Recession coming in next 12-18 months?

[booker20]

I was doing a little reading online this morning, and saw an article where 5 well-known and prominent hedge fund guys see a Bear market coming due to the Fed being so slow to raise rates thereby creating impending inflammation.

What do the LR Financial wizards think?

 

[Spearhead04]

I think it’s pretty unavoidable. Wait till rates keep rising. Anyone in debt is going to feel the pain.

 

[Imtotallynottribe]

I was doing a little reading online this morning, and saw an article where 5 well-known and prominent hedge fund guys see a Bear market coming due to the Fed being so slow to raise rates thereby creating impending inflammation.

What do the LR Financial wizards think?

No doubt in my mind. That’s the main reason I bought a smaller house than I could afford a couple of months ago, I assume we’re in for a rocky four years or so.

 

[scottarring]

It's going to be worse than 2008

 

[kooterridesagain]

Analysts imho just like to alarm people for headlines and investment opportunities and have no idea when it will hit. In 2015 they were sure it was 2016, then they were sure when Trump was elected it would occur, now its 2019. Riiiightttt

 

[LikeaG5]

Absolutely not a recession, a slight market correction will happen per normal.

 

[Formerly Rockymtnole]

I usually take a couple Advil for inflammation.

 

[GoNolesTX]

Besides the fact that a market correction is inevitable, I can see a minor recession coming up early 2019 once the Fed gets rates stable.

 

[ericram]

There has to be a housing market bubble on the horizon, again.

 

[mcgrawfsu]

There has to be a housing market bubble on the horizon, again.

Prices by me have been on the rise for a while now and houses in the nicer hoods are moving very quickly. New construction is also on the rise from what I can tell.

 

[Formerly Rockymtnole]

I hate thinking about this stuff. It always feels like the people in the industry will mostly make out fine whatever happens but us retail investors get screwed, both in loss of investment dollars and in taxes going to bailouts.

On the other hand market timing rarely works out well.

What to do??

 

[seminole97]

I’m sure that trillions of dollars in purchases by the worlds central banks, on top of a decade of low interest rate interventions by same have led to massive malinveatment that will at some point be written off.
The best part of the system is how the connected elites will again game things to preserve their gains at everyone’s expense. Then they’ll blame the guy in the White House, who isn’t responsible for any of it, which so many useful idiots are eager to do.
It’s going to be great.

 

[seminole97]

There has to be a housing market bubble on the horizon, again.

I have to say while prices have apparently rebounded past the 2008 levels, I’m not driving past dozens of for sale signs like I saw 2005-7. Haven’t looked at nationwide churn, but I don’t get the same sense as then.
There is exactly 1 house for sale in my hood (a little over a hundred homes), and it’s been on the market a while now.

 

[seminole4life1]

I don't see a huge housing bubble that is as wide spread as the one last decade. Certainly some markets will slow and even dip but the massive foreclosure wave is unlikely. Any "savings" you may get by waiting to buy a house will probably be off set by a higher interest rate.

The stock market will always correct, over shoot then correct again. If you are under 60 I wouldn't even think twice about it.

 

[noleclone2]

Recessions always happen and things have been good for a while now. I do not think it will be 2008-2013 bad though. That was really a mini depression.

 

[booker20]

We live in a desirable school district... Between two towns of about 25k people each.... A contractor just bought some land adjacent from the HS, somehow got it put into a residential TIF (screwing the school district) and is putting up a ton of duplexes.

There are houses for sale all over the place, and a new little subdivision is going in about a mile from me.

 

[LT4PLY]

The new tax law will cause the secondary home market to correct. I'm figuring it will happen next year after people file their taxes. When people realize they can't deduct the vacation home mortgage anymore it's likely to cause more supply with a decrease in demand at the same time.

 

[ericram]

The new tax law will cause the secondary home market to correct. I'm figuring it will happen next year after people file their taxes. When people realize they can't deduct the vacation home mortgage anymore it's likely to cause more supply with a decrease in demand at the same time.

Did a little research as we will be looking for a vacation home in the next year.

This is what I found,
The massive overhaul lowers the mortgage interest deduction to $750,000 from $1 million. That cap applies to all homes. The $1 million limit will remain for homes that were purchased before Dec. 15.

If you already have a $750,000 mortgage and plan to buy a second home next year, you will not be able to deduct the interest on that loan.

I think we are good here.

