[powayseller]

The most important flaw, and the biggest, and the one that invalidates their entire report, is already written. There is no need for parts 2-4, although I want to expand further.

Any comments on Part 1?

[powayseller]

I’m amazed that one country, the US, keeps thinking it has a right to tell other countries how to live within their borders. Overthrow is a new book written by a New York Times journalist, espousing the danger of taking out established leaders, and replacing him with one of the US choosing.

I find it odd that Bush think he should have nuclear weapons (and not Iran), when Bush is the one suggesting he may use them. Perhaps we should all get rid of our nuclear weapons. I suspect Iran wants to make nuclear weapons, so it will be on equal footing with the US, and not be intimidated any longer.

The US decides what country it wants to invade, does it without international support for its own gains (whatever they are), and then questions the patriotism of anyone who is against war.

Why is war patriotic?

Why is questioning the killing of foreigners in their own country, considered unpatriotic? We are supposed to blindly support the military.

We don’t need most of them!

Take half the military, send them to college to become teachers. Improve education! Pay down the debt!

My daughter came home today and told me her classmate did a presentation on the national debt. The boy said we spend 40% of our budget on war, 25% on healthcare, and 4% on education. Ever wonder why college is free in Germany? It’s the 40% part – they don’t need to kill people all over the world.

I am opposed to the military. What a waste of money!

[powayseller]

Alan Hamilton, editor of Zeal Investor, writes that the March 24 gold upleg was due to speculators. Only speculators can cause such huge price upswings.

Chris Johnston, in his June newsletter, did some analysis of gold, US$, and inflation. He found that historically, gold is linked to inflation, not the US$. I e-mailed him the Zeal newsletter, which writes that gold is linked to the US$ in Phase I, but not in Phase II. Now I”m really confused, because both present data (charts) in making their conclusions. Zeal found that in the last gold downleg, there was an 88% probability of it being linked to the rally in the dollar.

I am not a gold bug, nor a gold bear. Still trying to decide how to handle all this.

Where do you recommend getting gold bullion? When gold comes down in price, I would like to put 1% of my assets in gold bullion. The advantage that I see:
1) The government can’t tax you on physical assets you can hide in your house. No capital gains tax on gold.
2) If you have to file for bankruptcy, or someone sues you, or the colleges ask about your assets, your gold is hidden from view.
3) If the terrorists figure out how to destroy our communication system, and there are computer outages/glitches/wipeouts, your bank account data could be temporarily lost or inaccessible. Your gold is not.

I think I’ve been negligent in keeping all my money in electronic accounts: banks, brokerages, mutual funds. I’m being completely dependent on this electronic system to never malfunction. Some cash, some gold in a safe, some food storage in case of earthquake or bird flu (a question of when, not if), is just part of responsible planning for my family.

[powayseller]

4plexowner – in mid-May, gold dropped quite a bit. Was M-3 suddenly not important anymore? I am glad I didn’t buy gold then. According to Zeal, gold is still overvalued today.

Did you know that speculators accounted for the gold bull run, increasing the global value of gold by $847 billion in just 34 trading days? Wow, at that rate, “it would soon suck up all the capital on the planet like a financial black hole.” Zeal expects gold to fall unde its 200dma before this correction has run its course.

Thus, buying gold is very risky, because you can lose lots of money. What if I had believed the people on this forum to buy gold because it’s a store of value?

I would have lost 30% of this supposed value.

I am still not comfortable with gold. It is as volatile as any stock out there.

You say the dollar will lose value, but it is not volatile like gold. Perhaps some day that will change. But I do not like roller coasters.

[powayseller]

contentrenter – I am not qualified to give inevestment advice. I know nothing about tax implications, and not enough about how to pick a financial advisor.

licketisplit – Your company matching 401(k) should have a cash option. If not, you can put it into the no-load fund, and move to an IRA in another family. Unless they hold your money hostage?

doofrat – Zeal newsletter gives specific stock advice, and I’ve followed some of it. Chris Johnston’s service is great for bond futures trading. As Rich said, you can make money in select companies, but not by being in a general mutual fund. By the way, my neighbor met with a financial advisor, and he charges 1.5% fee for managing her money. She didn’t like that he gets paid, regardless of whether she makes or loses money that year. An appropriate commission structure is for the advisor to get a % of the profits, and to pay you a % of your losses. Who will do that? Or do what Chris J does: charge a minimal fee for giving the information. No commission!

Rich – thanks for clarifying about the financial advisors.

I’ve been off the computer, as my teens have needed it for homework. (I believe in sharing resources, thus, the one family computer will do for us. And now I must get off again, as she finishes her Power Point presentation about the future of GM, and my son works on his gay marriage debate.)

[powayseller]

George Bush believes he is doing God’s will in fighting the war and in his domestic policies. This is why my husband has turned away from church. He says more wars are fought in the name of religion, and he sees religion as causing suffering, not curing it. I myself know that God exists, because I meditate. Anyway, back to Georgie boy…. he believes he’s doing right by the American people. Most politicians believe that capitalism improves the lives of everyday people. The more profitable a corporation, the more it can improve hiring and pay, R&D, profitability. It’s an economics model they believe in.

Furthermore, they must keep up confidence. A fiat money system without confidence is only a house of cards.

I really believe most of these people have bought into their own BS. Like the alcoholic who convinced himself he isn’t one.

[powayseller]

Saiine, I think it would be fun to meet you and others. I would definitely go to any event you set up.

[powayseller]

Does anyone have any personal stories of people who are upside down on their mortgages?

I wonder what they are thinking about their own fault in this.

I wonder if we’ll see class action lawsuits against lenders.

I wonder what these people will do to pick up the pieces. Move? Do they have money to move?

[powayseller]

Agreed. An alternative to those who don’t want to pay for advice, is to read a lot.

