Gyroscopic Investing

MachineGhost wrote:

buddtholomew wrote: I don't understand the curb inflation argument Math as there are no indications of inflation at the present time.

Tell that to the landlord who is raising a freaking 3%.  BULLSHIT I say!  But what can you do about it?

Regarding rent raises:
Just saw this in the WSJ from August:

Rising housing costs are propping up inflation for consumers, despite relief at the gasoline pump and mild price increases for many goods.
...
“The rise in rent reflects the shortage of multi-family homes,” said Steve Blitz, economist at ITG Investment Research. Increased housing costs are cutting into consumers’ disposable incomes, he said.

http://www.wsj.com/articles/u-s-consume ... 1439987685

Desert wrote: Inflation is all over the place.  But there is generally offsetting deflation around as well.  Gas prices, for example.

The proportion that gas prices represent is minuscle compared to the proportion of housing costs.  Almost all deflation is not in the actual cost of living necessities but discretionary wants.

the united states consists of 1500 mini economies . many of these economies still are struggling with lower rents and lower property values . it isn't just about the most expensive city's . over all housing costs are still pretty tame . as i mentioned above for the first time  i can remember more than 1/2 the housing stock in nyc and the boroughs got no rent increases .

in fact my sister in Arizona refinanced and now her total budget is below 2007 levels .  low mortgage rates  have put loads of money back in to the pockets of homeowners .

but even as a renter many areas have not seen big jumps in rent  just like nyc , and we usually are the worst .

personal rates of inflation are going to all be unique , you can't generalize about  them just because we are so many mini economy's . .

I posted this on my blog, but I guess I'll post it here since its not ready to launch:

The Chapwood Index reflects the true cost-of-living increase in America. Updated and released twice a year, it reports the unadjusted actual cost and price fluctuation of the top 500 items on which Americans spend their after-tax dollars in the 50 largest cities in the nation.

It exposes why middle-class Americans — salaried workers who are given routine pay hikes and retirees who depend on annual increases in their corporate pension and Social Security payments — can’t maintain their standard of living. Plainly and simply, the Index shows that their income can’t keep up with their expenses, and it explains why they increasingly have to turn to the government for entitlements to bail them out.

Source: http://www.chapwoodindex.com/

That's perfect for mommy state progressives! More dependency equals more political power.

Here's a thread with some numbers that some of you may find interesting.
Treasury Market’s Inflation Expectations Tumble

MachineGhost wrote: I posted this on my blog, but I guess I'll post it here since its not ready to launch:

The Chapwood Index reflects the true cost-of-living increase in America. Updated and released twice a year, it reports the unadjusted actual cost and price fluctuation of the top 500 items on which Americans spend their after-tax dollars in the 50 largest cities in the nation.

It exposes why middle-class Americans — salaried workers who are given routine pay hikes and retirees who depend on annual increases in their corporate pension and Social Security payments — can’t maintain their standard of living. Plainly and simply, the Index shows that their income can’t keep up with their expenses, and it explains why they increasingly have to turn to the government for entitlements to bail them out.

Source: http://www.chapwoodindex.com/

Outstanding- thanks for that link!

I'm not sure this is entirely accurate though.  Year over year increases of 10%+ would result in a far more drastic drop in living standards than what I think most of us are experiencing. And the methodology & choice of items is not thoroughly spelled out.  In addition to what Desert said, the price determination is apparently based on a survey of the guy's friends, which I think is going to lend itself to some extra inflation.

However - I think you won't find much of an argument here that this guy has overall the right idea!  The CPI from my standpoint is just not that relevant.  The biggest determinant of costs around here are property taxes, which have more than doubled since 2007.  And since this has a ripple effect on businesses who have to pay rent for their stores, it means that prices for local goods and services are correspondingly rising.  None of this is reflected in the CPI.

long islan property taxes are so high that 2 years of taxes can be more than the paid off mortgage was .

when we all bought homes in the 1970's they were 35k . our mortgages were  250-300 a month  , that as an insane amount in those days , our rent was 187.00 .

well today that home can be paid off and the 250-300 bucks a month you no longer pay does not even cover the utility bill. .

two months taxes can be as much as the entire house was , so yes  real estate taxes certainly blow things out of the water  as far as affordability factor 

sophie wrote: However - I think you won't find much of an argument here that this guy has overall the right idea!  The CPI from my standpoint is just not that relevant.  The biggest determinant of costs around here are property taxes, which have more than doubled since 2007.  And since this has a ripple effect on businesses who have to pay rent for their stores, it means that prices for local goods and services are correspondingly rising.  None of this is reflected in the CPI.

It occured to me that someone on this forum could actually do it right.  It doesn't seem that hard from a crowdsourcing perspective.  It's an idea whose time has come, I say.

MachineGhost wrote:

Reub wrote: Why is it impossible to have rising rates, falling equities, and lower gold prices? Where does it say that it  can't happen?

That has happened several times in history.  It tends to be when equities are overvalued so something has go to give to get the returns back to normal to get people to buy again.

The nice thing is, short rates can go up a huge amount before necessarily pushing long rates up.  Historical yield curves aren't usually a 3.5% spread from short-to-long. 

And who's to say we don't have another inverted yield curve?  Long rates could go nowhere before the next recession.

Not arguing with you... just food for thought... which I'm sure you've thought of.

I wasn't able to find a quick reference of how many inverted yield curves we've had in the past and how often they tend to occur.  I could troll through the raw data, but I'm lazy today.

BTW... didn't realize that current LT rates are at 2.8%.  That leaves about a 2.8% yield curve spread.

http://seekingalpha.com/article/23870-a ... plications

Turns out this happens a lot (negative yield curves).

Which means that we have quite a mean to revert to (last negative curve was in 2007), but I'm not sure a negative yield curve is something you want to look at as having to "revert to a mean."

Especially if we think rates rising will just yield another recessionary blow, I highly doubt the market will have high long-term predictions on interest rates.  Perhaps a Rand Paul election into the white house could screw that up, but fat chance of that happening. 

moda0306 wrote:

MachineGhost wrote:

Reub wrote: Why is it impossible to have rising rates, falling equities, and lower gold prices? Where does it say that it  can't happen?

That has happened several times in history.  It tends to be when equities are overvalued so something has go to give to get the returns back to normal to get people to buy again.

The nice thing is, short rates can go up a huge amount before necessarily pushing long rates up.  Historical yield curves aren't usually a 3.5% spread from short-to-long. 

And who's to say we don't have another inverted yield curve?  Long rates could go nowhere before the next recession.

Not arguing with you... just food for thought... which I'm sure you've thought of.

I wasn't able to find a quick reference of how many inverted yield curves we've had in the past and how often they tend to occur.  I could troll through the raw data, but I'm lazy today.

or the reverse , we just had ten year rates up 30% higher than january  up until  the current flight to safety . short term rates didn't move , but the 10 year shot up 30% and long term treasury's  fell quite a bit .

MachineGhost wrote:

sophie wrote: However - I think you won't find much of an argument here that this guy has overall the right idea!  The CPI from my standpoint is just not that relevant.  The biggest determinant of costs around here are property taxes, which have more than doubled since 2007.  And since this has a ripple effect on businesses who have to pay rent for their stores, it means that prices for local goods and services are correspondingly rising.  None of this is reflected in the CPI.

It occured to me that someone on this forum could actually do it right.  It doesn't seem that hard from a crowdsourcing perspective.  It's an idea whose time has come, I say.

Got something to propose to us?  Out with it!!