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Beginner Financial Investing.

#281
In Galveston, TX, the City has asked it's fire and police departments to take a 3% pay cut to help them stretch for the end of the year. The unions considered this request, voted, and accepted the cuts. Now, they are being told they may not have jobs anyway come next year, as the City is broke. Property taxes are being collected on homes that no longer exist, or are damaged so badly they cannot be lived in, and they are thinking of raising the tax rates by 1% for next year. Yeah, that'll go over big. I can hear it now- "You want me to pay WHAT for an empty slab?? No, I think you need to take it over..."

Also, I have heard that the city is for sale, Tilman Fertitta, a local businessman with substantial holdings on the island, is said to be interested in buying the Island of Galveston for further development, either alone or as a partner with the Moody family.

Interesting times, I wonder if he'd secede if that went through? The tax benefits would be amazing...
 
#283
True, Bassrique ! Loved that chart you posted in the other thread too.

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Don't worry, it's coming : Invalid Link Removed

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At least read that last one folks. Utterly disgusting.



I read somewhere that GC is offering 0% financing on gear debt. Very bad omen for that retailer.

0% financing was the tip-off I had to short GM at the very top when it was over $60 years ago. Difference now is that short-term t-bills are going for 0% so that's about all that money's worth, whereas back when GM did it things were different.

Still, it smacks of desperation on GC's part.
 
#284
Hi everyone. I have a question for you.

Is a money market fund functionally equivalent to cash?

If I wanted to move my simple IRA equity based mutual fund into a money market fund, would that be an okay idea? I don't care about stock rallies or anything like that. I just want my money removed from unnecessary risk. Should I just roll it over into a savings account IRA type thing?

My problem is half my shares will incur a 5% sales charge if sold before 2012 which effectively freezes that money into the fund company (American Funds)...unless I just say "Screw it!" and take the hit.

Need help.

Here is a summary of the Money Market I'm looking at (CTAXX):
Commercial Paper & Cash - 56.1%
Government Agency Securities - 25.7%
U.S. Treasury Bills - 18.2%
Certificates of Deposit - 0.0%
The 7 day yield is 0.65%

Please keep in mind I know what a CD is, but I am unclear about Comm. paper, US treasury Bills, and Gov Securities.
 
#285
Yes, a money market fund is considered the equivalent to cash. There is very little chance that you would lose principal, but there is also very little chance that you will make much return.

If you are planning to retire soon, then by all means shift those funds into cash; but if it is more than 10 years away; you might want to reconsider and leave it in the stock fund (and try not to spend much time looking at your statements which I can attest is much easier said than done).

I wouldn't take the money out of American, take a hit on sales charges, and put it in a bank CD-based account - but that is me. I can tolerate some losses in the hopes of larger gains down the road. Everyone has a different risk profile and only you can determine what is right for you.

You said that half of your money will incure a sales charge if you pulled it out now. What if you left that half in stock funds and put the other half into CTAXX - that way your losses won't be as bad if '09 turns out to be as bad as '08; and if '09 is a little better, then you'll recoup some of your losses.
 
#286
I guess i am a little late to get into precious metals, but if from what i am hearing right with inflation headed upwards and onwards i figure now i should jump in.

Anyone have experience with getting into gold/silver other precious metals, i am not sure where to start looking for accurate info and am a newb in this area!
A friend of mine was heavily investing in gold coins a few years back, offered to give me the dealers name, of course i missed that boat...
 
#287
bassjamn said:
I guess i am a little late to get into precious metals, but if from what i am hearing right with inflation headed upwards and onwards i figure now i should jump in.

Anyone have experience with getting into gold/silver other precious metals, i am not sure where to start looking for accurate info and am a newb in this area!
A friend of mine was heavily investing in gold coins a few years back, offered to give me the dealers name, of course i missed that boat...
Click to expand...

You don't have to buy physical gold. There are gold based index funds and exchange traded funds.

Of course I am not an investment advisor.
 
#288
fdeck said:
You don't have to buy physical gold. There are gold based index funds and exchange traded funds.

