Tag Archives: millennials

LAST UPDATE ON REAL ESTATE AND STOCK MARKETS FOR AWHILE

MAY 29, 2020 – We have come a long way since the stock market bottomed on March 23rd and the Fed released an infinite amount of liquidity.  For 6+ weeks, the stock market traded in a narrow 10% range.  Then this week it finally broke above 25,000 on the DOW and has achieved the higher end of the rally targets.

Public sentiment has gone from the world ending in late March to bullish extremes that exceed the February all-time highs.  As I noted in March, the rally would wipe away all fears and it has.  Even Millennials have been turned on to day trading.  Gamblers with no sports to bet on but horse racing have also turned to day trading.  Robinhood is trending as they say nowadays.  Heck, even yours truly opened a Robinhood account to buy bitcoin with.  In a matter of minutes I owned some bitcoin.  Amazing how easy it is nowadays to open an account an invest.  Er, gamble.

I am glad I am on the sidelines still.  Corporate earnings will continue to decline the rest of this year.  Economic recovery will be in the shape of a Verizon swoosh that will take 2-3 years to see us get back to within say 20% of the prior peak.  But, with QE Infinity, asset prices might continue higher.

In the major 1973-1974 Bear Market, stocks dropped 45% while corporate earnings went up.  Regardless of what the Fake News Media tells the masses, there is no relationship between stock prices and underlying corporate earnings.  So, there is a chance this time around while earnings fall, stock prices may continue higher.  We shall see.  I am content holding my dividend stocks that are yielding 5%-8%.  If the prices go up, great.

As for real estate, it will be in to next year before we have an ample number of transactions to analyze.  Price discovery was made in April.  The market is just waiting for sellers to face reality and buyers to realize they won’t be getting major steals.  There is already some evidence that the price declines have begun to shrink.  As we move along the Verizon swoosh, we get closer and closer to recovery and thus prices slowly rise.

Also, there is talk that investors seeking any kind of yield in a zero percent interest rate environment will see that real estate cap rates of 4% and 5% and 6% and higher are exceptional.  There is literally TRILLIONS of dollars on the sideline waiting to be invested.  If some of it pours into real estate, cap rates will decline and prices increase.

The last 7 months of this year will be interesting to watch.

One last thought is in regard to what the stock market is forecasting.  As it projects out 6 months into the future, what has it told us.  First, something MAJOR is to occur around September.  What will that be is the question we should be focused on.  Possibilities I can think of…..the USA and IRAN get into a military conflict…..VP Biden drops out of the race due to a scandal or there being a true mental health issue (I am not saying there is one…..brainstorming things that would be a major shock is all)….or Trump dropping out for any reason (health or political).  We shall see what happens at the end of the Summer.

Also, six months out puts us past the November Election and the market is apparently happy as can be with the result of that event.  A Trump victory is the most obvious explanation for the stock market rising over the past 2 months.  If Trump loses, the market appears to be saying the two houses of government will remain split between the parties and thus gridlock will remain.  The stock market does not seem to give any chance to the Dems sweeping everything.

As a reminder, the DOW figure to watch is 23,377.  A close above that on October 31st suggests Trump wins.  Below that, he loses.  In February, when we were above 29,000 this figure didn’t seem pertinent.  Then we got down to 18,100 or such and again this figure was out of range.  But, now it has been in play constantly.  We are 5 months away from decision time.  A LOT will happen in that time.

I will close with my newest pet peeve:)  I must have a million of them by now, lol.  I am so, so sick of companies airing commercials about how great they are for helping people out during this crisis.  People hate people that brag about themselves.  Companies need to STFU and just give back as they can and they will get recognition from those that receive their generosity and word-of-mouth will take care of the rest.  But, we’re Amazon and we are so great for giving this amount and we’re Apple and blah blah blah.  Save the money you spend on commercials patting yourselves on the back and spend it on the people and entities that need help.

On the subject of commercials.  Do people actually buy something because they see a commercial?  I have never done that.  Do people actually click ads that pop up on a website?  I have never done that!  In fact, I cannot remember ever seeing an ad on Amazon or Facebook or Youtube or Dropbox or anything.  I have used every website for free for 20+ years now and never once clicked an ad or really I cannot even recall seeing an ad.  I have always wondered how Facebook and Twitter and YouTube make money.  Oh well, label me clueless:)

ADD JUNE 4 – Oh gaws, does every company and organization need to put out a public memo saying they aren’t into racism.  Geez, I didn’t know that.  I was certain that Apple and others have in their Personnel Handbook that that are into being racist.  This news is truly shocking to me.  I am so glad they made this announcement.  Time to go to the porcelain altar.  What a bunch of loser lemmings.

