DJIA, NYSE, S&P = CRASH!!!
- Thread starter presence
- Start date
Major changes to house closing rules/regulations take effect on Oct 1, also. A friend in the mortgage underwriting department at a large bank stated that people in her department are "really nervous" about the changes. Good chance a large number of pending mortgages slated to close on or around Oct 1 are halted at that time.
eta: A lot of purchasers state their 401k as reserve funds, as part of mortgage approval process. Those reserves are disappearing by the day, thus potentially causing disruptions to the required final reviews by the lender before closings are completed. Another change effective Oct 1 is that a change in the mortgage rate itself can halt a closing. If the Fed raises rates, that would materially change the mortgage rate.
Last edited:
helmuth_hubener
Banned
- Joined
- Nov 28, 2007
- Messages
- 9,484
I would recommend thinking about the home as a home, not an investment, and buying it as such. As a consumer good. Just as you buy, or do not buy, a computer or a car based on considerations of what will make your life better, so it would be wise to do so with a home.
Buy or do not buy based on things like:
What benefits it will provide you? How much will you love those benefits?
How much better it will make your life?
Can you afford it? This is a very large purchase (people, amazingly, often don't think of buying a home in that way, but it is!). Do you have the money for it? And don't count on being able to sell it for the same or more as you bought it for -- you may not be able to. It should be worth it to you in and of itself, even if its market price plummets.
Is there anything else you could do with the money that you would enjoy even more than owning the house?
That's my advice. The rates, the bubbles, these may not be the most important things to think about at all, in my opinion. When buying a laptop, I don't worry about the laptop market, whether it will go up or down, the prospects for selling it in ten years, whether there's a bubble in solid-state memory, etc. All that stuff is irrelevant. But, you may say, this is a much larger purchase! I can't afford to sink that much money into it unless I'm going to get it back and then some. In that case, I would say that it's too big a purchase for you to be financially responsibly considering. For that matter, this is more extreme but my personal feeling is that if you have to go into debt to buy it, you usually shouldn't do it. And so in that case rates are really irrelevant: you just pay cash. But you're probably not going to listen to that; nobody wants to hear that (for the most part).
Short version: buy it for you, don't buy it as an attempt to make money.
Zippyjuan
Banned
- Joined
- Feb 5, 2008
- Messages
- 49,008
My home is part of my retirement plan. Not as an income source but by having it paid off (and it is), lowering my expenses- the amount of money I will need to live off of. Lower expenses are equivalent to having a lot more money saved. It effectively gave me a 30% after-taxes raise since I no longer need to earn that much money to make the payments.
No....the main thing they own is a share of the profits in terms of dividends and a share of any assets (land, intellectual property , cash etc) owned by the company. The ability to elect the board of directors is not at all a major source of the value of a stock.
RonPaulIsGreat
Member
- Joined
- Nov 10, 2007
- Messages
- 1,462
presence
Member
- Joined
- Dec 20, 2011
- Messages
- 19,330
presence
Member
- Joined
- Dec 20, 2011
- Messages
- 19,330
An inverse exchange-traded fund is an exchange-traded fund (ETF), traded on a public stock market, which is designed to perform as the inverse of whatever index or benchmark it is designed to track.
If you have access to stocks... you should have access to inverse ETF's. You would buy something like SPXU (3x leveraged short ETF of S&P small cap 600) the same way you would buy AMZN (Amazon.com).
do not require the investor to hold a margin account as would be the case for investors looking to enter into short positions.
Taking Control
In some cases, employers choose 401(k) plans for their employees that offer the option of choosing individual stocks. However, this may only apply to a set percentage of the funds in the plan. The plan may still require employees to diversify or invest in more than one stock, thus limiting how much they can put into a single company's stock. If your employer offers a 401(k) with this high degree of employee control, you will take on added responsibility for your retirement income if you choose to exercise it.
Alternatives for Retirement
Even if you don't have a 401(k) that allows you to invest in individual stocks of your choosing, you can still put money into a company as a means of saving for retirement. IRAs, or individual retirement accounts, are personal retirement plans that offer more control, including the choice of stocks. You can fund an IRA with pre-tax income, up to a set annual limit that depends on your age. You can also buy shares of stock that you earmark for retirement, eliminating the tax benefits of a retirement plan but also working around the limitations of IRAs and 401(k)s.
