I am an old duffer with years of investing and something never change the total stock market gains 7-11% a year. but not every year. You are young and if you start to invest now you will retire happy as long as you control your risk. I have followed Bob Brinker on the radio for years he also has a web site by the same name. Invest in general mutual funds not stocks and let them grow. If you try to out guess the market you will eventually loose. Fedelity is an excellent company with a great web site and a lot of free advice. If it sounds to good to be true it usually is. Get rich quick sceams are everywhere. Trust only reputable companies!!!!!!!!!!! Phil
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Beginner Financial Investing.
- Thread starter MCBTunes
- Start date
Well, I'm a new investor but here is what i'm doing right now:
I just got hired at a nice Big 10 College. I get a salary (to start) at $27,000/yr + Overtime (not factored). I get a certain amount per year to spend on schooling, so I'm pretty much done with student loans at this point.
My Student Loan repayment starts in October. I owe $13,000 roughly and the payment is $166 a month. Not to bad, It could be worse much much worse. I'm still undergraduate though
.
I have bought my first house, right now I'm month to month rent w/ option. I have $1500 invested in the home as of now. $100 per month goes into equity, the rest pays the current owner. My purchase agreement is $82,500 and I have up to 3 years to Mortgage the house in my name, which should be no problem in 3 years. I figure I'll ride out this lease as long as possible because no way my first mortgage payment will get me $100 equity!
My Credit was badly damaged, but I've managed to remove all my derogatory marks by using some good scheme's listed on http://www.creditinfocenter.com/. This is an ongoing process. Last year, I was 500 low 540 High. I am now 600 low, 650 High. Thats one year of transferring student loan money to bad debt, and paying off the rest with my disposable income. If I continue making all my payments on time, as well as paying my student loan on time, I should be in GREAT shape in the 700's in no time (2 years) right around the time I will be pursing a Mortgage on this home.
Ok that aside. My Employer Contributes 10% if I contribute 5%, so I have maxed out my 403(b) to 5%. Thats not nearly enough per year though because I am 28 and just starting. I have decided that 50% goes into the safe and secure Fund, the rest are going into a World Equity and a some other fund. The safe and sound was 5.95% last year, the two riskier ones were doing 26% and 28% last year. TIAA-CREF is the 403(b) fund.
I have an IRA account started with Edward Jones. I have a financial advisor as well. So far I'm just following the moves he gave me, however my plan is to put another additional $2000 a year in the IRA. He has stated that the fund I'm in gets 26% / year. I would love to be riskier with that money, and use the net gains to pay off the student loan debt.
Also unfortunately I have some willed money coming of around $5000, and a big portion of that is NOT going into a Valenti/Skjold/Roscoe/Fender fund I have started at my bank.
Keeping in mind that the 403(b) is just starting up, and I am budgeting my life to allow the $2000 a year to be invested in my future rather than gear.
Am I doing fine for a starter?
I just got hired at a nice Big 10 College. I get a salary (to start) at $27,000/yr + Overtime (not factored). I get a certain amount per year to spend on schooling, so I'm pretty much done with student loans at this point.
My Student Loan repayment starts in October. I owe $13,000 roughly and the payment is $166 a month. Not to bad, It could be worse much much worse. I'm still undergraduate though
.I have bought my first house, right now I'm month to month rent w/ option. I have $1500 invested in the home as of now. $100 per month goes into equity, the rest pays the current owner. My purchase agreement is $82,500 and I have up to 3 years to Mortgage the house in my name, which should be no problem in 3 years. I figure I'll ride out this lease as long as possible because no way my first mortgage payment will get me $100 equity!
My Credit was badly damaged, but I've managed to remove all my derogatory marks by using some good scheme's listed on http://www.creditinfocenter.com/. This is an ongoing process. Last year, I was 500 low 540 High. I am now 600 low, 650 High. Thats one year of transferring student loan money to bad debt, and paying off the rest with my disposable income. If I continue making all my payments on time, as well as paying my student loan on time, I should be in GREAT shape in the 700's in no time (2 years) right around the time I will be pursing a Mortgage on this home.
Ok that aside. My Employer Contributes 10% if I contribute 5%, so I have maxed out my 403(b) to 5%. Thats not nearly enough per year though because I am 28 and just starting. I have decided that 50% goes into the safe and secure Fund, the rest are going into a World Equity and a some other fund. The safe and sound was 5.95% last year, the two riskier ones were doing 26% and 28% last year. TIAA-CREF is the 403(b) fund.
I have an IRA account started with Edward Jones. I have a financial advisor as well. So far I'm just following the moves he gave me, however my plan is to put another additional $2000 a year in the IRA. He has stated that the fund I'm in gets 26% / year. I would love to be riskier with that money, and use the net gains to pay off the student loan debt.
Also unfortunately I have some willed money coming of around $5000, and a big portion of that is NOT going into a Valenti/Skjold/Roscoe/Fender fund I have started at my bank.
Keeping in mind that the 403(b) is just starting up, and I am budgeting my life to allow the $2000 a year to be invested in my future rather than gear.
Am I doing fine for a starter?
I was sooo close to giving up on this thread, and now we have the great infusion of new and diverse approaches and opinions to compliment the few voices participating before. I thank the new folks who do pop in and hope they stick around and continue to post ... pro, con, whatever.