Oh, one other item.  Please do not listen to the Fake News Media and politicians that will be saying this Fall and Winter that the increase in COVID-19 cases is because we opened too early.  When you hear such, just say BS!  Those increases will surely happen.  Our re-opening (I am so happy to be in South Carolina – we were last to close and first to open….you don’t mess with our liberties in the South!) is well planned and needed and will not be the cause of the second wave …or possibly a third wave next Spring.  But, I guarantee the Fake News Media and let’s just say it out loud, the Dems, will blame any increases on reopening too early.  Of course, they won’t be talking about the majority of cases now and then being in their jurisdictions.

I would place a bet that in 5 or 10 years there will be evidence that more people will have died from the lockdown than from the virus itself.  The damage to the income and wealth generation of Gen Y will far exceed what the virus cost us.  Poor Millennials/Gen Y, they just weren’t meant to have a good existence on this rock.  But, when you are the first years of The Dark Ages II, you know you will have a brutal time of it.  But, not near as bad as generations 100 and 200 years from now.

I will talk about real estate and stocks down the road as things perk up.  We are just past the period of chaos.  Now we live out the long, slow recovery.  Which can still have some downside here and there in various sectors and markets.  Not everyone is going to be seeing improvement.

Thanks again to everyone that is sharing information with me.  I really appreciate it.  It has been very beneficial over the past 3 months for sure.

Please stay safe.  Over 330 million Americans have NOT got COVID-19!  Quoting the title of one of my favorite rock songs by Halestorm, Here’s To Us!

The Mann

WEEKLY UPDATE RE REAL ESTATE AND STOCKS

UPDATE APRIL 24 – Nothing new re the markets.  A quick note regarding VIs – Virus Incubators.  A report says that 3% of the counties in the USA account for 50% of GDP and 61% of COVID-19 cases.  Until we empty the large cities and distribute our populations throughout the country, we will have disastrous societal problems.  Less density is naturally better than high density.

That is it for this week.  Have a great weekend and stay safe.

UPDATE APRIL 22 – Well, the talk of the week was Oil futures hitting -$40 per barrel earlier this week.  I wish they would pay me to take some oil:)  I am confident we can say this week saw the conclusion of a 110-120 year cycle for Oil.  The next phase will see Oil soar past its prior high just below $150.  I believe this will be more due to the US Dollar’s devaluation and surging inflation than supply/demand factors.  BTW, June 2021 Oil Futures have stayed around $35.  This gives us an indication of where the market thinks we will be in a year.  That is still cheap.

A few other experts I follow (not to insinuate I am an expert….they are though) have also mentioned standing aside to watch who wins this battle between the bulls and bears.  The stock market should decline significantly from these levels.  But, when the world is implementing QE Infinity it is tough to overcome trillions of Dollars and Euros in buying activity.  It is comforting to know others are watching this unfold from the sidelines, too.

NOTE:  Next week I will post how far I believe real estate prices have declined.  These are being published in Mr. Wirgler’s next Broker Log Report so I want to let that get disseminated first.  I have analyzed several key indicators in a variety of ways and the data is fairly consistent.  So, I am confident enough in the indications to publicize them.

My side commentary this time is about the public and how they usually get things bass ackwards.  When gas prices are low, like now, I ask why aren’t people complaining about C-Store operators gouging them now?  Why do people think C-Store operators are ripping them off when gas prices hit $3 or $4 per gallon?  The operators have virtually no control over gas prices!  When gas prices are high, they still make the typical 20 cents or less per gallon.  As a percentage, their profit declines as gas prices go up!  I read that right now many operators are making up to 80 cents (!!!!!!!) per gallon.  Even if they were only making the normal 20 cents, the percentage would be 10%-15% versus 5% when prices are high.  The time for the public to scream about C-Store operators is when gas prices are low….not high.  But, no one has ever listened to this argument….so nothing will change.  But, I do feel better venting:)

Some Baby Boomer humor in this regard….today is like it was when I was 16 years old – gas prices are low, but I am grounded at home:)

Make a note to come back to my blog next week to see where I think real estate prices are today.

