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July 21, 2010 at 6:27 PM #582017July 21, 2010 at 11:40 PM #581085
cyphire
Participant[quote=CA renter][quote=jpinpb][quote=CA renter]I think that asset price deflation hits the rich more than the poor. While “the rich” do generally have more cash than poor people, more of their money is tied up in assets (stocks, bonds, housing, etc.) than poor people. Workers get their “wealth” from wages, not capital gains…[/quote]
CAR – I’d add that with the phenomena of zero down, NINA loans, the poor were able to buy houses (assets) and not just rely on wages b/c there was equity withdrawal, as well.[/quote]
True, and it was a great party while it lasted.
Unfortunately, the Joe Sixpacks of this world cannot distinguish between illiquid and liquid investments, nor do they necessarily understand the power of leverage, especially how that can work on the downside.
Wealthy people generally understand the risks and *in general* are hedged to some extent. They’re also better able to get in and out of certain asset classes or they can hire someone to babysit their investments for them. Poor people with highly leveraged housing “investments” are the poster children for what happens when all of your eggs (money and/or leverage) are in one basket. That rarely works out well in the long run.
I’d much rather see wage inflation than asset price inflation, but have no say in these things. ;)[/quote]
What frightens me is that when I talk to various friends, they all have money in the market – no one hedges anything. For example – I was watching MSNBC and they did a poll of their 8 money managers / financial experts last friday (during a falling day) and they asked what their positions were vis-a-vis the market. Not one was ‘buying’ the market, most were shorting the market in the short / medium term, some were buying defensive positions, but hedging all of their bets, most were just out of the market and making themselves neutral.
Most people I know put money into their 401K’s without regard to a) what they actually own, or if they do own mutual funds, they were recommended to them by their investment advisors (most of whom are as trustworthy as prostitutes or realtors who agree with and listen to the NAR – as in both the real estate agents (again not all of them sdrealtor!!), but many, as well as financial agents, their entire income is dependent on ‘selling’ clients into both houses and stocks)
b) people ignore what their allocations are – if they are near retirement they are still somewhat overexposed to the market as well as will be destitute should there be a short-medium term collapse
c) have NO HEDGE whatsoever…. Every financial professional has hedges on almost everything, and if they don’t they have other tools to mitigate their losses, but my friends have never looked at allocations and are, of course, just exposed to the financial markets with the idea that eventually everything will go back up…
It’s a hell of a way to manage your wealth and success, but only people with real money seem to try to protect (as previously stated by others) their assets and economic well being.
p.s. Sorry for the rant against investment advisors and realtors, but it’s very very hard for these folks to be agnostic when their entire cash flow is dependent on keeping folks buying both stocks and houses – and just like bookies they get a fee and as Randolf and Mortimer Duke said, whether their clients lose or win – the dukes make money!
July 21, 2010 at 11:40 PM #581177Participant[quote=CA renter][quote=jpinpb][quote=CA renter]I think that asset price deflation hits the rich more than the poor. While “the rich” do generally have more cash than poor people, more of their money is tied up in assets (stocks, bonds, housing, etc.) than poor people. Workers get their “wealth” from wages, not capital gains…[/quote]
CAR – I’d add that with the phenomena of zero down, NINA loans, the poor were able to buy houses (assets) and not just rely on wages b/c there was equity withdrawal, as well.[/quote]
True, and it was a great party while it lasted.
Unfortunately, the Joe Sixpacks of this world cannot distinguish between illiquid and liquid investments, nor do they necessarily understand the power of leverage, especially how that can work on the downside.
Wealthy people generally understand the risks and *in general* are hedged to some extent. They’re also better able to get in and out of certain asset classes or they can hire someone to babysit their investments for them. Poor people with highly leveraged housing “investments” are the poster children for what happens when all of your eggs (money and/or leverage) are in one basket. That rarely works out well in the long run.
I’d much rather see wage inflation than asset price inflation, but have no say in these things. ;)[/quote]
What frightens me is that when I talk to various friends, they all have money in the market – no one hedges anything. For example – I was watching MSNBC and they did a poll of their 8 money managers / financial experts last friday (during a falling day) and they asked what their positions were vis-a-vis the market. Not one was ‘buying’ the market, most were shorting the market in the short / medium term, some were buying defensive positions, but hedging all of their bets, most were just out of the market and making themselves neutral.
