What To Do With Your Money?
Readers suggested a topic on investing today. “How about a conversation on what to do with your money? I have a fairly significant amount of cash at a couple of different banks. I have worked hard my entire life and I have been extremely conservative with my money. I am one of those folks who only owns one television and that was given to me by parents back in 2001. When I open my wallet people joke that George Washington has to rub his eyes. I left a bubble in New York city in 2004 only to find the same bubble in Florida!”
“Anyway, I am terrified that my cash is ultimately going to be worthless and all my hard work and frugality will be all for naught. I guess my larger concern is that a major bank will go under and the FDIC wont have enough cash to insure the funds. I have actually given some thought to taking like $100k out and buying a safe and keeping it in my rented townhouse. Is that insanity? I don’t want to buy a house. Half the people in the ‘upscale’ hood that I live in haven’t made a mortgage payment in a year.. Gold? Think there is a bubble there. Stock market? Legalized gambling. I am not even worried about getting a return. I am just talking preservation…if the SHTF….I want to be prepared.”
A reply, “My advice:
1) Forget about your ‘larger concern.’ The FDIC is not going to go under, at least in a way that will wipe out your federally-insured bank accounts, at least up to the amount of the guarantee. In case you have amounts in excess of the guarantee in any one federally-insured account, you will have to open another account to make sure all your savings are protected.
In a worst-case scenario, whose importance is diminishing as the FDIC ‘problem bank list’ shrinks, the Fed/Treasury would provide whatever support was necessary to make good on guarantees. I know this for a couple of reasons:
a) Did you notice how the GSEs supposedly collapsed in Fall 2008? Yet they continue to operate, funding a large share of new mortgage origination’s. They seem to be miraculously immortal, don’t they?
b) I had a CD in an FSLIC-guaranteed Savings & Loan institution in the late 1980s, which went out of business before my CD matured. The ‘failed’ FSLIC somehow made good on not only the principle on my CD, but full interest through the scheduled maturity date, which was paid to me well after the S&L went broke.
c) The Bernanke Fed has shown a willingness to withstand the political flack that came their way as a result of funding bailouts with a balance sheet expansion. There is no reason to not expect them to do this again on a discretionary basis, and a collapse of the FDIC would certainly qualify.
2) Inflation risk is a larger concern, given the appearance of unrepayable debt at so many levels, from households to governments to international obligations. You should consider possible ways to shield your savings against collateral damage which may eventually be inflicted on cash savings by the dilution of the currency base to enable repayment of otherwise-insurmountable debt burdens.”
Another said, “I’d take 10% of my money and blow it on stuff I liked and stuff I wanted to do. Take some great vacations. See places. Buy an nice TV and a really nice couch. Eat like a king. You’ve been frugal your whole life and yes, your money and/or health could disappear in the blink of an eye.”
From Reuters. “The National Association of Realtors reported that ten real estate markets are ‘leading the nation toward a general recovery and stability of the housing sector,’ but myriad problems are going to weigh down the housing market for months to come. The lingering malaise in the economy has triggered a new wave of defaults and foreclosures. After five straight quarterly drops, foreclosures nationwide shot up 14 percent from the second to third quarter this year, according to Realtytrac, in October.”
“It’s estimated that some 3.4 million foreclosed homes will be on the books of banks and mortgage companies by the end of this year.”
“Adam Holm has been looking to sell his three-bedroom Victorian house in San Francisco’s Potrero Hill neighborhood all year, but he needs one thing to happen first: gaming-company Zynga’s initial public offering. His place is within walking distance of Zynga’s headquarters, and he expects prices in the neighborhood to rise significantly in the wake of the IPO. ‘It seems foolish to put it on the market before when there are a thousand people down the street who are about to make a million dollars,’ said Holm.”
“Stephen Rossi wanted to move out of his SOMA condo and was planning to rent it out, thinking he couldn’t sell if for the roughly $760,000 he paid back in 2009. But when a neighbor with an identical unit across the hall got multiple offers on his place and sold it in October for $800,000 to an employee at a cloud-based software company, Rossi had second thoughts. Rossi sold his condo two weeks ago to a bidder who had lost out on his neighbor’s home, also for $800,000, and had backup bids of his own.’
“‘The market was stronger than I thought,’ said Rossi.”
The Deseret News. “Since 2000, five million people living in the suburbs have fallen into poverty, according to the Brookings Institute. The Midwest led the ranks, with poverty increasing in both cities and suburbs. In Illinois’ Cook County the median household income has dropped more than $8,500 since 1999. The foreclosure rate in Hanover Park Township, where Deborah Smith lives, is one of the worst in the county, surpassing even some of Chicago’s most distressed inner-city neighborhoods.”
“Aside from the signs — ‘Bank Owned,’ ‘Price Reduced,’ ‘Short sale’ — the neighborhood looks much the same as it always has, Smith said. A white rambler with a wrap-around porch, a two story with fresh paint and smart, green shutters, a six-bedroom brick house with shade trees and a two car garage — this is foreclosure in Hanover Park. But behind closed doors, things couldn’t be more different. Mixing with neighbors while her two boys participate in Boy Scout activities, she used to chat about vacation plans, sports and the latest toys her kids were begging for.”
“‘Now we exchange information about where the best food banks are located,’ she said.”
“France and Germany agreed on Thursday to stop arguing in public over whether the European Central Bank should do more to rescue the euro zone from a deepening sovereign debt crisis. President Nicolas Sarkozy and Chancellor Angela Merkel also demonstrated their backing for Italian Prime Minister Mario Monti, an unelected technocrat, to surmount Italy’s daunting economic challenges.”
“Finance Minister Jan Kees de Jager said he would prefer that the European Financial Stability Facility, the euro zone bailout fund, should be strengthened. But if the EFSF did not succeed, other measures would have to be considered. ‘In a crisis one should never exclude anything beforehand. In the end, something has to happen,’ he said.”
From 8 News Now. “Thousands of distressed properties go into foreclosure every single month in Nevada. But a non-profit is trying to connect homeowners to resources that could save them before it’s too late. Claudia Castillo and her husband wait their turn in line. The Castillo’s and their four children are in danger of losing their second home in this foreclosure crisis. Housing for Nevada organizers say they are not alone.”
“‘It’s caused a lot of headaches, stress, including depression, because we weren’t expecting to lose the home we actually wanted to save,’ said Claudia Castillo.”
“Evidence of borrowers who took on too much debt to finance housing purchases, and many other non-housing expenses in some cases, can be seen in the number of residential foreclosures. It is estimated there are in excess of 14 million vacant homes in the U.S. right now out of a total of 130 million homes. Almost half of the vacant homes, or 7 million, are not yet on the market.”
“While enabling borrowers to purchase homes is needed to ease the excessive inventory of available homes, doing so on terms that put the borrowers and lending institutions at unnecessary risk will likely lead to additional default challenges as the economy stumbles along. Increased defaults will put severe downward pressure on housing prices which in turn will inevitably lead to additional defaults and foreclosures.”
“When home loans are made on terms that barely enable the borrowers to meet the payments, any material change in their financial situation can lead to payment defaults and likely foreclosures. Positioning borrowers too near the financial precipice ultimately is a disservice to all parties involved in the lending transaction.”
Gold is NOT in a bubble, because almost none of the public has any. It is the only way to protect yourself against the otherwise universal hazard of counterparty risk.
What about silver, which is more accessible to the public? For years I’ve been hearing about how silver is desperately needed for this and that industrial application and the supply is being depleted, etc. And yet it just doesn’t seem to appreciate. Is there a future for silver in your opinion?
Silver has been used as money, but is not really money at present, whereas gold is. I expect the purchasing power of gold to go up enormously when the catastrophe hits in full force, as it did in Weimar Germany.
I would definitely have some silver dimes to use as money for small purchases in a total collapse. However, in my opinion any significant amount of money beyond one or two $1000 face bags of “junk silver” dimes should be in gold coins.
The only real value gold has to me is it’s status as the currency of choice when you really, really need to bribe someone. I believe that if a authority figure like the police or a boarder guard could be bribed then you have a better than 50% chance that gold would be your best bet. Also once you have over 20 or 30 pieces it starts to become a hassle to store it.
You ask a difficult question. I disagree with the gold and silver bugs. I think it would be good to hold some, but I wouldn’t go all in. Both have been in a “correction” recently. I am mostly in CASH. While I hate the Federal Reserve and its recent illegal actions to buy bad debts from the banks, in hopes of re-inflating the asset prices, the FED is not the only “central bank” on the world scene and much is going on overseas, both in Europe and China.
Europe has a debt crises and a unification crises going on in real time. China has similar problems with a collapsing housing bubble, seeing prices collapse in some areas nearly 70%.
Australia’s bubble, which didn’t exist, is collapsing, too.
