Stock Market Stinks (Down -800 points Today) - Real Estate Great
Specialist · Paradise Valley, AZ · Member since 2018 · 3k+ posts · 2k+ votes
Stock Market Stinks (Down -800 points Today) - Real Estate Great
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I thought I was seeing objects falling from skyscrapers in Manhattan until I realized these were investment bankers jumping out of the windows ....
Just kidding. We had 900 point decline in Feb and we are still standing.
HOWEVER, clouds are on the horizon
a) International markets have been routed - from 50% down in Asia and Russia to 15% down in Europe
b) Interest rates are climbing, 30 year mortgage hit -- shock, horror -- 5% again
c) Real estate markets in some regions are showing seasonal cooling down
d) Tariff wars
e) Oil prices rising
f) Employers cannot find employees
The next 12 months should be interesting ....
When the credit markets sneeze, the real estate market will catch a cold ....
193 Replies
- Investor · Houston, TX · Member since 2017 · 129 posts · 62 votes8y
Originally posted by @Caleb Heimsoth:
Everyone the dow is up 400 points today! Guess the recession is over. Wow that was quick.
"Not so fast my friend" - Lee Corso
- Specialist · Paradise Valley, AZ · Member since 2018 · 3k+ posts · 2k+ votes8y
Originally posted by @Josh Nigh:
@Mike M. Just stop with the doom and gloom BS. You sound like somebody on a yahoo finance message board.Lol. Did you happen to notice that Bigger Pockets is a real estate investment website? I'm sure there are plenty of sites where you can promote the Stock Market, puts, calls, hedges, bonds, day trading and such.
But, real estate is far safer than the Stock Market for the average investor and real estate has far more benefits for the average investor. The last few days of the Stock Market as simple examples. Here are some other reasons:
Why Real Estate Beats the Stock Market – Most People who invest in the Market with their 401(k) don’t manage their investment properly. They think the Fund Manager does that for them, but that isn’t how things work. By investing in the Stock Market you are usually getting some benefits, yes, However, you are missing the *Greater* Benefits that Real Estate has. There is Good, Better & Best. It’s stepping over dollars to pick up nickels.
Real Estate Stock Market 1. Captured Equity – you can buy a $200k house for $180k – instant equity – many houses sell “off market” that sell for below value 1. Captured Equity - Try asking your broker to sell you $200k of Twitter for $180k – he will laugh at you 2. Cash Flow – a typical rental gets cash flow and the ones I have generate $500 to $1,000 a month cash flow 2. Dividends – *Sometimes* a Stock will pay dividends – but that is rare these days. 3. Tax write offs – having properties gives you great tax write offs so you *keep* more of your money. Actual more dollars into your pocket. 3. Tax write offs – None – instead they are heavily taxed and have substantial on-going fees (fees that are often hidden from the investor until they go to cash out) 4. Appreciation – Expected & hoped for but Not Guaranteed 4. Appreciation – Expected & hoped for but Not Guaranteed 5.Forced Appreciation– You can improve a property and increase it’s value (Fix & Flip) and other improvements 5.Forced Appreciation – NONE – The only way to make Pepsi go up in value that you have control over is to drink more pop 6. Capital Gains – Depends on your tax situation 6. Capital Gains – Depends on your tax situation 7. Depreciation – you actually reduce your taxes Substantially by taking the required depreciation the IRS imposes. 7. Depreciation – None (that is a bad thing) 8. Defer Taxes forever – by setting up your property to be inherited by your heirs, they get a “Stepped Up Cost Basis” and have no taxes to pay on the properties. This is Hundreds of Thousands of Dollars HUGE! To your heirs. 8. Defer Taxes for Heirs – No. When your heirs inherit your 401(k) they pay taxes on it as though they bought it the year you did. Most of the inherited 401(k) money goes to Uncle Sam, thank you very much! (You can do better by buying Real Estate in your 401(k) 9. If everything crashes, and people start losing their homes, they will need to rent your properties. 9. If everything crashes, your Stocks are worthless. 10. Principal Pay down – your renters pay down your mortgage until the property is “free & clear” 10. Principal Pay down – No No principal pay down 11. Amount Needed - You can get into real estate with 20% down (or substantially less if you use “Subject 2” and “Wraps”) 11. Amount Needed- You get into real estate with 100% down 12. Joint Venture – You can partner with someone for your first couple of deals to learn the ropes. 12. Joint Venture – You are on your own baby! 13. Real Estate Can Be Learned by Average Person 13. 401(k) Mutual Funds Can Be Learned by Average Person (puts, calls, hedge, margins, VIX, timing, day trading, yield, etc are all too complicated for typical investors) 14. When the Real Estate Market crashes – you still have your renters paying you money. 14. When the Stock Market Crashes, and Seconds count, you are only Minutes away from Selling if the broker will take your call - Specialist · Paradise Valley, AZ · Member since 2018 · 3k+ posts · 2k+ votes8y
