Real Estate is the conundrum to me.
From 1970-1980 the average sale prices of homes sold went from 23,900 to 66,400 (+177%). No other decade comes close.
In comparison, prior to the great recession the average home sale price rose from 169,800 in Q1 2001 to 257,400 Q1 2007 (+51.5%)
In the current market if you want to use Pre-COVID prices as the starting point. The average home sale price from Q2 2020 was 322,600 now it's 428,000 (+32.8). I think we see this number around 40% before things adjust.
Why did RE do so well in the 1970's when rates were double digit for the most part?
Lived through the 70-80 inflation. I wished I put all in 30 year treasury at 10%.
Wondering, if the smae inflation is currently experienced by other G7, G20 countries? They should be because all relied on Globalization AKA cheap labor to profit. It was win win for all many countires GDP went up and stock markets too. Maybe there is still juice left to be squeezed -- southeast asia, south asia and africa where G20s corporation can still grow buy using the available cheap labor.
Hi Tic, where do you see silver by end of 2022? Thank you sir.
Remember Mark Twain's "history rhymes" ... I think you also have to look at asset collapses in the 2008 time frame where previously thought to be uncorrelated asset classes got crushed. Most everything got taken out back and shot. If anything I think we're reverting to more of a mean series of economic cycles, and that includes the return of inflation.
The problem with this recession is it’s looking like it’s supply driven rather than demand driven. Commodities such as oil and wheat - things we need - prices are going to stay elevated due to shortages (real or fake). So the consumer is going to get wrecked and this scenario is somewhat unprecedented at the moment at least in America
Thanks for the comparison Tic, very helpful information.
Thank you Tic- I agree and believe real estate will continue to outperform- Our home purchased in March 2022 has gone up in value roughly 75K (Ca) I also think the death of crypto seriously benefits gold 🖤 🙏
Rangebound mkts also imply passive indexing at peak. Active mngmt shall reign again.
Haha I was looking at the same thing today. I think you need to add recessions into the picture. It helps paint a picture. My thought is fighting high inflation caused recession (3 of them in fact from 1970 to 1981), which caused earnings to decline, which caused stocks to suffer. Basically what the talking heads have been saying. What's really interesting is the market front ran the recessions, kinda like what may be happening now. Maybe history does repeat itself.
Thanks again Tic🙏
looks like dividend growth and cash cow stocks will be the play then?
Nice Tic, awesome analysis. I remember the later part of the 70s and the 80s but was to young for true financial awareness.
Thank you sir!
Born in 1955 - I don't believe there is any valid comparison between the 1970 to 1980 period of inflation in terms of the stock market. Today we have so much more money, much of it uneducated, chasing perceived fortune. My best investment in that time was real estate when one could assume an FHA loan without qualifying, and little money down, when interest rates were double digit. I think todays fluff is yet to appreciate the fleecing that has just begun. Current inflation is the result of a combination of circumstances that will resolve itself in the not too distant future (transitory) as entrepreneurs arbitrage corporations that have no shame.
Well written and clear macro correlation trends. Thank you! I noticed another trend whereby the surge in S&P in 1980s somewhat coincided with the opening up and globalization of China.
How much of the S&P growth and market liquidity is coming from China as well? They have certainly helped drove RE prices up in Asia including Singapore, and Bay Area the past decade.
More recently there has certainly has been a tightening on the money outflow from China the past couple of years.
So why to buy share when an inflation hit going down market you could get chance to buy shares at lower levels
Thanks for taking the time to provide your comments Tic 🙏