Stay safe.

The Mann

APRIL 19 – First, I hope everyone is well.  Continue to stay safe.

Stocks have been in a trading range for a few weeks.  This has helped many indicators get out of extreme oversold levels.  As I forecast, many analysts are taking credit for going bullish at the March lows and claiming a V-shape recovery is underway.  Admittedly, we are at that point where there is some support for us being in a new Bull Market versus the Wave Theory still calling for the next wave down to be worse than what we saw in March.

The bullish case has some solid support.  Amazingly, during the initial crash from near 30,000 to about 18,000 in the DOW, over 100% of the decline occurred during the gap down openings!  What occurred in this time frame was extreme buying by the professionals while the public was selling.  I have to admit it is tough to bet on the downside when the pros have bought while the public was throwing in the towel.  Also, very difficult to fight unlimited QE.  I am going to stand aside and see which way this goes.  There is no stress if you are on the sidelines.

I mentioned the ETF VNB in March.  It has recovered from about a 7% discount to NAV to being above NAV now.  This suggests bonds have been repriced to the market’s satisfaction.

Real estate markets are starting to gel regarding forecasts.  Hotels appear to be the first to show a value decline around 30%.  This applies to the mid-level to upper-end hotels, especially those that have closed down.  Economy hotels along interstates have not been hurt as bad.  Contractors and travellers (who are those people! lol) need a place to stay.

The forecast for office buildings has very divergent opinions.  One side believes that people have learned to work at home and many will not go back to the office.  The positive side sees the amount of space per employee increasing drastically due to a desire for some distancing.

I have always, and continue, to disagree with the at-home work movement being successful and significant.  In 1995 when I was getting my MBA, the prediction was by 2000 most people would be working from home.  25 years later this has not come to fruition.  And it won’t because of this virus.  Why, you ask:)

For the same reason as in 1995, humans are a social animal and we prefer to be together.  Also, people like to look you in the eye when decisions are being made.  What I found with email (and the blackberry, remember those) is it was a way for companies to bring work in to your personal life.  Of course, they don’t want you bringing your personal life into the work day.  But, having you work at home in the evenings is ok.

Employers want to have control over their employees.  They want you in the office.  It is not the employees choice how this plays out (Millennials will of course disagree as they think they can dictate to employers what working conditions should be….that is for sure dead now.).

Zoom and such is not a reason to expect more people to work from home.  Zoom is simply a conference call.  We have been able to communicate in groups for 30+ years.  I had my first Zoom meeting with about 20 people last week.  My observations were I am looking at a Brady Bunch intro for an hour and I am distracted by watching the faces of 20 people looking at their computer screen looking at 20 people looking at their computer screen.  Not a thing has been added to the phone conference call.  ((Side note….the meeting was fruitful regarding the information we all shared. But, a phone conference call would have accomplished that, too.))

Where I see videoconferencing having an effect is on business travel.  I see there being two types of company meetings – IntraOffice and InterOffice (both copyrighted, April 2020).    Per above, IntraOffice is not going to change.  Employers are going to make their employees come in to the office.  What might change is a movement back to the Baby Boomer way of doing things – having private offices and less of this common area stuff for employees to gather around and chat and whatever.  You can go back to doing that at the water cooler:)  So, the trend towards less square footage per employee could reverse.  Maybe we will go back to needing 250-300 square feet per employee.

Obviously, I believe executive suites (temporarily known recently as shared work areas…e.g. WeWorks) are dead for another 20 years.  The concept has always been on the fringe and that won’t change.  I think ‘hoteling’ (I recall that starting back around Y2K with accounting firms initiating such) will be adversely affected, too.  I sure wouldn’t want to go into an office that someone else has been in for the last few hours.  Or at least not until someone comes in and decontaminates it!

Where I do think a permanent change is occurring is what I term InterOffice – travelling to other corporate locations around the nation or world.  The current crisis has made it very difficult in the future to justify to your manager that your staff needs to go to New Orleans to have a sales meeting and brainstorm and plan for the upcoming year et al.  All of that travel cost and time away from the office is going to be hard to justify in comparison to a Brady Bunch, er Zoom, meeting.  This doesn’t hurt the office market.  But, it does hurt the airline, rental car, taxi, hospitality, and restaurant markets.

