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Back to Basics: Real Estate Investing

Hi All,
First of all, I’m a data scientist by profession but a history major by training. So I’ve tried to cite all relevant data points with a () tag. This allows us to separate debating the data vs. the analysis. I’m also a complete newbie to real estate investing. One of the main goals in fact of this post is to organize my thoughts so far and solicit feedback from more knowledgable individuals.
As part of a balanced portfolio, I've invested passively in real estate for several years (both public REITs and a small amount in a private platform). As my assets have grown and I'm entering the age to buy a primary residence, I've been trying to educate myself on the housing real estate market. After all, even if you don't own any investment properties the purchase of a home is the largest single financial transaction you'll likely ever make. In fact, if you look at the chart linked below (1, see Sources below) you'll see housing is the single largest asset for households with net worth below 1 million dollars, i.e. ~90% of Americans (2). In fact, even in 2010 (in the midst of the Great Financial Crisis): "The primary residence represented 62% of the median homeowner’s total assets and 42% of the median home owner’s wealth" (3). In fact, reading the Economist recently (obviously in my slippers) I was surprised to discover housing is the world's largest asset class. This HSBC report (avoiding the Economist paywall) cites housing as a $226 trillion (!) asset class at the end of 2016 (4) out of a total net worth in 2018 of ~$360 trillion according to Credit Suisse.
 
Even with my casual research, it's clear that real estate is divided into multiple segments including residential, commercial, industrial, farm land, etc. Even the subsector of residential is divided into single family, multi-family, commercial, mobile homes, etc. These segments are further divided across geographies with wildly different tax, capital, and regulatory regimes. So far I’ve limited my research to the US residential sector: single family homes, multifamily, and small commercial apartment buildings. Therefore moving forward when I say real estate I will limit the scope to the above US residential housing market, i.e. acquiring individual or personal portfolio of US housing properties.
 
More formally, the purpose of my analysis below is:
Note: I considered posting this in /realestateinvesting, but ultimately my goal is to evaluate real estate vs. other asset classes. Obviously some people will simply prefer real estate for a variety of reasons, but personally my goal is to achieve the greatest return for the least risk and work. I should stress that I love my career (data scientist) and have no intention of quitting, so the last point is particularly important.
 
Analysis
 
One thing that immediately strikes me as an investor accustomed to public securities, e.g. bonds / stocks, is how odd the real estate market (in particular housing) is in comparison. Having a margin account from a broker, i.e. getting leverage, is often a difficult process reserved for “advanced” investors. In residential real estate, it’s considered “conservative” for an individual to have leverage of 4-5 to 1 (FHA loans, for example, only require 3.5% down in some cases!) . What’s even crazier is that the loan is often issued at only 2-4% over the 10 year US treasury rate. For example today, April 26th, the 10 year treasure is 0.606% while NerdWallet has a rate of 3.3% for a prime credit score, single family home, primary residence 30 year loan.
 
Perhaps because real estate is the only avenue available for newer investors to take on large amounts leverage immediately, I've seen extreme and, in my opinion, irrational positions on the subject. Even a cursory glance at BiggerPockets, /realestateinvesting, etc. uncovers multiple posts along the lines of either "real estate investing is the best investment ever!" vs. "the real estate market is a massive bubble and will crash soon". I've summarized a few of the common tropes I've seen below with my analysis.
 
Real estate is a huge bubble, and is going to collapse any day!
As noted above, real estate / housing has numerous segments that are further divided across geographies with wildly different tax, capital, and regulatory regimes. Saying that "real estate" will crash is like saying the “food industry” will crash. What segment and where? US soybean growers? Fast Food? Argentinian ranchers? McDonalds in particular?
Limiting our discussion to US housing: the Case-Shiller national price index (7) shows that home prices dropped ~27% from peak to trough in the Great Financial Crisis over a period of almost 6 years (Mid 2006 to early 2012). The reason this was such a catastrophic event is that housing had never decreased nationally in a significant way before in the modern era (see Case Schiller home price index). Of course, it’s worth noting that housing had rarely increased rapidly against inflation before.
Let’s assume we had an equivalent event occur. The Jan 2020 index was at 212, so home prices would decrease by 27% to ~155 (mid 2008 levels). Crucially though, this price drop would be expected to play out for years! During that time vested interests (more on that later) would lobby governments extensively for support, foreign and US investors could form funds to take advantage of the situation, etc. As a reference point there is ~$1.5 trillion available in US private equity funds alone as of January 2020.
However, it is worth pointing out that this is at the national level. Local real estate markets, particularly those dependent on select industries or foreign investors, could easily see more dramatic price movements. The US census has a really cool chart (22) that shows the inflation adjusted (as of year 2000) median home values every decade by state from 1940 to 2000. We see that Minnesota home values actually dropped from $105,000 in 1980 to $94,500 in 1990, a fall of more than 10%.
 
Everyone needs a place to live, therefore housing can never go down
Everyone needs a place to eat, but restaurants and grocery stores are famously low margin businesses (5). Farms supply an even more basic need, but many go bankrupt (6). The question isn’t whether housing will go down or not, but whether it will return an attractive rate of return compared to alternative investments.
It’s also worth pointing out that for most “retail” US housing real estate investors, they are investing in a narrow geographic area. Migration and births/ deaths can play a huge role in the need for housing in a given area. Case in point, NYC may have actually begun losing population to migration in 2017 / 2018 (23). Even more interesting, NYC has experienced a substantial loss due to domestic migration which is almost balanced by foreign immigration / new births (24). If foreign immigration decreases in the post-COVID we would expect NYC’s population to decline more rapidly given current trends.
It is entirely possible for national housing prices to modestly increase while expensive coastal markets decline significantly, for example.
 
