Is it Deja Vu all over again?
Wasn't Yogi Berra a kick? He took from Lord Toynbee his Nobel Prize on history repeating itself into Brooklyn speak.
I was reminded of that when I read about the closing of the slaughterhouses and the issue of hogs. What does one do with all the hogs accumulating without their way into food chain? They are not like cattle. Cattle can be released to the pasture and graze until the food chain opens up again. "Where did I experience this before?"
As a rookie stock broker in 1970, just out of college, I came to a stock market not much different than the past few years. New Highs after new highs and nothing could stop the stock market ascent. The "new normal" was in vogue. THEN, like something out of nowhere prices began to fall. Fall they did, over 60%! The Nifty Fifty were the FANG stocks then. The difference it took over 3 or so years to fall 60%. This past month it fell 60%.
Interest rates were rising back then and kept rising along with inflation. Commodity prices began rising our supply of grains were sold to the Russians and before anyone realised it would happen the Saudis raised oil prices. Lines at gas stations, prices escalated and the new normal took a new phase.
Being a stockbroker became like a mortician. No one wanted to buy stocks to see them close lower in a week than they were when purchased. Dividends were cut. Banks and brokers folded. I switched to being a Commodity Manager. Right, a commodity manager in a department of one in Honolulu Hawaii. Business was GREAT! clients made money bought Grains and they went up, bought Hogs, Cattle and Pork Bellies and they went up. Sugar, Broilers and you name a commodity traded on our commodity exchanges and they went up. Gold and silver were sky rocketing.
The Federal Reserve needed to stop this inflation and stop it they did. Interest rates went up to double digits and commodity prices fell. On I went to real estate. As interest rates went up foreclosures followed. The commercials foreclosures were from shopping centers, office buildings and garden apartments. Some of them never lived in. The commercial properties had great anchor tenants. Investment banking my next stop as we put the properties in partnerships for individual investors and tenants in common for the institutional investors.
There is more to the story, but I will stop there. We are now in the new normal....better to say change will happen.
The most difficult thing for us humans is, we dislike change. We like the same way day in and day out. We like our stocks to keep going up, employment to keep going down, inflation low, change will happen.
To follow the pattern of the past it will be improbable to have us return to the past as it never has happened before. Politicians and government spokespersons will try to convince us that it will be back to normal. Sure but what is normal?
Like in the past the old normal will start with Air B&B's. How much leverage has been taken by investors in purchasing homes that they could rent at prices greater than what the property could rent for as a residence? Air B&B Becomes a Victim of the Cronavirus. Know a neighbor who has turned his home into a Air B&B or has several. Foreclosures will put pressure on housing prices. It is hard to tell where. The cities we live in do not have a registry for Air B&B. I questioned Menlo Park on business licences and a list...don't have it. Just like the last crisis in housing crisis. The investment community created it! Remember Air B&B was planning a mega billion IPO?
Hawaii was booming back when, in 1970 tourism was booming and by 74 no tourists! All my colleagues who bought into the condo conversion boom had negative cash flow and it became horrible as the number of condo's fell from occupied or rented to empty. The ability to rent long term did not cover the mortgage and maintenance. Sooner or later prices came down and auctions at the courthouse steps became common....EVEN IN HAWAII!.
How many senior citizens here in our area have a number of rental homes? Wasn't it that long ago that hedge funds and private capital were buying rental homes foreclosed on by banks? Why do we have a low supply of houses for sale? Too many in investor hands as they milk rents? The next shoe to drop is "Landlords are worried increasingly fewer renters will pay rents as coronavirus job losses mount" As I read the local county and state orders on rents:
I was reminded of that when I read about the closing of the slaughterhouses and the issue of hogs. What does one do with all the hogs accumulating without their way into food chain? They are not like cattle. Cattle can be released to the pasture and graze until the food chain opens up again. "Where did I experience this before?"
As a rookie stock broker in 1970, just out of college, I came to a stock market not much different than the past few years. New Highs after new highs and nothing could stop the stock market ascent. The "new normal" was in vogue. THEN, like something out of nowhere prices began to fall. Fall they did, over 60%! The Nifty Fifty were the FANG stocks then. The difference it took over 3 or so years to fall 60%. This past month it fell 60%.
Interest rates were rising back then and kept rising along with inflation. Commodity prices began rising our supply of grains were sold to the Russians and before anyone realised it would happen the Saudis raised oil prices. Lines at gas stations, prices escalated and the new normal took a new phase.
Being a stockbroker became like a mortician. No one wanted to buy stocks to see them close lower in a week than they were when purchased. Dividends were cut. Banks and brokers folded. I switched to being a Commodity Manager. Right, a commodity manager in a department of one in Honolulu Hawaii. Business was GREAT! clients made money bought Grains and they went up, bought Hogs, Cattle and Pork Bellies and they went up. Sugar, Broilers and you name a commodity traded on our commodity exchanges and they went up. Gold and silver were sky rocketing.
The Federal Reserve needed to stop this inflation and stop it they did. Interest rates went up to double digits and commodity prices fell. On I went to real estate. As interest rates went up foreclosures followed. The commercials foreclosures were from shopping centers, office buildings and garden apartments. Some of them never lived in. The commercial properties had great anchor tenants. Investment banking my next stop as we put the properties in partnerships for individual investors and tenants in common for the institutional investors.
There is more to the story, but I will stop there. We are now in the new normal....better to say change will happen.
The most difficult thing for us humans is, we dislike change. We like the same way day in and day out. We like our stocks to keep going up, employment to keep going down, inflation low, change will happen.
To follow the pattern of the past it will be improbable to have us return to the past as it never has happened before. Politicians and government spokespersons will try to convince us that it will be back to normal. Sure but what is normal?
Like in the past the old normal will start with Air B&B's. How much leverage has been taken by investors in purchasing homes that they could rent at prices greater than what the property could rent for as a residence? Air B&B Becomes a Victim of the Cronavirus. Know a neighbor who has turned his home into a Air B&B or has several. Foreclosures will put pressure on housing prices. It is hard to tell where. The cities we live in do not have a registry for Air B&B. I questioned Menlo Park on business licences and a list...don't have it. Just like the last crisis in housing crisis. The investment community created it! Remember Air B&B was planning a mega billion IPO?
Hawaii was booming back when, in 1970 tourism was booming and by 74 no tourists! All my colleagues who bought into the condo conversion boom had negative cash flow and it became horrible as the number of condo's fell from occupied or rented to empty. The ability to rent long term did not cover the mortgage and maintenance. Sooner or later prices came down and auctions at the courthouse steps became common....EVEN IN HAWAII!.
How many senior citizens here in our area have a number of rental homes? Wasn't it that long ago that hedge funds and private capital were buying rental homes foreclosed on by banks? Why do we have a low supply of houses for sale? Too many in investor hands as they milk rents? The next shoe to drop is "Landlords are worried increasingly fewer renters will pay rents as coronavirus job losses mount" As I read the local county and state orders on rents:
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