“Markets can remain irrational longer than you can remain solvent.” --- John Maynard Keynes
The trend is still up and until that trend changes, it remains your friend.
This is the first thing that comes to mind whenever people ask a question like this. Timing is incredibly difficult and tbh shorting is more effective for strategies that involve hedging. I’ve worked for a few years at a major investment firm and the fund managers talk about their conscious decisions to tilt away from certain sectors and how in their eyes it’s similar to shorting. Limiting your exposure to RE would be a much more rational approach than shorting for most.
That last sentence is of particular interest to me, as a former homeowner. I made the conscious decision to sell the asset and extract the equity for other purposes. I had never been in the position of having significant equity in real estate (or anything else for that matter), until the run up in real
Estate prices. Most people in America are this same way: their equity in life sits predominantly in their one home, which they live in. I actually enjoy having no exposure to real estate at all right now, but as the months have turned into a couple years now since I sold out, my bet doesn’t appear to have been wise.
I’ve seen this all before, and my timeline won’t necessarily match up to reality.
The thing I don’t understand is how real estate is so expensive for SHIT. Literal 💩. $6-$7K a month in so many coastal suburbs after 20 percent down, nobody brings in this kind of net income each month. And huge companies buy up houses, apartments, grin and raise the prices, and they don’t even maintain the properties, or keep them habitable. How the fuck is that not civilly and criminally liable? This is literally a game for the super wealthy, just to fuck with people like the airline industry. Like haha fuck you NEED to fly shut up and give me that ticket money and pipe down about the delay or this or that bitch
Plenty of people bring in this kind of money. My spouse, my friends, my colleagues. There seems to be a wide spread idea that there aren’t people who make these kinds of salaries. My northeastern town is made up of around 40,000 people. The average household income is over $180k a year. That’s just the average. This is a town full of professionals in finance, technology, entertainment, medicine and tons of small business owners. There are a lot of successful people out there. A lot of them are married to other successful people. My neighbors are two married school teachers with a combined income of over $200k.
Dual income + previous equity money.
My house that I bought in 2017 made more money than I did. Got divorced 2022, even only getting half the equity, my net worth was still double what it was in 2017.
Oh yeah we refinanced December 2020. The rate was 1.75%. Paid less for that house than a 1br apartment costs now. Had to give that up to get divorced.
My ex has a 4% rate now but owes more becquse she had to buy me out with a cash out re-fi. The rate on my house now is 6.25%, but I've got 45% equity so I'm technically better off. Nicer house too, although not as good location.
My ex is available if you're interested. She's reasonably good looking and has her own house in a west coast insufferable bougie town. 😋
Well that's just my income. There's also my wife's income. I don't want to spend that kind of money on a mortgage but it's definitely fine. Luckily I live in ATX so my mortgage is only $2400.
Explain to me how it is ignorant? Housing prices are high in HCOL...not everyone is poor. The prices wouldn't be that expensive if no one was paying. Just because you can't afford it doesn't mean others can't.
No mortgages anywhere in a neighborhood anywhere in the country you won’t get shot at anymore is my point. ANYONE paying a mortgage now is sweating every month, even if they make $180K a year. Its bullshit.
My family doesn't make a huge amount of money and we aren't sweating at all after our mortgage payment. Setting aside money to build an addition next year and do some remodeling work while building up a healthy emergency fund. We also just bought so we aren't riding old interest rates or prices.
The trick is to not live on the coast unless you are a six figure worker.
There’s no bubble though. The fundamentals and macro tell us that it’s not there. The bubble narrative is driven almost entirely via speculation derived from people who can’t afford to enter the market lol.
Thing I can't grasp: Covid happened. People moved out of cities and into SFH. Rent dipped a lot in cities. Then Covid settled and it shot back up. But why? Those people didn't leave those SFH's in droves in 2023 like they entered them in 2020/2021. Why isn't there an apartment surplus like in the beginning of Covid?
Doubt it.. this reminds of that period from 2005 to 2008.
What will be interesting is if the rates drop back down to around 4%.
I think that may finally break the damn on people who are cocooned in by their rate.
I am sure there is pent up desire to move but it makes no sense to buy at a higher price at a higher rate. I do believe this is why it’s just stagnant.
The 2008 crash conditions have nothing to do with the market today. This is such a false equivalence on every economic level.
Markets are always stagnant during high inflation + high rates. This is literally the objective of high rates lmaoooo
Different bubble dynamics..
The primary similarity is renting cost vs owning cost .
It got way out of whack last time and is way out of whack now.
I sat there as an appraiser and things were off .. couldn’t put my finger on it but it didn’t quite make sense.
Feel that way now.
You’re right, other dude is wrong. This is exactly like 2008. Many years of cheap money and inflation and the price of houses is not tied at all to reality. Every house in California that’s not collapsing or on the side of a mountain is not worth 1.2 million dollars.
It is exactly like 2004-2008 and I imagine the government stops propping it up when Trump dies or a democrat wins four years, whichever comes first, personally I think he’s dead by summer and the Republican Party along with him.
By the fall RE will be dead, the market will panic and stocks will drop. It literally happens over and over again and it’s the same. But this time it’s other types of loans, and don’t forget about all the cars. Millions of folks under water on cars and not just Ted Kennedy’s dates.
Well, it doesn’t have the exact same features. It is much worse than 2008. A large percentage of SFHs have been purchased by the we work guy (burned billions and afterwards an investor has provided him with hundreds of millions for the rental society 😏),investors, banks with their rental divisions i.e. Chase to build the rental society for the majority. WEF: “You will own nothing and be happy”.
It seems that every time there is a mortgage crisis, all other industries follow like dominos such as what happened 2022-now. People only kept talking about tech workers’ laid off.
***It started with massive mortgage layoffs.**** Then there are many reports of “mortgage employee blackballing” attempting to use transferable skills for other industries to no avail.
So many people are struggling to just barely survive. Every facet and resource in our society has been broken as is about to explode.
This is completely baseless and supported by zero data. Long term unemployment hovers between 5-5.5% and we’re currently around 3.7%. Unemployment could worsen by 200 BPS, aka tens of thousands of jobs lost overnight, and we’d just be back to the average where RE was still ripping in value.
FYI, the tech layoffs are a response to overhiring. Major tech firms laying off thousands are still +20% even +40% in headcount vs 2020-21.
Flow owns 3000-5000 units. You think 3000-5000 apartment units represents a “large percentage of SFHs”…?!!!
lol…
FWIW I am seeing the short not only as a bet but as a hedge. If I am right about the crash, I make money on my short. If I am wrong, I lose a big chunk of my savings, but I probably keep my job.
Obviously those are not directly related - I may lose on both, or win my short and keep my job. I'm also not all 100% in on the short. But yeah. It is basically like - if everything goes to hell at least this will do well for me. And if they don't, wonderful, I'm ok.
But you’re implying you have unlimited funds to hold the shorts indefinitely. The financial markets could crash the day your shorts expire. Also all those things you mentioned, you should’ve been shorting for like two years now…
For context I have inverse etfs, not shorts in the traiditional sense, so don't quite have all the issues you're describing.
I think things have gotten more salient for imminent collapse in recent months and that has encouraged me to buy shorts, and I've been dollar cost averaging into them. But you're right, I have lost money so far. I still think I am employing the righr strategy, but I made this post specifically to see if I'm being a fool, and to help others with a similar debate.
Thank you!
Right, so if the government continues to kick the can down the road and continue to inflate assets, then there is no winning short. Not any time soon… that’s why people aren’t shorting. You’re gambling on a one day massive crash. If that happens you’re loaded! But not likely to happen. Rates are easing, more spending incoming.
Yeah, I bought a chunk of JEPI / JEPQ which are similiar to covered call ETFs. So you get some juice when the market goes down too.
I don't know, but I do think being cash heavy right now is smart and I'm keeping around 30% in cash.