It's supply and demand. There's a nationwide housing shortage so prices can only go up!
This one has some factual basis. Freddie Mac put out a study in Feb 2020 (18) which indicated that there is a shortage of housing units between 2.5 - 3.3 million units. Some interesting notes about this study is that they consider the “missing” household formation and extrapolate interstate migration trends. As noted below, the US builds ~1.3 million housing units a year, so this reflects ~2 years of housing construction. It’s also worth noting the geographic variation, with “high growth” states like Massachusetts, California, Colorado, etc. seeing ~5% housing deficits vs. states like Ohio, Pennsylvania, etc. seeing housing surpluses of ~2-4%.
However, a Zillow analysis on our aging population (11) points to a slightly different conclusion. Based on their analysis, an additional ~190,000 home will be released by seniors between 2017-2027 compared to 2007-2017. That number increases by another 250,000 homes annually between 2027-2037. Combined, this is about ~50% of the average annual homes constructed in the US between 2000-2009 at ~900,000.
Given these slightly conflicting reports, let’s get back to basics. First, let's separate housing into single family homes, multi-family units, and large apartment buildings. Single family homes, particularly near dense and economically vibrant metros, are far more supply constrained. In contrast, multi family units / apartment towers are, barring regulatory issues (see California), less constrained by available land. See Hudson Yards in NYC, the Seaport area in Boston, the Wharf in DC, etc. It's worth noting that due to costs / market demand most of these developments cater to the entry level luxury category and above, but they are new supply.
I actually wound up looking at US Census projections to get a sense of the long term outlook. By 2030 the Census estimates the population will grow from 334.5 million to 359.4, for a total increase of 24.9 million or an annual increase of 2.49 million (8). In 2019 the Census estimated 888,000 private single family units and 403,000 units in buildings w/ 2+ units were constructed for a grand total of 1,291,000 units (9). The average number of people per US household is 2.52 (10). Some simple math suggests that if we assume each new single family home contains the average number of Americans and each apartment conservatively contains only a single person we get 888,000 * 2.52 + 403,000 = ~2.64 million.
Now, talking about averages in a national real estate market reminds me of a joke about Mars: on average it's a balmy 72 degrees. But the point still stands that at a high level, theoretical sense there is sufficient "housing" for the US population. The question, as always, is at what price and location?
 
Real estate is a safer investment than the stock market!
This one honestly irritates me. While there are many advantages to real estate I can see, safety is not one of them. It is a highly leveraged, illiquid, extremely concentrated asset when bought individually (i.e not in a REIT). Let’s use an example here. Is there a financial advisoy in the world who would recommend you put your entire investment portfolio in Berkshire Hathaway? Of course not, diversification is the bedrock of modern personal finance. And yet Berkshire Hathaway is an extremely diversified asset manager with well run and capitalized companies ranging from Geico to Berkshire Homes to Berkshire Energy. Oh, and it also has $130 billion (with a B) in cash equivalents.
I honestly think this impression stems from 3 factors:
 
You won’t build your wealth in the stock market
One common theme I’m already noticing listening to podcasts, reading blogs, etc. is that many people started investing in the aftermath of the Great Financial Crisis (2009 - 2011). And, in retrospect, it was clearly a great time to buy property! But it was also a great time it turns out to buy almost every investment.
I plugged in the average annual return of the S&P 500 from December 2009 to December 2019 with dividends reinvested (and ignoring the 15-20% long term tax on dividends) (12). It was 13.3%. If you managed to buy at the market bottom of Feb 2009 it was 15.8%!
The long term annual average of the S&P 500 from 1926 - 2018 is ~10-11% (with dividends reinvested). (13). The S&P has never lost money in a 30 year period with dividends reinvested, see the fantastic book Stocks for the Long Run (14). In fact, if you’re investing before 30 the worst 35 year period (i.e. when you would turn 65) is 6.1% (15).
Housing, in general, has tracked at or slightly above inflation ( 16). Even a click bait CNBC article (17) about “skyrocketing” home prices states that homes are rising 2x as fast as inflation (i.e. ~4%). If you look at the CNBC chart for inflation adjusted prices, you’ll see a compound annual growth rate (CAGR) of 2.3% from 1940 to 2000. Let’s do this same exercise again with the Average Sales Price of Homes from Fred (i.e. Fed economic data) (18). In Q1 1963 the average sales price of a house was $19,300. In Q4 2019 it was $382,300. That is a CAGR of ~5.38% over ~57 years.
Another thing to keep in mind is that while real estate does have some tax advantages, there are also property taxes, maintenance, etc.
But it’s harder than that. Because real estate is an illiquid asset. In general, illiquid assets require higher returns than the equivalent liquid asset because of the inconvenience / risk of not having the ability to transact frequently.
 
Case study of real estate purchase:
I’d like to focus the rest of my analysis on an area that many members of BiggerPockets, /realestateinvesting, etc. seem to gloss over: credit. I was surprised to see that for first time home buyers, 72% made a down payment of 6% or less according in Dec 2018 according to (27). This would imply prices only have to decrease 6% to put these new homebuyers underwater, i.e. owe more after a sale than their mortgage. But this fails to take into account costs associated with buying a property, which are substantial at 2-5% for closing according to Zillow (28). Costs for selling a property are even more substantial, ranging from 8-10% according to Zillow (29). This means that sellers only putting down 6% could be underwater (in the sense that they couldn’t sell without providing cash during the sale) with even modest price decreases when taking into account these transactional costs.
 
Obviously there are ways to reduce these costs, so let’s walk through a hypothetical example of the median valued home of ~$200,000.
 
A young, first time home-buyer puts down 10%, or $20k, and takes out a mortgage for $180,000. They also pay (optimistically) closing costs of 2% for $4000. Luckily, they bought in a hot housing market and prices increased 5% (real) over the next 5 years. Their house is now worth ~$255,000. They sell their house and again, optimistically, closing costs are only 4%. This means they pay $10,200. Consequently, after netting out costs we calculate naively that they would make $255k - $10k - $4k - $200k (original purchase price of home) = $41k. Given they only invested $20k of their own money, this is a compound annual growth rate (CAGR) of ~15.4%, which is handily above the S&P 500’s average. This is the naive calculation I first made, but as we’ll see it is deeply flawed. First, let’s look at costs.
 
WalletHub has a really nice chart that shows (conveniently) property taxes on a $205,000 home across all 50 states (30). The average American household spends $2375 on property taxes, so let’s assume a little less and go for $1500. So 5 years x $1500 = $7500.
 
