Are you having a tough time understanding the war between business models going on around you? News not making sense? Dissonance setting in?
This morning we unveil a simplified approach we call TAAYA (They’re All After Your Assets). Taken with a double-doze of “Everything’s a Business Model” (EBM) TAAYA will help you sleep better and live a less stress-filled life!
After headlines and charts, as always…
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An interesting article from doom porn website, zero hedge. Gives a possible May timeline for a looming war between Iran and Israel and the greater war between Europe and Russia.
Considering the loss of national idenity and the demonization of nationalism, how big of an army can Europe gather who are willing to fight for Europe?
In European countries and even the USA, if you’re proud of your nations heritage, you get called a fascist and a Nazi.
Where are we headed? And George your past timeline of war around 2022-2024 seems nearer to now than then. I guess we’ll have to see how May goes, but Israel seems determined to take out Iran and the neocons aren’t going to let go of the Russia Russia Russia narrative either as its all about oil, once again.
https://www.zerohedge.com/news/2018-05-04/what-may-2018-has-store-its-difficult-understate-looming-dangers
Since I am handing out advice today, stay away from Doom Porn & you will have a brighter outlook for the world’s future. President Trump, with the swamp trying to impeach him, keeps moving forward on the issues the people elected him to accomplish, because he sees a bright future for the good old USA & consequently, the rest of the world.
ECS, only thing is I learned in corporate America to operate from a no surprises expectation. Considering my age and my hair color is still naturally what it was in my youth, stress seems to be my fuel.
Now, if I could only sleep like I did before all these microwaves invaded our lives…
Kill all little charger lights at night – really helps the circ. rhythms
Robert, I listen to Coast to Coast AM at night to make me sleep. Also, I have the Simple Radio App & can listen to reruns of Art Bell. I think by getting away from the so called Normal Radio at night, I sleep better. What’s better than Mel’s Hole to escape this world &`relax your mind. That is how I learned about Urban Survival, George was being interviewed.
“if you’re proud of your nations heritage, you get called a fascist and a Nazi.”
One side of my ancestral tree goes back before the revolutionary war.
Looking at the news today and how our political leaders are acting. I am pretty confident that they are doing twirly whips in their graves..
Massive changes across continents happen on a regular basis – think WWI and II, Wars started by ‘great men’, shifts of peoples looking for better lives . . . we are due for ‘something’, the tension is rising for something new!!
Very good questions raised, Robert.
George, nice gain. In 3 years you can make up for your ex. But, what I still can’t wrap my head around is your obsession with the short side of the market. I look at the short side of the market as Las Vegas East’s TAAYA business model to get investors to sell low & buy high, and not as an investment opportunity. If the market goes up 75% of the time & down 25% of the time, a business model would say look long because the odds are 3 to 1 in your favor on the long side. I would rather see you’ve spend your energy (It is hard work & time consuming) & develop charts on the long side (the meaty side) of the market using 3X ETF’s.
Also, no left, right shoulder charts since 4/28/18.
Great points.
First, the reason to play the short side is simple: slope of the ascent or descent.
Markets tend to decline about 2-3 times faster than they go up. Therefore, when playing with instruments that are marked-to-market (I like ETF’s…I confess) you need the moves to be as quick and violent as possible. This happens more in markets going down than going up. When there is a slow upward bias in a market, ETF marking to market will kick Ure ass. I have a problem with that.
Second point: The parallels to 1929 left shoulder and right was discontinued because while initially useful, they were not outputting tradable information.
There is one potential – which if you look at the left side of the 1929 shoulder is the area about 46 degrees up from the circled area for the week.
When I get some time, I will be a new graphic to see if that lines up.
But already, we can see the “amplitude variances” are back-asswards. In other words, at the left shoulder pause in 1929 we had a series of increasing amplitudes. In this year’s very, the amplitudes are (for now) moderating.
