Friday, May 7, 2010

Ho, hum. Never mind.

Was innocently working at the store, talking comics, when friend Jared walked in and said, "Have you heard? The stock market has dropped 1000 points."

Yet almost immediately, this Freak Out was consigned to 'old' news. Never mind, said Nasdaq. It was all a big mistake.

I'll tell you what it does to me, though. It makes me want to find a safer place for my money. Like paying off my house. (This is going to be done). Like life insurance annuities. Like real estate or precious metals. Except all of those take more effort and time. I don't really want to be a landlord. I don't know that I believe that precious metals are any less of a gamble.

Life insurance annuities....?

Everyone hates those, it seems. But getting a modest 4 or 5% return and NOT being exposed to the stock market casino is looking more and more attractive to me. I'm willing to go against conventional wisdom if it makes sense. I can't remember which online magazine had a columnist propounding annuities -- Slate? Salon? Huff Post?

But the next time I see it, I'll actually take the time to read up.

I mentioned "timing" the market, which Jared pooh pawed. Which I get. But really, I speak of timing the market in only the most broad of terms; that is, everyone 'times' the market whenever they make a decision (or not); to invest (or not); to pay off the house and when (or not); to invest in precious metals instead or putting the money under the mattress.....(or not....................)

28 comments:

RDC said...

Annuities can play a useful role. However, keep in mind that inflation can real eat up their value quickly. If the US does go into a period of higher inflation over the next five years the return could quickly turn negative vs inflation. Compared to waiting until the higher period of inflation, and buying into the annuities when interest rates are also higher. (you can go with an inflation adjusted one, but you pay for that in rate of return)

If you do go the annuity route do not put any more with a single company then the state guarentees (after all there is a possibility of an insurance company failure).

Also since annuities generate a fixed rate of return be sure to keep enough out to pay for emergencies or other cases where a lump sum would be necessary, instead of monthly cash flow.

Jeff said...

Seems like you're still young enough that you want SOME risk, as opposed to going all out towards extremely conservative, low yielding investments. Diversify, diversify,...

If you're in the stock market you have to accept that you're going to lose money every once in a while. But if you're not in it at all you lose the potential for large upside gains.

Human nature is such that a 10% fall in portfolio is seen as unacceptable risk, but this is the price to pay to get larger gains on the upside, over decades. Thoughts?

RDC said...

I consider drops in the stock market to be buying opportunities (stock on sale). Reason for keeping a significant percentage outside of the market and liquid, to be able to take advantage. Where most people mess up is by keeping almost everything invested and then when a major drop happens they have nothing outside to be able to take advantage of the situation.

BENDBUST said...

Yesterday gold skyrocketed YOY gold is up 20%.

Nope yesterday's implosion was not a glitch, ... it was a RECOVERY by the powers to BUY.

Eventually the POWER's are going run out of AMMO to BUY. Then its' just going to keep going, ... down, down, ...

Note, yesterday even GOOD names like PPG, took the HIT, ... blue-chip is now an oxymoron in USA. Just like AAA, don't mean shit, nothing means shit.

Except BEND(tm) it means SHIT, and everyone in the world knows this thing.

Safe place for money? I'm betting the EURO, as the USA is terminally fucked. Eventually I'll shift to YUAN. I don't play gold. No fucking doubt that OIL is going to sky-rocket this off-shore fuck in the GULF is going make the cost of OIL sky-rocket. Which means is that shipping SHIT to Bend will become cost prohibited, which means all those smart folks that INVESTED their company's in BEND, are going to be looking like fucking idiots.

Hold on folks the ride ain't OVER.

Look at the country's DEBT to GDP ratio, ... USA is a 3rd world country. China is first-world, ... its NOT rocket science to predict the future. Hell look at the CIA-FACTBOOK and USA literacy rate. It's easy to predict the future.

A little GOLD in the REAL ain't bad, I got GOLD in the REAL. Don't even think about buying GOLD-PAPER, which I think is what 90% of USA morons trade. Do as Asians do, only OWN the real thing. I'll say one more thing on this, nobody in ASIA would ever own GOLD as paper. What a fucking idiot. The USA is really a nation of idiots that deserve to be fleeced to the fucking bone.

BENDBUST said...

"metal or RE"

Well dunc RE where?? Certainly not in the USA, maybe in the mid-west where they got lots of tar-sand. Those community's will grow now that off-shore oil will get shut-down.