For home maintenance, the consensus seems to be ~1% annually for home maintenance with wide variation. We’ll assume that’s $2000 off the base price, so $2000 * 5 = $10,000. (31).
 
For homeowner’s insurance, Bankrate (32) provides a nice graph that shows the average annual cost for a $300,000 dwelling across all states and then a separate chart for costs based on dwelling coverage. For a $200,000 dwelling coverage we have a figure of $1806 per year, so over 5 years we have $1800 * 5 = $9000.
 
Finally we need to calculate the interest on the debt. One thing that I didn’t realize until I looked at an amortization table how front-loaded the interest payments are. Case in point, I plugged in the $180,000 loan into the amortization calculator (34) using a 3.5% interest rate and saw that we pay on average ~$6000 each year in interest vs. only ~$3800 to principal.
 
So lets’s run the new numbers.
You sell your home still for $255,000. After 5 years, your mortgage is now ~$160000 (i.e. you paid off 20,000 over 5 years, or ~$4k per year). So after the sale you are left with ~$95,000. The buying and selling costs remain the same as before, so we subtract the $14k for $81,000. We also then subtract $7500 (property taxes), $10,000 (home maintenance), $9000 (homeowners insurance) which gives us $54,500.
 
We paid ~$9,700 each year in mortgage interest + principle (~6000 interest and $3700 principal). So 5 * 9700 = $48,500.
 
So, net of everything we get $255,000 - $160,000 (remaining mortgage) - $48,500 (mortgage payments over 5 years) - $14k (buying / selling costs) - $7500 (property taxes) - $10,000 (home maintenance) - $9000 (home insurance) = $6000. And we put down $20,000 as a downpayment, for a net compound annual growth rate (CAGR) of negative $21.4%.
 
That is truly an astounding result. We had 10x leverage on an asset that went up 5% each year for 5 years and we somehow lost money on our “investment” of a down payment? Keep in mind we also used fairly optimistic numbers (particularly home price appreciation) and didn’t factor in PMI, etc. On the flip side, this home provided shelter, i.e. you didn’t pay rent. That’s a massive “avoided” cost and I don’t mean to minimize it. But the point here is that many homebuyers I’ve spoken to fail to account for the substantial costs of home ownership and expect their primary resident to generate a substantial return.
 
Now, of course, for real estate investing you would likely either a) hold the property for less time and attempt to flip it via forced appreciation or b) have tenants in the property. Let’s focus on b) because frankly that’s more of my interest. From what little research I’ve done flipping houses requires much more time that’s incompatible with my day job.
 
I went ahead and used the rental price calculator I found online at (36) to calculate the return. I used a rent of $1300 monthly, a bit lower than the average national rent of $1476 (35) because our home price was also lower than the national average. I assumed a low vacancy rate of 5%, and no other expenses beyond the ones cited above (i.e. I didn’t assume property management, higher loan interest rate, higher property taxes).
 
The calculator spit back a 5 year internal rate of return (a metric in this case useful to compare against the securities markets) of 27.79% return, i.e. a profit of $63k on an initial investment of $20k. The IRR as I understand it captures the time value of money, basically accounting for when you made various returns (37). E.g if an investment over 30 years pays nothing then gives you a lump sum payment at the end that’s very different than if it pays 1/30th of that lump sum every year. It’s useful in this case for comparing against the stock market because the IRR takes all future cash flows back to a net present value of 0, i.e. as if we invested all the money immediately.
 
&Now let’s do some scenario modeling (originally we had 10% down, 3.5% interest rate for an IRR of ~28%):
This scenario for me demonstrated a number of interesting properties.
 
 
401k analysis
As I mentioned above, one of the big questions around real estate investing that I rarely see asked is “is it an appreciably better investment than the alternatives”? For W2 workers, which is ~50% of private sector workers, this question becomes even more pertinent because 401ks have massive tax benefits. In fact, only 33% of US households own taxable accounts outside of a 401k, which means the vast bulk of US households either have no accounts, 38%, or own only a retirement account like a 401k, 29%, according to (39). Let’s assume we have a middle to upper middle class worker making ~70k (this puts them roughly at the 75% percentile). They want to invest, and see two options:
 
At a salary of $70k and assuming you took the $12k standard deduction, you would still see much of your income fall into the 22% tax bracket. While certain states charge no income tax, they generally make it up in much higher sales / property taxes, so let’s also assume a 3% state income tax (40). This means that if you invest $19,500 in a 401k (the maximum in 2020) that’s equivalent to only $14,625 post-tax (because the $19,500 would be taxed ~25% before it got to you). That leaves almost $6000 when compared with the down payment figure above, which is coincidentally the exact IRA contribution limit for 2020! The math for deductions for the IRA gets painful, but we can assume a deduction of ~$1500 (i.e. 25% of 6000). Now, if your work offers an HSA it gets even better, because those contributions are tax-free even from social security (which is typically a 6.2% tax) + medicaid (1.45%). This means that if you contribute the $3500 limit, that’s equivalent to only $2300 post-tax.
 
This is getting rather long, so for the sake of simplicity we can basically say that in lieu of putting down a $20,000 post-tax downpayment on an investment property you could instead invest $19500 + $6000 + $3500 = $29000 into the stock market. What’s more, fees for well managed 401ks through Vanguard, Schwab are often ~0.25% (i.e. $72 annually on the $29k above).
 
If we assume the average S&P 500 index returns of 10% (we’ll ignore the $72 annually in expenses and of course there are no taxes), we would see $29k compounded over 5 years = $47,809. Since we’re investing the money all immediately, this is (I believe) more or less equivalent to the IRR rate.
 
So, what do we need to achieve to beat that return with our investment property? Well, we previously assumed a blistering 5% real home price appreciation. With inflation at ~2%, that’s a nominal 7% home price appreciation. According to both Zillow and Core logic, Idaho is the state with the fastest home appreciation values pre-COVID at ~9%. We’re essentially predicting close to this level for 5 years, which is quite rare. In August 2019, US home prices nationally were gaining ~2.6% according to (41).
Let’s plug those numbers into our rental property calculator from above. At a 10% down payment, 3.5% interest rate, and 2.6% home price appreciation we see an IRR of 18% per year. Game, set, match, real estate, right?
 