That post is a little tough to read, let's try this: CLICK image to enlarge
But, real estate is far safer than the Stock Market for the average investor and real estate has far more benefits for the average investor. The last few days of the Stock Market as simple examples. Here are some other reasons:
- Rental Property Investor · Marietta, GA · Member since 2018 · 41 posts · 43 votes8y
As a person who was literally about to press GO on a rollover from my standard stock market index-based 401k (with my previous employer) to a self-directed IRA so I can do more REI, I feel sick at my stomach. Literally, about a week and a half ago, I decided to go ahead and take my profits and do the rollover. What a crap sandwich. Now I can't afford wait for the recovery as I'm under contract and need the liquid cash. Ugh. So irked right now. :-(
Best quote ever from Warren Buffett
“Calling someone who trades actively in the market an investor is like calling someone who repeatedly engages in one-night stands a romantic.”
For me REI is a definitely 'long term relationship'
Originally posted by @Account Closed:
How many people had to file bankruptcy during the Great Recession due to real estate investments vs. stock market investments? How many people lost their homes due to real estate vs. stock market?
Originally posted by @Gloria Sheridan:
As a person who was literally about to press GO on a rollover from my standard stock market index-based 401k (with my previous employer) to a self-directed IRA so I can do more REI, I feel sick at my stomach. Literally, about a week and a half ago, I decided to go ahead and take my profits and do the rollover. What a crap sandwich. Now I can't afford wait for the recovery as I'm under contract and need the liquid cash. Ugh. So irked right now. :-(
if you did the rollover a week ago then you shoud've been out before the drop and have all the cash sitting in an IRA account? I'm confused, did you then go and buy market indexes immediately in the IRA?
Good summary Mike, except you can use Roth IRA's for after tax growth. Also stock market gains are compounded continuously, something RE does not do except for manual transactions into new properties. RE isn't liquid either, so equity is all theoretical. Transaction fees are much higher - imagine having your broker take nearly 10% of your sale price when you sold, and not just the profit?! Then the tax man is still waiting for you when you sell also. The stock market you can literally just automatically purchase without thinking for a second or adjusting anything leaving your time to do whatever you want. RE you have to work to hire people and address issues or constantly work to continually create income. The best case is rentals with a good property manager, but you still have to worry about vacancy or address other major issues and capital expenses over time for maintenance.
Annualized total return for the S&P 500 index over the past 90 years is 9.8%. That's not bad for literally doing nothing.
- @Caleb Heimsoth I agree, I only wish I could double vote your post... you would think as an “investor” people would understand dips in a market... instead you see people so set in their ways that they don’t understand diversification... there are 0% of billionaires who made their money in one single way or asset class. Everyone needs to stop bashing any other opinion as a reason to, or not to, invest in xyz company, property, etc. Find an opportunity and run with it... to say the stock market hasn’t gone up or that the RE market hasn’t gone down is ridiculous... act like an investor and identify opportunities and, when It happens, take your losses and run with them... no one who invested (intelligently) over the last 10-15 years is losing money on any asset class... if you want to be on the Forbes 20 list CREATE something... but I can guarantee you Bezos, Gates, Zuckerberg, etc. didn’t stop at saying you only had to invest in stocks OR real estate to get rich and I’m sure they are well diversified...
