Are you more risk averse now?

[Bubblesitter]

Are you more risk averse now? What steps have you taken?

In last 3 months I’ve progressively become more risk averse and I’ve taken concrete steps to protect my hard-earned nest egg. Please don’t construe the following as advice. I am not a financial advisor. I do have an MBA with finance concentration with many years of cultivating a nest egg. I lost a bundle in the dot.com collapse and I don’t want to repeat it. In general, I don’t trust Wall Street, but I will participate willingly, knowing that it is caveat emptor. The following are the things I’ve done to insulate myself from this historic housing collapse and upcoming housing-led recession. Again, do not take following as advice, please consult a financial advisor (preferably flat-fee based) and verify their credentials.

1. I’m now nearly completely shifted out of stocks. The LBO craze is on is on its last legs, the long bull run is gasping, and credit is crunching. Last week, I shifted remaining 50% of my diversified stock portfolio into CDs (6 month) and government securities. My only remaining stocks are a smattering of large cap mutual funds and oil industry funds/stocks. These consist of approx 15% of entire portfolio.
2. Over the last year I’ve progressively built up gold (gold ETFs) to approx 15% of my portfolio as a hedge against dollar decline. Gold is the ultimate safe haven, but be careful we will see downward spikes as people liquidate to cover margin calls/losses. I believe that the dollar’s decline is a certainty in coming years.
3. I sold my house last year, renting now a house and socking away a good % of my income and maxing out my 401K.
4. I’m closely monitoring my credit reports/scores. I’m using all the known tricks of trade to keep score high, e.g. high credit limits, no balances, never close an account, etc. Good credit is a key during a credit crunch.

When all the dust settles, I’m looking to jump back into home ownership. I’m estimating spring 2009 at the very earliest. I will finance with a traditional conforming 30yr fixed mortgage with large down payment. If I can’t finance that way, then the house is unaffordable.

Guys, be careful what you wish for. It seems that some on this site that seem to be cheering-on the housing collapse. This housing downturn and resulting housing-led recession will impact us all. We will see family/friends go into foreclosure, lose their jobs, etc. I just want to get through it, stay gainfully employed and not see too many of my assets depleted.

Are you more risk averse now vs. last year? What steps have you taken?

[GoUSC]

I work in Real Estate development (Retail) so I am watching things very carefully. I have two projects under development right now (start construction very soon, both 60% leased or greater and in prime locations). The other projects we have on the books are 2+ years out through entitlements. Plus the land is owned free & clear so we can wait out the market. We have a very strong (multiple millions of sf) portfolio of existing high quality real estate that kept the company going through the 90’s.

On the personal side, I have almost all my money sitting in savings accounts earning 5-6% interest. I have maybe 5% of my portfolio in stocks and both are long term holds. I have another 20% of my portfolio in two real estate projects in Arizona & Texas. I am nervous about them a little but we don’t have extreme leverage so we can stop distributions and give rent abatement if needed (plus we have 6 months of reserves for both properties). No CC debt, and renting. I do have a car loan but it’s minimal and I only owe 40% of the KBB value (at 3% interest). God forbid I was to loose my job I could pay rent and all other expenses with the income from savings accounts.

That about sums it up. I am going into this market with eyes wide open.

[GoUSC]

I work in Real Estate development (Retail) so I am watching things very carefully. I have two projects under development right now (start construction very soon, both 60% leased or greater and in prime locations). The other projects we have on the books are 2+ years out through entitlements. Plus the land is owned free & clear so we can wait out the market. We have a very strong (multiple millions of sf) portfolio of existing high quality real estate that kept the company going through the 90’s.

On the personal side, I have almost all my money sitting in savings accounts earning 5-6% interest. I have maybe 5% of my portfolio in stocks and both are long term holds. I have another 20% of my portfolio in two real estate projects in Arizona & Texas. I am nervous about them a little but we don’t have extreme leverage so we can stop distributions and give rent abatement if needed (plus we have 6 months of reserves for both properties). No CC debt, and renting. I do have a car loan but it’s minimal and I only owe 40% of the KBB value (at 3% interest). God forbid I was to loose my job I could pay rent and all other expenses with the income from savings accounts.

That about sums it up. I am going into this market with eyes wide open.

[Bubblesitter]

Hunker down…gonna be an interesting ride for all of us.
It will be interesting to see what happens on Wall street next week. Consumer sentiment and spending is still high, however this may not last long. All the lead stories on national news networks seem to be stocks slide and real estate problems. Will this result in a reverse wealth effect? Consumer spending is accounts for >75%+ of economy. I’m sure that someday I’ll again be bullish on both real estate and the stock market. Certain sectors will probably continue to thrive and some Hedge funds have made big bets against housing and are making a killing now.

