4 ms·

> Moreover, its not a scalable solution, and I'm fairly confident that it will show all the problems of trying to avoid market behavior: it might be hard to get

> Moreover, its not a scalable solution, and I'm fairly confident that it will show all the problems of trying to avoid market behavior: it might be hard to get in to the fund, it might end up causing a run in the case of a big down-turn where many people need to sell but the fund has overpromised, etc etc. What you're describing sounds exactly like the housing market under the rule of cheap mortgages and speculative investment. People having a hard time getting in, people having a hard time getting out without going bankrupt, these are all exactly what happened in the "free" housing market during the last decade. Anyway I don't understand how this program "avoids" market behavior. In your mind, is the free market somehow incomplete without a rentier class?

conanbatt 9y ago
> What you're describing sounds exactly like the housing market under the rule of cheap mortgages and speculative investment. People having a hard time getting in, people having a hard time getting out without going bankrupt, these are all exactly what happened in the "free" housing market during the last decade. I don't see the same effects you mention. If we talk pre-2008, getting in was too easy. Post-2008, to 2012 the market had a typical rebound curve, those were all good times to jump in. Now its expensive again, which means demand has to subsidize and start balancing out with the supply. In 2009 i used to say argentina RE prices were too high for the population, and that some crash should happen. 2017 and it hasn't happened: its possible house prices as they are now are here to stay for a long time. > Anyway I don't understand how this program "avoids" market behavior. It tries to set its own prices by means of insurance. By making a fund that caps wins and losses, it doesn't prevent them, it just distributes them differently. There is pervasiveness to the concept of "you can't beat the market": it means that if you are, you are absorbing some risk or cost you don't see. i.e.: What if a crisis happened that lowered house prices 40% across the board: 100% of the community wants to sell in the fund, which has capped losses, and then buy property again, to make a neat 15%. Moroever if the market goes up, as soon as the market shows 25% improvement, there is a great incentive to sell, because your gains are capped. So when you are close to that limit, your biggest interest is to sell, specially if property taxes adjust to a standard different from the one the fund uses. Not to mention that you have to pay the people managing this fund one way or another: their labor does not come free. These are all risks and consequences that exist on that management style alone. > In your mind, is the free market somehow incomplete without a rentier class? Not at all. And in this fund case, the fund managers are the rentiers.
- macawfish 9y ago
  I'm not sure if "capped at" was the right wording. "Reduced to" might have been clearer. If you bought a house through the trust at $100k, but now it's market value is $300k, you would only be able to sell it for an additional 25% of the appreciation ($50k). http://www.mncltc.org/faq.html http://www.mncltc.org/faq.html
  - conanbatt 9y ago
    I see its a general structure as well. As an owner you own shares of the organization, more than the land itself. Im not saying its a bad idea, or uninteresting, but its definitely not going to be superior to the general market as it is (afaik).

conanbatt 9y ago

> What you're describing sounds exactly like the housing market under the rule of cheap mortgages and speculative investment. People having a hard time getting in, people having a hard time getting out without going bankrupt, these are all exactly what happened in the "free" housing market during the last decade. I don't see the same effects you mention. If we talk pre-2008, getting in was too easy. Post-2008, to 2012 the market had a typical rebound curve, those were all good times to jump in. Now its expensive again, which means demand has to subsidize and start balancing out with the supply. In 2009 i used to say argentina RE prices were too high for the population, and that some crash should happen. 2017 and it hasn't happened: its possible house prices as they are now are here to stay for a long time. > Anyway I don't understand how this program "avoids" market behavior. It tries to set its own prices by means of insurance. By making a fund that caps wins and losses, it doesn't prevent them, it just distributes them differently. There is pervasiveness to the concept of "you can't beat the market": it means that if you are, you are absorbing some risk or cost you don't see. i.e.: What if a crisis happened that lowered house prices 40% across the board: 100% of the community wants to sell in the fund, which has capped losses, and then buy property again, to make a neat 15%. Moroever if the market goes up, as soon as the market shows 25% improvement, there is a great incentive to sell, because your gains are capped. So when you are close to that limit, your biggest interest is to sell, specially if property taxes adjust to a standard different from the one the fund uses. Not to mention that you have to pay the people managing this fund one way or another: their labor does not come free. These are all risks and consequences that exist on that management style alone. > In your mind, is the free market somehow incomplete without a rentier class? Not at all. And in this fund case, the fund managers are the rentiers.

macawfish 9y ago
I'm not sure if "capped at" was the right wording. "Reduced to" might have been clearer. If you bought a house through the trust at $100k, but now it's market value is $300k, you would only be able to sell it for an additional 25% of the appreciation ($50k). http://www.mncltc.org/faq.html http://www.mncltc.org/faq.html
- conanbatt 9y ago
  I see its a general structure as well. As an owner you own shares of the organization, more than the land itself. Im not saying its a bad idea, or uninteresting, but its definitely not going to be superior to the general market as it is (afaik).