Well, sort of. Right now we are assuming optimistic projections about maintenance (1%), closing costs (2%), and selling costs (4%). What if we bump those up to the averages cited by Zillow (3% and 8%)? Uh-oh, now we’re down to 12.38%. Okay, but what if we assume rent goes up by the same amount, ~2%? Great! Now we’re back up to 14% IRR. But if we assume all the other expenses like home insurance and maintenance go up 2% a year as well, we’re back down to 11%.
 
We could go on forever, but the point is that real estate (particularly for rental properties) are extremely sensitive to assumptions you make on a number of factors. Given the risk, illiquidity, and work involved with a real estate property I would want to see a substantially higher return than the tax advantaged, hands off 10% my 401k gives me. I didn’t even include the typical 3% match for the 401k, which would have added $2100 to the initial investment amount and increased the 5 year return to $51,272.
 
The bottom line in my mind is that for most W2 workers who have access to pre-tax investments, they should max them out first. If you’re lucky enough to be able to max out all of the above pre-tax accounts + get a 3% match (i.e. $31k total) every year, after 15 years at a 10% return you’ll have $1.2 million. In 30 years you’ll have $6.8 million. And again, keep in mind that maxing out your pre-tax accounts only “costs” you ~$20k, because that’s what you would get after taxes. And you’ll have “made” those millions without spending a single hour outside of your day job working.
 
Based on the above analysis and calculations, here’s what I’ve come away with as a newbie to real estate investing:
 
Some thoughts on the future:
Forecasting is always risky, but at the same time we all have to form an opinion on where the future is headed. My general thoughts are that crisis tend to accelerate existing trends rather than create new ones. There were already recession concerns in late 2019, and US GDP growth expectations had been downgraded to ~2.0% by the OECD even before COVID (45), albeit with slight optimism around the Phase 1 trade deal with China. Geopolitical tension and capital controls in China had led to mainland Chinese investors slowing their investments in US real estate and increasing dispositions (47).
From my point of view, I’m interested in seeing how the market reacts over the next 3-6 months. Do sellers react by rapidly putting properties on the market before it’s “too late”? Are there enough prime buyers given the tightening credit, particularly for expensive coastal markets, to absorb a spike in listings? As Warren Buffett once said: “"At rare and unpredictable intervals...credit vanishes and debt becomes financially fatal. A Russian-roulette equation--usually win, occasionally die--may make financial sense for someone who gets a piece of a company's upside but does not share in its downside.” We shall see.
Sources:
submitted by cooleddy89 to investing [link] [comments]

Sweden’s Famously Stealthy Submarine Is Now Even Quieter

Go Sweden! Thanks for that job done!
What's the difference inSweden and Switzerland. Switzerland has an economy more like The United States. They complain over there that the Franc is overvalued and they are not paid enough to live. Sweden has progressive taxation and income distribution and has a more stabler economy because of it. Stockholm is the Capital of Sweden since 1523 A.D. It shares the Scandinavian Peninsula with Norway. Coming up is the Difference between Norway and Normandy.
Here's a map of Sweden and Norway:

Location of Sweden Map from Encyclopedia Britannica Online.
Encyclopedia Britannica States," The country has a 1,000-year-long continuous history as a sovereign state, but its territorial expanse changed often until 1809. Today it is a constitutional monarchy with a well-established parliamentary democracy that dates from 1917. Swedish society is ethnically and religiously very homogeneous, although recent immigration has created some social diversity. Historically, Sweden rose from backwardness and poverty into a highly developed postindustrial society and advanced welfare state with a standard of living and life expectancy that rank among the highest in the world. "
Here are the Facts of Sweden according to Merriam-Webster:
Official Name: Konungariket Sverige (Kingdom of Sweden)
Form Of Government: constitutional monarchy with one legislative house (Riksdag, or Parliament [349])
Head Of State: King: Carl XVI Gustaf
Head Of Government: Prime Minister: Stefan Löfven
Capital: Stockholm
Official Language: Swedish
Official Religion: none
Monetary Unit: Swedish krona (SEK)
Currency Exchange Rate:
1 USD equals 9.879 Swedish krona
Population:
(2019 est.) 10,284,000
Population Rank:
(2018) 89
Population Projection 2030:
11,261,000
Total Area (Sq Mi)**172,750
Total Area (Sq Km)**447,420
Density: Persons Per Sq Mi(2018) 64.7
Density: Persons Per Sq Km(2018) 25
Urban-Rural Population:
Urban: (2018) 87.4%
Rural: (2018) 12.6%
Life Expectancy At Birth:
Male: (2017) 80.7 years
Female: (2017) 84.1 years
Literacy: Percentage Of Population Age 15 And Over:
Male: 100%
Female: (2008) 100%
GNI (U.S.$ ’000,000)
(2017) 529,460
GNI Per Capita (U.S.$)
(2017) 52,590
Here's what The CIA World FactBook has to say about Sweden: (Here are some highlights):
Sweden’s small, open, and competitive economy has been thriving and Sweden has achieved an enviable standard of living with its combination of free-market capitalism and extensive welfare benefits. Sweden remains outside the euro zone largely out of concern that joining the European Economic and Monetary Union would diminish the country’s sovereignty over its welfare system.
Timber, hydropower, and iron ore constitute the resource base of a manufacturing economy that relies heavily on foreign trade. Exports, including engines and other machines, motor vehicles, and telecommunications equipment, account for more than 44% of GDP. Sweden enjoys a current account surplus of about 5% of GDP, which is one of the highest margins in Europe.
GDP grew an estimated 3.3% in 2016 and 2017 driven largely by investment in the construction sector. Swedish economists expect economic growth to ease slightly in the coming years as this investment subsides. Global economic growth boosted exports of Swedish manufactures further, helping drive domestic economic growth in 2017. The Central Bank is keeping an eye on deflationary pressures and bank observers expect it to maintain an expansionary monetary policy in 2018. Swedish prices and wages have grown only slightly over the past few years, helping to support the country’s competitiveness.
In the short and medium term, Sweden’s economic challenges include providing affordable housing and successfully integrating migrants into the labor market.
Agriculture - products:
This entry is an ordered listing of major crops and products starting with the most important.
barley, wheat, sugar beets; meat, milk
Industries:
This entry provides a rank ordering of industries starting with the largest by value of annual output.
iron and steel, precision equipment (bearings, radio and telephone parts, armaments), wood pulp and paper products, processed foods, motor vehicles
Unemployment rate:This entry contains the percent of the labor force that is without jobs. Substantial underemployment might be noted.
6.7% (2017 est.)7% (2016 est.)country comparison to the world: 101
Population below poverty line:National estimates of the percentage of the population falling below the poverty line are based on surveys of sub-groups, with the results weighted by the number of people in each group. Definitions of poverty vary considerably among nations. For example, rich nations generally employ more generous standards of poverty than poor nations.
15% (2014 est.)
Household income or consumption by percentage share:Data on household income or consumption come from household surveys, the results adjusted for household size. Nations use different standards and procedures in collecting and adjusting the data. Surveys based on income will normally show a more unequal distribution than surveys based on consumption. The quality of surveys is improving with time, yet caution is still necessary in making inter-country comparisons.
lowest 10%: 3.4%highest 10%: 24% (2012)
Budget:This entry includes revenues, expenditures, and capital expenditures. These figures are calculated on an exchange rate basis, i.e., not in purchasing power parity (PPP) terms.
revenues: 271.2 billion (2017 est.)expenditures: 264.4 billion (2017 est.)
Taxes and other revenues:This entry records total taxes and other revenues received by the national government during the time period indicated, expressed as a percent of GDP. Taxes include personal and corporate income taxes, value added taxes, excise taxes, and tariffs. Other revenues include social contributions - such as payments for social security and hospital insurance - grants, and net revenues from public enterprises. Normalizing the data, by dividing total revenues by GDP, enables easy comparisons acr . . . more
50.6% (of GDP) (2017 est.)

