A word about real estate. In rural Indiana, you can buy a modest house for less than $50,000, but the problem is that you probably won't want to live there. Outside Berlin, you can buy a nice house for about $180,000, because the value of rural property is falling. In rural Japan, you can rent a house for $300 a year, and you can buy an abandoned house for less than $100,000. My sister and her husband who live in a leafy small town in Ohio bought a house for $85,000 thirty years ago. Today, that same house is worth about $80,000. In Italy you can buy a house for one Euro is some places. I think it is impossible to predict where the market will go, but one thing for certain is that the population of the world is shrinking and that means less demand for the same amount of land. Some places will always be in demand and the prices will probably remain high, but in other places there is zero demand.
In Japan, if you had bought a modest three bedroom flat in the suburbs of Tokyo in 1989, it would have cost $1 million five hundred thousand dollars. Today that same flat would cost about $150,000. In every year since 1989 the price has fallen. Japan just recently dropped to the third largest economy in the world.
In China today, there are approximately enough apartments and houses for 3 billion people, while the population has begun to shrink and is like 200 million fewer people than the headline number of 1.4 billion people. That means essentially that most apartments, completed or uncompleted, are worth almost nothing. This is the largest Ponzi scheme in human history.
Be careful where you invest. Graham has his money in gold and ETFs. I have US treasuries short term. Nothing else. 5.25%.
Thank you, Thomas, for the supply/demand, demographic perspective on real estate. My angle had more to do with other trends - interest rates, crime and such. They point the same direction.
My only thought about safe places for money lies in company shares. Gold is interesting, at the moment it's value in USD exceeds inflation considerably. Gold in 1970 was $38, inflation at 8X since then would price Gold at ~$300 but it's ~$2000. XOM in 1970 was ~$0.65 and now is ~$120 (incl dividends) also beating inflation (https://www.macrotrends.net/stocks/charts/XOM/exxon/stock-price-history). What's the risk between the two? I suspect a portfolio of decently managed companies will hold value over a long term - with the caveat of decent management. The goal, I think, is to beat inflation which all governments must do because politicians always spend more than revenues.
Highlight to me is increasing central bank demand over the last couple of years but declining interest in ETFs, coins and ingots. This despite rising prices. When it turns around, interesting times.
In Japan, commodity market companies used to engage in illegal bookmaking. Stock brokerage companies rarely engaged in such acts. Stock holds the rights to a company's factories, human resources, and assets. Both managers and workers at companies strive every day to provide good products and services and improve management, but sometimes the results are not good. I don't know what Bitcoin represents and it seems like gambling. When it comes to gambling, horse racing is better if you carefully observe the condition of the horse's body. Farmers with experience in raising horses may be good at this. However, 20 to 30% of the total premium is taken by the operating companies (mainly local governments). Even if we lose money, we can take solace in knowing that the money was used for local welfare.
In Japan, there are small gaming centers called Pachinko that are mainly aimed at workers. If you put a small ball skilfully into a hole on the board, many balls will come out. The balls that come out can be exchanged for small prizes (mainly household items). There is usually a hut near the game area where you can exchange prizes for money. (According to law, game parks are not allowed to exchange balls for money.)
Everyone longs for good luck, but it seems that the goddess of luck doesn't have any hair on the back of her head, and everyone, including me, is always disappointed when we see her back as she passes by. 🤣
Looks like Graham definitely captured his wife's bangs.
I remember the Pachinko machines from my time in Japan and Okinawa during the Vietnam War. People would play them for hours.
Bitcoin is a store of value that is limited - only 21 million BTC will ever be in circulation. No inflation. It exists only on the Internet - and the many thousands of computers that maintain identical copies of the transaction history since inception. There is no argument as to who owns what. It is international - crosses borders as easily as email. It cannot be destroyed by any person or government. It is a truly unique concept. See my several reviews.
I wish I had your confidence in pricey, education and bitcoin, but we’re rapidly approaching the singularity, and AI will be doing everything instead of the next generations. It seems like cracking the cryptography of bitcoin should be pretty easy for quantum computers in 20 years not to mention that electronic surveillance can probably locate the passwords for many if not all bitcoin accounts.
