A final challenge fo stevejhx, be correct just once, in reality, not in theory

Yawn.

figures, you can't do it.

I think you're missing Steve's point, which is that OVER TIME, renting one's home is better than owning it.

What you've shown is the good half of a full economic cycle, so of course it looks better. What Steve is hypothesizing requires a series of full economic cycles.

steve didnt say not to buy 10 years ago! He said not to buy 10 months ago, when prices appreciated 100% in 5 years time due to the credit bubble. Clearly, the credit bubble is now bust and the world is not the same.

alanhart, over which period of time?

10 years not good time to measure?

Theory theory theory. All good until you wake up.

Steve is the guy who actually said the other day that real estate declines over the long run. That isn't even possible. Nothing can decline forever. Even steve's correctness rate has to stop at zero percent.

Thank you, alanhart.

DanShorock, from streeteasy:

Bubble Wrap
Housing Recession Approaches Manhattan as Nearby Prices Fall

Bloomberg reports on the falling housing prices in the boroughs, with many down over 10%, and experts are predicting Manhattan will soon follow.

“The storm is going to engulf Manhattan,” said Mark Zandi, chief economist for Moody’s Economy.com. “It has held up well to this point for two reasons: one, global investor demand for everything New York, and second, the problems on Wall Street have only now really begun to impact jobs.”

First, that last paragraph answers your question. And second, if the Bush Administration weren't so incompetent this last 25% fall in the Dow wouldn't have occurred. Read Paul Krugman.

I can't predict other people's idiocy. If I could, I wouldn't have lost any money in the stock market. But I did.

urbandigs, you are not correct. Steve has said that real estate declines over the long run.
He has also stated that it is always better to rent than to buy. Always.

So steve you can only "predict" when everything works according to formula and theory and doesn't take into account reality, is that what you are saying?

give it a rest, would you rather he think he is always wrong?

Steve called this bubble around ten months ago, and he was right. I respect his insight. I too was a bull, and for many years I was right while the gloom and doomers ranted on. However, after debating Steve for a month, I realized that he was right and I was wrong, the party had ended. It's not a pretty picture, and I take zero pleasure in anyone's losses, but Steve does deserve credit for people right on this.

Steve may have screamed to sell 10 months ago, but he has also stated that it is never a smart decision to buy. 10 months ago when he said sell real estate he said buy stocks. So in the past 12 months, stocks are down ~40%. How much is real estate down in the past 12 months? Where would you have been better off?

Dan I count a few that are below 900k 2 beds that are more than 1000 square foot. Chelsea is unfortunately suffering from anchoring. There is a lot of supply and people believe that they can demand a price per square foot, developers and owners. This is an unfortunate consequence of momentum.
i have some apple stock for 200 if any one wants to buy some.

Second I don’t believe Steve has been on this board for much longer than a year.(or at least as vocal) and as UD states his same could be correct but his conclusion might have been different 10 years ago. It does not mean his theory is correct. I appreciate what Steve has to say because he at least does some work to convey fundamental ideas, most of which are useful because they give people a sense for the risks and how to measure relatives. The risks are important in this environment because there are so many variables working against a buyer such that the option to stay out the market is reasonably valuable.

correction "It does not mean his theory is incorrect"

"he has also stated that it is never a smart decision to buy."

I never, ever said such a thing. What I said was that it was better to buy when it's cheaper to buy, and it's better to rent when it's cheaper to rent. I also said that if you plan on staying where you purchase for more than 7 years, then the short-term risk is mitigated.

To clarify what I wrote that you don't understand, I wrote that IF YOU CONSIDER OWNER-OCCUPIED RESIDENTIAL REAL ESTATE TO BE AN "INVESTMENT," that over the long-term stocks yield higher returns. If you consider it to be capitalized rent (which it is) then buy when it's cheap, rent when it's cheap.

Sorry you don't understand the difference.

It is always easy to go back and say x or y would have been better to do 10 years ago. So tell me - 10 years hence, what is your prediction for stocks and real estate?

