OT: Stock and Investment Talk

[RU-05]

Inflation will start going down soon, especially as last year's base effect kicks in. This rate hike cycle will be historically modest.

But energy prices have really kicked up more recently. The year over year rate may still have upside.

And one can't help but be skeptical of the "inflation has peaked" predictions at this point.

That said 3% by the end of the year seems pretty unlikely, if only because the fed has shown they will take inflation over slowing the economy. Certainly they need to slow inflation, but they can slow it to a less damaging level, without choking off the economy. Or at least I think they will try to do that.

 

[RUAldo]

I remember talking to my boss 20 or so year ago, and the take away was a loan at 5% was basically free money.

We are no where near "opposite of cheap money" territory.

Housing market is a mess. No clue how average Joe can afford anything unless he/she takes on a bigger mortgage payment at low rates…but now that will be harder with rates rising - plus rents are off the charts. I’ve been looking at vacation homes for 3+ years. The market is just plain stupid. Look at LBI. There are people that bought houses 6 months ago that are trying to flip them for 100%+ profits. Even small lake towns in PA are up 300-400% in 2 years. I was looking at a small bungalow pre-COVID for $150K. Same house is now listed at $599K. Upstate NY…out West…down South…same story.

 

[rutgersdave]

Housing market is a mess. No clue how average Joe can afford anything unless he/she takes on a bigger mortgage payment at low rates…but now that will be harder with rates rising - plus rents are off the charts. I’ve been looking at vacation homes for 3+ years. The market is just plain stupid. Look at LBI. There are people that bought houses 6 months ago that are trying to flip them for 100%+ profits. Even small lake towns in PA are up 300-400% in 2 years. I was looking at a small bungalow pre-COVID for $150K. Same house is now listed at $599K. Upstate NY…out West…down South…same story.

I saw an article with the highest rent increase in the US which was about the Florida cities being some of the highest but it mentioned Newark, New Brunswick and NJ in general with 35% increase. I don’t know how the poor or even the middle class can save any money.

10 U.S. Cities Average Rent Increase 2021

Here are the top 10 U.S. cities that had average rent increase in 2021.

grow.acorns.com

One of the nephews closed on a house yesterday close to $900k. I don’t know how he can afford the mortgage especially when the wife is working PT and they have another kid coming. It would appear he overpaid but there‘s not much inventory and they were looking for over 2 years. The mortgage defaults are starting to increase and prices will fall in the next few years.

Where’s all the people that are moving out of New Jersey? such BS, they don’t mention the ones moving in or the birth rate in NJ. I wish all the complainers on the board would move out of NJ instead of complaining.

 

[RUAldo]

I saw an article with the highest rent increase in the US which was about the Florida cities being some of the highest but it mentioned Newark, New Brunswick and NJ in general with 36% increase. I don’t know how the poor or even the middle class can save any money.

One of the nephews closed on a house yesterday close to $900k. I don’t know how he can afford the mortgage especially when the wife is working PT and they have another kid coming. It would appear he overpaid but there‘s not much inventory and they were looking for over 2 years.

Where’s all the people that are moving out of New Jersey? such BS, they don’t mention the ones moving in or the birth rate in NJ.

Re: your nephew, I keep hearing that same story over and over again. I think younger families are so desperate to find a house that they overpay and use low mortgage rates to rationalize it in their minds. And most of those folks think low interest rates really means free money = never bother to look at the interest schedule so they don’t understand how much they are actually paying over 15-30 years. Seems it comes down to deciding between mortgage payment X vs. rent payment Y regardless of sale price. My gut tells me there is a good chance that in 10 years people will realize how much real estate has been consolidated with the wealthy and the lower to middle income will have been priced out or forced to pay exorbitant rents. Northern NJ is flush with NYers (pulling NYC salaries) throwing money around on housing because it seems like a steal compared to what they were used to in NYC.

 

[jtung230]

It’s kind of like the 2006 housing crisis but with two major differences. There is actually wage growth and higher savings rate. Plus, better handle on financing. No more liars loan.

 

[rutgersdave]

Re: your nephew, I keep hearing that same story over and over again. I think younger families are so desperate to find a house that they overpay and use low mortgage rates to rationalize it in their minds. And most of those folks think low interest rates really means free money = never bother to look at the interest schedule so they don’t understand how much they are actually paying over 15-30 years. Seems it comes down to deciding between mortgage payment X vs. rent payment Y regardless of sale price. My gut tells me there is a good chance that in 10 years people will realize how much real estate has been consolidated with the wealthy and the lower to middle income will have been priced out or forced to pay exorbitant rents. Northern NJ is flush with NYers (pulling NYC salaries) throwing money around on housing because it seems like a steal compared to what they were used to in NYC.