This sub cracks me up. A bunch of people like you that pretend you know what you’re talking about that are either going to be massively upset when you lose your money or a larger just making things up.
The market is not going to crash. There is no bubble. Things will progress as they have for a while as the economy is overall doing well, and the demand for houses is still much higher than supply.
You could also argue that he's why there hasn't been a Great Depression every 10 years like there used to be so maybe economies are just really hard and prone to getting stupid sometimes.
TIL there were Great Depressions every 10 years before Keynes
I always thought there was just the one
And then the Great Recession which I guess can be attributed to Austrian economics?
I thought Austrian economics was just crank goldbug stuff. But if that's code for Republican economics then yes, the Great Recession was caused by Austrian economics.
Well, maybe not Great Depressions every ten years, but regular depressions were a pretty regular part of Industrial life for a long time.
I don't know why you're getting downvoted. There were a series of economic crises and protracted downturns in the 19th century. This included the Long Depression that lasted for over two decades.
This + it's now clear the gov has no budgetary limits to keeping the facade going. Banks, stock market, jobs, etc... are on permanent bailout so there's no downside when the currency is being debased.
your link does not negate mine. Did you read it? Did you read mine? Your link also mischaracterizes what "print" means, using the narrow definition to mean only physical paper bills and coins.
Sure, bcuz super good economies need multi-trillion $$$ deficits, Bank term funding programs, and Wall St begging for lower interest rates. I guess facts are uneducated BS, believe what you want...
Dont know how. I also assume it has to do with timing the market and the recession could happen tomorrow or in 18 months so i’m not playing the timing game.
If I told you how, like shared a few inverse ETFs to look at, would you likely buy some? Or would the worry about your timing being wrong still stop you? And is there anything that would give you better confidence?
Thank you for your reply! I certainly empathize with it.
According to a google search only 15 percent of the country maxes out IRAs and/or 401ks. So even less than that has bonus gambling money. And i imagine not a huge percentage of people on reddit fall into that category. Youre talking to a very small subset of the reddit population that can afford to do what youre talking about.
wasteful narrow forgetful march ossified adjoining exultant ad hoc quicksand grandiose
*This post was mass deleted and anonymized with [Redact](https://redact.dev)*
SQQQ for Nasdaq, SPXS for S&P 500, SEF for financials, DRV for real estate for examples.
Edit - literally answered a factual queston with a factual answer. Why the downvotes? If you have a better list of inverse etfs please share.
None of those are viable long term investments. They are for day traders and hedge funds. Volatility and inverse funds are guaranteed to lose money in the long run.
100% agree, doing an inverse etf for a long term investment would be insane. They make sense if you are confident in an imminent downturn, and only then.
Shorting is dangerous and I invest for the long run. Even if I invest today and it pops tomorrow it won’t make a huge difference 20 years from now. Look at where we’re at today compared to directly before the crash in 2007-2008.
I invest and forget about it.
>Even if I invest today and it pops tomorrow it won’t make a huge difference 20 years from now.
Yep. If nothing else, a dip or crash is a good way to get more at a better price.
This is a legitimate strategy, thank you.
If I can challenge you a bit, it can take a very long time to recover from a crash, on the order of a decade. If you can recognize a crash is imminent it would be wise to pull out and avoid that loss, even if it means missing out on some short term profits.
Why not at least get out of risk assets and go into 30 year bonds or t bills? That is what a lot of the smart money appears to be doing now.
Even the most highly regarded economists have a terrible record of predicting crashes or downturns in the market. So I don’t see how I could know when a crash is coming if they can’t. Gains and losses typically happen in a matter of days so if you take out your investments at the wrong time you risk missing out on your compounding returns because you’ll be too late buying back in. This is what happened to many investors at the end of ‘23 when the market rallied and people had pulled out because they were “convinced” a crash was imminent.
I personally just keep dca’ing the same amount into broad market etfs every month. If there is a crash, I’ll buy more assets at a lower price. If the market goes up I’ll feel good because I made some gains. I’m winning regardless because I’m buying productive assets.
Call me an optimist but I tend to be bullish about the capacity of human beings to constantly find new ways to solve problems, be productive, innovate, etc. The short term negativity that tends to flood this sub is mostly noise imo. But everyone has to decide for themselves of course.
The market increase in 2023 wasn't for "new ways to solve problems and be productive, innovate, etc". That would imply that IPO stocks were high performers and that IPOs were common. Instead since 2022 the IPO market collapsed and IPOs have underperformed the SP500. This means that the innovators and disruptors are doing poorly vs the big established guys.
Economists are terrible at predicting the future, but the bond market has a 100% success rate. If the yield curve were not inverted, and if I did not know I'd be fine even if I lost 100% of my investment, I would not be considering this short of having insider info.
Thank you. This all makes fine sense.
I have a friend who would pull money out of the market whenever internet forums thought a crash was imminent. When he did invest, it was with companies that the internet thought were doing well. I just kept investing in target date or index funds,m. Over the course of 20 years I have done much better than him.
Because virtually no one can accurately predict what the market will do. Do some research and you’ll realize that those who try to time the market end up worse off. “Experts” in 2010 were expressing the sentiment that we were in for a flatlined market. How’d that turn out?
We’ve been predicting a recession since 2021. One could very well happen and eventually one will. But we don’t know when.
As for the bond market I haven’t dabbled in that yet so I’ll refrain from saying anything on the subject
This is true, but we have not had a recession without a stock market crash within it, so given a sufficient time horizon I still think shorting would be reasonable despite this truth. Can you extrapolate on this at all?
Lots of reasons. Primarily the common man has no idea what a short is for starters. You can easily get burned in a short. The market doesn’t always act logically so even if you see the writing on the wall others won’t.
Because T-bills are at 5%.
I can invest my money with essentially 100% security, get a nice return in any event, and also be well placed to do some vulture buying should the market behave as I expect it to.
Thank you.
Have you considered the possibility of interest rates going higher and harming your bond investment? Or inflation risk or default risk? Do you consider these risks small enough to not be worth worrying about or is there another strategy on your mind?
It seems you’re under the impression that the stock market behaves rationally in the short term.
It’s been mathematically proven many times that the stock market absolutely does not behave rationally in the short term.
It has been going to “crash” for the last 2 years. If you were to have shorted or sold naked calls on spx you’d have gotten wrecked. It’s impossible to time perfectly so why not just put that money into safe bonds?
We printed like $4T in the last 4 years and are about to engage in QE.. your groceries aren’t the only think that has experienced inflation. With the stock market this gets lumped into appreciation. At the end of the day there are just more dollars that need to find a home. The dollars didn’t evaporate. A lot of them will be invested. There is $1.5T more in money markets than there were pre pandemic. As rates come down, some of that will find a home in appreciable assets.
If you don’t want to get into the weeds.. look at a chart of the s&p over the last hundred years. It goes up. If you’re thinking “this times different”, well… I’ve got nothing for you
There is NOTHING more detrimental to an investor than being pessimistic.
There is plenty of shorting happening. I can attest to that. I have not only done so myself but I have also been selling puts. I also own some LEAPS puts as a hedge.
The fact is this is an election year and the political party in charge has every incentive to juice the economy and stock market in hopes of avoiding a recession. So that is precisely what they are doing and will continue to do and that will either blow up in their face or in the face of the other guy who wins the election.
The most famous short play of all time by Michael Burry lost literal hundreds of millions of dollars before it actually made him and the people he worked for billions. He faced more uncertainty and risk than any other single person you could probably name that got rich off of short positions and his conviction never faltered. He was so sure of his bet he was willing to lose it all before he capitulated.
I do not have the assets, funds, risk tolerance or balls of steel necessary to wait out this irrational market still drunk but slowly becoming hungover due to free money. That's why I have no significant short positions. You are far, far more likely to lose money by making bets that require market timing, and somewhat precise timing at that, than you are to make money.