You can't make a meaningful prediction, so drop the "past performance" business. Had I known in advance that the stock market was going to fall nearly 50% in a year, then maybe I would have sold last year as I almost did. But I didn't and I have significant losses as do many people, and I live with it and admit that I was wrong and will recover. I know why I was wrong - because I didn't and don't think we're in a serious nationwide recession (though that could change if the people in charge don't get their collective acts together) because my job - sensitive to economic downturns - is running along smoothly. As I recover I will adjust my future investing strategy. Unfortunately I wasn't around for the 1929, 1933, and 1937 stock market crashes & didn't think the likes of this could ever happen again, but I was clearly wrong.

"10 months ago when he said sell real estate he said buy stocks."

I never said that 10 months ago or 10 minutes ago. I have always said that stocks are risky because of their volatility, real estate is risky because of its illiquidity. I own both - what you do is your business.

Steve, this is the link where you said you achieve 60% yield on your investments on average each year.

http://www.streeteasy.com/nyc/talk/discussion/3715-crains-reporter-looking-for-buyerssellers

Steve, this is the link where you said renting is ALWAYS (caps are yours) better than buying

http://www.streeteasy.com/nyc/talk/discussion/3410-real-estate-is-a-bad-investment

wherein you suggested the a renter would be better off putting his money in equities

Another link where Steve suggests that buying real estate has an opportunity cost because you can buy equities: http://www.streeteasy.com/nyc/talk/discussion/3791-jp-morgan-chase-launches-major-round-of-layoffs
stevejhx
about 4 months ago
ignore this person
report abuse Your "real numbers" ignore the opportunity cost of investing in other than real estate, the risk premium assigned to owning property rather than renting it, and a short-term interest rate for a long-term investment.

--
and if someone could explain how to assign a risk premium to owning property rather than renting it ... steve how about you, you are good with formulas and math, where does that risk premium get plugged in?

ps - in that discussion, here's what JuiceMan said which was funny:
JuiceMan
about 4 months ago
ignore this person
report abuse credibility steve? That's funny. Every single one of your quotes is a blatant plagiarization of some economic white paper that you have read but barely understand. Couple that with all of your Google and Wiki sound bytes and you have a truckload of BS. If you didn't cheat you way into Columbia, you probably would understand the difference between marginal and effective tax rates, that data mapping isn't systems conversion, and that when you are comparing monthly costs in a rent vs. buy scenario you have to deduct principal. In case you forgot steve, you were the one that backed down when asked to go through a logical exercise utilizing real numbers. Why is that? You do humor me with your pathetic attempts to get people to read your posts. My guess is that you are the #1 reason streeteasy implemented the "ignore this person" functionality and the #1 person it is used for.

AND...on top of all of that, you have man boobs.

later, steve said about his 60% annual returns:

I did actually make 60% last year and I have, in varying asset classes (including real estate), made better than hedge fund performance over the past 15 or so years. Do I make it every year? No. Do I expect a smooth ride? No. Will I make it this year? Unlikely, unless things change drastically. But owner-occupied real estate is NOT an investment, and it shouldn't be looked at as such. It is merely a capitalized expense.

http://www.streeteasy.com/nyc/talk/discussion/4090-to-those-that-laughed-at-dow-going-to-11000

"Steve, this is the link where you said you achieve 60% yield on your investments on average each year."

I did, until this year.

"Another link where Steve suggests that buying real estate has an opportunity cost because you can buy equities"

If you deny that, you're crazy.

"wherein you suggested the a renter would be better off putting his money in equities"

IF you consider owner-occupied residential real estate to be an "investment." It is not - it has no yield over the long-term.

"you have man boobs."

LMAO. Sorry you hate me so much, dude, but I stand by everything I said, including my past returns, which have now been cut significantly, if today is the end date.

But it's not. It goes on. I don't pick a start and stop date for what I do - I use a moving average. Some years in that 60% annualized return - valid through May of this year - I lost money. Other years I made tons of money. This year I've lost tons of money. Next year I'll probably make tons of money. That's the way the cookie crumbles.

steve makes 60% annual average returns until this year. 60% annual average returns until this year. re-read what he just wrote above.

ok whatever you say

(and I didn't say you had man boobs, I quoted someone else who said you have it. Odd that you don't deny it, which means that the JuiceMan was correct, and what is disturbing about him being correct is that you had to tell him and tell everyone on streeteasy about this)

George Soros average annual returns: Soros is also famous for running the Quantum Fund, which generated an average annual return of more than 30% while he was at the helm.
http://www.investopedia.com/university/greatest/georgesoros.asp