If you have access to stocks... you should have access to inverse ETF's. You would buy something like SPXU (3x leveraged short ETF of S&P small cap 600) the same way you would buy AMZN (Amazon.com).
do not require the investor to hold a margin account as would be the case for investors looking to enter into short positions.
Taking Control
In some cases, employers choose 401(k) plans for their employees that offer the option of choosing individual stocks. However, this may only apply to a set percentage of the funds in the plan. The plan may still require employees to diversify or invest in more than one stock, thus limiting how much they can put into a single company's stock. If your employer offers a 401(k) with this high degree of employee control, you will take on added responsibility for your retirement income if you choose to exercise it.
Alternatives for Retirement
Even if you don't have a 401(k) that allows you to invest in individual stocks of your choosing, you can still put money into a company as a means of saving for retirement. IRAs, or individual retirement accounts, are personal retirement plans that offer more control, including the choice of stocks. You can fund an IRA with pre-tax income, up to a set annual limit that depends on your age. You can also buy shares of stock that you earmark for retirement, eliminating the tax benefits of a retirement plan but also working around the limitations of IRAs and 401(k)s.
Acala
Member
- Joined
- Feb 14, 2008
- Messages
- 13,421
Too bad you don't own it. You rent it from the government. Stop paying the rent, called property tax, and you will be evicted. And, aside from a few limitations (like Prop 13 in California) the government can raise your rent as much and as often as it likes. And it is actually worse than renting from a landlord because when a landlord raises your rent, you can just pick up and move because you have no equity in the property. To avoid higher property taxes, you have to sell your property (and hope the market is high) and leave the country or even the state.
Acala
Member
- Joined
- Feb 14, 2008
- Messages
- 13,421
I recall reading that during the Weimar hyperinflation in Germany, those who owned and held on to stock in solid businesses (and didn't try to "play" the volatile market) ended up doing okay because after all the smoke cleared and the currency changed they still owned a share of a sound business. The collapse of the currency didn't matter as long as the business survived. So the long term strategy for holding stock would be to buy stock in solid businesses and hold on, ignoring the share price, even ignoring currency collapse.
Madison320
Member
- Joined
- Jan 11, 2012
- Messages
- 6,036
That's a good point. I think that's another advantage to buying shares "directly" vs owing a mutual fund. If the shit hits the fan it seems like it would be a lot easier to sort things out if you simply own shares in one company vs owning hundreds of companies indirectly in a mutual fund.
Madison320
Member
- Joined
- Jan 11, 2012
- Messages
- 6,036
It looks like we got the first shot from the Fed. The Fed's Dudley just said, "the case for a september rate hike is less compelling". Maybe this will hold off the markets for a few weeks.
helmuth_hubener
Banned
- Joined
- Nov 28, 2007
- Messages
- 9,484
There was extreme volatility. As in super, super extreme. But yes, if someone actually held through the overwhelming 90-some% losses, for years, eventually it did actually go up again and all work out in the end, kind of, in theory.
Here's the chart:
The chart, unfortunately, doesn't adequately convey the chaos, the sheer craziness of the volatility during those few years, due to being such a long hundred year timescale on the X axis (so it looks like just a small blip of noise) and also the large logarithmic Y scale softens the appearance. I don't have the numbers in front of me, but suffice it to say that if you think the last few days of the US stock market were a roller coaster, it was laying in the grass in a peaceful meadow compared to the Weimar hyperinflation Germany stock market.
So, it all worked out in the end, eventually, as long as you waited for decades, and weren't a Jew or a gypsy or a rebel, but it's not inevitable that it work out like that every time.
Austria was much worse:
And honestly, neither of them were very good, relatively speaking. Here's the USA for perspective and comparison:
Log scale, remember. Big difference between 1,200 and 2. So just remember that's the context we're working in if it seems inevitable to you that the stock market is going to always go up. The USA has had an incredible run. A unique run. Unprecedented in history. Will it continue? Maybe. I sure hope so! But also maybe not.