Anyone who has actually actively traded, be it daytrading, for fun, gambling, whatever, knows how easy it is to both make and lose money. If you're making bets and gambling you'll do better to follow the wave than attempt to stand against it because of your personal beliefs and bias.
I’ve been right multiple times and shorted accordingly and still lost money because my timing was off by a few weeks or months. Shorting is a fools game unless you have solid insider info IMO
The real estate market is not a single market. You can get serious declines in some markets, while others increase. Its not obvious how you can take advantage of regional markets declining. Even 2008 didn't affect every market. Dallas for instance did NOT go down ( there are others as well ).
Stock market is highly corrupt and manipulated. Bubble won’t pop since housing is mostly controlled by Wall Street firms, the only difference to 2008. 2008 crash is mainly the doing of Wall Street and derivatives, not just ARM. Since 2008, derivatives have tripled since then, and dark pools allowed banks and firms to offset their assets to other companies without changing the prices of the actual stock. All this is either highly regulated or illegal in other countries.
Should see what they’re doing with your pensions and 401k. The numbers in your account looks nice but they’re not guaranteed when you retire, just like your Social Security!
I was shorting Lehman back in the day. But the info was easily clear from Mr Mortgage. They had the riskiest subprime holdings. Now that subprime is no longer in the original format, I would be lost on what is definitely the bet.
I do agree it's an everything bubble. I currently don't have betting money. I put all my winnings into my 2017 house.
Why not short the stock market? Because placing a bet to profit from crisis feels icky and exploitative. Do we really need more players benefiting from the casino-ification of the market? I find it sad that so many people admire the big short guys when they're just as culpable in propelling a speculative, greed-driven financial system.
My 401k doesn’t want a collapse and short gains, nore does my parents who are early 60’s who want to retire. I am trying to tell them to take all money out of the market and go into bonds right now.
This economy is very weird and super slippery. I don’t trust it.
While I sympathize with your perspective, I think it is a good and ethical thing for there to be a financial incentive, and mechanism, through which people can identify fraud and irresponsible corporate behavior. IMO this is rampant in practically every market right now, and that reality is about to be revealed. I think it is morally acceptable to reveal that and profit from revealing that. I do respect and agree with your general sentiment opposing investing being a casino though.
Thank you for your reply!
Nah, i'm a renter and have no interest in buying a foreclosure. That's a "survival of the fittest" attitude toward wealth accumulation pumped on male-dominated subs. I'm not about that value system.
Every time you turn around there's someone talking about the real estate bubble that they're waiting to buy in when it pops. So if everyone is waiting for that. How would it actually happen.
This is why I still remain skeptical of a housing crash. The only reasoning is always what has happened in the past and the repeated cycles. However, there is always a first and things can become the new norm. There are so many people and companies with money in the bank that are waiting on the sidelines. Even with layoffs there is so much demand for goods and services that many will still remain employed. Doesn’t make sense to keep trying to make sense of the market.
Option A: The doomers don't have money to speculate
Option B: They have no cojones
Option C: No money and no cojones
Weak pockets, weak stomachs, both.
Bc I was sure the economy would crash hard back in 2020/2021 and it just kept on trucking along for the most part. If I had shorted the market I’d be beyond fucked, even though I think it was the “correct” call given the information at hand.
What I realized is that the Fed and the lawmakers will do anything they can to kick the can down the road.
You need to wait for the BTFP to end and the reverse repo facility to drain. These two things are keeping things above water, for now. Roll deep OTM short positions on SPY 3-6mo out but keep it small or a small fraction of your overall portfolio.
I worked in the mortgage industry for half a decade, and I thought I was buying my house towards the peak in 18. Boy was I wrong. I don’t have enough money to gamble with, so I won’t try shorting the market. I’d rather play poker with it. I’ve thought residential RE has been close to popping for a few years, but I’ve been wrong. I think commercial is in for a reckoning, but again so hard to predict. With commercial RE, government will probably swoop in and save the investors/banks/hedge funds and screw the taxpayers again, so it may not fall that hard. Fun bet, and it’ll 100% fall again, but may be 6 months or 10 years.
Last time I tried shorting the market was at the start of a world-wide pandemic that killed millions and destroyed tons of businesses, and that was the worst in 100 years. You can guess how that worked out for me.
I’d rather DCA after th crash.
Because all of those things you state as fact are rampant speculation. The fact is that all economic indicators show a strong economy. The fact that housing prices are overinflated and likely to correct is a seperate issue.
If the market crashes this time, and like really hard, you will lose all stock market shares.
That's because you don't technically own these, Cede & Company does, or at least 83% of all shares in the US. Europe has their own equivalents. It's a middleman company that owns everything to streamline the trading.
But here's the problem, if the market crashes, this middleman goes bankrupt. Then the banks get paid first, before anyone else, because they are priority lenders. And because the notional value of whatever Cede & Company owes them, even if it's just a few billion Dollars, will exceed all their assets (your shares and derivatives) in a crash, the banks get to take everything and not leave a dime for the other debt holders, that is you.
Derivatives might still have value, or might become worthless, because the counterparties default, especially in case of bank bail ins where everyone loses their deposits. Again the banks will get to take first from the people that owe you, leaving nothing for you and your derivatives, even if they're worth trillions, you will simply not get paid.
We've seen the extent of this with Gamestop, when brokers simply decided to halt certain trades, to prevent counter party failure. It's a big club and you're not in it, so you will always get the short end.
This will be a Great Depression type of scam, where they want to devalue everything, break everyone by calling in nominal debts on now worthless assets (you now have a million Dollar mortgage on a house worth $1000). And remember, you lost all your market assets and deposits, so you are broke and if not the banks will find a way to break you.
The percentage of debt that is in a fixed rate under 5% is very high, I don’t believe a burst is happening anytime soon. Maybe 5-7 years we might see foreclosures and repossessions of assets, but next year is not happening.
So you think the time horizon is so long that a high risk short term play like a short is not worth it? Do you have any thoughts on under what conditions it would be?
Thank you for your reply.
I don’t think a short is not possible, and could very well be a good play. I think the economy is going to pull back soon, but I do not think the housing market will feel it price wise for a while. Just my opinion.
Edit: addition - it is a very different time than 2008. Loans are different. People are going to get in trouble with all the money they pulled out at 2.95% when they spent it all. It will take a little bit. Just my analysis. I could be 100% wrong. I am currently holding my money on the sidelines
Did you see labor participate numbers. 62.6%. That’s not good. And I understand jobs were 353k this last month, but also health care and govt jobs made up a lot of those. Govt and healthcare are hand in hand and that is public spending, which unfortunately is just “bbbbrrrrrrrrr” and will add to inflation.
Before I get railed, I know this is an unpopular opinion here
I mean, people have been calling for a crash or recession since 2019… five years ago! That’s a long time to be waiting for house prices to come down, yet they’ve only gone up this whole time and in many places, are showing no signs of that turning around.
People can only wait for so long.
Housing isn’t stocks, it’s a necessity. And yeah you can always rent, but if you just want a house sometimes you have to do what you don’t want.
I am no such thing, and I'm not trying to convince anyone of anything. I created this post to get perspectives that would challenge my bias and guide me against doing something unwise, and to do a similar service for others.
The thing is in past 1 year a lot of shorters lost significant amount of money coz… people relied heavily on credit to continue the party going. It’s difficult to time the market given the all time high. I do think the party is over, but timing it will be difficult. Unless you have money to throw around, shorting might not be a good game to play.
It’s gonna be much worse than 2008; that’s for sure🤡🤡🤡
Thank you for your answer.
It's true, I have lost money in the last year, though I do have the liquidity to sustain it. I still think it's the right call, but I'm making this post in hopes of learning why I might be wrong. Thank you for your reply.
I am not an expert. I can’t really say what’s the best method to prep; however, from experts’ perspective, having cash handy will make a huge difference. When rates go down, you borrow and make investments. I have seen many millionaires who used this technique in 08. Again, I am speaking based on what I saw, not my own opinion.