Michael Steinhardt annual returns: Steinhardt Partners achieved a performance track record that still stands out on Wall Street: 24% compound average annual returns – more than double the S&P 500 – over a 28-year period. What's more amazing is that Steinhardt accomplished this record with stocks, bonds, long and short options, currencies and time horizons ranging from 30 minutes to 30 days. There were few investment instruments over which Michael Steinhardt did not wield some mastery.
http://www.investopedia.com/university/greatest/michaelsteinhardt.asp

Julian Robertson annual returns: Robertson had the best hedge fund record throughout the 1980s and 1990s. It is reported that the compound rate of return to his investors was 32%. During his active years, he was considered to be the "Wizard of Wall Street." His hedge fund, Tiger Management, became the world's largest fund, which peaked at over $23 billion invested.
http://www.investopedia.com/university/greatest/julianrobertson.asp

Peter Lynch annual returns: Peter Lynch managed the Fidelity Magellan Fund from 1977 to 1990, during which time the fund's assets grew from $20 million to $14 billion. More importantly, Lynch reportedly beat the S&P 500 Index benchmark in 11 of those 13 years, achieving an annual average return of 29%.
http://www.investopedia.com/university/greatest/peterlynch.asp

Since we know you like to invest internationally, John Templeton annual returns: Templeton became a billionaire as a true pioneer of globally diversified mutual funds, including the Templeton World Fund, which was formed in 1978. His flagship Templeton Growth Fund posted a 13.8% annualized average return from 1954 to 2004, well ahead of the Standard & Poor's 11.1%.
http://www.investopedia.com/university/greatest/johntempleton.asp

Stevejhx annual returns: "Steve, this is the link where you said you achieve 60% yield on your investments on average each year." I did, until this year.
http://www.streeteasy.com/nyc/talk/discussion/5548-a-final-challenge-fo-stevejhx-be-correct-just-once-in-reality-not-in-theory
http://www.streeteasy.com/nyc/talk/discussion/3715-crains-reporter-looking-for-buyerssellers

Steve's annual returns surpass Julian Robertson (Tiger Management), George Soros, Michael Steinhardt, John Templeton, Peter Lynch, and who else?

DanShorock -- Why are you so hostile to stevejhx? Or anybody for that matter?

I have been reading these boards for over a year and Stevejhx has been very informative. Not only do I appreciate his perspective -- but I find his analyses interesting. I also am interested in hearing the positions of others -- both for and against the theories at hand.

If you do not agree -- leave it alone and move on. Your decision to attack in absolutes -- by extracting statements out of context-- is both weak and unnecessary. You are not contributing any value.

oh but wait, here's where steve's 60% returns were put into context

http://www.streeteasy.com/nyc/talk/discussion/3733-listing-prices-falling-fast
stevejhx
about 4 months ago:"I came to NY 10 years ago with about $50,000. Now I have a couple of million. It's about 60% per year."

to which someone had this reply:
"Apt_Boy
about 4 months ago
ignore this person Stevie Boy...you are quite silly...you said "I came to NY 10 years ago with about $50,000. Now I have a couple of million. It's about 60% per year."

But if you worked for 10 years full time to grow that $50k to $2mm, that is rather poor...an average of less than $200k in earnings per year...you did not earn 60% per year..you worked for 10 years and now have $2mm from that...I worked on Wall Street for 10 years and made $5mm in earnings during that time, but I did not make 5000% investment return, I worked and got paid, and that is what you did, but your job was invested your money, still a job

And if you do the math $50k invested for 10 years at 60% would get you $5.5mm"

Manhattanfox, very nice of you to show up, but what I read in your statements is that you are interested in "perspective", "analyses", and "positions" but not interested in facts or provable "absolutes".

I've challenged steve to put a stake in the ground and be proven correct with facks.

facts :)

Fine Dan - if today is the cutoff date, then my annual returns are closer to the 15% level though I'd have to figure it out exactly. A far cry from before - because I didn't see this present meltdown coming. In fact, I'm not sure anybody did. But I do believe that once this is over we will see one of the biggest rallies ever, because this is well overblown. The S&P is now trading at 12x earnings, down from its usual 21x. Brazil is trading at about 6x, down from a more normal 18x.

