Forum Replies Created
-
AuthorPosts
-
livinincali
Participant[quote=AN]
Which is why I’d say most do political talk/answer and most pander. At the presidential level, I would go as far as saying all.[/quote]This is one of the reasons vaccination conspiracy theories exist. Our government has lost the trust of the citizens and it’s credibility by being caught in telling so many lies. Even if you’re completely enamored with your political party and believe their lies, you still think the other party lies about everything.
February 3, 2015 at 5:22 PM in reply to: Opinions on VCAIX Vanguard California Intermediate-Term…. #782601ParticipantDuring the last crash (2008) Muni bonds were one of the safest place to be. Not sure how it will play out this time. Municipalities are the last entity to feel a recession when they show up.
Participant[quote=moneymaker]The dollar is indexed against different currencies differently I think it is weighted against the Euro the highest, like 57.6% or something like that. But if Peter has dollars and Paul has gold and gold goes up more than the dollar then Paul made more than Peter when he sells.[/quote]
Currencies are all relative to each other. Think of gold as just another currency in the realm of currencies. If you had only 3 currencies Gold, Euro, and Dollars. Then one and only 1 can go up against the other 2. One and only 1 can go up against one but decline against the other and one and only one can go down versus the other 2. It’s a mutually exclusive situation. There will always be one currency that is the best relative to the others.
So when you say Gold and the dollar trade inverse each other it really doesn’t make any sense. Gold can go up against the dollar it can go down against the dollar. Gold an go up against a basket of currencies it can go down versus a basket of currencies.
Gold tends to be more volatile than paper currencies so I usually find that gold is either the best place or worst place relative to fiat currencies. When gold goes down versus the dollar it tends to be going down versus the Euro as well.
Participant[quote=moneymaker]I guess I am looking for something more than a gold chart. I would like to see the delta between gold and the us dollar, let’s say for instance gold goes up 2% and the dollar goes up 1% then the ratio of gold to dollar would be positive, if on the other hand gold went up 1% and the dollar went up 2% then that would be a lower point on said chart. In a normal market they are inverse to each other, one goes up the other goes down, we have not been in a so called normal market for some time.[/quote]
It’s all relative though. When we say the dollar goes up the question to ask yourself is compared to what? The Euro, the Yen, the Aus dollar, gold. Gold is priced in dollars. If Gold goes up 1% versus the dollar and the dollar goes up 2% against the Euro than gold went up 3% against the Euro and 1% against the Dollar.
There’s silly charts like this one that price the dow in ounces of gold. Is that what you’re after?
http://www.macrotrends.net/1378/dow-to-gold-ratio-100-year-historical-chart
ParticipantGold is already priced in dollars. Typically 1 oz/Number of US Dollars. Kitco is a decent source of gold charts.
Participant[quote=AN]
Transaction cost only apply if you sell. You’re, right, there is maintenance cost. If you add that, you should also add appreciation as well.[/quote]But you can’t realize net equity until you sell right. Even if you take out a HELOC you also create a liability until you sell.
The bottom line is rent vs buy calculations can get tricky. I think you either need to keep it really simple like Mortgage monthly payment vs rent or it needs to be really complicated. In our low rate environment MID is mostly canceled out by Property Tax. Appreciation is probably mostly canceled out by maintenance. Equity build is mostly canceled out transaction costs. It’s only once you get past 5-10 years before you really start to see economic positives in ownership vs renting.
The biggest unknown right now is will rates move higher, how much will they move higher, and what potential effect does that have on the price of homes. In the worst case scenario I could see home prices significantly lower than they are now.
Participant[quote=AN]I don’t see why it’s not apple to apple comparison? PITI – tax deduction would be less than rent. You’re also paying ~$600/month toward principle, while rent, it’s all gone. I guess if you want to have a pure rent vs mortgage, then compare ITI – tax deduction vs rent. This particular house, ITI with 20% down is ~$1500/month. ITI with 10% down is ~$1600/month. That’s $500-600< than comparable rent. Depending on your tax bracket, you can add ~$200 to that number as well on the buying side for tax deduction. [/quote] Probably need to include transaction costs and maintenance if you're going to give yourself the benefit of realizing the principal part of the payment.
Participant[quote=FlyerInHi]
That doesn’t make any sense. Any deferment of taxes is worth something and worth doing. Time value of money.[/quote]Taking a deferment of taxes now is worth doing. I.e a 401K or IRA contribution. A Roth IRA/401K where you don’t get a tax benefit now but potentially get a better tax benefit in the future may or may not be worth doing. It depends if you can count on that future tax benefit. I think the odds are you probably can’t but it is a risk.
