MarketWatch! (was: If market drops more by the end of today: GET OUT)
10-10-2008, 11:45 AM
#1
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MarketWatch! (was: If market drops more by the end of today: GET OUT)
If it looks like it will close lower at the end of the day than at the start, GET OUT. Tuesday will likely be a bloodbath.
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10-10-2008, 11:58 AM
#5
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That's not a good suggestion Jason. If anyone is invested in the stock market it would be crazy for them to get out now. It's not like your economy is going to suddenly stop. Recessions are not the end of the World.
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10-10-2008, 12:03 PM
#7
My parents lost 60k+(at last count) this past week from from RRSP's/RSP's (Canadian 401k) but they are not going to pay penalties and taxes on pulling current money out.
The market WILL recover. If doesn't then all of this **** is a moot point anyway, and you best have your end of the world stash/ammo/food ready to go.
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10-10-2008, 12:08 PM
#8
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I took my 401k out of mutual funds last year. You?
I started buying bear funds several months ago (funds that go up when the market goes down). You?
I bought gold when it was $650. You?
I sold gold when it hit $950. You?
I locked my mortgage into a long term low interest rate. You?
I tried to convince all my friends to NOT buy a house since 2005. (y8s know this) You?
Why do I know this? Gary North is my financial adviser.
Why did I pick Gary North? Because I educated myself on economics and understood the seeming mystery of banking, the monetary system, and the stock market.
Gary is the ONLY adviser I know, who understands that the Federal Reserve and the entire monetary system is a complete scam and a house of cards.
Read his recent articles:
http://www.lewrockwell.com/north/north659.html
http://www.lewrockwell.com/north/north658.html
http://www.lewrockwell.com/north/north657.html
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10-10-2008, 12:15 PM
#11
Seriously? I find this to be more in line with things:
http://www.moneymorning.com/2008/10/...vidend-yields/
We're paying the piper... With 40 years to go on the IRA I'm okay with Riding the Snake. Dollar Cost Averaging also aides me nicely keeping me from buying too much when it's overpriced and buying too little when it's undervalued.
http://www.moneymorning.com/2008/10/...vidend-yields/
We're paying the piper... With 40 years to go on the IRA I'm okay with Riding the Snake. Dollar Cost Averaging also aides me nicely keeping me from buying too much when it's overpriced and buying too little when it's undervalued.
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10-10-2008, 01:13 PM
#13
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I took 90 percent of my money out of the stock market in 2004. Took some long term gains but overall good choice.
Bought a fixer-upper house with the money, fixed it up and resold it for a big profit before I went to law school (about a year's income after taxes).
Now I'm in another underpriced fixer-upper house. If I sell in the next year I'll probably break even due to the sudden housing surplus (government and school cutbacks are massively reducing the population here so there is too much empty property at the moment).
My money is mostly in cash until I graduate law school.
Bought a fixer-upper house with the money, fixed it up and resold it for a big profit before I went to law school (about a year's income after taxes).
Now I'm in another underpriced fixer-upper house. If I sell in the next year I'll probably break even due to the sudden housing surplus (government and school cutbacks are massively reducing the population here so there is too much empty property at the moment).
My money is mostly in cash until I graduate law school.
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10-10-2008, 01:29 PM
#14
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I don't think everything is collapsing.
First off, everyone who is talking about the problems is lying about what caused them. They're also suggesting solutions that won't fix the problems. This is political opportunism by the same people that caused the problem in the first place. The problem, as I see it, is lax lending standards. Lax standards enforced by the government at the urging of congress. It isn't a lack of regulation, it's an overabundance of bad regulation.
In the 80 and 90s it was a huge pain in the *** to get a mortgage because banks were worried about losing money if you defaulted. With Fanny and Freddie guaranteeing everything, banks no longer had to be careful. With the Reno DOJ threatening banks under the CRA, it was almost a crime to be careful. Even 10 years ago the NY Times was warning of this problem. That this would collapse was really obvious to anyone who knew anything about investing. Now, a few people bet that this would collapse but they shorted way too early and lost their shirts. As a result, people eventually gave up on the notion of this being bad and bought into the lie (promoted by Greenspan) that housing prices never go down.
Fast forward 10 years and suddenly housing prices no longer pass the smell test- everyone panics. When you revalue trillions of dollars of assets at once, this causes everyone to assign an artificially low value to that class of assets- it's sort of like rats jumping off the ship as it sinks, even if it isn't sinking. The problem with the government intervention is that it doesn't really address the lax lending standards- if anything, pouring more money is the problem in the first place.