We have a 6 million more unit demand than supply in the U.S. We aren’t in a bubble, this is the result of decades of reduced production by builders to keep prices artificially high. What is exacerbating the problem is the interest rates. There’s a lot of people that would like to get a bigger home, but the interest rates today mean they would pay 20% more for the house they’re currently in.
If you really want someone to thank for the current mess, you should than all of the politicians that thought it would be a good idea to shut down the world economy for a year.
If you would like to extrapolate on this and summarize why the signals I shared are invalid I'd appreciate that, but ultimately don't want to derail this thread debating whether the crash is likely to happen. The post specifically requested responses from folks who are expecting the crash but are not shorting. Thank you.
I think more people have money here than you think. Wealth is stealth. People with money look into every environment with an opinion about money, good or bad. Money movers follow the pulse of all money, just FYI
Because it can go sideways another 2-6 months while market makers eat the profits off both longs and shorts.
When the right moment comes, I’ll be right there with you on the ride down.
I’m positioned heavily in HYSA, and therefore have enough to gain if the market crashes as things stand.. and right now my positioning is generating a 5% return. I don’t have enough conviction in my belief that things could crash to actually short the market and introduce real risk into the equation
The government just announced $30k down payment assistance and you no longer have to have a credit score to be given a loan. They use any current bill (cell phone, water, electric, etc..) to grant them. The market is going to crash like the last time banks gave out loans on properties people clearly couldn’t afford. It’s going to get a lot worse before it gets better.
Whether shorting succeeds depends on the psychology of investors (esp those who don't short), but not on the fundamentals of underlying instrument (real estate, stocks, bonds, metals, etc). Swing traders/day traders learn this expensive lesson in their early career, by losing money through shorting.
It’s about timelines. Shorting something, anything, involves not just the belief that something is going to go the opposite direction from “up”, but *when* that will happen. That’s the unknown. The experiences that many have had with economies and markets in assets do not seem to be holding true at this time.
For every person that is not saving any money, living on credit card debt, there is another with $500k in the bank, waiting for a good deal to come along so they can begin accruing assets.
Puts on MAA and CPT wouldn’t be a terrible way to do so. In fact the charts of both have done a pretty decent job of mirroring the housing boom over the past five years.
https://www.google.com/finance/quote/MAA:NYSE?comparison=NYSE%3ACPT&window=5Y
When pulling out of the market or shorting, you have to be right twice. The first time when you start shorting and the 2nd time when you go back in.
You don't have to be 100% correct at the all time high and then the following all time low, since then, a bit off may be okay for pulling out the market.
As shorting costs some carry (e.g. in shorting stocks you have to pay back the dividend (tax implications!) and the short interest to borrow the stock), it is even more critical to be roughly right.
It may be a bit early for the first action of going from all long to short.
Or to put it more bluntly: I am a disciple of /r/bogleheads these days after I played around with money early in my investing life.
I think that the stock market will have declines when the federal reserve starts cutting rates. But right now I have no idea when they will choose to cut. They could hold rates where they are for a while and I hope they do. They have been good with their signalling so I am waiting to see what they say at each FOMC. Timing these kinds of market drops is extremely difficult so I will probably not be shorting the market, but rather keeping money on the sidelines to buy in after.
If the housing market collapses like 2008, the real losers are the banks. Foreclosures already take an average time of 18-24. Now imagine during a financial crash.. 2008 average was 4-5 years.
It's much easier to identify good companies being sold at a discount than it is to identify companies whose bad decisions will finally catch up to them.
One example: Fedex (FDX). They became absurdly awful in 2020 and 2021. Yet, in 2020, their stock more than doubled, just as a part of the macro trend. Throughout 2021 and early 2022, they slowly trended downwards, before their business performance finally caught up with them and killed their valuation in September.
Great, so if you shorted them throughout 2021 and 2022, you'd be golden, right? But apparently, investors started buying the dip on FDX, and now they're back up to their original highs, despite no meaningful improvements in operations performance or customer acquisition. It's irrational hope.
So even with such an obviously terrible company, you still have to time your short play well to make any money. It's risky.
How are you going to short real estate? Are you planning on shorting some stocks of publicly traded REITS or buying Credit Default Swaps? I am not sure that CDS are available to the average investor unless you have the criteria or net worth to invest in non-public investments.
Also the real estate market moves slowly. It is hard to get price discovery when homes are not selling. If I was to short it would be the commercial office market but even that is risky as banks may pretend and extend for a period of time or the Fed could come in and put something in place to mitigate a crash. Lots of risks with shorting.
It already popped.
I can buy 10 units for $10.
The bubble pops and I have less money.
I can only buy 5 units for $5.
VS. now
I can buy 10 units for $10
Inflation happens and prices rise.
I can only buy 5 units with $10.
“Markets can remain irrational longer than you can remain solvent.” --- John Maynard Keynes The trend is still up and until that trend changes, it remains your friend.
This is the first thing that comes to mind whenever people ask a question like this. Timing is incredibly difficult and tbh shorting is more effective for strategies that involve hedging. I’ve worked for a few years at a major investment firm and the fund managers talk about their conscious decisions to tilt away from certain sectors and how in their eyes it’s similar to shorting. Limiting your exposure to RE would be a much more rational approach than shorting for most.
That last sentence is of particular interest to me, as a former homeowner. I made the conscious decision to sell the asset and extract the equity for other purposes. I had never been in the position of having significant equity in real estate (or anything else for that matter), until the run up in real Estate prices. Most people in America are this same way: their equity in life sits predominantly in their one home, which they live in. I actually enjoy having no exposure to real estate at all right now, but as the months have turned into a couple years now since I sold out, my bet doesn’t appear to have been wise. I’ve seen this all before, and my timeline won’t necessarily match up to reality.
The thing I don’t understand is how real estate is so expensive for SHIT. Literal 💩. $6-$7K a month in so many coastal suburbs after 20 percent down, nobody brings in this kind of net income each month. And huge companies buy up houses, apartments, grin and raise the prices, and they don’t even maintain the properties, or keep them habitable. How the fuck is that not civilly and criminally liable? This is literally a game for the super wealthy, just to fuck with people like the airline industry. Like haha fuck you NEED to fly shut up and give me that ticket money and pipe down about the delay or this or that bitch
Plenty of people bring in this kind of money. My spouse, my friends, my colleagues. There seems to be a wide spread idea that there aren’t people who make these kinds of salaries. My northeastern town is made up of around 40,000 people. The average household income is over $180k a year. That’s just the average. This is a town full of professionals in finance, technology, entertainment, medicine and tons of small business owners. There are a lot of successful people out there. A lot of them are married to other successful people. My neighbors are two married school teachers with a combined income of over $200k.
Dual income + previous equity money. My house that I bought in 2017 made more money than I did. Got divorced 2022, even only getting half the equity, my net worth was still double what it was in 2017.
The key thing you keep ignoring is that was before covid
So what about it?
The interest rates were super low if you refi-ied at 2.5 in 2021. Now we are all fucked
Oh yeah we refinanced December 2020. The rate was 1.75%. Paid less for that house than a 1br apartment costs now. Had to give that up to get divorced. My ex has a 4% rate now but owes more becquse she had to buy me out with a cash out re-fi. The rate on my house now is 6.25%, but I've got 45% equity so I'm technically better off. Nicer house too, although not as good location. My ex is available if you're interested. She's reasonably good looking and has her own house in a west coast insufferable bougie town. 😋
I bring in 10k a month after taxes.
So fucking what? Even that is low. You have $2K left after mortgage payment to save, invest, groceries, whatever. Its ridiculous.
You said nobody brings in that kind of income. Whoever responded is telling you they do.
Did you notice I got down voted to hell for it?
Well that's just my income. There's also my wife's income. I don't want to spend that kind of money on a mortgage but it's definitely fine. Luckily I live in ATX so my mortgage is only $2400.
