Posted on 09/03/2014 5:36:27 AM PDT by Citizen Zed
No, that’s not the “real question,” because it is largely irrelevant. What’s done is done. Looking back on whether the money should have been moved to cash at that time also misses the point of investing - it’s a predictive exercise, not a retroactive, arm-chair quarterbacking exercise. That’s why every single investing commercial has the disclaimer, “Past results are not indicative of future performance.”
The *real* question is the one I asked: should someone who has cash now move their cash into the market now?
Anyone can look back and tell you what you SHOULD have done. If the market had crashed between now and then, *I* could look back and say, “Hey, you SHOULD have moved it to cash like me!” It’s an idiotic statement because it uses the perfect knowledge of what transpired to inform a decision that was made months ago.
So, let’s stick to the principles of *investing*, which is about predicting where to put your money NOW for gains in the FUTURE.
The second part of your response is predictive in nature, but I think fails to analyze how a dollar collapse will affect the market in the short term versus the long term. Everyone knows that currency deflation eventually props up markets because more dollars are required to represent the same physical value. We’ve actually been watching that in slow motion to some extent now.
What happens in the case of a precipitous currency decline, however? Usually the immediate impact is a big dip in the local stock market. Look at Argentina for an example. They had to indefinitely close the market to prevent further bleeding. Why?
1. Purchasing power is shattered, so revenues fall.
2. Company cash holdings become valueless, making many companies suddenly over-leveraged.
3. The cost of doing business rapidly increases relative to the value of outstanding accounts receivable. ALL companies in Argentina, for example, stopped doing NET30 terms. Hell, many of them paid wages on a daily basis.
Bottom line - many companies, even healthy ones, suddenly go bankrupt and die.
At any rate, the key is that the market usually goes down first before it goes back up. If you can get in while it is on the way down, and before they close the markets, you can turn your cash into meaningful shares by investing not in funds, but in companies with zero debt.
Again - irrelevant for now. I don’t think we will see an Argentinian style currency collapse prior to a regular stock market “correction.” (And if we do see a currency collapse, I am covered in other ways.)
So back to the basic investing question. I have cash. Do you think NOW is the right time to put it in the market?
All I know is that my Ruger RGR stock is going up.
I'm curious, what does monumental equal?
Depends on the account holder’s fees plus IRS penalties for early withdrawal (prior to 59.5) plus other fees. My aunt recently withdrew $50K from hers to try to hide the money during a nasty divorce. She only net $34K. That’s pretty substantial in my opinion.
Absolutely you should invest your cash. It depends on your portfolio where you should invest it. How much cash you have, where you’re already invested, your age, your total net worth, size and ages of your family.... all of these determine HOW you should invest the cash. But sitting out is what we do when we’re afraid. I’m not afraid of this market. There are buys, and there are don’t buy. Real estate is a buy. There are equities that are buys. There are some mutual funds that may be buys. Some sectors are buys and some aren’t. Sitting out with cash while the market soars is not a strategy that I have ever employed. But... at the end of the day... its your call.
When I sell an equity, a fund, whatever... I almost never go to cash. I have my new investment picked out and I move to that. A time or two I dumped to cash, but that was short lived and was because it was an emergency and I felt like I need out of that particular equity right now.
Ha. You really hedged your bets with that answer, didn’t you?
Invest now! In what? Well, that depends, so let me cover all the bases! (Or cover none by being specifically ambiguous!)
SO, to be fair, I *have* investments. And I have cash. My cash position right now is significantly larger than my investment position. On purpose. We are one event away from market meltdown. At this point, it could be just about anything. That doesn’t mean I’m sitting totally on the sideline. I’m just holding a reserve so I’m ready to pounce when it happens.
I didn’t hedge my position. If you want to message me the specifics of your portfolio I’ll give you specifics. I answered your question. Invest your cash. Invest it smart where it makes sense for you. That is your answer. I have two best friends who have been sitting in cash for the past two years. They do it because they are afraid of the impending market collapse they keep reading about. Its their call. But they’re going backwards and they don’t realize it.
Why wouldn't you just go to cash in your 401(k)? Just a few mouse clicks ...
If you’re talking about just moving money between cash and mutual funds within a 401k..... odds are you’ll come out shorter than if you had just stayed in the funds. That’s what happens to most people. In theory we get out when the market is down and back in at just the right time. That’s called timing the market. You better be way better than average if you think you’ll make money doing that. But if you’re still working and several years from retirement, why would you have money in a tax defered account that is sitting in cash? You have time... and time has a track record of the market going up. If you have a crystal ball and know exactly what the future holds... then I guess you’re more savy than most. Best of luck!
this is from CNBC.
CNBC has interviews which are paid appearances.
selloffs benefit the bargain hunters and hurt those who are naïve enough to buy on margin.
You sell the house for 220k. You get 20k down. You loan them 200k at 6.5%. You amortize it on either 20 or 30 years (their choice) but you balloon it in 10 years. This gives them time to get their credit rating fixed and possibly refinance in a few years. It gets you out of the deal in 10 years either way..... or if they're still paying and you still like them you can loan them money again.
You've just taken 200k out of the "risky" market. You've picked who you want to do business with. You have a hard asset behind your investment instead of a CEO's promise.
You setup an escrow account and collect their taxes and insurance and pay those annually.
You'll draw about 1600 dollars a month. After 10 years they'll still owe you 170k. You can reinvest the 1600 a month or whatever you want to do with it.
If you get the house back (which I did on one of them) you put 5 or 6k in it and resell it, and start over.
You can't beat that deal, and I could sell one every week like that if I had the resources. There are tons of people out there who will jump on the opportunity to own instead of renting. You just pick the most responsible that you want to be in business with.
I like the idea except...
Mortgage rates are considerably better than 6.5% right now. Go to LendingTree and look at their LoanExplorer and you’ll see that.
If I sold it, that would be better than renting it because I have no desire (or energy) to be a landlord. Too busy.
If I sold it, that would be great until they stop paying me. Then I’m tied up in foreclosure proceedings for years. My friend stopped paying on his house over 5 years ago and has been tied up in the courts since. (He does have cause - they refused him a legally required modification.) Nonetheless, he is now in the process of gutting the house while he still “owns” it, and putting all the fixtures in a new fixer-upper that he bought with cash. Sadly, this is all perfectly legal. He’s taking everything, even the heating and AC.
(Don’t ask me why this guy is still my friend despite this arguably immoral behavior. Let’s just say that I would trust him with my family’s life, but when it comes to his mortgage company, all bets are off.)
So, if you believe like I do, that we are in for a major crash and, with it, higher unemployment, I have no desire to sell a house to someone.
That’s just a headache I don’t want to deal with. I need a better investment vehicle.
I’m thinking solid consumer giants, food, and commodity generators (like oil companies) once the correction kicks in. Preferably companies that have little debt and high book value to lean on.
If you really believe an economic collapse is coming... you want to own real, hard, assets. That's fundamental in my opinion.
In Oklahoma it is not perfectly legal. In fact, its a felony.
Why Friday 13th? Is that the day they have everything strategically planned to happen worldwide? I think people will get freaked out about your Friday 13th statement.
Appreciate the tips and optimism
https://www.google.com/search?btnG=1&pws=0&q=blood+moon+harbinger+Sept+13%2C+2015&gws_rd=ssl
Friday the 13th is just icing on the cake.
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