Investing, Stock Market and Retirement Planning Thread

[eddy]

Thanks guys, I just saw a headline pop up about it being projected for $4.60 and didn't know if anyone else had any insight on it or if it's a thing that may continue going up (it's had a good year).

[dodint]

If it's had a good year, it's the first one since 2005.

[columbia]

Due to my employer making it MUCH easier (and cheaper) to invest beyond the match point of the 403b, I recently decided to liquidate my pretty meager taxable accounts. There was sure to be another crash, before I had any need to put any sizable amount of money in that direction, so no need to get caught in that. Now that WWIII seems to be upon us , I feel pretty ok about that decision.

[columbia]

Will value stocks do better than growth stocks? I don't know, and I don't care -- my index fund owns both. Will health care stocks be the best bet for the next 20 years? I don't know, and I don't care -- my index fund owns them. What's the next Microsoft? I don't know, and I don't care -- as soon as it's big enough to own, my index fund will have it, and I'll go along for the ride.

With an index fund, you're on permanent auto-pilot: you will always get what the market is willing to give, no more and no less. By enabling me to say "I don't know, and I don't care," my index fund has liberated me from the feeling that I need to forecast what the market is about to do. That gives me more time and mental energy for the important things in life, like playing with my kids and working in my garden.

http://money.cnn.com/2001/08/29/investing/Zweig/

[ExPatriatePen]

Peter Schiff, who predicted the 2008 collapse, has some sage words.

http://www.zerohedge.com/news/2015-12-0 ... pse-coming

@Guinness

[dodint]

Won't the impending Syrian War prop it back up?

[ExPatriatePen]

Won't the impending Syrian War prop it back up?

Economic history shows that wars "help" the economy, in the short term. But like Fed actions, they're detrimental in the long term.

Unless you're talking about WWIII and a massive rebuilding afterward ala the "Marshall Plan".
But no amount of economic stimulation is worth a war of that scale (of any scale actually)

[Troy Loney]

And hasn't he been crying wolf ever since?

[ExPatriatePen]

And hasn't he been crying wolf ever since?

That depends. Has he been predicting this as an "end game" state? Yes.
Has he ever said it was imminent before? If so, I haven't heard him sounding the bell before this.

[Troy Loney]

And hasn't he been crying wolf ever since?

That depends. Has he been predicting this as an "end game" state? Yes.
Has he ever said it was imminent before? If so, I haven't heard him sounding the bell before this.

Is he one of the characters in the upcoming movie "the big short".

I'm getting the sense that it wasn't that hard to predict that the bottom would fall out of the housing market back then. Problem is that the people who knew were making too much money to care, or people who had the info in front of them were also kneeling at the alter of the financial wizards running the bank and too blind to see what was in front of their faces.

[MrKennethTKangaroo]

Shiff was not a main character in the book.

This gentleman is not really familiar with Shiff's work, but is it any surprise that americans have a negative net worth? Or a net worth of $5,000? Has there ever been a point in history when the average american (or anyone in the world, for that matter) had a strong net worth?

[dodint]

The Japanese are big savers. At least they used to be, might've changed in the last decade.

[ExPatriatePen]

And hasn't he been crying wolf ever since?

That depends. Has he been predicting this as an "end game" state? Yes.
Has he ever said it was imminent before? If so, I haven't heard him sounding the bell before this.

Is he one of the characters in the upcoming movie "the big short".

I'm getting the sense that it wasn't that hard to predict that the bottom would fall out of the housing market back then. Problem is that the people who knew were making too much money to care, or people who had the info in front of them were also kneeling at the alter of the financial wizards running the bank and too blind to see what was in front of their faces.

Hindsight is always 20/20.
I remember going to lunch with a young lady back in 2007. She had just inherited her aunts house in a nice area of LI. She wasn't stupid, she was an attorney who I believe handled property closings. She was holding out for an extra $10-15k if I remember correctly. Something like $365k instead of $350k. (That's a small three bedroom cape cod in that area in 2007).
I remember telling her to take the money and run. She actually got pissed off at me for suggesting that the market couldn't go much higher. (I was making six figures and felt like *I* had been priced out of the market)
I spoke to a friend of hers a couple years later, she'd moved into the house because she had dropped the price to $290k and still couldn't sell it, but her existing house was marketable. (She didn't want to rent out the aunts house).
So, no, not everyone understood, if they had, there wouldn't have been a bubble.