Bubblesitter

[Bubblesitter]

Hunker down…gonna be an interesting ride for all of us.
It will be interesting to see what happens on Wall street next week. Consumer sentiment and spending is still high, however this may not last long. All the lead stories on national news networks seem to be stocks slide and real estate problems. Will this result in a reverse wealth effect? Consumer spending is accounts for >75%+ of economy. I’m sure that someday I’ll again be bullish on both real estate and the stock market. Certain sectors will probably continue to thrive and some Hedge funds have made big bets against housing and are making a killing now.

Bubblesitter

[mydogsarelazy]

My situation boils down to this:

– I am a homeowner who has accepted that my home, worth perhaps $550k at the peak of the madness will be declining in value rapidly, maybe to half of the peak value.

– My only debt is a mortgage balance of $148k.

– I have an STRS pension and contribute to a college fund for my kids each month.

So, I guess you could say that I see things the Piggington way in terms of what will happen in real estate, but I want to give my kids the stability of growing up in the same house. It was tempting in 2005 to say “Let’s take the money and run” but most of our equity is phantom equity that came to us with the blowing up of the bubble, and which will go away as it deflates.

JS

[mydogsarelazy]

My situation boils down to this:

– I am a homeowner who has accepted that my home, worth perhaps $550k at the peak of the madness will be declining in value rapidly, maybe to half of the peak value.

– My only debt is a mortgage balance of $148k.

– I have an STRS pension and contribute to a college fund for my kids each month.

So, I guess you could say that I see things the Piggington way in terms of what will happen in real estate, but I want to give my kids the stability of growing up in the same house. It was tempting in 2005 to say “Let’s take the money and run” but most of our equity is phantom equity that came to us with the blowing up of the bubble, and which will go away as it deflates.

JS

[Bubblesitter]

Bubblesitter has officially declared July 18 as the peak of of this cyclical Bull market.

Stay tuned when Bubblesitter makes a similar announcement identifying the bottom of the real estate market. Be patient, it will be a few years.

Note, for entertainment purposes only 😉

[Bubblesitter]

Bubblesitter has officially declared July 18 as the peak of of this cyclical Bull market.

Stay tuned when Bubblesitter makes a similar announcement identifying the bottom of the real estate market. Be patient, it will be a few years.

Note, for entertainment purposes only 😉

[Bubblesitter]

Big down day on Wall Street

The LBO craze is over, the long bull run is gasping, and credit is crunching.

Any Bulls still out there?

[Bubblesitter]

Big down day on Wall Street

The LBO craze is over, the long bull run is gasping, and credit is crunching.

Any Bulls still out there?

[GoUSC]

I just moved 50% of my 401k into cash equivalents. I kick myself for not shorting all the stuff I wanted to (blame it on being conservative). I will not miss jumping in full force to this market when it hits the bottom.

[GoUSC]

I just moved 50% of my 401k into cash equivalents. I kick myself for not shorting all the stuff I wanted to (blame it on being conservative). I will not miss jumping in full force to this market when it hits the bottom.

[one_muggle]

radelow, I’ve been doing the same slowly for a while. I also do not short since I am smart enough to know I don’t know enough. After this drop today, I am finally up overall for having pulled money out of the market. The big question is, when to start putting it back in?
Do you pick a date (I’ve heard October–don’t know the rationale) or do you pick a random number, like 12500?

The biggest and smartest thing I’ve done is move away from anything that is heavy on financials, homebuilders, and consumer discretion. I have been heavy beer and band-aids since spring (as well as foreign since ’05)

-one muggle

ps. I’m not more risk averse, since I’ve been skittish for some time. Now I just feel less timid and smarter (or less stupid, at least) for being risk averse.

[one_muggle]

radelow, I’ve been doing the same slowly for a while. I also do not short since I am smart enough to know I don’t know enough. After this drop today, I am finally up overall for having pulled money out of the market. The big question is, when to start putting it back in?
Do you pick a date (I’ve heard October–don’t know the rationale) or do you pick a random number, like 12500?

The biggest and smartest thing I’ve done is move away from anything that is heavy on financials, homebuilders, and consumer discretion. I have been heavy beer and band-aids since spring (as well as foreign since ’05)

-one muggle

ps. I’m not more risk averse, since I’ve been skittish for some time. Now I just feel less timid and smarter (or less stupid, at least) for being risk averse.

[Author]

Posts