Post: #51

I am curious how kicking the can down the road will work out for the US and the world. I am super grateful since I have do some debt adjusting under better terms and my portfolio is up a great deal, but I do wonder where this all leads to.

Not to make this terribly personal, but bankers, from my experience are not as concerned with the overall economy as much as it is making fees and bonuses. Make money on the ups and the downs. Just the average joe who really suffers. I am sure a ton of my classmates contributed to the pain in 08.

Post: #52

(05-18-2013 02:30 PM)WestCoast Wrote:  As a quick answer to assets even warren buffet says "the best single asset to buy right now is single family homes". I agree with him.

Thank you for editing this post to provide SOME sort an answer. But of course, its VERY faulty:

1) For one, its the logical error "appeal to authority". It says NOTHING on its own of YOUR beliefs. That's the extent of your market knowledge - " I do whatever Mr. Buffet does"?
2) Warren Buffet made this assertion on CNBC in FEBRUARY! A lot has changed since then. Particularly in regard to equities, but also regarding other macro factors such as the deficit, the shape of the yield curve, etc.
3) If you are as savvy an investor as you say, you know that the big money on Wall Street is famous for "front running" a trade: Buying something cheap, THEN advising the rest of the world to buy it, THEN dumping it before it all crashes. GS plays this game all the time. But of course, Warren Buffet, a savvy investor and a large GS shareholder, would NEVER do anything like that!
4) This only tells us a CONCLUSION - it doesn't tell us WHY. YOU were the one who got into the specifics about fed easing and how people "Don't understand what the government is doing".

So I beg you, for the 400th time, please tell us "what the government is doing" and why is means an asset bubble can't be reinflating. Because a lot of smart people think it might be.

Post: #53

(05-18-2013 02:49 PM)samsamsam Wrote:  I am curious how kicking the can down the road will work out for the US and the world.

Me too! And we have an expert on this very board who tells us it work out just fine, and those of us who aren't as certain "just don't understand what the gov't is doing". But he won't tell us exactly what that is :/

Post: #54

Apologies to those who think i'm being a dick. Yes, I know I'm being a dick. Sometimes, a guy's gotta make a point. And I don't make a buck off of selling stuff on a financial website; other people do...

Post: #55

I am in a good mood. Okay look I agree with warren buffet, because previously when Japan went through the same shit, they did not asset inflate. It is my belief that this will lead on to asset inflation to get houses above water.

This means you buy single family homes because you get the spread on interest and you also protect against inflation. This is a good return, also the credit needed to get homes is strict now, so you know it's not like before when Joe Schmoe could buy a house.

Again I agree with Buffet the above is my quick take.

Your below post is your opinion. People can listen to you if they want I really don't care. No where did I say I am an expert, you have put tons of words in my mouth and have zero credibility. I have nothing to prove to you, I again don't care if people listen to you or me or not, make your own call. We disagree and that is cool I am not mad or upset, take advice from who you will.

Also I am not recommending purchasing anything, make your own decisions my opinion is on here. I make no money from the website so that is a non issue it goes to charity.

Got it? Cool go make your own calls you have my opinion, or listen to dexter, truly don't care.

Do your own work, make your own calls, live with them. If I am wrong okay great cool.

(05-18-2013 02:56 PM)Dexter Morgan Wrote:  

(05-18-2013 02:30 PM)WestCoast Wrote:  As a quick answer to assets even warren buffet says "the best single asset to buy right now is single family homes". I agree with him.

Thank you for editing this post to provide SOME sort an answer. But of course, its VERY faulty:

1) For one, its the logical error "appeal to authority". It says NOTHING on its own of YOUR beliefs. That's the extent of your market knowledge - " I do whatever Mr. Buffet does"?
2) Warren Buffet made this assertion on CNBC in FEBRUARY! A lot has changed since then. Particularly in regard to equities, but also regarding other macro factors such as the deficit, the shape of the yield curve, etc.
3) If you are as savvy an investor as you say, you know that the big money on Wall Street is famous for "front running" a trade: Buying something cheap, THEN advising the rest of the world to buy it, THEN dumping it before it all crashes. GS plays this game all the time. But of course, Warren Buffet, a savvy investor and a large GS shareholder, would NEVER do anything like that!
4) This only tells us a CONCLUSION - it doesn't tell us WHY. YOU were the one who got into the specifics about fed easing and how people "Don't understand what the government is doing".