Now for Switzerland:

Map of Switzerland
It's rights next to France and Austria and is the size of Half of Scotland according to Encyclopedia Britannica online; This map is from their page.
According to Merriam-Webster:
Dialing code: +41
Population: 8.57 million (2019)
Currency: Swiss franc
Swit·​zer·​land | \ ˈswit-sər-lənd \variants: or French Suisse \ ˈswʸēs \ or German Schweiz \ ˈshvīts \ or Italian Svizzera \ ˈzvēt-​tsā-​rä \ or Latin Helvetia \ hel-​ˈvē-​sh(ē-​)ə \

Definition of Switzerland

landlocked country (a federal republic) in western Europe in the Alps; capital Bern area 15,937 square miles (41,277 square kilometers), population 8,293,000
see also SWISS entry 1 sense 1
Britannica states: " For many outsiders, Switzerland also evokes a prosperous if rather staid and unexciting society, an image that is now dated. Switzerland remains wealthy and orderly, but its mountain-walled valleys are far more likely to echo the music of a local rock band than a yodel or an alphorn. Most Swiss live in towns and cities, not in the idyllic rural landscapes that captivated the world through Johanna Spyri’s Heidi (1880–81), the country’s best-known literary work. Switzerland’s cities have emerged as international centres of industry and commerce connected to the larger world, a very different tenor from Switzerland’s isolated, more inward-looking past. As a consequence of its remarkably long-lived stability and carefully guarded neutrality, Switzerland—Geneva, in particular—has been selected as headquarters for a wide array of governmental and nongovernmental organizations, including many associated with the United Nations (UN)—an organization the Swiss resisted joining until the early 21st century. "
According to CIA"S World Factbook. Switzerland's Economy is as such:
Switzerland, a country that espouses neutrality, is a prosperous and modern market economy with low unemployment, a highly skilled labor force, and a per capita GDP among the highest in the world. Switzerland's economy benefits from a highly developed service sector, led by financial services, and a manufacturing industry that specializes in high-technology, knowledge-based production. Its economic and political stability, transparent legal system, exceptional infrastructure, efficient capital markets, and low corporate tax rates also make Switzerland one of the world's most competitive economies.
The Swiss have brought their economic practices largely into conformity with the EU's to gain access to the Union’s Single Market and enhance the country’s international competitiveness. Some trade protectionism remains, however, particularly for its small agricultural sector. The fate of the Swiss economy is tightly linked to that of its neighbors in the euro zone, which purchases half of Swiss exports. The global financial crisis of 2008 and resulting economic downturn in 2009 stalled demand for Swiss exports and put Switzerland into a recession. During this period, the Swiss National Bank (SNB) implemented a zero-interest rate policy to boost the economy, as well as to prevent appreciation of the franc, and Switzerland's economy began to recover in 2010.
The sovereign debt crises unfolding in neighboring euro-zone countries, however, coupled with economic instability in Russia and other Eastern European economies drove up demand for the Swiss franc by investors seeking a safehaven currency. In January 2015, the SNB abandoned the Swiss franc’s peg to the euro, roiling global currency markets and making active SNB intervention a necessary hallmark of present-day Swiss monetary policy. The independent SNB has upheld its zero interest rate policy and conducted major market interventions to prevent further appreciation of the Swiss franc, but parliamentarians have urged it to do more to weaken the currency. The franc's strength has made Swiss exports less competitive and weakened the country's growth outlook; GDP growth fell below 2% per year from 2011 through 2017.
In recent years, Switzerland has responded to increasing pressure from neighboring countries and trading partners to reform its banking secrecy laws, by agreeing to conform to OECD regulations on administrative assistance in tax matters, including tax evasion. The Swiss Government has also renegotiated its double taxation agreements with numerous countries, including the US, to incorporate OECD standards.
GDP (purchasing power parity)
$523.1 billion (2017 est.)
$514.5 billion (2016 est.)
$506.5 billion (2015 est.)
note: data are in 2017 dollars
GDP (official exchange rate)
$679 billion (2017 est.)
GDP - per capita (PPP):
$62,100 (2017 est.)
$61,800 (2016 est.)
$61,500 (2015 est.)
note: data are in 2017 dollars
Gross national saving:
33.8% of GDP (2017 est.)
32.3% of GDP (2016 est.)
33.9% of GDP (2015 est.)
GDP - composition, by end use: 53.7% (2017 est.)
government consumption: 12% (2017 est.)
investment in fixed capital: 24.5% (2017 est.)
investment in inventories: -1.4% (2017 est.)
exports of goods and services: 65.1% (2017 est.)
imports of goods and services: -54% (2017 est.)
GDP - composition, by sector of origin:
agriculture: 0.7% (2017 est.)
industry: 25.6% (2017 est.)
services: 73.7% (2017 est.)
Agriculture - products: grains, fruits, vegetables; meat, eggs, dairy products