I would call your attention to the biggest story that no one, save a handfual of knowledgeable economists are looking at. This is the approaching inversion of Fed and commercial real estate rates.
I suggest we poll Bay area real estate whiz Mark about his observations since that is THE go-go market next to Seattle.
At the same time, a note about where Calif. is in its 11-year real estate cycle would also be of interest.
Great questions! Anything I can do to help a subscriber!
Thank you for your insight George. It is always worthwhile & appreciated. I have always been a Warren Buffet style of investor & ETF’s are anti Buffet.
Good point about the interest rate inversion. In Raleigh, home prices have started to soar.
Your post today was definitely a Value Adder! You added a valuable BM theory that I can benefit from in modeling my business for growth. Great stuff.
Mark, thank you very much. Now, tell 10-million of your closest personal friends, lol!
NY City (considered real estate global bellwether), sales down 25% first qtr 2018
https://www.bloomberg.com/news/articles/2018-04-03/manhattan-home-sales-tumble-most-since-2009-as-buyers-push-back
London sales volume also down 17%
https://www.irishexaminer.com/breakingnews/business/london-housing-boom-ending-834606.html
CA’s cliff may take longer:
https://www.forbes.com/sites/ingowinzer/2018/03/01/investing-in-california-real-estate-here-are-a-few-things-you-should-know/#5a773a496d6e
We’re in a B wave rally (from A, 2009), and C is starting to drop. B waves are rallies within bear markets..summarized from EWFF/4/6/2018
This may sound like Bay Area Chamber of Commerce propoganda and I apologize in advance…but, numbers like these don’t happen without cause.
The Bay Area is certainly far and away one of the most robust real estate markets in the country, if not the world right now. It’s not just in one specific area either. For instance, in residential real estate, three Bay Area counties set new jaw-dropping records as home prices continued to climb to vertigo-inducing heights.
This uptick reflects the ratcheting up of what buyers are able to afford. And boy, I know first hand that they can afford a lot. There was a recent article in the SF Chronicle about Bay Area world headquarters and their MEDIAN PAY. This is all workers from the mail room to the top. Most of the home buyers here make more in the area that I sell…mostly San Mateo and Santa Clara counties.
For starters…the average MEDIAN pay for a Facebook employee is $240,430…Alphabet is $193,274…Netflix is $183,304…in Biotech, Gilead Sciences pays a median salary of $165,007…in energy, Chevron pays $137,849…that includes company owned gas station attendants. In the middle of all this, Apple, Salesforce, HP, Intel and hundreds more Bay Area corporations headquartered here have similar numbers.
What’s that mean? That means there is tremendous demand on homes driven by very wealthy buyers with high salaries, mature RSU’s and Other stock option plans. The result is that they have huge down payments…And…up to 35% have all cash on Homes that are AVERAGING $1.45 million in San Mateo County and $1.29 in Santa Clara County.
Why are prices so high? Desirability. The Bay Area has the perfect trifecta for many people…Perfect, low to no humidity weather, especially in the Valley’s…Gorgeous geographical landscape, with views of the Ocean, Bay, Mountains, and Redwood’s….Vibrant and active lifestyle in San Francisco with it’s world class restaurants, nightlife and variety of cultural neighborhoods from the Italian North Beach, Chinatown, ritzy Nob Hill, Corporate Financial district, the playful Marina district, bohemian SOMA area etc. etc.
But, the number one reason is high paying jobs, jobs, jobs. The upper crust College grads, engineers, marketeers looking for an upgrade, just keep coming. This is their “Holy Grail” …one client told me. Four years prior to buying a $2.6 million dollar San Carlos Home with 50% down, this client with his MIT engineering degreein tow, the day after he graduated, drove cross country with his engineer girlfriend to chase their dream. They hit Gold. He is now with GoogleX…a new venture of Alphabet and she is engineering consultant with the Silicon Valley’s largest VC firm. This George, is the typical Silicon Valley Home buyer.