And things don't always work out as well even as Austria, as bad as it was, which despite two disastrous defeats in colossal wars was a civilized nation with an advanced culture and high respect for private property. And so investors didn't lose everything. At least, not all of them did. Sometimes, things work out more like, say, this:
Last edited:
Zippyjuan
Banned
- Joined
- Feb 5, 2008
- Messages
- 49,008
Rent a home and face the same possible increases and costs. You pay property taxes as part of your rent. Stop paying rent and get evicted. Right now my costs are about $1000 a month less than if I was renting a comparable unit. And I have an asset worth about $300k I can sell if necessary in the future and get back more than I put into the mortgage. You can't do that with a rental. When you rent, you give that money away each month and get absolutely nothing for it. I got an asset worth a lot of money as well as an increase in disposable income for money which could have simply gone to renting. Way better than getting zero. Yes, if you rent, you have nothing to lose if you move. But if you stay, you gained nothing while I gained a lot.
(yes, I am in CA where property tax increases are severely limited- maximum 2%- until you resell your home).
Last edited:
helmuth_hubener
Banned
- Joined
- Nov 28, 2007
- Messages
- 9,484
You get:
A place to live
Worry-free maintenance
Immunity to housing market risk
Extreme flexibility
Probably indoor plumbing, full-house wiring, and complete climate control
You might also get:
Great surroundings
Nice neighbors
A beautiful view
Low crime
Ability to walk to work
Big kitchen
Exquisite floorplan
Vegetable garden
A lawn that you don't have to mow
Etc.
Doesn't sound like "absolutely nothing" to me.
Buying a house can be a good decision (I've certainly done it enough), but renting can also be a good decision. Saying that a renter gets absolutely nothing for his money is just pro-home-ownership propaganda that you're mindlessly parroting. It bears no relationship to reality and has no value in good decision-making.
Every man should do what's right for him. Jllundqu should do what's right for him. And it's exceedingly unlikely that he's going to listen to either of us anyway.
Bastiat's The Law
Member
- Joined
- Apr 19, 2012
- Messages
- 7,439
This means there's some opportunities out there no?
Traditionalist
Member
- Joined
- Feb 8, 2015
- Messages
- 87
Stocks rebounded. Asian market has been looking bit better lately too.
Acala
Member
- Joined
- Feb 14, 2008
- Messages
- 13,421
There was extreme volatility. As in super, super extreme. But yes, if someone actually held through the overwhelming 90-some% losses, for years, eventually it did actually go up again and all work out in the end, kind of, in theory.
Here's the chart:
The chart, unfortunately, doesn't adequately convey the chaos, the sheer craziness of the volatility during those few years, due to being such a long hundred year timescale on the X axis (so it looks like just a small blip of noise) and also the large logarithmic Y scale softens the appearance. I don't have the numbers in front of me, but suffice it to say that if you think the last few days of the US stock market were a roller coaster, it was laying in the grass in a peaceful meadow compared to the Weimar hyperinflation Germany stock market.
So, it all worked out in the end, eventually, as long as you waited for decades, and weren't a Jew or a gypsy or a rebel, but it's not inevitable that it work out like that every time.
Austria was much worse:
And honestly, neither of them were very good, relatively speaking. Here's the USA for perspective and comparison:
Log scale, remember. Big difference between 1,200 and 2. So just remember that's the context we're working in if it seems inevitable to you that the stock market is going to always go up. The USA has had an incredible run. A unique run. Unprecedented in history. Will it continue? Maybe. I sure hope so! But also maybe not.
And things don't always work out as well even as Austria, as bad as it was, which despite two disastrous defeats in colossal wars was a civilized nation with an advanced culture and high respect for private property. And so investors didn't lose everything. At least, not all of them did. Sometimes, things work out more like, say, this:
If I am reading your chart correctly Germans who held equities during the Weimar inflation and the global depression broke even after 15 years. Did I miss something? If not, that's a pretty damn good result after a total currency collapse followed by a major depression. WWII, on the other hand, not so much. But killing most of the working age men and destroying most of the industrial capacity will do that.
Last edited:
Acala
Member
- Joined
- Feb 14, 2008
- Messages
- 13,421
Not exactly. You have an asset worth exactly as much as somebody is actually willing to pay you for it on the day you need to sell it. There are an awful lot of people walking around today that would counsel you from their own hard experience against counting those chickens before they hatch. And just remember, the State of California is going to get revenue from SOMEWHERE. Just might be from you!
Similar threads
- Featured