Industries: machinery, chemicals, watches, textiles, precision instruments, tourism, banking, insurance, pharmaceuticals
Industrial production growth rate: 3.4% (2017 est.)
country comparison to the world:92
Labor force**:**5.159 million (2017 est.)
country comparison to the world:81
Labor force - by occupation:
agriculture: 3.3%
industry: 19.8%
services: 76.9% (2015)
Unemployment rate:
3.2% (2017 est.)
3.3% (2016 est.)
country comparison to the world: 40
Population below poverty line:
6.6% (2014 est.)
Household income or consumption by percentage share:
lowest 10%: 7.5%
highest 10%: 19% (2007)
Budget:
revenues: 242.1 billion (2017 est.)
expenditures: 234.4 billion (2017 est.)
note: includes federal, cantonal, and municipal budgets
Taxes and other revenues:
35.7% (of GDP) (2017 est.)
country comparison to the world: 60
Budget surplus (+) or deficit (-):
1.1% (of GDP) (2017 est.)
country comparison to the world: 33
Public debt:
41.8% of GDP (2017 est.)
41.8% of GDP (2016 est.)
note: general government gross debt; gross debt consists of all liabilities that require payment or payments of interest and/or principal by the debtor to the creditor at a date or dates in the future; includes debt liabilities in the form of Special Drawing Rights (SDRs), currency and deposits, debt securities, loans, insurance, pensions and standardized guarantee schemes, and other accounts payable; all liabilities in the GFSM (Government Financial Systems Manual) 2001 system are debt, except for equity and investment fund shares and financial derivatives and employee stock options
country comparison to the world: 119
Fiscal year:
Inflation rate (consumer prices):
0.5% (2017 est.)
-0.4% (2016 est.)
country comparison to the world: 30
Current account balance:
$66.55 billion (2017 est.)$63.16 billion (2016 est.)
country comparison to the world: 7
Exports:
$313.5 billion (2017 est.)
$318.1 billion (2016 est.)
note: trade data exclude trade with Switzerland
country comparison to the world: 17
Exports - partners:
Germany 15.2%
US 12.3%
China 8.2
%India 6.7%
France 5.7%
UK 5.7%
Hong Kong 5.4%
Italy 5.3%
(2017)
Exports - commodities:
machinery, chemicals, metals, watches, agricultural products
Imports:
$264.5 billion (2017 est.)
$266.3 billion (2016 est.)
country comparison to the world: 18
Imports - commodities:
machinery, chemicals, vehicles, metals; agricultural products, textiles
Imports - partners:
Germany 20.9%, US 7.9%
Italy 7.6%, UK 7.3%
France 6.8%
China 5%
(2017)
Reserves of foreign exchange and gold:
$811.2 billion (31 December 2017 est.)
$679.3 billion (31 December 2016 est.)
country comparison to the world: 3
Debt - external:.
$1.664 trillion (31 March 2016 est.)
$1.663 trillion (31 March 2015 est.)
country comparison to the world: 12
Exchange rates:
Swiss francs (CHF) per US dollar -0.9875 (2017 est.)
0.9852 (2016 est.)0.9852 (2015 est.)
0.9627 (2014 est.)
0.9152 (2013 est.)
And their Military is such as CIA states:
Military expenditures**:This entry gives spending on defense programs for the most recent year available as a percent of gross domestic product (GDP); the GDP is calculated on an exchange rate basis, i.e., not in terms of purchasing power parity (PPP). For countries with no military forces, this figure can include expenditures on public security and police.
0.68% of GDP (2018)0.68% of GDP (2017)0.68% of GDP (2016)0.66% of GDP (2015)0.66% of GDP (2014)country comparison to the world: 138
Military and security forces**:This entry lists the military and security forces subordinate to defense ministries or the equivalent (typically ground, naval, air, and marine forces), as well as those belonging to interior ministries or the equivalent (typically gendarmeries, bordecoast guards, paramilitary police, and other internal security forces).
Swiss Armed Forces: Land Forces, Swiss Air Force (Schweizer Luftwaffe) (2019)
Military service age and obligation**:This entry gives the required ages for voluntary or conscript military service and the length of service obligation.
18-30 years of age generally for male compulsory military service; 18 years of age for voluntary male and female military service; every Swiss male has to serve at least 245 days in the armed forces; conscripts receive 18 weeks of mandatory training, followed by six 19-day intermittent recalls for training during the next 10 years (2019)
Refugees and internally displaced persons:
refugees (country of origin):
34,072 (Eritrea)
16,565 (Syria)
12,282 (Afghanistan)
5,744 (Sri Lanka) (2018)
stateless persons:
49 (2018)
Illicit drugs
a major international financial center vulnerable to the layering and integration stages of money laundering; despite significant legislation and reporting requirements, secrecy rules persist and nonresidents are permitted to conduct business through offshore entities and various intermediaries; transit country for and consumer of South American cocaine, Southwest Asian heroin, and Western European synthetics; domestic cannabis cultivation and limited ecstasy production.
Here's an article about an International Dispute with the European Union (EU): https://www.express.co.uk/news/world/1283471/eu-news-switzerland-rejected-membership-bloc-twice-spt
When looking to solve problems with countries, look at their economy and study it.



submitted by jeskalana to u/jeskalana [link] [comments]