Speaking of cons, might as well post the latest.
"Borrowing short and lending long is a great business... up until the moment you can't borrow short anymore. American Home Mortgage was cut off, starting three weeks ago. It is now, apparently, insolvent. Likewise with hedge fund Sowood Capital... Sowood's managers must not have studied Keynes, who predicted the sorrows of every highly margined investor: "The market can stay irrational longer than I can stay solvent."
Sowood lost half of its $3 billion as the credit spread (the difference in the risk of holding any entity's debt versus holding the risk-free debt of U.S. government bonds) grew a little wider. Yesterday, the fund announced it would sell its open positions to Chicago-based hedge fund Citadel, and return $1.5 billion to investors.
Of course, we don't truly mourn for either the hedge fund managers or their investors. Instead, we assume what's said about such limited partnerships is probably true. At the beginning, the limited partners have capital and the general partner has experience. Later, the roles are reversed. We assume that next time the limited partners will try funding their tuition at a more reasonable price.
We do worry, however, about what will happen to the supply of credit in America. Under the guidelines of Basel II (trust me, you don't want to know...) banks and brokers must hold $0.56 of capital to each $100 of triple-A rated investments. Incredibly... bundles of mortgages were rated AAA in 2005 and 2006, despite containing adjustable-rate loans and so-called "liar loans" – no-document mortgages.
Banks, brokers, and hedge funds bought these securitized mortgages... because in addition to being triple-A rated, these loan packages had the even more envious quality of paying a few extra hundred basis points in interest than U.S. treasuries. But... as mortgages default... sooner or later, these loan packages must be downgraded. So far, Moody's has downgraded 339 residential loan packages and placed another 32 on "credit watch."
How much capital, you might wonder, will your bank or broker have to come up with to meet the requirements of Basel II in the event that their mortgage investments are downgraded to, say, below investment grade, or BBB? In that case, the bank or broker needs to hold $4.80 in capital per $100 invested – or eight times more capital than they needed when they were holding AAA investments. Where will the capital come from? Banks and brokers will be forced to "call in" their loans...
We're about to witness what happens when credit contracts. I suspect this will cause quite a shock to my fellow Americans, who have become addicted to the never-ending river of easy credit.
It is this risk of a true credit contraction that's sent the bonds of Goldman Sachs, Bear Stearns, Merrill Lynch, and Lehman Brothers into "junk" range. According to credit default swaps based on these banks' bonds, their credit ratings are below investment grade. Bonds of these banks lost about $1.5 billion in face value this month. The highest level of defaults in 10 years and a $33 billion pileup of unsold bonds are sending investors running from the New York firms."
Speaking of cons, might as well post the latest.
"Borrowing short and lending long is a great business... up until the moment you can't borrow short anymore. American Home Mortgage was cut off, starting three weeks ago. It is now, apparently, insolvent. Likewise with hedge fund Sowood Capital... Sowood's managers must not have studied Keynes, who predicted the sorrows of every highly margined investor: "The market can stay irrational longer than I can stay solvent."
Sowood lost half of its $3 billion as the credit spread (the difference in the risk of holding any entity's debt versus holding the risk-free debt of U.S. government bonds) grew a little wider. Yesterday, the fund announced it would sell its open positions to Chicago-based hedge fund Citadel, and return $1.5 billion to investors.
Of course, we don't truly mourn for either the hedge fund managers or their investors. Instead, we assume what's said about such limited partnerships is probably true. At the beginning, the limited partners have capital and the general partner has experience. Later, the roles are reversed. We assume that next time the limited partners will try funding their tuition at a more reasonable price.
We do worry, however, about what will happen to the supply of credit in America. Under the guidelines of Basel II (trust me, you don't want to know...) banks and brokers must hold $0.56 of capital to each $100 of triple-A rated investments. Incredibly... bundles of mortgages were rated AAA in 2005 and 2006, despite containing adjustable-rate loans and so-called "liar loans" – no-document mortgages.
Banks, brokers, and hedge funds bought these securitized mortgages... because in addition to being triple-A rated, these loan packages had the even more envious quality of paying a few extra hundred basis points in interest than U.S. treasuries. But... as mortgages default... sooner or later, these loan packages must be downgraded. So far, Moody's has downgraded 339 residential loan packages and placed another 32 on "credit watch."
How much capital, you might wonder, will your bank or broker have to come up with to meet the requirements of Basel II in the event that their mortgage investments are downgraded to, say, below investment grade, or BBB? In that case, the bank or broker needs to hold $4.80 in capital per $100 invested – or eight times more capital than they needed when they were holding AAA investments. Where will the capital come from? Banks and brokers will be forced to "call in" their loans...
We're about to witness what happens when credit contracts. I suspect this will cause quite a shock to my fellow Americans, who have become addicted to the never-ending river of easy credit.
It is this risk of a true credit contraction that's sent the bonds of Goldman Sachs, Bear Stearns, Merrill Lynch, and Lehman Brothers into "junk" range. According to credit default swaps based on these banks' bonds, their credit ratings are below investment grade. Bonds of these banks lost about $1.5 billion in face value this month. The highest level of defaults in 10 years and a $33 billion pileup of unsold bonds are sending investors running from the New York firms."
