United States Social Security benefits could get the biggest increase since 1983

[Mike J]

Pretty much anything that is purchased with the primary expectation that the value will increase rapidily will create a bubble and then collapse.  Real estate, bitcoin, tulip bulbs, etc.  There are certain exceptions such as rare cars, fine art, old and rare wine, etc that typically do not bubble.  The reason is the these are typically only purchased by the VERY wealthy who tend to use them as status symbols.  I realize that some will say bitcoin is the exception, but I think any commodity whose value can oscillate between 34K and 40K in a 24 hour period is/should be part of the group.

[OnMyWay]

6 hours ago, earthdome said:

The other thing to consider is if the housing market bubble bursts it will likely be due to the federal reserve letting interest rates rise. So if after the crash you don't need to borrow much for the house you make out. But if you get the house at a lower price but you need a mortgage and interest rates have risen it may not make much difference.

The Fed will not let rates rise much before 2023.  It depends on the market, but I expect prices to fall a lot more than than a 1 or 2 % rate increase will cost.

If you have liquid assets and don't have to borrow much then you are in the drivers seat.

Originally, 1 year ago, I thought I might pay cash around 250k.  Now those houses cost 300k.  If the market crashes a lot, I might end up buying a house to live in and a rental.

We are thinking of relocating to a different state and are considering selling our current home while prices are up then rent at the new area we want to live and wait to see what happens while trying to put the extra cash from the sale to work.

If you want to do that, sell now.  I don't think you have much time.  Watch some of his other videos.  Foreclosures / short sales will start hitting the market soon.

 

[GeoffH]

9 hours ago, Mike J said:

Pretty much anything that is purchased with the primary expectation that the value will increase rapidily will create a bubble and then collapse.  

 

I would go further and say that if the trend in value for those types of items is above the long term inflation rate then it's at risk of having (or becoming) inflated in value.


NB there are a couple of items for whom this rule does not apply... 

 

Edited July 27, 2021 by GeoffH

[Mike J]

2 hours ago, GeoffH said:

NB there are a couple of items for whom this rule does not apply... 

You forgot the bubbles in the bathtub if you ate too much fiber.  

[earthdome]

14 hours ago, Mike J said:

I realize that some will say bitcoin is the exception, but I think any commodity whose value can oscillate between 34K and 40K in a 24 hour period is/should be part of the group.

Yes, the price of bitcoin in USD can be very volatile and even bubbly at times. Yet, over its 12 year lifespan it has averaged greater than 200% returns per year. This especially is true when the number of new bitcoin's created halves each four years creating a period of increased volatility. This is a new asset class so volatility is expected as it gains wider adoption. Best advice now is to only put in money you can afford to lose, dollar cost average your purchases and hold on for the long term. Some large fund managers and investment advisors are starting to recommend 2-5 % of your portfolio be invested in the crypto currency space.  A large percentage of the gains I have in my retirement investment portfolio over the last 3 years has come from crypto currencies.