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As someone who is on the precipice of purchasing a new home, this is my top concern and reason for potentially continuing to rent. So naturally I am attuned to

As someone who is on the precipice of purchasing a new home, this is my top concern and reason for potentially continuing to rent. So naturally I am attuned to comments like this, and articles elsewhere, which talk about this subject. Do you have any further insight into why you think there will be a recession in the next 2-3 years? Other than "it's a cycle and we're lined up for another one" ... Are there other market conditions that are making that more and more of a reality?

jimbofisher1 8y ago
Rates of indebtedness, quality of debt(AAA, BBB ratings etc), stock market overvaluation, real estate overvaluation. Take your pick, conditions are very similar to 2007. Whether anything actually happens is the trillion dollar question.
- rubicon33 8y ago
  Appreciated. That gives me some things to look into. Cheers
  - jimbofisher1 8y ago
    https://www.hussmanfunds.com/comment/mc180604/ https://www.hussmanfunds.com/comment/mc180604/ This was recently posted on HN and gives a good overview of indicators to look at though it's pretty blatantly alarmist.
    - rubicon33 8y ago
      Reading through this now. There's a lot here and I have to admit, much of it is out of my wheelhouse. But I can get the gist of what's being said. I appreciate the link. Makes me definitely consider putting this housing search on the back burner. In my area we've seen massive price increases in just the last 3 years. I was on a tour of a home yesterday and the agent told me that the previous home tour was with a bay area investor who had cash on hand for the home. Hard to compete with that. And maybe it's just the wrong time to be competing at all.
      - jimbofisher1 8y ago
        I am not an investment advisor But you can approximate the returns you would get from real estate appreciation by carefully investing what you would spend on a home (down payment, taxes, mortgage etc.). Though if theres a major downturn that could also be risky. Buy gold?
ScottBurson 8y ago
Well, I saw this the other day: https://www.washingtonpost.com/business/economy/beware-the-mother-of-all-credit-bubbles/2018/06/08/940f467c-69af-11e8-9e38-24e693b38637_story.html https://www.washingtonpost.com/business/economy/beware-the-m... I can't speak to its accuracy, but it's certainly a sobering read.
dv_dt 8y ago
There are many indicators that one could look at, "inverted yield curve" is one, but given it's popularity if it actually flips, it might actually trigger the recession in the behaviour that follows, so you end up needing to predict the predictor. And many indicators can get into "lucky socks" cargo cult territory quickly because they happen to match up events/stats with recessionary time periods. If you need a general introduction, Dalio provides a nice starter for thinking about it: https://www.youtube.com/watch?v=PHe0bXAIuk0 https://www.youtube.com/watch?v=PHe0bXAIuk0 A interesting proposed measure here based upon fundamentals IMHO to me is consumption investment ratio: http://necsi.edu/research/economics/econuniversal http://necsi.edu/research/economics/econuniversal All I can really say is be very sceptical of anyone who says they know for sure - I'm going mostly off my reading of cycle behaviors with some hand wavy harder measures (but economics is a terrible field and even the rigorously defined measures in the end have poor real-world predictive accuracy.)

jimbofisher1 8y ago

Rates of indebtedness, quality of debt(AAA, BBB ratings etc), stock market overvaluation, real estate overvaluation. Take your pick, conditions are very similar to 2007. Whether anything actually happens is the trillion dollar question.

rubicon33 8y ago
Appreciated. That gives me some things to look into. Cheers
- jimbofisher1 8y ago
  https://www.hussmanfunds.com/comment/mc180604/ https://www.hussmanfunds.com/comment/mc180604/ This was recently posted on HN and gives a good overview of indicators to look at though it's pretty blatantly alarmist.
  - rubicon33 8y ago
    Reading through this now. There's a lot here and I have to admit, much of it is out of my wheelhouse. But I can get the gist of what's being said. I appreciate the link. Makes me definitely consider putting this housing search on the back burner. In my area we've seen massive price increases in just the last 3 years. I was on a tour of a home yesterday and the agent told me that the previous home tour was with a bay area investor who had cash on hand for the home. Hard to compete with that. And maybe it's just the wrong time to be competing at all.
    - jimbofisher1 8y ago
      I am not an investment advisor But you can approximate the returns you would get from real estate appreciation by carefully investing what you would spend on a home (down payment, taxes, mortgage etc.). Though if theres a major downturn that could also be risky. Buy gold?

ScottBurson 8y ago

Well, I saw this the other day: https://www.washingtonpost.com/business/economy/beware-the-mother-of-all-credit-bubbles/2018/06/08/940f467c-69af-11e8-9e38-24e693b38637_story.html https://www.washingtonpost.com/business/economy/beware-the-m... I can't speak to its accuracy, but it's certainly a sobering read.

dv_dt 8y ago

There are many indicators that one could look at, "inverted yield curve" is one, but given it's popularity if it actually flips, it might actually trigger the recession in the behaviour that follows, so you end up needing to predict the predictor. And many indicators can get into "lucky socks" cargo cult territory quickly because they happen to match up events/stats with recessionary time periods. If you need a general introduction, Dalio provides a nice starter for thinking about it: https://www.youtube.com/watch?v=PHe0bXAIuk0 https://www.youtube.com/watch?v=PHe0bXAIuk0 A interesting proposed measure here based upon fundamentals IMHO to me is consumption investment ratio: http://necsi.edu/research/economics/econuniversal http://necsi.edu/research/economics/econuniversal All I can really say is be very sceptical of anyone who says they know for sure - I'm going mostly off my reading of cycle behaviors with some hand wavy harder measures (but economics is a terrible field and even the rigorously defined measures in the end have poor real-world predictive accuracy.)