Posted on 10/08/2005 2:35:32 PM PDT by wagglebee
Amen! Thank you for your wisdom.
Yes, if your house goes down in value, you still own something of value. However, if a toxic dump opens business down the street, you're outta luck.
I'd like someone to tell me how if I own stock in Coca-Cola, in Home Depot, in Bank of America, or in Harley Davidson, then I own nothing of value. I own a piece of some of the best-run businesses in America. And one of the nice things is, I don't have to mow Coca-Cola's lawn, and I don't have to put a new roof on the Home Depot every 20 years.
Now, I can understand how someone would say that owning stock in one of the dot.com penumbra companies would be holding a worthless piece of paper. But those were companies with no earnings, no assets, and no idea how to run a business. People who bought into that fantasy were seriously deluded. They should have bought tulip bulbs instead--at least their garden would look pretty.
I think you're right. We should all make decisions as if the most extreme things will happen to all of us.
I know what you mean. I grew up in Newton, Mass. and my old home sold for 1,175,000 4 months ago. It won't last.
So, are those gurus saying there were no economic cycles prior to dropping the gold standard? If so, someone should revoke their teaching degrees.
Mmmmmmm....harvest gold.
That and lime green. I really miss those.
Oh, and don't forget brown and orange carpets. And plywood paneling.
Those were the days...
I saw someone on CNBC the other day saying the prices of real estate in NYC have been dropping recently.
You can at least rent the condo.
Not really: an asset is an asset, and its value depends on beliefs about the stream of future benefits.
if values drop, you still own something of value as opposed to worthless stock
You seem to be completely misunderstand value and the mechanism of price formation.
More disturbingly, you believe that things have an intrinsic value. This is idea was introduced by Marx and has been discredited even by socialists. Does that bother you that you are in such company?
The same happened with NASDAQ: you just got in too late. And the same will happen with real estate "investors" who got in late.
Contrary to popular belief, purchase of one's own home is about consumption. It is a very bad investment vehicle.
You are right on the money, Hildy, no pun intended.
Are you trying to say that it was Marx who first introduced the idea that land has value, and by the same token are you saying that a value could exist in stock certificates of a defunct company?
You confuse sock market fluctuations with business cycles and misunderstand what you quote.
It is indeed true that the business cyclicity was indeed amazingly low since 1982.
Are you denying that Rubin made this statement? Are you disputing that we had a recession in 2000-2001?
I think it has more to do with central banking.
Oh no, I am not merely trying: I am a pretty courageous guy who just goes ahead and says it.
that it was Marx who first introduced the idea that land has value, Did you miss the word "intrinsic" in my previous post?
and by the same token are you saying that a value could exist in stock certificates of a defunct company?
Of course it does! There is market for Russian bonds from 1900 that communists refused to honor back in... 1917. They are still traded in the belief that some future Russian government will honor the claims.
Value is exists ONLY in the heads of economic agents. This is called the agent's utility function. Open a book on economics. I really mean A book. You are musing on subtleties while misunderstanding the basics.
There is no intrinsic value in a house or land or anything else.
What's worse, and where the comparison to the stock market bubble falls apart, is that it's very possible to owe more than 100% of your initial investment.
Almost all of the losses in the stock market bubble, horrific as they were, were paper losses of paper gains or actual losses of whatever you started with or both.
But if you put down 10% on a house and its value drops by 25%, you're out the 10% and another 15% on top of that. To get out at that point, you are out real money. You're more of a futures trader than a stock trader.
No, not at all. Just look at your house like you would your car. Cars are NOT an investment, they are a consumable just like a house. Houses don't produce anything.
The word "investment" has lost it's meaning. An investment is saving some of the seed of the harvest for next year's crop. It's putting money into a college eduction. Saving money to start your own business. Investing in a company or loaning money to a company to give that company the capital it needs to grow and expand the business and hopefully grow revenues and profits as well.
If you do buy a house, you shouldn't be getting an interest only mortgage. Put enough money down 10-20% so that you can have some sort of a cushion in case you need to sell. Don't buy in a market (CA, FL, NY, VA, MD) where renting the same house is half of what the mortgage payment is.
Don't buy a property because you'll think it'll go up in value. If it has gone up when you need/want to sell, great. But don't have that (unreasonable) expectation.
Of course not: the recession was very muld.
Why don't you give us the exact quote of what Rubin said?
"Mmmmmmm....harvest gold.
That and lime green. I really miss those.
Oh, and don't forget brown and orange carpets. And plywood paneling.
Those were the days..."
Sounds like my house when I bought it 30 years ago. It only cost $35,000. Now those were the good old days.
And it is a far better investment than real estate.
Strangely, most people do not know today that ownership of real estate has never been "The American Dream:" that myth was created by then newly formed REALTORs Association (REALTOR is a made-up word theretofore nonexistent).
Ownership of one's home is about consumption, not investment.
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