The 3 Kinds of Cryptocurrency Traders that are Kicking Your Ass

The 3 Types of Cryptocurrency Traders that are Kicking Your Ass

For an investor to outperform the market, someone else must underperform.That is a simple arithmetic fact.
In a fair and regulated environment, investors have equal access to information. Winners and losers are determined by whoever can make a better prediction.
But cryptocurrency is the wild, wild west. Market participants don’t play fair and they can profit at the expense of others.
Here are the three types of traders that are kicking your ass
Insider Traders
Under Rule 10b5–1, the SEC defines insider trading as “any securities transaction made when the person behind the trade is aware of nonpublic material information.” Insider trading is illegal in almost all traditional markets. In a research paper published in 2010, Qin Lei found empirical evidence that insiders were able to consistently beat the stock market.
Over the last year, we’ve seen many high-profile cases of insider trading in the cryptocurrency market.
Coinbase** — The Bitcoin Cash Incident**
On December 19, 2017, Coinbase tweeted it would add Bitcoin Cash to its exchange. But before the announcement was made public, both the trading volume and the price of Bitcoin Cash suspiciously surged.
On March 1, Coinbase was hit with a class action lawsuit. The full court document is available here.
South Korea Financial Supervisory Service (FSS)
Even regulators are being investigated for insider trading. Korean FSS officials knew ahead of time that new cryptocurrency trading restrictions would be put in place. Yet, they still made trades before the announcement.
The chief of the FSS, Choi Hyung-sik, confirmed on Jan. 18 that trading violations had occurred. Despite being caught red-handed, another FSS official responded that there was technically “no code of ethics or conduct for virtual currencies and therefore difficult to issue any punishment.”
The examples mentioned above are just a few high-profile cases. Insider trading runs rampant in the cryptocurrency space. Very often, prices and trading volumes will pump right before an exchange announces a new coin.
To many, insider trading is no longer a surprise but rather something that “just happens” in an unregulated market.
Whales
A whale is simply a colloquial way to describe an investor who is able to manipulate markets by mobilizing large amounts of capital.
Most crypto investors treat whales like the boogeyman. They’ve never had a personal encounter, but swear that whales are responsible for large market swings everywhere.
In some cases there is strong evidence indicating that they are right. Recently, academic research has come out showing that large-scale price manipulation does happen. Here’s an example from 2013, where a single entity was largely responsible for pushing the price of Bitcoin from $150 to $1,000 in two months. Another paper that came out last week shows how large amounts of USDT was used to manipulate Bitcoin prices.
Here are a few techniques whales use to manipulate price.
Stop-loss hunting
Whales intentionally push the price down in order to trigger stop-loss orders.Then they turn around and buy coins from these stop-loss orders for cheap and wait for the market to recover.
This strategy works well for coins with low trading volumes and small order books. With enough coins, whales can push down the price by introducing a slew of market-price sell orders.
To show how this works, let’s imagine a scenario:
The goal is to drive the price down past $100, which may be a psychological breaking point for some people and therefore a likely place for stop-losses.
One can do this by:
  1. Placing a market sell order totaling 10 BTC, to drive the price down from $150 to $110
  2. Keeping the sell pressure on, as investors naturally start selling their holdings.
  3. Watching people’s stop-losses go off at $100 without their knowledge. This drives the price down further.
  4. Buying up all the stop-loss orders at $90 and under.
  5. Waiting for the market to recover before selling the coins.
Short/Long Hunting
This is another form of market manipulation, but one that only exchanges can pull off.
Let’s see how this works on Bitmex for BTC.
The price just has move slightly in the wrong direction to trigger a liquidation. When liquidations happen, the investor loses their entire margin and pays a big fat fee.
Because exchanges know exactly what prices will trigger these liquidations, they have both the capability and financial incentive to engineer price movements using bots.
To be clear, there is no evidence implicating Bitmex. But it is suspicious that low volume trading periods are followed by a furious uptick in volume. When this happens, liquidation tears through leveraged positions, leaving traders with nothing other than a fistful of trading fees.
BitmexRekt tweets these liquidations in real time. You can follow them here.
Spoofing
Another common strategy whales use to manipulate the market is called spoofing. It means to bid or offer with intent to cancel before the orders are filled.The goal of spoofing is to send false signals to investors.
Here’s an example of using this strategy to profit:
This also works in the opposite direction. By placing large sell orders, spoofers can send bearish signals and lure investors into selling their cryptocurrencies at a discount.
Bitfinex’d investigates an entity known as “Spoofy” operating on the Bitfinex exchange.
Wash Trading
The last strategy we’ll cover is wash trading. In a wash trade, an investor takes both buy and sell positions. This may be done in order to:
Usually wash trading is extremely hard to prove, as washed trades look very similar to real trades.
On July 27, however, Bitfinex unknowingly baited wash traders during the Bitcoin (BTC) fork to Bitcoin Cash (BCH). At the time of the fork, all BTC holders were to receive BCH commensurate with the amount of BTC they held.
To accommodate for BTC held in margin positions at the time, Bitfinex had to finesse the numbers. To quote the announcement:
BCH will be distributed to settled bitcoin wallet balances as of the UTC timestamp of the first forking block, which is expected to occur on August 1st, 2017.
The token distribution methodology will be:
  • All BTC wallet balances will receive BCH
  • Margin longs in BTC/USD and margin shorts in XXX/BTC will not receive BCH
  • Margin shorts in BTC/USD and margin longs in XXX/BTC will not pay BCH
  • BTC Lenders will receive BCH
Due to the net amount of BTC committed in margin positions at the time of the fork, the above methodology may result in Bitfinex seeing a surplus or deficit of BCH. As such, we will be resolving this discrepancy in the form of a socialized distribution coefficient. For example, currently, there are more longs than shorts on the platform, causing a distribution coefficient of ~1.091 (Meaning that for each qualifying BTC a user will receive 1.091 BCH). The actual coefficient will be calculated at the moment of the distribution.
These rules turned out to be game-able. Because Bitfinex did not charge BCH to open short positions leading up to the split, one could simply purchase 10 BTC and short 10 BTC. This way, you could collect free BCH without any exposure to BTC price volatility. If BTC drops, the shorts cancel out any loss. If BTC soars, the profits cancel out the short positions.
On July 27, there were more longs than shorts on the platform and the distribution coefficient was 1.091.
However, on August 1, the distribution coefficient moved to 0.7757.
Leading up to the fork, an enormous amount of short positions were created. And instead of prices going down, which is what usually happens when shorts increase so dramatically, prices actually went up.
To make matters even more dubious, shorts dropped by 24,000 on a single tick right after the fork.
The manipulation here was so obvious that even Bitfinex had to acknowledge it. They issued an official statement about the wash trading here.
Pump & Dump Group Executives
So we’ve talked about insider traders and whales.
The final type of traders we’re going to talk about are the pump & dump group executives.
Pump & dump (P&D) is a form of market manipulation that involves purchasing a cheap asset, artificially inflating its price, and then dumping the asset a higher price.
The cryptocurrency market is rife with such groups. Here are just a few:
Here’s howPump & Dumps work
  1. P&D executives find a coin that is easy to manipulate and easy to sell. I.e. A coin with a strong community, advertising potential, small order book, and low trading volume.
  2. Executives secretly accumulate the coin over time while trying not to affect the price.
  3. These executives spread their pump signals to their inner circle members who pay upwards of $300 for the privilege of hearing early signals.
  4. The first wave of pumpers start shilling on signal groups. They tell gullible investors that a pump is about to happen because of “new website updates”, or “new partnership announcements”, generally whatever angle they can spin.
  5. As the price rises, the P&D executives start dumping their coins.
  6. Once the executives are spent, they spread the signal to their paid members to begin dumping the coin.
  7. The price starts falling and like a game of soggy cookie, the slowest players lose.
Cryptomedication wrote a great piece exposing BravadoGroup and several large influencers in the crypto space planning large scale P&Ds.
The reason I single out P&D executives is because they are the only ones that consistently profit. They have the most control and the highest amount of influence.So much so that members are willing to pay $300 for the privilege of being used as pawns. The buyers in signal groups are even worse off. They are falsely led into buying into a promising, undervalued coin, without any knowledge that it will soon be dumped.

