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8-Weird Tricks to Crash the Real-Estate MarketSo one of my daily rants got long enough to warrant a Medium post. Whether you agree with it or not, I think I do have a plan mapped out for myself, at least financially speaking. The tl;dr is that underlying trends don't really look good for the US real-estate market right now, despite record high gains in the last few years. Or maybe it's more accurate to say that the record gains is what *is* going to cause it to crash later on. Just like with #crypto, except more unpleasant, because it's tied to so many more things, and people. When, I don't know. But "if" is no longer a question for me anymore. ryangtanaka.medium.com
COINBASE:ETHUSDLong
by RyanTanaka
Still plenty of upside in Canadian lumber stocks.I recommended West Fraser Timer (WFT on TSX) some time ago. In November the company announced it would buy another lumber company, Norbord. Nov 19, 2020 | Posted in Corporate News, News West Fraser to Acquire Norbord, Creating a Diversified Global Wood Products Leader – Complementary OSB business expands product and geographic diversity – Greater scale and customer relevance unlocks and de-risks growth opportunities – West Fraser and Norbord shareholders to benefit from a stronger value creation platform The shortage of lumber due to a strong housing market continues, and the potential for a friendlier administration in the White House (elimination of duties?) is a distinct possibility.
W
by malvinspooner
NASDAQ- TINA?Sure, low yield rate alone doesn’t justify the extremely high valuation of NASDAQ, but many investors may have overlooked other factors that may have contributed to NDX's rise. Quick recap of recent macro events- THE BAD Corporate profits in the United States dropped 11.8 percent to USD 1,569.2 billion in the second half of 2020, following a downwardly revised 11 percent fall in the previous period, a preliminary estimate showed. It was the sharpest decline in corporate profits since the last quarter of 2008, amid the coronavirus crisis. According to association of corporate growth, 81% of middle-sized business failed to get a loan through the Fed’s Main Street lending program. Of course, survey might contain the selection bias. According to S&P Global Market Intelligence, U.S. bankruptcies are on pace to hit their worst levels in 10 years , with experts expecting even more companies to suffer as the coronavirus pandemic stifles economic activity. A total of 424 companies have gone bankrupt this year as of Aug. 9. Over 100 consumer-focused companies have gone bankrupt this year already. Industrials and energy combined account for nearly 100 bankruptcies. Overall, 35 companies that filed for bankruptcies year-to-date reported more than $1 billion in liabilities. THE GOOD Out of the 35 companies that filed for bankruptcies year-to-date and reported more than $1 billion in liabilities, none came from IT. Overall, only 17 out of 424 companies that have gone bankrupt this year came from information technology. Most came from large retail, energy, and transportation. Of course, when a big portion of sectors becomes highly unprofitable, investor's money would appropriately reward ones that remain profitable. According to the Mortgage Bankers Association, The forbearance rate for mortgages backed by Fannie Mae and Freddie Mac dropped to 4.94% in the first week of August, the first time it’s been below 5% since April. Almost all housing indicators are up except mortgage origination rate. THE INEVITABLE In my opinion, the potential acceleration of industry consolidation is a bigger concern than dislocation. J&J and Apple, for example, are able to get 40yr loan at 3-4 percent interest rate. Low interest rate encourages big firms to refinance and borrow so they can more easily build up large cash cushion for M&A pursuit which ultimately might hurt consumers. According to American association of individual investors’s July asset allocation survey, individual investors’ exposure to fixed-income assets declined to its lowest level in 15 months. Again, no one likes low yield rate and I would guess most money go into the equity market especially profitable sectors such as tech. Some investors are still hoping for the dip back to the March lvl. According to research note from Bank of America securities, since 1928, the 30% market drawdown happens once every decade and the average time for the market to bounce back after a drawdown of 20% or more is 4.4 years. The two most similar situations in terms of magnitude of drawdown happened in 1987 & 1968 and it took them 101 days and 543 days respectively before the bottom was reached. Many of us thought this time would be the same especially since rarely has the bottom been reached at the onset of recession. Well, guess what? Many of us have been fooled into believing that this time would be no different without realizing the underlying condition has changed... There was no QE back then. Past doesn’t always predict the future especially if the underlying condition no longer applies. Despite of the string of bad macro signals I listed above, market remains unfazed and marches on. No party can last forever though. I believe that such a meteoric rise in tech stocks will come at the expense of long-term return as high valuation today leads to weak return tomorrow. Inevitably, valuation mean will one day revert lower to stay in line with historical trends. However, none of us knows exactly when it will happen. Therefore, waiting on the sideline, incurring the opportunity cost and missing out on all the gain is not the way to go either. Time like this is why risk management and asset allocation matter.
