The Investment Thread

[NBBrewFan]

When will my buggy whip stock go up?  I blame the government for cutting horse and buggy subsidies!

[Fear The Chorizo]

First you have to make alternative energy to be the cheaper option and convenient.

And those two reasons are why renewables/green energy will always play second fiddle.  They key is finding and developing something that can replace fossil fuels on a global scale, not just be a niche market in fully developed and wealthy countries who've farmed out much of their heavy manufacturing and mining needs overseas.  I can see an alternative to fossil fuels that will become both cheaper and more convenient with further innovation in nuclear energy in the next century if it is allowed to happen.  Hydrogen, as a fuel source, is one of those holy grail options if its industrial production can happen without using fossil fuels.  Currently, most industrialized hydrogen production uses natural gas as an electrolysis fuel source and it's not a very efficient process.  However, hydrogen could readily be made using the heat generated within nuclear reactors and the use of various catalysts to break down methane into hydrogen gas and solid carbon (solid carbon being a much more desireable and environmentally friendly by-product than CO2 or CO).

[MrTPlush]

13 hours ago, Fear The Chorizo said:

First you have to make alternative energy to be the cheaper option and convenient.

And those two reasons are why renewables/green energy will always play second fiddle.  They key is finding and developing something that can replace fossil fuels on a global scale, not just be a niche market in fully developed and wealthy countries who've farmed out much of their heavy manufacturing and mining needs overseas.  I can see an alternative to fossil fuels that will become both cheaper and more convenient with further innovation in nuclear energy in the next century if it is allowed to happen.  Hydrogen, as a fuel source, is one of those holy grail options if its industrial production can happen without using fossil fuels.  Currently, most industrialized hydrogen production uses natural gas as an electrolysis fuel source and it's not a very efficient process.  However, hydrogen could readily be made using the heat generated within nuclear reactors and the use of various catalysts to break down methane into hydrogen gas and solid carbon (solid carbon being a much more desireable and environmentally friendly by-product than CO2 or CO).

Does it have to play second fiddle though? Fully electric cars are arguably cheaper due to being cheaper than buying gas and the lower cost to maintain. The cost of the vehicles and their respective batteries should continue to go down...though frocing them to be made in the U.S. might make that more difficult. It just is woefully inconvenient at this point for most people. I could see that be fixed enough where electric vehicles could push for a market share around 50%.

Solar energy seems like a cheaper alternative even in more northern climates. I ran the numbers and even for me I think I could save thousands over 20-30 years. My house and bill just aren't big enough for the risks involved. The companies installing and making the products are just so young at this point there is a ton of risk if either of those entities go out of business and you have problems. A 20-year warranty isn't much if the business is gone in 5 years. Reputable companies and higher quality/efficient products should continue to strengthen the solar sector though. 15 years from now I could see solar being a big player in the market. If families start adding 1-2 fully electric vehicles it will make their energy bill a lot bigger and solar might actually push their bill high enough to consider solar. 

[owbc]

This discussion started with a number of very serious concerns about the current and future state of the oil supply. The issues with renewables are certainly not trivial but compared with the status quo the future looks promising. And as noted by others, renewables are already cheaper and the gap will continue to grow as the technologies scale. 

If you want to look at a place that knows how to scale things quickly, look at China. EV sales recently surpassed 20% (25% if you include PHEVs). They are 2-3 years ahead of their targets. 

Now that the "inflation reduction act" has passed we're already seeing billions of dollars invested in battery factories. So it's just a matter of how fast the transition is at this point and how close we get to fully electric (75%? 85%? 95%). It's closer than you think. Other states are starting to follow California in banning gas car sales after 2035. I think we're maybe 10-15 years from seeing gas stations starting to close due decreased demand. Most of them will be gone by the 2040s. Imagine telling someone in the year 2005 that Blockbuster Video would cease to exist in 2020...