Most people I know put money into their 401K’s without regard to a) what they actually own, or if they do own mutual funds, they were recommended to them by their investment advisors (most of whom are as trustworthy as prostitutes or realtors who agree with and listen to the NAR – as in both the real estate agents (again not all of them sdrealtor!!), but many, as well as financial agents, their entire income is dependent on ‘selling’ clients into both houses and stocks)
b) people ignore what their allocations are – if they are near retirement they are still somewhat overexposed to the market as well as will be destitute should there be a short-medium term collapse
c) have NO HEDGE whatsoever…. Every financial professional has hedges on almost everything, and if they don’t they have other tools to mitigate their losses, but my friends have never looked at allocations and are, of course, just exposed to the financial markets with the idea that eventually everything will go back up…
It’s a hell of a way to manage your wealth and success, but only people with real money seem to try to protect (as previously stated by others) their assets and economic well being.
p.s. Sorry for the rant against investment advisors and realtors, but it’s very very hard for these folks to be agnostic when their entire cash flow is dependent on keeping folks buying both stocks and houses – and just like bookies they get a fee and as Randolf and Mortimer Duke said, whether their clients lose or win – the dukes make money!
July 21, 2010 at 11:40 PM #581708Participant[quote=CA renter][quote=jpinpb][quote=CA renter]I think that asset price deflation hits the rich more than the poor. While “the rich” do generally have more cash than poor people, more of their money is tied up in assets (stocks, bonds, housing, etc.) than poor people. Workers get their “wealth” from wages, not capital gains…[/quote]
CAR – I’d add that with the phenomena of zero down, NINA loans, the poor were able to buy houses (assets) and not just rely on wages b/c there was equity withdrawal, as well.[/quote]
True, and it was a great party while it lasted.
Unfortunately, the Joe Sixpacks of this world cannot distinguish between illiquid and liquid investments, nor do they necessarily understand the power of leverage, especially how that can work on the downside.
Wealthy people generally understand the risks and *in general* are hedged to some extent. They’re also better able to get in and out of certain asset classes or they can hire someone to babysit their investments for them. Poor people with highly leveraged housing “investments” are the poster children for what happens when all of your eggs (money and/or leverage) are in one basket. That rarely works out well in the long run.
I’d much rather see wage inflation than asset price inflation, but have no say in these things. ;)[/quote]
What frightens me is that when I talk to various friends, they all have money in the market – no one hedges anything. For example – I was watching MSNBC and they did a poll of their 8 money managers / financial experts last friday (during a falling day) and they asked what their positions were vis-a-vis the market. Not one was ‘buying’ the market, most were shorting the market in the short / medium term, some were buying defensive positions, but hedging all of their bets, most were just out of the market and making themselves neutral.
Most people I know put money into their 401K’s without regard to a) what they actually own, or if they do own mutual funds, they were recommended to them by their investment advisors (most of whom are as trustworthy as prostitutes or realtors who agree with and listen to the NAR – as in both the real estate agents (again not all of them sdrealtor!!), but many, as well as financial agents, their entire income is dependent on ‘selling’ clients into both houses and stocks)
b) people ignore what their allocations are – if they are near retirement they are still somewhat overexposed to the market as well as will be destitute should there be a short-medium term collapse
c) have NO HEDGE whatsoever…. Every financial professional has hedges on almost everything, and if they don’t they have other tools to mitigate their losses, but my friends have never looked at allocations and are, of course, just exposed to the financial markets with the idea that eventually everything will go back up…
It’s a hell of a way to manage your wealth and success, but only people with real money seem to try to protect (as previously stated by others) their assets and economic well being.
p.s. Sorry for the rant against investment advisors and realtors, but it’s very very hard for these folks to be agnostic when their entire cash flow is dependent on keeping folks buying both stocks and houses – and just like bookies they get a fee and as Randolf and Mortimer Duke said, whether their clients lose or win – the dukes make money!
July 21, 2010 at 11:40 PM #581814Participant[quote=CA renter][quote=jpinpb][quote=CA renter]I think that asset price deflation hits the rich more than the poor. While “the rich” do generally have more cash than poor people, more of their money is tied up in assets (stocks, bonds, housing, etc.) than poor people. Workers get their “wealth” from wages, not capital gains…[/quote]
CAR – I’d add that with the phenomena of zero down, NINA loans, the poor were able to buy houses (assets) and not just rely on wages b/c there was equity withdrawal, as well.[/quote]
True, and it was a great party while it lasted.
