AndyM,
Can you not increase your wealth by some kind of "sector rotation" argument here? If you took your 2x price tag and, knowing that all assets in this housing sector were equally inflated, move your asset purchasing power to something that was not inflated? I/e could you not exchange one 'income stream' for a lesser-inflated one?
I agree with the point/fact that if every asset inflates equally, selling and buying at higher prices doesnt increase wealth for anyone involved, and maybe the example of differentiating asset inflation levels isnt worth the time in reality, but it's where I get confused.
Where has all the money gone!
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Rookie_Quant
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Where has all the money gone!
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"Whenever I watch TV and see those poor starving kids all over the world, I can't help but cry. I mean I'd love to be skinny like that, but not with all those flies and death and stuff." --Mariah Carey
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"Whenever I watch TV and see those poor starving kids all over the world, I can't help but cry. I mean I'd love to be skinny like that, but not with all those flies and death and stuff." --Mariah Carey
"Your food stamps will be stopped effective March 1992 because we received notice that you passed away. May God bless you. You may reapply if there is a change in your circumstances." --Department of Social Services, Greenville, South Carolina
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tripitaka
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Where has all the money gone!
i guess that efficient markets tells you that all income streams ought to be valued on an equal footing (on a risk adjusted basis)
i also guess that contrarian/value investing is based on the principle that the above doesn't hold in reality, and you can sell the overvalued income streams to buy the out of fashion ones.
I haven't read marc faber in a while, but until about last year he seemed to be complaining exactly that all assets have been inflated unreasonably, unlike what would be expected in a typical cycle, where some industries/asset classes are out of favour and some in. This sort of line of reasoning, however, seems to lead one towards tha camp that draws the conclusion that the $ is phucked and that we should all hoard up on gold.
i also guess that contrarian/value investing is based on the principle that the above doesn't hold in reality, and you can sell the overvalued income streams to buy the out of fashion ones.
I haven't read marc faber in a while, but until about last year he seemed to be complaining exactly that all assets have been inflated unreasonably, unlike what would be expected in a typical cycle, where some industries/asset classes are out of favour and some in. This sort of line of reasoning, however, seems to lead one towards tha camp that draws the conclusion that the $ is phucked and that we should all hoard up on gold.
You've done your best at the the gym you've got your lip gloss on.
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AndyM
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Where has all the money gone!
RQ, the discussion relates to societal (or aggregate) wealth, not individual wealth. Clearly an individual can practice sector rotation, astrology, Elliot Waves or other techniques, and may well come out ahead. Society cannot practice sector rotation in the way you describe.
Society can practice a form of sector rotation, by shifting investment to more productive enterprises. That is how societal wealth accumulates. (Obviously this refers to net investment, not secondary market share trading where there is no net flow of funds).
Society can practice a form of sector rotation, by shifting investment to more productive enterprises. That is how societal wealth accumulates. (Obviously this refers to net investment, not secondary market share trading where there is no net flow of funds).
Hell is other forums!