The Investment Thread

[PlayerHader]

On 8/4/2022 at 3:22 PM, PlayerHader said:

Just got another email. Ally goes to 1.6% tomorrow.

Bump to add that Ally has jumped a couple times in the past month and is up to 2.0% as of today. It was 2.5% when we decided to move all our cash there back in 2018 and bottomed out at .5% in early to mid 2020, I believe.

You obviously aren’t beating inflation, but it’s nice to get something for your cash. My US Bank account, which I’ll be closing very soon, sits at .01%. It’s robbery right now.

[GAME05]

I'm trying to figure out what company would be a good play with any coming food and energy shortages in Europe. Maybe Repsol? 

[nate82]

16 hours ago, GAME05 said:

I'm trying to figure out what company would be a good play with any coming food and energy shortages in Europe. Maybe Repsol? 

Europe sounds a bit risky to me right now but energy would be a good guess there.  

[LouisEly]

16 hours ago, nate82 said:

Europe sounds a bit risky to me right now but energy would be a good guess there.  

Definitely energy.  I'd look into electric energy providers and any global alternative energy providers.  The EU governments should be providing every incentive they can to consumers to move away from using oil and gas, and if the people of the EU are smart they are investing in any alternative energy home heating and transportation option they can find.

[GAME05]

Admittedly I've been doing more speculating than investing this year, but it's been treating me fairly well.

The brother works in the energy industry and he really likes the future of alternative aviation fuel. Darling, Neste and Calumet seem to be doing most of it, though they've gone up a good bit the past few months and I'm inclined to wait on what I expect would be a good drop once the Ukraine situation ends.

[nate82]

56 minutes ago, GAME05 said:

Admittedly I've been doing more speculating than investing this year, but it's been treating me fairly well.

The brother works in the energy industry and he really likes the future of alternative aviation fuel. Darling, Neste and Calumet seem to be doing most of it, though they've gone up a good bit the past few months and I'm inclined to wait on what I expect would be a good drop once the Ukraine situation ends.

I wouldn't expect the Ukraine situation to end any time soon this could last for another year or more.  Right now the war in Ukraine is a war of attrition without an end in sight at this time.  

[Fear The Chorizo]

On 9/3/2022 at 9:08 AM, GAME05 said:

I'm trying to figure out what company would be a good play with any coming food and energy shortages in Europe. Maybe Repsol? 

Gazprom, unfortunately - might be tricky to find a way to get money invested with all the sanctions, but that hasn't stopped Russia from getting its oil and gas sold.

Much of western Europe is in a really bad spot in terms of being incredibly dependent on receiving energy from outside its borders.  I hope they get some things figured out quickly - otherwise they are in for a world of hurt this winter.

[homer]

Not really an "investment" but if you are looking to buy a used car, you may want to wait a few months (same person mentions Dec - Mar):

 

Investing related - this guy seems like a decent Twitter follow 

[Fear The Chorizo]

12 minutes ago, homer said:

Not really an "investment" but if you are looking to buy a used car, you may want to wait a few months (same person mentions Dec - Mar):

 

Investing related - this guy seems like a decent Twitter follow 

I really hope he's right - both our vehicles are in that queasy spot in terms of mileage/age that it feels like anytime a significant repair comes up we question whether it's worth it compared to just buying a new vehicle (we consistently purchase used cars traded in after their initial lease is up).  Had to replace a differential on my ride this summer, which would've typically led to me changing vehicles if car prices weren't so insane.  If they get the chip shortage sorted out that relieves the delays getting new vehicles purchased and on the road faster, that should drive used car prices down even faster.

Those prices almost have to crater because people are just not looking to buy anything substantial unless they absolutely need to right now - the mechanic I go to said his business has never been better aside from all sorts of part shortages, because if people have a car that isn't totaled they're holding onto it for dear life. 

Guessing home prices are going to hit a wall and fall as well, although that might be due more to rising interest rates shocking that market than a lack of demand.  People have funds for housing, but the combo of skyrocketing mortgage rates and home prices are a double whammy that forces many 1st time homebuyers to stick with paying their rising rents and keeps current homeowners in their own home.

[owbc]

Mortgage rates have plateaued (and are now falling slightly) so I don't think we're going to see any dramatic decline in the housing market, other than the seasonal slowdown. I'm sure it will go right back to being insane again next spring. The massive explosion in rent prices is only further tipping the scales in favor of more people wanting to own rather than rent. 

I do think we're likely to see a construction boom again as materials costs have plunged and housing remains scarce. 