Of course I am not an investment advisor.
Click to expand...
I would, at the very least, own both. I do own physical metals, but the premiums on gold coins can be steep, especially from a small dealer. The risk in gold ETFs is that they seem to be similar to fractional banking, which is a part of what got us into this mess in the first place. They may or may not have enough physical metal to cash you out in gold, and even if they do, it is not available to you unless you fill out the form, and hop on one foot, while swinging a dead chicken over your head, singing "Oh, Susanna" backwards...in other words, they are a financial derivative of sorts. I wouldn't just invest in "paper gold", as I call it. I would insist on having a tangible asset in my hand, just in case the SHTF. Pre-1933 gold coins are non-confiscatable, while anything minted since then is seizable. If I were buying gold coins, I would have to base it on pre-1933, it would have to be a cash transaction (non-reportable), and I would have the coins in a safe (not in a bank).

If you're just out to make a buck on the spread, that's where the paper gold" comes in. If you are looking for a hedge against inflation, real gold would be my choice, preferably in smaller coins (not necessarily in $20, 1-oz coins).

Then again, there are lots of other metals that trade as well- copper, palladium, silver (a favorite of mine), platinum, etc. Don't have to diversify, but it makes sense to me.

Good luck!
 
#289
This is just my opinion, but right now, gold is extremely high priced. Maybe an all time high? No one can say for certain that gold is going up or down. But, my outlook on things is that it's best not to buy something at the highest price it has ever been. If people in the late 70s went by that logic, their investment would have just recently (in the past 5 years or so) gained back its value.

However, another school of thought is that with all of this gummit spending, other investments would be worth even less due to inflation. Personally, I don't like gold as an option right now at $1000/oz.
 
#290
I always keep a small slice <5% of my retirement in paper gold partly because I believe in asset diversification and partly in gold's traditional role as an inflation hedge. I also keep some other inflation-hedgey assets: real estate, commodities (especially oil stocks), TIPS. The way I am set up now, I can't make a killing, but I shouldn't get too badly burned either.

While there is a risk to buying any asset at its high, I am glad that one of my first stock purchases back in the early 90's was Microsoft. It was already the largest PC software company at the time (but it had some strong competition) and it sold for a high P-E and I likely bought it at or near its 12-month high, it continued to make new highs for another 8 years. :smug:
 
#291
It could definitely work out. But right now, all in my pretty useless opinion, gold is a very trendy asset. I do have, as you do, a very small part of my portfolio in precious metals. Not much at all, but it is there. I just think gold has become "trendy" as of late with all of the economic uncertainty. I think a lot of people are just throwing all of their money into gold and that's certainly a mistake, in principle. IMO, stocks are at a really low point right now and it's a great time to buy. I just checked my portfolio today and since March 9th, the low of the stock market, I am up almost 60%.

But I also thought that email was the silliest thing I ever heard of when it came out, so consider the source.
 
#292
But I doubt that email fad will last...:smug:

Yes, gold is high. Can it go higher? Yes. Reason I think it could go higher? Lack of confidence in US debt. Will it go lower? Possibly. It is being hyped a lot, there are little old ladies and even kids getting into gold now. I doubt that it will rise 25% or more overnight, but it could. Gold has always been a very volatile precious metal, and now that the economy is failing, I think lots more people will try to buy into it. The key is getting an attractive spread, or the difference between ask and bid. Right now, gold is not behaving rationally, the hype is scaring lots of people. If I were to have a choice right now between 3 troy oz of gold and 6 months worth of dehydrated food, I would choose the latter. If you are worried about socio-economic collapse vs. hedging against the dollar, I would go for non-hybrid seeds, dehydrated food, water filtration and medical supplies. Those would be worth far more than gold if the SHTF. Add to that a few bricks of .22 ammo and a small rifle to put them in, and you can hunt. See where I am going here? Gold would be nearly worthless in a survival situation, where bartering would become a way of life. To me, there ar lots of other bargain-priced stocks, it might be nice to have a few gold coins tucked away somewhere, but to tell you the truth, platinum would outpace gold handily should the world's car industry come back. Also, consider lithium as another side bet. What are all these hi-tech hybrids going to run on, anyway? Batteries. And what will they make these batteries from for the next few years at least? Lithium. It's just a hint, do your own due diligence and you might find something out there to like.
 

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