- Investor · Saint Paul, MN · Member since 2015 · 663 posts · 512 votes8y
Originally posted by @Account Closed:
That post is a little tough to read, let's try this: CLICK image to enlarge
But, real estate is far safer than the Stock Market for the average investor and real estate has far more benefits for the average investor. The last few days of the Stock Market as simple examples. Here are some other reasons:
The real question is what are you trying to sell? You really seem defensive of RE. Is there something we should know?
- Specialist · Paradise Valley, AZ · Member since 2018 · 3k+ posts · 2k+ votes8y
Originally posted by @Leland S.:
Good summary Mike, except you can use Roth IRA's for after tax growth. Also stock market gains are compounded continuously, something RE does not do except for manual transactions into new properties. RE isn't liquid either, so equity is all theoretical. Transaction fees are much higher - imagine having your broker take nearly 10% of your sale price when you sold, and not just the profit?! Then the tax man is still waiting for you when you sell also. The stock market you can literally just automatically purchase without thinking for a second or adjusting anything leaving your time to do whatever you want. RE you have to work to hire people and address issues or constantly work to continually create income. The best case is rentals with a good property manager, but you still have to worry about vacancy or address other major issues and capital expenses over time for maintenance.
Annualized total return for the S&P 500 index over the past 90 years is 9.8%. That's not bad for literally doing nothing.
Your Comment: "Annualized total return for the S&P 500 index over the past 90 years is 9.8%."
That's great IF you've been in the S&P for the last 90 years. Lol
- Specialist · Paradise Valley, AZ · Member since 2018 · 3k+ posts · 2k+ votes8y
Originally posted by @Eric C.:
Originally posted by @Account Closed:
How many people had to file bankruptcy during the Great Recession due to real estate investments vs. stock market investments? How many people lost their homes due to real estate vs. stock market?
Your question: "How many people had to file bankruptcy during the Great Recession due to real estate investments vs. stock market investments? How many people lost their homes due to real estate vs. stock market?"
I would argue that buying a property on a 100% loan on NINJ (No Income No Job) isn't investing. It is speculating with other people's money and is fraud at best.
- Specialist · Paradise Valley, AZ · Member since 2018 · 3k+ posts · 2k+ votes8y
Originally posted by @Marcus Johnson:
Originally posted by @Account Closed:
That post is a little tough to read, let's try this: CLICK image to enlarge
But, real estate is far safer than the Stock Market for the average investor and real estate has far more benefits for the average investor. The last few days of the Stock Market as simple examples. Here are some other reasons:
The real question is what are you trying to sell? You really seem defensive of RE. Is there something we should know?
Your Question: "The real question is what are you trying to sell? You really seem defensive of RE. Is there something we should know?"
I sell sanity. Market manipulation is real and national debt is real and student debt is real and lack of planning for the future is real. I got caught in the exuberance of the Stock Market when I was young:
- Specialist · Paradise Valley, AZ · Member since 2018 · 3k+ posts · 2k+ votes8y
Originally posted by @Steve K.:
Wait, what? The stock market absolutely does do that for people, in the form of dividends. Many companies even increase dividends in a downturn to keep investors from selling. All you have to do is hold, ignore the rise and fall of the stock price, and collect dividends (just like shrinking equity doesn't phase you as long as the $500 rent check clears). It's no different in stocks or RE. Hold, collect rent/dividends, and you're fine. For example LMT, WFC, WMT, WU, XOM, AAPL, BLK, CA all actually increased their dividend yield during the last crash. Those invested in solid companies with plenty of cash to weather the storm collect dividends and buy more stocks at a discount. Just like RE investors holding solid properties still collect rent (although rents may go down) and if they're brave, go discount shopping. That is if they aren't suffering evictions, foreclosures, vacancies, ARM's, loans being called, the one mill in town closing, etc.
Not too mention all the short sellers who made a fortune playing the swings this week...
