. I hadn’t intended to hijack the thread into a discussion of partisan politics. Gad, I’d sooner eat a cooked slug then go down that road. In any case my profuse apologies.

A question. I’m looking to do “passive” income soon or during my retirement but not-retirement. Possibly getting into rental properties. I’m listening to the standard fare such as bigger pockets which reminds me of a lot of the FI stuff out there; very positive and light on the reality checks. For those of you who took the real estate route, what has been your experience? Any books you would recommend?  Would I be too late to the game?

I really like Gallinelli's book on Cash Flow and other Measures.    Real estate is a numbers game and he teaches how to do the numbers.

After that, your public library probably has a ton of books on real estate investment.   Read a bunch.

Once covid allows meetings again, look for  REIA groups in your area.  (Real Estate Investment Association)   Lots of good knowledge and contacts to be made.

Thanks for the tip, @SwordGuy! The book is on its way.

[Buffaloski Boris]

Well, a huge mea culpa to y’all. I hadn’t intended to hijack the thread into a discussion of partisan politics. Gad, I’d sooner eat a cooked slug then go down that road. In any case my profuse apologies.

A question. I’m looking to do “passive” income soon or during my retirement but not-retirement. Possibly getting into rental properties. I’m listening to the standard fare such as bigger pockets which reminds me of a lot of the FI stuff out there; very positive and light on the reality checks. For those of you who took the real estate route, what has been your experience? Any books you would recommend?  Would I be too late to the game?

Most of my FIRE wealth is real estate related. It got me there, but I am positive it was not the most expedient path. I did it because I love fixing up houses, and I understand Real Estate better than stock derivatives (or whatever). I wouldn't change a thing, but I wouldn't advise others to follow my path. There are exceptions. arebelspy comes to mind, because he saw an opportunity and jumped on it. IIRC, most of his properties were purchased during the Great Recession.

Some people will recommend REITs as an easier path, but I have grave concerns about big chunks of that market. The retail sector is getting killed by Amazon et al, and the pandemic. It may never rebound. Commercial RE, particularly office space, is going to shift dramatically now that WFH has been proven to be effective and popular. Employers have realized that WFH costs them a lot less money, and employees are loving the lack of commute, among other things.

Thanks @Dicey. There is lots of fluff and blowing of hot air out there in the real estate space. I’m very curious as to why you wouldn’t advise others to follow in your footsteps, if you’re willing to tell. I appreciate ground truth.

And.commercial doesn’t interest me right now. Waaaaay too much retail and office space out there. Maybe once the shakeout starts in earnest there’ll be some deals.

[Dicey]

Well, a huge mea culpa to y’all. I hadn’t intended to hijack the thread into a discussion of partisan politics. Gad, I’d sooner eat a cooked slug then go down that road. In any case my profuse apologies.

A question. I’m looking to do “passive” income soon or during my retirement but not-retirement. Possibly getting into rental properties. I’m listening to the standard fare such as bigger pockets which reminds me of a lot of the FI stuff out there; very positive and light on the reality checks. For those of you who took the real estate route, what has been your experience? Any books you would recommend?  Would I be too late to the game?

Most of my FIRE wealth is real estate related. It got me there, but I am positive it was not the most expedient path. I did it because I love fixing up houses, and I understand Real Estate better than stock derivatives (or whatever). I wouldn't change a thing, but I wouldn't advise others to follow my path. There are exceptions. arebelspy comes to mind, because he saw an opportunity and jumped on it. IIRC, most of his properties were purchased during the Great Recession.

Some people will recommend REITs as an easier path, but I have grave concerns about big chunks of that market. The retail sector is getting killed by Amazon et al, and the pandemic. It may never rebound. Commercial RE, particularly office space, is going to shift dramatically now that WFH has been proven to be effective and popular. Employers have realized that WFH costs them a lot less money, and employees are loving the lack of commute, among other things.

Thanks @Dicey. There is lots of fluff and blowing of hot air out there in the real estate space. I’m very curious as to why you wouldn’t advise others to follow in your footsteps, if you’re willing to tell. I appreciate ground truth.

Dude, I totally thought I did! RE is a lot more work than equities are. Your stock portfolio will never make the toilet overflow, lol!

Example: You throw money into the stock market. It goes up, it goes down, it goes all around. All you have to do is hold on and history has proven you'll come out on top in the long run, without lifting a finger again.

Or: You buy a rental. The market tanks, a pandemic hits, your tenants can't pay the rent and you can't evict them. There is a heat wave, the air conditioning breaks beyond repair and you're paying through the nose for a whole new A/C system to the only company who will answer their damn phone. Then the water heater goes, or a water line springs a leak, or any number of expensive things happen. But guess what? The bank still wants their payment every month, the taxes are still due, and OMG, they're trying to cancel your damn insurance. When you're a landlord, rent is not guaranteed, but continuing expenses that always go up most certainly are.

Oh, did I mention [lowercase] fires? No I did not, even though huge fires are raging out of control in my state and the air quality makes China look environmentally friendly. Your whole property could burn to the ground, and those damn payments would still be due. It sounds exaggerated, but every long-time LL could tell a similar tale that's 100% true.

If that doesn't help, ask me anything you want to know.