'metal' own the real thing, NEVER own fucking paper.

Insurance, annuity, any fucking paper is worthless in today's USA, that includes money-market and stock-aggregration aka mutual funds.

We're still DEEP into devaluation of all paper assets, everybody is still selling their shit to live. What sells today? Guns, bullets, cars, motorcycles, ... real shit will get you cash. As the CRISIS worsens paper-assets will become worthless as their will be NO BUYERS.

Dunc folks need to READ to pass the fucking time commercial free. I would put my effort into lindas shop to buy used books say a penny a ton, and sell them for $1-2, ... should be a good biz. She's got the floor space. You'll survive, you'll eat. Keeping your money? Your wealth? Well like marge used to say, butter, bullets, and bacon.

Hopefully you have put away some real metal to buy the butter&bacon, I'm not a fan of mormon style food storage, but I do think that putting away bullets is a damn good investment. Not that you would want to use bullets for their intended purpose, but a box bullets will get you a tank of fuel in any economy, or a bag of food. Most special forces people are taught that if you have a gun, then the world is your shopping cart.

Don't get me wrong, I'm not like marge, I'm not going to hold my ground. I'm getting the fuck out of here. Just talking about survival. YOU got kids here, and you don't know anything else but Bend. You go to survive. I really do think the used-book biz for $1, will sky-rocket in the future as folks don't have anything else to do with their time. TV as we know will be largely government propaganda aka new-world-order, as advertisers quit to even bother.

BENDBUST said...

Oh, now I remember marge always said

"Guns, butter, and booze"

Ahh well, ... I have to admit, that the booze will be a damn-good investment, but hell I don't intend to drink, and moonshine is awful easy to make if you got corn, and sugar.

I hate butter.

I intend to get out of here long before the fucking bullets start flying.

BENDBUST said...

Yes Yes, I love the news yesterday ...

MOVE-ALONG, ... pay no attention, just a programming glitch, ...

The real interesting thing is NOW they have to make good today for all the shit they bought yesterday to engineer this recovery.

Whose money is being used?

I know the US government has the secret 'economic emergency recovery team' whose job is to BUY stock.

In my opinion the BIG, or the rich or the influential are selling, and they got the likes of PAULSON now buying the stock with USA GOVERNMENT money to cover the cash-out. Eventually the ONLY people HOLDING the worthless stock will be MA&PA USA pension funds. Then its GAME-OVER. CIVIL WAR.

Duncan McGeary said...

Heh.

Always get a response to

Computers...

Investing...

Jeff,

Mostly I'm keeping it in for the long run: Vanguard and our two I.R.A.'s. As I said, I'm going to pay off the house, a guaranteed 5.85%.

Duncan McGeary said...

RDC's.

That's good advice.

If inflation kicks in, paying off the house won't look quite so smart either....

Anyway, I think a small amount-- maybe 10% might make sense...

As far as keeping money out to buy on the dips -- hopefully, that's what Vanguard and the others are doing.

Duncan McGeary said...

Buster,

the euro is diving.

If your disaster scenario takes place, there IS NO safe place....

The investing in gold or whatever -- yeah, you're buying into a 'marketplace' which is the very thing that can fall apart.

But no thanks on the physical stuff. I know how hard it can be to unload the physical stuff -- it may seem liquid, but I don't think it is...

Actually, in real estate -- we could buy local commercial property, but probably won't. I think even at the bottom is will be overpriced.

I was thinking more of the acre in Crescent City; which could be both an investment and a getaway. But it's in a very low class neighborhood, overall....

RDC said...

Duncan,

Keep in mind that if inflation kicks in then the house value will go up. The value won't be leveraged, but real estate does make a nice hedge in times of inflation.

As far as gold goes, keep in mind that if it goes up another $500 or so it will be equal to is price in the 70's adjusted for inflation. In other words even with the huge run up it has had the last couple of years, it still lags inflation from its last peak. Gold is a short term play at best.

As you indicated paying off your house gives you a return of 5.85% (give or take with some playing around with taxes). Being debt free is a wonderful thing.

RDC said...

If Bendbust is correct, and I think that he is far from correct, then the only real investment is guns, ammo, and food.