So I beg you, for the 400th time, please tell us "what the government is doing" and why is means an asset bubble can't be reinflating. Because a lot of smart people think it might be.

Post: #56

Dexter, you don't even know the difference between pump and dump and front running.

You #3 point mentions front running but describes a pump and dump scheme.

Spend some more time in Wikipedia please.

Post: #57

Mike: You are completely right, I misspoke. It is more of a pump and dump. Doesn't really change the point though.

Post: #58

Westcoast knows his stuff, i've been following him. You can disagree with his outlook on the economy, but he still knows his stuff...

Post: #59

(05-18-2013 03:07 PM)WestCoast Wrote:  and you also protect against inflation.

That is the big one for me especially with the printing presses on overtime.

Post: #60

Let's get back to the original question I posed:

You have a Great career, and you hit 62 today with 1 million in your 401k....

You are at MOST going to get 3-5 percent, which equals 30-50K a year. Most or almost 90 percent of americans are going to have a pretty shitty retirement.

Post: #61

(05-18-2013 03:34 PM)TheCaptainPower Wrote:  Let's get back to the original question I posed:

You have a Great career, and you hit 62 today with 1 million in your 401k....

You are at MOST going to get 3-5 percent, which equals 30-50K a year. Most or almost 90 percent of americans are going to have a pretty shitty retirement.

How much do you plan on needing when you retire? 30k to 50k is pretty good depending on where you live.

Post: #62

(05-18-2013 03:34 PM)TheCaptainPower Wrote:  Let's get back to the original question I posed:

You have a Great career, and you hit 62 today with 1 million in your 401k....

You are at MOST going to get 3-5 percent, which equals 30-50K a year. Most or almost 90 percent of americans are going to have a pretty shitty retirement.

Are you including that you own your home outright in that scenario? Don't forget social security you still get something.

I think 4k a month and you own your place, you would be ok.

Post: #63

Its not a great lifestyle at 30K. Can't live by yourself and own a car in Brooklyn where I live now....

And that's if I ever hit a million. A couple more market crashes and nobody is going to get to that point.

I'm trying to wean myself away from banking on my 401K for retirement and look towards other venue's.

My old training partner moved to Arizona and bought a 3 bedroom house, his two roommates pay his complete mortgage. I might have to look for something like that....

Post: #64

(05-18-2013 03:15 PM)TheCaptainPower Wrote:  Westcoast knows his stuff, i've been following him. You can disagree with his outlook on the economy, but he still knows his stuff...

I'll take your word for it. I just think he was waaaay off base in this particular post. Here's why I think so:

- Everyone knows what happened the last few times the Fed expanded credit in the face of economic difficulty; you're all familiar with how the tech bubble, the housing bubble , the mortgage bubble, etc. ended. It ended with a crash! Those were, essentially, the case of too many dollars chasing the same assets.
- What we have now is essentially the same situation. Except now we have it on a world wide basis: Prime Minister Abe is doing it in Japan (and unsurprisingly, the Yen is falling as a result), Carney at the BoE is doing the same. So you have it on a grander scale - and that suggests to me we may have a grander fall.
- For my money, I don't see how the Fed's extreme quantitative easing can produce anything other than a temporary (and ultimately disasterous) financial distortion, as has happened in the recent past.
- Think of the money supply this way: There are only two forms of monetary base - 1) currency and 2) banking reserves. Of the many trillions of dollars of monetary base created the past few years, only a small percent ($200B?) has been in the form of actual currency. All of rest is just an increase in banking reserves, which eventually takes the form of an expansion of credit. This credit can be exchanged for actual assets! They only "go away" at the point that the Federal Reserve reverses course and begins to sell Treasuries or mortgage backed securities, and retires that credit in circulation as payment.

Meanwhile, with the Fed keeping the short end of the curve near zero, all that extra money floating around creates discomfort for those holding it: There is a negative real interest rate (i.e., inflation exceeds what your bank will pay you in interest), which does what? It causes you to SEEK HIGHER YIELDS. To take more risk. To buy stocks, bonds, and real estate. The Fed is hoping you will do this!