Congratulations on the job and getting your finances in order. It all makes good sense to me. I presume your advisor has checked if you're better off putting more into this or that - student loan, etc. - based on the interest you pay on each.
IMO = Generally eliminate *all* debt before investing. Do not put retiremeny money into fund because this year's 26% gainer is often next year's bust. US equities definitely, and likely world equities to a lesser degree are going to crash hard and fast at some point. There are no "safe funds" (see news clips in posts above) and there are no "safe companies" (see Enron et. al.) ergo don't speculate with your savings and retirement money.
What you do set aside regularly to invest, yeah go ahead and speculate with that. I think you're doing very well. Keep it up !
You can withdraw from a Roth IRA without penalty up to the amount you've personally invested into the IRA. Any earnings withdrawn from a Roth before you're 59.5 years old (to the day, the IRS doesn't fudge this number) will be subject to the 10% early withdrawal penalty.
Standard IRAs are primarily funded with deposits that can be claimed on your 1040 in order to reduce your AGI. Due to this, all monies deposited into a standard IRA are subject to early withdrawal penalties.
[edit to my earlier post]
Roth IRAs also don't have forced distribution rules like standard IRAs. Standard IRAs force you to start taking distributions at age 70.5. Also, standard IRA distributions have the deductible and non-deductible portions prorated at time of withdrawal where a Roth IRA starts with your deposits first. This can help with strategies to mitigate tax liabilities.
[edit to my earlier post]
Roth IRAs also don't have forced distribution rules like standard IRAs. Standard IRAs force you to start taking distributions at age 70.5. Also, standard IRA distributions have the deductible and non-deductible portions prorated at time of withdrawal where a Roth IRA starts with your deposits first. This can help with strategies to mitigate tax liabilities.
I was raised the only way to make money is by working hard. Its seems to be true even with the stock market.
I'm 18 have a few grand saved up looking to invest. I work at McDonalds and I'm just looking for away to earn more money.
I thought about exchanging my Canadian dollor in American then I did some research and it might take 5 years for me to see a large enough growth. I decided not to do that because I can't afford to keep my money "locked up" right now.
Anywho I just thought I should share
I'm 18 have a few grand saved up looking to invest. I work at McDonalds and I'm just looking for away to earn more money.
I thought about exchanging my Canadian dollor in American then I did some research and it might take 5 years for me to see a large enough growth. I decided not to do that because I can't afford to keep my money "locked up" right now.
Anywho I just thought I should share
That was my understanding, and since it was post-tax money, I can use it to do whatever I like with it. I would of course keep interest-earned money in there to keep earning interest.
However, at this point with a relatively short credit history, It would probably be best to use the student loan to build credit history. I want to make payments for at least 5 years before I would consider refinancing the loan. I also can defer payments at some point in the future by going back to school 1/2 time from what I know, which could be good.
Thanks for the pointers guys! I actually made a call to my financial adviser and will be setting up an appointment to create a strategy that works best for me this week. I'll chime back in with what he suggests just to make sure its kosher.
Friends, look at these charts, memorize them, and print them out as future reminders.
These are among the "safe" stocks that "experts" recommend with "STRONG BUY" ratings. And arguably it says more than a little about where real estate prices are heading in the US which, as with stocks like these, is where all smart people were supposed to put their savings the past few years because there was a "paradigm shift" or some other such nonsense.
Point being, it's all about cycles. All prices come back down eventually, and all bubbles burst.
If you learn nothing else from this thread, learn that you NEVER NEVER NEVER buy or hold a stock that trades to its 52-week low. Short those, if anything, and you'll make killings on garbage like this :
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Sadly, I'm only short this one but I can't complain - Invalid Link Removed
In the news :
BSC (112.93, -2.70, -2.3%) lost more than 7% Friday morning after S&P said Friday that it revised its outlook on Bear Stearns to negative from stable, because the investment bank's hedge-fund troubles have damaged its reputation and could hurt its performance for an extended period.
Elsewhere, more bad news on subprime mortgages hit the financials sector. Some banks and financial institutions are exposed to the bad loans because they bought mortgage-backed securities.
Shares of American Home Mortgage Investment Corp. lost more than 48% after the company late Thursday said that it was cutting about 7,000 jobs. "Unfortunately, the market conditions in both the secondary-mortgage market as well as the national real-estate market have deteriorated to the point that we have no realistic alternative," said Chief Executive Michael Strauss in a statement.
Shares of mortgage-lending giant Countrywide Financial Corp. lost more than 4%, even though the company in a statement Wednesday said its financial condition "remains strong."
Accredited Home Lenders Holding Co.'s stock rebounded about 24% after losing almost half its market value at one point on Thursday. The mortgage lender had said that it's facing margin calls from its own lenders and warned that it may not be able to continue as a going concern.
Shares of lender IndyMac Bancorp Inc. were down nearly 10% Friday after an e-mail by Chief Executive Mike Perry to employees surfaced that described the mortgage-backed bonds market as "very panicked and illiquid." As a result, he said in the note that the lender will have to make major changes to its underwriting and pricing guidelines.
