Author Topic: Investing in Illinois  (Read 3417 times)

woodstove

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Investing in Illinois
« on: May 21, 2019, 08:27:31 AM »
In a recent interview WEB made a remark about potential future economic burden of state debt, on business enterprises located in some states.  The interviewer asked if he had Illinois in mind, to which WEB responded that he preferred to praise specifics but only negatively comment on general categories of behaviour.   This news item on top of other downbeat articles re Illinois economy, which I am presently noticing in conversation on my current visit to Springfield.

However, as a contrarian value investor:  I am seeing opportunity, or rather opportunities.  Strengths quite visible to a visitor are well educated and young group of potential employees with good attitudes, excellent state buildings and private buildings in the capital area, Amtrack train service is excellent though some track improvements are in order (and underway, I heard). 

So I would like to hear thoughts of others on opportunities for investing in Illinois.

Here is a quote which I saw upon a statue of Abraham Lincoln: 

"Why should there not be a patient confidence in the ultimate justice of the people?  Is there better or equal hope in the world?" 

(From Lincoln's 1861 innaugural address.)

That expresses my take:  If the chattering crowd reading news reports from afar is anticipating disaster, and a personal on the ground visit discovers opportunities, then patience and trust, and suitable alignment of participation, will often be rewarded by the passage of time.

Over to you-all !

Cheers,
woodstove


gfp

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Re: Investing in Illinois
« Reply #1 on: May 21, 2019, 09:10:19 AM »
I can only comment on individuals, not businesses. I have clients from Illinois, and the overwhelming trend has been to give up Illinois residency as soon as possible. Between property taxes in the Chicago suburbs and the State income tax, Illinois is not a great place for wealthy folks to officially call home. Plus itís cold.

cubsfan

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Re: Investing in Illinois
« Reply #2 on: May 21, 2019, 09:30:37 AM »
I can only comment on individuals, not businesses. I have clients from Illinois, and the overwhelming trend has been to give up Illinois residency as soon as possible. Between property taxes in the Chicago suburbs and the State income tax, Illinois is not a great place for wealthy folks to officially call home. Plus itís cold.

Yes, no doubt - the high end home market in Illinois (beyond $500K) is in real trouble. Exactly what GFP said. The state tax burden is terrible and will only go up with our current government.  People with money want out - I live in the Hinsdale area (near west suburbs) - you can't believe the number of homes on the market -and nothing is moving. I've lived here all my life and want out. House has been on the market for almost 4 years.

I can only speak for the Chicago area.

PullTheTrigger

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Re: Investing in Illinois
« Reply #3 on: May 21, 2019, 09:41:35 AM »
I can only comment on individuals, not businesses. I have clients from Illinois, and the overwhelming trend has been to give up Illinois residency as soon as possible. Between property taxes in the Chicago suburbs and the State income tax, Illinois is not a great place for wealthy folks to officially call home. Plus itís cold.

Yes, no doubt - the high end home market in Illinois (beyond $500K) is in real trouble. Exactly what GFP said. The state tax burden is terrible and will only go up with our current government.  People with money want out - I live in the Hinsdale area (near west suburbs) - you can't believe the number of homes on the market -and nothing is moving. I've lived here all my life and want out. House has been on the market for almost 4 years.

I can only speak for the Chicago area.

I live in western suburbs as well. Anecdotally, I agree with gfp and cubsfan. Most people I talk to say the real estate taxes are ridiculous. I constantly hear people talking about leaving the state to lesson the tax burden. Many parents I've talked to have commented, "as soon as my kids are out of school, I'm out of here."  All anecdotes, but I hear very few people saying anything positive.

Castanza

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Re: Investing in Illinois
« Reply #4 on: May 21, 2019, 09:53:53 AM »
Quote
That expresses my take:  If the chattering crowd reading news reports from afar is anticipating disaster, and a personal on the ground visit discovers opportunities, then patience and trust, and suitable alignment of participation, will often be rewarded by the passage of time.

Reminds me a bit of the book "Better Angles" by Steve Pinker. Premise: The world is the least violent it has ever been, contrary to what media and people assume.

However, it's difficult for me to see value in Illinois because of all the pension and govt related issues. Even with a 30 year horizon it's difficult to justify. Look how long Detroit has been going downhill. Even if Illinois makes the right decisions and economic slowdown or recession could halt all efforts for a decade or more.

DTEJD1997

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Re: Investing in Illinois
« Reply #5 on: May 21, 2019, 09:55:21 AM »
Hey all:

I would add to this thread that a person would ALSO HAVE TO CONSIDER what county and city that they will be residing in and doing business in.