Why? B/c the government hopes that the feeling of wealth created by the rise in prices of the assets you have bought will cause you to feel richer, and therefore SPEND more in the consumer economy. I.e., they hope that creating a "phantom" recovery (based on credit) will eventually lead to a REAL recovery! That would certainly be nice, if it happened. Maybe it will. It remains to be seen.

But the problems associated with this course of action, in my view, are the following:

1) This is all "fiat money": The currency isn't tied to gold or any actual asset, so all it does in the long run is cause more dollars chasing the same amount of goods (the very definition of inflation). AND ONE OF THE THINGS THAT GET INFLATED IN THIS SEARCH FOR YIELD IS ASSET PRICES! Houses, stocks, etc. Now, if this could be done indefinitely (I guess that's what Wall St is implying, though he won't actually tell us), then I suppose asset prices could rise indefinitely. But that doesn't happen! We've seen three times the past 13 years that eventually, the music stops, and this game of musical chairs is over. When does the music stop? When credit has been expanded too far, and people are getting credit and buying assets (such as homes!) that they can't afford. Then, since banks want to minimize losses, a GREAT UNWIND of credit begins. Fewer dollars chasing the same amount of assets has exactly the opposite effect that MORE dollars chasing the same amount of assets had: Prices DECLINE!
2) The second problem this scenario has is it causes MALINVESTMENT. I.e., instead of credit going where it naturally would in a normal credit environment, excess credit means projects get done that SHOULD NOT GET DONE. Well, that leaves a bit of a hangover when these projects crash! Just like you can use your time wisely or spend it poorly - but you pay a price years later if you've spent your time poorly -- you've nothing to show for it! Its the same with money that flows towards projects that should never have gotten funded: Our society is poorer for it.

That's what I base my opinions on. That's what I think the government is doing. Anyone who has a different view, and wants to tell us why, is more than welcome to do so and will be treated respectfully. I may even learn something! But if you reply with a childish "hahaha - anyone who thinks that knows nothing", well, you will be repeatedly invited to tell us WHY you think that.

Post: #65

^ I gave you my quick answer already. It's above you may have missed it. Feel free to debate this on another thread, I may even post.

Captain how much money do you spend a month. Break it down. Rent, partying, food, other etc. all you need is about 4 categories.

Post: #66

(05-18-2013 03:47 PM)Dexter Morgan Wrote:  - Everyone knows what happened the last few times the Fed expanded credit in the face of economic difficulty; you're all familiar with how the tech bubble, the housing bubble , the mortgage bubble, etc. ended. It ended with a crash! Those were, essentially, the case of too many dollars chasing the same assets.

I am trying to follow your logic but it is backing up what Westcoast said about real estate and why I will be putting cash into real estate myself.

If you're expecting inflation then why wouldn't you be touting real estate?

Because it may crash? Well, I would have loved to have sold my real estate at that top of the bubble. It's the people that bought/refinanced at the top of the bubble that got screwed.

Are you saying we are at the top of another bubble? I am just trying to understand your fear here.

Post: #67

(05-18-2013 03:07 PM)WestCoast Wrote:  It is my belief that this will lead on to asset inflation to get houses above water.

It will. In the very short run. If you're a flipper, I guess you could make it work. Most people aren't - they keep real estate throughout the full cycle. See my recent reply why I think that this will lead to pain in anything beyond the short run. Its like eating a snickers bar for the sugar rush - fine, but very short term.

Post: #68

(05-18-2013 03:50 PM)worldwidetraveler Wrote:  

(05-18-2013 03:47 PM)Dexter Morgan Wrote:  - Everyone knows what happened the last few times the Fed expanded credit in the face of economic difficulty; you're all familiar with how the tech bubble, the housing bubble , the mortgage bubble, etc. ended. It ended with a crash! Those were, essentially, the case of too many dollars chasing the same assets.

I am trying to follow your logic but it is backing up what Westcoast said about real estate and why I will be putting cash into real estate myself.

If you're expecting inflation then why wouldn't you be touting real estate?

Because it may crash? Well, I would have loved to have sold my real estate at that top of the bubble. It's the people that bought at the top of the bubble that got screwed.