RE is awesome but let's not be ignorant about how the stock market works and spread bad information just because we like RE.
(Sorry for the double post, my comment got lumped in with the quote, maybe a mod can clean this up for me?) @Mindy Jensen
Your Comment: "For example LMT, WFC, WMT, WU, XOM, AAPL, BLK, CA all actually increased their dividend yield during the last crash."
Great. How much was the dividend payout for a month on $200,000 of WFC or WMT or any of them ?
I'm getting between $500 and $1,000 per month per property, plus someone else is paying down my mortgage, plus I get to write off my payments and depreciate my properties. I save a ton on taxes as well.
What was the monthly dividend? Not challenging you, just curious if it is even in the ball park. I suspect not.
Oh, wait, I just found this "WFC - A cash dividend payment of $0.43 per share is scheduled to be paid on September 01, 2018" "the dividend yield is 2.92%." Seriously?
- Investor · Houston, TX · Member since 2017 · 1k+ posts · 871 votes8y
The last crash wasn't a crash at all -- it was a breakdown in the market.
When banks stop lending to other banks, because they cannot determine with any level of confidence which assets on balance sheets are really worth something, and how much, OK that is not a cyclical market correction -- that is a broken market system.
There was a time in late 2008 when some big names like CAT and Deere and Honda and Toyota and others like them were unable to obtain debt funding for their financial services captives for a period of several weeks. It was bad.
In a market, you have buyers and sellers, and there is equilibrium at some price. There would be some trading, even if for pennies on the dollar. Not this, back in 08. 2009 sucked bigly, being a minion in financial services.
It is like some third-world nation where your money devalued overnight - only it wasn't the currency it was the mortgage-backed collateral.
This is pretty mild by comparison. In fact there is no comparison.
We got mid-term elections coming up, we got a major trade-war brewing, and we got capital markets that have long been way over priced (in terms of fundamentals). Many have listed a dozen other contributing factors. So we had been due for this. There are normally 3-4 threads on this subject running at all times here on BP.
Those that extol the virtues of raising private money will be shouting from the rooftops that (a) they told us so and (b) now is the time to be raising PM, because the traditional bank debt avenues are going to dry up for a spell.
- Member since 2018 · 7 posts · 2 votes8y
Long term horizon bump in the road as long as you have a "solid" portfolio or individual stock.
Yeah scary but Im holding on, happens every so often.
- Investor · Houston, TX · Member since 2017 · 1k+ posts · 871 votes8y
Originally posted by @Anthony R.:
I feel like I need to point this out again lol .... I'm not a professional and certainly could be wrong, but these are some ominous signals lmao
For those too lazy to googleM is for murder, or so the traders say. You can see it here, almost.
That double top shows the resistance, but you can also clearly see the support line as well. If fact there was resistance right where we are now (at the support line), but the market broke resistance and went up. Now let's see if this is in fact support, or if we drop back down to complete the M.
Either way, you can make money in crumbling markets. Traders like volatility, up or down. It is the doldrums that they don't like. You just need to know how to do a few option strategies to make money (or at least manage risk and protect positions) on the way down.
Easy to say, I realize.
- Property Manager · Lakewood, OH · Member since 2015 · 250 posts · 258 votes8y
Originally posted by @Mark Sewell:
M is for murder, or so the traders say. You can see it here, almost.
That double top shows the resistance, but you can also clearly see the support line as well. If fact there was resistance right where we are now (at the support line), but the market broke resistance and went up. Now let's see if this is in fact support, or if we drop back down to complete the M.
Either way, you can make money in crumbling markets. Traders like volatility, up or down. It is the doldrums that they don't like. You just need to know how to do a few option strategies to make money (or at least manage risk and protect positions) on the way down.
Easy to say, I realize.
Yeah that support line is pretty clear. I think next week is going to make or break it. If it is a true double top then god help 2019 lmao. That's a year long pattern. The resulting downtrend could be enormous. I also think the bearish divergence is super ominous. I'd think if anything the divergence confirms the double top pattern.