Sorry you don't like it. Remember, my annual returns started out from a very low initial amount. The people you quote are starting out with much larger amounts, so they can't make returns like that. It's much easier to double $1 than it is to double $100.

You really do obsess about me. Sorry you don't like my prediction about Manhattan real estate. I stand by it. I am also sure that I will recover all my losses not only because worldwide markets are oversold, but because in the future I get the double benefit of tax losses - my own, and the carry-forward of mutual funds. I probably won't have to pay capital gains taxes for the next 2 or 3 years. Neither will most mutual funds. Then, since Obama is likely to win and taxes will go up, I will have those benefits at a higher rate than my losses would have been taxed at had they been offset by gains this year. That, however, is probably a concept that you don't understand.

Stop obsessing. It's unbecoming.

Dan you must be new.

Some of us on streeteasy are impressed by frequent posting, use of algebra and multiplication, names of professors and theories and 10th grade words.

Some of us aren't.

ah, sunshine steve, 60% annual returns over 10 years, with the benefit of one year have turned into 15% annual returns in 11 years.

$50K at 60% for 10 years = $5.5 million
$50K at 15% for 11 years = $232K

pretty lousy return this past year

"60% annual returns over 10 years, with the benefit of one year have turned into 15% annual returns in 11 years."

Yes, faced with the worst meltdown in the stock market since 1933. Fully agreed. I was taken by surprise. That's still a lot better than Lehman Brothers did. And Merrill Lynch. And Washington Mutual. And Wachovia. And Countrywide. And Freddie Mac and Fannie Mae. And Bear Stearns.

And I could go on.

This is a rough time in the stock market. General Motors is now worth what it was in 1953. Does that make it a failure over the course of its storied past? No. It means it's in trouble today and it could very well get out of it.

You really need to take your meds and chill.

hey, Manhattanfox, how do you like the quality of the advice you've been taking now?

Steve - just a tip for you if you haven't figured it out, but "DanShorock" looks/sounds like a lot of the other poster screennames (who also have a capped first name/last name) who suddenly appeared out of nowhere but seemed to be familiar with your entire posting history.

In other words, may as well put him on "ignore" like you did to his original screenname.

Man is he obsessed with you, though. Created a new screenname just to stalk you.

who am I? EddieWilson?

Wow "DanShorock", you're also obsessed with EddieWilson!

But, lo, you're "new" to this board!

Oh, please, "DanShorock", let' change the subject a little bit. Tell us your opinion about Long Island City. Bear in mind that just about everyone I know with an intimate knowledge of current market conditions thinks that LIC is the most overpriced neighborhood in the NYC metro area, with the most downside. Heavily overdeveloped with no services. No investors I know are willing to go near it. Do you have an opinion?

I don't really have an opinion on Long Island City.

I did go to a wedding that I think was there around December 2006.

No, I'm not LICComment.

Okay, not LICComment.

Help us out then... Who else could you be who is pathologically obsessed with stevejhx and EddieWilson?

Better yet, don't bother. I've already lost interest.

man boobs. he he he he.

ok DanShorock, then who are you? You know far too much about steve's history to be new. I'm not buying it.

farquhar, there are people on this board I often don't agree with (JuiceMan, malraux, among others) but they don't stalk me & I don't stalk them. petrfitz & LICComment (and eah) are what I call permablocked.

DanShorock doesn't sound like LICC, but you are wise to note that it's just another screen name for a permaposter - spunky, maybe? - since he knows who LICC is and LICC hasn't posted in weeks.

What LICC is trying to do is to say that because the stock market has fallen by 25% in 7 days, that I - somehow - am a bad investor because I've lost money. That because I lost money in the stock market during the worst crash since 1933, I don't know what I'm talking about in real estate. What DanShorock needs to do is to take a course in deductive logic, because that's the most illogical thing ever posted here.

Richard Lewis (think that's his name) lost $1 billion on Bear Stearns. He still has $4 billion. Should we not believe that he, overall, is a great investor?

Warren Buffett lost money in the airlines, and Salomon Brothers. Ditto?

That's stupid. Most of the world has lost money, unless you were very long-sited and double-shorted everything which I almost did, but again, I did not expect this reverse irrational exuberance.

"What LICC is trying to do" = "What Dan is trying to do"

Steve - you only lose money when you sell.