I offered him a couple hundred thousands considering he’ll get it in a few years as inheritance and his mother offered also but he refused. I guess he doesnt have to worry about his retirement since he’ll get it from his baby boomer mom. Yes, I think he was competing with NY‘ers and he paid over $100k over asking against 20 other offers. His wasn’t the highest offer but he was more financially sound than the other offer. The seller was upgrading to Upper Saddle River with a $2 million home.

 

[T2Kplus20]

I remember talking to my boss 20 or so year ago, and the take away was a loan at 5% was basically free money.

We are no where near "opposite of cheap money" territory.

Huge +1.

Watched a video last night that the market may RALLY as the Fed raises rates. The logic is that it is best for the economy in the long-term to have a Fed Funds rate of about 2.5% with the corresponding real rate. This level was still be very attractive for growth, inflation, and stability.

 

[Rutgers Chris]

Housing market is a mess. No clue how average Joe can afford anything unless he/she takes on a bigger mortgage payment at low rates…but now that will be harder with rates rising - plus rents are off the charts. I’ve been looking at vacation homes for 3+ years. The market is just plain stupid. Look at LBI. There are people that bought houses 6 months ago that are trying to flip them for 100%+ profits. Even small lake towns in PA are up 300-400% in 2 years. I was looking at a small bungalow pre-COVID for $150K. Same house is now listed at $599K. Upstate NY…out West…down South…same story.

I bought on LBI last January. I had a builder over this weekend who told me I could list at almost double what I paid. You walk around the island and every block has 2-3 new homes or significant remodels. I was in wawa at lunch time during the week and there were about 25 construction workers getting lunch. I’ve never seen anything like it.

 

[T2Kplus20]

But energy prices have really kicked up more recently. The year over year rate may still have upside.

And one can't help but be skeptical of the "inflation has peaked" predictions at this point.

That said 3% by the end of the year seems pretty unlikely, if only because the fed has shown they will take inflation over slowing the economy. Certainly they need to slow inflation, but they can slow it to a less damaging level, without choking off the economy. Or at least I think they will try to do that.

The Fed has a gradual timeline for inflation to get back down to 3%. The energy price pop will go away quickly as Putin wins or runs out of steam. Also, let's see what happens with COVID, which is another big driver of inflation.

Also, need to track core inflation as well as the overall #.

 

[T2Kplus20]

It’s kind of like the 2006 housing crisis but with two major differences. There is actually wage growth and higher savings rate. Plus, better handle on financing. No more liars loan.

Wage growth in my industry (pharma) was huge in 2021. Our base merit increase was 6% and many folks got above this. And we were benchmarked against the industry and was at market! We haven't increased our cost of living at all, so our savings rate is insane.

 

[T2Kplus20]

FYI - Giga Berlin is ready to roll! TSLA blows up yesterday:

Elon Musk breaks out the dance moves as he opens new Tesla factory in Germany

Elon Musk officially opened Tesla's first manufacturing facility in Europe as the company looks to take pressure off its other factories in the U.S. and China.

www.cnbc.com

 

[RUAldo]

I bought on LBI last January. I had a builder over this weekend who told me I could list at almost double what I paid. You walk around the island and every block has 2-3 new homes or significant remodels. I was in wawa at lunch time during the week and there were about 25 construction workers getting lunch. I’ve never seen anything like it.

There may be an obvious answer, but where are folks getting all the money to buy up LBI homes at sky-high prices? Something just doesn’t add up. How the F are bungalows in the Poconos selling for $500K?!

 

[rutgersdave]

Wage growth in my industry (pharma) was huge in 2021. Our base merit increase was 6% and many folks got above this. And we were benchmarked against the industry and was at market! We haven't increased our cost of living at all, so our savings rate is insane.

I think if you’re in the right industries, Pharm, Medical device, Finance, wage increases will allow you to keep up with inflation. However, it’s not true with most industries. Retirees are getting hurt if they only have the fixed income. I have a friend living basically on his social security and he can afford it now but his rent goes up $100 month annually. We kid that he’ll have to find a friend to move in with in a year or two. There’s a lot of poor people out there.

 

[tom1944]

I bought on LBI last January. I had a builder over this weekend who told me I could list at almost double what I paid. You walk around the island and every block has 2-3 new homes or significant remodels. I was in wawa at lunch time during the week and there were about 25 construction workers getting lunch. I’ve never seen anything like it.

The shore towns have always been a unique housing market

After Sandy the construction at the shore boomed

 

[rutgersdave]

There may be an obvious answer, but where are folks getting all the money to buy up LBI homes at sky-high prices? Something just doesn’t add up. How the F are bungalows in the Poconos selling for $500K?!

