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patientrenter
Participantscaredycat, I think you show evidence of having been abused at an impressionable age – by the financial markets.
Certainly hard assets can play a useful role in an investment strategy. But it is also true that assets used to provide goods and services for others usually produce income, whereas commodities can only hope to preserve their value.
Would you rather own an apartment building worth $1 mill, or gold bars worth $1 mill? Obviously, if you buy either at peaks, you could get your clock cleaned. But if you buy in a disciplined way, not chasing returns, and spreading your purchases over a variety of assets, then it’s reasonable to expect that investing in some income-producing businesses would help out a portfolio.
If you are rich enough, or frugal enough, then you can just stuff everything in gold and hope for the best. Most of us are not that rich, or abstemious.
Participantscaredycat, I think you show evidence of having been abused at an impressionable age – by the financial markets.
Certainly hard assets can play a useful role in an investment strategy. But it is also true that assets used to provide goods and services for others usually produce income, whereas commodities can only hope to preserve their value.
Would you rather own an apartment building worth $1 mill, or gold bars worth $1 mill? Obviously, if you buy either at peaks, you could get your clock cleaned. But if you buy in a disciplined way, not chasing returns, and spreading your purchases over a variety of assets, then it’s reasonable to expect that investing in some income-producing businesses would help out a portfolio.
If you are rich enough, or frugal enough, then you can just stuff everything in gold and hope for the best. Most of us are not that rich, or abstemious.
Participantscaredycat, I think you show evidence of having been abused at an impressionable age – by the financial markets.
Certainly hard assets can play a useful role in an investment strategy. But it is also true that assets used to provide goods and services for others usually produce income, whereas commodities can only hope to preserve their value.
Would you rather own an apartment building worth $1 mill, or gold bars worth $1 mill? Obviously, if you buy either at peaks, you could get your clock cleaned. But if you buy in a disciplined way, not chasing returns, and spreading your purchases over a variety of assets, then it’s reasonable to expect that investing in some income-producing businesses would help out a portfolio.
If you are rich enough, or frugal enough, then you can just stuff everything in gold and hope for the best. Most of us are not that rich, or abstemious.
Participantscaredycat, I am very cautious like you. I’ve concluded that I will only buy if it’s a relatively small % of my wealth (and cash only). If I choose to live somewhere cheap, then I can do that right away. If I want to live near the coast on So Cal, then I will be renting. Right now, I live in very expensive places, near my work. That may change when I retire.
There’s no point in agonizing endlessly, trying to convince yourself to buy beyond your price comfort level. First decide how much risk you’re comfortable with = the maximum price you’d pay. Then decide where you want to live, and how you want to live, including the owner vs renter choice.
Participantscaredycat, I am very cautious like you. I’ve concluded that I will only buy if it’s a relatively small % of my wealth (and cash only). If I choose to live somewhere cheap, then I can do that right away. If I want to live near the coast on So Cal, then I will be renting. Right now, I live in very expensive places, near my work. That may change when I retire.
There’s no point in agonizing endlessly, trying to convince yourself to buy beyond your price comfort level. First decide how much risk you’re comfortable with = the maximum price you’d pay. Then decide where you want to live, and how you want to live, including the owner vs renter choice.
Participantscaredycat, I am very cautious like you. I’ve concluded that I will only buy if it’s a relatively small % of my wealth (and cash only). If I choose to live somewhere cheap, then I can do that right away. If I want to live near the coast on So Cal, then I will be renting. Right now, I live in very expensive places, near my work. That may change when I retire.
There’s no point in agonizing endlessly, trying to convince yourself to buy beyond your price comfort level. First decide how much risk you’re comfortable with = the maximum price you’d pay. Then decide where you want to live, and how you want to live, including the owner vs renter choice.
Participantscaredycat, I am very cautious like you. I’ve concluded that I will only buy if it’s a relatively small % of my wealth (and cash only). If I choose to live somewhere cheap, then I can do that right away. If I want to live near the coast on So Cal, then I will be renting. Right now, I live in very expensive places, near my work. That may change when I retire.
There’s no point in agonizing endlessly, trying to convince yourself to buy beyond your price comfort level. First decide how much risk you’re comfortable with = the maximum price you’d pay. Then decide where you want to live, and how you want to live, including the owner vs renter choice.
Participantscaredycat, I am very cautious like you. I’ve concluded that I will only buy if it’s a relatively small % of my wealth (and cash only). If I choose to live somewhere cheap, then I can do that right away. If I want to live near the coast on So Cal, then I will be renting. Right now, I live in very expensive places, near my work. That may change when I retire.
There’s no point in agonizing endlessly, trying to convince yourself to buy beyond your price comfort level. First decide how much risk you’re comfortable with = the maximum price you’d pay. Then decide where you want to live, and how you want to live, including the owner vs renter choice.
Participant[quote=paramount]TG: You may very well get that chance again…
Has there really been a fundamental change?
Slightly less “preliminary” unemployment numbers?
The gov’t hired 70k Census workers…BFD, gov’t jobs aren’t all that helpful anyway.
Until jobs start coming from the private sector, it’s all manipulated and phony.
Even Newt Gingrich basically stated that yesterday in a Sunday morning news show.