How all this plays out is difficult to assess. But, whenever there are crises, people seek “safe havens”, just as you and I would like to do. As much as I don’t trust the Dollar, money is flowing out of European areas and into Dollars. Same for China.
The dollar, as a currency is going UP.
This puts pressure on the Stock market and Commodities, which includes gold and silver.
I bought one small house at a huge discount. We are in a depressionary cycle in real estate that is moving into the overall economy. Under such circumstances, since all the “balance sheet” money the FED has provided the banks has not yet made its way into the mainstreet business operations, I would not be quick to unload the dollars. You can find “bargains”, as the past few days have shown.
I stock up on storable goods and look for places to put my money besides the bank. Most of it is still in the bank, inspite of the ZERO return on the capital.
I expect the markets to continue to correct as the eurozone breaks apart, and the dollar rises relative to other ‘overvalued’ currencies. My advice is to sit on the sidelines with your money, buy some commodities and properties at very large discounts, and wait for the markets to finish their bottoming process before re-entering the stock or bond markets.
But, of course, no one ever takes my advice, so I don’t know why I bother to give any. It is, after all, Free advice, and you usually get what you pay for.
Good luck. Just know that we are ALL frustrated with the rigged money and banking system called the FEDERAL RESERVE.
Vote Ron Paul.
Nowhere in China have property prices fallen by anything close to 70%. In a few high-end developments in Shanghai and Beijing prices have been cut by 20% to 30% by a few developers. Country wide prices are flat.
Story link: Correction 62%.
http://www.wantchinatimes.com/news-subclass-cnt.aspx?id=20110711000005&cid=1102
Where do you see a 62% decline in that article?
I would definitely have some silver dimes to use as money for small purchases in a total collapse.
If there’s a total collapse, I’m thinking copper-jacketed lead might be a more valuable commodity than silver dimes.
“…but is not really money at present, whereas gold is.”
One of the primary definitions of money is ‘a medium of exchange.’ Gold certainly was this back in 1850, but is not today. I suggest you stop by your nearest CostCo this afternoon and count how many check-out counter transactions are conducted in gold, if you don’t believe me.
Or otherwise, refer to your other post on this thread about how gold cannot be in a bubble, since so few people own any. Saying gold is money and then turning around and saying that few people own any is logically inconsistent.
P.S. I personally have nothing against you or anyone else buying gold, but let’s agree that this amounts to no more nor less than a speculative investment in a special asset class.
“Saying gold is money and then turning around and saying that few people own any is logically inconsistent.” Few people own New Zealand dollars, certainly fewer than own gold. Is the NZ$ not still money, even in the US?
“Is the NZ$ not still money, even in the US?”
Yes it is. If you go to a grocery store in NZ, you will find yourself surrounded by people with NZ$ in their pockets, ready to use this money to buy groceries.
By contrast, nobody anywhere on the planet buys groceries with lumpy assets such as gold coins, or illiquid assets such as gold earrings. One needs to first sell assets for money in order to spend money.
Is this really that difficult to understand, or are you just pretending to be dense?
What about silver,…it just doesn’t seem to appreciate.
http://www.kitco.com/charts/popup/ag3650nyb.html
Socialists are not supposed to promote precious metals. The precious belongs to everyone. You are going against your philosophy.
Silly.
Silly.
He tried but it needs a lot of work.
Everyone’s a conservative and a capitalist when it hits close to home.
Not saying that’s right or wrong, just an observation.
Silver is used in film & photos. And that business is down quite a bit lately.
And that business is down quite a bit lately.
Yeah, to the point that you might have to explain what you mean by “photos” or people might think you mean something different.
“Gold is NOT in a bubble, because almost none of the public has any.”
Hmmm… did most of the public have Beanie Babies when they were in a bubble? Or comic books?
Should the percentage of the public involved or not involved in a bubble be considered a good indicator of whether a bubble exists?
Ask everyone(including my father) if gold was in a bubble at $800/oz at the 1980 peak. If you bought then, you lost ALOT of money if you held onto it or sold it.
“Gold is NOT in a bubble” <—-lmao. Gold…. the most manipulated commodity in world history.
” … the most manipulated commodity in world history.”
My vote for this title is for diamonds.
“My vote for this title is for diamonds.”
+1.
“My vote for this title is for diamonds.”
Government bonds, anyone?
U.S. NEWS
NOVEMBER 23, 2011
Capital Gains
Investors Bullish on Fed Tips
By SUSAN PULLIAM
Hours after an Aug. 15 meeting with Federal Reserve Chairman Ben Bernanke in his office, Nancy Lazar made a hasty call to investor clients: The Fed was dusting off an obscure 1960s-era strategy known as Operation Twist.
The news pointed to a boom in long-term bonds.
It was a good call. Over the next five weeks, prices on 10-year Treasury bonds soared, offering double-digit returns in an otherwise dismal year.
By the time the Fed announced its $400 billion Operation Twist on Sept. 21, the window for quick profits had all but slammed shut.
Ms. Lazar is among a group of well-connected investors and analysts with access to top Federal Reserve officials who give them a chance at early clues to the central bank’s next policy moves, according to interviews and hundreds of pages of documents obtained by The Wall Street Journal through open records searches. Ms. Lazar, an economist with International Strategy & Investment Group Inc., wouldn’t comment for this article.
The access is part of a push by hedge funds and other traders to get more information about the inner workings of government. Developments in Washington have become more important after the financial crisis in 2008 spawned new regulations and a stronger hand by lawmakers in businesses.
The words and actions of the Federal Reserve, in particular, have an enormous impact on markets, prompting the creation of new guidelines at the central bank to combat the perception of favoritism.
…
“Ask everyone(including my father) if gold was in a bubble at $800/oz at the 1980 peak. If you bought then, you lost ALOT of money if you held onto it or sold it.”
Seems to me that if you held it through today, you wouldn’t have lost a lot of money. You wouldn’t have a really great rate of return either, though…
An oz of gold in 1980 you’d be up roughly 225%. If you bought the S&P in 1980 you’d be up over 1100%.
I’m not endorsing either one.
“gold in 1980 you’d be up roughly 225%”
If you compared it to the cost of most things, I don’t think so.
($800)(225)/100%=$1800
“An oz of gold in 1980 you’d be up roughly 225%. If you bought the S&P in 1980 you’d be up over 1100%.”
As a drooling socialist, which would you confiscate from person a (holder of the 1980 gold) and person b (holder of the S&P 500 since 1980) and redistribute?
As a babbling ideological clown, nobody takes your posts seriously so why are you here?
Viewing Fox editorial content fills the viewer with bile, that he must vomit up someplace.
They don’t call the The Angry Channel for nothing.
We see a lot of people point to the idea of buying gold in 1980 at $800 per ounce. Did most gold buyers in those days wait until it reached $800 per ounce to buy?
You can see how ridiculous such a hypothetical “buy at $800 in 1980″ is. 99.9999% of the people cannot time the market perfectly to make good buys. But the same amount cannot time the market to make bad buys, when their purchasing power was at the worst ebb.
Talk about the people who dollar cost averaged into gold in the 90s and the last decade. They bought low. They are not concerned if gold prices will take a hit.
Likewise, a lot of nattering nabobs have been pronouncing the death of the stock market. Many socialists (OWS) would cheer it on. But the ones who have been dollar cost averaging into the stocks post-2001 are patient enough. Stocks will come back and beat gold eventually. It’s done that before and will do it again.
People are still drinking the Kool-aid and thinking they can time the market and that dollar cost averaging won’t do a thing to increase their wealth. They are wrong. Far wrong!
If I’d dollar cost averaged into the stock market over the last 10 years, I’d have been rewarded with nothing or worse, and it looks like that can easily go on for another 10 years, assuming the dissolution of the EU doesn’t catastrophically crash it.
Given the scale of a human life, that’s long term dollar cost averaging yourself to nowhere, whereas that gold I bought at 680 a few years back has more than doubled in value.
30 years ago, a little guy could put money in the stock market, leave it alone, and do well. Now you’re up against supercomputers making billions of trades to scrape the last meat off the bones of any profits that might materialize. That game is over. For the last 10 years stock market investments have been free loans to Wall St.
Gold is a silly thing to put so much value in, but it’s the least-preposterous looking investment at this point in history.
A GOOD friend of mine got $150,000 in 1980 for the sale of an old historic property in New Orleans ( a former commune with 3 remaining members). He bought a house here in Tampa, and some other stuff with the 50k and gave a “broker” the rest to “invest”, since he knew nothing about investing money.
The Broker put ALL $100,000 in GOLD, since it was on a trajectory higher. He took his money back after the broker lost half.
$100k invested, 50k returned.
He never took “financial advice” from “experts” from that time till now.
What!? There was a comic book bubble? I could have unloaded my collection. Dang!
Bubble symptom numero uno: Denial that there is a bubble.
non bubble symptom numero uno.
recognition there is no bubble.
