3 ms·

If I were lucky or if I had made any effort whatsoever to time the market, you might be right. On the other hand, I know of lots of data points like mine, even

by tpz 16y ago

If I were lucky or if I had made any effort whatsoever to time the market, you might be right. On the other hand, I know of lots of data points like mine, even with the crapfest of the last couple of years. (Sensationalist news articles and statistics about idiots lending too much money to other idiots really shouldn't hold much water to the HN audience, if you think about it.) Regardless, find me that renter and I'll buy them a nice lunch. If I could have made $125,000 during those years then by their own arguments all of these "smart" renters should have been able to do the same through some alternate portfolio of their choice. As an aside, am I the only person to notice that every time a renter posts these kinds of articles they always talk about how down the road they'll have enough money to buy a mortgage-payer's home but they never actually bother to mention how their investments have been doing for them in the meantime? I suspect there's an obvious reason for the omission.

mechanical_fish 16y ago
they never actually bother to mention how their investments have been doing for them in the meantime So, you're unhappy because other people don't use the same sort of anecdotal evidence that you are so fond of using yourself? Who needs anecdotes when you have data? Here's a typical chart of median home prices since 1971, adjusted for inflation: http://www.newfinancialwisdom.com/median-home-prices-inflation-adjusted/ http://www.newfinancialwisdom.com/median-home-prices-inflati... And here's a chart of the inflation-adjusted S&P500 since 1950 (skip down a few charts): http://www.simplestockinvesting.com/SP500-historical-real-total-returns.htm http://www.simplestockinvesting.com/SP500-historical-real-to... What we see here is that, aside from some interesting but minor fluctuations and a scary but temporary blip representing last decade's bubble, housing prices are almost flat in real terms: The increase in median house price is almost equal to the inflation rate. Meanwhile, stock market investment values fluctuate a lot -- the last decade was not especially kind to investors -- but over the 1950-2008 time period the market averaged nearly 7% over inflation if you reinvest all dividends. Now, you can get lucky. Or you can leverage insider knowledge: If you figure out that land in a certain area is systematically underpriced relative to future demand, you can make a killing without relying solely on luck. But the averages show that for every person who makes a killing in residential real estate, there's someone else who takes the equivalent bath. And note that the argument that "land in NYC/Northern California/Desirable Area X will keep growing in value because everyone wants to live there" presumes that the rest of the market hasn't already figured out that such land is more desirable and set prices accordingly.
- tpz 16y ago
  For the record, I'm not unhappy at all, and if you'll look back at my original reply I was very up front about being just one data point. You can get lucky. Or you can leverage insider knowledge. Or you can do some personal learning and invest wisely. All of these are equally applicable to investing in real estate or to investing in other things while being a renter. For some reason, however, those who profit from real estate are chalked up as lucky and those who profit from other things while renting seem to get to talk as if their success involved any less luck or any more informed investing. Why is this? In my case, I invested in a physical market in a particular region I had been watching for many years and which has generally steady indicators. I exited for entirely personal reasons (to live with my girlfriend, just to put it out there), not to "time" the market as claimed by one commenter who also claimed I got lucky. I was subsequently called out as unhappy by another - you. Again, why is this? Any argument that can be made for or against success by an owner can be made equally well for or against success by a renter investing elsewhere, yet luck only gets cast towards the former, wisdom only towards the latter, and all the while the latter never seem to publish any of their investment success numbers to match their claims of benefit down the road. Again, why the disparity? Whether in real estate or elsewhere, it's the same $500 per month during the same five years. Whether sourced from luck and/or expertise, why are one class of returns immediately disparaged while another goes entirely unstated yet entirely uncontested? I've never taken it as an offense personally, but do admit that it does seem to be a common pattern and not a particularly fair pattern, at that.

by tpz 16y ago

mechanical_fish 16y ago

they never actually bother to mention how their investments have been doing for them in the meantime So, you're unhappy because other people don't use the same sort of anecdotal evidence that you are so fond of using yourself? Who needs anecdotes when you have data? Here's a typical chart of median home prices since 1971, adjusted for inflation: http://www.newfinancialwisdom.com/median-home-prices-inflation-adjusted/ http://www.newfinancialwisdom.com/median-home-prices-inflati... And here's a chart of the inflation-adjusted S&P500 since 1950 (skip down a few charts): http://www.simplestockinvesting.com/SP500-historical-real-total-returns.htm http://www.simplestockinvesting.com/SP500-historical-real-to... What we see here is that, aside from some interesting but minor fluctuations and a scary but temporary blip representing last decade's bubble, housing prices are almost flat in real terms: The increase in median house price is almost equal to the inflation rate. Meanwhile, stock market investment values fluctuate a lot -- the last decade was not especially kind to investors -- but over the 1950-2008 time period the market averaged nearly 7% over inflation if you reinvest all dividends. Now, you can get lucky. Or you can leverage insider knowledge: If you figure out that land in a certain area is systematically underpriced relative to future demand, you can make a killing without relying solely on luck. But the averages show that for every person who makes a killing in residential real estate, there's someone else who takes the equivalent bath. And note that the argument that "land in NYC/Northern California/Desirable Area X will keep growing in value because everyone wants to live there" presumes that the rest of the market hasn't already figured out that such land is more desirable and set prices accordingly.

tpz 16y ago
For the record, I'm not unhappy at all, and if you'll look back at my original reply I was very up front about being just one data point. You can get lucky. Or you can leverage insider knowledge. Or you can do some personal learning and invest wisely. All of these are equally applicable to investing in real estate or to investing in other things while being a renter. For some reason, however, those who profit from real estate are chalked up as lucky and those who profit from other things while renting seem to get to talk as if their success involved any less luck or any more informed investing. Why is this? In my case, I invested in a physical market in a particular region I had been watching for many years and which has generally steady indicators. I exited for entirely personal reasons (to live with my girlfriend, just to put it out there), not to "time" the market as claimed by one commenter who also claimed I got lucky. I was subsequently called out as unhappy by another - you. Again, why is this? Any argument that can be made for or against success by an owner can be made equally well for or against success by a renter investing elsewhere, yet luck only gets cast towards the former, wisdom only towards the latter, and all the while the latter never seem to publish any of their investment success numbers to match their claims of benefit down the road. Again, why the disparity? Whether in real estate or elsewhere, it's the same $500 per month during the same five years. Whether sourced from luck and/or expertise, why are one class of returns immediately disparaged while another goes entirely unstated yet entirely uncontested? I've never taken it as an offense personally, but do admit that it does seem to be a common pattern and not a particularly fair pattern, at that.