Participant[quote=flu]
So basically what you are say is Obama/Democrats are bullies that like to pick on the minority of financially responsible people that went out of their way to try to save/invest in their family’s future…because they are an easy target… no different than a classroom bully that goes after the kid that is the weakest in the class…knowing that no one is really going to help them….yup, that pretty much sums it up…[/quote]
Not saying it’s right but everybody likes an easy target. It’s why the founding fathers wrote the Constitution the way they did. They knew a pure democracy eventually involves majorities repressing the minorities. In this case the minority is 529 saving account holders. Taking away a tax benefit isn’t unconstitutional, it’s why I like to stay far away from deferred benefits promised by governments. They are under no obligation to keep those promises and the people that made those promises are long gone by the time they come due.
Participant[quote=flu]I wonder why Obama/Democrats didn’t go after the carried interest loophole that hedge funds and private equity managers enjoy…
I wonder why Obama/Democrats didn’t listen to Warren Buffett and try to propose the “Buffett Rule”, which would have been an explicit tax on the “rich”
Instead, they want to tax the 529 plan? Really?….[/quote]
529 plan holders are a small group and don’t have lobbyists to fight for them. Easy target that will produce little uproar and of course little income.
Participant[quote=CA renter]
No, a currency collapse tends to be inflationary (even hyperinflationary), not deflationary. This is when the currency loses the most value. When I said, “if our currency can survive such an event,” I meant that if the currency can survive the inflation and the resulting collapse/deflation (IF the deflation can happen), then it might be worth more at the end. But most currencies don’t survive — their money is exchanged to a new currency worth a fraction of their old currency…and this can happen multiple times in a row. People who hold hard assets like real estate are the most likely winners, though in some cases, you will see reforms put in place that redistribute land when these collapses happen. Ultimately, there is no safe place when currencies are manipulated like this.That is what scares me most: that so many people who did nothing to create this mess — people who tried to be as conservative and prudent as possible — will end up carrying the burden for a long, long time, possibly for generations.[/quote]
Iceland’s 2009 currency crisis is a decent case study because it’s fairly easy to get historical data on want happened. In a nut shell this is what happened.
1) Currency collapsed by about 50% relative to the US Dollar/Euro
2) Inflation went up to 20%
3) Interest Rates went up to 18%
4) Home prices lost about 20% measured in Krona
5) Stock market declined by 95% measured in KronaSo in the nutshell the best place to be when Iceland had a currency crisis was to be in some foreign currency or investment. The next best place to be was in cash. The worst place to be was in the stock market or other assets like houses that are priced based on the availability of leverage. The problem with a currency crisis is that interest rates go sky high so that hits assets that rely on the availability of leverage. So you have consumer price inflation but that doesn’t translate into higher home prices.
Participant[quote=CA renter]
Probably true about this not going anywhere with Republicans controlling congress; not sure it would pass with Democrats, either. It’s a bit like talking about eliminating the mortgage interest deduction…they can talk about it so that they sound tough, but it just isn’t going to happen (IMO).
They could only do this going forward. The uproar would be huge if they tried to do this to existing accounts.
Really, why would anyone invest in a 529 plan if it passed? It’s bad enough that there is a penalty if the money isn’t used for qualifying expenses…take the tax savings away, and I doubt that anyone would invest in one of these plans.[/quote]
Only 3% of families invest in 529 accounts. You win if you can give something away to the families that didn’t invest in 529 plans. It’s why I think the day is coming when they are going to do something with Roth accounts. For instance we’ll save you social security payment or boost it and in order to pay for it we’re going to retroactively tax Roth accounts. Yeah you piss off 10% of the population with Roth accounts but you satisfy a bigger percentage of people with the give away.
Participant[quote=moneymaker]I think a better question than “are savers doomed?” is “are 401K’s doomed?”. As with government there are 3 basic checks and balances, stocks,bonds,commodities. Problem with 401k’s is you can only invest in stocks or bonds, so when the market in over valued and interest rates start climbing you are screwed as an investor with no where to turn. The rich can invest in gold/silver but the little guy will get squeezed as the proverbial turnip.[/quote]
Sometimes the best option is just not losing and staying in cash.
Participant[quote=spdrun]
(2) Wonder what’s in it for Switzerland. Are they just protecting themselves against the effects of Euro QE and encouraging capital inflows if Euro QE happens? Will it hurt their economy, making their products and travel to their country even more expensive?[/quote]They did it because in order to maintain the currency peg they had to commit to the same level of QE that Draghi is/will undertake. They just couldn’t go along with having to do that much QE so they gave up the peg. They might end up with some short term pain but it’s likely not going to be as bad as trying to maintain the peg through ECBs next round of QE.
[quote]
(4) Any way to take advantage of this at this point? Opinions on the future direction of the Franc?
[/quote]Short the entities that were short the swiss franc in significant quantity, although that’s easier said than done.
Once you get a currency move this big it’s not going to be the end of the trend. Maybe we get a dead cat bounce but I’d expect the Swiss franc and US dollar to continue to appreciate against the Euro in the short/medium term. Obviously there will be some volatile counter direction swings from time to time. I honestly think that we might see Euro/Dollar parity within the next 12-18 months.
-
AuthorPosts