So you’re telling me the game is rigged and I’m boned, what should I do?

The simple answer is to stop actively trading.The more you try to time the market, the more you open yourself up to opportunities of getting screwed over.
Speculative trading is a zero-sum game. In order for investors to outperform the market, they require others to underperform the market. In an unfair market, the average investor will more likely lose to people who have an unfair advantage and are gaming the market.
This is why I genuinely believe the average investor should just index the entire market. If you’re in it for the technology and the long-term growth, why bother speculating at all? Just hold a small piece of the entire cryptocurrency market. Indices has been proven to beat 95% professional traders in equity markets over a 15 year-period.
This is why I built HodlBot. It’s an easy way to diversify across the top 20 cryptocurrencies by market cap. It indexes 87% of the entire cryptocurrency market. Every week, your portfolio automatically rebalance so you’re always tracking the top 20 coins. It helps you get some quiet sleep while active traders lie awake, staring at their phones. You can read more about it here.
The best thing about a total market index is that it can guarantee market performance. Active trading, on the other hand, cannot.
I don’t mean to spread FUD by pointing out all the different ways traders are ripping investors off. I just want investors to know what exactly free and unregulated markets really mean. We’re not protected by the SEC or any other sanctioning bodies. While this comes with unbridled freedom and breathing room for rapid innovation, it also means all foul play is fair play.
It’s a brave new world out there filled with all kinds of splendor and danger. If you’re going to take your chances, please make sure you’re prepared.
submitted by haggenballs to BitcoinMarkets [link] [comments]

How to Place a Trade in Trading 212 - YouTube what is Free Margin Trading 212 - YouTube How to Trade in Channels How Easy it is to Invest with Trading 212 - YouTube

As long as you have no positions, your account equity and free margin are the same as your account balance. Let’s say you have a $10,000 account and you have some open positions with the total required margin of $900 and your positions are $400 in profit. Therefore: Equity = $10,000 + $400 = $10,400. Free Margin = $10,400 – $900 = $9,500 Trading 212 UK Ltd. has the right to change or increase its Margin Requirements at any time: In order to protect the firm and all of our clients, Trading 212 UK Ltd. may modify Margin Requirements for any or all clients for any open or new positions at any time, in Trading 212 UK Ltd.'s sole discretion. Trading 212 is a trading name of Trading 212 UK Ltd. and Trading 212 Ltd. Trading 212 UK Ltd. is registered in England and Wales (Register number 8590005), with a registered address 43-45 Dorset Street, London, W1U 7NA. Trading 212 UK Ltd. is authorised and regulated by the Financial Conduct Authority (Register number 609146). Trading 212 reported this review for breaching of Trustpilot guidelines. We are currently assessing the review in accordance with our reporting processes. Mike([email protected] com or+19852402623 16 reviews. Praesent nec erat convallis Lorem ipsum dolor sit amet, consectetur adipiscing elit. Welcome to the tradingapps.org review of the Trading 212 App & Platform. Before we jump into the review, I want to personally recommend Trading 212. It has received a 5* rating in the tradingapps.org rankings and is fully deserved. This top-class trading platform caters to everyone from beginners right through to advanced traders – you’d have to go a long way to find a better app for

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How to Place a Trade in Trading 212 - YouTube

In this video, Peter Martin discusses how simple it is to invest in shares using Trading 212's zero commission dealing service. Explore the opportunities for... Trading 212 is a London fintech company democratising the financial markets with free, smart and easy to use apps, enabling anyone to trade equities, currenc... Free margin is the difference of your account equity and the open positions’ required margin: When you have no positions, no money from your account is used as the required margin. David Jones takes us through all the steps of opening a trade in Trading 212. He also shows us where we can set a stop loss and take profit order to manage r... Now Open Your Fyers Trading Account with this Link & Get Options Selling Intraday 10x Margin, Futures Intraday 4x Margin & Equity Intraday 10x Margin. Brokerage Rs. 20 Per TRADE. More Videos

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