Hmmm… same either way. Makes for good jibber jabber at least.
Numero dos: Never fall in love with an asset. (been there done that).
Primary symptom of asset-class love:
Strongly insisting to anyone who will listen that your special asset class is not in a bubble…
My current issue with Gold having done well with gold in the last decade is that Italy is the third largest holder of gold in the world at some 150 billion dollars. Me thinking they might just sell some of that gold once things turn ugly over there in the coming year.
http://www.kitco.com/market/
Platinum is ten times more rare than gold and is in strong industrial demand, yet is selling for less than gold. Hmmm….tangible assets or Bernanke Bux….
Remarked to people about how I should buy silver when gold was going up and silver seemed unaffected. Kicking myself in the balls for not buying it at 5 bucks an ounce.
As long as I can remember, platinum has been anywhere up to double the price of gold.
Platinum been left behind? Maybe it’s time to mention buying it….so I can kick myself in the balls over that when I don’t, too.
You are referring to above ground platinum. But there is twice as much Pt below ground as there is Au.
“…because almost none of the public has any.”
I was unaware that widespread public ownership was a necessary condition for bubble formation. Wouldn’t it be sufficient for central banks to either deliberately or inadvertently drive up the price?
COMMODITIES
NOVEMBER 18, 2011
Gold Lures Central Banks
Purchases Accelerated in Third Quarter Amid Debt Crisis
By RHIANNON HOYLE
LONDON—Total central-bank gold purchases in the third quarter more than doubled from the second quarter and were almost seven times higher than a year earlier as countries continued to diversify reserves, according to a World Gold Council report.
At 148.4 metric tons, gold buying among central banks was at the highest since the sector became a net buyer of the precious metal in the second quarter of 2009, according to the quarterly report.
Central banks and other official institutions, by comparison, had bought 66.5 tons of gold in the second quarter and 22.6 tons in the third quarter of 2010.
Central banks bought 148.4 metric tons of gold in the third quarter, more than double the prior period and nearly seven times higher than a year ago. Gold replicas from the Old Summer Palace in Nanjing, China.
“Central-bank buying was a highlight of the quarter. Statistics this year have been remarkable,” Marcus Grubb, managing director of investment at the gold council, said in an interview.
The report included a significant number of purchases that hadn’t been reported publicly and whose buyers couldn’t be identified due to confidentiality restrictions, the council said.
“This large number is a surprise,” said UBS analyst Edel Tully, who said her own tally of net purchases reported through the World Gold Council and International Monetary Fund totaled just 20.2 tons for the quarter. “This information is very bullish. And no doubt the market will be busy speculating on the identity of such buyers.”
…
Yes, without significant public participation you can’t have a bubble. It doesn’t have to be a majority of the public, but it does have to be in the public mindset, e.g., water cooler talk about “so-and-so making a ton of money on their [beanie babies, comic books, real estate, etc.]“. Gold doesn’t meet that criterion.
What?! Everyone and their mother is talking about gold. Every other commercial is talking about buying/selling gold. My own aging mother even mentioned gold.
“…without significant public participation you can’t have a bubble. It doesn’t have to be a majority of the public,…”
Can you cite the evidence on this, or would you otherwise be so kind to admit this is just your own personal opinion?
My personal opinion is that if a significant number of members in the rich world’s central banking cartel all decided to drive the value of one special asset class skyward through collectively buying unprecedented quantities with newly-created fiat money, they would succeed. And the resulting run up in the asset price would look like a bubble, walk like a bubble and quack like a bubble. Of course, that would not mean you would have to call it a bubble — you could call it a duck if you preferred.
Re Cash on hand:
Relax. You are one of the lucky ones. In your shoes, I would rent a small house on the South Island of New Zealand, and take 6 months to just savor the landscapes, the food, and the people. Decompress a bit. If at all possible, I would get in shape and do the Milford Track. Back in the US, I would brush up on my Spanish, then rent a condo in Buenos Aires for 6 months. Take in the city, see the Southern Alps, travel to Chile, Peru, Bolivia. The point: enjoy your money; spread it around a bit. Last December, my neighbor had a pain in his back. Massage didn’t work, chiropractor was no help. Finally, an orthopedic specialist gave him the bad news: spinal tumor, already spread, you have 3 months. Do you want treatment? [He took the treatment; died in three months anyway.]
Re Cook County poor:
First, deindustrialization; then, decommercialization; now the housing bubble deflation. The number of people is about the same, but the economic pie is smaller, shrinking, and our pieces increasingly under attack. It’s a common observation that we are all living with less stuff in our lives, less opportunity, fewer jobs, more obstacles. Fortunately, our infrastructure is holding up OK. Decent roads, reliable electric power and natural gas, fresh water. Could be worse.
First, deindustrialization; then, decommercialization; now the housing bubble deflation. The number of people is about the same, but the economic pie is smaller, shrinking,
There it is.
;-), t3.
Please hang around?
My father was an assessor for Cook County, and later worked as an independent fee appraiser. So the elements of the real estate bubble–fraudulent mortgages, bundling, securitization, regulator failure–have been dinner table conversation items for years. The value of HBB for me is that it serves to broaden the scope of the problem, and put real numbers to it. That’s why it (and Paul Krugman, and Bob Somerby’s incomparable Daily Howler) is on my browser’s most-visited URL stack.
As for the ongoing techno-economic implosion of the Midwest, I have had a front-row seat. Electronics engineer, telecommunications software, automated testing tools … I have tried to keep ahead of it all. But the tsunami that began with the closing of the steel mills (that some welcomed–less noise, smoke, traffic, etc.) inevitably spread to the steel warehouses, the electric motor factories, the metalbending and machine tool places, and so on. Whole industries collapsed and disappeared: catalog houses, television, printing (no Teletype!). Yesterday, I drove the industrial corridor surrounding WW Grainger in the North suburbs (Howard-Lehigh-Gross Point Rd area). Not only was it pleasantly low-traffic (used to be filled with semis and delivery trucks), but they are finally getting around to pulling down the abandoned factories in the area. The effect is eery, like you’re traveling through some war zone. And in a way, you are.
I don’t know the answers. The politicians seem clueless (Put in a casino!), or unwilling to help. The big military buildup didn’t help our area at all–the one smallish base we had (a WWII training facility) was sold to the real estate developers. But the financial fraudsters hurt us badly, and the commercial/industrial hollowing-out has handicapped our recovery. On the other hand, we are better off than Detroit, or Las Vegas, or Phoenix, or a lot of places. Most places are worse–I am not moving to Ireland any time soon. But my overall feeling is that it will be a long, slow, recovery that lots of folks will not fully participate in.
Oh my word…. your description of your area is remarkably similar to the thousands(maybe more) of mill and factory towns in the northeast and new england. The aftermath of deindustrialization and the post industrialization decline outside of the automaker zone is understated and seldom discussed. I believe the discussion is avoided because it’s just too uncomfortable for the older generations(retired) to admit that there is no economic opportunity for their own offspring. They seem to think that if they ignore the aftermath it will go away. I can promise you this disaster is not going away. It’s been avoided for 30 years and now it hit a wall. There are too many pissed off working aged folks that demand economic opportunity for themselves and their own kids.
Not wanting to start a divisive intergenerational war but I cannot wrap my skull around the utter selfishness and callousness of the retired class. Their contempt for the working class is evident in the language they use.
I suspect the average person is dumber than you think. They know what worked for them, and are only starting to realize that what worked for them then might not work for their offspring now.
Was talking to my retired dad about this. I mentioned that young people just want job opportunities like he had. He’s a very skilled machinist, started as an apprentice, and made good money from the 70’s through 90’s through work and the stock market runup, saved his money, and retired comfortably.
His response?
“F*ck ‘em”.
Dad is very blunt and honest, and I can’t help but think that despite the hand wringing and double talk, most of his generation feel the same way. It’s clear in how they vote.
He’ll be dead before his grandson is old enough to face the diminished opportunities, so I doubt he’ll ever get any insight.
You can’t fix stupid. That is this nation’s root problem.
Pretty much.
Stupidity + Democracy + Time = Fascism
Russ… your father is as mentally sick as mine. Pathetic, selfish, ignorant creatures they are.
His response?
“F*ck ‘em”.
Dad is very blunt and honest, and I can’t help but think that despite the hand wringing and double talk, most of his generation feel the same way.
Thank goodness we’re a “Christian” nation.
Good point. I wonder if his father thinks he’s a “good Christian man” and goes to church every Sunday like mine.
His response?
“F*ck ‘em”.
Dad is very blunt and honest, and I can’t help but think that despite the hand wringing and double talk, most of his generation feel the same way. It’s clear in how they vote.”
the Greatest Generation. Acually I think that generation is already gone we now have the ” ” generation as the old geezers. Next up the boomers.
