All Forum Posts by: Dan DiFilippo

As mentioned a bit farther up, history is upended at the idea that Stalin was a nationalist.  You can't know what nationalism is if you believe that.

Regarding something like people being employed in academia.  Yeah.  For a lot of academia, that's the point of academia.  Not to teach anyone anything useful, but to employ the previously graduated class of people they pushed through it.  Because if they can keep employing them, they can do better to guarantee future attendance.  It's like the most genius pyramid scheme ever because people outside of the organization are the ones who pay for it.

Stalin?  A nationalist?  Are you posting in bad faith?

I feel a couple of ways about this.  Most of the comments, of course, miss the nuance of the issue.  And the reality is that there's enough blame to go around.

While Millennials have had an impressive explosion in their share of wealth over the last couple of years, it's still worth noting that it's a relatively meager amount of wealth, ringing in *still* in the single digits percentages.  The argument can be made that they are younger than their older counterpart generations, and that, therefore, it's appropriate that they should have less wealth accumulation.  But then it must be pointed out that the Baby Boomers, at a similar stage in their lifetimes, had a substantially higher share of national wealth.

In terms of how much wealth that is, without regard to cohort size, consider the following.  On average, at the same point in their lives, Baby Boomers had approximately twice as much wealth as Millennials do now.  And that is *after* adjusting for increases in consumer prices.  Generation X had some 30% more wealth at the same point on their timeline.  But it doesn't even stop there.  We need to consider the limits of our lens of analysis.  We need to consider the fact that, over time, American wealth has skewed toward the upper class across all age strata.  An average accounting of Baby Boomers' wealth throughout the 1980's would be a better reflection of a randomly selected Baby Boomer than an average accounting of Millennial's wealth would today be a reflection of a randomly selected Millennial.  In simpler terms, many Millennials have below the average Millennial net worth.  A tiny minority of Millennials have stupendous wealth while the remaining are struggling to afford rent or buy a home.  This is in contrast to the way Boomers were 40 years ago.  Fewer Boomers had mega-yachts, colloquially speaking.  More Boomers had more money.

Another variable.  Investment opportunity.  Back in the 70-90's, we were looking at risk-free rates that were as high as 10%, 15%.  Today, the risk-free rate is around 2.50%.  And there isn't much indication that it's going to be back up over 5% anytime soon.  What this means is that Boomers not only had more relative wealth.  But also that they were able to make more money for investing that wealth.

Essentially, it's inarguable that Millennials are better off than Baby Boomers were.  Baby Boomers are the overall most irresponsible cohort of Americans who ever lived.  Their lack of foresight and restraint, in conjunction with their penchant for tasteless opulence ensured the cessation of the Pax Americana.  And what's worse is that they were so senseless that they have forced their children to live in relative poverty.  And this is to say nothing of the deteriorated social fabric they've handed down to us.  Half a century ago, a child would have a roughly 50% chance of making it from 0 to 18 with married parents.  Today, that number, is under 10%.  Then considering explosive illegitimacy rates (not a term I like, but will use for sake of discussion), divorce rates, population displacement, population replacement, and dyscivic government incentives, we no longer have a sense of national cohesion, national identity, or national duty.  It's even the case that our average IQ has sunk like a rock.

No for Millennials.  In particular university.  We've turned university into summer camp with classes.  Altogether too many Millennials go to university and we let them go way too far into debt in order to attend.  And then they attend and they get useless degrees in art.  Or any number of made up Social Justice liberal arts degrees.  Or colleges that cobble together a few quasi-interdisciplinary classes in order to stretch their curricula to create degrees that vaguely seem useful.  I'd love to have a budget allocation for community art programs so that people can have access to art education throughout their childhood and into their adulthood.  That's fine.  What we don't need is a university experience which involves kids going to university, enjoying all of these expensive amenities, usually living away from home, all so that a generation of Tumblrinas and TikTok kids can have Instagram university experiences.  The labor market has been telling us for ages that we just don't need this many people with degrees.  We don't have the capacity to employ them all.  The returns on the existing economic opportunities are diminishing, therefore, we shouldn't be investing more human capital into them.  Increased education finance (loan) availability is what caused this obtuse proliferation of the university experience.  The addition of 40,000sqft gyms, apartment style dormitories, gourmet dining.  They're charging more and giving them lower quality education.

And many Millennials agreed to this when they were as young as 17.  They should have debt forgiven.  It's not their fault the university system is a pile of Social Justice garbage.  The Millennials deserve a break.  The crime, however, is that there were no prevention measures applied to the problem.  We've essentially given the nod to universities to keep coming up with useless made-up programs and increase their tuition rates and overall admissons.  And we've given the nod to the marginal high school student to go ahead and attend.  Because there's now a precedent for loan forgiveness.  Which means it's likely to happen again in the future.