An afterthought. Public key cryptography depends on the fact that it is extremely difficult to extract the prime factors of very big numbers. If and when they break Bitcoin, it could be that they apply immense computer power to crack the prime number of one or a few holders of a large quantity. There might be some warning. Just a naive guess.
Certainly when they improve quantum computers, they'll crack prime factor cryptography. Unlike precious metals, Bitcoin is totally vulnerable to breakthroughs in computing power and electronic surveillance. Who are going to be the first to benefit from such breakthroughs? Google, Microsoft, IBM, CIA, NSA, FBI, DoD, and their foreign counterparts. But why would there be any reason not to trust those guys? After all Google's corporate slogan is "Don't do evil."
Eddie attends a selective government school, kind of Kyiv's equivalent to Bronx HS of Science or Stuyvesant. My first family attended pricey private schools in Washington, where I sat on the boards and later taught. This one is far better.
What will crack Bitcoin is not AI but simply vast computer power. As you suggest, quantum computers. Not soon, but perhaps someday. Hence my prediction of a pivot to metals.
You have noticed that just about all of your online accounts now have two-factor authentication. Most mechanisms for trading and holding Bitcoin do as well. Holding them in a street name, as in an ETF, is as safe as holding stock. The weak link is the brokerage itself. The mechanisms for holding Bitcoin offline are, IMHO, more secure.
Thus the concerns for Bitcoin are similar to those for other financial instruments. For now, phishing, keystroke capture trojans etc. etc. We need to keep our eyes open. I have Malware Bytes scan my computer daily to keep it clean. Never follow an email link or open a document I don't trust. Not 100%, but far better than nothing.
A word about real estate. In rural Indiana, you can buy a modest house for less than $50,000, but the problem is that you probably won't want to live there. Outside Berlin, you can buy a nice house for about $180,000, because the value of rural property is falling. In rural Japan, you can rent a house for $300 a year, and you can buy an abandoned house for less than $100,000. My sister and her husband who live in a leafy small town in Ohio bought a house for $85,000 thirty years ago. Today, that same house is worth about $80,000. In Italy you can buy a house for one Euro is some places. I think it is impossible to predict where the market will go, but one thing for certain is that the population of the world is shrinking and that means less demand for the same amount of land. Some places will always be in demand and the prices will probably remain high, but in other places there is zero demand.
In Japan, if you had bought a modest three bedroom flat in the suburbs of Tokyo in 1989, it would have cost $1 million five hundred thousand dollars. Today that same flat would cost about $150,000. In every year since 1989 the price has fallen. Japan just recently dropped to the third largest economy in the world.
In China today, there are approximately enough apartments and houses for 3 billion people, while the population has begun to shrink and is like 200 million fewer people than the headline number of 1.4 billion people. That means essentially that most apartments, completed or uncompleted, are worth almost nothing. This is the largest Ponzi scheme in human history.
Be careful where you invest. Graham has his money in gold and ETFs. I have US treasuries short term. Nothing else. 5.25%.
Thank you, Thomas, for the supply/demand, demographic perspective on real estate. My angle had more to do with other trends - interest rates, crime and such. They point the same direction.
My only thought about safe places for money lies in company shares. Gold is interesting, at the moment it's value in USD exceeds inflation considerably. Gold in 1970 was $38, inflation at 8X since then would price Gold at ~$300 but it's ~$2000. XOM in 1970 was ~$0.65 and now is ~$120 (incl dividends) also beating inflation (https://www.macrotrends.net/stocks/charts/XOM/exxon/stock-price-history). What's the risk between the two? I suspect a portfolio of decently managed companies will hold value over a long term - with the caveat of decent management. The goal, I think, is to beat inflation which all governments must do because politicians always spend more than revenues.
The World Gold Council provides this information on gold supply and demand.
https://www.gold.org/goldhub/research/gold-demand-trends/gold-demand-trends-full-year-2023
Highlight to me is increasing central bank demand over the last couple of years but declining interest in ETFs, coins and ingots. This despite rising prices. When it turns around, interesting times.