These are among the "safe" stocks that "experts" recommend with "STRONG BUY" ratings. And arguably it says more than a little about where real estate prices are heading in the US which, as with stocks like these, is where all smart people were supposed to put their savings the past few years because there was a "paradigm shift" or some other such nonsense.
Point being, it's all about cycles. All prices come back down eventually, and all bubbles burst.
If you learn nothing else from this thread, learn that you NEVER NEVER NEVER buy or hold a stock that trades to its 52-week low. Short those, if anything, and you'll make killings on garbage like this :
Invalid Link Removed
Invalid Link Removed
Invalid Link Removed
Sadly, I'm only short this one but I can't complain - Invalid Link Removed
In the news :
BSC (112.93, -2.70, -2.3%) lost more than 7% Friday morning after S&P said Friday that it revised its outlook on Bear Stearns to negative from stable, because the investment bank's hedge-fund troubles have damaged its reputation and could hurt its performance for an extended period.
Elsewhere, more bad news on subprime mortgages hit the financials sector. Some banks and financial institutions are exposed to the bad loans because they bought mortgage-backed securities.
Shares of American Home Mortgage Investment Corp. lost more than 48% after the company late Thursday said that it was cutting about 7,000 jobs. "Unfortunately, the market conditions in both the secondary-mortgage market as well as the national real-estate market have deteriorated to the point that we have no realistic alternative," said Chief Executive Michael Strauss in a statement.
Shares of mortgage-lending giant Countrywide Financial Corp. lost more than 4%, even though the company in a statement Wednesday said its financial condition "remains strong."
Accredited Home Lenders Holding Co.'s stock rebounded about 24% after losing almost half its market value at one point on Thursday. The mortgage lender had said that it's facing margin calls from its own lenders and warned that it may not be able to continue as a going concern.
Shares of lender IndyMac Bancorp Inc. were down nearly 10% Friday after an e-mail by Chief Executive Mike Perry to employees surfaced that described the mortgage-backed bonds market as "very panicked and illiquid." As a result, he said in the note that the lender will have to make major changes to its underwriting and pricing guidelines.
This stuff is scary. I'd hate to be paying 14-20% mortgages for conforming lending considering I want to do a considerable amount of real estate investing in my area. Prices have slid back a few years recently. House prices on the whole (newspaper trends) are down 7-8%.
Overall they will keep sliding. Drastically. I was harping stridently on this coming a few years ago. The grossly irresponsible - at the personal and gov't levels - will bring everyone down, at least for a good long while. That's how cycles work. You can't just "buy real estate" or anything else without the right amount of cash vs. debt and a good plan and understanding of the cycles, much less a factoring of all the real costs of ownership. Many renters will come out way ahead of the "buyers" (ie debtors) this decade, and the effects will be widespread throught the economy for *everyone*. Well, I guess buying actual real estate is fine, especially if it's your residence, but what most people are buying are mortgages and effective lottery tickets when they try to be tycoons and flip properties.
The quotes below refer to this chart :
The chart shows the amount [in $ billions] of adjustable-rate mortgages that reset each month for the first half of this year and will reset for the next 18 months, explains John. Note that these reset numbers are a driving factor in the increasing rise in foreclosures. Pay attention to the numbers I highlight in red for January through June of 2008. The largest portion of mortgage resets is not until next year.
We have just seen $197 billion of mortgage resets so far this year. That is less than we will see in two months (February and March) of next year, says John. The first six months of next year will see more than the total for 2007, or $521 billion. This suggests to me that the number of foreclosures is due to rise dramatically from the already high current levels, putting more homes into a weak housing environment.
These homes that are going to see reset prices are for the most part not going to be able to be rolled over into a traditional 30-year mortgage, because there is not going to be enough equity to get a traditional mortgage. While the total increase in payments, an estimated $42 billion, is not all that large in the grand scheme of things, to the individuals who are paying the increase, it is a large increase in their housing costs. My estimate is that this is about one-half of 1% of total consumer spending.
Along with inflationary rises in food and energy, John Mauldin concludes, this is going to continue to put pressure on consumer spending.
And this is from an AHM employee. AHM chart - Invalid Link Removed
[EDIT] Oops they've gone bankrupt now so they have a new ticker symbol - Invalid Link Removed
"Unfortunately, there were many people stuck in hotels, apartments and other places waiting to get money funded so they could move into their new home! Being in this industry for nine years, I wonder when the next shoe will drop. I have heard there are a few others struggling, and I hope somehow they can survive. Purchasing a home was supposed to be an achievement, not for every Tom, Dick and Mary. And therein lies the problem. What loans can we create to fit for your financial situation today? Many of the loans have been around a long time (option ARM), but they were not meant to be for first-time homebuyers! Same with interest only -- unless you are doing full-documentation loans. Anyway, time to move on and find new employment!
LUM stock chart - Invalid Link Removed
"What to Do When You Can't Analyze a Company
By Graham Summers
Gail Seneca just got taken to the cleaners.
Seneca is the founder and chairman of Luminent Mortgage Capital (LUM), a Maryland-based, mortgage-backed REIT. She founded the company in 2003. From 2003 to 2007, she served as LUM's CEO.