It’s those families making over $300k. There’s a lot of them out there.

 

[rutgersguy1]

Mortgage rates are surging faster than expected, prompting economists to lower their home sales forecasts

Mortgage rates are rising far faster than economists had predicted, and some are now revising their home sales forecasts lower as a result.

www.cnbc.com

 

[T2Kplus20]

I think if you’re in the right industries, Pharm, Medical device, Finance, wage increases will allow you to keep up with inflation. However, it’s not true with most industries. Retirees are getting hurt if they only have the fixed income. I have a friend living basically on his social security and he can afford it now but his rent goes up $100 month annually. We kid that he’ll have to find a friend to move in with in a year or two. There’s a lot of poor people out there.

What was the SS cost of living adjustment? I thought it was pretty high as well. Over the past 12 months, I got a promotion and a merit + performance bounce in base. Ironically, the 2 best times in my career (from a comp POV) were 2008/2009 and the COVID years. This is the power of pharma. We are essentially immune to the economy.

 

[rutgersdave]

What was the SS cost of living adjustment? I thought it was pretty high as well. Over the past 12 months, I got a promotion and a merit + performance bounce in base. Ironically, the 2 best times in my career (from a comp POV) were 2008/2009 and the COVID years. This is the power of pharma. We are essentially immune to the economy.

He only gets about $1,800 a month so 5.9% SS is still nothing.

 

[rutgersdave]

What was the SS cost of living adjustment? I thought it was pretty high as well. Over the past 12 months, I got a promotion and a merit + performance bounce in base. Ironically, the 2 best times in my career (from a comp POV) were 2008/2009 and the COVID years. This is the power of pharma. We are essentially immune to the economy.

You’re one of the lucky ones. I would guess that almost 98% managers at my previous company, medical devices, were millionaires. You wouldn’t guess it from the parking garage. I had access to the Corporate salary budget.

 

[RUAldo]

I think if you’re in the right industries, Pharm, Medical device, Finance, wage increases will allow you to keep up with inflation. However, it’s not true with most industries. Retirees are getting hurt if they only have the fixed income. I have a friend living basically on his social security and he can afford it now but his rent goes up $100 month annually. We kid that he’ll have to find a friend to move in with in a year or two. There’s a lot of poor people out there.

May be it’s just me and not that I wasn’t appreciative, but 5%-6% increase was the norm in my group and I didn’t think it was enough considering where prices of everything have gone.

 

[rutgersdave]

May be it’s just me and not that I wasn’t appreciative, but 5%-6% increase was the norm in my group and I didn’t think it was enough considering where prices of everything have gone.

Back in the 80’s everyone was getting 9% or better for a few years. I guess if inflation get outs of hand, expect 10% increases but not for everyone.

 

[tom1944]

What was the SS cost of living adjustment? I thought it was pretty high as well. Over the past 12 months, I got a promotion and a merit + performance bounce in base. Ironically, the 2 best times in my career (from a comp POV) were 2008/2009 and the COVID years. This is the power of pharma. We are essentially immune to the economy.

It’s nice to see you were able to get posting on this website all day as one of your job responsibilities

Lucky for you volume is more important than quality

 

[RUAldo]

It’s those families making over $300k. There’s a lot of them out there.

$300K+ seems like a good number until you take out taxes, investment contributions, cost of NJ/NY living, etc. = doesn’t equate to million dollar shore houses and half million dollar Pocono homes. Although I’m one of those guys that maxes out every investment vehicle and crushes the backdoor Roth strategy so perhaps those folks are simply diverting funds to vacation homes instead of the stock market.

 

[T2Kplus20]

You’re one of the lucky ones. I would guess that almost 98% managers at my previous company, medical devices, were millionaires. You wouldn’t guess it from the parking garage. I had access to the Corporate salary budget.

+1
Overall, pharma isn't a showy group of people, unlike finance/Wall Street. Even though pricing power has been greatly reduced in pharma, margins are still amazing. Our margins make most other industries cry. I'm at the lowest exec band and my overall comp is beyond what I ever hoped for. I'm also set-up with options and RSUs that if my company hits on the next few milestones, we will be buying a house in Stone Harbor with 100% cash and increasing our retirement plans.

PSA - push your kids and family members into pharma/health sciences. Still an amazing place to be!

