There will be no 1929 style crash. We are in a painful period for pension funds, equity managers, mutual funds and average joe passive index investors. I do believe that this bear will not end until after we get thru 1st quarter, 2023. We have a ways to go and a wide trading range but its definitely a traders market. I have made two multi-month round trips in value, dividend-paying ETF's, such as DIVO, COWZ, and SHYD. I buy on the big dips and then exit when market has legs. I exited ALL ETF's last Thursday, Oct 27th and sitting, other than the LQD and ZROZ that I purchased today. I am not about to go short, I'd rather earn cash interest and wait for the next painful downleg to purchase again.
It is possible that inflation keeps thing afloat in equities...but there is EPIC damage underneath the surface going on in Commercial Real Estate right now (just a teeny tiny part of the economy, eh?)
And folks may not be aware, bu the vast majority of CRE loans are not on long term fixed deals. (we are currently all cash, and looking to lever big time when reality hits hard).
But just a year ago, CRE loan brokers were pushing 6 month reset, cheap loans that you could get for near 2%. I looked up the index it was based on, and it was .09% at the time. That same index is now over 4%, and those folks that took those loans, (and there were many when Austin CRE cap rates were 3-4% and even under in many cases), are now on reset number 2.
Even if capped per rise, just gonna keep getting uglier.
I expect by Q4 2023, folks will realize just how bad it is underneath the surface right now, as it gets reported widely in the press about all the foreclosures.
Smart RE guys I know in Austin are already putting together investment funds to buy distressed properties down the road a bit. They all see it coming.
Meta backs out of plan to occupy 589K sf in Austin
Edited by K Wave, 06 November 2022 - 02:36 PM.