[/quote]
And Mr Grantham already factors the underlying weaknesses in our economy into his forecasts. That’s why he thinks the recovery will be VL. A small bounce now, and then a long grind without much sunshine. But he thinks markets will over-react, and zoom up over the rest of the year, and then only slowly deflate in small steps over the next seven or so years that will likely not retrace the low of March any time soon.
Read it. It’s worth the time.
Participant[quote=paramount]TG: You may very well get that chance again…
Has there really been a fundamental change?
Slightly less “preliminary” unemployment numbers?
The gov’t hired 70k Census workers…BFD, gov’t jobs aren’t all that helpful anyway.
Until jobs start coming from the private sector, it’s all manipulated and phony.
Even Newt Gingrich basically stated that yesterday in a Sunday morning news show.
[/quote]
And Mr Grantham already factors the underlying weaknesses in our economy into his forecasts. That’s why he thinks the recovery will be VL. A small bounce now, and then a long grind without much sunshine. But he thinks markets will over-react, and zoom up over the rest of the year, and then only slowly deflate in small steps over the next seven or so years that will likely not retrace the low of March any time soon.
Read it. It’s worth the time.
Participant[quote=paramount]TG: You may very well get that chance again…
Has there really been a fundamental change?
Slightly less “preliminary” unemployment numbers?
The gov’t hired 70k Census workers…BFD, gov’t jobs aren’t all that helpful anyway.
Until jobs start coming from the private sector, it’s all manipulated and phony.
Even Newt Gingrich basically stated that yesterday in a Sunday morning news show.
[/quote]
And Mr Grantham already factors the underlying weaknesses in our economy into his forecasts. That’s why he thinks the recovery will be VL. A small bounce now, and then a long grind without much sunshine. But he thinks markets will over-react, and zoom up over the rest of the year, and then only slowly deflate in small steps over the next seven or so years that will likely not retrace the low of March any time soon.
Read it. It’s worth the time.
Participant[quote=paramount]TG: You may very well get that chance again…
Has there really been a fundamental change?
Slightly less “preliminary” unemployment numbers?
The gov’t hired 70k Census workers…BFD, gov’t jobs aren’t all that helpful anyway.
Until jobs start coming from the private sector, it’s all manipulated and phony.
Even Newt Gingrich basically stated that yesterday in a Sunday morning news show.
[/quote]
And Mr Grantham already factors the underlying weaknesses in our economy into his forecasts. That’s why he thinks the recovery will be VL. A small bounce now, and then a long grind without much sunshine. But he thinks markets will over-react, and zoom up over the rest of the year, and then only slowly deflate in small steps over the next seven or so years that will likely not retrace the low of March any time soon.
Read it. It’s worth the time.
Participant[quote=paramount]TG: You may very well get that chance again…
Has there really been a fundamental change?
Slightly less “preliminary” unemployment numbers?
The gov’t hired 70k Census workers…BFD, gov’t jobs aren’t all that helpful anyway.
Until jobs start coming from the private sector, it’s all manipulated and phony.
Even Newt Gingrich basically stated that yesterday in a Sunday morning news show.
[/quote]
And Mr Grantham already factors the underlying weaknesses in our economy into his forecasts. That’s why he thinks the recovery will be VL. A small bounce now, and then a long grind without much sunshine. But he thinks markets will over-react, and zoom up over the rest of the year, and then only slowly deflate in small steps over the next seven or so years that will likely not retrace the low of March any time soon.
Read it. It’s worth the time.
Participant[quote=SDEngineer][quote=jpinpb]
…All I can go by is what I see and there are people owning multiple properties, clearly investments and not just small time investments, and they’re 100% financed getting NODs….
Liar loans were popular, banks weren’t checking and pretty darn easy for an investor to say he lives there and not put 20% down. Heck, Rich posted Kelly’s VOSD story on fraud. People are creative, that’s for sure. They will find a way and work the system.
[/quote]While this was true during the bubble run-up, it really wasn’t true before it (when banks were actually paying attention to loan qualifications), nor will it be true going into the future (now that banks have recovered some sense). Flippers, by the way, are not, and never were, RE investors – they were RE gamblers, even if they called themselves “investors”.
We’re not talking about the same mentality. A long term RE investor pays far less attention to appreciation, and much more attention to cash flow. An investment property should pay for itself (after the initial investment). During the bubble, the flipper mentality was to leverage oneself to the hilt with as many properties as you could rob Peter and pay Paul with the mortgages, and hope that you made yourself a multimillionaire with the appreciation before the music stopped and you were left holding more mortgages than you were worth. Cash flow didn’t factor into it.
When trying to determine rental parity today, you need to imagine how a long term RE investor would view the property. A long term RE investor will look at a property using the 20% down, since that is the minimum cash they need to put in to qualify for loans (without lying) and to eliminate unnecessary carrying costs (i.e. PMI). Once a property drops to a valuation where buying it as an investment makes sense, someone is likely to do just that.[/quote]
SDEngineer, in the old days, lenders kept loans on their own books, and took 100% of the loss from a failure to repay, or a failure to pay the full agreed original monthly payment. Today, nonrepayment of most mortgages is covered by guarantees from a govt agency, e.g. the FHA (directly) or the FDIC (indirectly). So the mortgage and housing markets will look nothing like they used to.
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