[Fear The Chorizo]

11 hours ago, MrTPlush said:

Does it have to play second fiddle though? Fully electric cars are arguably cheaper due to being cheaper than buying gas and the lower cost to maintain. The cost of the vehicles and their respective batteries should continue to go down...though frocing them to be made in the U.S. might make that more difficult. It just is woefully inconvenient at this point for most people. I could see that be fixed enough where electric vehicles could push for a market share around 50%.

Solar energy seems like a cheaper alternative even in more northern climates. I ran the numbers and even for me I think I could save thousands over 20-30 years. My house and bill just aren't big enough for the risks involved. The companies installing and making the products are just so young at this point there is a ton of risk if either of those entities go out of business and you have problems. A 20-year warranty isn't much if the business is gone in 5 years. Reputable companies and higher quality/efficient products should continue to strengthen the solar sector though. 15 years from now I could see solar being a big player in the market. If families start adding 1-2 fully electric vehicles it will make their energy bill a lot bigger and solar might actually push their bill high enough to consider solar. 

We may just be looking at things a bit differently because there's value in renewables where appropriate, they're just not going to be able to replace fossil fuels on a macro/global scale unless the focus is on personal vehicles only.  Get EV use of personal vehicles in the US up to 50% and it would still not be close to the total amount of energy required for overall transportation and construction energy needs for this country alone - planes, ships, freight (truck and rail), and all sorts of heavy equipment still need diesel/jet fuel/oil/etc.  I saw Pepsi ordered a bunch of EV trucks that it will be able to use between its distribution centers equipped with charging stations that will be able to have make routine trips back and forth - those trucks are now a couple thousand pounds over highway limits when fully loaded because of the battery weight but they're allowed to do so because they're EVs.  Scale that up to a majority of semi trucks and then road construction needs to be dramatically re-engineered.  Concrete and asphalt pavement happen to require a ton of fossil fuels for building materials or energy to recycle/construct.

Solar power in northern climates require alot more O&M than people realize, particularly for utility-scale developments - plus solar intensity is diminished 6 months of the year because of the sun being on the wrong side of the equator, requiring larger panel arrays to generate the same amount of energy than if it was constructed further to the south.  Also, snow and ice cover can both prevent panels from generating energy and damage them. 

There needs to be a ton of regulatory pressure on how to manage solar panel waste so it's actually recycled instead of landfilled or incinerated if there's actually a significant environmental benefit.  Mining and manufacturing of the panel aren't eco-friendly and generate their own toxic waste streams that need to be dealt with.  Once panel arrays are constructed and generating electricity, they're pretty benign and very eco-friendly until they stop working.  Solar panels don't last forever, and frankly haven't been used long enough on a utility scale for their waste streams to become a concern, but that's right around the corner.  Right now just throwing the voltaic cells in a landfill or waste a ton of energy incinerating them after stripping the aluminum frame and electrical wiring off it is the preferred method because it's a ton cheaper than trying to separate and reuse those materials in new panel manufacturing.  Not reusing that voltaic cell material means more of it is needed from mining when making new cells.

https://cen.acs.org/environment/recycling/Solar-panels-face-recycling-challenge-photovoltaic-waste/100/i18#:~:text=PV panels contain toxic materials,these resources are mostly wasted.

 

[LouisEly]

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.

I think this is based on several assumptions that don't apply to everyone:

1. You have to live in the same area - people who are retired or people who now can work remote don't have to stay in the same area, opening up many, many options
2. You have to buy another house - there is nothing wrong with renting, especially now with interest rates high
3. You have a family - many homeowners are single or a couple w/no kids and can get a one-bedroom if they need to, opening up many more options
4. You have to have a home that has A, B, C, D, E, F, and G - you don't need stainless steel appliances, an attached 2-car garage, hardwood floors, quartz counters, open kitchen/living room, heated bathroom floor, etc., especially if you are only renting for a year or less

There's plenty of housing options out there (so long as you don't have a big family).