All in all, the system is more dysfunctional than most people realize.  We don't have a healthy economy, we don't have a healthy university system, we don't have a healthy social apparatus.  We don't even have good homes.  We aren't building new ones.  We built over 50 million homes between 1990 and 2010.  Since then, it's been less than 10 million.  We're just living off our existing stock of various types of wealth.  And we seem intent on doing that until we're wholly impoverished.

I think about this guide you wrote a lot.  I've always liked it, and yes, I think it is probably time to give it an update.  Something like that amount.

 They've been frantically trying to manage prices using interest rate policy and quantity for fifteen years.  It hasn't worked.  In terms of LIBOR, you miss the point.  As I said, the Federal Reserve has maybe up to two years of influence.  Three month LIBOR is within the influence of the Federal Reserve.  But if you look at the futures contracts, you're seeing all that money being given back.  The markets that are actually close to economic activity don't have economic activity to lend on going out any more than a couple of years.  They have no use for any more bank reserves.  And if they aren't lending out bank reserves, then the money creation isn't taking place.  It's not inflation.

And just to reinforce that point, to call it inflation, you would need to explain inversion in various money market curves.  You would need to explain why the Treasury curve is riddled with inflections.  The markets are actively fighting against the Federal Reserve.  They're pricing in near term rate cuts despite the Federal Reserve pretending they won't make them.

@Patricia Cote it wasn't their error.

@Nick Sansivero you gotta love Social Justice. They get special treatment now *and* they'll get to complain about targeted predatory lending once they start getting foreclosed on.

@Ashley Marrazzo I think you need some more subject education before you pull this trigger.

Please check out "The Money Guy Show". It's a couple of financial advisors who have a YouTube show podcast. Bright guys, very personable. They give very accessible and helpful lessons on personal finance on wealth-building. And it's very much geared toward the average person. They have something they called the "financial order of operations" which they describe as the various capital allocations you should make as you accumulate wealth. The first operation is establish an emergency fund. Three to six months of living expenses in cash. Essentially, if you're not drowning in debt, you need to be holding this cash to keep your life from falling apart in an emergency. From there, you can build higher, start to pay off certain debts, establish the incentivized investments (benefits IRA's, HSA's, etc.), then look for the other investments.

Not to be rude, but it's not clear to me that you have any of this worked out. I'd be worried that you're so mortgaged up to the hilt, that one single bump would cause you to lose your entire arrangement. For example, what happens if the HVAC needs to be replaced this winter, so your tenant withholds rent and begins to constructively evict. Well, now your $6-10k HVAC problem just caused you to lose your property and you have a deficiency judgment against you.

I tend to tell people, unless you're making about $65k, you don't need to worry about investing in real estate. Now, that isn't without its exceptions, but the point isn't for you to insist you're one of them.

People get emotional in this business and make some extremely poor decisions. I took on a client once who told me he was making about $30-35k in his new role at his job (not yet established/secure in it). He asked me to find him a multi. He said it could've been a 3 unit, but that he really wanted it to be 4 unit (so around $250-300k). He was going to buy with his VA loan (no money down, thereby incurring a funding fee). AND he had just overpaid for his present home a year before AND he did that with 100% VA financing (again, funding fee) AND he'd helped himself to COVID forbearance. I'm pretty sure he did actually understand that the forbearance only deferred payments, but his explanation of it to me was "if the government wants to offer me money, I'm going to take it."

Needless to say, he did not go on to buy a four plex. But he did not go on to not do it before asking me about a hard money alternative for acquisition financing. As if he would somehow be able to carry at a 10% interest rate.

And I don't mean to make the case that you're making this poor of a decision, but it does sound a bit to me like you're caught up in the stories that get shared around on places like this website.

@Trevor J Dammon if you don't require cashflow, then you can be shop farther out on the quality curve. Higher value homes. People pay a premium for cashflow, so if you're willing to forgo it, you can essentially improve your investment. That would be the theory anyway. But it's a recommendation I make all of the time. Buy a higher value home and you'll sleep a little better at night *and* you've mortgaged more, meaning you're amortizing more debt.

@Jay Hinrichs well when you use the term "interest rate hikes" you de facto are referring to the policy rate.

In regards to larger scale commercial finance, I'd be surprised if Fed Funds was really relevant. Most of that transacts in Eurodollars or reluctantly on the newly ascended SOFR. Fed Funds has only been found to have any influence going out about 12-24 months.