1%-klubben (bostäder)

Den senaste tiden har det i media diskuterats mycket om ojämnt fördelade förmögenheter och inkomster i olika länder. Mina två senaste blogginlägg har också fokuserat på denna fråga och huvudskälet till detta är att inkomstfördelning påverkar konsumtion som påverkar såväl företags försäljning och aktiepriser som länders bytesbalans och växelkurser och räntor. Med andra ord tror jag fördelningen av hushållens köpkraft är av stort intresse för den som är aktiv på finansmarknaden.

Jag har funderat en del på fastighetspriser och deras kraftiga uppgångs effekt på fördelningen av köpkraft över landet och över generationerna. Inte minst är det intressant att studera vad det har för effekt på förmögenhetsöverföringen mellan generationer. Som ett första steg tänkte jag i detta inlägg visa hur rika de allra rikaste i Sverige, i bostadsmening, är. Idén till detta fick jag då jag häromdagen läste att du för att kvala in som ägare till ett av de 1% dyraste husen i San Fransisco måste punga ut med 35Mkr! Naturligvis är många hushåll kraftigt belånade så kanske är siffrorna här framförallt intressanta för just arvtagare (då de idag troligen ofta ärver nära obelånade hus av sina 40-talistföräldrar). D.v.s. hur mycket ärver egentligen de som ärver de dyraste husen i Sverige?

Vad jag gör är att jag tittar på alla villor, radhus och bostadsrätter som är till salu just nu i respektive tätort (enligt en välbesökt bostadssajt) och ser hur dyra bostäderna behöver vara för att ägaren (med nöd och näppe) ska kvala in i 1%-klubben respektive 5%-klubben på olika orter i Sverige.

Stockholms tätort 1% 18Mkr 5% 7.2Mkr
Lunds tätort 1% 8.4Mkr 5% 5.1Mkr
Malmös tätort 1% 8.7Mkr 5% 5.0Mkr
Ronnebys tätort 1% 5.9Mkr 5% 3.8Mkr

Vilka slutsatser kan man dra?
- Det finns rika bostadsägare även i småstäder.
- Stockholm ligger dock i en klass för sig när det gäller de riktigt rika (1%) bostadsägarna. Faktum är att San Francisco krösusarna bara är dubbelt så rika.
- Jämfört med hur mycket Medelsvensson har på banken så är det intressant att var tjugonde arv i en typisk tätort tycks ligga i 5-miljonersklassen (eller mer). Med två arvtagare ger det ungefär 2Mkr per arvtagare efter skatt.
- Jag vet inte om dessa siffror tyder på en ojämn fördelning eller ej. Vad jag tycker är intressantare är vad de beror på (dubbelarbetande inkomstmatchade par?), hur de kommer att utveckla sig framöver (bostadskrasch, italienifiering?) och framförallt hur fenomenet med en relativt stor grupp (ett par hundra tusen hushåll bara i Sverige) välbesuttna påverkar finansmarknaderna runt omkring i världen framöver (börsuppgång?).
- Naturligtvis ignorerar dessa siffror belåning. De tar förstås inte heller med annat ägande än primärbostaden. Och så är de ju bara ett snapshot taget från ett litet urval av tätorter.

An (un)friendly tax!

I wrote a short (ironic) piece in Financial Times last week that has attracted some attention. It was titled (by Financial Times) “Tax the socially wealthy, too!” You can find it here. From the title it is easy to draw the conclusion that I advocate more taxes. In fact, this is far from the truth. Instead, the letter was an ironic critique against the taxation of wealth, regardless of the shape of this wealth (i.e. savings, stocks, houses, social capital, human capital and so on).

What I try to do in my Financial Times letter is to give an illustrative example demonstrating the problems with wealth taxation. I suggest a way for social capital to be treated just like other forms of capital, and how those with a lot of social capital could give some of this capital (N.B. not money but social capital) to those who are poor in social capital. I exemplify this using Facebook since those with many Facebook friends probably have more social capital than those with fewer friends. In other words, some are socially wealthier than others. Ergo, if you have many Facebook friends, why not give some of these to those with fewer friends? In the name of fairness! Needless to say, such a tax could probably not be implemented successfully. The interesting question is instead whether a tax on peoples savings can be designed more successfully? And then we are back to the reason for why I wrote the article in the first place.....

Capital is Back!

In an interesting paper titled “Capital is back: wealth-income ratios in rich countries 1700-2010” Piketty and Zucman (2013) show how wealth-to-income ratios in rich countries have come back to the levels seen in the eighteenth and nineteenth century. Between now and then, i.e. in the post-war period, the wealth-to-income levels were much lower. Today, the ratios in countries such as US, UK, France and Germany are around 400-600%, which is similar to the ratios from 1700 to 1900, while in 1970 the ratios were closer to 200-300%! I.e., there is a clear U-shape in the wealth-to-income ratios in all these countries. The U is most extreme in Italy (250% in 1970 and 650% today) and least extreme in Germany (200% in 1970 and 400% today) and in the US (300% in 1970 and 500% today).

Interestingly, Piketty and Zucman (2013) argue that the low post-war ratios, particularly in Europe, appear to be a historical anomaly. They argue, and I cannot but agree, that the special circumstances of massive capital destruction and anti-capital policies destroyed a large fraction of the world capital stock during the two world wars. Most likely, this will not happen again.... Instead, low growth, substantial savings rates and low productivity and population growth will keep wealth-to-capital ratios high in the future. Of course, the form of capital is very different today then in 1800. Back then, half of wealth was agricultural land (today that is close to zero) while today the wealth is made up of housing, machinery and patents etc. But still!