[JoJoP]

I think a well thought out investment of a SFH or duplex/ 2 house on a lot that is within a 30 minute drive of your house is a great idea.   You can do a lot of research yourself-- what do those houses sell for?  What area is "hot"?  How much are rents?   A sweet little turn key house will always command a premium purchase price, but fixer uppers are usually where the outsized profits and headaches lie.    There's a bizillion stories on Bigger Pockets of the successes and failures.  There's plenty of each to go around. 

We did an analysis 5 or so pages back in this thread on RE as a wealth building and FI strategy.  It was about a week or two ago.   The profits can be a beautiful thing.  Just for kicks, I did some ROI calculations.  I used this "rental property ROI calculator"  https://sparkrental.com/rental-property-roi-calculator/

 Not counting equity or appreciation, just the monthly return of the rental incomes minus all expenses, my worst purchase gets about a 5% return a year after expenses,  and my best ones are north of 15%.   The average is about 7.5%.  I factor repair costs, vacancies, rehab costs if there were any, etc. 

 If I add in the equity appreciation, it would be when I sell.   Most of them have doubled in value. 

[SwordGuy]

We bought properties and renovated them.

The renovation was a lot of work and took a fair bit of our time.   But that's just one strategy that we happened to use, it's possible to purchase rent-ready properties also.

Then we hired a property management to deal with the routine work on those properties.   I spend no more than 4 hours a year (total) on four properties.   It just doesn't have to be this horrible, onerous amount of work.   At about $5,000 an hour I can handle 4 hours (tops) of work.  PS - that 4 hours includes a house that was trashed by tenants.   PPS - Insurance covered those trashing costs.

As for expensive stuff like hvacs roofs, etc., you build the cost to replace them into the rent.  (That's one thing that Gallinelli's book teaches how to do.)   Same thing for insurance, bad tenants, no tenants, etc.    You set those funds aside into "sinking funds".

You'll need reserves for big stuff that breaks because it does take time to build up those sinking fund balances.

Now, we invest in low property tax areas and we're not buying super expensive properties.   So our taxes and insurance aren't all that high.   Other markets are different, of course.

Also, because we're buying inexpensive properties, we paid cash instead of getting mortgages.   So a typical property would cost us less than $2500 a year to sit empty with the utilities off.   One rented property covers a lot of houses at that cost point.

It's also possible to buy expensive properties and have really high mortgages.   Not our cup of tea but it can be a good long-term wealth building approach.  More risk but certainly more reward if it works out.    We had a short timeframe to FIRE and we're older so we didn't need to take on the additional risk.

[soccerluvof4]

Monday Morsel -Interesting from Barrons

The market Cap for Tsla is now at 1M $ per car produced. The market Cap for GM is 10k. Yowzy. TSlA for the first time in forever as of this post in the red this morning despite the market being up.

[Buffaloski Boris]

We bought properties and renovated them.

The renovation was a lot of work and took a fair bit of our time.   But that's just one strategy that we happened to use, it's possible to purchase rent-ready properties also.

Then we hired a property management to deal with the routine work on those properties.   I spend no more than 4 hours a year (total) on four properties.   It just doesn't have to be this horrible, onerous amount of work.   At about $5,000 an hour I can handle 4 hours (tops) of work.  PS - that 4 hours includes a house that was trashed by tenants.   PPS - Insurance covered those trashing costs.

As for expensive stuff like hvacs roofs, etc., you build the cost to replace them into the rent.  (That's one thing that Gallinelli's book teaches how to do.)   Same thing for insurance, bad tenants, no tenants, etc.    You set those funds aside into "sinking funds".

You'll need reserves for big stuff that breaks because it does take time to build up those sinking fund balances.

Now, we invest in low property tax areas and we're not buying super expensive properties.   So our taxes and insurance aren't all that high.   Other markets are different, of course.

Also, because we're buying inexpensive properties, we paid cash instead of getting mortgages.   So a typical property would cost us less than $2500 a year to sit empty with the utilities off.   One rented property covers a lot of houses at that cost point.

It's also possible to buy expensive properties and have really high mortgages.   Not our cup of tea but it can be a good long-term wealth building approach.  More risk but certainly more reward if it works out.    We had a short timeframe to FIRE and we're older so we didn't need to take on the additional risk.

Thanks for the insights. So you purchased properties for cash? Or did you finance?

[Exflyboy]

I swear the markets are now officially in "stupid territory"

[LWYRUP]

I swear the markets are now officially in "stupid territory"

I just took another $20k out of VTSAX and put it in bonds because of your comment.  I was like "hmmm, millionaire mustachians also think things are frothy, ok then."

Mostly this is just rebalancing but it's a good reminder, in the past I've gotten real lax about rebalancing on the way up because who wants to start winding down before the party's done?  But I like to hold some bonds even at crap rates, not for their return but as basically round #2 of the emergency fund (a source for drawdowns during a long emergency) and some firepower for if things really tank. 

[achvfi]

I swear the markets are now officially in "stupid territory"

I hear similar assertions around this forum regularly, especially with folks with large investments in the market. But as far as I notice market has been hovering in same range since Jan 2018. Aside from pandemic effects, Not very impressive.