Simply put, no one on earth knows more about LUM's business than Gail Seneca.
So if you saw Seneca loading up on shares of LUM's stock, you'd think big gains were on the way. At least that's what I thought when I saw Seneca purchase $126,000 worth in May 2007.
Seneca's purchases occurred at around $7 a share, bringing her total holdings to more than $4 million of LUM's stock.
And in the last two days, Seneca has lost $3.6 million. On Tuesday, LUM discontinued its dividend and warned that it may not be able to cover its margin calls. Shares fell 90% on the news.
Seneca is just the latest in a string of insiders and other savvy investors who have gotten cleaned out by the collapse of the mortgage lending industry. That all of these people lost money just offers more proof that the lending industry is so opaque even corporate insiders don't know how much the assets they own are worth."
Good stuff. I take exception to that last line though. Anyone following the lending markets should have not been buying the stocks of lenders or real estate the past few years. They should have been selling and short. She was a greedy speculator wilfully ignoring mountains of evidence. IMO.
In other news, another thing I've been saying for years - that wars are fought economically these days.
=======
This morning, the Communist Party threatened to use its $1.33 trillion of foreign reserves as a political weapon -- its “nuclear option” to counter pressure from the U.S. Congress.
Described as a "bargaining chip" by one of China’s finance chiefs, China’s $900 billion in U.S. bonds are enough to send our economy into full-blown recession, and perhaps mark the beginning of the end for the dollar… something the Chinese clearly understand:
"China has accumulated a large sum of U.S. dollars,” states He Fan, a Chinese yes man. “Such a big sum, of which a considerable portion is in U.S. Treasury bonds, contributes a great deal to maintaining the position of the dollar as a reserve currency. Russia, Switzerland and several other countries have reduced their dollar holdings.”
The threat comes on the heels of heightened protectionist legislation from the dingbats in the U.S. Congress, senators taking the Donald Trump approach to finance: “Look, we owe you sooo much money that if you don’t do what we say, we’ll just forfeit and take you down with us.”
The Communists made clear their objective: "China is unlikely to follow suit as long as the yuan's exchange rate is stable against the dollar,” Mr. Fan said. If not, “The Chinese central bank will be forced to sell dollars once the yuan appreciates dramatically, which might lead to a mass depreciation of the dollar."
======
China owns $1.3 trillion US Dollars, and Japan $914 trillion. #3 is the Euro zone with a mere $439 trillion.
China may not be selling US Dollars outright - yet? - but they've been spending them as fast as they can for a few years now smartly buying oil, gas, uranium, gold, real estate, and any other tangible assets and resources they can in exchange for collapsing fiat currency. That's what I mean when I've often said that once again the East is buying the West off with trinkets. It was done to the natives way back when, and it's being done again now. No politics or racism in that - it's a dispassionate observation I try to use to make money, same as with the risky lenders' collapse. Simply, patterns emerge and history repeats.
"What to Do When You Can't Analyze a Company
By Graham Summers
Gail Seneca just got taken to the cleaners.
Seneca is the founder and chairman of Luminent Mortgage Capital (LUM), a Maryland-based, mortgage-backed REIT. She founded the company in 2003. From 2003 to 2007, she served as LUM's CEO.
Simply put, no one on earth knows more about LUM's business than Gail Seneca.
So if you saw Seneca loading up on shares of LUM's stock, you'd think big gains were on the way. At least that's what I thought when I saw Seneca purchase $126,000 worth in May 2007.
Seneca's purchases occurred at around $7 a share, bringing her total holdings to more than $4 million of LUM's stock.
And in the last two days, Seneca has lost $3.6 million. On Tuesday, LUM discontinued its dividend and warned that it may not be able to cover its margin calls. Shares fell 90% on the news.
Seneca is just the latest in a string of insiders and other savvy investors who have gotten cleaned out by the collapse of the mortgage lending industry. That all of these people lost money just offers more proof that the lending industry is so opaque even corporate insiders don't know how much the assets they own are worth."
Good stuff. I take exception to that last line though. Anyone following the lending markets should have not been buying the stocks of lenders or real estate the past few years. They should have been selling and short. She was a greedy speculator wilfully ignoring mountains of evidence. IMO.
In other news, another thing I've been saying for years - that wars are fought economically these days.
=======
This morning, the Communist Party threatened to use its $1.33 trillion of foreign reserves as a political weapon -- its “nuclear option” to counter pressure from the U.S. Congress.
Described as a "bargaining chip" by one of China’s finance chiefs, China’s $900 billion in U.S. bonds are enough to send our economy into full-blown recession, and perhaps mark the beginning of the end for the dollar… something the Chinese clearly understand:
"China has accumulated a large sum of U.S. dollars,” states He Fan, a Chinese yes man. “Such a big sum, of which a considerable portion is in U.S. Treasury bonds, contributes a great deal to maintaining the position of the dollar as a reserve currency. Russia, Switzerland and several other countries have reduced their dollar holdings.”
The threat comes on the heels of heightened protectionist legislation from the dingbats in the U.S. Congress, senators taking the Donald Trump approach to finance: “Look, we owe you sooo much money that if you don’t do what we say, we’ll just forfeit and take you down with us.”