- 8yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Anthony R.:
Originally posted by @Mark Sewell:
M is for murder, or so the traders say. You can see it here, almost.
That double top shows the resistance, but you can also clearly see the support line as well. If fact there was resistance right where we are now (at the support line), but the market broke resistance and went up. Now let's see if this is in fact support, or if we drop back down to complete the M.
Either way, you can make money in crumbling markets. Traders like volatility, up or down. It is the doldrums that they don't like. You just need to know how to do a few option strategies to make money (or at least manage risk and protect positions) on the way down.
Easy to say, I realize.
Yeah that support line is pretty clear. I think next week is going to make or break it. If it is a true double top then god help 2019 lmao. That's a year long pattern. The resulting downtrend could be enormous. I also think the bearish divergence is super ominous. I'd think if anything the divergence confirms the double top pattern.
just curious why would those that jumped in in 09 at 7k dow now just start selling and taking profit.. whats wrong with that ?? I know i would at some point..
- Member since 2018 · 5 posts · 3 votes8y@Mark Sewell Technical analysis of stock charts is a waste of time. It was probably made up by people who make their money on commissions of traders. When the market is moving based on emotion and news headlines all those technicals mean nothing. The companies who are moving large volume of stocks have computers trading of an algorithm. It's really interesting reading all the comments. One big pissing contest... Bottom line is that nobody wants to see their portfolio down 40 or 50 percent, even if they represent only paper losses. Sure it takes a lot of discipline not to panic and sell during a major market rout but more importantly it takes financial security and knowing that you are not investing money you will need to pay your bills next week.
- Rental Property Investor · Houston, TX · Member since 2014 · 91 posts · 76 votes8y@Mike M. I don’t see a correction that size as EM is way over-valued and the US is the prettiest girl at closing time. However, I do see more reallocation to hard assets.
Originally posted by @Marcus Johnson:
It’s fun to watch how most people don’t have a clue on here and that index funds have an amazing return. Have fun with your below average returns.
Marcus, thanks for explaining, I thought that most of the total market index funds imitate sp500. Most of my colleagues do X to bonds and 100-X to sp500, where X is their age. You probably think this is not optimal. Could you give examples of your extras that you add to your blend?
- Real Estate Agent · Murrysville, PA · Member since 2018 · 12 posts · 3 votes8yYeah but there was a surge (pump) in the market for quite some time this year. All time highs and pumps are never good, that's why we have a big dump. Small, long term gains are healthy gains
- Specialist · Paradise Valley, AZ · Member since 2018 · 3k+ posts · 2k+ votes8y
Originally posted by @Jay Hinrichs:
Originally posted by @Anthony R.:
Originally posted by @Mark Sewell:
M is for murder, or so the traders say. You can see it here, almost.
That double top shows the resistance, but you can also clearly see the support line as well. If fact there was resistance right where we are now (at the support line), but the market broke resistance and went up. Now let's see if this is in fact support, or if we drop back down to complete the M.
Either way, you can make money in crumbling markets. Traders like volatility, up or down. It is the doldrums that they don't like. You just need to know how to do a few option strategies to make money (or at least manage risk and protect positions) on the way down.
Easy to say, I realize.
Yeah that support line is pretty clear. I think next week is going to make or break it. If it is a true double top then god help 2019 lmao. That's a year long pattern. The resulting downtrend could be enormous. I also think the bearish divergence is super ominous. I'd think if anything the divergence confirms the double top pattern.
just curious why would those that jumped in in 09 at 7k dow now just start selling and taking profit.. whats wrong with that ?? I know i would at some point..
Your Comment:"just curious why would those that jumped in in 09 at 7k dow now just start selling and taking profit.. whats wrong with that ?? I know i would at some point.."
Smart *traders* do what you just mentioned. They are selling (taking profit)
However, the *investors* (Ma & Pa average investor) typically don't Manage their 401(k) and take a bath.
If they don't have real estate cash flow or some other cash flow, and are scheduled for retirement before the market recovers and need that money to live on (think baby boomers) they have a serious problem.
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