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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: TobagoJack who wrote (163515)	10/9/2020 11:20:11 PM
From: THE ANT	1 Recommendation Recommended By elmatador Read Replies (2) \| Respond to of 219818

The housing market lags by about 5 years when there is a large,sudden change in interest rates. A drop in Fed rates from 1.75% should result in housing going up by 50-60%. Problem is most house purchases require bank lending. Banks will only lend money based on the price of the last house sold in the community plus maybe 10%. It thus takes years for housing to reflect the fall in interest rates of 2%. Same reason for housing busts,If the Fed raises rates by 2% housing will fall by about 50% but banks keep lending for housing at the value of the last house sold in the community. Now for the developing world. When Fed dropped rates to zero this year stocks in a stable economy like India should rise by 50%. This assumes the market in India was not at a speculative premium ( the world was buying India way above value as it was in vogue ) prior to the 2% interest rate drop ( In this case in the moderate run India rises but less than 50% as some of the steam from the speculative frenzy wears off) Speculative positivity or negativity is always short term and in long run returns to zero (TSLA) but it must be estimated to be able to get a feel for an assets value over the long term Anyhow the liquidity from the 2% drop in rates in the US always hits the developing market with a delay ( although less delay than with housing) so a lot more developing world stock appreciation coming. Again the housing market and developing markets will be back with a boom and take oil up with them. This will be the last hurrah as with zero rates its game over other than MMT.Sorry for typos in last post.As I have said before on this board I dont read words I read pages

To: TobagoJack who wrote (163515)	10/10/2020 8:58:27 AM
From: THE ANT	1 Recommendation Recommended By SirWalterRalegh Read Replies (1) \| Respond to of 219818

TJ, my brain has remembered and played with numbers since I was 8 years old. As I moved to a new city every 2 years until age 25 I know the dates of the price of things. Our 3 bedroom 2 bath apt on the second floor on Ipanema beach in 1966 was 60K, 3 bedroom 2 bath house in Brasilia 60K in 1972 (Brazilian currency was strong, that was the cheapest house in Brasilia-owner liked my dad and dropped the rent so he could live in a house and not an apartment as government stipend would not allow a rental to be over a fixed value in dollars). Or cheapest house in Coral Gables 1968 was 40K and the cheapest house on the water in Coral gables 1969 was 80K. In 1969 the hamburgers at McDonald next to Ponce Deleon middle school were 20 cents and cheeseburgers 22cents As a quick and dirty estimate of future value one must guess at income stream which will vary over the next 20 years ,and assume a 30% increase or decrease in value for each percentage change in interest rates. In the long run an asset class will not be influenced by this moments herd positivity or negativity towards an asset class but you and I live calculating this speculative froth or great value out of an out of fashion asset class (reversion to the mean) So lets assume golds low was 30 years ago at a price of $200. Next lets assume that the low included speculative negativity and a discount. So I assume golds real value at that point was $400. Now interest rates drop slowly over 30 years by 6%. At each 1% fall in rates we raise its value by 30% (about 300% cumulative)) or $1200 an ounce. Now inflation was almost exactly 100% in dollars over the last 30 years so $2400 is a good current price. This assumes that at this point in time gold is a neutral asset amongst investors. Should it become a popular asset class it could double over the short run but in the long run it will lose this premium. Now if electric cars need gold or we return to the gold standard then we could have a permanent change in the above estimate. No such change has happened in the last 30 years Now is the above a good model? No it is just one piece of data. My statistics professor once asked: "If a truck of apples drives up to the plant and I reach up and pull one apple out and it is rotten. I reject the shipment. Is this good statistics? The class said NO! He said "you are right, but its better than nothing" By the way if I do the calculation on my current house in the DC area without looking at rates my house has doubled in 30 years which is exactly inflation. Only thing is in 1991 my mortgage rate was 7.25% and a 30 year mortgage is now below 3%. When I bought in 1991 we were just entering a down phase so I will assume no speculative froth or negative discount. We are now entering an early mania but I will assume no premium or discount at this time. USA housing will boom. Friends come to visit me for answers. I have been saying buy,buy.buy for 3 years now