The prices are rising because supply can’t keep up with demand. If you know the geography of the Bay Area, it is sort of landlocked by the Bay, coastal Mountains, protected wetlands and Redwood forests in west San Mateo County. In other words, unless it is a high rise condo complex, there isn’t a lot of single family homes being built. Inventory is further complicated by a property tax proposition called Prop 13. That means…in essence…that whatever you buy your home for…that is the basis for your property tax for life. My next door neighbor is 78 years old. He bought his house in 1974 for $48,000. His property tax…at a 1.25% rate is $600 a year. His house is worth $1.9 million now. Yes, he could sell and make a ton of money…but a downsized replacement home for him would cost him a minimum of $800,000. And…his property tax bill would now be $10,000 a year. This November, a ballot initiative revision to another bill called prop 60 will allow people over the age of 55 to sell their home anywhere in the state and keep their old property tax rate. That will in theory, help older people move to more desirable areas without the burden of a higher tax bill…thus freeing up inventory. But, until that ballot measure is passed, we have at least another year of low inventory and high prices. After that…it should stabilize, in theory…but maybe not enough to satisfy the growing number of people moving here on a daily basis.
One of my clients works for Waymo and he thinks the proliferation of self driving cars could have an impact on housing choices. He thinks that if a worker had the opportunity to work while on his or her commute, that they could purchase a home In More ex-urban areas south of San Jose or the East Bay where prices are more affordable and land is more abundant. Of course…that will end up driving those housing prices in the outlying areas as well over time….Bottom line…in residential real estate…you can’t go wrong investing here in the Bay Area. Next post is on Commercial real estate.
The Bay Area commercial real estate world is even crazier than the residential side. Everywhere you look, there are high rise cranes dotting the skyline up and down the Silicon Valley, San Jose and Oakland. High rises are easier to justify, because the footprint is smaller. It has to be…Land is tight in the urban cores.
Overall, over 50 million sq ft of office/condo/mixed use buildings are going up or are nearing completion. Over a third of those sq ft are being built by just 4 companies. Apple is finishing up its 2.4 million sq ft campus. That may not be enough…It’s no wonder Warren Buffet just bought an additional $75 million sharers of Apple. He is no dummy. He knows the future of where business is headed.
Salesforce.com’s tower is the tallest west of the Mississippi. At 1,070 feet high, it holds over 1.6 million sq ft and it’s already 100% sold out. Google/Alphabet is building an 8 million sq ft campus in San Jose for an additional 20,000 workers. Facebook already has 1.5 million sq ft and is adding another 1.75 sq ft. So these buildings are NOT Build It And They Will Come projects. They are fulfilling a demand that is constantly trying to catch up with the exponential growth of high tech, bio tech and more.
An area you are familiar with George is South San Francisco and it’s Marina. It looks nothing like it did 5 years ago. Several million sq ft of office space dedicated to bio-tech is under construction there. There are cranes everywhere. It looks like a whole new skyline. Another “downtown” that has transformed the area is the Mission Bay district of San Francisco near what used to be a hard scrabble area near AT&T park…home of the Giants. Over 9 million sq ft of office space, high rise condos and apartments now dot the skyline. The Golden State Warriors are building a new high tech arena there as well.
The fuel that feeds the engine are jobs, jobs, jobs. And the thing is…it will never stop. Even if the economy crashes…and property values plummet nationwide including the Bay Area…Where would you rather pick up and re-invest your money when it starts to rebound….The Bay Area of course. That’s what happened after the dot.com crash…prices went down…opportunistic investors went on a buying spree and more businesses moved here due to better lifestyle and cheaper prices. The same happened after the crash of 2008…let’s move to San Francisco became the Corporate battle cry. We can live in a great place at a reduced price.
