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Learning, Sharing, and Teaching => Real Estate and Landlording => Topic started by: KingCoin on May 06, 2014, 09:34:53 PM

Title: Author Makes a Case for Renting
Post by: KingCoin on May 06, 2014, 09:34:53 PM
An amusing and thought provoking (if imperfect) analogy:
http://www.nytimes.com/2014/05/06/upshot/everyone-wants-to-be-a-homeowner-why-not-a-foodowner.html
Title: Re: Author Makes a Case for Renting
Post by: arebelspy on May 06, 2014, 10:05:35 PM
If I could lock in today's food prices for the next 30 years, I'd be all over that.
Title: Re: Author Makes a Case for Renting
Post by: Heart of Tin on May 07, 2014, 07:42:07 AM
Someone needs to inform this author that commodity options trading is totally a real thing that actually happens, not a hypothetical. It doesn't happen in precisely the way he supposes, but the some of the absurdity of his supposed food contracts evaporates when you realise that people actually do speculate on the future price of chicken, yet the world food market has not crumbled.
Title: Re: Author Makes a Case for Renting
Post by: Zamboni on May 07, 2014, 08:07:42 AM
Porkbellies (whatever those are) was where it was at in the movie Trading Places.
Title: Re: Author Makes a Case for Renting
Post by: S0VERE1GN on May 07, 2014, 08:10:16 AM
If I could lock in today's food prices for the next 30 years, I'd be all over that.

anything is possible if you freeze dry your food and believe in yourself.

Just kidding, don't do that.
Title: Re: Author Makes a Case for Renting
Post by: plainjane on May 07, 2014, 08:27:24 AM
Porkbellies (whatever those are) was where it was at in the movie Trading Places.

Pork bellies are exactly what they sound like.  The raw material for bacon.
Title: Re: Author Makes a Case for Renting
Post by: Eric on May 07, 2014, 12:20:20 PM
Porkbellies (whatever those are) was where it was at in the movie Trading Places.

Pork bellies are exactly what they sound like.  The raw material for bacon.

Which you might find in a bacon and lettuce and tomato sandwich.

http://www.youtube.com/watch?v=emvySA1-3t8
Title: Re: Author Makes a Case for Renting
Post by: bostonjim on May 07, 2014, 12:57:49 PM
Porkbellies (whatever those are) was where it was at in the movie Trading Places.

Nope, Billy Ray and Winthorpe made their fortune in the frozen concentrated orange juice (FCOJ) pits at the Comex...
Title: Re: Author Makes a Case for Renting
Post by: Zamboni on May 07, 2014, 02:08:21 PM
OJ is boring.  Pork bellies is where it's at (in a bacon, lettuce, and tomato sandwich, lol)
Title: Re: Author Makes a Case for Renting
Post by: KingCoin on May 07, 2014, 06:30:54 PM
Someone needs to inform this author that commodity options trading is totally a real thing that actually happens, not a hypothetical. It doesn't happen in precisely the way he supposes, but the some of the absurdity of his supposed food contracts evaporates when you realise that people actually do speculate on the future price of chicken, yet the world food market has not crumbled.

While you can technically trade commodity futures, they're not really analagous to a mortgage in many ways.

1) They're not useful for retail consumers. One futures contract on wheat is 5000 bushels. You could use them for pure speculation, but unless you own a 5000 acre farm or are General Mills, they're not helpful from a cost-hedging perspective.
2) They mostly trade short dated, 1 year and less. This makes them more analagous to a one or two year lease than a 30yr mortgage (though some futures contracts trade as long as 7 years).
3) Futures are marked to market, and you have to post daily margin. Your bank won't ask you to pony up 50k if the the price of your 500k home falls 10%.

I don't think long dated mortgages are evil, but I can appreciate that they can be market distorting.