Dad’s a boomer, and no bible banger. As reprehensible is it is, at least there’s no hypocrisy, just self interest overriding common sense.
AmazingRuss, your father must be an early boomer. A lot of us will not be retiring. And many of us worry about our children and grandchildren. My father is of the Greatest Generation and he IS clueless. He has been out of the workforce for 25 years.
“It’s clear in how they vote”
I am not sure how you deduce from a voting pattern that a particular generation feels like your father. Voting is a very low information process that is dependent on the choice of candidates more than anything else.
In some parts of the country, only one party fields viable candidates. My father chooses to register Republican so he gets to choose the best candidate in the primary for his local elections. He is much more centrist than the bulk of the Republican presidential candidates. They would probably accuse him of being a socialist.
Yeah, he’s 65. He worked really hard and was prudent, so he got to retire despite being a machinist. I base my voting comment on the people I have met that are in his age range. Universally within about 15 minutes of talking to them, they start barfing up content from The Angry Channel and blaming Obama for everything from the housing bubble to their lumbago. If I dare to point out a logical or factual inconsistency, I’m branded a socialist and told I’m responsible for all that ails the world… which is annoying because I’m pretty conservative.
My wife’s dad is of the previous generation, and he’s the same way, just a bit more addled. The other folks I have met that are his age have the grace to not trot that stuff out around somebody they don’t know well, but I have a strong impression they believe the same.
Great posts; please keep them coming!
Your advice is good for those people with no job but with a lot of cash on hand. For people who have good jobs and a lot of cash on hand, I suggest keep working and keep accumulating. I keep 10% of my assets in precious metals and rebalance time is in December (looks as though I will sell some of my gold again). Accumulate cash (T-bills), series I savings bonds, gold, developed market (ex-US) stock funds for contrarian reasons, and emerging market stock funds. U.S. will be last to recover from a stock meltdown.
When I find myself unable to get a job, I will consider your advice to brush up on my Spanish and I will check out Costa Rica.
‘While Mexico’s bloody war against the drug cartels is making headlines worldwide, there is a little-known fact that is sounding alarm bells among U.S. and Latin American officials: Central America’s drug-related violence is far worse than Mexico’s. Even Costa Rica, a country known as “the Switzerland of Latin America” for being an island of peace and prosperity in its region, is feeling anxious about the rising tide of drug-related murders.’
‘I was surprised to learn during my visit here that crime has suddenly become the No. 1 concern among Costa Ricans. The average homicide rate of the five Central American countries is 43 people per 100,000 inhabitants a year, more than twice that of Mexico. Honduras and El Salvador have the highest murder rates in the world, according to a new United Nations Global Study on Homicide.’
http://www.miamiherald.com/2011/11/12/2498119/never-ending-drug-war-moves-to.html#ixzz1ep2e4nMy
Thanks. I will stay home in the USA with its implied adherence to the Bill of Rights. Just takes one scare article to turn me away from foreign travel again. I haven’t even set foot in Mexico since 2003.
This is what I was saying the other day. Those who think they can take their US dollars and go live like a king in a 3rd workd country will be in for an unpleasant surprise when they learn that its unsafe to set foot outside their homes and that they aren’t even safe there.
My brother was in Mexico last month (in Cuernavaca) and he said that the overall sense of insecurity was palpable and unlike anything he ever expeirenced during all the years he lived down there. He was also telling me that most of his college classmates from Mexico have emigrated (most of them legally) to the USA to get out of Mexico, as they fear for their safety. We have a Mexican cousin who is in the process of trying to get a sponsored transfer to the US via her multinational employer.
Everyone who can is getting out of Dodge.
Picture any US urban center when Uncle Sam is forced by fiscal reality to turn off the Free $hit spigot. It won’t be pretty.
Picture any US urban center when Uncle Sam is forced by fiscal reality to turn off the Free $hit spigot. It won’t be pretty.
You need to travel around more. The poor no longer live just in the urban centers. Section 8 vouchers have spread them every where.
WELL. So much for House Hunters International. Those folks loved going to Costa Rica for their retirement castles.
Some of them are already there, and when they found out that crime is increasing (the information Ben posted above), their smug grins turned upside down.
The U.S. constitution is only a rag written as a contract that, as Lysander Spooner said, applied to only those people who agreed to it. Not to later generations. Aside from that, it’s like a fiat money system in reasonable balance, like Milton Friedman’s Monetarist economic ideas if implemented. However this same constitution is taken seriously. Americans love the free speech, the right to worship their religion or the right to not have religion forced upon them. The Bill of Rights is what sets us apart, and polarizes us, but I cherish that we can be polarized in politics, because that means we have free speech.
What other nation has a Bill of Rights? This includes the RKBA (and I am a proud gun owner).
What other nation has a Bill of Rights? This includes the RKBA (and I am a proud gun owner).
Mexico does. They are called “Las garantias individuales” and they cover pretty mush the same stuff our BofR does.
We need to stop falling for our “American Exceptionalsim” claptrap. We might like to crow that we are the “land of the free” but your local SWAT team can kick your door down with a no knock warrant and if you are armed when that happens they will shoot you dead.
Mexicans do not have the legal right to bear arms. Which explains why entire communities are held hostage to murderous cartels and freelance thugs - who have no difficulty acquiring guns, and rarely face consequences for getting caught with them - as well as corrupt officials and police.
http://www.borderlandbeat.com/
Actually gun ownership is legal in Mexico.
Investing today? Ha. There is no safe investment. Anything that may have looked like a value has already been sniffed out by the PTB and speculated to high heaven.
City-metro real estate: we know about that.
Rural real estate: overpriced.
Commodities and oil: overpriced relative to demand — too late to get into those.
Gold: wild card. People on HBB tell me to buy gold and people on the street corners tell me to sell gold.
Blue chips: are roller-coastered by Wall street, K street, Downing Street, Arab Street, and have no relation to goods and services on Main street.
Politicans: sold out and backordered for about a year.
Microprofit stocks: exploited with over leverage by Golden Sacks and their supercray microtrades. Retail consumers can’t compete.
Emerging markets: generally means you’re encouraging pollution and outsourcing and fueling bubbles. Too much capital needed anyway.
Canned peas and AK-47s: seems like the best bet, but seems extreme
“Investing today? Ha.”
Hence cash, and cash flow (i.e. a good paying, secure job).
If all the investment vehicle alternatives to holding cash are fully-priced then the path of least resistance for these fully-priced investment vehicles is down.
This would not necessarily be true in an expanding economic environment but it is certain to be true in a contracting one.
Just happens to be that I’m selling my biggest gainer, gold, in a few weeks and will be buying more of my biggest loser, T-bills.
Canned peas and AK-47s: seems like the best bet, but seems extreme
On the extreme side, if you like to drink cheap or mid priced liquor I read that having a lot of small bottles of it would be a great barter asset if SHTF. The problem is, is that the small bottles are more expensive so maybe a grand or two “invested in 1.75 liter bottles of liquor and a bunch of smaller empty water bottles or jars in storage would make a good plan. And then you could be drinking it too if S does not hit the fan.
(And you could pass it out during family holidays and talk politics)
In SHTF circumstances, I would think that sealed brand name products would command a bit of a premium, due to the perceived assurance that you were really getting what you paid for.
Otherwise, perhaps some distilling equipment would be the way to go…
Maybe both, to cater to both the have and have-not clientele. However, if the biofuel really did hit the wind turbine (like in the movie The Road) I would go for the guns and ammo — and save a couple bullets for myself.
If things went “The Road” I am confident I could commandeer plenty of weapons for myself without even paying a penny. I certainly don’t want to ever have to do that, but I know I am capable. I really don’t believe something like that is going to happen.
I love the worst-case-scenario, nightmare, dystopian future prospects for this country. A lot of eggs will get broken, and the omelette will still end up tasting like sh*t
The squad is banking on 7.62×39 rounds as a substitute for fiat currency. They are cheap and fast and get the job done. Silver dimes and quarters may work too.
Picture 100+ million fat, diabetic, armed and angry Amerikans realizing what game over means when the fossil-fuel dependent, just-in-time logistics system collapses and they can’t get their high-fructose-corn-syrup addict fix off the shelf at Krogers or Ralph’s anymore.
I want chaos and anarchy. This measured and controlled decline is so boring…
I’d much prefer Americans coming to their senses, but the prospects for that look bleak. Every Black Friday we get treated to yet another spectacle of, as “Tyler Durden” of Zero Hedge puts it, of “pure unadulterated ignorant mentally deficient bottom feeding fat-saturated sheeple mania.” Once the Democratic Party, their natural home, is unable to accomodate both their ever-escalating entitlements-for-votes demands AND the banksters’ demands for ever-more-brutal “austerity” to cover the kleptocrats’ bad bets and fat bonuses, these chromosomal disasters are going to react very badly, I’m afraid.
“pure unadulterated ignorant mentally deficient bottom feeding fat-saturated sheeple mania.”