Unfortunately, the Joe Sixpacks of this world cannot distinguish between illiquid and liquid investments, nor do they necessarily understand the power of leverage, especially how that can work on the downside.
Wealthy people generally understand the risks and *in general* are hedged to some extent. They’re also better able to get in and out of certain asset classes or they can hire someone to babysit their investments for them. Poor people with highly leveraged housing “investments” are the poster children for what happens when all of your eggs (money and/or leverage) are in one basket. That rarely works out well in the long run.
I’d much rather see wage inflation than asset price inflation, but have no say in these things. ;)[/quote]
What frightens me is that when I talk to various friends, they all have money in the market – no one hedges anything. For example – I was watching MSNBC and they did a poll of their 8 money managers / financial experts last friday (during a falling day) and they asked what their positions were vis-a-vis the market. Not one was ‘buying’ the market, most were shorting the market in the short / medium term, some were buying defensive positions, but hedging all of their bets, most were just out of the market and making themselves neutral.
Most people I know put money into their 401K’s without regard to a) what they actually own, or if they do own mutual funds, they were recommended to them by their investment advisors (most of whom are as trustworthy as prostitutes or realtors who agree with and listen to the NAR – as in both the real estate agents (again not all of them sdrealtor!!), but many, as well as financial agents, their entire income is dependent on ‘selling’ clients into both houses and stocks)
b) people ignore what their allocations are – if they are near retirement they are still somewhat overexposed to the market as well as will be destitute should there be a short-medium term collapse
c) have NO HEDGE whatsoever…. Every financial professional has hedges on almost everything, and if they don’t they have other tools to mitigate their losses, but my friends have never looked at allocations and are, of course, just exposed to the financial markets with the idea that eventually everything will go back up…
It’s a hell of a way to manage your wealth and success, but only people with real money seem to try to protect (as previously stated by others) their assets and economic well being.
p.s. Sorry for the rant against investment advisors and realtors, but it’s very very hard for these folks to be agnostic when their entire cash flow is dependent on keeping folks buying both stocks and houses – and just like bookies they get a fee and as Randolf and Mortimer Duke said, whether their clients lose or win – the dukes make money!
July 21, 2010 at 11:40 PM #582117Participant[quote=CA renter][quote=jpinpb][quote=CA renter]I think that asset price deflation hits the rich more than the poor. While “the rich” do generally have more cash than poor people, more of their money is tied up in assets (stocks, bonds, housing, etc.) than poor people. Workers get their “wealth” from wages, not capital gains…[/quote]
CAR – I’d add that with the phenomena of zero down, NINA loans, the poor were able to buy houses (assets) and not just rely on wages b/c there was equity withdrawal, as well.[/quote]
True, and it was a great party while it lasted.
Unfortunately, the Joe Sixpacks of this world cannot distinguish between illiquid and liquid investments, nor do they necessarily understand the power of leverage, especially how that can work on the downside.
Wealthy people generally understand the risks and *in general* are hedged to some extent. They’re also better able to get in and out of certain asset classes or they can hire someone to babysit their investments for them. Poor people with highly leveraged housing “investments” are the poster children for what happens when all of your eggs (money and/or leverage) are in one basket. That rarely works out well in the long run.
I’d much rather see wage inflation than asset price inflation, but have no say in these things. ;)[/quote]
What frightens me is that when I talk to various friends, they all have money in the market – no one hedges anything. For example – I was watching MSNBC and they did a poll of their 8 money managers / financial experts last friday (during a falling day) and they asked what their positions were vis-a-vis the market. Not one was ‘buying’ the market, most were shorting the market in the short / medium term, some were buying defensive positions, but hedging all of their bets, most were just out of the market and making themselves neutral.