[Fear The Chorizo]

2 hours ago, LouisEly said:

I think this is based on several assumptions that don't apply to everyone:

1. You have to live in the same area - people who are retired or people who now can work remote don't have to stay in the same area, opening up many, many options
2. You have to buy another house - there is nothing wrong with renting, especially now with interest rates high
3. You have a family - many homeowners are single or a couple w/no kids and can get a one-bedroom if they need to, opening up many more options
4. You have to have a home that has A, B, C, D, E, F, and G - you don't need stainless steel appliances, an attached 2-car garage, hardwood floors, quartz counters, open kitchen/living room, heated bathroom floor, etc., especially if you are only renting for a year or less

There's plenty of housing options out there (so long as you don't have a big family).

If you're looking to downsize, or move from a market with higher real estate values to one with lower, and if you've got a significant amount of equity in the place you already own, it's not a bad time to sell and make a move.  Now is a terrible time for 1st time homebuyers and people looking to upsize their home in the same area due to a growing family and for people with minimal equity who would need a new mortgage.  

[owbc]

Housing prices are clearly going to come down, it's just a matter of time. 

I'm throwing a ton of cash into savings to wait for the deals at the end of the upcoming recession when prices are low and rates have gone back down. In an ideal world the vacation rental market crashes as well...fingers crossed. 

[homer]

Is a high interest rate on a new mortgage as big a deal as it used to be? Sure you have a higher payment initially but re-financing takes like 15 minutes now. Maybe the rules around that have changed since I did it way back when. Obviously if you can wait it out, then do so.

[Fear The Chorizo]

19 minutes ago, homer said:

Is a high interest rate on a new mortgage as big a deal as it used to be? Sure you have a higher payment initially but re-financing takes like 15 minutes now. Maybe the rules around that have changed since I did it way back when. Obviously if you can wait it out, then do so.

It is when factoring what type of house you get.

A $300K mortgage at 3% would be roughly a monthly $1,250 loan payment for a 30 yr fixed.  That's where that rate was about 1 year ago.  Now with that rate much closer to 7%, the same $300K mortgage on a 30 yr fixed basis would cost someone about $2,000 a month.  To get the same monthly mortgage payment with a 7% loan vs 3%, the same buyer needs to find a home $190K less in value to move into, which for most housing markets is an entirely different type of property in terms of location/size/etc. 

You can't really refinance until rates get back down to a level that makes sense to do so....and also when your home value gives you enough equity to justify a refi - assuming home values decline and it takes a significant amount of time for mortgage rates to actually drop, new mortgage holders may be stuck with a much pricier loan alot longer than what makes any sort of financial sense.

[wallus]

What are you guys finding for good savings interest rates right now? I am sitting on a sizeable house down payment and want to be doing better than what I am doing right now.

[nate82]

1 hour ago, wallus said:

What are you guys finding for good savings interest rates right now? I am sitting on a sizeable house down payment and want to be doing better than what I am doing right now.

Affirm is at 2.5 APY but that is only available through their app.  
 

Capital one is at 2.3, Lendingclub 2.85, sofi 2.5,  Marcus 2.35 and Ally 2.25.  Just stay away from the traditional national banks and you should be fine.  Might want to check on a local credit union.

[wallus]

3 minutes ago, nate82 said:

Affirm is at 2.5 APY but that is only available through their app.  
 

Capital one is at 2.3, Lendingclub 2.85, sofi 2.5,  Marcus 2.35 and Ally 2.25.  Just stay away from the traditional national banks and you should be fine.  Might want to check on a local credit union.

My brokerage is 3% which I assumed is okay but was hoping for better obviously. Still better than the .50% that used to be common.

[wallus]

Ibond deadline is quickly approaching if you want the 9+%. I just got mine today.

[homer]

On 10/19/2022 at 9:09 PM, nate82 said:

Affirm is at 2.5 APY but that is only available through their app.  
 

Capital one is at 2.3, Lendingclub 2.85, sofi 2.5,  Marcus 2.35 and Ally 2.25.  Just stay away from the traditional national banks and you should be fine.  Might want to check on a local credit union.