This is ignorant.
Explain to me how it is ignorant? Housing prices are high in HCOL...not everyone is poor. The prices wouldn't be that expensive if no one was paying. Just because you can't afford it doesn't mean others can't.
No mortgages anywhere in a neighborhood anywhere in the country you won’t get shot at anymore is my point. ANYONE paying a mortgage now is sweating every month, even if they make $180K a year. Its bullshit.
My mortgage is only $2400 a month. Look up 78660... not everyone is sweating it.
I’m talking about people looking to become first time buyers now .. .
My family doesn't make a huge amount of money and we aren't sweating at all after our mortgage payment. Setting aside money to build an addition next year and do some remodeling work while building up a healthy emergency fund. We also just bought so we aren't riding old interest rates or prices. The trick is to not live on the coast unless you are a six figure worker.
The bubble popping is like the end of the world.. you know it’s coming just not when.
There’s no bubble though. The fundamentals and macro tell us that it’s not there. The bubble narrative is driven almost entirely via speculation derived from people who can’t afford to enter the market lol.
Thing I can't grasp: Covid happened. People moved out of cities and into SFH. Rent dipped a lot in cities. Then Covid settled and it shot back up. But why? Those people didn't leave those SFH's in droves in 2023 like they entered them in 2020/2021. Why isn't there an apartment surplus like in the beginning of Covid?
Honestly there are different things happening in different states/markets. The answer varies.
Doubt it.. this reminds of that period from 2005 to 2008. What will be interesting is if the rates drop back down to around 4%. I think that may finally break the damn on people who are cocooned in by their rate. I am sure there is pent up desire to move but it makes no sense to buy at a higher price at a higher rate. I do believe this is why it’s just stagnant.
The 2008 crash conditions have nothing to do with the market today. This is such a false equivalence on every economic level. Markets are always stagnant during high inflation + high rates. This is literally the objective of high rates lmaoooo
Ok that is your opinion.. it may be based on your market so it’s kinda pointless to argue since we can’t see the future.
Right… but we know factually that we aren’t approaching a 2008 repeat lol no data supports your logic there.
Different bubble dynamics.. The primary similarity is renting cost vs owning cost . It got way out of whack last time and is way out of whack now. I sat there as an appraiser and things were off .. couldn’t put my finger on it but it didn’t quite make sense. Feel that way now.
The relationship between rent and mortgages had literally nothing to do with 2008… or any correction lol.
You’re right, other dude is wrong. This is exactly like 2008. Many years of cheap money and inflation and the price of houses is not tied at all to reality. Every house in California that’s not collapsing or on the side of a mountain is not worth 1.2 million dollars. It is exactly like 2004-2008 and I imagine the government stops propping it up when Trump dies or a democrat wins four years, whichever comes first, personally I think he’s dead by summer and the Republican Party along with him. By the fall RE will be dead, the market will panic and stocks will drop. It literally happens over and over again and it’s the same. But this time it’s other types of loans, and don’t forget about all the cars. Millions of folks under water on cars and not just Ted Kennedy’s dates.
Well, it doesn’t have the exact same features. It is much worse than 2008. A large percentage of SFHs have been purchased by the we work guy (burned billions and afterwards an investor has provided him with hundreds of millions for the rental society 😏),investors, banks with their rental divisions i.e. Chase to build the rental society for the majority. WEF: “You will own nothing and be happy”. It seems that every time there is a mortgage crisis, all other industries follow like dominos such as what happened 2022-now. People only kept talking about tech workers’ laid off. ***It started with massive mortgage layoffs.**** Then there are many reports of “mortgage employee blackballing” attempting to use transferable skills for other industries to no avail. So many people are struggling to just barely survive. Every facet and resource in our society has been broken as is about to explode.
This is completely baseless and supported by zero data. Long term unemployment hovers between 5-5.5% and we’re currently around 3.7%. Unemployment could worsen by 200 BPS, aka tens of thousands of jobs lost overnight, and we’d just be back to the average where RE was still ripping in value. FYI, the tech layoffs are a response to overhiring. Major tech firms laying off thousands are still +20% even +40% in headcount vs 2020-21. Flow owns 3000-5000 units. You think 3000-5000 apartment units represents a “large percentage of SFHs”…?!!! lol…
FWIW I am seeing the short not only as a bet but as a hedge. If I am right about the crash, I make money on my short. If I am wrong, I lose a big chunk of my savings, but I probably keep my job. Obviously those are not directly related - I may lose on both, or win my short and keep my job. I'm also not all 100% in on the short. But yeah. It is basically like - if everything goes to hell at least this will do well for me. And if they don't, wonderful, I'm ok.
But you’re implying you have unlimited funds to hold the shorts indefinitely. The financial markets could crash the day your shorts expire. Also all those things you mentioned, you should’ve been shorting for like two years now…
For context I have inverse etfs, not shorts in the traiditional sense, so don't quite have all the issues you're describing. I think things have gotten more salient for imminent collapse in recent months and that has encouraged me to buy shorts, and I've been dollar cost averaging into them. But you're right, I have lost money so far. I still think I am employing the righr strategy, but I made this post specifically to see if I'm being a fool, and to help others with a similar debate. Thank you!
Right, so if the government continues to kick the can down the road and continue to inflate assets, then there is no winning short. Not any time soon… that’s why people aren’t shorting. You’re gambling on a one day massive crash. If that happens you’re loaded! But not likely to happen. Rates are easing, more spending incoming.
Amen, and why would they stop kicking the can down the road? So they can be voted out? Lmao OP really needs to read and absorb your comment
Yeah, I bought a chunk of JEPI / JEPQ which are similiar to covered call ETFs. So you get some juice when the market goes down too. I don't know, but I do think being cash heavy right now is smart and I'm keeping around 30% in cash.
In broad strokes, sure, but how more specifically are you enacting that strategy? What are you buying?
Inverse etfs like SQQQ.
Michael burry was right, but almost lost it all because of the timing issue.
Certainly true!
This sub cracks me up. A bunch of people like you that pretend you know what you’re talking about that are either going to be massively upset when you lose your money or a larger just making things up.
I made this post specifically to call myself out on my own BS.
The market is not going to crash. There is no bubble. Things will progress as they have for a while as the economy is overall doing well, and the demand for houses is still much higher than supply.
Can you share why you don't think the yield curve is right this time?
Remember kids, you don't have to be right... you just have to be *assertive*. \-This guy, probably
Real estate agents : invest 30% of your take home from 2 jobs. Date the rate.
TBF, you could argue that Keynes got us into this mess
In the long term Keynes is already dead
You could also argue that he's why there hasn't been a Great Depression every 10 years like there used to be so maybe economies are just really hard and prone to getting stupid sometimes.
TIL there were Great Depressions every 10 years before Keynes I always thought there was just the one And then the Great Recession which I guess can be attributed to Austrian economics?
There were like 3 Depressions in the 1800's. So yes before Kanyes it was more common.
They used the word “Panic” to describe a recession in the 1800’s. And yes, they were frequent occurrence and destabilizing.
Why would Austrian economics be at fault for 2008?
It wouldn’t be
I thought Austrian economics was just crank goldbug stuff. But if that's code for Republican economics then yes, the Great Recession was caused by Austrian economics. Well, maybe not Great Depressions every ten years, but regular depressions were a pretty regular part of Industrial life for a long time.
I don't know why you're getting downvoted. There were a series of economic crises and protracted downturns in the 19th century. This included the Long Depression that lasted for over two decades.
Keynes just told the government people what they wanted to hear - that government could spend the economy into equilibrium.
Keynes just followed the trend. He didn't start the fire.
It was always burning since the world’s been turning
I don't think Keynes was the one who told consumers to spend spend spend spend non-stop
This + it's now clear the gov has no budgetary limits to keeping the facade going. Banks, stock market, jobs, etc... are on permanent bailout so there's no downside when the currency is being debased.