Are you saying we are at the top of another bubble? I am just trying to understand your fear here.

Yes, you are correct: Housing prices will inflate and you will have an opportunity to profit IF you get out before the cycle turns. But someone will be left holding the bag - i hope it ísn't you. This is "junk calories" in my view and the wrong approach for the Fed to take. Their is a way to grow the economy without encouraging boom/bust cycles. Its called minimal government intervention, a return to hard currency, and balanced budgets.

As for where we are now, economist Mike Shedlock, a better expert than I, estimates we are around mid-2003 equivalent in housing prices. The bubble crashed in 2006. Well, mid-2005, really, if you count condos AND all the "selling incentives" that decreased the real sales price below the nominal price.

Post: #69

Guys go start a different thread seriously, want to see what captain wants to know.

Captain break down your expenses or PM me and I can help, this thread is being derailed.

Post: #70

(05-18-2013 03:55 PM)WestCoast Wrote:  Guys go start a different thread seriously, want to see what captain wants to know.

When did you become mod?

Post: #71

(05-18-2013 03:54 PM)Dexter Morgan Wrote:  Yes, you are correct: Housing prices will inflate and you will have an opportunity to profit IF you get out before the cycle turns. But someone will be left holding the bag - i hope it ísn't you. This is "junk calories" in my view and the wrong approach for the Fed to take. Their is a way to grow the economy without encouraging boom/bust cycles. Its called minimal government intervention, a return to hard currency, and balanced budgets.

As for where we are now, economist Mike Shedlock, a better expert than I, estimates we are around mid-2003 equivalent in housing prices. The bubble crashed in 2006. Well, mid-2005, really, if you count condos AND all the "selling incentives" that decreased the real sales price below the nominal price.

That still tells me real estate is a good investment right now. I would have no problem dumping when things heated up. I sold before the burst and got out of real estate knowing it was insane prior to the last bubble burst. I have been wanting to get back in lately.

Post: #72

@ worldwide not trying to start beef just saying it would be easier. Hopefully captain can answer. Carry in with the debate then, I'll wait for him.

Wtf? At the below, still trying to troll me I am saying post them here or PM me if he doesn't want to share with people. You know privacy?

Post: #73

(05-18-2013 03:55 PM)WestCoast Wrote:  Captain break down your expenses or PM me and I can help

You'd love to be able to spew your pretend-knowledge where no one can critique it, wouldn't you? You're a pretender, Cupcake.

Post: #74

(05-18-2013 04:00 PM)WestCoast Wrote:  @ worldwide not trying to start beef just saying it would be easier. Hopefully captain can answer. Carry in with the debate then, I'll wait for him.

Wtf? At the below, still trying to troll me I am saying post them here or PM me if he doesn't want to share with people. You know privacy?

No problem bud. At least I didn't take it as one.

Post: #75

(05-18-2013 03:59 PM)worldwidetraveler Wrote:  

(05-18-2013 03:54 PM)Dexter Morgan Wrote:  Yes, you are correct: Housing prices will inflate and you will have an opportunity to profit IF you get out before the cycle turns. But someone will be left holding the bag - i hope it ísn't you. This is "junk calories" in my view and the wrong approach for the Fed to take. Their is a way to grow the economy without encouraging boom/bust cycles. Its called minimal government intervention, a return to hard currency, and balanced budgets.

As for where we are now, economist Mike Shedlock, a better expert than I, estimates we are around mid-2003 equivalent in housing prices. The bubble crashed in 2006. Well, mid-2005, really, if you count condos AND all the "selling incentives" that decreased the real sales price below the nominal price.

That still tells me real estate is a good investment right now. I would have no problem dumping when things heated up. I sold before the burst and got out of real estate knowing it was insane prior to the last bubble burst. I have been wanting to get back in lately.

Right, but if you think through what I've said, its not only real estate that would get bid up. If you have a short term perspective and want to market time, why not do a more liquid asset like equities? You can be out in a day, and without the 6% realt-whore's fee. Besides, the same bubble rarely inflates twice in a row: First it was stocks, then housing, then bonds, then gold: I'd put money that equities will re-inflate before housing. It certainly has the last few months!