It sounds funny,I can even laugh at that statement, but from my point of view, the black friday shopping crowd is a bunch of moms and dads that are thrifty shoppers that are providing for their families Christmas. I also wonder if the black Friday haters are a bunch of childless people who don’t understand how much effort parents exert to give their family a wonderful Christmas (their families biggest holliday of the year).
My wife and I are serious black friday shoppers, we usually spend $600 on that day. We buy toys and clothes for our two kids, toys for the neices and nephews and pajamas for all the kids. We also got a 40″ hdtv at Wall Mart for $248. Best of all 70% of all the Christmas shopping is completed on one day.
My wife and I usually spend $1,000 -$1,200 on Christmas every year for our family, and like most families it is our biggest holliday.
This year we did black friday shopping at Wall Mart and Target, other years it was K-mart and Kohls. One year it was JC Pennies and Sears. Where ever I go from my point of view black friday is moms and dads providing for their families biggest holliday.
I love christmas, including the Christmas Day feast, the presents, the cards, Mass on Christmas morning…everything!
The kids look forward to it all year long, and I want them to have a great Christmas.
I want you and everyone reading this to have a great Christmas, Merry Christmas everyone!
http://www.thepowerhour.com/news/items_disappearfirst.htm
Somebody’s already thought through that “what to have if the SHTF” list.
I like all this negativity. I hope it is prevalent in all developed countries because this means the contrarian thing will happen. The prospects in 1980 were dim…until 1981. No one in his right mind in the late 1970s would have bought stocks or the vanguard 500 index fund (which started up in August 1976). If you put $5,000 into that fund in 1976 you would have $140,000 now without putting in another dime. If you put $5,000 per year into that fund for the ten years from 1976 to 1985 you would have over $1,000,000 in the balance. This was all possible for young boomer couples.
‘all this negativity’
I just don’t trust the lame-stream media. When they start pushing some line, I look between the lines:
http://www.telegraph.co.uk/news/politics/8917077/Prepare-for-riots-in-euro-collapse-Foreign-Office-warns.html
‘As the Italian government struggled to borrow and Spain considered seeking an international bail-out, British ministers privately warned that the break-up of the euro, once almost unthinkable, is now increasingly plausible. Diplomats are preparing to help Britons abroad through a banking collapse and even riots arising from the debt crisis.’
IMO, this is to condition people for the PTB plans. Notice how they usually sugar coat everything, and all naysayers are ‘doom and gloomers’. Then suddenly they have a problem and it’s non-stop potential Armageddon (unless they get more power that is).
Well noted. But I question whether it’s possible for this MSM to really have one voice. I am skeptical against conspiracy theories.
Even when I was a government employee, I was surprised to find that (gasp) a great deal of them vote for entirely different political parties and candidates, some are very religious, some are atheist like me, some fly the American flag on patriotic days, some invest in stocks, some buy gold. There is no “one voice” situation.
We all fall into the trap of collectivism - imagining that any person with a few characteristics of one group, must have all characteristics that are generalized about that group. Harry Browne warned about the “Group trap” in his “How I Found Freedom in an Unfree World.” Timeless.
I know where you are coming from.
http://www.gahanwilson.com/ithinkiwonweb.jpg
‘whether it’s possible for this MSM to really have one voice’
There are a handful of media corporations that control most of the media outlets. These same corporations are mostly involved in globalist trade. The media sections of their holdings are tiny.
For instance, I’ve seen a lot of violence against OWS protesters on the internet. Have you seen much in the MSM? I’m not saying they have one voice, but there are more subtle things involved in shaping “public opinion.”
Like “conspiracy theories.” If joe 6 pack says it, and it differs from the “conventional thought,” it’s a conspiracy theory. If Colin Powell gets up and starts talking about mushroom clouds, it taken seriously. So seriously, we’ll go to war over it. If this joe 6 pack is proven right or wrong, he’s still a nut. There were no nukes, many thousands of innocent people are dead, and Colin Powell is currently on a speaking tour, raking in the loot.
Here’s a conspiracy theory for ya: recently I heard on NPR that a respected economist had taken over the Italian govt. No mention that he is unelected, and had worked for Goldman Sachs and the ECB. Turns out it’s the same with the new ruler of Greece. Funny how these Goldman guys turn up everywhere, huh? And now they have the power to reduce pensions, impose austerity measures, pretty much anything.
It’s to prevent Armageddon, we’re told. The unthinkable. These are what’s called word clouds. Like invading Iran. It’s repeated in the MSM so often and with ever more hysteria that it becomes almost a certainty in the public’s mind. Remember this happening before the Iraq invasion?
It’s no conspiracy that the EU “technocrats” are insisting that member countries give up even more sovereignty if the “crisis” is to be solved. A crisis of the EU’s own making. Now that’s problem-reaction-solution in action.
Good grief! What economic theory explains all this? Do they teach this stuff at University of Chicago or Stanford? Is there a common denominator(ideology) all these technocrats share? Time to throw out Adam Smith’s invisible hand and Hayek’s “spontaneous order” ideas.
‘Do they teach this stuff at…’
They teach it everywhere. Have you ever heard some professor pronounce the “nation-state is obsolete”? Why, you are a knuckle dragging fool if you don’t believe that.
Another example of the subtle opinion shaping; the media never mentions that Iceland told the bankers to get stuffed, and no Armageddon. As a matter of fact, I believe they just got a credit upgrade.
The “nation state” sounds like a ideology I would put under the topic of political theory. Game changer this time is the wild card of global instant communication and the internet. It’s really going to challenge the gate keepers to manage things.
Have you ever heard some professor pronounce the “nation-state is obsolete”?
I did, more than once while I worked on my useless MBA. We were also told that giant super corporations (say Walmart-BP-IBM-ADM-etc.) would someday issue their own currency. It was then that I understood that the plan was to replace the nation state with corporations.
They are going for the gusto, all the marbles so to speak. We will have no rights and be their property.
It’s scenarios like these that make me believe that Biblical prophecies might be onto something.
This guy has been on to them all along:
http://www.youtube.com/watch?v=13j_MChsDqQ
“Iceland told the bankers to get stuffed, and no Armageddon. As a matter of fact, I believe they just got a credit upgrade.”
Iceland could afford to go BK because there was still enough money in the EU to swallow the losses. Now that the PIIGS are out of their poke, the EU is facing a run on the bank; even the printing press can’t work fast enough.
If there’s going to be a panic, be the first one to panic…
blue (”red” really) star, that link is supposed to show me as a war monger. You are an idiot since you have seen my posts in support of Ron Paul, who is the only non-interventionist candidate.
I am a non-interventionist. Your link is as retarded as you.
Oxide is not retarded. He adds much to the discussions in here. He is, however, blind in the left eye, in that he thinks the corrupt, sleazy DNC is somehow superior to the equally corrupt, sleazy Establishment GOP.
Gee, and here I thought the media was touting and romanticizing OWS, and suppressing the violence of the protesters themselves.
Ben,
I’m currently reading “House of Cards,” about the collapse of Bear Stearns (and the massive swindle of US taxpayers by the Federal Reserve, Treasury, and JP Morgan, aided and abetted by their fluffers in the media and on Capitol Hill, especially Chris Dodd). Anybody who buys the shill’s cooing of “Forget about your ‘larger concern.’ The FDIC is not going to go under” should read that book. Our financial system truly is a house of cards and a massive confidence game.
Which the sheeple will figure out only after it’s way too late.
…if at all.
So true Sammy and the Level 3 assets will be the catalyst.
The Fall of the House of JP Morgan will be spectacular, when their derivatives exposure blows up on them and the planet.
“If you put $5,000 into that fund in 1976 you would have $140,000 now without putting in another dime. If you put $5,000 per year into that fund for the ten years from 1976 to 1985 you would have over $1,000,000 in the balance. This was all possible for young boomer couples.”
In 1976, minimum wage was $2. Even a childless couple would have had trouble saving $5K per year if they were both earning minimum wage.
Median household income was $11,960 (http://www.davemanuel.com/median-household-income.php). While it may have been possible for that median income couple to save $5K per year from 1976-1985, it would have been difficult and would have meant postponing family and home acquisition.
As a single, frugal, college-educated, above median income earner, I was able to save $5K between 1974 and 1979.
How many people are willing to forego living to save for a retirement that may never come?
I put 10K into a Vanguard S&P 500 index fund in early 2002, thinking the market had dropped all it was going to. I cashed it out this year. Net result? I got 11K back. I could have done better in a savings account. Most of that time, the account was negative.
It’s like picking horses. Easy to identify which one would have won, after the race is run.
Bill,
The early 80s were miserable. Inflation was still fairly high while interest rates were sky high and unemployment higher than today. I benefited from the high interest rates but my sister with a 17% mortgage was being killed.