[SwordGuy]

I swear the markets are now officially in "stupid territory"

I hear similar assertions around this forum regularly, especially with folks with large investments in the market. But as far as I notice market has been hovering in same range since Jan 2018. Aside from pandemic effects, Not very impressive.

Oh, heck, I've thought the market was frothy and unsustainable since about 2012...

Our stocks are for long term growth so I just don't worry about it.

[SwordGuy]

Thanks for the insights. So you purchased properties for cash? Or did you finance?

We have financed our own personal home.   But we bought our investment properties for cash. 
Recognize that the purchase price of our four rental properties were:   $38.4k,  $37k, $33k, and $55.4k.

Renovation costs were in the $7k to $13k range apiece. 

Sale value of the property usually went up about $25k to $30k above purchase and renovation cost added together.

So it's not like we were spending $100k to $300k apiece!

[Dicey]

Because I should be doing something else, I stopped to look up our stats. These are all in the same fancy pants retirement community in a much lower COLA than where we actually live. That said, it's still California. Just for grins, I pulled the tax info. If I pull the HOA numbers, it will make me cry.

Property #1 $301k in 2003. Taxes $4,916
Property #2 $259k in 2015. Taxes $3,663
Property #3 $335k in 2016. Taxes $4,633

We put 25% down on each of them and have 30 year fixed rate mortgages.

[SwordGuy]

Property taxes for our four investment properties are:
$1,223
$1,226
$1,323
$885

That last one is actually the most expensive house, but it's in the county and so doesn't have city taxes added in.  Otherwise it would be comparable to the others.

No HOAs.

Insurance averages about $1200 each a year.   

Of course, rents are also much lower than in HCOL areas.   But it does make it easier for middle class folks to get into real estate investing when the property is that inexpensive.

[soccerluvof4]

I swear the markets are now officially in "stupid territory"

and then some!

[secondcor521]

I swear the markets are now officially in "stupid territory"

I hear similar assertions around this forum regularly, especially with folks with large investments in the market. But as far as I notice market has been hovering in same range since Jan 2018. Aside from pandemic effects, Not very impressive.

We must be looking at different markets.

The S&P 500 finished January 2018 at an adjusted close of 2822.43.  Dividing today's close of 3431.28 by that number shows a market return of 21.5%.  Dividing by the January 2, 2018 close shows a market return of 27.3%.

Source:  https://finance.yahoo.com/quote/%5EGSPC/history?period1=1514678400&period2=1517356800&interval=1d&filter=history&frequency=1d

[honeyfill]

I swear the markets are now officially in "stupid territory"

I just took another $20k out of VTSAX and put it in bonds because of your comment.  I was like "hmmm, millionaire mustachians also think things are frothy, ok then."

 

Mostly this is just rebalancing but it's a good reminder, in the past I've gotten real lax about rebalancing on the way up because who wants to start winding down before the party's done?  But I like to hold some bonds even at crap rates, not for their return but as basically round #2 of the emergency fund (a source for drawdowns during a long emergency) and some firepower for if things really tank.

I confess. I also sold 10k out of VFIAX and VEXAX put it in cash today.  I needed cash anyway but I planned to do 5k on 9/1 and 5k on 10/1.  I am actually more worried now than I was in March.  March was pretty obviously panic selling because of Covid overreaction but I get the feeling we are in a panic buying bubble. 

[pecunia]

I was told about the crash of 1929.  The smart rich people knew enough to get out.  I was told about 1987.  The smart rich people knew enough to get out.  I was told about 2008.  The smart rich people knew enough to get out.  (Some of those 2008 folks were more than a little crooked.)

Now I am reading about smart rich people selling out in previous posts.   Hmmmmmmmm.

[achvfi]

I swear the markets are now officially in "stupid territory"

I hear similar assertions around this forum regularly, especially with folks with large investments in the market. But as far as I notice market has been hovering in same range since Jan 2018. Aside from pandemic effects, Not very impressive.

We must be looking at different markets.

The S&P 500 finished January 2018 at an adjusted close of 2822.43.  Dividing today's close of 3431.28 by that number shows a market return of 21.5%.  Dividing by the January 2, 2018 close shows a market return of 27.3%.

Source:  https://finance.yahoo.com/quote/%5EGSPC/history?period1=1514678400&period2=1517356800&interval=1d&filter=history&frequency=1d

Yes, that is my point, its been average and until recently well below average performance for S&P or US Total stock. For the most part its been flat over time. Its not some rip roaring crazy stupid performance. Its about time we see some returns and I hope it continues.

[Fomerly known as something]

Hmm, stocks/bonds are still in their bands.  So far n the last 2-3 years there is only one quarter where I bought anything but Bonds and that was April.

[LWYRUP]

I swear the markets are now officially in "stupid territory"

I hear similar assertions around this forum regularly, especially with folks with large investments in the market. But as far as I notice market has been hovering in same range since Jan 2018. Aside from pandemic effects, Not very impressive.

We must be looking at different markets.

The S&P 500 finished January 2018 at an adjusted close of 2822.43.  Dividing today's close of 3431.28 by that number shows a market return of 21.5%.  Dividing by the January 2, 2018 close shows a market return of 27.3%.