The Communists made clear their objective: "China is unlikely to follow suit as long as the yuan's exchange rate is stable against the dollar,” Mr. Fan said. If not, “The Chinese central bank will be forced to sell dollars once the yuan appreciates dramatically, which might lead to a mass depreciation of the dollar."
======
China owns $1.3 trillion US Dollars, and Japan $914 trillion. #3 is the Euro zone with a mere $439 trillion.
China may not be selling US Dollars outright - yet? - but they've been spending them as fast as they can for a few years now smartly buying oil, gas, uranium, gold, real estate, and any other tangible assets and resources they can in exchange for collapsing fiat currency. That's what I mean when I've often said that once again the East is buying the West off with trinkets. It was done to the natives way back when, and it's being done again now. No politics or racism in that - it's a dispassionate observation I try to use to make money, same as with the risky lenders' collapse. Simply, patterns emerge and history repeats.
Surely everyone has heard about the stock markets crashing the past week or so?
DOW Invalid Link Removed
NIKKEI (Japan) [Invalid or Expired Link Removed]
Hang Seng (China) [Invalid or Expired Link Removed]
TSE (Canada) [Invalid or Expired Link Removed]
To those who don't know the markets, these might not seem like a big deal but they are quite dire and historic (in some cases record) moves. Many "experts" and amateurs alike are being ruined. For further reading on the housing/lending market which precipitated this crash, here's a couple of musts : Link Removed Invalid Link Removed
Many say it came as a shock and a surprise, but I disagree.
From a PM to Joshua Nov 3 2006 "If you come across any good mortgage shorts in the coming months, pls. let me know?"
Adding to some of the very important charts of lenders in preceding posts :
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And very important in re: the first article above, my post from August 3 2007 "Sadly, I'm only short this one but I can't complain - Invalid Link Removed "
I have very bearish posts on housing & lenders going back several years in varied threads, predicting a stock market crash beginning in '07 which several TBers can vouch for, but solely from my recent posts in this thread :
April 3, 2006 "For example I expect a major downturn coming between '07 and '10 likely at least starting sometime in '07 for which I'd go short or at least go mostly into cash (perhaps in order to fund real estate if interest rates continue rising thus providing some good bargains in a bursting bubble scenario?)"
July 30, 2007 "I think in 10-15 years you'll be lucky if the indexes are as high as they are now and in the meantime it'll probably get quite ugly. And that's the "bright side" if measuing in rapidly devaluing US Dollars. If measuring in gold, oil, Euros, etc. it'll look far worse. Real estate, same thing."
My point in all this is to underscore yet again that history repeats and trends stay in motion until they end. This ain't over yet, in fact IMO this trend has just begun, and the next to suffer are consumers and housing prices. Suffer severely, by historical standards and certainly by bubble standards of the past 10 years.
So too there's been a trend in my being correct. Consider that when I now reiterate my prediction that there'll be much cheaper prices on everything from houses to basses in the next few years. Those who have prudently saved and paid down debt rather than speculating and accumulating debt - including mortgage debt - will feast on great deals at the expense of the greedy & irresponsbile selling desperately to avoid going bust if they're lucky. Many will take offense at that message. Too bad. It's true.
What about uranium, which I have harped on so bullishly? After rises of between several hundred to over a thousand percent on most uranium stocks I've trumpeted the past few years, on April 04 2007 I wrote "Right now is not a good time for new entries into uranium stocks, due to recent big price spikes on the great news that uranium has recently sold for over $100 - $113 in fact, which is a continuation of a virtually non-stop run from below $10 started a few years ago. It might be currently more prudent to sell small portions as those you are holding are rising so dramatically, if those holdings have started to skew your usual portfolio balance. [...] and given the dire outlook currently for the US economy and Dollar, my best suggestion is to diversify out of US holdings."
Note that at the time uranium stocks were at all-time highs, and at the time the "sample portfolio" had 9 stocks in it - all 9 of which were uranium speculations. The portfolio was then +119% By a month later, in early May there was only 12% of the example funds in uranium, and today the portfolio is still up a total of 113% despite the recent market collapse. Many uraniums have fallen as much as 50% since mid-April, so my timing was extremely fortunate.
I personally have zero uranium holdings as of earlier this week, and previously I had only one for the past few months with ocassional, mostly losing, attempts to catch bounces in some of my faves on their way down. That's never a smart play, trying to "catch a falling knife" but I tried. Yesterday I waded back into them in earnest however, and am up as much as 20% overnight on one of them, but will sell if those positions go into the red.
I think I may have caught the bottom though, so despite the tempting huge 1-day gains I'll hold awhile because I'm still long-term bullish on uranium and nuclear power. Those who sold whole or partial positions for nice gains on the way up might consider redeploying those funds now if they wish to put them back into uranium (or better yet any "value" stocks). The markets could still easily fall a very long way though, without yet even breaking their uptrends in fact, so be very careful and quick to preserve capital if positions turn into losers.
That's all just IMO, for what it's worth ... which isn't much given I'm simply an anonymous crank online.
Those of you who are investors, what is your take on the current markets? How are you doing / reacting?