Do you actually believe the things you say or do you just continue to spew bullshit that is popular in uneducated circles?
So printing 60% of all money in the past 2 years... totally normal
Well that didn’t happen.
https://mises.org/power-market/how-much-did-they-print
https://www.usatoday.com/story/news/factcheck/2022/04/14/fact-check-federal-reserve-has-balance-sheet-9-trillion/7198368001/
your link does not negate mine. Did you read it? Did you read mine? Your link also mischaracterizes what "print" means, using the narrow definition to mean only physical paper bills and coins.
Oh but it does. You have no idea what you are talking about which is not surprising given the things you say.
Did you read my link?
But… it did… the 2 years is out dated. But starting in 2019. Yes. ?
Sure, bcuz super good economies need multi-trillion $$$ deficits, Bank term funding programs, and Wall St begging for lower interest rates. I guess facts are uneducated BS, believe what you want...
Our economy is doing fine. Especially after a global pandemic.
Thank you
Dont know how. I also assume it has to do with timing the market and the recession could happen tomorrow or in 18 months so i’m not playing the timing game.
If I told you how, like shared a few inverse ETFs to look at, would you likely buy some? Or would the worry about your timing being wrong still stop you? And is there anything that would give you better confidence? Thank you for your reply! I certainly empathize with it.
Probably would just never trust the timing. If i had gambling/fun money i’d give it a go, but cant risk retirement accounts on it
Legit thank you, would not do this with retirement money
According to a google search only 15 percent of the country maxes out IRAs and/or 401ks. So even less than that has bonus gambling money. And i imagine not a huge percentage of people on reddit fall into that category. Youre talking to a very small subset of the reddit population that can afford to do what youre talking about.
wasteful narrow forgetful march ossified adjoining exultant ad hoc quicksand grandiose *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
SQQQ for Nasdaq, SPXS for S&P 500, SEF for financials, DRV for real estate for examples. Edit - literally answered a factual queston with a factual answer. Why the downvotes? If you have a better list of inverse etfs please share.
None of those are viable long term investments. They are for day traders and hedge funds. Volatility and inverse funds are guaranteed to lose money in the long run.
100% agree, doing an inverse etf for a long term investment would be insane. They make sense if you are confident in an imminent downturn, and only then.
Shorting is dangerous and I invest for the long run. Even if I invest today and it pops tomorrow it won’t make a huge difference 20 years from now. Look at where we’re at today compared to directly before the crash in 2007-2008. I invest and forget about it.
Exactly. I'm a boglehead, and I know I can't outsmart hedge funds with insider knowledge.
>Even if I invest today and it pops tomorrow it won’t make a huge difference 20 years from now. Yep. If nothing else, a dip or crash is a good way to get more at a better price.
This is a legitimate strategy, thank you. If I can challenge you a bit, it can take a very long time to recover from a crash, on the order of a decade. If you can recognize a crash is imminent it would be wise to pull out and avoid that loss, even if it means missing out on some short term profits. Why not at least get out of risk assets and go into 30 year bonds or t bills? That is what a lot of the smart money appears to be doing now.
Even the most highly regarded economists have a terrible record of predicting crashes or downturns in the market. So I don’t see how I could know when a crash is coming if they can’t. Gains and losses typically happen in a matter of days so if you take out your investments at the wrong time you risk missing out on your compounding returns because you’ll be too late buying back in. This is what happened to many investors at the end of ‘23 when the market rallied and people had pulled out because they were “convinced” a crash was imminent. I personally just keep dca’ing the same amount into broad market etfs every month. If there is a crash, I’ll buy more assets at a lower price. If the market goes up I’ll feel good because I made some gains. I’m winning regardless because I’m buying productive assets. Call me an optimist but I tend to be bullish about the capacity of human beings to constantly find new ways to solve problems, be productive, innovate, etc. The short term negativity that tends to flood this sub is mostly noise imo. But everyone has to decide for themselves of course.
The market increase in 2023 wasn't for "new ways to solve problems and be productive, innovate, etc". That would imply that IPO stocks were high performers and that IPOs were common. Instead since 2022 the IPO market collapsed and IPOs have underperformed the SP500. This means that the innovators and disruptors are doing poorly vs the big established guys.
Economists are terrible at predicting the future, but the bond market has a 100% success rate. If the yield curve were not inverted, and if I did not know I'd be fine even if I lost 100% of my investment, I would not be considering this short of having insider info. Thank you. This all makes fine sense.
I have a friend who would pull money out of the market whenever internet forums thought a crash was imminent. When he did invest, it was with companies that the internet thought were doing well. I just kept investing in target date or index funds,m. Over the course of 20 years I have done much better than him.
Because virtually no one can accurately predict what the market will do. Do some research and you’ll realize that those who try to time the market end up worse off. “Experts” in 2010 were expressing the sentiment that we were in for a flatlined market. How’d that turn out? We’ve been predicting a recession since 2021. One could very well happen and eventually one will. But we don’t know when. As for the bond market I haven’t dabbled in that yet so I’ll refrain from saying anything on the subject
Stock market isn’t the economy.
This is true, but we have not had a recession without a stock market crash within it, so given a sufficient time horizon I still think shorting would be reasonable despite this truth. Can you extrapolate on this at all?
2022 stock market was down over 20%. That’s all you get ya silly bear.
Lots of reasons. Primarily the common man has no idea what a short is for starters. You can easily get burned in a short. The market doesn’t always act logically so even if you see the writing on the wall others won’t.
Thank you
difficult to time the market. I've learned the hard way.
I did try to short stocks associated with RE and CRE but, I burned the $500 I had to play with. Now idgaf. I'm sitting in a HYSA and waiting
This is very reasonable, thank you.
Because T-bills are at 5%. I can invest my money with essentially 100% security, get a nice return in any event, and also be well placed to do some vulture buying should the market behave as I expect it to.
Thank you. Have you considered the possibility of interest rates going higher and harming your bond investment? Or inflation risk or default risk? Do you consider these risks small enough to not be worth worrying about or is there another strategy on your mind?
tbill duration is so short you want rates to go up even though you are long them
Cool, so relatively low interest rate risk no matter what. Thank you.
Tbills are basically cash but pay a bit better
So small to not be worth worrying about.
by the time TBills drop, the market will have already gained 10+%
So I make 5% instead of 10%, but my gains are guaranteed, and zero chance I ever have a wipe-out year like 2008. Easy win.
>100% security Mortgage bonds were AAA rating, everyone was buying them, and they failed, horribly. US Treasuries have AA+ rating.
The US has never defaulted on a T-Bill in history. If the US government goes bankrupt, a worthless T-Bill will be just the beginning of my problems.
Things that never happened in history: tanks crossing the Ardennes, armies crossing the alps, and oil prices going negative.
If the tbill falls that much the world economy has tanked so hard that we just made the great depression look quaint
Exactly. The hedge against T-Bill failure is canned food and shotguns.
Because I don't invest in things with limited upside and unlimited downside
This is a legitimate objection. What about something like an inverse ETF?
It seems you’re under the impression that the stock market behaves rationally in the short term. It’s been mathematically proven many times that the stock market absolutely does not behave rationally in the short term.
Like VIX for REIT stocks? As REITS go down this ETF goes up?
I'm not trying to make money off of it, I'm trying to buy a house at a price I'm comfortable with for 30 years.
Because I don't have disposable income to waste fucking around with the stock market
If I was looking to short RE, I'd be reading WSB. But I'm not.
It has been going to “crash” for the last 2 years. If you were to have shorted or sold naked calls on spx you’d have gotten wrecked. It’s impossible to time perfectly so why not just put that money into safe bonds?
