🏡 Will Home Prices Crash for 5 More Years?

What’s on the Menu 🍴

Today we’re taking a look back at historical prices…

For real estate, stocks, and even bitcoin.

Volatile prices can lead people to having incorrect beliefs and expectations about the future.

So let’s get into the data!

• Will Home Prices Crash for 5 More Years? 🏡

• What To Watch This Week 👀

• What's Your Asset's True Growth Rate? 📈

•  Hedge Fund investor buys Paypal stock. Will he get WRECKED? 💰

Today’s newsletter is a 4 minute read.

Will Home Prices Crash for 5 More Years? 🏡

In the ebb and flow of the US housing market, current trends and historical data paint a picture that's worth more than a thousand words — it's worth potentially thousands of dollars for homeowners and investors.

Global Financial Crisis:

• After the 2008 debt crisis, home prices flattened out for two years, then plummeted during the four years after the mortgage crisis.

• An 11-year climb followed, with home values soaring to new heights.

• Present-day indicators suggest a market teetering on the edge of another possible decline.

Why It Matters: The real estate market is a critical economic indicator. A potential five-year downturn would affect millions of Americans' net worth and ability to invest.

Be Smart: Mortgage rates are the silent arbiters of the housing market's fate. Their recent incremental rise has a cooling effect on home-buying fervor, potentially leading to a price plateau or even a decline.

Keep a close eye on these rates — they're often a harbinger of what's to come.

The Big Picture: A future downturn in home prices could have a domino effect, impacting everything from consumer spending to the ability to invest across various asset classes.

Bottom Line: The data suggests a cooling period ahead for home prices, echoing concerns of a market poised for correction.

As we've seen in the past, the housing market can defy expectations, so while caution is advised, don't write off the potential for surprise rebounds.

What To Watch This Week 👀

Markets were quieter last week as solid employment data kept investors pleased with the status quo…

This week however we do have the ingredients for some fireworks!

Tuesday brings the ever important US CPI inflation report followed by central bank meetings at the Federal Reserve, Bank of England, and Euro Central Bank later in the week.

All three central banks maintained their current interest rates at the last meeting, but they are being pressured to bring down rates as economies soften.

Our prediction is that rate cuts will likely be punted to 2024 but we’ll be watching for any surprises!

We continue to keep our eyes glued to crypto, as Ethereum and altcoins are showing strength:

Interestingly, gold’s attempts at rallying alongside crypto faltered last week.

Small cap stocks are still outperforming though, suggesting the risk-on environment remains intact across both stocks and crypto in general.

The earnings calendar this week is light, but Adobe, Costco, Oracle, Lennar, and Darden Restaurants might give us some hints as to how the economy is performing near year end.

Retail sales figures for November in both China & the US will be released this week, giving further clues into consumer spending.

We’ll be watching the following assets & sectors closely this week:

📈 Rising Recently

• Crypto (BTC / ETH / Alts)

• Airlines (JETS)

• Homebuilders (XHB)

• Regional Banks (KRE)

• Biotech (XBI)

• Small Caps (IWM)

📉 Falling Recently

• Energy (Crude / XLE / XOP)

• Gold Miners (GDX / GDXJ)

• Solar & Cleantech (TAN)

What's Your Asset's True Growth Rate? 📈

The Compound Annual Growth Rate (CAGR) offers a clear picture of investment performance over time.

Unlike the transient opinions of financial pundits, CAGR provides a reliable measure of how an asset class has truly fared over a given period.

For those unfamiliar, CAGR is essentially the mean annual growth rate of an investment over a specified time frame longer than a year.

It represents one of the most accurate ways to calculate and determine returns for anything that can rise or fall in value over time.

We looked into the CAGR of some popular assets over the last decade, starting from January 1, 2013.

We examined the S&P 500, Bitcoin, Apple stock, and a popular Real Estate ETF.

The results are quite revealing:

• Vanguard Real Estate ETF: A modest 2.1% CAGR, underscoring the notion that while real estate is often seen as a safe asset class, its returns, when adjusted for expenses and transaction costs, can be relatively low.

• S&P 500: Showing a solid 11.1% CAGR, this reflects the steady growth that diversified, large-cap stocks can offer.

• Apple Stock: With an impressive 23.4% CAGR, Apple stands out as a tech giant that has consistently delivered substantial growth.

• Bitcoin: The standout with a staggering 109.7% CAGR, highlighting the remarkable, albeit volatile, journey of this cryptocurrency.

The contrasting fortunes of these investments are stark…

Real estate, often prized for its stability, has yielded lower returns.

On the flip side, Bitcoin's rollercoaster ride over the past decade has handsomely rewarded those who braved its volatility.

Our commitment to transparency is shown by publicly sharing Bitcoin trades since its early days in the $100 range…

And our Wealth Building Community has helped thousands students learn skills to create life-changing wealth.

What This CAGR Study Means For You:

The decade-long journey across different asset classes underlines a fundamental investment wisdom: while safe assets offer stability, higher rewards often come with higher risks.

Hedge Fund investor buys Paypal stock.
Will he get WRECKED? 💰

With PayPal stock trading near its lowest valuation ever, Travis breaks down the bull and bear case and explain why he recently bought it.

Food For Thought 🧠

"We are going from an economy that is analog to digital,
from centralized to decentralized, from closed to open,
from violent to peaceful, from corrupt to incorruptible.”
- Michael Saylor

DISCLAIMER: We are not investment advisors, and this content is for educational purposes only. We don’t offer financial, legal, or tax advice. Nothing we say is a recommendation to buy or sell any assets. Trading and investing are extremely risky, so please be careful and do your own research.