The Japanese are big savers. At least they used to be, might've changed in the last decade.

They still are, but not to the degree that they were in the 80's. The lost decade and demographics (retirees) took care of a lot of that.

[Troy Loney]

And hasn't he been crying wolf ever since?

That depends. Has he been predicting this as an "end game" state? Yes.
Has he ever said it was imminent before? If so, I haven't heard him sounding the bell before this.

Is he one of the characters in the upcoming movie "the big short".

I'm getting the sense that it wasn't that hard to predict that the bottom would fall out of the housing market back then. Problem is that the people who knew were making too much money to care, or people who had the info in front of them were also kneeling at the alter of the financial wizards running the bank and too blind to see what was in front of their faces.

Hindsight is always 20/20.
I remember going to lunch with a young lady back in 2007. She had just inherited her aunts house in a nice area of LI. She wasn't stupid, she was an attorney who I believe handled property closings. She was holding out for an extra $10-15k if I remember correctly. Something like $365k instead of $350k. (That's a small three bedroom cape cod in that area in 2007).
I remember telling her to take the money and run. She actually got pissed off at me for suggesting that the market couldn't go much higher. (I was making six figures and felt like *I* had been priced out of the market)
I spoke to a friend of hers a couple years later, she'd moved into the house because she had dropped the price to $290k and still couldn't sell it, but her existing house was marketable. (She didn't want to rent out the aunts house).
So, no, not everyone understood, if they had, there wouldn't have been a bubble.

The Japanese are big savers. At least they used to be, might've changed in the last decade.

They still are, but not to the degree that they were in the 80's. The lost decade and demographics (retirees) took care of a lot of that.

Maybe I wasn't clear. But that anecdote has no relationship to what i'm saying. Selling a house and analyzing investment securities and stock prices for financial institutions are two different things. I imagine Schiff was part of the latter crowd.

[ExPatriatePen]

Maybe I wasn't clear. But that anecdote has no relationship to what i'm saying. Selling a house and analyzing investment securities and stock prices for financial institutions are two different things. I imagine Schiff was part of the latter crowd.

Well, they are and they aren't. Both were calls on the strength of the housing market. One was just higher stakes than the other.

Anyone in finance who understood CDO's knew they were bundles of mortgage obligations.

[Troy Loney]

Maybe I wasn't clear. But that anecdote has no relationship to what i'm saying. Selling a house and analyzing investment securities and stock prices for financial institutions are two different things. I imagine Schiff was part of the latter crowd.

Well, they are and they aren't. Both were calls on the strength of the housing market. One was just higher stakes than the other.

Anyone in finance who understood CDO's knew they were bundles of mortgage obligations.

Both are market participants, I think that's as far as it goes.

But seriously, listen to some accounts from some of the players during that time, and you can see why nothing was said and why no one cared to think twice. And I'm not talking about individual homewners.

[ExPatriatePen]

Maybe I wasn't clear. But that anecdote has no relationship to what i'm saying. Selling a house and analyzing investment securities and stock prices for financial institutions are two different things. I imagine Schiff was part of the latter crowd.

Well, they are and they aren't. Both were calls on the strength of the housing market. One was just higher stakes than the other.

Anyone in finance who understood CDO's knew they were bundles of mortgage obligations.

Both are market participants, I think that's as far as it goes.

But seriously, listen to some accounts from some of the players during that time, and you can see why nothing was said and why no one cared to think twice. And I'm not talking about individual homewners.

I've read extensively on the subject. Devouring books like Andrew Ross Sorkins "too big to fail" and Michael Lewis "The Big Short" as well as Paulsons book "On the Brink". I find them fascinating.
I think many cared. Those that stood to make profits. Many more were only worried about their own small tranche of responsibility and the overall bureaucracy of the financial system is what led to things crashing down. Even more so, the governmental initiatives like "red lining" prohibitions put in place under people like Henry Cisneros. But we debated that for years on the old board.

[MrKennethTKangaroo]

And hasn't he been crying wolf ever since?

That depends. Has he been predicting this as an "end game" state? Yes.
Has he ever said it was imminent before? If so, I haven't heard him sounding the bell before this.

Is he one of the characters in the upcoming movie "the big short".

