milkchaser

Celebrating the 'Recovery': I'm Disgusted

It's not the number of people owning houses and stocks, but the price paid for them. Perhaps the American people cannot support 60% home ownership, but there is little reason for the lowliest of investors not to own stocks (or mutual funds) as long as they priced right. If you can't afford a mortgage payment, you can't own a house, but you can work at McDonald's and buy its stock.


On Aug 24 02:06 PM John Lounsbury wrote:

> In the history of bubbles and financial dilusions, the cycle has
> never ended until the object of affection is treated with revulsion.
> When home ownership drops well below the historical average in the
> low 60% area, that will be the equivalent of revulsion and a centennial
> bottom bottom will be in. When less than 20% to 30% of Americans
> own stocks, that will be the equivalent of revulsion.
>
> Anything less than drastic devastation of what would be considered
> "normal" will just constitute an extension of the bubble, be it houses
> or stocks. There is no reason why these bubbles can not extend for
> a long time, with only partial deflations from time to time. But
> if you want 60 years like the last 60 years, the bubbles have to
> go flat and start over. Otherwise the two markets (houses and stocks)
> will have significantly lower returns going forward than we have
> become used to.