Source:  https://finance.yahoo.com/quote/%5EGSPC/history?period1=1514678400&period2=1517356800&interval=1d&filter=history&frequency=1d

Yes, that is my point, its been average and until recently well below average performance for S&P or US Total stock. For the most part its been flat over time. Its not some rip roaring crazy stupid performance. Its about time we see some returns and I hope it continues.

I like to compare it to earnings, both 10 year trailing and forward P/E. 

I think historical P/E is around 16.  We are at about 25 forward P/E right now. 

Now, some people think that since accounting standards tightened after Sarbanes Oxley, we aren't going to be regularly back down to P/E of 16 levels again.  Some people also point out that low interest rates would tend to be correlated with high P/E because stocks become relatively more attractive than bonds. 

I just sort of split the difference and assume that a P/E ratio of 20 is "about right" so anything below that is buy-buy-buy, between 20-25 is "stay the course" and beyond that "warning, potential bubble, consider de-risking."  De-risking doesn't mean pull everything out, it just might mean beef up the emergency funds and dial back on the stock-bond ratio.  I generally just hover between 85-90% stock and doubt I'd shift much beyond 80-95% in the accumulation phase.  I might get more conservative as I age or if I am drawing down but not yet. 

These are my very lazy rules of thumb.  I try not to get too granular beyond that because sometimes you lose the forest for the trees and also because lazy. 

[EscapeVelocity2020]

I swear the markets are now officially in "stupid territory"

I hear similar assertions around this forum regularly, especially with folks with large investments in the market. But as far as I notice market has been hovering in same range since Jan 2018. Aside from pandemic effects, Not very impressive.

We must be looking at different markets.

The S&P 500 finished January 2018 at an adjusted close of 2822.43.  Dividing today's close of 3431.28 by that number shows a market return of 21.5%.  Dividing by the January 2, 2018 close shows a market return of 27.3%.

Source:  https://finance.yahoo.com/quote/%5EGSPC/history?period1=1514678400&period2=1517356800&interval=1d&filter=history&frequency=1d

Yes, that is my point, its been average and until recently well below average performance for S&P or US Total stock. For the most part its been flat over time. Its not some rip roaring crazy stupid performance. Its about time we see some returns and I hope it continues.

I'm not sure how old you are or how many dips you've been through, but this is a pretty rip roaring crazy stupid uninterrupted long term performance trend since a low of 667 in March 2009.  The fact that we had a quick dip and come back up to higher highs this year without any real change to the overall earnings outlook boggles my mind.  The only thing that explains climbing the 'wall of worry' so quickly without pandemic or economic resolution is that Congress and the Fed have so incredibly overcompensated in their initiatives to provide liquidity (it was only 800B and 2T in 2008, vs. more than 2T and 3T - and counting now), that they are inflating a bubble.  I would even hazard to guess, when economic historians look back on this, they will shake their head at our foolishness thinking that the pandemic battered market would best be helped by showering the owner classes with free money.  Assets skyrocketed, unemployment remained high, and the underlying economy barely budged - i.e. the poor were still being evicted and the rich received loads of money that didn't trickle down, expand business activity, etc.  A crony market cycle, if you will, as opposed to a virtuous cycle that sustains healthy stock markets.

[Bateaux]

I swear the markets are now officially in "stupid territory"

I hear similar assertions around this forum regularly, especially with folks with large investments in the market. But as far as I notice market has been hovering in same range since Jan 2018. Aside from pandemic effects, Not very impressive.

We must be looking at different markets.

The S&P 500 finished January 2018 at an adjusted close of 2822.43.  Dividing today's close of 3431.28 by that number shows a market return of 21.5%.  Dividing by the January 2, 2018 close shows a market return of 27.3%.

Source:  https://finance.yahoo.com/quote/%5EGSPC/history?period1=1514678400&period2=1517356800&interval=1d&filter=history&frequency=1d

Yes, that is my point, its been average and until recently well below average performance for S&P or US Total stock. For the most part its been flat over time. Its not some rip roaring crazy stupid performance. Its about time we see some returns and I hope it continues.

I'm not sure how old you are or how many dips you've been through, but this is a pretty rip roaring crazy stupid uninterrupted long term performance trend since a low of 667 in March 2009.  The fact that we had a quick dip and come back up to higher highs this year without any real change to the overall earnings outlook boggles my mind.  The only thing that explains climbing the 'wall of worry' so quickly without pandemic or economic resolution is that Congress and the Fed have so incredibly overcompensated in their initiatives to provide liquidity (it was only 800B and 2T in 2008, vs. more than 2T and 3T - and counting now), that they are inflating a bubble.  I would even hazard to guess, when economic historians look back on this, they will shake their head at our foolishness thinking that the pandemic battered market would best be helped by showering the owner classes with free money.  Assets skyrocketed, unemployment remained high, and the underlying economy barely budged - i.e. the poor were still being evicted and the rich received loads of money that didn't trickle down, expand business activity, etc.  A crony market cycle, if you will, as opposed to a virtuous cycle that sustains healthy stock markets.

There is no virtue to the gains we've enjoyed since the March lows.  But there is no shame to them either.  We put our money and risk and have been rewarded.  Yes much of those gains are from nothing byt government created debt.  Debt that woukd have been much better spent in the hands of the poor and unemployed.   But it came to us instead indirectly in the form of a stock market bubble.  I may indeed take profits.  Buy and hold can still work.  Especially for those with a long time to work.  But the stock market is now a poker game.  A good gambler knows when to cash in.

