Yeah I completely concur. The optionality alone adds a lot of value on top of the earnings yield. Not to mention there are other benefits such health benefits and just knowing more about the world in general.
Seems like the market has been really shrugging off a lot of potential bad news lately, which is par for the course during a bull. However, some pretty reputable sources are saying that Deustche Bank might be in big trouble, and is currently levered 40x (vs. 31x for Lehman at its peak). Share prices are now below their 2009 panic level, and falling. Anyone have any thoughts on this? http://finviz.com/quote.ashx?t=DB&ty=c&ta=0&p=m
My thoughts are Greece, Spain, Portugal, and now Italy. But I would play it with puts, because we are still shrugging off bad news, meaning volatility ahead if it is indeed distressed. Put time on your side. The real estate market peaked in the second half of 2005, last cycle. Give or take.
I would love to see an inflation adjusted view of college professors and private school salaries post WWII. I have some anecdotal evidence but I'd like to see numbers first. If you want, start another thread and we'll take this outside.
with all this talk about the debt and the end of the cycle...does anyone have any way / ideas to take advantage of this or is it by definition a black swan event and therefore unpredictable?
Honestly if you are a trader whatever storms come out of it you will be able to see and trade the volatility that comes from it. Trying to make a long term macro prediction in which you are going to sit on risk waiting for a catalyst seems to be counterproductive. However....I would say for example that buying real estate here and now will produce a long term negative return for some time to come. Obviously buying bonds here as a long term hold will produce negative long term returns and buying stocks at these levels will probably produce negative medium term returns.
This is a great read on all asset classes. The "main" point this book makes is that for most asset classes, the expected return is "highly" dependent on where in the cycle you enter. You can't just make blanket statements like real estate always a good investment or stocks always return 7.5% a year. If you bought bonds in 1980 you destroyed the market over 30 years. If you buy those same bonds today and hold for 30 years you will underperform. Anyone who owned real estate before QE got very lucky. Anyone who bought after the credit crisis got very lucky. But if you get long today, not so much. So the way to play this stuff is not really as a trade but more as a way to manage your very long term asset holdings.
It's sort of unbelievable that after all we've been through and having to listen to lectures from government officials, Dodd, Frank, the media, the president etc. about all the excess and how they were going to clean it all up, we still have a bubble.
I think the issue is they have not figured out how to remove one bubble without creating another one. As an elected official, it's very hard to live with the idea of removing a bubble at the expense of their power because removing it will create a lot of short term pain which will cost them their seat, but will benefit everyone greatly in the long term. As humans we are far too focused on daily prices, quarterly earnings and where the exact unemployment rate is on non-farm Friday. We live in the moment and the future is just something to write about.