4 ms·

Many assets such as real estate, stocks, bitcoin are overvalued. So they can return to a fair value and make a loss against inflation.

runbathtime 5y ago
Agree, the question to ask is compared to what? Compared to gold, which hasn't had a run up like the other assets, comes to mind. What others?
- slumdev 5y ago
  I own some (paper) gold because I think it's been neglected. The market and real estate have produced outsized returns for 20 years (even factoring in the 2008-9 recession), and investors haven't really gotten spooked. Popular stocks are still trading at 100+ (or even 1000+) P/E ratios, and everybody's kid sister is now a stock wiz. I don't know what it's going to take to scare retail investors out of stocks, but when it happens, metals will benefit.
  - swader999 5y ago
    You don't own it if you can't hold it.
    - slumdev 5y ago
      Fair enough. I have significantly more PSLV than GLD. I recognize that even the PSLV isn't sitting in my safe, but because it's in a retirement account, I don't have the option of taking physical delivery.
nico_h 5y ago
"How do bubbles burst?" Real estate prices are sky high, but what can bring them down? The taxes on corporations and the rich is sufficiently low that they can't spend all their money, and what is most safe for pension funds to invest in? What don't we make more of (with rare and expensive exceptions) ? Land!
- rwmj 5y ago
  That's not really how it works. House prices are high because of very low interest rates, and even a (by historical standards) small increase would mean people could borrow less, causing prices to decrease sharply. Also we're not actually short of land except in the most densely populated countries like HK and Singapore which are exceptional for other reasons. The US has plenty of land to build on.
  - throwaway6734 5y ago
    There's also a supply shortage: http://www.freddiemac.com/perspectives/sam_khater/20210415_single_family_shortage.page http://www.freddiemac.com/perspectives/sam_khater/20210415_s...
    - jefftk 5y ago
      This seems like it ignores condominiums? Instead of building one house at 1200 sqft, you can build a house with 2+ units and sell them individually. (The graph they have lines up quite well with condos becoming a thing)
  - A4ET8a8uTh0 5y ago
    Yes to the land part, but low rates are not the only reason prices are this level of crazy. The raw building materials shortage, old fashioned NIMBY, zoning laws are all culprits here. We shouldn't succumb to easy answers here since many factors influence it.
- villasv 5y ago
  > What don't we make more of (with rare and expensive exceptions)? Land isn’t made, but more land becomes legally available all the time. The scarcity argument is overestimated given the immense surface area available and the actual limiting factor being zoning laws (and logistics).
  - newsclues 5y ago
    Land is rarely made. It happens naturally occasionally and man made at great expense, like in the UAE

runbathtime 5y ago

Agree, the question to ask is compared to what? Compared to gold, which hasn't had a run up like the other assets, comes to mind. What others?

slumdev 5y ago
I own some (paper) gold because I think it's been neglected. The market and real estate have produced outsized returns for 20 years (even factoring in the 2008-9 recession), and investors haven't really gotten spooked. Popular stocks are still trading at 100+ (or even 1000+) P/E ratios, and everybody's kid sister is now a stock wiz. I don't know what it's going to take to scare retail investors out of stocks, but when it happens, metals will benefit.
- swader999 5y ago
  You don't own it if you can't hold it.
  - slumdev 5y ago
    Fair enough. I have significantly more PSLV than GLD. I recognize that even the PSLV isn't sitting in my safe, but because it's in a retirement account, I don't have the option of taking physical delivery.

nico_h 5y ago

"How do bubbles burst?" Real estate prices are sky high, but what can bring them down? The taxes on corporations and the rich is sufficiently low that they can't spend all their money, and what is most safe for pension funds to invest in? What don't we make more of (with rare and expensive exceptions) ? Land!

rwmj 5y ago
That's not really how it works. House prices are high because of very low interest rates, and even a (by historical standards) small increase would mean people could borrow less, causing prices to decrease sharply. Also we're not actually short of land except in the most densely populated countries like HK and Singapore which are exceptional for other reasons. The US has plenty of land to build on.
- throwaway6734 5y ago
  There's also a supply shortage: http://www.freddiemac.com/perspectives/sam_khater/20210415_single_family_shortage.page http://www.freddiemac.com/perspectives/sam_khater/20210415_s...
  - jefftk 5y ago
    This seems like it ignores condominiums? Instead of building one house at 1200 sqft, you can build a house with 2+ units and sell them individually. (The graph they have lines up quite well with condos becoming a thing)
- A4ET8a8uTh0 5y ago
  Yes to the land part, but low rates are not the only reason prices are this level of crazy. The raw building materials shortage, old fashioned NIMBY, zoning laws are all culprits here. We shouldn't succumb to easy answers here since many factors influence it.
villasv 5y ago
> What don't we make more of (with rare and expensive exceptions)? Land isn’t made, but more land becomes legally available all the time. The scarcity argument is overestimated given the immense surface area available and the actual limiting factor being zoning laws (and logistics).
- newsclues 5y ago
  Land is rarely made. It happens naturally occasionally and man made at great expense, like in the UAE