[EscapeVelocity2020]

There is no virtue to the gains we've enjoyed since the March lows.  But there is no shame to them either.  We put our money and risk and have been rewarded.  Yes much of those gains are from nothing byt government created debt.  Debt that woukd have been much better spent in the hands of the poor and unemployed.   But it came to us instead indirectly in the form of a stock market bubble.  I may indeed take profits.  Buy and hold can still work.  Especially for those with a long time to work.  But the stock market is now a poker game.  A good gambler knows when to cash in.

I'm guessing you're not cashing in quite like this guy -

Elon Musk’s financial upswing shows no signs of slowing.

The outspoken entrepreneur is now the world’s fourth-richest person after Tesla shares surged 11% on Monday, closing at a record high and boosting Musk’s net worth by $7.8 billion.

The rise vaulted the Tesla co-founder past French luxury tycoon Bernard Arnault, the wealthiest non-American on the Bloomberg Billionaires Index. Musk’s $84.8 billion fortune puts him within $15 billion of Mark Zuckerberg, No. 3 on the ranking of the world’s 500 richest people.

Monday’s Tesla rally is just the latest triumph for the billionaire who only two years ago was sued by the U.S. Securities and Exchange Commission and had to resign as chairman of the electric-car maker over rogue tweets. Tesla shares, which rose 3% at 12:10 p.m. in New York, are up more than 353% this year, fueled by growing anticipation that the company will be included in the S&P 500 Index.

Is it reassuring for humanity to know that the world has folks with private fortunes of $50B+ while there are still many problems with hunger, disease, unemployment and eviction/homelessness...

I'm not really sure what I'd do with 1B because it almost seems like too much to be able to give away effectively, but it seems like a failure of the social system that multiple individuals attain this level of wealth.  The largest lottery jackpots are 600 - 700M, but have to pay 24 - 37% in tax...

It's an odd world that we live in, that's for sure.

[Bateaux]

There is no virtue to the gains we've enjoyed since the March lows.  But there is no shame to them either.  We put our money and risk and have been rewarded.  Yes much of those gains are from nothing byt government created debt.  Debt that woukd have been much better spent in the hands of the poor and unemployed.   But it came to us instead indirectly in the form of a stock market bubble.  I may indeed take profits.  Buy and hold can still work.  Especially for those with a long time to work.  But the stock market is now a poker game.  A good gambler knows when to cash in.

I'm guessing you're not cashing in quite like this guy -

Elon Musk’s financial upswing shows no signs of slowing.

The outspoken entrepreneur is now the world’s fourth-richest person after Tesla shares surged 11% on Monday, closing at a record high and boosting Musk’s net worth by $7.8 billion.

The rise vaulted the Tesla co-founder past French luxury tycoon Bernard Arnault, the wealthiest non-American on the Bloomberg Billionaires Index. Musk’s $84.8 billion fortune puts him within $15 billion of Mark Zuckerberg, No. 3 on the ranking of the world’s 500 richest people.

Monday’s Tesla rally is just the latest triumph for the billionaire who only two years ago was sued by the U.S. Securities and Exchange Commission and had to resign as chairman of the electric-car maker over rogue tweets. Tesla shares, which rose 3% at 12:10 p.m. in New York, are up more than 353% this year, fueled by growing anticipation that the company will be included in the S&P 500 Index.

Is it reassuring for humanity to know that the world has folks with private fortunes of $50B+ while there are still many problems with hunger, disease, unemployment and eviction/homelessness...

I'm not really sure what I'd do with 1B because it almost seems like too much to be able to give away effectively, but it seems like a failure of the social system that multiple individuals attain this level of wealth.  The largest lottery jackpots are 600 - 700M, but have to pay 24 - 37% in tax...

It's an odd world that we live in, that's for sure.

We're the top 5 percent.  We still rub elbows with the bottom 95 percent.  Even clip an occasional coupon.  We do hold money made with speculation.  It's money from thin air that we never had to exchange physical work for.  I'm just saying it's not immoral to take it. 

[SwordGuy]

There is no virtue to the gains we've enjoyed since the March lows.  But there is no shame to them either.  We put our money and risk and have been rewarded.  Yes much of those gains are from nothing byt government created debt.  Debt that woukd have been much better spent in the hands of the poor and unemployed.   But it came to us instead indirectly in the form of a stock market bubble.  I may indeed take profits.  Buy and hold can still work.  Especially for those with a long time to work.  But the stock market is now a poker game.  A good gambler knows when to cash in.

I'm guessing you're not cashing in quite like this guy -

Elon Musk’s financial upswing shows no signs of slowing.

The outspoken entrepreneur is now the world’s fourth-richest person after Tesla shares surged 11% on Monday, closing at a record high and boosting Musk’s net worth by $7.8 billion.

The rise vaulted the Tesla co-founder past French luxury tycoon Bernard Arnault, the wealthiest non-American on the Bloomberg Billionaires Index. Musk’s $84.8 billion fortune puts him within $15 billion of Mark Zuckerberg, No. 3 on the ranking of the world’s 500 richest people.