The stock market may very well drop another 20-40%, who knows, which will hurt for everyone including myself. I significantly reduced my longs over the past 15 months but still have equities. At 80+% cash I have no reason/desire to sell at these levels. In fact, I'm a buyer.

Real estate is a very different game. I would not be happy to be long NYC real estate now. Why? In my mind there is no doubt prices continue to decline over the next few years as they lag the current economic/market conditions. And my pain would be magnified with leverage (I use no leverage with equities). All the while, I'd be paying out a large chunk of cash every month for the privilege of watching a leveraged bet erode. No thanks.

But the consolation to those holding NY real estate is: "you only lose money when you sell."

Ok, Steve, you went from $5.5 million (which was really $2 million but let's not have numbers get in the way of a good argument) to $230K in one year. And you should keep giving lessons to other people.

ps - Steve, you haven't been stalked. I didn't go by your rental apartment in Chelsea or see your manboobs live. All I did was shine a little light on your arguments. You are the only one on this board who keeps telling very personal details about yourself like your manboobs or your date with a 25 year old, or the names of the companies you worked for, or your age, or your sexuality, or your penchant for vodka, and on and on..

pps - the example of Richard Lewis, yes, he lost $1 billion. But he does still have $4 billion. You have a rental apartment.

ppps - were you trying to compare yourself to Warren Buffett?

oh, well maybe, Warren owns a big stake in GE, the parent of CNBC which airs Mad Money starring Jim Cramer, who you got off the air on Thursday (ignore the little detail about the religious holiday he was observing, the most important religious holiday in his religion)

steve blocked me because he couldn't handle the discussions with me. I pinpointed his mistakes and flaws with reality, logic and facts, so he ran away.

I don't know DanShorock but I know he is not me.

I have commented on steve much lately because he hasn't talked about real estate much, and I actually agree with many of his comments on the financial markets.

farquar - LIC seems to be holding ok so far. Who knows what will happen if Manhattan real estate tanks, but LIC's process of completely changing over from an industrial area to a residential one is a non-market factor that may mitigate some of any downturn that will happen.

DanShorock, how do you know any of my "personal details" are true?

That said, you are now officially ignored.

DanShorock - I think you bears need to think seriously about either making an effort to sell (put your units on the market, price them properly, and be patient) or spend less time on boards like streeteasy. Because if you're not comfortable with your city real estate exposure, then do something about it - - don't just hang out here looking for more anecdotal data, and try to poke holes in it. Perhaps THE most important part of investing is to be honest about your risk tolerance, IMHO, and if you're not basically at peace with where real estate is now, seriously consider taking some action. (If you bought 10 years ago, like you (the OP) posited, then you've still got a monster gain! Take it!)

This is just the wrong time to seek validation from others about NYC real estate. A year ago, sure, you had a viable argument, but the trend is going against it now. Bears took the heat a year ago, when it was hard to give them the benefit of the doubt. Today, it's hard to give bulls the benefit of the doubt.

Try looking into something online that'll make you feel better (renovation blogs, maybe? stories about how bad it is in other parts of the country, maybe? try housingdoom.com, which focuses on Arizona, and is pretty extensive) rather than hanging out here and trying to tell people that gravity doesn't exist. I mean, it's up to you to decide what to do with your time, but give it some thought.

hrdnitlr, thanks for your post. You'll probably note that I've placed no personal details on the discussion (and the posting name isn't a personal detail because it is fictitious), so your conclusion about my real estate holdings is without basis. That said, I'll give you one personal detail: I don't own real estate.

With respect to stevejhx, how do I know "any of [your] 'personal details' are true?'

Well, much of it I don't. But at some point a few months ago, a photo of you was available on the internet by simply googling your name. Additionally, your real name and email address, and your old apartment address was available by just simply googling your name as well.

I also know that you've made statements about your investment prowess. And where those are concerned, that has actually been disproven and shown to be entirely false: first mathematically ($50K at 60% average annual returns for 10 years is $5.5 million, not $2 million), second logically (if you started with $50K and now have $2 million but you are including your wages in the returns calculation, that doesn't make sense), and third credibly (60% average annual returns would exceed Michael Steinhardt, Julian Robertson, George Soros, Peter Lynch, Sir John Templeton, and on and on).