In reality we are still in a high debt period. The actions of the government have been to increase public debt loads faster then private debt has been reduced. As a result leverage as increased and the world still faces a major deleveraging event. The governments are in effect trying to kick the can further down the road, but in doing so they are just delaying the deleveraging that must take place. The end result will be a period of very tough decisions and pretty hard times, that we still must face. It may include a period where the US government's ability to borrow is dramatically reduced, reduction in benefits, and some fairly high inflation. All of which this country and others have gone through in the past. Not pretty, but not the end of the world either.

blackdog said...

RDC: "If Bendbust is correct, and I think that he is far from correct ... "

I'm glad you said it so I didn't have to. Buster has been proclaiming the imminent arrival of the Apocalypse for the past five years.

blackdog said...

Krugman says the only outcome he can foresee for the Greek mess is Greece uncoupling its currency from the Euro, possibly triggering crises in other EU nations. Things will get bloody.

blackdog said...

Jesse Felder (My Back Pages) says the same thing Dunc has been saying: "The past decade has been one of the worst ever for risk assets. History shows that after periods like this one entire generations swear off the source of risk that caused them so much pain."

The market's bizarre plunge yesterday doesn't help inspire confidence, of course, even though most of the lost ground was quickly made up.

Bend Economy Man said...

First I do think that the stock market will come back and it is a good investment over time.

But I also think that when we're looking at all this happening, stock market crashes, credit market crisis, and yes, the bursting of the real estate bubble, it brings us back to one of the old themes we've been discussing for 5 years now: exactly what assets are these Baby Boomers--on whom Bend seems to still be staking its future--supposed to retire on in the next 10 years?

I think for those of us in our 20s-40s, or even 50s, we'll have plenty of chances to earn it back, God willing. But what about these Baby Boomers in their 60s?

Like the housing bubble, it just doesn't add up. And having called the RE bubble burst, I'm now more confident when I spot something that just doesn't add up.

I think that the retirement of the Baby Boom generation is more of a crisis than an opportunity, at least for those who are counting on the Baby Boom retiree dollar, and I don't think that overall, the Baby Boomers will be the wealthy, high-consuming retirees that the optimists talk about. I think they'll be broke and I think they'll be very demanding and long-lived and try to hang on to their jobs for dear life and will make a stink about their fate for the next 30 or even 40 years.

Duncan McGeary said...

Sorry about that.

I think those of us baby boomers who haven't actually made it, you younger folk are going to have to put out on the ice flows...

The rest will be cowering behind our little gated communities...

And, most annoying of all, those of us who have made it are going to live the high life, goofing off, while you guys work to support us...

jared said...

See what happens dunc, you mention my name twice and you out come the bubble heads, Nice!

I wasn't picking on you, there are a lot of folks lately that tell me they are going to time the market. So it was more just a generalization to rethink and check yourself, nothing more.

-later

BENDBUST said...

18 posts glad you bitches can still read ...

BENDBUST said...

Buster has been proclaiming the imminent arrival of the Apocalypse for the past five years.

*

HBM has been feeding us shit via his SORE for years.

I take exception to this statement, I have NEVER said 'apocolypse', I have NEVER advocated 'guns,beans,&butter' vis-a-vis marge.

What I have consistently said is that I LOVE BEND when we have these depressions ( think 1983 ), I have said these are the best of times.

End of the world? Apocolypse? Big fuck you HBM. THE US fucking public could take 90% hair-cut in the wallet and still survive and be the biggest fucking parasitic nation on earth.

Cock-Roaches survive, and the US public are cock-roaches. End of the world for US cockroaches? Hell no, what I have said is that when it really gets bad, we'll start another war, we'll send all the blacks&mexicans off to war to die, there will be a new baby-boom, post 2018, and life moves on.

Apocolypse? Hell no.

I have always that a recession is when your neighbor don't have a job, and a depression is when you don't have a job. Bend is in a depression NOW, end of the world? Hell no, best of fucking times in my my world and mine.

I just like to write about shit eating miscreants ( benders ) going down.

I have NEVER advocated storing food, nor have advocated arming. I do know for a fact of times of peril that boxes of bullets are easier to barter than ounce kuggerands. This is a fact.

Lastly, having now spent over 40 years in this shit-hole called Bend, I'm now making every attempt for an orderly exit ASAP. MY exit has MORE to do with MY Bend of the 1960's having been run-over by CALI assholes who now run our city government. Bend's going down and HARD, but end of world or apocolypse? Hell no, couldn't happen to a finer bunch of assholes.