 

[nynole1]

Analysts imho just like to alarm people for headlines and investment opportunities and have no idea when it will hit. In 2015 they were sure it was 2016, then they were sure when Trump was elected it would occur, now its 2019. Riiiightttt

I've always hated this too. These people predicted chaos constantly, are wrong 95% of the time and no one cares. When they hit on that 5%, they run around talking about their genius. Low risk, high reward douchebags.

 

[LT4PLY]

Did a little research as we will be looking for a vacation home in the next year.

This is what I found,
The massive overhaul lowers the mortgage interest deduction to $750,000 from $1 million. That cap applies to all homes. The $1 million limit will remain for homes that were purchased before Dec. 15.

If you already have a $750,000 mortgage and plan to buy a second home next year, you will not be able to deduct the interest on that loan.

I think we are good here.

It's the base deduction that will kill it. The base deduction went up to 24k for couples which is good... but if you are looking to buy a vacation home it's likely that there won't be a tax benefit unless you are in the big money market. In other words... if you itemized your taxes for 2017 and used your mortgage interest off say a 300k vacation home, along with your primary residence which is also 300k, it's likely that with both those interest amounts, donations, and all the other stuff you have going on adds up to about 24k. This means you got a 12k benefit for itemizing and thousands of deductions from your vacation home. In 2018 that same person isn't going to bother itemizing because the standard deduction is already 24k. This means the vacation home provides no tax shelter.

So while you can deduct the interest it is going to take a LOT of interest or other deductions to make it actually impact your taxes. Even for a couple making 200k+ a year it's not likely to have over 24k in deductions and at that income level that couple is in the top 5 percent of Americans from an earning perspective (the census actually says 250k is the top 1.5 percent, 200k is the top 2.5 percent). And if that couple manages to have deductions well above 24k they are likely broke and can't actually afford said vacation home.

The bottom line is the number of people itemizing and actually getting tax benefits from things like mortgage interest, property taxes, etc. will be greatly reduced. When that happens the perceived 'tax break' goes away and that has been a major selling point of vacation homes and also a major reason for keeping those homes. The payment blows but it sure feels good on tax day when you get that nice break.

 

[goldmom]

The new tax law will cause the secondary home market to correct. I'm figuring it will happen next year after people file their taxes. When people realize they can't deduct the vacation home mortgage anymore it's likely to cause more supply with a decrease in demand at the same time.

That will affect us in FL a bit, especially the condo market.

 

[OrlandNole]

I was doing a little reading online this morning, and saw an article where 5 well-known and prominent hedge fund guys see a Bear market coming due to the Fed being so slow to raise rates thereby creating impending inflammation.

What do the LR Financial wizards think?

There's nothing I hate more than an inflamed market. Still, there's a difference between a bear market and a bona fide recession.

 

[booker20]

There's nothing I hate more than an inflamed market. Still, there's a difference between a bear market and a bona fide recession.

Right. . Def a bear market... These 5 fund managers just saw that the tipping point was simewhere in that time frame

 

[seminole97]

In 2018 that same person isn't going to bother itemizing because the standard deduction is already 24k. This means the vacation home provides no tax shelter

But for that person isn’t the prior deduction essentially subsumed by the new deduction?
Are they actually worse off on net?

I feel like I’m missing something.
True the second home itself isn’t going to present a tax reduction opportunity, but if the standard deduction is overall higher doesn’t that leave him with a lower adj gross income and thereby reduced taxes and more after tax income to buy recreation properties?

I guess I’m wondering how many people are buying additional homes purely for the tax advantage, and is that presumably small percentage of the already small percentage that own second homes really moving the needle much in the real estate market?

Maybe an issue in high dollar vacation spots?

 

[SKSnole]

Analysts imho just like to alarm people for headlines and investment opportunities and have no idea when it will hit. In 2015 they were sure it was 2016, then they were sure when Trump was elected it would occur, now its 2019. Riiiightttt

Will be interesting to see how these big news stories impact the market. His interview this morning is what you call a primer. I know we don't discuss politics on this board, but something big is coming in the next 24 hours IMO.

 

[NoleMoreTears]

I've always hated this too. These people predicted chaos constantly, are wrong 95% of the time and no one cares. When they hit on that 5%, they run around talking about their genius. Low risk, high reward douchebags.

There is/was a theory running around that Warren Buffet was no better than chance at predicting phenomena, he was simply on the right side of chance at each major market turn.