Most people I know put money into their 401K’s without regard to a) what they actually own, or if they do own mutual funds, they were recommended to them by their investment advisors (most of whom are as trustworthy as prostitutes or realtors who agree with and listen to the NAR – as in both the real estate agents (again not all of them sdrealtor!!), but many, as well as financial agents, their entire income is dependent on ‘selling’ clients into both houses and stocks)
b) people ignore what their allocations are – if they are near retirement they are still somewhat overexposed to the market as well as will be destitute should there be a short-medium term collapse
c) have NO HEDGE whatsoever…. Every financial professional has hedges on almost everything, and if they don’t they have other tools to mitigate their losses, but my friends have never looked at allocations and are, of course, just exposed to the financial markets with the idea that eventually everything will go back up…
It’s a hell of a way to manage your wealth and success, but only people with real money seem to try to protect (as previously stated by others) their assets and economic well being.
p.s. Sorry for the rant against investment advisors and realtors, but it’s very very hard for these folks to be agnostic when their entire cash flow is dependent on keeping folks buying both stocks and houses – and just like bookies they get a fee and as Randolf and Mortimer Duke said, whether their clients lose or win – the dukes make money!
July 22, 2010 at 12:29 AM #581095CA renter
Participantcyphire,
Yes, and you’re making my point exactly.
The people who have all of their wealth in 401Ks with mutual funds that were simply recommended to them by their financial advisors are the “Joe Sixpacks” of which I speak.
There are varying degrees of wealth, of course, and the hedged “wealthy” that I was referring to would not normally have all their assets in a 401K (or housing)…some would, but most probably would not; and if they did, they’d be hedged.
What you’ve noted is exactly what I’m talking about.
July 22, 2010 at 12:29 AM #581187Participantcyphire,
Yes, and you’re making my point exactly.
The people who have all of their wealth in 401Ks with mutual funds that were simply recommended to them by their financial advisors are the “Joe Sixpacks” of which I speak.
There are varying degrees of wealth, of course, and the hedged “wealthy” that I was referring to would not normally have all their assets in a 401K (or housing)…some would, but most probably would not; and if they did, they’d be hedged.
What you’ve noted is exactly what I’m talking about.
July 22, 2010 at 12:29 AM #581718Participantcyphire,
Yes, and you’re making my point exactly.
The people who have all of their wealth in 401Ks with mutual funds that were simply recommended to them by their financial advisors are the “Joe Sixpacks” of which I speak.
There are varying degrees of wealth, of course, and the hedged “wealthy” that I was referring to would not normally have all their assets in a 401K (or housing)…some would, but most probably would not; and if they did, they’d be hedged.
What you’ve noted is exactly what I’m talking about.
July 22, 2010 at 12:29 AM #581824Participantcyphire,
Yes, and you’re making my point exactly.
The people who have all of their wealth in 401Ks with mutual funds that were simply recommended to them by their financial advisors are the “Joe Sixpacks” of which I speak.
There are varying degrees of wealth, of course, and the hedged “wealthy” that I was referring to would not normally have all their assets in a 401K (or housing)…some would, but most probably would not; and if they did, they’d be hedged.
What you’ve noted is exactly what I’m talking about.
July 22, 2010 at 12:29 AM #582127Participantcyphire,
Yes, and you’re making my point exactly.
The people who have all of their wealth in 401Ks with mutual funds that were simply recommended to them by their financial advisors are the “Joe Sixpacks” of which I speak.
There are varying degrees of wealth, of course, and the hedged “wealthy” that I was referring to would not normally have all their assets in a 401K (or housing)…some would, but most probably would not; and if they did, they’d be hedged.
What you’ve noted is exactly what I’m talking about.
July 22, 2010 at 7:22 AM #581130Arraya
Participant60 % of the population don’t have assets much less a hedge against their non-existent assets. Ironically, if they did what was good for them individually, save, on a mass scale, it would further collapse demand and lead to more job losses usually distributed to the periphery.
July 22, 2010 at 7:22 AM #581222Participant60 % of the population don’t have assets much less a hedge against their non-existent assets. Ironically, if they did what was good for them individually, save, on a mass scale, it would further collapse demand and lead to more job losses usually distributed to the periphery.
July 22, 2010 at 7:22 AM #581753Participant60 % of the population don’t have assets much less a hedge against their non-existent assets. Ironically, if they did what was good for them individually, save, on a mass scale, it would further collapse demand and lead to more job losses usually distributed to the periphery.
July 22, 2010 at 7:22 AM #581859Participant60 % of the population don’t have assets much less a hedge against their non-existent assets. Ironically, if they did what was good for them individually, save, on a mass scale, it would further collapse demand and lead to more job losses usually distributed to the periphery.
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