Six weeks left of the year edition
This one kind of crept up on me. 2019 is almost over!
Not really sure what kind of year it has been. Not a spectacular one, for sure. No crowning achievements or anything like that. If anything a year of steady progress towards goals, with a couple of milestones reached.
Not a bad year, by all means.
In December we’ll be doing our annual progress blog posts. That will give me a chance to look back and actually see what we did 😉
Before then we’ll have some guest posts. It’s kind of funny, you wait all year for a guest post, then three come along at once. Otanoshimi!
This week’s posts
- I think this is probably going to continue for a while: Natural disasters force Japanese insurers to raise premiums again
- Now this is really interesting. Hope to see something like it in Japan soon: A $300 Billion Twist on Indexing Is Enticing Picky Investors
- Tower manshons are increasingly looking like a very bad deal: …the further they fall
- This seems like the psychologically correct thing to do: Bernstein Says Stop When You Win The Game
- Do you have yours yet? HOW TO BUILD A COMPOUNDING MACHINE
- Hopefully the public discussion will improve this: Public divided over treatment of the homeless during Typhoon Hagibis
- I agree with this. We just need to get over the demographic hump: There is no crisis in reproduction
This week’s books
- The Severed Streets, by Paul Cornell. This is the second in Cornell’s supernatural police thriller trilogy. Enjoyed the first one, this one is going well so far.
- Dispel Illusion, by Mark Lawrence. The third in Lawrence’s D&D-themed young adult fantasy/sf/adventure trilogy. Looking forward to this one once I finish TSS.
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I don’t understand why the Tower Manshons are turning into such bad investments. NYC has many much older buildings of that scale or larger that continue to be good investments. What is the difference?
That is a really good question. Maybe it’s a function of how they are funded? How the governance works? Anyone know?
I think the primary factor is the loss in desirability of tower manshons, in particular after 3/11 where many towers suffered structural damage and the elevators stopped working. Also recently some towers in Musashi Kosugi lost power and people had to use the stairs. No joke when you live higher than 10 floors up. So the occupancy rate has gone down which means less people paying the kanri and maintenance fees which means the repair budget is under funded which means the older towers gradually ghettoize themselves. My wife and I would never buy a tower manshon for these reasons and I am sure many people feel the same.
Secondly, there is very little land value tied to a condo so as the building depreciates in value, the value of each apartment also decreases (while the fees go up).
Finally, unlike other cities, Tokyo has actively building more manshons which leads to over-supply. In my area of west Tokyo there are a tonne of low-rise manshons being build where there used to be single unit dwellings. So for that reason also there is strong competition against the tower manshions.
Also, no mention of comparably large commercial buildings–any non-manshon tower. Some comparison/contrast might be useful.
I don’t know much about REITs here, but for those that focus on commercial real estate, they likely own large office towers. How are those REITs doing, and why? Maybe commercial buildings can be “fatter”, i.e., the proportion of floor space in a building with no windows can be higher?
As for #4, readers of “Stop When You Win the Game” should follow thru and read the comments, many of which provide good counterpoint to Bernstein’s thesis. Also, relying on the ‘safe’ investments he mentions might be possible with enough money in the US (or access to US mkts), but buying bonds (inflation-protected bonds!) in Japan won’t get you very far.
And his final note that most people need to use an investment advisor? Part of his rationale seems to be ‘go conservative, since you’ll likely flub it up’, so I guess this final suggestion fits Bernstein’s overall POV.