[werfds]

"We don't talk about the lack of affordable AAPL shares do we? That's insane, it's an investment, we want it to go up. The less affordable, the better!"

I've always found our obsession with stock price amusing. It's the dividend that technically matters (and, with risk and growth potential, what ultimately should be setting the stock price).

When you sell your stock at a gain it just means that, while you owned it, the expectations of future dividends has done up. You're just bowing out of the future returns to enjoy them today.

So, seeing how people need retirement funds as well, expensive [0] AAPL means people can't afford to fund their retirement.

[0] What does "expensive" mean when shares are, individually, kinda cheap? First the fees to play are very high, unaffordable to low-income people. Second, it means that returns, interest rates, are low (price = return / interest rate as a quick rule of thumb).

So yea, we should be complaining that, not AAPL but financial instruments, are expensive!

[sokoloff]

At least four major discount brokerages have zero commissions on stock trades.

Many major mutual fund companies have had commission free trading of mutual funds for over a decade (probably more like 3+ decades.)

I’m not sure which fees are “very high” in this context.

[helen___keller]

> So yea, we should be complaining that, not AAPL but financial instruments, are expensive!

And to the point of this topic I think this contributes to housing woes, atleast in major markets where there's a very low rental yields.

I can afford to rent in my area, but I can't afford to buy because (with an identical unit in the same neighborhood) my monthly costs would go up by $1000 or $1500 or so, even with 20% down. I think low returns on financial instruments contribute to this (because on the contrary, if you could buy bonds yielding 5% why would you hold rental properties that yield less before maintenance?)

All financial markets are connected, and across the board we have capital appreciation with low yield. It seems like we're headed to some kind of reckoning, but I have no idea what or when. Last year I thought it would come with rising interest rates, but that's off the table for who knows how long.

[sokoloff]

> if you could buy bonds yielding 5% why would you hold rental properties that yield less before maintenance?

There is leverage available for real property that is much greater than that typically available for other investments. (There are also depreciation tax incentives that further help cash flow.)

An investor who is seeking cash-on-cash returns can invest $200K to control $1MM of property or invest $200K to control $200K of bonds. If the bonds yield 5%, that's $10K per year. (With bonds yielding ~2% now, that's $4K per year on $200K invested.)

If the property appreciates at 3% per year, that's $30K per year in appreciation. Add rental income, subtract insurance/taxes/interest on the mortgage (but not principal), and you can often find that real estate is a "better" investment than bonds, particularly if you discount the fact that you're working it as a second job, the labor of which is not taxed as labor but returned to you as capital gains later.

[ummonk]

>(because on the contrary, if you could buy bonds yielding 5% why would you hold rental properties that yield less before maintenance?)

Because you're able to get a mortgage for lower interest than that?

[helen___keller]

Not if federal bonds are yielding 5% you're not

[ummonk]

Sorry, I see what you mean. Yes, price to rent ratios tend to be inversely proportional to bond yields.