Where is the money?

[underdose]

I agree with the Jim Jon scenario. The declines in stock and real estate prices do not mean money/wealth disappeared. It merely changed hands. Who’s hands is it going into? The US’s creditors. Many of them are suffering some write downs as the US private sector defaults, but with all the bailouts, most of the private defaults are being socialized and absorbed by the government and replaced with new government issues (treasuries and greenbacks). Who’s lending the US all this money to provide these bailouts? China, Saudi Arabia, Russia. You know, our friends. So as our “friends” continue to sit on the sidelines and suck more wealth out of America, the day will eventually come when they get off the sidelines and start divesting themselves of that sideline money. Will it go into our stock market? Doubtful. Our real estate? Only if they want to be our landlords. Into raw materials for building up their own countries’ infrastructures and looking after their own people. I think this is very very likely. China would be much better served keeping their people making TV sets but distributing them throughout China instead of sending them here so we can give them worthless IOU’s as compensation. I can not think of (and I have never heard offered) a realistic scenario in which China extends us an infinite amount of seller financing, nor can I think of (or heard offered) a realistic scenario for the US government to ever make good on its debt. So most likely, the sideline money will cause shortages and severe inflation at home when it finally, inevitably starts to move.

[poorsaver]

Everyone I know, including myself is flush with cash, just waiting to buy a home and reinvest in the stock market. I sold my home in Nov. ’05 and have been renting ever since. Waiting, and waiting, and waiting. Still no bargains around here.

[poorsaver]

Everyone I know, including myself is flush with cash, just waiting to buy a home and reinvest in the stock market. I sold my home in Nov. ’05 and have been renting ever since. Waiting, and waiting, and waiting. Still no bargains around here.

[poorsaver]

Everyone I know, including myself is flush with cash, just waiting to buy a home and reinvest in the stock market. I sold my home in Nov. ’05 and have been renting ever since. Waiting, and waiting, and waiting. Still no bargains around here.

[poorsaver]

Everyone I know, including myself is flush with cash, just waiting to buy a home and reinvest in the stock market. I sold my home in Nov. ’05 and have been renting ever since. Waiting, and waiting, and waiting. Still no bargains around here.

[poorsaver]

Everyone I know, including myself is flush with cash, just waiting to buy a home and reinvest in the stock market. I sold my home in Nov. ’05 and have been renting ever since. Waiting, and waiting, and waiting. Still no bargains around here.

[barnaby33]

Well poorsaver, you are among a very prescient minority. poorsaver, Good on ya. Your friends must be all those well healed buyers sdrealtor is talking about.

As to sideline cash, I like Mish but that isn’t an accurate portrayal. More cash comes into the market as stocks are rising and people put money in to buy stock from someone who paid less. The difference between John who paid 20/share and Jim who paid 50/share for the same stock later is the new money entering the market.

The question becomes what happens to all that cash when the market starts decline and the fear sets in? Short answer, it departs. Sure for a while it sits on the sidelines, but in many cases people take it off the sidelines after a bit to do something else with it, like buy an overpriced house.

I wouldn’t expect the market to suddenly turn around. Even assuming there is a large pool of sideline cash (other than under the feds printing press) it won’t be deployed en masse anytime soon. That is excluding bear market rallies. If you want to be a long term value investor thats cool. You’d better lengthen your term.
Josh

[barnaby33]

Well poorsaver, you are among a very prescient minority. poorsaver, Good on ya. Your friends must be all those well healed buyers sdrealtor is talking about.

As to sideline cash, I like Mish but that isn’t an accurate portrayal. More cash comes into the market as stocks are rising and people put money in to buy stock from someone who paid less. The difference between John who paid 20/share and Jim who paid 50/share for the same stock later is the new money entering the market.

The question becomes what happens to all that cash when the market starts decline and the fear sets in? Short answer, it departs. Sure for a while it sits on the sidelines, but in many cases people take it off the sidelines after a bit to do something else with it, like buy an overpriced house.