TVC:NDQ
by Libratus
SHORT VNQ, GET OUT WHILE YOU CANI have been tracking this ETF for a long period of time. We just broke one-year resistance and clear evidence on the fib retracement (specifically level 0.5) shows that the price was weakening. Technicals aside, there is no reason as to why this should move upwards. This pandemic has taken out firms with high leverage, left more than 25 million Americans jobless, and monetary policy hasn't been as effective because people haven't been going out. Not only that, but the government will also now have to think twice about their spending, as our debt has dramatically increased this year accompanied by a significant drop in tax revenue. Consumers have less income and are looking towards their savings to live through this pandemic. As we move to reopen, firms will look to deleverage and cut spending. This means that unemployment will most certainly not go back to its previous levels anytime soon and the average American will be in no position to take in debt in the form of a mortgage. I'd even argue to some extent that many will look to sell their homes. So how does this relate to VNQ? Home prices haven't adjusted because a decrease in supply helped remedy the decrease in demand. If you analyze active listing for the months of April, you will see that in almost every market, there has been a significantly smaller number of homes being listed. Hence, there have been fewer homes being sold at the price pre-virus. These price levels were already thought to be reaching a bubble, but with this sudden change in demand, these prices will correct most certainly. As we look to reopen, people will look to sell their houses. Realtors will push people to sell their homes. This increase in supply accompanied by the withstanding lack of demand will drive housing prices all the way down. I expect we will see these prices fall in areas with typically less demand than others first. Looking at listings in suburban areas, we are already seeing sellers change listings and drop their price, with still no buyer. It is still early to get out as prices haven't adjusted and many cities haven't reopened. Now, residential real estate accounts for 14.53% of VNQ. The problem lies in commercial real estate, 40.48% of VNQ. As said before, firms will want to deleverage and cut spending. Not only that, but offices will be dead anytime soon as many companies will want to remain online for the next quarter or two. The only downside will have to do with hospitals and clinics, but as we flatten the curve, the need for hospitals will not be any larger than the need for them a month or two ago. Regarding specialized REITs, there are going to be numbers of people that will not be able to pay rent or will find the price of rent too high in comparison to their income. All in all, all we can see is red! Hopefully, this doesn't truly occur because many will be hurt by this crash, but it is hard not to warn against the inevitable.
AMEX:VNQShort
by FrancescoChiappe
Housing market - a response to ForbesRead a fascinating article from Forbes this morning about the state of the American housing market, Allegedly supply and demand are at an all time high and millennials Nearly at the mean age of buying houses 34y/o. so I opted to have a look myself and yes its True, sinse February it's been on a 45% bull run. Impressive stuff... And they say it can go higher... Can it? Switching between weekly and monthly TF's tells a more cautionary tale: Bear scenario - weekly it has double typed with a huge spike in volume followed by Dismal volume - monthly it broke upwards. Which is good.. Orrrr is it? Based on volume tend It could also be a B wave and waiting for 20-28% correction C wave with bearish divergent on the RSI On both time frames it has recently completed 5th waves Bull scenario: Weekly it may have already drawn an abc correction and started anew and is waiting for volume to push it through resistance monthly it is above the weekly double top. Will it turn it into support and follow a new channel to an elliot wave extension? Overall I am thinking it is on a tight leash and which ever way could have real consequences.. We are in the longest housing bull market in decades.. Interesting times. Opportunity abounds
NYSE:NVR
by tonywantsacookie
1
$FNMA/$FMCC Riding On Momentum From 2 Catalysts;Long Road AheadBoth Fannie Mae ( FNMA ) and Freddie Mac ( FMCC ) are rocking and rolling. Mnuchin's interview paired with the court of appeals' move against the Gov't have sparked more interest here. This is great and another potential catalyst today could add fuel to the fire. HOWEVER, is there a motion likely before the election? I think the jury is still out on that front. We've got the election year to think about as well. My guess is short term momentum and hopefully, it retraces back to a higher support than its previous resistance range. " So, are FMCC stock and FNMA stock penny stocks to buy or should you avoid them like the plague? In my opinion, there still needs to be some diligence had right now and don’t throw caution to the wind either...Should a Democrat beat the current incumbent, this whole “to do” may be scrapped entirely. Even though things are exciting now, make sure to keep tabs on the underlying risks and learn how to manage should those materialize...At the end of the day, if an overhaul does happen, Congress will lead negotiations. All these points mentioned would be up for discussion. Some of the more conservative ideas would most likely get taken out of the running. So, keep in mind that there are many unknowns, still. The fact of the matter is that these two penny stocks will remain under close scrutiny for the foreseeable future; this week being the next potential milestone to keep an eye on. " Source - The Best Penny Stocks To Buy This Month? FMCC & FNMA
OTC:FNMA
by PennyStocks101