Real Estate is the Best Anti-Inflation Play

[dinosaur]

Are you sure that $1,000 isn't old or for grazing land or something? Decent corn fields are selling for $7k+ an acre in most parts of the country.

Anyway, if biofuels go away, food prices will drop dramatically. Biofuels eat up 40% of all US corn supplies each year, which exerts incredible pressure on all agricultural output. Less land being used to produce food equals rising food prices. And it goes all the way up and down the chain, since harvested crops are often turned into animal feeds which then drives up the cost of raising farm animals. So biofuel is the main driver. After that I would say increased meat demand in Asia. It takes a lot more calories of grain to make a steak or chicken breast than you get back in return.

That makes sense, thank you. Farms go for that in some of the less populated parts of Michigan. Corn is grown in old hay fields, but the deer eat a good portion of the crop.

[cbc58]

Jordan,

How many properties do you own?

[adams101]

You're discussing the notional value of derivatives, which is totally unimportant and frankly, not really related to your thesis. Anyway, talking about the notional value of derivatives as a relevant statistic is like saying the car insurance business is doomed for failure because everyone is going to get in a wreck tomorrow and spend 30 days in the hospital. Alas, that's not going to happen.

Anyway, what do all these derivatives have to do with real estate being overvalued? Is real estate also overvalued because everyone owns a homeowners insurance policy on their home, which represents trillions in potential liabilities?

I am not sure how you don't see the failure of a Quadrillion dollars in investment capital specifically with mortgage backed securities not tying into US real estate? As I said we saw just a glimpse of this in 2008 but poured tens of trillions into the industry propping up the massive losses.... of just a glimpse. This is all one GIANT spreadsheet here the bankers have separated into two spreadsheets by forming the unregulated derivatives market. Even a 5 or 10 percent variance in these values is a global economic crash of epic proportions.

Derivatives are simply an unregulated place to hide 100 times as many toxic mortgages as those few brought to light in 2008. These mortgages are tied to tens of millions of American individuals, retirement accounts, IRA/401K's, corporations, unions, schools, city governments etc etc etc. They are all tied into derivative investments. The solvency of those people are dependent on the solvency of those derivatives.

The price of real estate is directly tied to the amount of wealth in the country. The wealth of this country is tied up in a Quadrillion dollars of derivatives. Those belong to real people both wealthy but most of all the middle class. Their pensions, 401K/IRA's, the stockmarket, employment etc are massively tied to them. Much of the corporate wealth in the US is tied to them.

How you see this as unrelated I have no clue.

[newbitech]

Jordan,

How many properties do you own?

vs how many ounces of gold vs how much liquidity does he have to continue accumulating one or the other.

[cubical]

Yes, it doesn't mean it is undervalued, but it does mean that no one is going to make more of it until it goes back to the cost of replacement.

Just because people are not going to make more of it, doesn't mean it will go up in price.

[Jordan]

Jordan,

How many properties do you own?

Minority stake in several residential properties via a flipping/holding company. I would be happy to pour money in my own direct real estate investments if I wasn't likely to move. Additionally, I'd love to own residential properties via REITs, but there aren't any good pure-plays on residential property.

So, for now, I stick to passive participation in the real estate market. Returns are phenomenal with no work on my part.

I am not sure how you don't see the failure of a Quadrillion dollars in investment capital specifically with mortgage backed securities not tying into US real estate? As I said we saw just a glimpse of this in 2008 but poured tens of trillions into the industry propping up the massive losses.... of just a glimpse. This is all one GIANT spreadsheet here the bankers have separated into two spreadsheets by forming the unregulated derivatives market. Even a 5 or 10 percent variance in these values is a global economic crash of epic proportions.

Derivatives are simply an unregulated place to hide 100 times as many toxic mortgages as those few brought to light in 2008. These mortgages are tied to tens of millions of American individuals, retirement accounts, IRA/401K's, corporations, unions, schools, city governments etc etc etc. They are all tied into derivative investments. The solvency of those people are dependent on the solvency of those derivatives.

The price of real estate is directly tied to the amount of wealth in the country. The wealth of this country is tied up in a Quadrillion dollars of derivatives. Those belong to real people both wealthy but most of all the middle class. Their pensions, 401K/IRA's, the stockmarket, employment etc are massively tied to them. Much of the corporate wealth in the US is tied to them.

How you see this as unrelated I have no clue.

I see them as unrelated because you have no concept of what notional value means.

vs how many ounces of gold vs how much liquidity does he have to continue accumulating one or the other.

I own zero ounces of gold. Gold is impossible to value, and I find metals to be a very boring asset class because they don't do anything. Much easier to assign a value to the cash flows of a business or piece of real estate than to guess what someone will pay for gold 5, 10, or even 20 years from now. No problems with accumulating, as I can acquire minority positions.

Care to share your financials? This is stupid.

Just because people are not going to make more of it, doesn't mean it will go up in price.

Right, but I'd much rather own a commodity at a price less than its cost to replace than at a price above it. Demand is coming back, and I have time.

[newbitech]

I own zero ounces of gold. Gold is impossible to value, and I find metals to be a very boring asset class because they don't do anything. Much easier to assign a value to the cash flows of a business or piece of real estate than to guess what someone will pay for gold 5, 10, or even 20 years from now. No problems with accumulating, as I can acquire minority positions.

Care to share your financials? This is stupid.

So you aren't really accumulating you are pushing paper. Ok, done with this stupid argument.

[Jordan]

So you aren't really accumulating you are pushing paper. Ok, done with this stupid argument.

Whatever the hell that means. There's more to the investment universe than what you can find in a jewelry store.

[newbitech]

Whatever the hell that means. There's more to the investment universe than what you can find in a jewelry store.

of course there is. However, you said that real estate is the best anti-inflation play and then carry on to tell us how you own paper real estate. that's not convincing.

I don't care to know you financials, but you don't actually own any real estate, or gold. So it's kind of hard to have that conversation with someone who is still making paper valuations. Know what I mean? What you own is still tied to the value of fiat. If you want to hedge against inflation, you have to decouple from assets that track the value of the currency you are hedging against.

At this point, you be better off buying wheel barrows and pitch forks so people can move their money once inflation reasserts. Right now, what real estate is doing is adjusting from damn near 30 years of inflation with a really big explosion in notional valuation in the last 10 years. We've hard blown off that notional value, and some are calling for a bottom. This is just crazy. Unless wages catch up to the cost of financing the medium home price over the next 5-10 years, you are going to be buying into a deflating market. That's not a bad deal if you have enough liquidity to accumulate and NOT be saddled by the paper you hold.

[cbc58]

Jordan,

I think you may be trying to make yourself feel better by promoting real estate as a good investment even though you don't own any but may have invested in a flipper. Some flippers make alot of money and many lose their shirts and go after unsuspecting investors for "sure-fire" deals. We have one guy here who does just that but uses another alias to off-load loosing money properties for less than he paid for them. Seen this before back in the 80's when rates were low and then BAM - rates shot up to the high teens and people lost their shirts. Of course mileage may vary from location to location...