Saving $5,000 a year was possible for many higher income couples but many college grads in 1976 were making less than $10,000/year before taxes. A couple with the median income of $12,700 in 1976 would rarely be saving that amount per year.
What about mutual funds, cash equivs, bond funds etc at places like Vanguard or Fidelity?
I know they’re not (usually) guaranteed, but could these places go TU?
Vanguard is all investor-owned, which is a cool thing. Off and on I ponder the same things. These funds are all electronic, albeit saved and backed up in secure areas (presumably). A cyber attack would be the bigger threat than government. I do think it’s all paranoia that we will lose 100% of our wealth from cyber attacks. There still are a lot of safety mechanisms.
If you have to worry about all that, then the only safe things are cash under your mattress and a chest of gold coins buried in your back yard. I am confident we will never get to that point. May as well swallow the same Kool-aid the Jonestown folks swallowed if we are at that point.
You know, it does look more and more as if there is going to be a collapse of some sort.
In that case a secure home, effective weaponry, access to food, fuel and clean water, these all sound like good things to have. And friends.
It seems like 1979. I watched a Phil Donohue show where he had survivalist guests in flak jackets warning about the end of good times.
I guess we are not really at 1979 yet since I haven’t seen a resurgence in survivalism. When the media starts writing about survivalists, that’s when you know the end of the gloom and the begin of boom is at hand.
Stock mutual funds are the place to be for contrarians. If I was in my 20s I would be 80% in stock mutual funds.
There is a big differnce between now and 1979. The debt owed back then was nothing compared to today and we still made most of our stuff. Back then I believed that we would eventually bounce back. I harbor no such belief today.
I guess we are not really at 1979 yet since I haven’t seen a resurgence in survivalism.
You must not be looking very hard, Bill.
http://stlouis.cbslocal.com/2011/11/23/survival-shop-reports-jump-in-sales-to-people-preparing-for-possible-collapse/
Thanks for you URL. This is a sign that the economic bad times are about to end. Market cycles. I think 2013 will be the start of great times, particularly for equities.
Didn’t equities remain in the toilet for decades after the GD?
23 years. But that is only if you were foolish enough to go from 100% cash to 100% stocks on black Tuesday (or whatever day it was) in October 1929 and never invest another dime again in the stocks.
It turns out that those who dollar cost averaged during the 23 years (both decades of the 1930s and 1940s) did reasonably well.
This teaches a lesson to never be 100% in any single asset class. 80% at the most if you are in your 20s. If you have several years worth of cash savings, you can shift an equal amount into stock index funds once a month for several years and buy lots of shares when the indices are down and fewer shares when the indices are up.
S&P 500 yield is about 2%. My T-bills yield about 0.015%.
This is a sign that the economic bad times are about to end. Market cycles. I think 2013 will be the start of great times, particularly for equities.
Hope you’re right, Bill, but I think an economic collapse that will dwarf that of the Great Depression, coupled with prolonged socioeconomic unrest, is much more likely to be in the cards. We’ve let way too many liabilities pile up for any such cheery ending.
“80% at the most if you are in your 20s. If you have several years worth of cash savings, you can shift an equal amount into stock index funds once a month for several years and buy lots of shares when the indices are down and fewer shares when the indices are up.”
How many 20-somethings have several years worth of cash savings and enough to invest?
If you knew that you were going to be wheel-chair bound by MS at 50, would you save for retirement in your 20s? I have a HS classmate in that situation.
At any point, you have to weigh the tradeoffs of saving for the future or spending now. There are things you will be able to do now that you won’t be able to do later.
I was at the gun shop yesterday picking up a new toy and the place was hopping with activity.
Could have been due to the holidays.
All i want for Christmas is a new Carbine.
Could have been due to the holidays.
Sigh, if only my friends and family were cool enough to buy me such toys for the holidays :/
Instead I had to buy my own propane camp stove from REI this week. Building out the home disaster kit…
Current inflation rate.
Note - “All Items” price increase is 3.5% over the past year. That’s what I personally look at. The interest rates I get are less than 1%. But it’s a relatively slow and at least predictable decline.
My focus right now is limiting principal decay rather than actually getting any interest.
Stocks - ha. Instead of ‘turtles all the way down’, it’s a buying opportunity all the way down.
Bond funds - with a debt crisis? With Bill Gross saying the bull market in bonds is over? Ha.
CD’s - some interest rate, but less than the All Items increase. At least somewhat predictable I guess.
Under normal circumstances, real estate is an inflation hedge, but in an overpriced, declining market, not so much.
Had I thought to buy gold before the runup, I would have. Now? Any investment with any hint of return is going to attract a tremendous amount of cash. So IMHO, my sense is that it might be at a new plateau pending the resolution of this debt crisis. After the end of the gold standard, gold skyrocketed and then pulled back a little. Now with the world’s central bankers desperately wanting to print money, it’s skyrocketed again. With inflation, they risk utterly collapsing the world’s economy versus with austerity, they have a controlled burn. But for some - many? - short term solace trumps long term concerns.
You should read what you wrote. You say you should have bought gold before the runup and imply you don’t want to buy gold now. You imply that its price is too high.
You then go and say bonds and stocks and CDs are all bad to park your money in.
I can never get over this type of writing. Any experienced investor knows that when some assets reach peak heights, they start to be sold off to lock in gains and the gains will be used to buy weaker asset classes.
This is precisely what I do once a year. I’m selling off my gains and buying more of my losers. Losers for right now are T-bills.
Bill, what are your percentage allocations right now?
53% equities, 11% precious metals (all physical ownership) and 36% government securities (including cash, treasuries, CDs, and municipal bonds).
53% Ayn Rand “philosophy” having no relationship to history, anthropology or societal reality, 11% I’m a cowboy (but I don’t got no cows) and 36% Strict Constitutionalist (but not when it comes to my feedbag).
I never invest politically. If I did, I would be 100% in precious metals. Investing politically is retarded.
That would be 11% Ayn Rand, since she was not keen on stocks and was a gold bug. Your extra words are riotarded of course.
Is this strategy just relying on the ‘greater fool’ though? If it works, that’s fine. If it works.
I feel like stock investing is like driving through heavy traffic (something I do all the time). There is one slower lane - the right lane. But the other three lanes sometimes move faster than each other, some slower. There is occasionally someone who surfs the lanes till his exit who gets ahead absolutely. But usually, we all catch up to each other at some point and the fast guy becomes the slow guy.
What’s “high” - well, something reaching historic highs. What’s low? Traditionally low P/E’s, if I’m picking stocks (which I never did, just mutual funds). Are P/E’s historically low? Or just P/E’s for certain asset classes?
I think people who got started investing in the mid 80s enjoyed a rare bull run. I recall a chart which showed the stock market didn’t reach its pre-Depression highs till 20 years later. And then it wasn’t just constant run-ups, there were long periods of flat returns.
Interest I understand. The stock market - just seems like trying to outwit the rest of the market. And I don’t see myself being able to do that consistently. Some can, perhaps.
And for me, the bottom line is, it’s like a poker game - you don’t make money till you cash out your chips.
Usually (exception was the “cooked books” scandal of the late 90s, early 2000s) the numbers do not lie. Earnings per share, revenue per share, income. I’ve seen companies that have these gains year to year but the general market is down because of sentiment. Even so, those are the stocks to consider. I look at book value per share versus price. I also look at current price versus 50 day EMA and 200 day EMA. I look at earnings reports. I look at debt to equity ratio (depends on which industry) and consistency in dividend growth if applicable.
I have failures and successes. But my equity investing strategy is to primarily be into stock mutual funds because of (what did you expect?) market cycles. Market cycles are like a slingshot being pulled back in bad times. You cannot have several years of excellent earnings reports during a market downturn without a major recovery.
You cannot have several years of excellent earnings reports during a market downturn without a major recovery.
Unless there are net outflows in the markets, or there is a structural change/adjustment in the markets.
“…it’s a buying opportunity all the way down.”
How does dollar-cost averaging work for an asset whose value steadily trends down over the course of decades?
It’s called “averaging down”, and is generally not a recommended investment technique.
I am a major proponent of “dollar cost averaging”.
Why? Totally psychological, like much of today’s markets.
The market goes down= “Yes, I am buying it cheaper now!”
The market goes up= “So glad I locked in my profit!”
A tad delusional, but seems to placate some of the paranoia I often feel as a buy-and-hold (plus DCA) kind of guy -
I have been dollar cost averaging since 1991. My favorite times were not in the 1990s when everything after 1994 was straight up. My favorite times have been the last eleven years. I reminisce about 2003 and 2009. And I am particularly enjoying the last three months as a dollar cost averager.
The bottom line is you have to understand the markets are all cyclic. Most people on this blog deny it. But the cyclical nature is exactly what makes dollar cost averaging worthwhile.
If you know it’s cyclic, why not buy low and sell high?
