[quote=FlyerInHi][quote=flu]
I guess this is why a good portion of wealth is still made from old school rental property….much more predictable it seems.[/quote]
That’s a very observation flu. I prefer real estate.
But, in real estate, you won’t become billionaire, or even multi-millionaire. Much easier and faster with stocks.[/quote]
I ran some calcs a few years back and came up with decent and consistent returns above 10% for long periods of time with rentals. I factored in many things including tax advantages including depreciation allowance at income tax rate vs recapture capital gains at cap gains rates on taxes, the counter balance of asset appreciation vs money depreciation etc. It was part of a rent vs buy calc I did years ago. It was interesting and almost made me pull the trigger on getting rental property.
As for the downturn, I expected it and am expecting a total of nearly 15%. Since I have been in the market (w/ not much churn), I am still ahead for the past year + 1 month by about 16%. Because I was expecting it, I was and am keeping a good sized block of cash on the side and am planning to use it once the day-traders wring and wipe themselves out.
I think that part of what sparked it was that day-traders were expecting an ‘instant’ jump in earnings within the first month of the new tax law and panicked when they didn’t see it. They forgot it all depends upon what the date is for the corporate tax year, and one month does not a quarter’s earnings make.
So its time to keep the cards close to the chest and keep the green casino visor down low over your eyes.. its still going to be bumpy, but patience pays off… ☺
PS: With reference to Shiller PE graph, I find PEG more useful because it factors in growth. One is willing to tolerate a higher PE if there is strong growth. I also look at growth in revenues and how much is being paid for that and whether they have a chance of recapturing the cost. Looking at only PE is oversimplification.