BENDBUST said...

the euro is diving.

If your disaster scenario takes place, there IS NO safe place....

*

Pleeeze DUNC quit the fucking SHIT, the EURO has been NOTHING been up since 2000, and before that the DM had gone up 500%, and since euro conversion I have seen 50%. The fact that a few days ago the EURO went down a few percent and you look at a one-day drop as a harbinger of information shows that well your a 'min-wage guy' to the bone.

There is NO fucking disaster here, the OLD people, the people who hold stock in the USA the pension funds are going to get wiped out. The trillions saved post 1960's have all been stolen by WALL-ST who own OBAMA&BUSH&CLINTON,...

Disaster? FUCK NO. It's ONLY fucking MONEY, if anything from reading my SHIT for 4+ year dunc haven't you figured I don't give a fuck about money?

The future I don't see the EURO or DOLLAR going much of anywhere, a little might be safe.

I completely agree with RDC that de-leveraging is what's going on, now EVERYBODY is selling EVERYTHING. They're selling what's real.

PAPER-WEALTH be it the stock-market, or annuity's, or money-market, or gold-cert, ...its all being hosed, nothing can book mark-to-market. The entire CHARADE is imploding before our eyes.

But end of the world? FUCK NO.

I own all my property 100% NO-DEBT, I'm already off-shore divested. None of this shit hurts me ONE FUCKING IOTA, its all show to me. Even what BEM writes above, is essentially what I'm saying is that the PENSION folk get wiped out, but I'm not effected, because in the 1970's I made the realization that ALL the fucking stock market was a scam. That said, I made public issues (IPOS) and made money off this gig, but NEVER did I buy stock, I only SOLD stock to MORONS.

End of the world? Fuck NO.

What fascinates ME, is simply watching our GOVERNMENT ROB trillions of dollars from OLDSTER's who bought the RETIREMENT program HOOK-LINE&SINKER.

Like BEM says above, so the oldsters now have to work another 20 years, BIG FUCKING DEAL. When I say 'civil war', ... I'm talk more about politics. It's going to be young vs old soon. The young are going to pay for the old ( think social-security ), and old ain't got shit, and the young ain't got shit. Should be interesting.

End of world? FUCK NO

End of the day the young move in with the OLD and we all live like Asians, the USA quits living beyond its means. End of the world? FUCK NO

BENDBUST said...

In summary, having read all the above comments I really think we're all in consensus and saying the same thing.

HBM as always riles my goat by saying stupid shit.

I used to think that RDC was full of shit, but nowadays his posts are starting to make sense. Could this be RDC coming around? What I'm saying is he writes like a fucking MBA student. Hey big-guy we're here to have fun. Quit being so fucking serious.

Dunc as always doing his Ned-Flanders thing of 'begging the question'. What a fucking bore.

Well at over 20 posts on a day-to-day blog, it looks like dunc's site is NOW the goto for those that want to smell the rock that all the dogs in BEND piss on.

Shit we even GOT BEM to post today, and BEM is in my mind saying the same as me, the oldsters are going to lose their pensions. Hey its ONLY money. Not to be a religious ass and I'm not, I'm a buddhist, but when JEEBUS christ was asked about giving the money to ROME he said "WHOSE FACE IS ON THE COIN"?? Give unto Caesar what is Caesar this paper-money that ALL the shit-eaters in the USA love so much always belonged to the GUBMINT, the USA is and always has been a KLEPTOCRACY, government of and for the criminal class, so called 'elite'. End of the world that trillions of oldster money get moved to the elite? Hell no, saw it coming all along, and wrote about it since the 1970's.

Time to go back to bed, its now 4am. Still got jet-lag.

Duncan McGeary said...

So which is it? Inflation? Deflation? Both?

Stagflation?

BENDBUST said...

It's De-leveraging.

Folks are selling anything they can OIL, GOLD, auto's, ... jewelry, .. to raise cash to live. Real assets are the ONLY thing selling. Nobody wants paper.

Paper is becoming worthless.

We're in a depression.

Normally recovery mechanism would lead to inflation, but business isn't reacting. 2010 is going to be much worse than 2009 for most biz. More layoffs in 2011. More un-employment.

It's been said before and I'll say again, NOW is only 1932 in the same-equivalent of the Great-Depression, it was not until the great war of 1942 that the USA depression ended.