How would I spend / save to protect my future?
1. Education combined with related experience. I would pay $1 for every dollar invested (in the first year).
2. Rotary or wire line oil and gas drilling equipment (used). I would like to pay five cents on the dollar for good condition equipment.
3. Ten acre market garden farm with house, fully equipped for only $100,000 (ha ha)
4. Blue chip stocks of global companies paying a dividend for only 10% of their average price (ladder down as they descend in price).
5. A vacation house in Florida for $50,000 with 1500 sf, pool, and a garage in a decent area of Buenavista Lakes, Orlando.
6. Buy more jewellery from the government’s crown asset disposal auctions (seized, lost, etc and sold off) for 5% of value.
7. Get GF Fixer to find me an airplane - in excellent condition - for -
I zeroed in on Naples as the safest place in FL. It’s also the most expensive place, but I keep in mind Doug Casey’s recommendations years ago that safer places for people with money are high end resort areas: Aspen, Jackson Hole, Vail,…
You could always bus tables or clean houses for the elite in Aspen.
How far away do they bus them in from these days? Glenwood? Rifle? Silt?
They ceratinly don’t live in Aspen. From what I’ve heard even Glenwood Springs is too pricey for the hired help.
There is a mobile home park on the other side of the Aspen airport where the companies subsidize living quarters for the workers. They live 4 or 5 to a trailer.
Strangely enough, the city bus is free from the opposite side of the airport to downtown. The workers have to pay to ride from their trailers.
Why is it that the wealthy, the very people who can afford to pay people handsomely, are using illegal aliens on the cheap?
Best Investment?
US Treasuries as we go through the rough patch.
I love those oil/gas Master Limited PArtnerships. Good yield on a good business.
I really think that the investment community is counting on Merkel crying uncle and letting the borrowing/printing on a grand scale begin. She just said no again today to a euro bond.
“US Treasuries as we go through the rough patch.”
I agree, but there will come a time to get out despite the penalties. But the second leg down will have hit RE by then, so it will be time to buy again and hunker-down; keep some cash handy.
Energy investments will not do well until wages catch-up with commodities inflation, and that will be well after years of painful write-downs. Limited Partnerships are not for renters who still make payments on a mid-sized sedan, IMHO.
“I really think that the investment community is counting on Merkel crying uncle and letting the borrowing/printing on a grand scale begin. She just said no again today to a euro bond.”
Before next week is out we’ll know how deep we’re into Europe.
What to do with your money?? Well here is something we should all have an opinion on, how about buying some Cuban Real-estate? As of this month Cubans will be allowed to buy and sell RE for the first time in 50 years. There is already huge piles of money being funneled into new private funds that are looking at everything from factory farms to lavish resorts and golf courses. Do a little Google news search and see how many financial news services are covering the Cuban RE boom.
That’s a contrarian consideration. Does Cuba have a Bill of Rights?
Well that didn’t bother you earlier when you were toying with the idea of moving to Costa Rica? It was the physical danger from the ‘natives’ that caused you to flip-flop, not whether Costa Rica had a Bill of Rights. Anyway as regards to Cuban law, it’s being radically redone right now so it looks like the changes are going in the right direction. Cuba is the Crown Jewel of the Caribbean and if things had turned out differently it would have been our own Taiwan. I’d keep an eye on them. 80% of the country wasn’t alive when the revolution happened so maybe there is real change coming.
I would never buy land in Costa Rica. There’s a decades old cottage industry of taking land from foreigners.
I can’t imagine buying land in ANY foreign country that does not have a long history of private ownership and a protection of property rights by the rule of law.
USA has the RKBA. It guarantees the other nine bill of rights.
“USA has the RKBA. It guarantees the other nine bill of rights.
Yeah right, as if a bunch of rednecks wearing cammies and armed with Walmart rifles and shotguns could really fend off the US military if it was turned against us. Hussein couldn’t do it and he had a real army.
Wrong. Most of the US armed forces are also for the RKBA.
At least here in the US of A, the government only takes your land away to build sport arenas.
Heaven knows what the Cuban government might waste your property on.
Yeah right, as if a bunch of rednecks wearing cammies and armed with Walmart rifles and shotguns could really fend off the US military if it was turned against us. Hussein couldn’t do it and he had a real army.
I’ve heard that argument a lot, but don’t buy it. Iraq circa 2004 showed how determined people with virtually nothing could have a major affect on US Army operations. And as Bill implied, the US Army would be full of people who sympathized with the rednecks in this case.
I’d say you’re in far more danger of getting a government you don’t like that both the Army and the rednecks are fully behind.
Wrong. Most of the US armed forces are also for the RKBA.
Our mercenary military is trained to obey orders (that’s what soldiers do). I have no doubt they would open fire on OWS people if ordered to do so.
I’m sure you’re right. That’s different from getting them to open up on their redneck relatives.
My plan is to stay solvent while both of my kids are in daycare (started at $440/week and is now $298/week) and to pay cash for my wife’s graduate degree.
In 2.5 years my wife will be done and both of my kids will be in elementary school, at which point we will be saving again. Our 2nd car will be paid off by then, too, so if we can keep our jobs we’ll be in a good position to maybe, possibly buy a house, say, in 2015/16.
Mugz….. that is not what the Housing Crime Syndicate wants to hear from you.
Anyways….. is relocating to DE still a consideration?
“Anyways….. is relocating to DE still a consideration?”
My current position is funded through June 2014, which coincidentally is when everything else comes together (my youngest will be done with daycare, 2nd car paid off, wife will walk with degree, etc.). So, we will be in a holding pattern until then. We’re very happy with our jobs, daycare, and elementary school and my current job is flexible which will allow us to get through this busy period without going crazy, so there is no rush.
But the short answer is: yes, we still plan on relocating in the summer of 2014. I’m about 1/2 through the DE credentialing process. We’d probably settle in the Wilmington area since my buddy is well established there.
At this point we have no plans to move to upstate NY for a lot of reasons. We’d like to keep a little distance from our families and it is very unlikely that we could both get jobs. But… my “fantasy/lottery” scenario is still living in Skaneateles or Canandaigua.
The 3/2 for $120 (Seminole, FL) I posted the other day is already under contract. I am comfortable now (more than ever) with maybe staying in FL, but I refuse to buy a piece of chit.
As of today, here is my ranking:
1. Wilmington
2. Bethany Beach
3. *Good* area of Florida / upstate
It will be really interesting to see where the Feds take education. This will single-handedly be the largest impact on my ability to relocate. If RTTT dies, all of my experience will not be attractive to other states, but if Florida somehow reinvents the educational wheel, I will be a hot administrative commodity since I know how to run all of these programs, “capture data,” and turn around struggling schools.
DE seems to be both a hotbed of reform and union activity, which is a rare combination that I’d welcome.
“3. *Good* area of Florida / upstate”
6.A sinkhole just opened in the middle of my street…who should I call? back to top
The hole should be immediately cordoned off and clearly marked to protect traffic. Contact local law enforcement to report the hazard and call your city/county road department to initiate repair work. If the road is private, repair of the hole is usually the responsibility of the landowner or property owners’ association.
7.A sinkhole opened in my next door neighbor’s yard….should I be concerned? back to top
Although sinkholes in Florida sometimes occur in sets, most are isolated events. The bedrock underlying the state is honeycombed with cavities of varying size, most of which will not collapse in our lifetimes. A quick inspection of your property for any sinking or soft areas might be prudent. Unless the sinkhole is very large, and extends to your property, there’s likely to be little reason for concern.
16.Is there a safe area of Florida in which to live with no chance of sinkholes? back to top
Technically, no. Since the entire state is underlain by carbonate rocks, sinkholes could theoretically form anywhere. However, there are definite regions where sinkhole risk is considerably higher. In general, areas of the state where limestone is close to surface, or areas with deeper limestone but with a conducive configuration of water table elevation, stratigraphy, and aquifer characteristics have increased sinkhole activity.
The only way to ensure that you don’t purchase property that might be prone to sinkhole activity is to not buy property in a karst region. Karst refers to landforms that develop due to the dissolving away, over geologic time, of geologic materials near the surface. In most cases that material is limestone. Learn about the local geology in an area you are considering purchasing land in and find out if it is a karst region.
19.I am buying a new home and I want to know if there is a sinkhole disclosure law? back to top
Most real estate seller’s disclosure forms used in Florida today include a sinkhole disclosure statement. Sometimes it is overlooked. If it is in question, be sure to ask.
21.I was denied homeowners insurance because there is a sinkhole within one-half mile of my home. What can I do? back to top
Currently, an insurance company has the right to not issue an insurance policy on the basis of sinkholes in the “area.” The definition of “area” remains subjective, and the issue will likely only be resolved through specific legislation, or by the general adoption of a standard by the insurance industry. Some companies utilize private sinkhole data to assign relative sinkhole risk (see question #12). Other companies may have more liberal policies, and you may wish to shop around for other insurance that may be available.
http://www.dep.state.fl.us/geology/feedback/faq.htm - 50k -
“Sometimes it is overlooked.”