The second problem is that under Sarbanes Oxley, whenever a corporation takes an unrealized loss (ie a loss only on paper) that loss immediately goes to their balance sheet. This is to prevent corporations from hiding losses by not selling a worthless asset like stock or bad loans, even when there is no hope of it ever going up in value again. The bad side of this is that corporations can't ride out hard economic times with lots of temporarily devalued assets on their books- this means that NO ONE can afford to have these trillions of dollars of bad loans on their balance sheet. Even if the loans are good, the current attitude in the market is that they are all extremely risky (because of Fanny and Freddy) and thus worth a lot less.
In summary:
-fanny and freddie bought risky loans as fast as banks would write them and then sold them to investment houses as non-risky assets. This flooded the housing market with capital and also created a lot of overvalued assets on the books of those investment houses
-the carter administration got passed something called the CRA which the Clinton DOJ heavily enforced against the banking industry. The basic idea is that it is racist whenever you aren't giving lots of loans to minorities. Nevermind the fact that minorities weren't getting loans because they were poor, the government said they had to lower their standards until minorities qualified. As a result, standards were lowered, industry-wide.
-sarbanes-oxley doesn't let you retain assets and wait for them to rise in value- the second they go down, they hurt your balance sheet. When the assets going down are trillions of dollars of securitized bad loans, your whole company goes down.
First off, everyone who is talking about the problems is lying about what caused them. They're also suggesting solutions that won't fix the problems. This is political opportunism by the same people that caused the problem in the first place. The problem, as I see it, is lax lending standards. Lax standards enforced by the government at the urging of congress. It isn't a lack of regulation, it's an overabundance of bad regulation.
In the 80 and 90s it was a huge pain in the *** to get a mortgage because banks were worried about losing money if you defaulted. With Fanny and Freddie guaranteeing everything, banks no longer had to be careful. With the Reno DOJ threatening banks under the CRA, it was almost a crime to be careful. Even 10 years ago the NY Times was warning of this problem. That this would collapse was really obvious to anyone who knew anything about investing. Now, a few people bet that this would collapse but they shorted way too early and lost their shirts. As a result, people eventually gave up on the notion of this being bad and bought into the lie (promoted by Greenspan) that housing prices never go down.
Fast forward 10 years and suddenly housing prices no longer pass the smell test- everyone panics. When you revalue trillions of dollars of assets at once, this causes everyone to assign an artificially low value to that class of assets- it's sort of like rats jumping off the ship as it sinks, even if it isn't sinking. The problem with the government intervention is that it doesn't really address the lax lending standards- if anything, pouring more money is the problem in the first place.
The second problem is that under Sarbanes Oxley, whenever a corporation takes an unrealized loss (ie a loss only on paper) that loss immediately goes to their balance sheet. This is to prevent corporations from hiding losses by not selling a worthless asset like stock or bad loans, even when there is no hope of it ever going up in value again. The bad side of this is that corporations can't ride out hard economic times with lots of temporarily devalued assets on their books- this means that NO ONE can afford to have these trillions of dollars of bad loans on their balance sheet. Even if the loans are good, the current attitude in the market is that they are all extremely risky (because of Fanny and Freddy) and thus worth a lot less.
In summary:
-fanny and freddie bought risky loans as fast as banks would write them and then sold them to investment houses as non-risky assets. This flooded the housing market with capital and also created a lot of overvalued assets on the books of those investment houses
-the carter administration got passed something called the CRA which the Clinton DOJ heavily enforced against the banking industry. The basic idea is that it is racist whenever you aren't giving lots of loans to minorities. Nevermind the fact that minorities weren't getting loans because they were poor, the government said they had to lower their standards until minorities qualified. As a result, standards were lowered, industry-wide.
-sarbanes-oxley doesn't let you retain assets and wait for them to rise in value- the second they go down, they hurt your balance sheet. When the assets going down are trillions of dollars of securitized bad loans, your whole company goes down.
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10-10-2008, 01:49 PM
#15
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The reasons
10% is because of oil, 10% housing market, and 80% because all the news media keeps reporting its going to happen.
We have to be scared of something... always
In the 50's it was the atom bomb
In the 60's it was racism
In the 80's communism
In the 90's terrorists
In the 00's We tried N korea, no one was scared so back to iraq.
2007 Economy - seems to be working well, should keep working until we find something else to hate or be scared of.
10% is because of oil, 10% housing market, and 80% because all the news media keeps reporting its going to happen.