[nate82]

The chip shortage is coming to an end by the end of the year is what they are saying.

There should be new plants coming online in the next couple of years also.  One day pant in Phoenix and I believe another in Texas.  This should help supply a bit.

[LouisEly]

4 hours ago, owbc said:

Mortgage rates have plateaued (and are now falling slightly) so I don't think we're going to see any dramatic decline in the housing market, other than the seasonal slowdown. I'm sure it will go right back to being insane again next spring. The massive explosion in rent prices is only further tipping the scales in favor of more people wanting to own rather than rent. 

I do think we're likely to see a construction boom again as materials costs have plunged and housing remains scarce. 

I don't know about that.  Maybe for apartments/rentals, but new home inventory is up to an almost 12-month supply.

I've heard that about used cars as well, but everyone I've spoken to recently (small sample) who is actively looking for a vehicle has said that inventory is still low and it's hard to get what they want.  For new vehicles almost everyone has said that they've had to go to multiple dealers to try to get on a reasonable waiting list for what they want.  I just don't see demand going down, so supply is going to have to increase significantly.

[Fear The Chorizo]

6 hours ago, owbc said:

Mortgage rates have plateaued (and are now falling slightly) so I don't think we're going to see any dramatic decline in the housing market, other than the seasonal slowdown. I'm sure it will go right back to being insane again next spring. The massive explosion in rent prices is only further tipping the scales in favor of more people wanting to own rather than rent. 

I do think we're likely to see a construction boom again as materials costs have plunged and housing remains scarce. 

Mortgage rates haven't plateaued at all - they're just waiting for the next Fed rate hike announcement to continue proceeding higher.  They are basically at 6% on average, which hasn't been seen since 2008.

https://www.cnn.com/2022/09/08/homes/mortgage-rates-september-8/index.html

 

[nate82]

On 9/6/2022 at 5:45 AM, Fear The Chorizo said:

Gazprom, unfortunately - might be tricky to find a way to get money invested with all the sanctions, but that hasn't stopped Russia from getting its oil and gas sold.

Much of western Europe is in a really bad spot in terms of being incredibly dependent on receiving energy from outside its borders.  I hope they get some things figured out quickly - otherwise they are in for a world of hurt this winter.

It is mostly Germany that is in trouble.  Which basically means all of western Europe because Germany is basically the biggest economy in western Europe.  France is not even being impacted by the Ukraine war.  Why is that?  It is because France gets about 70% of its electricity from nuclear power plants compared to Germany which only gets about 13% because Germany has shut down the majority of their nuclear power plants.  Germany was supposed to shut down all of its nuclear power plants by the end of this year and thankfully for Germany the Ukraine war stopped this.  

Not that I want to see a positive out of war but this is a positive for Germany.  I believe Germany only has 3 operational nuclear plants right now but could bring a few more back online that they shutdown.  Ironically Germany has started to use more coal to fuel its energy deficiency which we all know now is one of the least green friendly options.

I can't believe I am going to say this but the world needs to be more like France when it comes to energy options.  Right now France gets 69% from nuclear, 11% from hyrdro, 7% wind, 6% gas, 2% solar and 5% other.  If the US wanted to be serious about green energy it would follow the French model which is more nuclear.  The US currently sits at about 19% of its total energy from nuclear.  That needs to increase to about 50-65% in the next 20-30 years.  Renewables are right around where they should be.  The US is already at about the same for wind and solar as France is so that goal has been reached.  

Hopefully our government wakes up and starts investing more into nuclear.  While the US can produce enough on its own through natural gas it is time to start retiring the coal plants.  If the US replaces its coal plants with nuclear plants that would get the US to about 40% nuclear.  Also one nuclear plant equals about two coal plants or about 3 (1gw) sized renewable plants.  Not sure why we are not making more nuclear plants as this seems to be the correct choice over green renewable plants.  Environmentally in total cost to the environment nuclear is the best option.  

[MrTPlush]

Home prices lately have been interesting to watch. I have heard some places the market has died and reducing prices has becomes common...but that seems like larger metro areas. In my part of Wisconsin things are still going pretty strong...especially sub $300k. Looking at sales in my town, still most going for $10k+ over asking. I know one person who just listed in their city. Very average and small 2 bedroom house got an offer $10k over asking in a few days and too many showings to even try to count. 

I don't know, high increases in price and interest rates still haven't stopped people from aggressively shopping. Even inflation hasn't scared people off. People keep clamoring for the moment home prices fall tens of thousands, I just don't see it. Not without a bad recession. People said it two years ago that they would just wait. Well they waited...and now they have even worse prices and high interest rates. 

