Global Market Comments
July 4, 2021
Fiat Lux
SPECIAL FOURTH OF JULY ISSUE
Featured Trade:
(COULD YOU QUALIFY TO BECOME A U.S. CITIZEN?)
Today’s Fourth of July celebration brings back memories of my late wife’s campaign to become an American citizen 25 years ago. Kyoko originally came from Japan.
Part of the process required a verbal quiz about U.S. history and government. Our family spent a year energetically prepping her, with nightly grillings over dinner about the most obscure details of our independent form of government. She took cram courses and read a dozen prep books.
By the time the test day came, she was a veritable constitutional law scholar, and any one of us could have qualified for a seat on the Supreme Court.
I drove her up to the Federal Building in Santa Rosa, California, with the greatest trepidation. As the interviewing officer entered, the tension in the room was so thick, you could cut it with a knife.
There were only three questions:
1) What colors are in the American flag? (Answer: red, white, and blue).
2) Who was the first general of the U.S. army? (Answer: George Washington).
(3 What are the three branches of government? (Answer: legislative, executive, and judicial).
I was stunned.
All that work and she got a test that a child could pass. Two months later, we were in an auditorium on San Francisco’s posh Nob Hill with 1,500 others to be sworn in by a federal judge. By tradition, the ceremony is led by the oldest English applicant.
In 2008, the Bush administration revamped the test to make it a little harder in an attempt to keep immigrants out.
Here are some sample questions:
1) Who wrote the Articles of Confederation? (Answer: Alexander Hamilton).
2) How many seats are in the House of Representatives? (Answer: 435 voting, six nonvoting).
3) How many amendments are there to the Constitution? (Answer: 27).
Whoa!
I’m not sure I could pass this test. Just as my SAT scores are probably too low to get into a decent university today, I’m not sure that I could meet the standard to become a citizen either. But over 1 million immigrants did last year.
Happy Independence Day to all.
The Swearing-in Ceremony in 1997
Global Market Comments
July 2, 2021
Fiat Lux
SPECIAL EARLY RETIREMENT ISSUE
Featured Trade:
(HOW TO JOIN THE EARLY RETIREMENT STAMPEDE)
Global Market Comments
July 1, 2021
Fiat Lux
Featured Trade:
(A VERY BRIGHT SPOT IN REAL ESTATE)
I feel obliged to reveal one corner of this bubbling market that might actually make sense.
By 2050, the population of California will soar from 39 million to 50 million, and that of the US from 330 million to 400 million, according to data released by the US Census Bureau and the CIA Fact Book (check out the two population pyramids below).
That means enormous demand for the low end of the housing market, apartments in multi-family dwellings.
Many of our new citizens will be cash-short immigrants. They will be joined by generational demand for limited rental housing by 65 million Gen Xers and 85 million Millennials enduring a lower standard of living than their parents and grandparents.
These people aren't going to be living in cardboard boxes under freeway overpasses.
If you have any millennial kids of your own (I have three!), you may have noticed that they are far less acquisitive and materialistic than earlier generations.
They would rather save their money for a new iPhone than a mortgage payment. Car ownership is plunging, as the “sharing” economy takes over.
This explains why the number of first-time homebuyers, only 32% of the current market now, is near the lowest on record.
It’s not like they could buy if they wanted to.
Remember that this generation is almost the most indebted in history, with $1.6 trillion in student loans outstanding.
They don’t care. Coming of age since the financial crisis, to them, homeownership means falling prices, default, and bankruptcy. Bring on the “renter” generation!
The trend towards apartments also fits neatly with the downsizing needs of 85 million retiring Baby Boomers.
As they age, boomers are moving from an average home size of 2,500 sq. ft. down to 1,000 sq ft condos and eventually 100 sq. ft. rooms in assisted living facilities.
The cumulative shrinkage in demand for housing amounts to about 4 billion sq. ft. a year, the equivalent of a city the size of San Francisco.
In the aftermath of the economic collapse, rents are now rising dramatically, and vacancies rates are shrinking, boosting cash flows for apartment building owners.
Fannie Mae and Freddie Mac Financing is still abundantly available at the lowest interest rates on record. Institutions combing the landscape for low volatility cash flows and limited risk are starting to pour money in.
Run the numbers on the multi-dwelling investment opportunities in your town. You’ll find that the net after-tax yields beat almost anything available in the financial markets.
"The difference between a Tesla and all of its competitors is the difference between an iPod and a cassette player," said Harvard Law fellow Vivek Wadhwa.
Global Market Comments
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Global Market Comments
June 29, 2021
Fiat Lux
Featured Trade:
(RIGHTSIZING YOUR TRADING)
“The last few years have been periods of high returns and relatively low volatility. I think with the yield curve inversion and the economy slowing, PMI is in contraction in much of the world ... we’re entering a period that’s the opposite of that. We’re going to have lower returns and substantially higher volatility,” said Ben Kirby of Thornburg Investment Management.
Global Market Comments
June 28, 2021
Fiat Lux
Featured Trade:
(BACK FROM MY 50-MILE HIKE)