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BA Deere
Honored Advisor

The Pandemic made me rich!

...no, not really, i just love writing headlines  Smiley Happy   However, usually this time of year i`m running on fumes in the checkbook, but this year I have a little clingalotta after expenses.  So i go on Craigs List, calling and texting  (I am a human X  Which one of these pictures show a buss?)  Smiley Happy   and it seems every seller has either sold what`s advertised or i`m number 3 on the list of guys coming to look at it. 

In the past I`d argue "this isn`t government money doing this, but this time it most definitely is government money CFAPs, PPP forgivable loans, stimulus checks.  If you have a dead cat in the grove, just put it on Craigs List and your phone`ll blow up with calls.   The higher commodity prices alone would`ve made this a great year, but this government sugar has made things stupid. 

Oh I know one clown in the bunch will say "if you don`t like the money, send it back!!!" well this is a good example of how you can`t unilaterally disarm yourself in this environment.  If a $6,000 rock picker has a dozen willing buyers at $9,000 inflated dollars, you better damned well have those extra $3,000 or you won`t be buying the rock picker. 

Land is making another leg up higher.  A $25 sheet of plywood is now $50, if a building project barely made economic sense 2 years ago at that cost, how does doubling lumber prices make sense now?

I don`t see a CFAP IV coming or more forgivable PPP loans.  I see another year or two of good commodity prices ...if you can make it through the higher fertilizer costs.  I see taxes coming back with a vengeance.  When this thing inevitably unwinds, it`s gonna leave a lot of carnage in it`s wake. 

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13 Replies
bruce MN
Advisor

Re: The Pandemic made me rich!

The Big crystal ball

Higher taxes as ag states tell the Federal govt they don’t need them and Congress takes them up on it 

Offers on sales and rents too shiny, as they fit overlain on obligations   to refuse.

Cannibalistic competition for custom rates for eventual landowner production among those who have machinery fleets. 

You....at least your generation...probably gets to stay in your house. 

Biggest problem you’ll have is the shrunken to next to nothing cohort of fellow victims to muse with over the demise of the Gold Standard and how none of these fabulous conservative people we sent  to DC and Des Moines and St Paul did anything to stop it.

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BA Deere
Honored Advisor

Re: The Pandemic made me rich!

Yeah Bruce, I remember an episode of Gilligans Island where the Professor says "The condemned shall eat a hearty meal"  and I think this Scrooge McDuck cash we`re all swimming in is a temporary rally before the "reset".    The Modern Monetary Theory is give out cash (for votes) Andrew Yang on steroids, if you will.  

We are not going back to the "way things were".  I`ve wondered many times if farmland won`t eventually be owned by the government and "farmers" will bid on who will pay the highest property tax/rent and the winning bidder gets to farm the ground for a year ...that`s essentially the way it is now.  Land must generate maximum income as the county tax assessor gives no quarter on what you owe, drought or high water or crashing markets.

Klaus Schwab says – You will Own Nothing in 10 years | Armstrong Economics

 

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Packard27
Senior Contributor

Re: The Pandemic made me rich!

Say whatever you like about our senility challenged POTUS, since the November elections, corn futures are up 44%, soybeans are up 31%, and a plain vanilla VG Index fund in the S&P 500 is up an impressive 18% in little more than 7.5 months. Copper and lumber futures, as well as prime farmland (when it is available) are also up, although I did not run the actual election to date numbers on these particular commodity areas.

Remember, anything above a 10% gain for an entire year is considered a good return for most prudently diversified and relatively conservative investors. Hurray for diversification of portfolios and the modesty of expectations!

The only problem is that the bottom 50% of American households (roughly 65 million households) never had jack in any investments during this period. The median household balances of 401K/IRA/Roth accounts for the upper 50%-90% is not much better with only  $75K/household . Don’t try to retire too early on that meager figure.

If I have painted a picture of a nation of incredibly wealthy “haves” living in the top 10% and a cohort of fragile “have not” families living in the next 90%, then congratulations. That is about where we stand today.

Also, if anyone wishes to check my numbers of wealth creation back to March 9, 2009 (i.e. Beginning of the Obama Administration), be my guest. Those who had it during the past 12 years of Obama and Trump did remarkably well in spite of the political vitriol. Everyone else got Obama phones, diversity lectures, AA police chiefs and prosecutors, and affordable Obamacare for “hard working Americans.”

 

BA Deere
Honored Advisor

Re: The Pandemic made me rich!

Not that long ago a manager that touted a 4% return was called a "Bernie Madoff".   With lumber prices, everyone says "prices tripled" but you go on the Menards site and lumber has more like doubled, but still a barebone house that was $200,000 and now would be $400,000+ and the first time home buyer that was staring at the ground at a 3% ARM over 30yrs, now has to really have doubts when the ante has doubled and click on CNBC and talk of rates having to go up to "fight inflation". 

Just what i hear about lumber is the sawmills slowed because of covid and those stuck at home making more than going to their job, went to Home Depot and bought materials for a she shed.  Someone that normally goes clickety clack on the computer job doesn`t have a clue if $3.50 for a 2x4 stud is cheap or if $8 is normal.  In the coming months there might develop a glut, however lumber yards stuck with high priced supply and customers with pent up demand might keep prices higher longer than one thinks...then throw it a hurricane or two and they have excuse to go on longer. 

Farmland going up there is nothing that will derail that, even a drop in commodity prices, nothing else Bill Gates will show up at the auction at the Woden community center and bid on the 240 for sale by the Christensen Feedmill...so i don`t know. 

I wonder about the retired guys renting out their land hear about the CFAPs and PPP forgivable loans if they just kept farming another couple years, they would`ve gotten in on that windfall.  Oh well, just raise the rent   Smiley Happy

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k-289
Senior Advisor

Re: The Pandemic made me rich!

Retirement  on  75K  might  carry  some  weight , UN- LE$$  ,  you  desire  several  extravagant  travel  destinations that  may  unravel  your  holdings  -  -  -  

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bruce MN
Advisor

Re: The Pandemic made me rich!

Or as The Dr. and a few of his commenters point out,  as John Fogarty wrote... just life choogling along 

https://twitter.com/paulkrugman/status/1383120018305605634

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BA Deere
Honored Advisor

Re: The Pandemic made me rich!

That stand alone Krugman tweet isn`t actually bad.  Most times with farmers "getting displaced" it isn`t too traumatic in that the 80 year old farmer chooses to "retire early" instead of investing in the new 36 row GPS guided planter. Smiley Happy

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rsbs
Veteran Advisor

Re: The Pandemic made me rich!

BA, it is not a well kept secret why Bruce mentions his vision of individual farmers being displaced, and replaced with a Soviet style ag system.

I understand the mentality....grasped it a decade ago.

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bruce MN
Advisor

Re: The Pandemic made me rich!

Nah.  Government will have nothing to do with it, but as always could assist in avoidance. 

Govt. will run a supercharged soup line, however,  Right up til when the last shoe drops. 

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