Investor · Midlothian, VA · Member since 2015 · 305 posts · 199 votes
I have been watching the last 4 months in absolute awe. Unemployment is through the roof, businesses are going bankrupt, most people are staying home not spending money yet the stock market and Real Estate market are doing great. The US government has done a lot to try and curb the effects that Covid has had on the economy but can it last? The housing market in my local market, Richmond, VA, is red hot. Interest rates are super low and the inventory is low so I feel those two factors are carrying the market for now but how long can that last? We have already seen a steep decline in higher end properties across the nation. I fear people are being lured into a false sense of security with the current market conditions and are not preparing themselves for the fall out. Thoughts?
I'd say the answer is definitely there is a probability that something might possibly happen sometime soon. (*grins)
With great kindness I say this: this post reads exactly like the 2-3 posts per week that have been on this board since 2015. Hundreds of people have been predicting crashes, recessions, corrections, and disaster for at least 5 years. Still waiting. All we can do is if/when it happens, be prepared to take advantage of whatever situation that develops, and it might not develop in all markets at the same time or even go in the same direction.
Example: In late February thru mid-March this year the stock market tanked for about a 3-week period, then started to rise and has kept rising generally since then with a few hiccups. I was ready with cash in the bank and bought several solid companies at 35-40% off their peak price. Today, they've recovered all but about 10% of their value. No one could have predicted that 3-weeks crash period even with all the data, modeling, forecasting, etc. It happened when it happened, I was ready, and I went "all in" knowing that if those companies tanked, America was going down the tubes shortly thereafter. So the two outcomes were either buy solid companies that would most likely recover while they were on sale, or we were going to end up on "Mad Max" apocalypse, and my stock market loss would be irrelevant. You have to be ready when the time comes. There's no second place trophies/rewards for those who wait for hindsight to validate whether or not the course of action was correct. My strategy was simple: I didn't seek to get the lowest price (I bought about 4 days before it hit bottom, but at the time I didn't know that of course), but I sought to get a good price, and I was successful.
Bottom line is a wise investor makes money when the markets are rising or falling. Sitting on the sidelines is for the 3rd - 4th stringers. Get in the game and play.
@Scott Lennon I think we really need to wait and see what happens in the next 6-12 months as eviction moratoriums are lifted and the various government assistance programs dry up.
I’ve heard some people speculate that since the majority of the lay offs are service workers (most don’t buy houses) that residential RE values will be fine (who knows).
On a macro scale over the long term, I think it’s reasonable to speculate that everything currently happening is going to exacerbate the gap between the rich and the poor and further reduce the size of the middle class. Our assets will likely inflate in value quite a bit in the coming years (even if there is a drop at first) and home ownership will be harder and harder for the average person.
I'd say the answer is definitely there is a probability that something might possibly happen sometime soon. (*grins)
With great kindness I say this: this post reads exactly like the 2-3 posts per week that have been on this board since 2015. Hundreds of people have been predicting crashes, recessions, corrections, and disaster for at least 5 years. Still waiting. All we can do is if/when it happens, be prepared to take advantage of whatever situation that develops, and it might not develop in all markets at the same time or even go in the same direction.
Example: In late February thru mid-March this year the stock market tanked for about a 3-week period, then started to rise and has kept rising generally since then with a few hiccups. I was ready with cash in the bank and bought several solid companies at 35-40% off their peak price. Today, they've recovered all but about 10% of their value. No one could have predicted that 3-weeks crash period even with all the data, modeling, forecasting, etc. It happened when it happened, I was ready, and I went "all in" knowing that if those companies tanked, America was going down the tubes shortly thereafter. So the two outcomes were either buy solid companies that would most likely recover while they were on sale, or we were going to end up on "Mad Max" apocalypse, and my stock market loss would be irrelevant. You have to be ready when the time comes. There's no second place trophies/rewards for those who wait for hindsight to validate whether or not the course of action was correct. My strategy was simple: I didn't seek to get the lowest price (I bought about 4 days before it hit bottom, but at the time I didn't know that of course), but I sought to get a good price, and I was successful.
Bottom line is a wise investor makes money when the markets are rising or falling. Sitting on the sidelines is for the 3rd - 4th stringers. Get in the game and play.
Interesting point of view. I think home-ownership is looking pretty easy right now with the rates so low and qualifying standards don’t seem to be overly strict. We will see. I admit I do not know what the future holds.
I agree you have to be in the game and play. But I think jumping in the game without a solid understanding of what it going on will most likely end in disaster. Congrats on your stock wins. Well done!
Love your post! Perhaps I'm an cockeyed optimist, but like any other investment ecosystem, with peaks and valleys come winner and losers. This will be no different. My gut tells me the government is propping things up and there will inevitably come a "thud". That doesn't mean there aren't opportunities embedded therein. Like Erik W. wrote, "get in the game and play".
@Account Closed when you say "will stay this way" do you suggest that the market has been static in 2 months since my market snapshot comment? or are you looking for an update since then?