I am kinda on the boat where prices might plateau and get stagnant...but not sure I see homes losing 10% or more of their value. If they haven't done it yet...can't imagine it will happen.

[LouisEly]

All real estate is local.  If someone lives in an area where supply is low and they have a median or less priced home they will probably not have to drop price at all and may still get over listing.  If someone lives in an area where supply is high or they are priced on the upper end of the spectrum, they will likely have to drop price.

[Fear The Chorizo]

A few years Germany and much of the EU actually incentivized burning wood pellets by claiming it as "renewable" since trees grow back...with that line of thinking, fossil fuels are also renewable because biomass in the earth eventually turns into coal/oil/natural gas - problem is that burning wood for energy is worse than fossil fuels in terms of GHG emissions and it has led to a deforestation problem that should have been all to easy to predict:

https://www.nytimes.com/2022/09/15/world/europe/europe-wood-energy-deforestatation.html

Energy policy needs to be focused on it being incredibly reliable, resilient, secure and cost-effective above all else.  Once those factors are addressed satisfactorily, then industry can work around the fringes to improve overall environmental impact (not just from energy emissions at a power plant level, but from all aspects of energy production) and continue to improve via technological advancement.  If energy policy is driven too much by secondary factors or becomes too reliant on inconsistent energy sources for new generating capacity to provide a growing population, you wind up with scenarios like the above where developed continents are reverting to medieval energy production by burning wood on an industrial scale because it gets countries a few percentage points away from reliance on fossil fuel/nuclear sources.

 

 

 

[nate82]

9 hours ago, LouisEly said:

All real estate is local.  If someone lives in an area where supply is low and they have a median or less priced home they will probably not have to drop price at all and may still get over listing.  If someone lives in an area where supply is high or they are priced on the upper end of the spectrum, they will likely have to drop price.

Houses in Phoenix are still selling at a premium.  Even new houses in some areas are starting at $600k.  The migration of people from California needs to stop already but is unlikely as a lot of jobs are moving from NY and California to Phoenix.  The company I work for will be moving another group from NYC to Phoenix soon.  These are also all high paying jobs in finance.

Then there is the TSMC plant opening up in the next year or two.  But I have heard those jobs will pay closer to Taiwan wages.  Which is going to be challenging for those workers to find affordable housing in that area.  Majority of the houses in that area range from $400k - 2m+.  

[nate82]

Another 75 BPS raise.  With another 75 planned for November and a 50 in December.

The rate increases look to continue through 2023.

[wallus]

Yes, the housing market is local. We are looking to do a major upgrade to our housing situation and there isn't much out there. One house that we like a lot is clearly significantly overpriced and has been on the market almost 6 months. If your house isn't selling in a month or so, you are overpriced.

Same for an investment property I put an offer in on and didn't even get a counter. Now it is sitting on the market.

[LouisEly]

Not everyone who puts a property on the market has to sell.  Sometimes it's a "make me move" number.

[wallus]

Unless you own another place or have one lined up "make me move" in this market is pretty risky.

[Fear The Chorizo]

On 9/23/2022 at 9:21 PM, wallus said:

Unless you own another place or have one lined up "make me move" in this market is pretty risky.

Unless people are relocating geographically to an area with significantly lower home/property values than their current location, or are newfound empty nesters looking to sell their now oversized home and downsize to something smaller that also costs less, now is definitely a risky/uneven time to sell and you really have to know what your local market conditions are - particularly if selling and then buying something new results in you having to grab a mortgage at interest rates not seen since the early 2000s.  If you own your home outright or have enough equity to wind up in a new place/property without a mortgage that fits you better, full steam ahead on listing right now.

Home values should stagnate a bit due to those escalating mortgage rates....but they likely won't start uniformly dropping across the board until the job market feels the effects of the recession that's been slowly building steam throughout 2022 and foreclosures start adding to the market - hopefully not to the extent of what happened during the housing crash of 2008-2011 since the lending market isn't the cause of this recession, but there will be an impact. 

[Samurai Bucky]

I-Bonds.  So let it be written, so let it be done ?

[nate82]

The $4 gas prices were nice while they lasted. Should see an increase at the pump around December with OPEC now deciding to cut production.

Probably will see gas prices around $5-6 as an average starting in December.  The Fed is definitely going to have to rethink its rate hike if oil goes north of $110 a barrel.