I have been here through two recessions and it’s the same story over and over. Don’t ever bet against Bay Area real estate. There is too much to offer here for it not to rebound over and over again. I missed the opportunity in the early 2000’s…You can bet I didn’t make the same mistake again after 2008. If another correction happens…I will be even more prepared and in buying mode.
I hope this helps…as much as our politics seem to dominate our reputation on Fox News…I don’t think there is a conservative business titan around that isn’t totally impressed with what the Bay Area has done from a business standpoint. We are the envy of the world right now…all you have to do is look around at the construction…the money…the growth…It’s real…it’s impressive.
The same is happening in Portland. I look at all the new high rises and the street level commercial spots they are adding and wonder, what kind of businesses are going to rent them. Were already saturated with pot shops, tattoo parlors, coffee shops, coffee roasters, and restaurants and bars. And I havent even touched on the huge increase in traffic and no major changes to the freeway system to accommodate the increased traffic…and then theres the growing homeless population that is in direct opposition to the appearance of a happy days are here again economy.
Portland is awesome. I love that town…and yes…it is growing fast as well. Lots of Midwest transplants and some California as well.
I suppose you could be happy there if you own a construction company and have good managers so you don’t need much personal involvement. And good political contacts too, or you’ll be drummed out of business. I couldn’t stand the taxes, regulations, and PC nonsense, and every time I’ve visited, I couldn’t wait to leave!
I missed most of the sights there because I felt so uncomfortable. The same is true for most cities over 1 million.
I guess as a summation of my two posts is that while the drops are quick and furious, the inversion in Bay Area rebounds at a faster rate than the rest of the country because of the desirability factor. There is plenty of money and intellectual capital here for controlled, vigorous re-invention. From the 1989 earthquake…to the dot com crash to the 2008 financial crisis…the Bay Area has been a robust and resilient place. No reason to believe this will change in the future. The infrastructure is already here ready for another run.
Mark. Thank you for your posts. I agree. As Cramer said on Mad Money last week, “Cash is Everything”, & CA has plenty.
Survived the 6.9 earthquake with no home damage! It’s built on a slab and tends to ‘float’ as a unit and it held together. Forty seconds of riding a bucking volcano feels like an eternity, though. “When will it stop?”
Hilo will not slide into the ocean… that area is stable. The danger zone is the whole south coast of the big island next to the volcano. It is a volcanic shelf that is slowly slipping into the ocean. That’s where the quakes are all swarming now. Yes, if it slides into the ocean enmass Honolulu will have 20 minutes before being inundated by 100 feet of water. California will be next a few hours later.
Mr. Ure, this is off topic but i would like to read your thoughts on the deagel.com 2025 projections. I am both baffled and a little frightened. Maybe a column if you think it has merit.
If you are a subscriber, start here:
https://urbansurvival.com/a-response-to-deagel/
Oh, and by the way, Deagel says in their latest “2025 forecast” we lose 70% of our population and 85% of our GDP, but they predict the UK and Ireland to lose over 80% / 92%, Germany and Israel to lose over 65% / 80%, France and Spain over 50% and virtually every other “Western” nation to lose over 25%.
That’s a lot of people, services, and manufacturing to go away, without benefit of a pandemic or nuclear war (read their notes.)
I’d not be too concerned…
Found your July 1, 2015 column. Still ready to move to the mountains!
George, you claim that no matter how much money you make, you will always be able to spend it. No doubt true, but can you spend it effectively and meaningfully? You also mentioned that focusing on income is the only thing that makes sense. I disagree, unless I can find ways to spend gobs of money meaningfully. To date, I have not. Of course, others may feel differently, and I have no aversion to making lots of money, as long as I have a good accountant and lawyer to stand between me and the IRS. I just don’t feel that it matters compared to the other areas of life that I have the money(if any), yet not the time, or non-monetary requirements.
I’d alo say that anything that triggers endorphins and dopamine while being enjoyable is valuable in moderation. I don’t do video games, though I know others who do, and actually monetize them.