My conclusions when reading this paper is:
(i) In the future, it will be impossible to ignore the importance of international cooperation on issues such as capital and wealth tax. Purely national attempts to tackle these tax issues are doomed to fail (capital flight to tax havens), with anti-globalization and anti-capital policies most likely stepping in their shoes.
(ii) Conditional on (i) above, I find the situation more problematic in countries such as Italy than in the US and in Germany. The (rather academic and theoretical) findings by Piketty and Zucman are also supported by my own personal observations after having lived in both Italy and the US: the much larger wealth-to-income ratios among my peers in Italy (where jobs are few and new graduates make 1000 dollars or so per month but a decent house costs 1 million dollars) than in US (where jobs are many and new graduates make 5000 dollars or so per month and a decent house costs 1/2 million dollars) are real-life parallels to the observations in Piketty and Zucman (2013). Another reason to avoid Italian stocks in the long run perhaps?

Ska man köpa aktier i folktomma länder?

Ett nytt ”Byströms Börstips” har publicerats i LINC MAGAZINE #5 2013 s.60-61. Börstipset kan hittas här och handlar om huruvida börsen går bättre i länder med mindre folk. Kanske en lite konstig fråga att ställa sig, eller? Jo, kanske det. Inte minst som jag inte känner till ngn teori som skulle kunna styrka antagandet att folktäthet skulle kunna vara kopplad till börsutvecklingen. Dock, avsaknad av teori innebär ju inte alltid avsaknad av empirisk evidens: ljusets böjdes t.ex. lika mkt vid dess passage kring himlakroppar innan Einstein kom ut med sin allmänna relativitetsteori 1916 som efter….. Dessutom, det är ju inte förbjudet att undersöka saker av denna typ bara för att en välgrundad bakomliggande teori saknas.

Hur som helst, min korta och ganska ad hoc mässiga studie visar trots allt tydligt att om historien kan användas som kristallkula, så ska du köpa aktier i länder där folk inte trängs med varandra! Som figuren visar har en likaviktad portfölj med aktier från de folktomma länderna Island, Ryssland, Norge, Finland, Sverige och Estland gått upp nästan 400% från 1996 till 2013 medan en likaviktad portfölj med aktier från folktäta Malta, Holland, Belgien, Storbritannien, Tyskland och Italien bara gått upp 100% under samma period. Fast å andra sidan, om du är ”contrarian” snarare än trendföljare, kanske du istället ska sälja aktier i de folktomma länderna …… Mer analysarbete krävs uppenbarligen! Läs mer här!

How much do you know about world business and politics? - Part II

I just had to do the FT Worldwise test again. My results this time was 625/800. A slight improvement (rank 222 out of 1007). The proof is seen in the nice figure above.... :)

I promise to not blog more about this until I reach at least the next level (expert?)........

How much do you know about world business and politics?

I came across a web-test testing my skills in world business and politics today. It is called FT Worldwise, is administrated by Financial Times and is hosted by Smarterer.com. Being a keen follower of financial markets I wanted to test my knowledge of more general business/political issues relevant to investors. This is of course particularly interesting to us who consider ourselves global macro style investors. Why don’t you test it yourself?

A nice feature which makes it impossible to inflate your results before sharing them to your friends (and employers….) is that you can choose to share your results via social media! Being a social media novice I actually managed to do that on my (almost) dormant linkedin site. For those of you who are not already connected to me I can reveal that my results were OK. I am evidently Proficient with a test result of 597 points out of 800. That puts me at rank 254 out of 995. I think I can do better ( :) ) so I guess I have to redo the test again as soon as Smarter.com lets me……

BIG DATA!

I think one of the more promising novelties in finance is the application of “big data” in financial research as well as in practical investment activities. The amount of data that is available in the world today is clearly huge. Most likely this is still just a fraction of the amounts that will be available in five or ten years’ time though. Similarly, the financial usage of (truly) huge data volumes, while definitely taking off already today, is still largely in waiting.

Personally, I have touched upon big data in my own research and, for instance, in the paper News Aggregators, Volatility and the Stock Market I collect news volumes using a certain well-known and web-based news aggregator. While this paper focused on news in English (currently the dominant language for web news) I have also looked at news volumes in Chinese (Mandarin, potentially a future dominant in web news) and the picture is the same, at least for the Hong Kong market; the link between stock volatilities and the amount of news circulating in cyber space is strong.

While my own research collects data from huge “big data” data bases the actual work does no really involve huge data volumes. There are, however, other (often commercial) applications out there that dig much deeper into the mountain of data. One interesting example is hedge funds’ and other traders’ attempts to use Twitter to detect profitable trades seconds before their competitors. To my knowledge, at least one company has entered into a partnership with Twitter to launch trading applications with access to the “Twitter Firehose” of public tweets (the entire stream of messages that flows through the system each day).

The company claims that it has given its users profitable buy/sell signals and if these claims are accurate, I think this is a great testament to the power of Twitter as a real-time news source (including gossip and rumors). One problem, of course, is that in breaking news situations, initial gossip is often wrong. People could also try to fool investors by sending out tweets that are actually false. We have seen some examples of this recently. I am certain, however, that software that learns to differentiate between trustworthy and false messages will be developed and, whether we like it or not, Twitter and other social media phenomena will almost surely be used much more by market participants in the future than they are today.

PS. It should be made very clear that I have never used Twitter myself and I am definitely not a fan of social media in general......