In Japan, commodity market companies used to engage in illegal bookmaking. Stock brokerage companies rarely engaged in such acts. Stock holds the rights to a company's factories, human resources, and assets. Both managers and workers at companies strive every day to provide good products and services and improve management, but sometimes the results are not good. I don't know what Bitcoin represents and it seems like gambling. When it comes to gambling, horse racing is better if you carefully observe the condition of the horse's body. Farmers with experience in raising horses may be good at this. However, 20 to 30% of the total premium is taken by the operating companies (mainly local governments). Even if we lose money, we can take solace in knowing that the money was used for local welfare.
In Japan, there are small gaming centers called Pachinko that are mainly aimed at workers. If you put a small ball skilfully into a hole on the board, many balls will come out. The balls that come out can be exchanged for small prizes (mainly household items). There is usually a hut near the game area where you can exchange prizes for money. (According to law, game parks are not allowed to exchange balls for money.)
Everyone longs for good luck, but it seems that the goddess of luck doesn't have any hair on the back of her head, and everyone, including me, is always disappointed when we see her back as she passes by. 🤣
Looks like Graham definitely captured his wife's bangs.
I remember the Pachinko machines from my time in Japan and Okinawa during the Vietnam War. People would play them for hours.
Bitcoin is a store of value that is limited - only 21 million BTC will ever be in circulation. No inflation. It exists only on the Internet - and the many thousands of computers that maintain identical copies of the transaction history since inception. There is no argument as to who owns what. It is international - crosses borders as easily as email. It cannot be destroyed by any person or government. It is a truly unique concept. See my several reviews.
http://www.grahamseibert.com/Reviews/Finance/
I wish I had your confidence in pricey, education and bitcoin, but we’re rapidly approaching the singularity, and AI will be doing everything instead of the next generations. It seems like cracking the cryptography of bitcoin should be pretty easy for quantum computers in 20 years not to mention that electronic surveillance can probably locate the passwords for many if not all bitcoin accounts.
An afterthought. Public key cryptography depends on the fact that it is extremely difficult to extract the prime factors of very big numbers. If and when they break Bitcoin, it could be that they apply immense computer power to crack the prime number of one or a few holders of a large quantity. There might be some warning. Just a naive guess.
Certainly when they improve quantum computers, they'll crack prime factor cryptography. Unlike precious metals, Bitcoin is totally vulnerable to breakthroughs in computing power and electronic surveillance. Who are going to be the first to benefit from such breakthroughs? Google, Microsoft, IBM, CIA, NSA, FBI, DoD, and their foreign counterparts. But why would there be any reason not to trust those guys? After all Google's corporate slogan is "Don't do evil."
I tell my kids, when we are in an unfamiliar Metro station, to follow the crowd. They will know how to get to the bus stop or whatever.
Same applies here. With some risk. Pay attention, and be ready to move ahead of the crowd. Doesn't always work, but might.
As stated many times, there are no risk-free options, and no agreement on relative risk. You gotta diversify.
Eddie attends a selective government school, kind of Kyiv's equivalent to Bronx HS of Science or Stuyvesant. My first family attended pricey private schools in Washington, where I sat on the boards and later taught. This one is far better.
Some of Dad's best recruiting trips when he was Director of Admissions at Reed were at Bronx Science and Bed-Stuy.
What will crack Bitcoin is not AI but simply vast computer power. As you suggest, quantum computers. Not soon, but perhaps someday. Hence my prediction of a pivot to metals.
You have noticed that just about all of your online accounts now have two-factor authentication. Most mechanisms for trading and holding Bitcoin do as well. Holding them in a street name, as in an ETF, is as safe as holding stock. The weak link is the brokerage itself. The mechanisms for holding Bitcoin offline are, IMHO, more secure.
Thus the concerns for Bitcoin are similar to those for other financial instruments. For now, phishing, keystroke capture trojans etc. etc. We need to keep our eyes open. I have Malware Bytes scan my computer daily to keep it clean. Never follow an email link or open a document I don't trust. Not 100%, but far better than nothing.