Market Perspective

The Impact of Bubbles – Week 2

Posted by on Jan 10, 2018 in Ned Massie, Perspective | 0 comments

Positive Force – The 2017 Tax Law: It is possible to simplify a complex law to understand its impacts. From that perspective, the new tax law will have a significant positive impact on the American economy. Because of the length of time it takes for any change in economic policy to be reflected in the real world economy, the bulk of the effects of the new tax law will not be seen until the fourth quarter of 2018 (October-December). But our American economy should enter 2019 with a full head of steam. The initial impact of the 2017 tax law will come from households having higher monthly income that they will spend in the economy on goods and services. The delayed but equally significant impact will come from capital that American companies will bring back from overseas into the United States. Both of these financial stimuli are huge and significant. Because of the enormous effort being made to confuse the public about them, I want to focus on the reduction in corporate tax that will enable corporations to bring money back into the United States. Some politicians are representing this as a negative when it actually is a huge positive force for our economy. Various estimates have been made that show a range of the capital held overseas by American corporations as being $500 Billion to $4 Trillion. Those same forecasts have debated as to what portion will come back into the United States. Let us assume for discussion purposes that only $500 Billion comes back into the United States in 2018. The American economy GDP today is approximately $20 Trillion. Even just $500 Billion coming back into the United States would effectively increase our GDP from $20 Trillion to $20.5 Trillion which is an increase of 2.5%. This is a huge economic positive force. Unlike misinformation from those opposed to the tax law and the talking heads reading their scripts, it makes no difference how the corporations use that money. They can either build new facilities, hire more people or they can just simply use this money to pay higher dividends and fund stock buy backs. In any event, the money will flow into the American economy and end up a positive economic force that grows our economy. Since it is flowing into the private arena not the government, there will be a multiplier effect of anywhere from 1.5 to 3.0, so $500 Billion will actually grow to $750 Billion or $1.5 Trillion of economic growth. That is enormous. It is critical to remember that land is the source of all wealth. Every product that we humans consume originates with land. Not all tracts of land are equal in quality and portfolio management requires every investor to hold some cash for liquidity. But historically, long-term the best investment is land....

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The Impact of Bubbles – Week 1

Posted by on Jan 5, 2018 in Ned Massie, Perspective | 0 comments

Introduction: A survivor of four recessions in my 45+ year career in real estate, I have learned the importance of the economic cycle and its impact on the land market. It is from that perspective that I watch the economy carefully. In this series of blogs, we will explore three very strong positive forces that will have a direct impact on land values in 2018 and 2019. But we will also cover three extremely negative forces that will impact the land market. Please understand that this is being written in very early January so the new tax law is so new that we have not received a complete briefing on all of its aspects. For that reason, we are focusing on the big impacts of the new law instead of any nuances it may contain. I hope that this series of blogs will help you make your plans for your land investments in 2018. It is critical to remember that land is the source of all wealth. Every product that we humans consume originates with land. Not all tracts of land are equal in quality and portfolio management requires every investor to hold some cash for liquidity. But historically, long term the best investment is...

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Is the Appropriate Color of Solar – Green or Yellow? Week 6

Posted by on Dec 14, 2017 in Ned Massie, Perspective | 0 comments

Conclusion: The current “solar farm” system can be summarized: Taxpayers pay higher taxes to subsidize “solar farms” so that as consumers they can pay higher rates for electricity receiving low quality electricity (called “dirty” within the industry). In short, this becomes another market place distorted by government and special interests. Our contacts within the solar energy industry expect solar farms of today to be seen as the equivalent of dinosaurs in the future. We have been told there are numerous new technologies that will replace solar panels. Ultimately every house and building will be a solar energy collector. But the current status of technology in the solar industry is to use solar panels, build solar farms, and depend on heavy government subsidies. The transition that will occur means many participants will get hurt, some very seriously. If you decide you want to participate, our recommendation is that you sell your land, not lease it. Then you can do a tax deferred exchange into another investment property. It is critical to remember that land is the source of all wealth. Every product that we humans consume originates with land. Not all tracts of land are equal in quality and portfolio management requires every investor to hold some cash for liquidity. But historically, long term the best investment is...

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Is the Appropriate Color of Solar – Green or Yellow? Week 5

Posted by on Dec 6, 2017 in Ned Massie, Perspective | 0 comments

Question Number 4: What is the approval process prior to settlement or commencement of the construction? Because the solar industry is subsidized by us taxpayers, there is a long approval process and intense competition for the subsidies. Not every “potential” solar farm will become a solar farm. To evaluate a proposal on your land, you need to understand the requisite process and make sure your rights are protected during that process. Please remember, the longer the approval process the more things can change that will adversely affect your transaction. In evaluating the approval process, inquire about the track record of the party with whom you are working. That will help you understand the probability of success. It is critical to remember that land is the source of all wealth. Every product that we humans consume originates with land. Not all tracts of land are equal in quality and portfolio management requires every investor to hold some cash for liquidity. But historically, long term the best investment is...

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Is the Appropriate Color of Solar – Green or Yellow? Week 4

Posted by on Nov 28, 2017 in Ned Massie, Perspective | 0 comments

Question Number 3: Over our 45 years of selling land, we have seen a significant variety of “trends”. The hottest, greatest, newest, best-ever items often a decade or so later turn out to be horrible, disastrous, and money pits. So we are cautious. Some of the literature that we have read about solar farms expresses concern about the hazardous waste that could result from the solar panel structures, the heat, and the chemical reactions that occur. Therefore, one of your four critical questions ought to be what assurances and documentation the solar farm developer can provide to you that prove that your property at the end of the lease will not be a hazardous waste dump. Hazardous waste dumps and land adjacent to them have little value and are significant liabilities. Perhaps you should read up on the “Superfund Law” passed in 1978 that makes the land owner financially responsible for clean-up of hazardous waste on their land. If the government has to do the clean-up, the government can charge the land owner triple the costs of the clean-up. It is critical to remember that land is the source of all wealth. Every product that we humans consume originates with land. Not all tracts of land are equal in quality and portfolio management requires every investor to hold some cash for liquidity. But historically, long term the best investment is...

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Is the Appropriate Color of Solar – Green or Yellow? Wk 3

Posted by on Nov 16, 2017 in Ned Massie, Perspective | 0 comments

Question Number 2: Who bears the cost of demolishing and removing the solar panels and related structures 30 years from now when they are out of date and no longer working? It is our understanding from talking with experts in the field that solar panels lose a little bit of efficiency every year. Therefore, at the end of 30 years they are highly inefficient and basically rubbish. But the cost of demolishing and hauling them away to a dump could be quite substantial. It might make the lease payments received by the landowner look insignificant. What has been represented to me as the cost per acre to build a solar farm is astronomical. In our conversations with one representative of a solar farm development company that was only interested in leasing land, we asked at the end of the 30-year lease who paid to remove all the solar panels and improvements that would now be worn out. The company representative answered that that would be the cost of the land owner. So be careful if you are talking about leasing your land to a solar farm developer. Understand who is paying for the demolition cost at the end of the lease, and the magnitude of the cost if you are responsible as a land owner. Be especially careful evaluating the future financial ability of that company to perform their obligations. It is critical to remember that land is the source of all wealth. Every product that we humans consume originates with land. Not all tracts of land are equal in quality and portfolio management requires every investor to hold some cash for liquidity. But historically, long term the best investment is...

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