The stock market is tanking, we should be happy right????

[Coronita]

futures way down with trade war escalation.

stabilization of the markets my ass.

Gold on the other hand….

[SK in CV]

[quote=flu]futures way down with trade war escalation.

stabilization of the markets my ass.

Gold on the other hand….[/quote]

Gold has another thing causing influence that it never had before. Global instability always has meant a rush to gold. Probably still the case, but the crypto tank has coincided with the run up the last 90 days.

[Coronita]

[quote=SK in CV][quote=flu]futures way down with trade war escalation.

stabilization of the markets my ass.

Gold on the other hand….[/quote]

Gold has another thing causing influence that it never had before. Global instability always has meant a rush to gold. Probably still the case, but the crypto tank has coincided with the run up the last 90 days.[/quote]

Funny thing is. I was looking at ebay, and noticed that the purchasing of gold bullion has seen a lot of uptick… Some folks purchasing 100+count 1-ounce bullion sets in one shot.

I guess folks are trying to convert their under-the-table crypto currency gains into hard currency (still under the table more or less, I guess)

[kev374]

[quote=flu]futures way down with trade war escalation.

stabilization of the markets my ass.

Gold on the other hand….[/quote]

S&P is up as we speak and it has bounced off the 200 DMA which is a key technical.

As for buying a home..i’m not against real estate in general but I am against buying it at these prices as it represents a greater risk than the stock market.

Your thinking is not accurate in my opinion that the stock market has risk… stocks have wild gyrations in the short term but over a long period 10-15 years stocks have always been a super bet…infact Case-Shiller analysis has documented that investing in equities is far superior than investing that capital in a house.

Buying a home at a 40-50% DTI which people very frequently do these days is exceptionally risky. There used to be a reasonable DTI in the past decades, 28% Front end ratio, all that is blown out of the water these days because banks themselves don’t follow it. There are plenty of people who blindly sign anything the banks give them, then they cry like victims saying the bank made them do it. No personal responsibility for guaging affordability on their own… a ton of people think they can afford it because the bank told them so which does make them idiots.

I think you fail to understand that a starter home (1500sqft with 2 car garage in Irvine) costs $800,000, even with a 20% down (which is a ridiculous $200k and would consume most people’s entire savings if they even have such a down.. everyone does not have rich Chinese parents!) with the plethora of fees HOAs, Mello Roos, City taxes etc. the increased expenses for maintenance, furnishing the home, fixing other stuff etc. etc. with such leverage you are one step away from bankruptcy if you lose your job. And since all your savings is now in your home (downpayment) you lose that as well.

With stocks at least I can sell my stocks even at a loss… and for the record, I am diversified, I have bonds as well which is the beauty of investing in stocks, I can buy any amount I want. I can’t buy half a house.

Buying a home in the current environment is an extremely bad financial move, just my opinion, of course you have yours. Just because I waited for things to come down and they didn’t does not mean I was wrong on concept, overvaluations and bubbles can last a very long time.

Yes, eventually your home will come back up in value through a severe downcycle but it’s much more likely you will lose your home and will not be able to ride out a hard time than having your money in stocks and being able to ride it out. As I said I have six figures in bonds which could tide me over for a few years in an absolute emergency. If I put all my money down for a home I would be seriously F-ked!

[carlsbadworker]

[quote=kev374] Most people are idiots who did exactly that and lost it all in 2008 but they will never learn and make big bets that they cannot sustain and then think they are doing great… wait till all of them lose their homes.[/quote]

I find the key thing of life is not to worry about whether other people are idiots but rather whether myself is an idiot because it has far greater consequence to my life.

But how could an idiot know that he is an idiot?

The only trick that I find is that one has to make testable predictions that can be calibrated with reality. Most people don’t make measurable predictions which I think is a terrible mistake. One recent examples that I find is Trump supporters. Trump always surprises them with his actions but since they never predicted what a good president should do, but only try to make sense from it after the fact, they will never find inconsistency and therefore their belief in Trump can never be shattered.

If no matter what happened, it will never prove you wrong, then you never learn even when you are wrong.