Basically, he's the guy who got 10 straight heads at the flip of a coin...I originally heard this in a section of "What the Dog Saw" by Malcolm Gladwell, which is worth reading regardless. It makes intuitive sense to me after meeting a bunch of so-called top experts that didn't know jack about what they were predicting (my field is sports science but same idea).

 

[Zeek99]

Prices by me have been on the rise for a while now and houses in the nicer hoods are moving very quickly. New construction is also on the rise from what I can tell.

Same in my neighborhood. Houses the past 6 months are selling for 50,000 - 80,000 over what they were a year or two ago without major upgrades. I think there are some signs of a recession, but there seems to be signs every two years since '08. We'll see if the for sale or foreclosure signs start popping up everywhere.

 

[Random_John]

So what you're saying is, don't buy a house to protect your taxes. Buy something else instead.

 

[ericram]

So what you're saying is, don't buy a house to protect your taxes. Buy something else instead.

Like a plane. I hear planes really hold their value.

 

[PoopandBoogers]

There has to be a housing market bubble on the horizon, again.

Seen it first hand in NY the last few weeks.

 

[SoddyNole]

But for that person isn’t the prior deduction essentially subsumed by the new deduction?
Are they actually worse off on net?

I feel like I’m missing something.
True the second home itself isn’t going to present a tax reduction opportunity, but if the standard deduction is overall higher doesn’t that leave him with a lower adj gross income and thereby reduced taxes and more after tax income to buy recreation properties?

I guess I’m wondering how many people are buying additional homes purely for the tax advantage, and is that presumably small percentage of the already small percentage that own second homes really moving the needle much in the real estate market?

Maybe an issue in high dollar vacation spots?

zero

 

[seminole97]

There is/was a theory running around that Warren Buffet was no better than chance at predicting phenomena, he was simply on the right side of chance at each major market turn.

Basically, he's the guy who got 10 straight heads at the flip of a coin...

Nah, he just sticks to buying companies that actually make money making things lots of people buy.
When things like the 2008 crash come along he has he cash to step in and buy when others are trying to cover their bets.

 

[Random_John]

I'm in Houston for my wife's Ironman race. The amount of new construction out here is mind blowing.

 

[LT4PLY]

But for that person isn’t the prior deduction essentially subsumed by the new deduction?
Are they actually worse off on net?

I feel like I’m missing something.
True the second home itself isn’t going to present a tax reduction opportunity, but if the standard deduction is overall higher doesn’t that leave him with a lower adj gross income and thereby reduced taxes and more after tax income to buy recreation properties?

I guess I’m wondering how many people are buying additional homes purely for the tax advantage, and is that presumably small percentage of the already small percentage that own second homes really moving the needle much in the real estate market?

Maybe an issue in high dollar vacation spots?

It is simply another reason to buy or hold something you don't need and when you get to that level of income it feels 10 times as good to pay less taxes because you are already pay so much.

Same goes for things like champions club seats. Wife and I talked about it over and over. The one thing that had us most engaged (besides the experience obviously) was the tax shelter. Mathematically it still made no sense but sticking it to the man while having fun is such a good thought we almost did it. (In fact we would have done it if the boosters offered price protection instead of selling the tix cheaper when you don't make the commitment)

We have a place in Panama City that we use rarely but the feeling around tax day kept making it feel good to keep.... now not so much

 

[noleit]

The area north of Tampa is on a major growth spurt with new housing communities constantly sprouting up. It certainly feels like the last housing bust.

 

[Fijimn]

I'm in Houston for my wife's Ironman race. The amount of new construction out here is mind blowing.

Depending on where you are it could be Harvey related repairs or knock downs, build up

 

[Random_John]

Depending on where you are it could be Harvey related repairs or knock downs, build up

I was in and around The Woodlands area

 

[squiffynole]

I hoped to be set =

+ House is paid for, money saved, retirement income assured.

As it turns out =

- Health insurance cost through the roof, one adult child back home, one sister in law running out of options.

 

[NoleMoreTears]

Nah, he just sticks to buying companies that actually make money making things lots of people buy.
When things like the 2008 crash come along he has he cash to step in and buy when others are trying to cover their bets.

Very true, but how he got to that point was the the crux of the story. There's a compelling case to be made that he simply got lucky on several important occasions to build the type of capital where 2008 was easy to weather.

If the topic interests you I'd read the segment rather than dismissing it.