One other thing about the veracity of stevejhx's personal details ... he's stated that his graduate education includes a graduate certificate in creative writing. Maybe all of those personal details, along with his formulas, math, citations, theories, claims, etc. are all just part of the creative writing exercise.

Ignoring comment by DanShorock.

Since your posts are becoming threatening, I've asked streeteasy to remove them.

DanShorock:

"alanhart, over which period of time?

10 years not good time to measure?"

What method would you use to figure out average US stock market returns over time, in planning for someone's retirement? Would you use 10 years? The standard that's most widely used tracks performance back to 1926 . . . not perfect, but much more valid than any 10-year period.

One's home often increases in *sentimental* value, and few investments can beat the performance of real estate by that measure, but I'm assuming that's not usually what's discussed on Streeteasy.

Interesting that just a few days ago stevejhx said that in the long run real estate values decline. When questioned, he said 70s OR 80s. So he's talking about a 10 year period for real estate. In any case, he's also stated that renting is always better than buying. So that isn't even a time sensitive argument.

What, stevejhx, is threatening about breaking down your arguments and logic (who was ignoring me but didn't seem to ignore me)? If you want privacy, be private. Don't throw out your personal details if you don't want your personal details known. As usual, you ask for one standard (e.g. no personal details) and can't handle when you are held to it yourself (e.g. what is the likelihood that you will stop telling us personal details about yourself?)

Why when confronted with the weakness of your own argument do you feel the need to ignore and report? Why not support your argument if it holds water?

If you are loud, you should expect attention.

If you give advice, your credentials should be subject to scrutiny.

If you are not private, you should not expect privacy.

If you are fair, you should be treated fairly, but if you are unfair, you can't be the one to complain about unfairness.

Peace be with you. It is a nice Sunday in October. Smile :)

Ignoring comment by DanShorock

Good job ignoring.

Are you ignoring my comment or my challenge? Seems more like you are ignoring the challenge.

Not a surprise.

People who followed your advice in the past year would have saved money on real estate and lost 10x that amount in equities. After all, you went from a fictitious $5.5 million down to $230K in your portfolio. But, fortunate for you, fortunate for us all, the market is up today.

People who followed your advice in the past 10 years would be flat on equities and have lost a significant opportunity to buy NYC real estate, even if it comes down to 2003 levels (for which we are still waiting) it will still be way above 1998 levels.

Ignoring comment by DanShorock

Dan, can you please drop this? Steve's posted a lot on here, and like others, I don't always agree with him, but it's a waste of everyone's time here to obsess on his (or anyone else's) being right or wrong. Thanks.

What should be dropped?

That steve knows everything, but when he is put to the test, he fails?

That when challenged, he cowers?

If my post is a waste of your time, YOU don't read it.

> People who followed your advice in the past year would have saved money on real estate and lost 10x
> that amount in equities.

Not quite sure about that. Even if the RE decline is only 10% so far, and lets assume everyone put down 20%, that still means a 50% decline in the RE investment, more than the decline in stocks. Make it just 15% decline in RE (which I'm pretty sure we're at already), and you're talking about the stock portfoilio blowing away RE.

Steve suggests buying equities on margin, so that would parallel the mortgage on real estate. So equities are down 40%, but margined equities are down a multiple of that.

Thank you however for making a valid argument. Steve, you next, try to defend yourself ...

Ignoring comment by DanShorock.

If you can't fight for yourself, close your eyes, put your hands over your ears, and yell to yourself "nanananananana"

What a mockery, when I ignore someone I actually ignore them

The problem here is that idiots think there's a one size answer in all times and all markets. The value of real estate vs. renting has made the purchase decision over the last few (if not more) years tricky. Steve, myself and others think we dial these prices back to a point where purchases after a date in time (2002? 2004? who knows?) will prove poor decisions. Time will tell. Steve or I or anyone doesn't need to prove it to you. Just like the market, many thought it was expensive since the mid 1990s and they were right. This is not to say you can't trade real estate or stocks over short time frames and make money, even when they are overvalued. DanShorock, what the F do you offer to this discussion? These 10-year real estate victory laps actually prove Steve and my argument. The equation of buying real estate in the mid to late 1990s was completely different than its been since 2001-2002, and by 2006-2007 it was retarded to buy, especially before rents rose (expect that to reverse too...)