One last argument for the plus side and one for the negative side as I write this and listen to various experts speaking (I must spend 5-8 hours a day right now just listening to various experts that predicted this crisis….can’t wait for things to calm down so I don’t have to listen to all of this every day!).

Positive – I was very surprised to hear that a survey of Millennials showed that 77% prefer learning in a classroom to online.  For a generation raised on technology, this certainly shows that the human species prefers in-person interaction.  Also, with my wife being a former teacher, she points out that only in-person learning will account for all the different ways individuals learn.  That cannot be accomplished online.  This supports the argument for an increase in office demand as employees remain in the office, but require more private space.

Negative – A demographer I was listening to said that worldwide the number of professional workers is going to decline 8% to 10% over the next decade.  This directly reduces the need for office space.

As of today, that is all I know about the office and hotel markets.  I always encourage you to gather all of the information you can and make your own decisions and forecasts.  Do not blindly listen to the Fake News Media and the pundits they bring on.  Think for yourself.

I have absorbed information on other real estate property types.  But, this is already a long post.  I will address the other types over the next few weeks.  Hopefully, I will obtain even more information by then.

Thanks again for all that send me information they come across.  I truly appreciate it and I try to digest it and put it here on my blog.

I look forward to seeing which side wins the Bear/Bull stock battle.

Lastly, one of the experts I subscribed to did a lot of math and predicts a 16.5% unemployment rate when the May 8th report comes out.  I like when someone shows the math and the reasoning for a projection.  We shall see how that turns out.

Stay safe and well.

The Mann

IT’S HUMAN NATURE – THE SUBURBS WILL ALWAYS RULE

July 3, 2019 – First off, Happy Birthday to our great republic.  I hope everyone had a safe and enjoyable 4th.

The following article is just one more tidbit of data that proves that the younger generations NEVER moved into the CBDs at any rate greater than prior generations.  Since 2000, the percentage of the population in CBDs has not changed!

As I continue to tell any city planner I see speak at a conference, you best be spending 99% of your money on infrastructure in the suburbs.  It is a waste of money to spend fortunes on downtown parking garages, apartment buildings, trains, etc.  The cost is extremely high and the population using it is insignificant.

City planners simply mislead the public as it is all ABOUT THE MONEY.

Environmentalists mislead the public because it is all ABOUT THE MONEY (e.g. The USA has 17 coal plants….1600 coal plants are under construction and planned in 62 countries…the FNM tells you the use of coal is declining, when in fact it will increase 43% with just these new plants, much less new ones after these).

And vegans make it sound like plant-based food is catching on and is the future for the world.   Again, they are simply AFTER THE MONEY!  Between now and 2050, worldwide meat consumption will increase from 330 million tons to 560 million tons!  Someone please tell PETA to stop wasting all of that donation money they get on trying to make people stop eating meat.

It is sad to see how the masses get used by the Fake News Media that promotes these money-grabbing agendas.  But, as I have always said, thankfully the masses are predictable in this way and that makes it easy for everyone to profit off of them.  I guess that includes me, albeit I am not an unethical, greedy corporation.

You cannot save this planet.  Whatever you do as an individual (not eat meat, walk or bike instead of using your car when possible, buying an electric car [thanx for increasing the need for more coal plants to provide electric for all of these electric cars!], recycle, et al) is not going to help.  Nor is a multitude of Americans and Europeans doing the same thing.  China and India alone will offset any benefits provided by the climate change believers 10-fold over.  My dad had a saying for your efforts, but it is a bit vulgar so I won’t write it out.  Just shake my head about the futile efforts and how legislation continues to price the poor out of housing and automobiles.

In the end, only Mother Earth can save herself.  And she will!  She always has.  Mass extinctions.  Bubonic Plague.  Man might help with World War III and the use of nukes.  But, I believe Mother Earth will unleash a disease that will kill billions before mankind figures out how to stop it.  I won’t be around to see if that happens.  Neither will anyone reading this.  But, down the road our over success as a species will have to be corrected….or we do as I have always proposed as an option – move to Mars:)

Enjoy the suburbs, life is so much more beautiful and relaxing there.

The Mann

https://www.foxbusiness.com/features/millennials-leaving-cities-rising-costs