Learning is mentally harder therefore people are relying all kind of belief systems (including value is better, which is kind of motto of Rich’s site). But I personally don’t want to be religious about anything, as all my theory should be subject to verification.

[Coronita]

[quote=kev374][quote=flu]futures way down with trade war escalation.

stabilization of the markets my ass.

Gold on the other hand….[/quote]

S&P is up as we speak and it has bounced off the 200 DMA which is a key technical.

As for buying a home..i’m not against real estate in general but I am against buying it at these prices as it represents a greater risk than the stock market.

Your thinking is not accurate in my opinion that the stock market has risk… stocks have wild gyrations in the short term but over a long period 10-15 years stocks have always been a super bet…infact Case-Shiller analysis has documented that investing in equities is far superior than investing that capital in a house.

Buying a home at a 40-50% DTI which people very frequently do these days is exceptionally risky. There used to be a reasonable DTI in the past decades, 28% Front end ratio, all that is blown out of the water these days because banks themselves don’t follow it. There are plenty of people who blindly sign anything the banks give them, then they cry like victims saying the bank made them do it. No personal responsibility for guaging affordability on their own… a ton of people think they can afford it because the bank told them so which does make them idiots.

I think you fail to understand that a starter home (1500sqft with 2 car garage in Irvine) costs $800,000, even with a 20% down (which is a ridiculous $200k and would consume most people’s entire savings if they even have such a down.. everyone does not have rich Chinese parents!) with the plethora of fees HOAs, Mello Roos, City taxes etc. the increased expenses for maintenance, furnishing the home, fixing other stuff etc. etc. with such leverage you are one step away from bankruptcy if you lose your job. And since all your savings is now in your home (downpayment) you lose that as well.

With stocks at least I can sell my stocks even at a loss… and for the record, I am diversified, I have bonds as well which is the beauty of investing in stocks, I can buy any amount I want. I can’t buy half a house.

Buying a home in the current environment is an extremely bad financial move, just my opinion, of course you have yours. Just because I waited for things to come down and they didn’t does not mean I was wrong on concept, overvaluations and bubbles can last a very long time.

Yes, eventually your home will come back up in value through a severe downcycle but it’s much more likely you will lose your home and will not be able to ride out a hard time than having your money in stocks and being able to ride it out. As I said I have six figures in bonds which could tide me over for a few years in an absolute emergency. If I put all my money down for a home I would be seriously F-ked![/quote]

So just one question….

So your argument is, that you were better off to speculate in the stock market in January by putting a large portion of your net worth all into the stock market on one index fund

…better than if you were to have speculated in the stock market this month, by doing the same thing with the same amount of money this month?

or

…better than if you were to have put 20% down on a $300k condo and left the remaining amount in cash as an emergency fund, possibly in ladder of CD’s, with a smaller percentage in SPY (with that smaller SPY purchase taking an 11% hit)….

I’m sorry, I’m an idiot, I’m just not following why going all in (or at least mostly all in) into the stock market seems to be a safer route….

[FlyerInHi]

[quote=kev374]
I think you fail to understand that a starter home (1500sqft with 2 car garage in Irvine) costs $800,000, even with a 20% down (which is a ridiculous $200k and would consume most people’s entire savings if they even have such a down.. everyone does not have rich Chinese parents!) with the plethora of fees HOAs, Mello Roos, City taxes etc. the increased expenses for maintenance, furnishing the home, fixing other stuff etc. etc. with such leverage you are one step away from bankruptcy if you lose your job. And since all your savings is now in your home (downpayment) you lose that as well.
[/quote]

I agree with this right now.

But why didn’t you buy a 400 – 700sf condo in cash at the bottom?
I think that rent in OC is under $2000 now. And why Irvine? An older condo, nicely remodeled, near Bella Terra would be perfect for a single person or couple. Close to restaurants, the beach and entertainment.
Had you done that you would now have paid off housing and plenty of money to invest.

I think the mistake people make is that they want that dream house.

BTW, I have a friend who thinks very much like you. He’s close enough that I told him to buy. But he didn’t listen to me. Water under the bridge now…. and we are due for another recession.

[carlsbadworker]

FlyerInHi, I am in similar situation as kev374 that I am also looking in buying a house in Irvine, but have not pulled the trigger.