Here in MI, we have tremendous problems with CITIES that are going to have to go bankrupt to deal with pensions and post retirement benefits. 

I suspect that the situation is similar in IL.

Gregmal

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Re: Investing in Illinois
« Reply #6 on: May 21, 2019, 10:10:38 AM »
Has there ever been a positive turn around story? I haven't heard of one.

The reason there is not is because there is no incentive and the people in positions of power only react in in a reflexive manner to issues. There is no upside and all downside for the town officials and politicians. The problems are largely because they have it too good. So to fix them they have to remove the punch bowl from not only their office, but from the offices of all their colleagues as well. Which again is a very unpopular thing to do. So instead, they just milk it for all it is worth and then pass the problem to the next in line. Thats why these things never get fixed. The only half assed efforts to "do something" are raising taxes...

Spekulatius

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Re: Investing in Illinois
« Reply #7 on: May 21, 2019, 04:16:54 PM »
Has there ever been a positive turn around story? I haven't heard of one.

The reason there is not is because there is no incentive and the people in positions of power only react in in a reflexive manner to issues. There is no upside and all downside for the town officials and politicians. The problems are largely because they have it too good. So to fix them they have to remove the punch bowl from not only their office, but from the offices of all their colleagues as well. Which again is a very unpopular thing to do. So instead, they just milk it for all it is worth and then pass the problem to the next in line. Thats why these things never get fixed. The only half assed efforts to "do something" are raising taxes...

NYC and Boston are turnaround stories on an urban scale.

On Illinois, I agree, it seems a basket case. NY and CA at least have the high paying jobs to make it worthwhile to work their. I donít see they being the case in Chicago. If I were to look for contrarian bets in the heartland, I would look probably at something like Pittsburgh or other ares in PA.
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Crip1

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Re: Investing in Illinois
« Reply #8 on: May 21, 2019, 07:23:40 PM »
Background is that I took a corporate transfer from the Chicago area to the Dallas area at the end of 2005, leaving all of my family and my wifeís family there. Grandparents were not happy that we took two grandsons away but we made the move, unsure whether or not it was the right thing. Having made the move and having virtually all of our family and a number of good friends there gives us a little perspective.  Remarks, in no particular order:
∑         The history of politicians who have ended up in jail is remarkableÖjust insane.
∑         The two main reasons for Illinoisí development into a reasonably economically powerful state were agriculture and transportation. The former is a shrinking part of our economy and the latter has become far less important than it was when the easiest way to get things from the Atlantic Ocean to the middle-west of the US was through Chicago.
∑         The state is broke
∑         I left 14 years ago, moved to a larger house in Texas for less money. Property taxes were about 20% higher here than in Illinois but the absence of state income taxes more than made up for the property tax increase. After 14 years, according to Realtor.com the taxes at my old home are the same as they are in my new one. My new home has appreciated in value where my old home is not worth what I sold it for in 2005 and Illinoisí state income tax has almost doubled and Texas still does not have state income tax.
∑         Most of my family and extended family have indicated that the only thing keeping them there is family and/or kids in school. This is consistent with net population outflows experienced for years.
As a dyed-in-the-wool Chicagoan who still supports the Bears, Blackhawks and White Sox (Sorry Cubsfan, I hate the Cubs) and who will always call the area ďhomeĒ, it pains me to see this take place. We miss our family tremendously. And, Chicago is nothing short of a remarkable city. But, it would take a financial fortune to get me to move back from Dallas.
Iím a bit of a contrarian at heart, but there is very little about that state that compels me to want to invest there.
-Crip

Jurgis

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Re: Investing in Illinois
« Reply #9 on: May 21, 2019, 10:00:40 PM »
On Illinois, I agree, it seems a basket case. NY and CA at least have the high paying jobs to make it worthwhile to work their. I donít see they being the case in Chicago. If I were to look for contrarian bets in the heartland, I would look probably at something like Pittsburgh or other ares in PA.

There's a large Lithuanian community in Chicago. I have relatives there and have visited them recently. Chicago is great city: great downtown, arts, culture, eating. I'd probably be happy living there. Climate sucks more than Boston though and there's no ocean, but overall it's a good place to live. RE is way cheaper than Boston. Jobs are there. There's tech sector that might not be as big as Boston/NY, but not tiny either. Logistics/transportation is still there and large.

Pittsburgh is contrarian? It's got CMU and that's one of the hottest schools in tech/AI. I'm pretty sure there's tons of tech jobs based on CMU collocation/startups/spinoffs/etc.
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