We have to be scared of something... always
In the 50's it was the atom bomb
In the 60's it was racism
In the 80's communism
In the 90's terrorists
In the 00's We tried N korea, no one was scared so back to iraq.
2007 Economy - seems to be working well, should keep working until we find something else to hate or be scared of.
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10-10-2008, 01:57 PM
#16
JimAtFSU pretty much hit the nail on the head.
If you consider the bigger picture, relatively speaking we(global market) are all doing poorly, so its not necessarily as horrible as the media is making it seem.
What we need to do is wait for the market to cleanse itself and stabilize, leaving only players with clean capital. Then re-invest into the market, and regulate the **** out of it.
If you consider the bigger picture, relatively speaking we(global market) are all doing poorly, so its not necessarily as horrible as the media is making it seem.
What we need to do is wait for the market to cleanse itself and stabilize, leaving only players with clean capital. Then re-invest into the market, and regulate the **** out of it.
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10-10-2008, 02:51 PM
#17
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You missed a main point of what I said. Regulation is the problem here. All of the causes of the current crisis are regulations that seemed like a clever idea at the time but turned out to have very bad effects. There is such a thing as too much regulation. That is what the crisis proves above all else.
Main offenders:
-Sarbanes-Oxley mark-to-market rule. If you didn't have this, we would still have the bad mortgages but it wouldn't have caused all the bankruptcies.
-Community Reinvestment Act of 1977 and the Clinton era interpretation of that act was what got the easy credit ball rolling.
-Fannie Mae and Freddie Mac as government backed private businesses- if it's private it can be risky and profitable- if it is government backed, it gets bailed out no matter how badly it fails. You can't have success without the possibility for failure. Guaranteed success just shifts the failure upstream to whoever is guaranteeing the success.
-The fed easing its way out of every economic problem (easing interest rates), even this one has helped make credit too easy for even the most unworthy of borrowers.
Yes, tight credit makes consumption drop. That's what happens when people only buy stuff they can afford instead of borrowing money to buy stuff they can't afford. THIS ISNT A BAD THING.
Main offenders:
-Sarbanes-Oxley mark-to-market rule. If you didn't have this, we would still have the bad mortgages but it wouldn't have caused all the bankruptcies.
-Community Reinvestment Act of 1977 and the Clinton era interpretation of that act was what got the easy credit ball rolling.
-Fannie Mae and Freddie Mac as government backed private businesses- if it's private it can be risky and profitable- if it is government backed, it gets bailed out no matter how badly it fails. You can't have success without the possibility for failure. Guaranteed success just shifts the failure upstream to whoever is guaranteeing the success.
-The fed easing its way out of every economic problem (easing interest rates), even this one has helped make credit too easy for even the most unworthy of borrowers.
Yes, tight credit makes consumption drop. That's what happens when people only buy stuff they can afford instead of borrowing money to buy stuff they can't afford. THIS ISNT A BAD THING.
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10-10-2008, 02:58 PM
#19
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whether it's a good idea or bad idea is up to your personal situation
IMO, now is a perfect time to be sitting on a lot of cash. A lot of people are going to get rich buying up foreclosures in the coming years.
IMO, now is a perfect time to be sitting on a lot of cash. A lot of people are going to get rich buying up foreclosures in the coming years.
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10-10-2008, 03:20 PM
#20
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This is my situation:
No mortgage, paid off. Home equity loan, obtained to put new roof on and windows in house; mostly paid off. New porch going on house in next month or so, paid for with HE loan, but in my area porches generally recoup nearly 100% upon sale.
No other loans, cars paid off. Credit cards balances paid in full each month.
Plenty of ready cash (almost stuck it in the market, but knew the housing bubble was due to burst) sitting in short term CDs. When it bottoms out, I'll be ready to jump in and ride the wave.
Oh, and about 12,000 rounds of various caliber ammo and the weapons for same, just in case.
No mortgage, paid off. Home equity loan, obtained to put new roof on and windows in house; mostly paid off. New porch going on house in next month or so, paid for with HE loan, but in my area porches generally recoup nearly 100% upon sale.
No other loans, cars paid off. Credit cards balances paid in full each month.
Plenty of ready cash (almost stuck it in the market, but knew the housing bubble was due to burst) sitting in short term CDs. When it bottoms out, I'll be ready to jump in and ride the wave.
Oh, and about 12,000 rounds of various caliber ammo and the weapons for same, just in case.
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