The difference is that I did rush to buy at the bottom in Temecula, as we were living there at that time. So in theory, we could just “upgrade” but I couldn’t convince myself to sell a high rental-yield property to trade for a low rental-yield property even it is for my family’s use. In addition, I am a good saver so I can again afford the 20% down so I see no point selling my rental property.

We shopped last year after moving to Irvine, but I find that buying costs maybe $500-$1000 more each month even after 20%, which makes it really hard for me to part my money into a property. Like kev374 said, not everyone has rich Chinese parents that they can care nothing about ROI in face of biggest purchase one can make in life.

For us, Irvine is primarily because we have school age kids…and it has one of the best public school district.

My investment strategy is different than kev374. I DCA my extra “savings” each month into stocks (primarily mid-cap growth stocks, hoping they will yield more in a possible “melt-up” market), but I leave the down payment in CDs waiting for possible “melt-down” market (either in stock or house, but I don’t see it happen anytime soon).

What’s your suggestion for my situation?

[kev374]

I did not invest the bulk of my assets in Jan, I invested a large amount at the bottom of the Feb correction and have been investing in chunks all the way up to now.

However, if you listen to the vast majority of Financial experts, including Vanguard founder Jack Bogle, you will notice that they frown upon timing the markets but rather adopt a long term strategy of “time in the market vs timing the market”. I learned a lot at the bogleheads forum from long term investors and noted that most regular people know nothing about investing or the markets. Waiting for a bottom is the absolute wrong thing to do when it relates to long term investing because markets are notoriously difficult to predict and more often than not you will time the top incorrectly and in addition time the bottom incorrectly too and lose on both ends.

Getting back to houses – it is good to have reasonable expectations but buying a home is a long term, very expensive and important purchase. I know some people who have bought the wrong type of home and have been extremely unhappy that they are paying so much money for a place and worse – are locked in to a contract that is very difficult and expensive to get out of (realtors commission etc.) that did not meet their basic requirements. They bought thinking they would just get into the door but it was more difficult to get out than they thought due to various reasons including rising values of homes and also a re-establishment of higher cost basis for taxes.

For me, I would like at least 1500sqft of living space so I can be future proof to some extent, a 2 car garage, a lower HOA ($250/mo or so is fine, some properties in OC have $500-700/mo HOAs which I find laughable!) so that if I pay off the home I don’t still have ridiculous monthly payments, no mello roos for the same preceding reasoning – some places have ridiculous atrocious mello roos for 30-50 years!!! location in a good area – I rent currently in a good area so why do you think I would significantly LOWER my standard of living and in exchange significantly RAISE my monthly payment? That makes no sense whatsoever.

To me a dream home is a pool, 2500sqft, 3 car garage, upper class neighborhood, probably some kind of view etc. A 1500sqft 3 bedroom, 2 car garage in a middle class neighborhood is not a dream home – give me a break! Yet, these “starter” homes still cost $800,000 with astronomical ongoing monthly expenses. No thanks, that is a BAD deal!

A final key fact is that I am a single income, so I can take less risk than say a dual income couple who has 2 distinct sources of income.

So, having my money in the stock market – yes I can sleep at night because I know I have a buffer and I know even if I lose some money upfront now it will rebound eventually. Buying a astronomically expensive house with astronomical monthly expenses, it would cause me tremendous stress and I would not be able to sleep at night… so at least for me the former is the choice I made, not the latter.

[carlsbadworker]

[quote=kev374]I did not invest the bulk of my assets in Jan, I invested a large amount at the bottom of the Feb correction and have been investing in chunks all the way up to now.
[/quote]

You know that the site has logs, right?

I put in my buy order today,
Submitted by kev374 on January 6, 2018 – 9:54am.
I put in my buy order today, VOO @ 251.25 for 1094 shares, total value ~$275,000. I am going to take a bet that the market will be higher end 2018. Even though it’s crazy I think the market has solid momentum.

[FlyerInHi]

Carlsbad worker, I agree, why sell the Temecula house that’s a cash cow.
If you have school age children who need a certain school, then I would say rent for now.