> Steve suggests buying equities on margin, so that would parallel the mortgage on real estate.

I don't remember doing that, but even if he did, you can't get ANYWHERE NEAR the leverage on stocks as you can on a house.

So that would absolutely NOT parallel the mortgage on real estate.

The problem here is that idiots think there's a one size answer in all times and all markets.

Can I reference you to this discussion topic by stevejhx?: http://www.streeteasy.com/nyc/talk/discussion/3410-real-estate-is-a-bad-investment

Notice the word ALWAYS.

What I offer to this discussion is a takedown of a guy who is always right, except that he hasn't been right.

Also, if you bought in 2001, 2002, 2003, 2004, 2005, 2006, you would be up on NYC Manhattan real estate. Where would you be in equities?

nyc10022, maybe you missed how in 1 year steve went from $2 million or $5.5 million (let's not let details get in the way of a good story by stevejhx) down to $230K. You can only have that amount of decline by using leverage.

Leverage can be achieved in many ways, margin, use of derivatives, and even double performance equity securities, like SSO that you suggested earlier today on another post.

What you fail to see Dan is that you are never "up" in real estate until you sell. And until sellers drop to levels they can actually get, its all just a guess. It's not clear everything in the market is up vs. 2005-2006, especially one bed coops.

It's kind of gay of you dude to attack Steve and add nothing. I don't care to read his old shit. What I have read has been just a pretty reasonable bear case on real estate FROM HERE and buying over the last 12 months...which from what I can tell is proving correct.

Equities... I was adding last week. US market cut in half, P/Es under 10-11x, in my view was worth buying in a panic. I was coming from a zero base of equities however, and did it with money I hopefully won't need within 5-10 years.

thrinald:

"...What you fail to see Dan is that you are never 'up' in real estate until you sell..."

Same goes for anything - stocks, commodities, art, beanie babies, whatever. Just an observation.

"Equities..."

I just added more.

Ignoring comment by DanShorock.

"beanie babies" - are they in your safe-deposit box, too, malraux, along with your krugerrands?

Malreaux, I know it's a truism. But 'I made $X' is especially abused in real estate.... And in stocks and commodities you can be out in a second Art and beanie babies are even easier than real estate to transact. So my point maybe more precisely, is it's even truer (yes, a misuse for affect) in real estate.

thrinald: It's kind of gay of me?

I think this will be my last response to you.

Dan who cares what you think or respond to? The more interesting part of this string is the responses by others. Who sets a post to attack one guy.

Agreed.... now that you mention it, anyone who posts to clearly call one person out doesn't deserve any attention...

And ... IGNORE ... DanShorock. Click!

nyc10022, interesting statement coming from you. Between you (aka EddieWilson), stevejhx, dco and petrfitz, you are the serial posters and discussion starters. You even promised to go away for 6 months after challenged to make one prediction and stick to it, and then came back within a couple of weeks.

Only differences between you and stevejhx are that you are much less dramatic (not hard) and understand financials better (also not hard).

"So my point maybe more precisely, is it's even truer (yes, a misuse for affect) in real estate."

Thus my weasel-boy bet with malraux: he couldn't determine the price of the apartment he wanted me to bet on without selling it. Maybe now he's glad that I didn't take the bet in the first place - he'd have to try to sell, and if he couldn't sell it he would have to mark-to-market it to $0.00, which is what all the banks are having to do (until this week's changes, that it).

I'm glad, malraux, that you finally agree with my logic!

My point has always been that owning real estate is just as risky as owning stocks, but for different reasons: the former, because it is illiquid, the latter because it is volatile. We are seeing the volatility now, and the illiquidity is also showing up in ever-increasing inventories.

"Who sets a post to attack one guy."

A coward.

"Ignoring comment by DanShorock."

stevejhx...you set up a post to attack me.

julia, come on, steve is held to a different standard

Steve:

"...'beanie babies' - are they in your safe-deposit box, too, malraux, along with your krugerrands?"

Nah - I top ticked those little suckers during the great Beanie Baby run-up of 99'.

not!

Haha... I didn't realize Malraux and Steve were fighting. If anything need to be market to zero in Manhattan at 60c of peak price (to flip at 75c tomorrow to a hopeful dope). Real estate is almost as volatile as the stock market...just not marked as often to market...and adjusted for the leverage people almost always use, it's more volatile.