Monday’s Tesla rally is just the latest triumph for the billionaire who only two years ago was sued by the U.S. Securities and Exchange Commission and had to resign as chairman of the electric-car maker over rogue tweets. Tesla shares, which rose 3% at 12:10 p.m. in New York, are up more than 353% this year, fueled by growing anticipation that the company will be included in the S&P 500 Index.

Is it reassuring for humanity to know that the world has folks with private fortunes of $50B+ while there are still many problems with hunger, disease, unemployment and eviction/homelessness...

I'm not really sure what I'd do with 1B because it almost seems like too much to be able to give away effectively, but it seems like a failure of the social system that multiple individuals attain this level of wealth.  The largest lottery jackpots are 600 - 700M, but have to pay 24 - 37% in tax...

It's an odd world that we live in, that's for sure.

We're the top 5 percent.  We still rub elbows with the bottom 95 percent.  Even clip an occasional coupon.  We do hold money made with speculation.  It's money from thin air that we never had to exchange physical work for.  I'm just saying it's not immoral to take it.

There's literally 3 orders of magnitude difference between a millionaire and a billionaire.   

Any young person in America who can get a middle class job and keep it, and isn't subjected to catastrophic legal or medical woes, can achieve millionaire status by the time they retire.    It takes work, and knowledge, and discipline -- and luck not to get sick or sued by some crazy person, but it's completely achievable.   

A billionaire is an entirely different kettle of fish.   If I were Bezos or Musk, etc., I would up the pay of the folks at the bottom of the pay scale.   No one working for me would have a piss-poor wage.   I would be pumping huge swaths of my income into things  that would make a real difference in the quality of people's lives.   I don't mean a few % points off the top, I'm talking about 80+%.    I would say more but I assume billionaires need to pay for security details, etc., and I have no idea what that costs.   

My stock would take a hit and then, over a few years, as the money kept rolling in, it would recover.    I would have no problem with unions because employees would be paid well.   My staff would be very experienced, more efficient due to that, and very loyal as they would know they had a great job.

[soccerluvof4]

There is no virtue to the gains we've enjoyed since the March lows.  But there is no shame to them either.  We put our money and risk and have been rewarded.  Yes much of those gains are from nothing byt government created debt.  Debt that woukd have been much better spent in the hands of the poor and unemployed.   But it came to us instead indirectly in the form of a stock market bubble.  I may indeed take profits.  Buy and hold can still work.  Especially for those with a long time to work.  But the stock market is now a poker game.  A good gambler knows when to cash in.

I'm guessing you're not cashing in quite like this guy -

Elon Musk’s financial upswing shows no signs of slowing.

The outspoken entrepreneur is now the world’s fourth-richest person after Tesla shares surged 11% on Monday, closing at a record high and boosting Musk’s net worth by $7.8 billion.

The rise vaulted the Tesla co-founder past French luxury tycoon Bernard Arnault, the wealthiest non-American on the Bloomberg Billionaires Index. Musk’s $84.8 billion fortune puts him within $15 billion of Mark Zuckerberg, No. 3 on the ranking of the world’s 500 richest people.

Monday’s Tesla rally is just the latest triumph for the billionaire who only two years ago was sued by the U.S. Securities and Exchange Commission and had to resign as chairman of the electric-car maker over rogue tweets. Tesla shares, which rose 3% at 12:10 p.m. in New York, are up more than 353% this year, fueled by growing anticipation that the company will be included in the S&P 500 Index.

Is it reassuring for humanity to know that the world has folks with private fortunes of $50B+ while there are still many problems with hunger, disease, unemployment and eviction/homelessness...

I'm not really sure what I'd do with 1B because it almost seems like too much to be able to give away effectively, but it seems like a failure of the social system that multiple individuals attain this level of wealth.  The largest lottery jackpots are 600 - 700M, but have to pay 24 - 37% in tax...

It's an odd world that we live in, that's for sure.

We're the top 5 percent.  We still rub elbows with the bottom 95 percent.  Even clip an occasional coupon.  We do hold money made with speculation.  It's money from thin air that we never had to exchange physical work for.  I'm just saying it's not immoral to take it.

There's literally 3 orders of magnitude difference between a millionaire and a billionaire.   

Any young person in America who can get a middle class job and keep it, and isn't subjected to catastrophic legal or medical woes, can achieve millionaire status by the time they retire.    It takes work, and knowledge, and discipline -- and luck not to get sick or sued by some crazy person, but it's completely achievable.   

A billionaire is an entirely different kettle of fish.   If I were Bezos or Musk, etc., I would up the pay of the folks at the bottom of the pay scale.   No one working for me would have a piss-poor wage.   I would be pumping huge swaths of my income into things  that would make a real difference in the quality of people's lives.   I don't mean a few % points off the top, I'm talking about 80+%.    I would say more but I assume billionaires need to pay for security details, etc., and I have no idea what that costs.   

My stock would take a hit and then, over a few years, as the money kept rolling in, it would recover.    I would have no problem with unions because employees would be paid well.   My staff would be very experienced, more efficient due to that, and very loyal as they would know they had a great job.