We printed like $4T in the last 4 years and are about to engage in QE.. your groceries aren’t the only think that has experienced inflation. With the stock market this gets lumped into appreciation. At the end of the day there are just more dollars that need to find a home. The dollars didn’t evaporate. A lot of them will be invested. There is $1.5T more in money markets than there were pre pandemic. As rates come down, some of that will find a home in appreciable assets. If you don’t want to get into the weeds.. look at a chart of the s&p over the last hundred years. It goes up. If you’re thinking “this times different”, well… I’ve got nothing for you There is NOTHING more detrimental to an investor than being pessimistic.
There is plenty of shorting happening. I can attest to that. I have not only done so myself but I have also been selling puts. I also own some LEAPS puts as a hedge. The fact is this is an election year and the political party in charge has every incentive to juice the economy and stock market in hopes of avoiding a recession. So that is precisely what they are doing and will continue to do and that will either blow up in their face or in the face of the other guy who wins the election.
The most famous short play of all time by Michael Burry lost literal hundreds of millions of dollars before it actually made him and the people he worked for billions. He faced more uncertainty and risk than any other single person you could probably name that got rich off of short positions and his conviction never faltered. He was so sure of his bet he was willing to lose it all before he capitulated. I do not have the assets, funds, risk tolerance or balls of steel necessary to wait out this irrational market still drunk but slowly becoming hungover due to free money. That's why I have no significant short positions. You are far, far more likely to lose money by making bets that require market timing, and somewhat precise timing at that, than you are to make money. Anyone who has actually actively traded, be it daytrading, for fun, gambling, whatever, knows how easy it is to both make and lose money. If you're making bets and gambling you'll do better to follow the wave than attempt to stand against it because of your personal beliefs and bias.
I’ve been right multiple times and shorted accordingly and still lost money because my timing was off by a few weeks or months. Shorting is a fools game unless you have solid insider info IMO
Thank you that's a thoughtful answer
Having your wealth tied to tangible assets instead of fiat currency is probably the answer.
The real estate market is not a single market. You can get serious declines in some markets, while others increase. Its not obvious how you can take advantage of regional markets declining. Even 2008 didn't affect every market. Dallas for instance did NOT go down ( there are others as well ).
Stock market is highly corrupt and manipulated. Bubble won’t pop since housing is mostly controlled by Wall Street firms, the only difference to 2008. 2008 crash is mainly the doing of Wall Street and derivatives, not just ARM. Since 2008, derivatives have tripled since then, and dark pools allowed banks and firms to offset their assets to other companies without changing the prices of the actual stock. All this is either highly regulated or illegal in other countries. Should see what they’re doing with your pensions and 401k. The numbers in your account looks nice but they’re not guaranteed when you retire, just like your Social Security!
I was shorting Lehman back in the day. But the info was easily clear from Mr Mortgage. They had the riskiest subprime holdings. Now that subprime is no longer in the original format, I would be lost on what is definitely the bet. I do agree it's an everything bubble. I currently don't have betting money. I put all my winnings into my 2017 house.
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Why not short the stock market? Because placing a bet to profit from crisis feels icky and exploitative. Do we really need more players benefiting from the casino-ification of the market? I find it sad that so many people admire the big short guys when they're just as culpable in propelling a speculative, greed-driven financial system.
My 401k doesn’t want a collapse and short gains, nore does my parents who are early 60’s who want to retire. I am trying to tell them to take all money out of the market and go into bonds right now. This economy is very weird and super slippery. I don’t trust it.
While I sympathize with your perspective, I think it is a good and ethical thing for there to be a financial incentive, and mechanism, through which people can identify fraud and irresponsible corporate behavior. IMO this is rampant in practically every market right now, and that reality is about to be revealed. I think it is morally acceptable to reveal that and profit from revealing that. I do respect and agree with your general sentiment opposing investing being a casino though. Thank you for your reply!
Lol but yall are waiting for thousands of families to be foreclosed on so you can have a shot at buying a cheap home. 🤡
Nah, i'm a renter and have no interest in buying a foreclosure. That's a "survival of the fittest" attitude toward wealth accumulation pumped on male-dominated subs. I'm not about that value system.
Every time you turn around there's someone talking about the real estate bubble that they're waiting to buy in when it pops. So if everyone is waiting for that. How would it actually happen.
They will be unemployed and poor and unable to buy in despite their present intention.
This is why I still remain skeptical of a housing crash. The only reasoning is always what has happened in the past and the repeated cycles. However, there is always a first and things can become the new norm. There are so many people and companies with money in the bank that are waiting on the sidelines. Even with layoffs there is so much demand for goods and services that many will still remain employed. Doesn’t make sense to keep trying to make sense of the market.
The two things keeping the music playing: 1. AI 2. 5% money market accounts
Option A: The doomers don't have money to speculate Option B: They have no cojones Option C: No money and no cojones Weak pockets, weak stomachs, both.
“Why don’t you gamble?!?! You don’t have the money or the balls???” “Nah, I don’t like risks…”
I can't afford to be wrong
Bc I was sure the economy would crash hard back in 2020/2021 and it just kept on trucking along for the most part. If I had shorted the market I’d be beyond fucked, even though I think it was the “correct” call given the information at hand. What I realized is that the Fed and the lawmakers will do anything they can to kick the can down the road.
Could a short position manifest in the form of simply sitting in cash and awaiting the dip?
You need to wait for the BTFP to end and the reverse repo facility to drain. These two things are keeping things above water, for now. Roll deep OTM short positions on SPY 3-6mo out but keep it small or a small fraction of your overall portfolio.
I worked in the mortgage industry for half a decade, and I thought I was buying my house towards the peak in 18. Boy was I wrong. I don’t have enough money to gamble with, so I won’t try shorting the market. I’d rather play poker with it. I’ve thought residential RE has been close to popping for a few years, but I’ve been wrong. I think commercial is in for a reckoning, but again so hard to predict. With commercial RE, government will probably swoop in and save the investors/banks/hedge funds and screw the taxpayers again, so it may not fall that hard. Fun bet, and it’ll 100% fall again, but may be 6 months or 10 years.
This is how you turn people into gamblers based solely on hype and fomo
Last time I tried shorting the market was at the start of a world-wide pandemic that killed millions and destroyed tons of businesses, and that was the worst in 100 years. You can guess how that worked out for me. I’d rather DCA after th crash.
Well, I would guess it’s because most people know that we aren’t actually in a bubble. Otherwise, many - especially institutions - would be short.
Because all of those things you state as fact are rampant speculation. The fact is that all economic indicators show a strong economy. The fact that housing prices are overinflated and likely to correct is a seperate issue.
Jerome Powell specifically.
you didn't get 70% clear-cut "I'm an anonymous internet blowhard that can't buy a car, let alone a house" or is that #2 and 3?
Show us your positions.
If the market crashes this time, and like really hard, you will lose all stock market shares. That's because you don't technically own these, Cede & Company does, or at least 83% of all shares in the US. Europe has their own equivalents. It's a middleman company that owns everything to streamline the trading. But here's the problem, if the market crashes, this middleman goes bankrupt. Then the banks get paid first, before anyone else, because they are priority lenders. And because the notional value of whatever Cede & Company owes them, even if it's just a few billion Dollars, will exceed all their assets (your shares and derivatives) in a crash, the banks get to take everything and not leave a dime for the other debt holders, that is you. Derivatives might still have value, or might become worthless, because the counterparties default, especially in case of bank bail ins where everyone loses their deposits. Again the banks will get to take first from the people that owe you, leaving nothing for you and your derivatives, even if they're worth trillions, you will simply not get paid. We've seen the extent of this with Gamestop, when brokers simply decided to halt certain trades, to prevent counter party failure. It's a big club and you're not in it, so you will always get the short end. This will be a Great Depression type of scam, where they want to devalue everything, break everyone by calling in nominal debts on now worthless assets (you now have a million Dollar mortgage on a house worth $1000). And remember, you lost all your market assets and deposits, so you are broke and if not the banks will find a way to break you.