Today is none of the above, we're in a time a de-leveraging where all assets are being DUMPED, this is why you see a 50% DROP in BEND RE in the last 2 years. Fewer buyers with time as less people have money, eventually shit will be down 90%.

Everything now is being un-wound it may take a decade for everyone to UNLOAD their shit. As time progresses there will be less buyers. Price drops will accelerate. Today there is NO stabilization on the horizon.

Today is not stagflation, inflation, or dis-inflation. We're in a FULL on DEPRESSION. More and MORE folks are losing their jobs and selling everything they have to eat, and eventually end up on the street or living with family.

I think its been said here, but I'll remind. Normal recovery might have led to inflation. But this fiasco is going to take decades to un-wind. Inflation, stagflation are only metrics of the currency. Only numbers for an economist. Now we're in a full on depression. Which means MASSIVE unemployment, closure of business.

End of the world? Hell no, couldn't be happening to a nicer country.

For the people who don't have ANY MONEY, they can care less if there is inflation or dis-inflation, or stagflation. I think back in the 1970's the government could use its magic bullets, and folks became obsessed with forms of positive and negative inflation. Today there are no bullets left, the USA is a debtor nation, the resources are BEND-GONE. Its a new world order and the USA is BENDFUCKED(tm).

End of the world? Hell no. Read a book. Love your family. Live simple, enjoy the ride.
USA is simply returning to its pre 1920's semi-agrarian penal colony slave colony of illiterate peonage. The good all days are around the corner. Post WWII the USA had it good for 50 years, as a debtor nation, now its game-over.

BENDBUST said...

Some here might ASK how can I invest in my brothers misery, aka depression.

Well typically you don't want to invest in a sinking ship. Sure BEND RE is cheap, but its going to go down even more.

I would look where the action is, and invest there, where the future is bright. Where people are employed. These places exist. To often folks are like ostrich and ONLY know their own misery, and have no idea that over the pond life is good.

For me wealth has ALWAYS been about preservation, NEVER in my life have in invested for speculation. When I here this group talk about investing, I think speculation. Preservation of income is the rule of day. EURO & YUAN will preserve, ditto for the CANADIAN dollar. There are many safe haven.

Canadian banking system did NONE of the stupid shit of the USA. A good investment in my mind if I were younger and HAD TO BUY RE, might be vancouver BC, ... Asian will continue to move there and have money. No way in HELL tomorrows RICH will come to Bend (tm-fucked).

All my life I only think about preservation of wealth. This is why I have always despised ALL forms of paper, other than when I'm issuing and selling the paper.

All my life I have advocated keeping low profile and not rubbing your wealth in your neighbors face, .. now is the best of times to appear simple.

End of the world? Only if you do stupid shit, like drive around in a lexus and dress like a fat-cat, you might become a target. Otherwise life is good. Enjoy the good things in life like hiking, biking, fishing, .. the thing that are free, like fucking in a meadow on a warm day.

blackdog said...

"Anyway, I think a small amount-- maybe 10% might make sense..."

A rule of thumb I've heard is to take the number of years until your anticipated retirement, multiply it by three, and that's the percentage of your portfolio that should be in stocks. So if you're going to retire in 10 years, 30% should be in stocks.

Personally I think that's too much, in today's economic climate.

RDC said...

A better rule of thumb is 100 - Age.

So if you are 50 the 100-50=50%.

The problem is that in this day and age the life expectancy that one needs to plan on is 80+. That means that your savings at 65 needs to carry you 15+ years. If you are totally out of equities once you retire your chances of doing that is slim to none.

Now when you talk about this time. Lets look at the recent drop. If someone had 50% equities, 30 per cent bonds and 20% cash. After the drop someone would have lost around 25% of their total investment, but then if they had used their cash to buy in then with the return on stocks and bonds they would have a networth about 10% higher then when the collapse started.

THe problem is most people are selling when they should be buying and buying when they should be selling.

Duncan McGeary said...

I've got 9 or 10 years, so I know what happens this week or next, or even next year, isn't going to tell the tale.

I only money I could've done anything about is the money I could've pulled out for the House. I was waiting for summer for a number of reasons.

The fact that it is so scary to me, means it's may actually be a good time to go counter to that.

It isn't clear cut the way the housing market was.

Up until the last few years, I felt the absolute best use of my money was in the store, but I've maximized that route. Can't fit anything more in...