DOW Invalid Link Removed
NIKKEI (Japan) [Invalid or Expired Link Removed]
Hang Seng (China) [Invalid or Expired Link Removed]
TSE (Canada) [Invalid or Expired Link Removed]
To those who don't know the markets, these might not seem like a big deal but they are quite dire and historic (in some cases record) moves. Many "experts" and amateurs alike are being ruined. For further reading on the housing/lending market which precipitated this crash, here's a couple of musts : Link Removed Invalid Link Removed
Many say it came as a shock and a surprise, but I disagree.
From a PM to Joshua Nov 3 2006 "If you come across any good mortgage shorts in the coming months, pls. let me know?"
Adding to some of the very important charts of lenders in preceding posts :
Invalid Link Removed
Invalid Link Removed
And very important in re: the first article above, my post from August 3 2007 "Sadly, I'm only short this one but I can't complain - Invalid Link Removed "
I have very bearish posts on housing & lenders going back several years in varied threads, predicting a stock market crash beginning in '07 which several TBers can vouch for, but solely from my recent posts in this thread :
April 3, 2006 "For example I expect a major downturn coming between '07 and '10 likely at least starting sometime in '07 for which I'd go short or at least go mostly into cash (perhaps in order to fund real estate if interest rates continue rising thus providing some good bargains in a bursting bubble scenario?)"
July 30, 2007 "I think in 10-15 years you'll be lucky if the indexes are as high as they are now and in the meantime it'll probably get quite ugly. And that's the "bright side" if measuing in rapidly devaluing US Dollars. If measuring in gold, oil, Euros, etc. it'll look far worse. Real estate, same thing."
My point in all this is to underscore yet again that history repeats and trends stay in motion until they end. This ain't over yet, in fact IMO this trend has just begun, and the next to suffer are consumers and housing prices. Suffer severely, by historical standards and certainly by bubble standards of the past 10 years.
So too there's been a trend in my being correct. Consider that when I now reiterate my prediction that there'll be much cheaper prices on everything from houses to basses in the next few years. Those who have prudently saved and paid down debt rather than speculating and accumulating debt - including mortgage debt - will feast on great deals at the expense of the greedy & irresponsbile selling desperately to avoid going bust if they're lucky. Many will take offense at that message. Too bad. It's true.
What about uranium, which I have harped on so bullishly? After rises of between several hundred to over a thousand percent on most uranium stocks I've trumpeted the past few years, on April 04 2007 I wrote "Right now is not a good time for new entries into uranium stocks, due to recent big price spikes on the great news that uranium has recently sold for over $100 - $113 in fact, which is a continuation of a virtually non-stop run from below $10 started a few years ago. It might be currently more prudent to sell small portions as those you are holding are rising so dramatically, if those holdings have started to skew your usual portfolio balance. [...] and given the dire outlook currently for the US economy and Dollar, my best suggestion is to diversify out of US holdings."
Note that at the time uranium stocks were at all-time highs, and at the time the "sample portfolio" had 9 stocks in it - all 9 of which were uranium speculations. The portfolio was then +119% By a month later, in early May there was only 12% of the example funds in uranium, and today the portfolio is still up a total of 113% despite the recent market collapse. Many uraniums have fallen as much as 50% since mid-April, so my timing was extremely fortunate.
I personally have zero uranium holdings as of earlier this week, and previously I had only one for the past few months with ocassional, mostly losing, attempts to catch bounces in some of my faves on their way down. That's never a smart play, trying to "catch a falling knife" but I tried. Yesterday I waded back into them in earnest however, and am up as much as 20% overnight on one of them, but will sell if those positions go into the red.
I think I may have caught the bottom though, so despite the tempting huge 1-day gains I'll hold awhile because I'm still long-term bullish on uranium and nuclear power. Those who sold whole or partial positions for nice gains on the way up might consider redeploying those funds now if they wish to put them back into uranium (or better yet any "value" stocks). The markets could still easily fall a very long way though, without yet even breaking their uptrends in fact, so be very careful and quick to preserve capital if positions turn into losers.
That's all just IMO, for what it's worth ... which isn't much given I'm simply an anonymous crank online.
Those of you who are investors, what is your take on the current markets? How are you doing / reacting?
I'm not doing anything differently than I was yesterday. My 401(k) is in it for the long haul (25-30yrs) and the philosophy behind the NAIC club I'm in is buy into good companies, not 'good stocks' so even though it sucks to watch stuff devalue short term, nothing is realized until I sell.
Like I said in an earlier post, I feel like this is the late 80s all over again. So much spent on speculative real estate that when it comes time to pay the piper no one can and the banks go south. We're seeing this today, only this time it's mortgage lending companies and investment bank backed bonds instead of street corner banks. Credit will tighten and soon it'll be like '91-'92 all over again.
That's my thoughts anyway.
Like I said in an earlier post, I feel like this is the late 80s all over again. So much spent on speculative real estate that when it comes time to pay the piper no one can and the banks go south. We're seeing this today, only this time it's mortgage lending companies and investment bank backed bonds instead of street corner banks. Credit will tighten and soon it'll be like '91-'92 all over again.
That's my thoughts anyway.