You don’t say!
Suzzanne we have a bit of a problem.
Did I forget to tell you the Gainsville Strangler lived there and your neighbors house got swallowed by a sink hole with their 2 children in it? I am sure I told you about that.
I wish I knew what to do with my money. Most of it right now is parked in cash, much of it at TreasuryDirect.
I’ve been sticking to relatively short-term laddering (1-3yrs), thinking that a decent fraction of it will mature every year, and be available to purchase bargains if they ever do show up in the markets.
So far, I’m not seeing any. But I’m comfortable with my conservative position, and sleeping well in spite of slowing losing ground to inflation.
Hey, that’s better than I’m doing. I don’t even ladder treasuries - just sitting in cash and equivalents at the moment. Looking into the possibility of partnering with a local business looking to expand which would involve buying a 5+ acre parcel of land out east of the city. I figure either the business can do well, or the land can work as a play towards more self-sufficiency if needed.
Until then, it’s work hard, try to enjoy life in the moment (wine and food) and save what’s left (Cash, PMs, and physical assets/necessities which make sense)
What money?
“It is estimated there are in excess of 14 million vacant homes in the U.S. right now out of a total of 130 million homes. Almost half of the vacant homes, or 7 million, are not yet on the market.”
I assume the 14 million count does not include people who stopped paying their mortgages but are not yet foreclosed? Sounds as though there will be millions upon millions of homes available for prospective buyers if the market ever manages to adjust.
“Sounds as though there will be millions upon millions of homes available for prospective buyers if the market ever manages to adjust.”
If the market is allowed to adjust.
“I assume the 14 million count does not include people who stopped paying their mortgages but are not yet foreclosed?”
That`s a safe bet. So add another 10 million. It also doesn`t include homeowners who have died yet, and around here it happens every day.
I just came back from Vegas looks like johnson Ranch but closer to the freeway ( johnson ranch s and east of Phoenix )
my prediction they will rot in the desert
also noticed lake mead was quite low
got rain ?
I like stock’s that pay dividends like utilities AEP etc.
Corporate bonds and of course cash to buy more stocks when things get cheap hopefully pretty soon
REITs are doing pretty good these days , good for retirement accounts because of the tax thing.
Gold ? I sold all my minning stocks years ago. Werid the stocks have not kept up with the physical what does it cost to extract gold from the ground at most big mines ? you can easily look it up.
hint its not 1800 per oz
On Monday, after the bipartisan 12-member super committee announced its failure to agree upon $1.2 trillion in cuts over the next 10 years, Roubini, also known as Dr. Doom, tweeted the following: “Super-Committee: Super-Failure, Super-Pathetic, Super-Gridlock, Super-GOP-Lunacy on Taxes, Super-Fiscal Drag in 2012 that ensures double dip.”
If you believe this then were do you put your money ? probably not growth stocks. But who knows forecasting recessions is not easy , I think we will double dip but that certainly doesn’t mean much.
I wonder how black friday and all the rest of the days up to Xmas will turn out ? Europe seems to be in more trouble just like the US was back in 2008.
I think your stay in cash and wait is not a bad idea.
Opinion
Investors Beware After Super Committee’s Failure
By Peter Morici
Published November 25, 2011 | FoxNews.com
The Super Committee’s failure to come up with $1.2 trillion in budget savings over the next ten years should not affect the U.S. credit rating—or immediately affect the interest rates paid on Treasuries or their value. However, investors still need to be cautious about loading up on those securities—the longer term outlook is not so good.
…
Longer term, the cuts required in the Budget Act won’t be enough. The United States will continue to borrow too much and grow too slowly until more important structural issues are addressed. Within a few years, or sooner, U.S. borrowing costs will be much higher than today.
Currently, Washington enjoys low borrowing costs, because foreign central banks, private institutions and ordinary investors are all fleeing European debt.
Similarly, questions about China’s banks and dodgy accounting standards, along with Beijing’s exhortations that yuan appreciation has run to course, are causing money from the Middle Kingdom to flee to America. That money is dumping into Treasuries, solid corporate and state debt, and even junk bonds, which are currently overpriced.
Within a few years, that money will leave, after Europe has its ultimate financial crisis and then recovers. and investors realize that China’s sovereign debt is no more risky than U.S. paper. Rates on Treasuries will rise, as investors become much more nervous that either Washington won’t be able to continue floating $1 trillion a year in new debt or the Fed will simply roll the printing presses to buy what Treasuries investors won’t take.
Long bond rates will rise, and Treasuries bought today will lose value. Simply put, in 2014, why would someone pay as much for Treasuries maturing 27 years later and yielding 3 percent, when a new 30 year bond pays 5 percent. At that point investors who purchased bonds today either must wait for those to mature and endure low interest rates, or take a haircut if they sell.
The message to the ordinary investor is simple, Treasuries are safe up to a point—the U.S. government can always print money if necessary to honor its debt—but those investors should only buy bonds with maturities no longer than their circumstances permit them to have their money tied up. Treasuries won’t be long a liquid investment.
Peter Morici is a professor at the Smith School of Business at the University of Maryland and former chief economist at the U.S. International Trade Commission.
…
Japanese 10 year bonds pay 1%
Japan has a debt to GDP of 212 vs less than 100 for the US.
“The new face of poverty: As recession lingers, poverty migrates to the suburbs”
That was a good read, comments too!
The best investment I ever made was to get rid of the credit cards. I’d suggest that for anybody regardless of their circumstances.
Silver bought back at $5 now looks like a smart move, but I wouldn’t add to that stash today. This is not a get rich gamble for me, rather a cushion against who knows what.
Renting has paid off, especially since I only need an appartment four months of the year. The “buy someday” account is growing at leaps and bounds relative to the market.
I took my 401K money out of stocks in 2000 and still think that is the right strategy. I’d like to be out of $$s eventually, but not now. Inflation favors the very rich but not hyperinflation. I believe we will see drastic drops in asset prices way before hyperinflation. That will come when we can no longer pay the interest on our FedGov debt, and I rather think we will be the last one to get there. My bet for the next decade at least is deflation in assets and wages, but I don’t extrapolate that to infinity.
I continue to be amazed at how glacial mega trend changes are. I hope not to get too sleepy.
I took my 401K money out of stocks in 2000 and still think that is the right strategy. I’d like to be out of $$s eventually, but not now.
Did you simply sell all your stocks, or liquidate the account? I’m thinking of doing the latter before all the tax cuts expire - if I’m not going to be invested in stocks/mutual funds, what’s the point of having the money locked up in an IRA/401k?
“if I’m not going to be invested in stocks/mutual funds, what’s the point of having the money locked up in an IRA/401k?”
Uhhhmmm… Deferring current taxes, and avoiding the 10% penalty is not motivation enough?
I don’t understand why you would do that, unless you think your current tax rate (while having earned income) is lower than your future tax rate will be (when not having earned income).
drumminj, please explain; is it just a vote of no confidence on them changing the rules in the future?
drumminj, please explain; is it just a vote of no confidence on them changing the rules in the future?
Yes, pretty much. And wanting control over that money rather than an investment bank, not being dependent on government/IRS “rules” to get it, since those rules are subject to change. I think many here wouldn’t be surprised if the fedgov required retirement accounts to hold/purchase treasury bills in the future.
I certainly don’t relish the thought of paying a penalty, but the income taxes are something I’m going to have to pay regardless. Maybe they’ll be less in the future, maybe more. But with the cash available to me now I can use it to work towards having fewer expenses in the future (paid off land/home or whatever), and at the same point in time starve the beast (FIRE) if I so choose.
I didn’t close the account, because of the tax implications. I am past the 10% penalty age now at least. Moving some or all the money out of the company 401K plan into a self directed IRA is a possibility.
“The best investment I ever made was to get rid of the credit cards.”
Me and Dimon are homies now that I carry the Freedom card. Oh well.
Not one mention of shorting the stock market?
I like those odds.
I’m glad to see that even the usually unconventional thinkers here are still touting the “gold bubble” nonsense, which means that there is a LONG way to go before there is any such bubble. If gold really were in a bubble, it would be the first bubble in history that had been announced in the mass media before it burst.
Gold may be in a bubble some day, but I think it is more likely that it will be used to anchor a new monetary system. Once that happens, its “price” (conversion rate) will no longer change (until the next crisis). Of course, that fixed conversion rate is likely to be many multiples of the current one, as there isn’t anywhere near enough gold to back a new monetary system at the current price.
You are going to twist your brain into a knot if you keep that up.
My retirement account has had a CAGR of 11.5% since 1998 by following my silly notions, so I guess I’ll continue following them in spite of your expert opinions.