 

[T2Kplus20]

It’s nice to see you were able to get posting on this website all day as one of your job responsibilities

Lucky for you volume is more important than quality

Vacation week. My daughter has the last 2 weeks of March off for spring break. Took this week off. :)

 

[tom1944]

Vacation week. My daughter has the last 2 weeks of March off for spring break. Took this week off. :)

From your posting history you have a lot of vacation weeks

 

[RU-05]

Housing market is a mess. No clue how average Joe can afford anything unless he/she takes on a bigger mortgage payment at low rates…but now that will be harder with rates rising - plus rents are off the charts. I’ve been looking at vacation homes for 3+ years. The market is just plain stupid. Look at LBI. There are people that bought houses 6 months ago that are trying to flip them for 100%+ profits. Even small lake towns in PA are up 300-400% in 2 years. I was looking at a small bungalow pre-COVID for $150K. Same house is now listed at $599K. Upstate NY…out West…down South…same story.

I have a niece that bought a house there early in covid, and I was thinking "I dunno, it's pretty expensive right now", welp I was way off on that one.

 

[tom1944]

I believe we are in a housing bubble.

 

[T2Kplus20]

From your posting history you have a lot of vacation weeks

COVID spread out work hours throughout the day. Pharma is never going back to M-F 9-5.

 

[rutgersdave]

+1
Overall, pharma isn't a showy group of people, unlike finance/Wall Street. Even though pricing power has been greatly reduced in pharma, margins are still amazing. Our margins make most other industries cry. I'm at the lowest exec band and my overall comp is beyond what I ever hoped for. I'm also set-up with options and RSUs that if my company hits on the next few milestones, we will be buying a house in Stone Harbor with 100% cash and increasing our retirement plans.

PSA - push your kids and family members into pharma/health sciences. Still an amazing place to be!

Being in the right industry make a big difference same as picking the right college degree.

 

[tom1944]

COVID spread out work hours throughout the day. Pharma is never going back to M-F 9-5.

Now that I agree with

Most companies should do that
Get your work done but utilize each day in a manner that works best for your unique circumstances

My current job allows that I work between 6 am and 10 pm but I pick the hours. I also can do it over any 7 days

 

[RU-05]

There may be an obvious answer, but where are folks getting all the money to buy up LBI homes at sky-high prices? Something just doesn’t add up. How the F are bungalows in the Poconos selling for $500K?!

Their jobs?

I mean people are getting loans, and people need to meet the banks criteria, but people are and have been making money the last couple years.

 

[Rutgers Chris]

There may be an obvious answer, but where are folks getting all the money to buy up LBI homes at sky-high prices? Something just doesn’t add up. How the F are bungalows in the Poconos selling for $500K?!

Small sample size but plenty of people on this thread seem to have done well in the markets the last few years. The most expensive house on our block just sold earlier this year. I talked to a neighbor and he said the Chairman of the Board/CEO of a national retail chain bought it. Might also be a case of people looking for local vacation spots because of COVID.

 

[RU-05]

I believe we are in a housing bubble.

Probably?

Or maybe the inflation over the past 2 years proves sticky and this is just the new normal. People make more money, and things cost more.

Another thought is, with prices of building materials so high, and such a dearth of housing inventory, I'm not sure how housing prices come down anytime soon.

 

[tom1944]

Probably?

Or maybe the inflation over the past 2 years proves sticky and this is just the new normal. People make more money, and things cost more.

Another thought is, with prices of building materials so high, and such a dearth of housing inventory, I'm not sure how housing prices come down anytime soon.

It comes down when people stop buying

 

[rutgersguy1]

ADBE down 8.5% at the open after earnings yesterday.

 

[RU-05]

Small sample size but plenty of people on this thread seem to have done well in the markets the last few years. The most expensive house on our block just sold earlier this year. I talked to a neighbor and he said the Chairman of the Board/CEO of a national retail chain bought it. Might also be a case of people looking for local vacation spots because of COVID.

Ya and that could be problematic. People with money buying up supply for vacation homes, and thus driving up prices, making it harder for people with less money to buy even a single home.

Air BnB contributing to this as well. If you have a 2nd home you may Air BNB it as opposed to renting it out full time. Thus more people can own 2nd homes, makes some money on it, but still use it as a vacation home.

 

[RU-05]

It comes down when people stop buying

That's the demand side, but if the supply side remains limited, pricing downside remains limited.

 

[rutgersguy1]

Probably?

Or maybe the inflation over the past 2 years proves sticky and this is just the new normal. People make more money, and things cost more.

Another thought is, with prices of building materials so high, and such a dearth of housing inventory, I'm not sure how housing prices come down anytime soon.

I kind of agree with you. I do think it will soften but I wonder just how much.

 

[T2Kplus20]

I kind of agree with you. I do think it will soften but I wonder just how much.

If inflation stays high but wages essentially match it, I guess the new prices are justified and will stick. Right?