All Forum Posts by: William Coet

@Christopher Smith

I remember an interview with Cathie Wood where she discussed valuations for "value" vs. "growth" stocks.  She said it is common to see higher p/e ratios for growth stocks in their growth phase that level off when they reach the value stage.  As you know she is a big proponent of identifying companies with high growth potential (she often refers to exponential growth potential).  I suppose it's riskier, but she is hitting it out of the park.  She'll even go so far as to say that it's risky to be in value and not be in the stocks they choose!  I'm not making an argument for or against, just sharing ideas here.

@Steve K. check Bill Gates' recent comments on needing nuclear to meet electricity demands

Maybe that's why Elon is working on space so that the nuclear fuel for the cars can be disposed of...

@Christopher Smith  Thank you for the explanation. It is always good to hear an example of a measured and balanced approach to stock investing.  The market seems like gambling today, and I am trying to avoid the frenzy.
     I have looked at historical returns for the DOW and S&P and seen multi-decade periods of no returns.  I am therefore convinced it is better to carefully select stocks to get the best returns.
    Do you think we will have to wait for another correction/crash before buying? Are there any stocks in your "buy zone" at their current values? (I wasn't sure if the stocks you mentioned are still in that zone, or if you would only buy those again in the event of a correction/crash).

Thank you again

Hello,

We are looking at a 10 yr HELOC that has an adjustable rate based on the prime rate.  It's attractive because there are no upfront fees. However, we are concerned about the future of the prime rate, and may opt for a fixed-rate conventional mortgage for that reason.

 Where is the prime rate expected to go over the next 10 years, and by how much?

Thanks!

@Christopher Smith   Great reply! It seems your careful timing has worked out very well, and based on your responses you are more knowledgeable on the subject of investing than I am.  I too started picking up RE in 2009 and have dabbled very lightly in stocks (picked up Apple in Dec.2018).  As stated in the original post, at the moment I am trying to decide where to allocate funds between RE and stocks

I would be interested in your opinion of the following: This weekend Cathie Wood (ARK Invest) presented their 2025 estimates for Tesla. Cathie Wood and ARK Invest have proven their ability to achieve better than average returns that beat the indexes. Their "bear case" estimate of $1,500/share would mean a 22% Annualized ROI for the next 4 years (their "bull case" is $4,000/share and "expected case" is $3,000/share by 2025).

As you know, investing in stocks is much easier than owning and managing RE.  With projections like this for a stock such as Tesla, it's hard to justify allocating funds to RE and not placing it in a stock like Tesla.  In my case, it would be diversification as I'm nearly 100% RE for allocated funds.

What are your thoughts on the expected ROI for Tesla? Are there other stocks that you believe will have returns of 15% plus for the next 10-15 years at their current value (without waiting for a significant crash)? Final note: The attractive thing about RE is that I have been able to choose reliable locations that have a steady ROI that shouldn't change significantly and becomes even more attractive once the debt is paid down. (I don't plan to sell).

In conclusion, I am seeking annual ROI of 15-20% or greater, and as the original post stated, I am trying to compare the benefits of RE where I can achieve around 15% vs. Stocks where others, (not me yet) are achieving it.

Thanks you again for your insight.

@Christopher Smith Thanks for the reply. You will want to verify this, but I recall hearing recently that they are considering eliminating or changing some of the passthrough stuff. 

Also, I can get 15-20% annual ROI on real estate. There are people who promise these returns with certain stocks (Tesla being one of them), but I'm always reluctant. I'm interested to know if you think there are stocks that can match or beat 15% annual ROI for the next 10 years.

Thanks for the excellent reply.  Can you elaborate on number 3?  I would like to do this as well.

If a RE investment and Stock investment return the same amount of ROI over a 15 year period and then sold which is the better investment? Assuming a 1031 is not used (they may not exist in 15 years), do certain structures of owning the stock (Roth ira) make the stock investment more desirable from a tax perspective?

Thanks!

Thanks. Appreciation is definitely nice, but the cap rates are much more compressed in those markets. I can pay 5x gross rents and get more cash flow than in most appreciating markets that I've seen where the cost is 10x gross rents. That cash flow adds to total ROI. I suppose there are advantages to both types of markets and would appreciate your perspective if you care to elaborate.