Couldn't agree more. Occasionally we hear something good these CEO's do but there either are not enough of them with good intentions or,( like in Bezo's case being roughly 11% shareholder +/- last I checked awhile ago..).the boards might fire them before they could do to much. Tough part of being publicly traded. To your point being that smart, one would think there would be more creative ideas they could come up with, to sell there board, and further there brand be it by design or not. Considering his wife got 38 Billion ? and he survived just fine I am sure him and others could do more in ways like wages you suggested and might not even affect there stock.

[Buffaloski Boris]

Couldn't agree more. Occasionally we hear something good these CEO's do but there either are not enough of them with good intentions or,( like in Bezo's case being roughly 11% shareholder +/- last I checked awhile ago..).the boards might fire them before they could do to much. Tough part of being publicly traded. To your point being that smart, one would think there would be more creative ideas they could come up with, sell the to there board, and further there brand be it by design or not. Considering his wife got 38 Billion ? and he survived just fine I am sure him and others could do more in ways like wages you suggested and might not even affect there stock.

People don’t read their history.

Social and economic inequality? Check.
Economic mismanagement? Check.
Environmental factors? Check.
Political mismanagement? Check.
Expensive wars? Check.
Successful opposition to reforms? Check.
Extravagant lifestyles of the leadership and elites? Check.

Ya know, it didn’t work out real well for the elites in late 18th century France.

[pecunia]

Couldn't agree more. Occasionally we hear something good these CEO's do but there either are not enough of them with good intentions or,( like in Bezo's case being roughly 11% shareholder +/- last I checked awhile ago..).the boards might fire them before they could do to much. Tough part of being publicly traded. To your point being that smart, one would think there would be more creative ideas they could come up with, sell the to there board, and further there brand be it by design or not. Considering his wife got 38 Billion ? and he survived just fine I am sure him and others could do more in ways like wages you suggested and might not even affect there stock.

People don’t read their history.

Social and economic inequality? Check.
Economic mismanagement? Check.
Environmental factors? Check.
Political mismanagement? Check.
Expensive wars? Check.
Successful opposition to reforms? Check.
Extravagant lifestyles of the leadership and elites? Check.

Ya know, it didn’t work out real well for the elites in late 18th century France.

Yeh - Well this printing all this money kind of reminds me of the stories of the Weimar republic.

https://en.wikipedia.org/wiki/Hyperinflation_in_the_Weimar_Republic

Seems like they borrowed a bunch of money to pay for wars.  The article says something like they expected the spoils of war to be used to pay it off.  Seems to me I remember a country talking about doing that with Iraqi oil a few years back.

I guess all bubbles eventually burst, oh well.

[ixtap]

Couldn't agree more. Occasionally we hear something good these CEO's do but there either are not enough of them with good intentions or,( like in Bezo's case being roughly 11% shareholder +/- last I checked awhile ago..).the boards might fire them before they could do to much. Tough part of being publicly traded. To your point being that smart, one would think there would be more creative ideas they could come up with, sell the to there board, and further there brand be it by design or not. Considering his wife got 38 Billion ? and he survived just fine I am sure him and others could do more in ways like wages you suggested and might not even affect there stock.

People don’t read their history.

Social and economic inequality? Check.
Economic mismanagement? Check.
Environmental factors? Check.
Political mismanagement? Check.
Expensive wars? Check.
Successful opposition to reforms? Check.
Extravagant lifestyles of the leadership and elites? Check.

Ya know, it didn’t work out real well for the elites in late 18th century France.

Yeh - Well this printing all this money kind of reminds me of the stories of the Weimar republic.

https://en.wikipedia.org/wiki/Hyperinflation_in_the_Weimar_Republic

Seems like they borrowed a bunch of money to pay for wars.  The article says something like they expected the spoils of war to be used to pay it off.  Seems to me I remember a country talking about doing that with Iraqi oil a few years back.

I guess all bubbles eventually burst, oh well.

The Weimar Republic came about after the Great War. And yes, Germany went into debt to fund that war, but they were also subjected to crippling reparations at the end of the war. Most historians focus on these reparations when talking about Germany's "war debt" over the debt incurred fighting the war.

[SwordGuy]

Think of the reparations payments as the "pain and suffering" component of a legal judgment against them.    Huge swaths of an entire generation died in that war and the victors wanted those responsible to pay thru the nose.   

May not have been the wisest approach in retrospect, but it was certainly understandable.

[LWYRUP]

Warring militias in the streets, cat. 4 hurricane approaching, another 0.82% increase today for the S&P 500... 

I really just need to stick to real estate law and stop pretending I understand what moves the stock market. 

[Fomerly known as something]

Think of the reparations payments as the "pain and suffering" component of a legal judgment against them.    Huge swaths of an entire generation died in that war and the victors wanted those responsible to pay thru the nose.   

May not have been the wisest approach in retrospect, but it was certainly understandable.

And it was not what Woodrow Wilson wanted.  I listened to some NPR program basically about the Spanish flu and apparently Wilson was very anti reparations, but he got very sick at one point during treaty negotiations and when he came back to the table he didn’t hold a firm line.

[SwordGuy]

Think of the reparations payments as the "pain and suffering" component of a legal judgment against them.    Huge swaths of an entire generation died in that war and the victors wanted those responsible to pay thru the nose.   

