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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum
GLD 383.12+0.8%Nov 26 4:00 PM EST
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From: marcher8/27/2023 5:00:48 PM
   of 218044
 
going down?

"...This is how bubbles collapse: the "vital few" 4% sell at whatever the market will bear, pushing prices down,
and the 64% awaken to the rapidly narrowing window for locking in bubble capital gains.

...this bubble is fundamentally an artifact of central bank and government policies that enrich the already-rich,
who were incentivized to outbid each other with low-cost credit to snap up "investment properties" with their
"surplus capital" that generate more income and capital gains that cash, which until recently was "trash" due
to near-zero savings yields.

...This policy-driven hoarding / concentration of housing in the top 10% is one factor driving rents higher due
to artificial scarcity--a scarcity created by central bank and government policies, not the "market."

...A systemic driver of this bidding war for rental properties is the "AirBnB" model of monetizing individual
properties to compete with hotels and resorts for lodging. This model is called short-term vacation rentals
(STVR), and the already-rich have been pouring their wealth into STVRs for the past 15 years.

...The Pareto Distribution is often summarized as the 80/20 Rule. The 80/20 rule can be distilled down to 80%
of 80% and 20% of 20% to the 64/4 Rule: the "vital few" 4% exert outsized influence over the 64% mass. So
4% of sales can re-set the valuation of 64% of all neighboring houses. So 40 houses selling for around
$450,000 will re-set the valuation of 1,000 nearby homes from $800,000 to $450,000. This is why an
apparently modest number of fire sales of money-losing STVRs will dissolve the floor under bubble
valuations.

...The collapse of the STVR bubble will topple a line of dominoes as corporate owners will awaken from their
fantasies and realize they better sell now to lock in their gains before they vanish. Wealthy households who
"land-banked" properties for capital gains and places to park "surplus capital" will also awaken to the the
need to lock in gains by selling..."

charleshughsmith.blogspot.com
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