Hey Smash,
Well i had a little invested in Uranium until about a month ago i sold it all(still had a good profit) and now trying to re-allocate it follow the Coffee house investor strategy putting investments
in low cost index funds, 50% large cap, 25% small, 25% intl
I wonder if this is wise to do right now, and if it is i am still trying to find good examples of low cost index funds you guys might reccommend.
Most of my savings is in CD's
Well i had a little invested in Uranium until about a month ago i sold it all(still had a good profit) and now trying to re-allocate it follow the Coffee house investor strategy putting investments
in low cost index funds, 50% large cap, 25% small, 25% intl
I wonder if this is wise to do right now, and if it is i am still trying to find good examples of low cost index funds you guys might reccommend.
Most of my savings is in CD's
Hi bassjamn,
Nobody knows the future. People make forecasts all the time. Sometimes they are right, sometimes they are wrong. Some people have been predicting a bear market for years now. Some people are always bullish. Nobody knows if the stock market will be up 30% next year or down 30%. Anyone who says they know where the stock market is heading is either lying to you or has deceived themselves.
So is today a good time to invest money in the stock market? Yes! It is always a good time to invest. One year from now you might lose money. In hindsight (which is 20/20) you might say that today was a bad time to invest. But there is no way of knowing that today. So invest today, understand the risks of investing in the stock market, and appreciate the returns you will receive over the next 10, 20 or 30 years.
I think the Coffeehouse is a fantastic approach. I have read the book and bought a copy for my Mom. Any low cost broad market index fund such as the S&P 500 or Total Stock Market Index is a good choice. Vanguard is high on a lot of people's list although other companies offer fine index funds as well.
I run a website called Icarra (Invalid Link Removed) that tracks several portfolios. If you search for "coffeehouse" under the shared portfolios you will see a sample of its returns over time. Coffeehouse and index fund investing will not make you rich overnight. But it will generate wealth over time. It is the right choice for 95% of the people out there, me included.
Trestles
Nobody knows the future. People make forecasts all the time. Sometimes they are right, sometimes they are wrong. Some people have been predicting a bear market for years now. Some people are always bullish. Nobody knows if the stock market will be up 30% next year or down 30%. Anyone who says they know where the stock market is heading is either lying to you or has deceived themselves.
So is today a good time to invest money in the stock market? Yes! It is always a good time to invest. One year from now you might lose money. In hindsight (which is 20/20) you might say that today was a bad time to invest. But there is no way of knowing that today. So invest today, understand the risks of investing in the stock market, and appreciate the returns you will receive over the next 10, 20 or 30 years.
I think the Coffeehouse is a fantastic approach. I have read the book and bought a copy for my Mom. Any low cost broad market index fund such as the S&P 500 or Total Stock Market Index is a good choice. Vanguard is high on a lot of people's list although other companies offer fine index funds as well.
I run a website called Icarra (Invalid Link Removed) that tracks several portfolios. If you search for "coffeehouse" under the shared portfolios you will see a sample of its returns over time. Coffeehouse and index fund investing will not make you rich overnight. But it will generate wealth over time. It is the right choice for 95% of the people out there, me included.
Trestles
It's a shame, but at this point it was necessary for Bernanke to act in some way. Given that Greenspan's cutting of rates to effectively zero caused this whole mess, I doubt that cutting rates will do anything but prolong it.
I agree totally with this article today :
Lets Put Some Lipstick On This Pig!
By Keith Fitz-Gerald
Advisory Panelist, Money Morning
Like many, I'll take the Fed's cut this morning and the meteoric rise that's taking place...
But I'm not happy about a few things... and I haven't even had my caffeine yet.
First, the world's central bankers have now collectively injected nearly $275 billion over the last few weeks. And for what? To bail out a bunch of elitist hedge fund managers who screwed up royally and a mortgage business that had badly managed itself by lending money to anybody who's breathing? What a great use of tax dollars. Way to go Team Bernanke... Not.
Second, none -let me repeat that NONE - of the things the markets were worried about before the surprise Fed announcement have changed. In fact, the markets were poised for a lower opening once again. In other words, they want to go down some more before they come back up again.
Third, people look to the Fed, but that shows how little they actually understand how the rates impact the markets. The Fed controls less than 20% of the debt market. What's more, the Fed discount rate is symbolic even after a 50-basis point cut to 5.75%. It has nothing to do with how consumers access funds - and it's available only to the big boys. So basically, the so-called cut that everybody's cheering about today does little for the average consumer.
Team Bernanke did not change its more closely watched federal funds rate, which actually does affect consumers because it drives the rates that consumers pay on various types of loans, including credit cards, home equity lines of credit, and car loans. That rate remains at 5.25 percent.
And fourth, there are an estimated $1 trillion in adjustable rate mortgages heading for resets and higher rates. According to some reports I've seen, this will translate into mortgage payments that are increased by as much as 30% or more for homeowners who have them.
Before I wrap up though and get down to the business of trading today, I do have one final thought. Two actually.
History shows that every time the Fed fights the markets, the Fed loses. Given that traders were concerned enough about what's happening to take the markets down in pre-opening, there's still some downside left from here. Perhaps another 5%.
And finally, the markets are a free market organism that trade on a combination of emotion and analytical data. The use of rate cuts like this simply keeps the rubbage in the sewer. I think it's far better to flush the pipes.