Robinhood has a new "Gold" service that pays 3.75

drawback is you have to pay $5 a month so obviously you shouldn't put $1000 in there. 

[wallus]

9 hours ago, homer said:

Robinhood has a new "Gold" service that pays 3.75

drawback is you have to pay $5 a month so obviously you shouldn't put $1000 in there. 

I am looking to put some money in there for that next week.

[LouisEly]

Apparently my company filed notice with the state of CA on Friday of a small number of layoffs (<100) in CA effective Jan 6th.  CA has a law that requires employers to give 60-days notice to the state of any layoffs.  From what I can tell, it's less than 10% of our CA employees (as our US HQ is in CA).

I know this borders on political, but I am sick of the Fed raising interest rates with the deliberate outcome of increasing unemployment.  I don't know anyone who is spending excessively and deliberately trying to spend more than they have to.  I have a mortgage so my housing payment isn't going to change (save for small changes in taxes/insurance).  My vehicle is paid off and I have no plans on changing that unless absolutely necessary. 

What I don't see people talking about is competition.  Mergers and acquisitions have left most industries with at most 3-4 big companies that account for >75% of sales.  If you want bran flakes with raisins for breakfast, your choices are Kellogg's, Post, and whatever the store brand is.  If Kellogg's raises their prices, you can bet that Post and the store brand will raise theirs as well.  If you switch to oatmeal, you have Quaker, the generic store brand, the premium/organic store brand, and maybe one or two smaller organic/premium companies.  There's not a lot of choice, and they're all subject to grain prices.

The Fed can only control interest rates, but the government needs to focus on increasing supply and competition.  Demand isn't the issue.

[nate82]

The FED still has a planned 50 BP scheduled for December.  Rumor has it that CPI will show a sharp increase in December’s report and it maybe a financial shocking number.

We could see another 75 BP in December instead of the planned 50 BP increase.  This will all depend on the December CPI reports.  Should be coming out of the recession sometime in 2024 or 2025.

This is definitely a FED caused extended recession.  The FED missed getting inflation in check by a whole year.  

[homer]

On 11/4/2022 at 8:05 PM, wallus said:

I am looking to put some money in there for that next week.

Did you end up pulling the trigger on this?

[wallus]

2 hours ago, homer said:

Did you end up pulling the trigger on this?

Yes I did. It's a little annoying that it takes 5 days to get into your account but I've now deposited twice. $42 earned so far which is more than I earned in my regular savings all year.

[wallus]

Used car prices are falling like a rock

[PlayerHader]

On 12/10/2022 at 10:03 PM, wallus said:

Used car prices are falling like a rock

Sounds good to me. Been waiting in this for several months now.

[LouisEly]

With the impending bankruptcy of Carvana, there's a fear that they are going to have to sell off a lot of or all of their inventory to raise cash which will flood the market and cause prices to fall further.  Some are trying to get ahead of that and sell before the market gets flooded.

New cars are still hard to come by.  My sister and BIL went to Lexus of Appleton around Thanksgiving and they had something like five new cars on the lot.

[Fear The Chorizo]

Average age of a vehicle across the US has ballooned to over 12 years, an all-time high for this country.  Used car sales plummeting was bound to happen when large portions of the consumer base for buying used were priced out of the market and have instead continued pumping money into their existing rides for repairs.

 

[owbc]

2 hours ago, Fear The Chorizo said:

Average age of a vehicle across the US has ballooned to over 12 years, an all-time high for this country.  Used car sales plummeting was bound to happen when large portions of the consumer base for buying used were priced out of the market and have instead continued pumping money into their existing rides for repairs.

 

The miles driven in my household plunged during the pandemic and never went back to the previous normal, so now I'm sitting on a second car that is 12 years old with roughly 75,000 miles. I came fairly close to going down to a 1 car household when used car prices were high, but it's nice to have it around for the 3 or 4 times per month that it gets used. If it was the 'before times' I would have wanted to replace it but instead we splurged on an expensive primary car and I'll keep the backup car as long as possible.