I wouldn’t expect the market to suddenly turn around. Even assuming there is a large pool of sideline cash (other than under the feds printing press) it won’t be deployed en masse anytime soon. That is excluding bear market rallies. If you want to be a long term value investor thats cool. You’d better lengthen your term.
Josh

[barnaby33]

Well poorsaver, you are among a very prescient minority. poorsaver, Good on ya. Your friends must be all those well healed buyers sdrealtor is talking about.

As to sideline cash, I like Mish but that isn’t an accurate portrayal. More cash comes into the market as stocks are rising and people put money in to buy stock from someone who paid less. The difference between John who paid 20/share and Jim who paid 50/share for the same stock later is the new money entering the market.

The question becomes what happens to all that cash when the market starts decline and the fear sets in? Short answer, it departs. Sure for a while it sits on the sidelines, but in many cases people take it off the sidelines after a bit to do something else with it, like buy an overpriced house.

I wouldn’t expect the market to suddenly turn around. Even assuming there is a large pool of sideline cash (other than under the feds printing press) it won’t be deployed en masse anytime soon. That is excluding bear market rallies. If you want to be a long term value investor thats cool. You’d better lengthen your term.
Josh

[barnaby33]

Well poorsaver, you are among a very prescient minority. poorsaver, Good on ya. Your friends must be all those well healed buyers sdrealtor is talking about.

As to sideline cash, I like Mish but that isn’t an accurate portrayal. More cash comes into the market as stocks are rising and people put money in to buy stock from someone who paid less. The difference between John who paid 20/share and Jim who paid 50/share for the same stock later is the new money entering the market.

The question becomes what happens to all that cash when the market starts decline and the fear sets in? Short answer, it departs. Sure for a while it sits on the sidelines, but in many cases people take it off the sidelines after a bit to do something else with it, like buy an overpriced house.

I wouldn’t expect the market to suddenly turn around. Even assuming there is a large pool of sideline cash (other than under the feds printing press) it won’t be deployed en masse anytime soon. That is excluding bear market rallies. If you want to be a long term value investor thats cool. You’d better lengthen your term.
Josh

[barnaby33]

Well poorsaver, you are among a very prescient minority. poorsaver, Good on ya. Your friends must be all those well healed buyers sdrealtor is talking about.

As to sideline cash, I like Mish but that isn’t an accurate portrayal. More cash comes into the market as stocks are rising and people put money in to buy stock from someone who paid less. The difference between John who paid 20/share and Jim who paid 50/share for the same stock later is the new money entering the market.

The question becomes what happens to all that cash when the market starts decline and the fear sets in? Short answer, it departs. Sure for a while it sits on the sidelines, but in many cases people take it off the sidelines after a bit to do something else with it, like buy an overpriced house.

I wouldn’t expect the market to suddenly turn around. Even assuming there is a large pool of sideline cash (other than under the feds printing press) it won’t be deployed en masse anytime soon. That is excluding bear market rallies. If you want to be a long term value investor thats cool. You’d better lengthen your term.
Josh

[poorsaver]

Josh, that minority must include you as we both are well heeled on the Market Ticker (KD). I think knowing where to get the good advice, including this fine blog, and then implementing it into your own personal plan is the way to preserve wealth. Use the information superhighway to your advantage.

[poorsaver]

Josh, that minority must include you as we both are well heeled on the Market Ticker (KD). I think knowing where to get the good advice, including this fine blog, and then implementing it into your own personal plan is the way to preserve wealth. Use the information superhighway to your advantage.

[poorsaver]

Josh, that minority must include you as we both are well heeled on the Market Ticker (KD). I think knowing where to get the good advice, including this fine blog, and then implementing it into your own personal plan is the way to preserve wealth. Use the information superhighway to your advantage.

[poorsaver]

Josh, that minority must include you as we both are well heeled on the Market Ticker (KD). I think knowing where to get the good advice, including this fine blog, and then implementing it into your own personal plan is the way to preserve wealth. Use the information superhighway to your advantage.

[Author]

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