My guess is we’ll see a continued decline overall this fall with the luxury market seeing a bigger drop. The liberal’s vacant home tax would be pathetic, just a psychological tactic to scare away Asian buyers. The overall Canadian market isn’t strong which indicates the economy isn’t great. The Toronto market has a lot of downward momentum that could continue right through to spring. Vancouver has bounced back from government meddling so maybe by spring Toronto can do it too. Can Toronto continue to be isolated from the Canadian economy? The NAFTA deal is what could send the Toronto Housing Market and the economy crashing. Overall, homeowners would be wise to sell because prices are high and availability limited. Why wait for lower prices in 6 months?
The following day, Black Tuesday, was a day of chaos. Forced to liquidate their stocks because of margin calls, overextended investors flooded the exchange with sell orders. The Dow fell 30.57 points to close at 230.07 on that day. The glamour stocks of the age saw their values plummet. Across the two days, the Dow Jones Industrial Average fell 23% – from Wikipedia
I have been an agent and real estate investor since 2001. I have seen the good times in the early 2000’s, worked through the housing crash, and the good times again. A lot of people think we are due for anther housing market crash because housing prices have increased in many areas of the country. Besides prices, there are many things that drive the housing market. In fact, prices cannot be used as an indicator of what the market will do because they are just a result of many other factors. Supply and demand are what push prices up or down. Supply is affected by foreclosures, homeowners’ willingness to move, new construction, and many other factors. Demand is driven by the economy, lending guidelines, potential homeowners confidence, wages, and much more. I believe the supply and demand affecting today’s’ housing market is much different than what drove the last housing boom. While prices could level out or decrease in some areas, I do not think we are in for a nationwide crash.
Buffett is being optimistic. In fact, if history can offer any lessons, note that the Dow Jones 100 years ago, in 1917, stood at 1,328 points. That would be less than 20 times the current number. But Buffett probably doesn’t have to worry too much about the events that may or may not occur in the 22nd century. Now, as far as the present is concerned, you can be sure that Buffett chooses his words and predictions more carefully, as it were.
The CAPE ratio (also known as Shiller P/E ratio) is a long term cyclically adjusted measure of equity valuations devised by the respected economist Robert Shiller. The CAPE ratio has been at historically high level for several years, although high valuations alone do not mean a crash is imminent. Whether US stock prices today are in a stock bubble or not is debatable. In general, bubbles do not necessarily imply a crash, unless there is a catalyst.
The real estate market could collapse if banks and hedge funds returned to investing in risky financial products. These derivatives were a major cause of the financial crisis. Banks sliced up mortgages and resold them in mortgage-backed securities. These securities were a bigger business than the mortgages themselves. That's why banks sold mortgages to just about anyone. They needed them to support the derivatives. They sliced them up so that bad mortgages were hidden in bundles with good ones. Then when borrowers defaulted, all the derivatives were suspected of being bad.
When Tobin’s Q is in its uppermost quartile, as it is today, it suggests this reward/risk equation is not at all favorable for investors. In other words, these “fat tails” get even fatter during these periods thus investors should look to hedge their portfolios against large declines. And this is precisely the “asset inflation” Taleb was referring to in the interview mentioned at the top of this post.
Secondly, he says, higher interest rates raise borrowing costs for consumers and companies, so auto loans and mortgages become more expensive and companies have a harder time tapping the debt market. "Clearly, higher rates are not good for housing or auto sales," says Ed Yardeni, chief investment strategist at Yardeni Research. And if sales of these big-ticket items slow, so does the broader economy.
But what drives the Toronto housing market? Will it succumb to the same fate as Vancouver or worse? If you’re a buyer, you’re wondering which neighbourhoods and towns to focus on and whether this market will tank. If you’re a seller, you’re wondering if you’re going to miss the biggest payday of your life by not selling. If you’re close to retirement, you may want to carefully review your choice not to sell. 2017 is a grand time for you to sell and move onto a better life.
This is a time for contemplation; reflect on the wealth you have and keep it. Don’t gamble it away. Indeed, to describe the present scenario, it would be an insult to call it a market. It’s much more a casino. And this is where Warren Buffett’s warnings become important. It’s not so much Warren Buffett’s predictions for 2018 that count. Buffett tends to make longer-term analyses. For example, his latest major prediction is that the Dow Jones could hit 1,000,000 points in 2118. That’s well over 40 times the current number.
The Trump tax reform plan might trigger a fall in prices that could lead to a collapse. Congress has suggested removing the deduction for mortgage interest rates. That deduction totals $71 billion. It acts like a federal subsidy to the housing market. The tax break helps homeowners have an average net worth of $195,400. That's much greater than the $5,400 average net worth of renters. Even if the tax plan keeps the deduction, the tax plan takes away much of the incentive. Trump's plan raised the standard deduction.
But don’t be paranoid either over the inaction. In fact, certain individual stocks are apparently overvalued with unreasonable PE ratios – including Amazon (AMZN) and Netflix (NFLX) – that have the right ingredients to form a bubble. Now don’t get this wrong. We are not saying that Amazon or Netflix is a bubble, but given a potential crash, it would be wise to stay away from overvalued stocks.
Adding to the problem is that much of the Chinese private debt is pledged with collateral from the stock market, which has been in free-fall this year. According to Reuters, more than 637 billion shares valued at $4.44 trillion yuan ($639.86 billion) were pledged for loans as of Oct. 12. As the air continues to pour out of the stock market, it will put additional pressure on the debt market.
It truly does appear that the elements for a “perfect storm” are beginning to come together. We have been enjoying a period of relative stability for so long that many Americans have allowed themselves to become lulled into a state of complacency. That is a huge mistake, because all along we have been steamrolling toward disaster, and nothing has been done to alter our course.
By the time of Trump's inauguration and into the first months of his presidency, broad market indexes climbed to new heights. Early conventional wisdom suggests that all of his signals on reducing regulation and corporate taxes would improve profits. Financial services, petroleum, private prisons, and other market sectors saw even larger gains as the administration made specific gestures to shuffle more money their way.
I don’t know this much, if the grid is taken down, dileberately or not, once it goes down, it will trigger according to my scientits friend, The One Second After event. It will be like what i just posted. He said that this book, One second After is the actual research done on the effects of EMP and what to expect if the grid goes down. So we need to be ready. Any one without food and water is completely screwed. If the stock market is crashing right now, and we know it’s and engineered crahs involving Russia, China, and the US cabal, then we need to get ready.
The first microcomputers such as the Altair 8800 and Apple I were marketed to a niche of electronics hobbyists as most required assembly from a kit. In 1977, factory-assembled machines with BASIC in ROM became available, including the "Trio of '77": the Apple II, Commodore PET, and TRS-80 Model I. The latter two retailed for under $1,000, but lacked game joysticks and high-resolution color video. Third-party developers created games for all of these platforms. The TRS-80 benefited from Radio Shack's retail stores, which displayed computers and accessories locally in an era where many personal computers were mail-ordered from manufacturers.
Though we don't know what will motivate a future market crash, it's likely to be something that will ultimately be recovered from if history is any guide. The economy and society are very flexible. Industries, and even countries, can rise and fall over time, but if you have a global, well-diversified and lower cost portfolio, then you should be well-positioned. This is an area where diversification helps. If you spread your bets it will likely help. You'll probably find that the next crisis centers on a specific country, part of the globe or investment theme. If you've spread your bets through diversification, then you'll undoubtedly have some assets that fall in value, perhaps alarmingly, but often certain assets can do well during certain crises such as high-quality bonds, more defensive or inexpensive parts of the stock market, or commodities including gold.