Kev, if you’re childless, then, when the time is right, consider buying a place equivalent to what you’re renting. Get a top floor condo (to avoid noise) and remodel it nicely and you’ll be fine. Continue to invest so you can eventually buy the house you want.

I’ve been to many places in the world and I have seen how people live. No need to insist on a single family house right off. You can have a nice condo. Imagine it’s a New York bachelor pad or an expensive London flat. There are many apartments that are way more beautiful than houses.

[spdrun]

Also, why insist on a “high class” neighborhood? “High class” areas usually have prissy-poo neighbors and HOAs. In a lower-middle-class area, you can do a lot more of what you want. No one is going to call the cops or HOA because you’re fixing your motorbike in your driveway.

[kev374]

[quote=carlsbadworker][quote=kev374]I did not invest the bulk of my assets in Jan, I invested a large amount at the bottom of the Feb correction and have been investing in chunks all the way up to now.
[/quote]

You know that the site has logs, right?

I put in my buy order today,
Submitted by kev374 on January 6, 2018 – 9:54am.
I put in my buy order today, VOO @ 251.25 for 1094 shares, total value ~$275,000. I am going to take a bet that the market will be higher end 2018. Even though it’s crazy I think the market has solid momentum.[/quote]

You do realize that securities can be bought and sold right?? I did buy those shares but I sold them all when it hit 260 for a handsome gain and bought back in around 236-245, even Warren Buffet himself could not have timed it more perfectly. While my timing in the housing market sucks looks like it does not quite suck in the stock market, perhaps I should become a trader LMAO! Actually it was a mistake to get out of the market, as the long term philosophy is to stay in which is what I learned from bogleheads.

This time I am in permanently, I am not selling anything even if it goes up!

[Coronita]

[quote=kev374]

You do realize that securities can be bought and sold right?? I did buy those shares but I sold them all when it hit 260 for a handsome gain and bought back in around 236-245, even Warren Buffet himself could not have timed it more perfectly. While my timing in the housing market sucks looks like it does not quite suck in the stock market, perhaps I should become a trader LMAO! Actually it was a mistake to get out of the market, as the long term philosophy is to stay in which is what I learned from bogleheads.

This time I am in permanently, I am not selling anything even if it goes up![/quote]

I call bullshit on that one.

Of course everyone always talks about the time they bought and scored, no one likes to talk about the times they bought and got screwed….

Second, in continuing my idiocracy of trying to understand your home ownership logic…. I’m not following the relevancy of you not being able to afford an $800k home in Irvine as a starter home…
Yeah, I don’t think I would be able to afford a $1.0million starter home in Del Mar either, if I were in the same situation. In fact, I don’t think I would be even able to afford living in Del Mar as a renter if I wanted to eventually be a home owner.

BTW: just curious, I thought you mentioned you rented in Huntington Beach or something like that. not Irvine. So why are you mentioning home ownership in Irvine, which is considerably more expensive than where you currently rent? Doesn’t seem to be an apples-apples comparison.

[kev374]

[quote=flu]
I call bullshit on that one. [/quote]

what exactly is bullshit about it? I bought at 251 sold when it reached 260… not rocket science. I did not sell my international holdings or my bonds which are both negative but they will eventually rebound.

My buddy bought $100,000 worth of AMZN 2 years ago at 620, he clocked in a profit of $150,000 in just 2 years for doing virtually nothing… he sold a few shares and bought a new car, GIFTED by Amazon thanks!

Making money in an upmarket, especially the last 2 years with zero volatility was stupidly easy.

The biggest mistake was trying to attempt in buying homes which is a losers game. Should’ve spent more time researching the stock market.

Making money in the stock market is easier than one thinks.. you just need to know how the game is played, much much easier than housing and you don’t need the kind of ridiculous capital that you need to get into housing.

Btw, Huntington Beach is way more expensive than Irvine depending on the exact zip, but even in other parts it’s on par with Irvine. There is no cheap place in Orange County… if you want cheap you have to go to the real ghetto, City of Commerce which is where the nation’s drugs are peddled. The neighborhood is so disgusting that if this was Detroit houses would be selling for $5 or even free, but since it is LA the asking is “only” $500,000 LMAO!

[Author]

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