I'm getting the sense that it wasn't that hard to predict that the bottom would fall out of the housing market back then. Problem is that the people who knew were making too much money to care, or people who had the info in front of them were also kneeling at the alter of the financial wizards running the bank and too blind to see what was in front of their faces.

IKTKHO, it wasn't so much that the people in charge of large banks were whistling past the graveyard, it has more to do with a lack of understanding of what was at risk.

Did the CEO, or the board, or really anyone at AIG understand that AIG could ultimately need like $80 billion to pay counterparties for credit default sawps? probably not

When someone purchased a home -with no money down, interest only for 12 months, with low teaser rate - did they realize that there was zero chance that they could make monthly mortgage payment? probably not

did anyone at S&P or Moodys understand what the hell they were rating? Obviously not.

no question that there were some really bad actors actors in the financial crisis-particularly the lenders-but this gentleman feels that basic ignorance was the key proponent.

[ExPatriatePen]

And hasn't he been crying wolf ever since?

That depends. Has he been predicting this as an "end game" state? Yes.
Has he ever said it was imminent before? If so, I haven't heard him sounding the bell before this.

Is he one of the characters in the upcoming movie "the big short".

I'm getting the sense that it wasn't that hard to predict that the bottom would fall out of the housing market back then. Problem is that the people who knew were making too much money to care, or people who had the info in front of them were also kneeling at the alter of the financial wizards running the bank and too blind to see what was in front of their faces.

IKTKHO, it wasn't so much that the people in charge of large banks were whistling past the graveyard, it has more to do with a lack of understanding of what was at risk.

Did the CEO, or the board, or really anyone at AIG understand that AIG could ultimately need like $80 billion to pay counterparties for credit default sawps? probably not

When someone purchased a home -with no money down, interest only for 12 months, with low teaser rate - did they realize that there was zero chance that they could make monthly mortgage payment? probably not

did anyone at S&P or Moodys understand what the hell they were rating? Obviously not.

no question that there were some really bad actors actors in the financial crisis-particularly the lenders-but this gentleman feels that basic ignorance was the key proponent.

Up until 2007 you could have struck almost any deal for a mortgage, refinanced a few years later and made out.
As long as the trajectory of the housing market was "up" there was very very very little risk.
It wasn't sustainable and it wasn't realistic.
I knew of a friend who bought a house in 1996 with an interest only mortgage. They paid a ridiculously small monthly payment and sold the house at a profit in 2005. That was a once in a lifetime event but people tend to get used to the current economic climate and think it will stay the same forever (or at least for the foreseeable future). Not so.
IMHO, this is how people view inflation today.
It's not a mater of if, but a matter of when, the return of inflation will offer similar opportunities to make $$$.

[Guinness]

Peter Schiff, who predicted the 2008 collapse, has some sage words.

http://www.zerohedge.com/news/2015-12-0 ... pse-coming

@Guinness

There's the theory that when a government gets backed into a corner like this, an "easy" solution is for it to go out and stir up a war. The bigger the mess, the bigger the war... and that's what I'm afraid we're seeing in the Levant.

But hey, whatever. Bless the God of all people. Drink the wine. Let the world be the world.

[columbia]

He's predicted 100 of the last 1 market crashes.
Possibly even 500.

[MrKennethTKangaroo]

Interest rates. ITS HAPPENING PEOPLE

Discuss.

[ExPatriatePen]

Interest rates. ITS HAPPENING PEOPLE

Discuss.

In this case I think the market had pretty much anticipated this.

I'm not sure the rate hike will effect equities much, but certainly I see signs the early of the economy stalling. Since the fed has very little wiggle room... We could see deflation.

The housing market will probably spike a bit as folks rush in to beat further increases, then you may see that market stall.

It'll f'un to watch.

The only think for sure is volatility. VIX baby.

[columbia]

Interest rates. ITS HAPPENING PEOPLE

Discuss.

I take this advice, which is to do nothing...

“The idea that a bell rings to signal when investors should get into or out of the market is simply not credible. After nearly 50 years in this business, I do not know of anybody who has done it successfully and consistently. I don't even know anybody who knows anybody who has done it successfully and consistently.”
― John C. Bogle, Common Sense on Mutual Funds: New Imperatives for the Intelligent Investor

[Miami Vice]

quit maxing out your credit cards