I meant to write I have an offer at 60c on the dollar peak price.

Yes, it's stupid to imagine real estate ever declines 30-40%, except that it has many times in the past... And people just want to talk about whether it will happen this time, either more or less severe... Yes, so idiotic, STR.... As you add nothing.

> Idiots, thrinald, nyc10022, eddiewilson - same person

Whenever someone is showned to be wrong and in the minority, they always seem to counter with "well, but you are all the same person".

Hey, whatever makes you feel better...

You can easily find an apt that is better to buy than rent in NYC.
I paid around $850 psf with 50cents per sf on CC "AND" RE TAX (10 year abated) on a brand new construction (within a year).

There are many deals to be found in this financial/RE mess.

What Steve is trying to say is with $1200-1500+ per sqf price with high CC/RE tax, it's always better to rent than to buy.

Answer to both of your quarrel, just do the math before you buy/rent.

The math is pretty tough to make work when half an industry gets laid off and you know prices are going down just not how much. Also debateable how to account for transaction costs, investment returns on down payment saved...etc..etc. If you wait here I think you get a no brainer opportunity at 10x annual rent or less, which works in spades.

> Answer to both of your quarrel, just do the math before you buy/rent.

The math generally includes an assumed return on RE. The models all for the most part completely break down when you figure in even just a 10% RE price reduction when leveraged 5 to 1.... and we're already past that.

Even if you get offered a 10x deal today, you have to factor in whether you'll be able to buy in 10% or 20% cheaper in a year.... that would offset any short term extra cost.

I'm just saying... I mean before Fannie Freddie, Lehman, AIG, I could have entertained the rent/buy math... Now I think it's toxic through 2009 regardless of price. Why try to make a bid in a frozen market. Nothing is happening out there to get a real sense of price.

I agree.

Of course you do, we are the same person. The idea that real estate isn't always a great investment is held by only a handful of people in the world.

"you set up a post to attack me."

Never did I set up any thread specific to anyone but the long-lost spunky. That doesn't mean I don't criticize people, though (having learned from past mistakes) I try not to make the attacks personal. It wasn't an attack - it was a supposition that you are a real-estate agent. Someone else set up the thread about you.

I think I remember that post... that was to call attention to some "inconsistencies".
I don't remember any personal attacks...

The cat fighting goodness gracious... To 'da bulls': What happens to your rent/buy math when rents fall, interest rates spike and banks lending loan-to-values decrease? As a follow on to everyone, if someone needed to sell this weekend, how low do you think they'd need to mark down in % terms vs. the Q4 07/ Q1 08 peak? I think the answer to the follow on is 20% easy. It was already 10% down before the second layer of insanity (Fannie/Freddie nationalized, Lehman, AIG, bailout passed).

The market hit about 40% off peak at the bottom.... almost one year to the day.

And LOTS of folks sold in the past few days....

What market are you talking about? I'm talking about the real estate market... The Dow was 7800 in premarket on Friday, like 45% down.

7800 was for a few seconds. I'm talking about the day to day bottom... which was 42.5% per my calculations. I figure more folks are going in and out of funds...

I like you man but I'm pondering real estate... And the market may not have bottomed last week, but with lags the real estate market will recover more slowly... Ideally like the late 90s where the stock market was already ripping for 3 years in 1998 and real estate was still a pretty good deal on rent to buy math.

Hello, I pointed out that EddieWilson and stevejhx were the same person a few months ago obviously I was wrong but can you clarity what you said above
> Idiots, thrinald, nyc10022, eddiewilson - same person

Thank you

An entire thread dedicated to stevejhx??? What's the point? Steve is clearly a lonely man who has nothing better to do than to post his real estate theories/predictions on this message board, oftentimes in a pedantic, insulting and demeaning manner. Wow, steve, you have mastered the arithmetic of the buy vs. rent calculation. Congratulations on functioning at a sixth grade level. What you clearly don't understand is that buying a home/apartment is a personal decision involving many non-economic variables. So, my bit of advice to you is to do more listening (or reading in this case) and less talking (or writing).

In the interest of full disclosure, I should mention that I have been bearish on the NYC real estate market since the beginning of 2007 and have become even more so given the recent turmoil in the financial markets.