May not have been the wisest approach in retrospect, but it was certainly understandable.

And it was not what Woodrow Wilson wanted.  I listened to some NPR program basically about the Spanish flu and apparently Wilson was very anti reparations, but he got very sick at one point during treaty negotiations and when he came back to the table he didn’t hold a firm line.
[/quote

No, it wasn't.  Then again, the USA didn't suffer the huge losses that France and Britain did.   We might have sung a different tune if we did.   

For example, in WWII we expected to incur about 1,200,000 casualties invading the Japanese islands.    (We also expected the Japanese would have had about 10,000,000 casualties.)    We decided "Screw that.    They started this.  They can feel the pain instead of us."   So we nuked them.   Can't say it was the wrong decision, either.   The Japanese as a whole came out ahead due to that decision.  (Obviously, those in Hiroshima and Nagasaki didn't.)  Truman was certainly unwilling to lose that many more Americans when we had an alternative because he didn't know how to explain to all those mothers and fathers of dead sons why he had the ability to stop the war without their son's death -- and didn't use it.

[Bateaux]

Getting through Hurricane Laura OK thus far.  We're South of Baton Rouge and West of New Orleans.   Haven't lost power or had damages.  Western Louisiana and East Texas will be hurting for a long time however.  Send them some love.

[soccerluvof4]

Getting through Hurricane Laura OK thus far.  We're South of Baton Rouge and West of New Orleans.   Haven't lost power or had damages.  Western Louisiana and East Texas will be hurting for a long time however.  Send them some love.

For sure! the DW and I were talking about that this morning and all the areas in the country including near us that are dealing with alot more on top of the Pandemic. Stay safe!

[bluebelle]

I'm feeling 'have' guilt today.....with all that's going on in the world, natural disasters, people loosing jobs/homes/businesses, I feel guilty that my nest egg has not only recovered but has reached new highs.

I know I'm not 'lucky', I'm here through hard work and diligence.....the only 'gifts' I got were a mind that works the way it does, parents that encouraged/helped with university and I live in Canada and the benefits that comes with that.

Still I feel guilty....you're the only people I can tell.   I can't talk about it IRL.   I don't have the assets of many on this group, but I have more than my immediate circle IRL.

[pecunia]

Getting through Hurricane Laura OK thus far.  We're South of Baton Rouge and West of New Orleans.   Haven't lost power or had damages.  Western Louisiana and East Texas will be hurting for a long time however.  Send them some love.

Good Luck!  Seems like there are a lot more big storms than there used to be.

[couponvan]

Warring militias in the streets, cat. 4 hurricane approaching, another 0.82% increase today for the S&P 500... 

I really just need to stick to real estate law and stop pretending I understand what moves the stock market.

I'm just going to say - I used to audit employee benefit plans of law firms.  They always "had" to have individual brokerage accounts for attorneys.  The attorneys would have hundreds of trades each year in their brokerage accounts. There'd be 1 or 2 attorneys at a firm that were successful at this effort and had significant returns, but the vast majority seemed to just never do well.  Day trading is not what you went to law school for.  (I am married to an attorney - he's crowing about his Tesla stock right now, but that same dude has historically bad taste in stock.  Luckily the majority is in index funds and it's only his fun money in individual stocks.)

[Buffaloski Boris]

I'm feeling 'have' guilt today.....with all that's going on in the world, natural disasters, people loosing jobs/homes/businesses, I feel guilty that my nest egg has not only recovered but has reached new highs.

I know I'm not 'lucky', I'm here through hard work and diligence.....the only 'gifts' I got were a mind that works the way it does, parents that encouraged/helped with university and I live in Canada and the benefits that comes with that.

Still I feel guilty....you're the only people I can tell.   I can't talk about it IRL.   I don't have the assets of many on this group, but I have more than my immediate circle IRL.

I'm sorry that you're feeling guilt for your wealth.  There might be a bit of a cultural difference between Canadians and Americans in that sense.  I have zero wealth guilt.  As in none, nada, zip. I have a responsibility I think for using what I have wisely and morally, but guilt about having it?  Nope. In my view if you've somehow figured out a way to save money and build your wealth in spite of the godawful political governance, the wretched taxation, and the ever-present thievery, you should be applauded, not made to feel like you're done something wrong. Congratulations! You've figured out the code! 

There is a point I think where wealth needs to be reined in a bit and is likely counterproductive, but none of the folks assembled here are, to my knowledge, in the $100 million net worth and up range.

I think it's immensely entertaining to look at the personal wealth of those who profess to be "concerned" about excessive wealth.  Mike Bloomberg?  Now there's a populist for ya.  Net worth estimated at around $36 billion.  Even Bernie Sanders is in the 2 comma club; he would feel right at home with us given his personal net worth is estimated at being somewhere in the $2 million range.

A lot of those who profess to be "concerned" about concentrations of wealth seem to be more motivated by pulling up the ladder so others can't climb up.  Much more so than they are about any concerns about equity.  By and large they're NIMBYs and hypocrites shedding gallons of crocodile tears, who think that wealth is only good if they're the ones who possess it.

So let me congratulate you on your nest egg and wish you good fortune in acquiring enough to achieve your dreams!