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Prices.... Going Up!!!

Someone mentioned (@OBMG74 maybe) that Harbor Freight would show up, and people would buy their cheap goods, and the money left the area.

Well, I hate to state the obvious, but Wal-Mart and Bentonville, Arkansas long ago sucked the marrow from the small town bones. That money left that particular community and went to Wal-Mart shareholders and suppliers (ahem, that big Red Country we shan't mention).

The words of that little, funny billionaire from Texas ring in my ears.

".....that giant sucking sound....."
 
YY1 said:
Of course the "problem" with comparing mortgage interest rates to investment return rates is usually the compounding factor.

Otherwise that 3% mortgage would be a total cash outlay of $206,000 over time on a 200K house and not $383,500.
Click to expand...
The compounding element of mortgage interest, as compared to investment (interest) returns, is always the financial logic fail in these cases, exacrebated by the belief (religious fervor) that the value of real estate will always rise, never decline or even just "stay about the same" for a spell.
 
YY1 said:
Of course the "problem" with comparing mortgage interest rates to investment return rates is usually the compounding factor.

Otherwise that 3% mortgage would be a total cash outlay of $206,000 over time on a 200K house and not $383,500.
Click to expand...
I don't understand this.
 
init4fun said:
An interesting article that I thought I'd share with all of you financially savvy folks........

https://www.fool.com/investing/2023/07/02/money-supply-since-great-depression-big-move-stock/
Click to expand...
Interesting article.

I am curious, though - how many people put their cash into other markets, like Real Estate, etc., when interest rates were stuck in the basement. I myself consolidated some of my smaller investments that would fall into the M1-M2 footprint. They no longer do, yet the money is still there.

With some institutions offering decent interest on larger accounts, I imagine others did the same thing. I think the $100K figure may be a bit outdated.
 
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IMO they "key" is putting yourself in a position to make inflation work for you, to counter when it's working against you.

One of our residential rentals was supposed to turn over this month as the 9.5 year tenants are having a house built.

They asked to stay another month because it wasn't done on time.

Their previous rent was $1250 and had been going up the agreed upon 5% per year but they were happy to pay $1850 for that additional month, and we reworded our lease agreement to a 15% maximum annual increase in the process.
 
felix_katze said:
I don't understand this.
Click to expand...

Mortgage interest rates are compounded drastically different than savings account (and other "simple interest") rates.

That's why you end up paying almost double the price of the house over the term of a 30 year loan.

...and why it makes sense to make additional payments directly towards the principal amount if you can afford it.

Therefore- you can't use the "I'm investing my money at 8% while I'm only paying 3% on my mortgage" argument unless you're very late in the amortization schedule and most of your payment is going to the principal- IE year 25-ish of those 30), and even then, you have already paid all that compound interest at the beginning of the payment schedule.
 
YY1 said:
That's why you end up paying almost double the price of the house over the term of a 30 year loan.
Click to expand...
It's simple math. The compounding method, yearly, monthly, daily, continuous, does make some difference to the final result, but not that dramatic.
The reason you pay almost double over 30 years is because the term is 30 years.
 
init4fun said:
An interesting article that I thought I'd share with all of you financially savvy folks........

https://www.fool.com/investing/2023/07/02/money-supply-since-great-depression-big-move-stock/
Click to expand...

Not mentioned in the article is the huge amount of cash moving into Treasury bills....both on an institutional and individual level.
While T bills aren't considered cash, they are still fairly "liquid".
I have done this myself. Nice to finally see a relatively decent return again.

All and all, I fall into the group dismissed early on in the piece.
What I see are various indicators trending towards an even keel.....with a few bumps along the way.

I don't find short term stats very useful in light of the extraordinary events surrounding the pandemic.
Yes, the M2 supply is down 4.1%, but that's compared to the record breaking 26% pandemic era increase.
So, the M2 is still 22% higher than it was pre-pandemic?
Or am I missing something?
 
Gasoline

The average price of gasoline, all grades, across the US last week – after surging for three months – exceeded the price in the same week a year ago for the first time since February 2022. According to EIA data this afternoon, the average price at $3.93 per gallon, was up by 1.7% from the same week in September a year ago ($3.86).

This is the year-over-year percent change of the average price of gasoline on a weekly basis. And it’s another setback for the Consumer Price Index to (soon) follow.

Hopefully gasoline prices will not return to the levels of July-August 2022.
 
87's been 3.89 here a few times over the last 6 months, usually after a significant jump of 10-15, even 20-25 cents over night.

Fortunately I've missed all of them and either bought just before a jump, or had enough in the tank to wait it out.

Almost every time it's come back down in about a week, almost as much as the jump up.

The best around here is currently 3.67, but 3.73 and 3.77 are common.

Two weeks ago, it was at one of those 3.89 plateaus.
 
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I still see a lot of nice big shiny new pickup trucks on the road and I'm pretty sure it's just an attitude statement. I remember when people actually cared. I bought a fairly decent Lincoln Continental for $500 and got my sister a fairly decent Chrysler Newport for $300. Front lawn specials. I'm not seeing those kinds of panic sales with gas guzzling used pickups.
 
loopstick said:
I still see a lot of nice big shiny new pickup trucks on the road and I'm pretty sure it's just an attitude statement. I remember when people actually cared. I bought a fairly decent Lincoln Continental for $500 and got my sister a fairly decent Chrysler Newport for $300. Front lawn specials. I'm not seeing those kinds of panic sales with gas guzzling used pickups.
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Yes, I agree, big new and used trucks everywhere. Price of gas is getting off the ground and that will affect everything, it's energy, power, of all sorts.
 
loopstick said:
I still see a lot of nice big shiny new pickup trucks on the road and I'm pretty sure it's just an attitude statement. I remember when people actually cared. I bought a fairly decent Lincoln Continental for $500 and got my sister a fairly decent Chrysler Newport for $300. Front lawn specials. I'm not seeing those kinds of panic sales with gas guzzling used pickups.
Click to expand...
Neighbor just bought himself a big tired, high suspension, V8 "monster" truck. He has a law degree, will never take it off road and use those tires/suspension and doubt it will see any serious pick-em-up duty. Previously he had a Tesla for a while. Wondering what he's stating. :biggrin:
 
nailer said:
Neighbor just bought himself a big tired, high suspension, V8 "monster" truck. He has a law degree, will never take it off road and use those tires/suspension and doubt it will see any serious pick-em-up duty. Previously he had a Tesla for a while. Wondering what he's stating. :biggrin:
Click to expand...
Reminds me of what I used to say. In jest, of course. ;)
"Once I'm over my mid life crisis, I'm starting my second childhood."
 
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