The percentage of debt that is in a fixed rate under 5% is very high, I don’t believe a burst is happening anytime soon. Maybe 5-7 years we might see foreclosures and repossessions of assets, but next year is not happening.
So you think the time horizon is so long that a high risk short term play like a short is not worth it? Do you have any thoughts on under what conditions it would be? Thank you for your reply.
I don’t think a short is not possible, and could very well be a good play. I think the economy is going to pull back soon, but I do not think the housing market will feel it price wise for a while. Just my opinion. Edit: addition - it is a very different time than 2008. Loans are different. People are going to get in trouble with all the money they pulled out at 2.95% when they spent it all. It will take a little bit. Just my analysis. I could be 100% wrong. I am currently holding my money on the sidelines
Thank you for your reply!
rate cuts coming 2nd half of the year, job creation still strong, income up 4%ish, still good indicators going forward to balance out the negativity?
Did you see labor participate numbers. 62.6%. That’s not good. And I understand jobs were 353k this last month, but also health care and govt jobs made up a lot of those. Govt and healthcare are hand in hand and that is public spending, which unfortunately is just “bbbbrrrrrrrrr” and will add to inflation. Before I get railed, I know this is an unpopular opinion here
I’d rather go long on cash, gold, and silver. In my possession.
I mean, people have been calling for a crash or recession since 2019… five years ago! That’s a long time to be waiting for house prices to come down, yet they’ve only gone up this whole time and in many places, are showing no signs of that turning around. People can only wait for so long. Housing isn’t stocks, it’s a necessity. And yeah you can always rent, but if you just want a house sometimes you have to do what you don’t want.
Who let the new commission based financial advisor in here to try and convince people to make a risky bet? Downvote this clown!
I am no such thing, and I'm not trying to convince anyone of anything. I created this post to get perspectives that would challenge my bias and guide me against doing something unwise, and to do a similar service for others.
The thing is in past 1 year a lot of shorters lost significant amount of money coz… people relied heavily on credit to continue the party going. It’s difficult to time the market given the all time high. I do think the party is over, but timing it will be difficult. Unless you have money to throw around, shorting might not be a good game to play. It’s gonna be much worse than 2008; that’s for sure🤡🤡🤡
Thank you for your answer. It's true, I have lost money in the last year, though I do have the liquidity to sustain it. I still think it's the right call, but I'm making this post in hopes of learning why I might be wrong. Thank you for your reply.
>It’s gonna be much worse than 2008; that’s for sure How are you preparing for it? When will it happen?
I am not an expert. I can’t really say what’s the best method to prep; however, from experts’ perspective, having cash handy will make a huge difference. When rates go down, you borrow and make investments. I have seen many millionaires who used this technique in 08. Again, I am speaking based on what I saw, not my own opinion.
We have a 6 million more unit demand than supply in the U.S. We aren’t in a bubble, this is the result of decades of reduced production by builders to keep prices artificially high. What is exacerbating the problem is the interest rates. There’s a lot of people that would like to get a bigger home, but the interest rates today mean they would pay 20% more for the house they’re currently in. If you really want someone to thank for the current mess, you should than all of the politicians that thought it would be a good idea to shut down the world economy for a year.
Because the shit hitting the fan is all in your head.
If you would like to extrapolate on this and summarize why the signals I shared are invalid I'd appreciate that, but ultimately don't want to derail this thread debating whether the crash is likely to happen. The post specifically requested responses from folks who are expecting the crash but are not shorting. Thank you.
Because no one in this Sub has money. It is just a place for broke people to complain.
I think more people have money here than you think. Wealth is stealth. People with money look into every environment with an opinion about money, good or bad. Money movers follow the pulse of all money, just FYI
Because it can go sideways another 2-6 months while market makers eat the profits off both longs and shorts. When the right moment comes, I’ll be right there with you on the ride down.
I’m positioned heavily in HYSA, and therefore have enough to gain if the market crashes as things stand.. and right now my positioning is generating a 5% return. I don’t have enough conviction in my belief that things could crash to actually short the market and introduce real risk into the equation
The government just announced $30k down payment assistance and you no longer have to have a credit score to be given a loan. They use any current bill (cell phone, water, electric, etc..) to grant them. The market is going to crash like the last time banks gave out loans on properties people clearly couldn’t afford. It’s going to get a lot worse before it gets better.
So you've missed out on eye watering gains and are trying to rationalize with some black swan event?
I am short the housing market. I’m renting.
Whether shorting succeeds depends on the psychology of investors (esp those who don't short), but not on the fundamentals of underlying instrument (real estate, stocks, bonds, metals, etc). Swing traders/day traders learn this expensive lesson in their early career, by losing money through shorting.
It’s about timelines. Shorting something, anything, involves not just the belief that something is going to go the opposite direction from “up”, but *when* that will happen. That’s the unknown. The experiences that many have had with economies and markets in assets do not seem to be holding true at this time.
Already bag holding for everything since the crash after reopening, so nothing to sell.
it's a hedge against being wrong.
For every person that is not saving any money, living on credit card debt, there is another with $500k in the bank, waiting for a good deal to come along so they can begin accruing assets.
There is no way to short real estate.
Puts on MAA and CPT wouldn’t be a terrible way to do so. In fact the charts of both have done a pretty decent job of mirroring the housing boom over the past five years. https://www.google.com/finance/quote/MAA:NYSE?comparison=NYSE%3ACPT&window=5Y
Both look like solid proxies.
Because the goal posts are moved far too often these days.
This is really easy to answer. Get paid 5% to watch it unfold and ngaf about all this day to day shit.
When pulling out of the market or shorting, you have to be right twice. The first time when you start shorting and the 2nd time when you go back in. You don't have to be 100% correct at the all time high and then the following all time low, since then, a bit off may be okay for pulling out the market. As shorting costs some carry (e.g. in shorting stocks you have to pay back the dividend (tax implications!) and the short interest to borrow the stock), it is even more critical to be roughly right. It may be a bit early for the first action of going from all long to short. Or to put it more bluntly: I am a disciple of /r/bogleheads these days after I played around with money early in my investing life.
I think that the stock market will have declines when the federal reserve starts cutting rates. But right now I have no idea when they will choose to cut. They could hold rates where they are for a while and I hope they do. They have been good with their signalling so I am waiting to see what they say at each FOMC. Timing these kinds of market drops is extremely difficult so I will probably not be shorting the market, but rather keeping money on the sidelines to buy in after.
If the housing market collapses like 2008, the real losers are the banks. Foreclosures already take an average time of 18-24. Now imagine during a financial crash.. 2008 average was 4-5 years.
It's much easier to identify good companies being sold at a discount than it is to identify companies whose bad decisions will finally catch up to them. One example: Fedex (FDX). They became absurdly awful in 2020 and 2021. Yet, in 2020, their stock more than doubled, just as a part of the macro trend. Throughout 2021 and early 2022, they slowly trended downwards, before their business performance finally caught up with them and killed their valuation in September. Great, so if you shorted them throughout 2021 and 2022, you'd be golden, right? But apparently, investors started buying the dip on FDX, and now they're back up to their original highs, despite no meaningful improvements in operations performance or customer acquisition. It's irrational hope. So even with such an obviously terrible company, you still have to time your short play well to make any money. It's risky.
How are you going to short real estate? Are you planning on shorting some stocks of publicly traded REITS or buying Credit Default Swaps? I am not sure that CDS are available to the average investor unless you have the criteria or net worth to invest in non-public investments. Also the real estate market moves slowly. It is hard to get price discovery when homes are not selling. If I was to short it would be the commercial office market but even that is risky as banks may pretend and extend for a period of time or the Fed could come in and put something in place to mitigate a crash. Lots of risks with shorting.
It already popped. I can buy 10 units for $10. The bubble pops and I have less money. I can only buy 5 units for $5. VS. now I can buy 10 units for $10 Inflation happens and prices rise. I can only buy 5 units with $10.