What advice will a financial advisor give you? The name of a mutual fund to get into? Encourage you to get into the commodities market? If anyone here has met with an advisor, I’d be curious to know.

Once I met with an advisor, and he recommended we get disability insurance. The premiums ran about 5% of our salary, so we took the chance on not needing it. Instead, we put the money into mutual funds, and it was a better move than throwing it away on disability. We figured if my husband became disabled, I would work. Besides, with a desk job, you’d need to be pretty messed up to not be able to work. A life insurance salesman talked us in to a whole life policy. That was a bad mistake, but we fell for it. I once fell for a financial advisor’s Franklin Templeton Funds. She was pushing them, because she earned 5% on all the money I put in. That’s called a load fund. I had that same fund since 1986, and kept waiting to recoup the losses it had early on. It still hasn’t.

If you get a financial advisor, make sure it’s fee-only. Make sure he gives you his rate of return on his recommendations over the last 20 years. How did he do in the previous bear markets? If he doesn’t have 20 years in the market, get someone else; don’t be his guinea pig. Most people are afraid to ask for a track record. If you don’t ask, you could end up with a guy whose a great salesman, but a lousy investor.

Ask your advisor which asset classes he recommends. Don’t get a guy who only recommends stocks and bonds. You need someone who knows when is the right time to buy real estate and commodities.

My big mistake is that I was brainwashed by the Wall Street marketing ploy of investing for the long haul in stocks, dollar cost averaging, keeping my money in even during down times. Well, because of that sh*tty advice, I missed out on the real estate boom. I missed out on buying gold when it was still $300/oz. Where were the supposed experts then?

Ask this financial advisor if he was recommending people buy gold back when it was $300/oz, and real estate to flip in 1999. If not, he’s not worth the money!

As you can see, I am very skeptical of financial advisors.

If anyone can give me the name of a financial advisor who meets the above criteria, I will eat my words, and I will go speak to him and pay him myself. Does anyone that smart even exist?

I figure if no one is smarter than me, has a better track record than beating the S&P500 index fund, I can do it on my own. Then I have only myself to blame if it doesn’t work out.

I read in the paper today that investors lost billions of dollars in the stock market in the past week. I lost zilch.

Anyone listening to the advice of a financial advisor probably was in the stock market and lost money.

[powayseller]

Good finds! This will be an interesting thread to follow.

All this makes me wonder how some economists say RE will go up 5% this year, a slower rate of appreciation. Or the flat landing scenario.

Here we have proof of some units falling 8.5%.

Why can’t they be honest and say, “We expect nationwide depreciation of 2%, and some pockets of cities may even see a 10% drop by summer”. Wouldn’t that be more honest, and accurate?

[powayseller]

You don’t need to read tea leaves to know the stock market is overvalued. Just read Barry Ritholtz (hedge fund manager) who writes The Big Picture, Bill Fleckenstein, Warren Buffett, Irwin Yamamoto, economist Joseph Elliott. The only people pitching stocks now are the ones who make money off you buying stocks, whether they go up or down.

Interesting, isn’t it? Wall Street makes money off you, even if the mutual fund goes down. Brokers get paid for your trades, not how profitable they were.

rockclimber makes good points about having debt paid off, but it’s also helpful to have some cash or credit line around in case of job loss. Your 6 month job loss reserve could be held in CD. Again, it’s best to check with an accountant for your personal situation, as I mentioned above. A good rate, a guy with very low overhead, is Michael Gallon in El Cajon.

If you want to get into some trading in this down market, check out Chris J’s site. He’s a disciplined bond futures trader, who takes a position only if all his technical indicators are in his favor. Since I’ve been following his trades, he made one very profitable trade on 5/19, and no trades since. His service tells you to buy the bond the next day, if certain parameters are met. After that mid-May trade, those parameters were not met, so he did not trade. He’s more like a week-trader than a day-trader. His method has worked, and he is up 50% this year. I am going to set up a futures account with some extra money I have, that I could afford to lose, and do these trades. The futures account is in Treasury notes, but you take some of that money to make the trade. There is a stop loss, so you cannot ever lose your entire trade. My husband looked into this also, and told me I could do this.

But again, something like this is for people who have extra money to invest. The only reason I can even think of something like this is from the money I made selling my house. I would not use my emergency fund or borrow against my home or stock accounts for investing in anything, no matter how good it sounds.

You can also check out Zeal. I subscribe to the Newsletter (monthly, for long term investors), and not to the weekly Speculator. The latter is for short-term traders. I purchased shares of a lead mining company recommended in their May newsletter. These people spend all day scouting out the best deals, and in the May newsletter, they had that one mining company, so I put some extra cash, that I could afford to lose, in that.

There is no easy ride in investing. If you want to make money investing, you’ve got to take the time to educate yourself. When you buy a car, a house, you must take time to drive around to look at cars and houses, learn about financing options, how to spot a good deal, do inspections. Unfortunately, many people don’t want to take the same amount of time to figure out their investments.

They find it difficult to understand the markets, so they tune out. They hand their money over to their company’s retirement fund, and trust the right choices were offered. They invest in the mutual fund, believing Wall Street propaganda that this is all too complicated, and only mutual fund managers can figure this out. They convince you to take big risks in the market, and ride out the lulls. Well, ask people in 2000 how well that philosophy served them. If you can think for yourself, you can outdo the crowd, by getting out of stocks when they are overvalued, and getting in when they are undervalued.

Let me give you an example. Back in 2000, when everyone was buying tech stocks, I could see we were in a highly speculative bubble. I loaded up on Vanguard index funds, favoring the small caps and overseas funds. They had been the laggards, and I knew that these things are cyclical. I did not lose money in the tech stock crash. Only because I used common sense and did not follow the crowd, and exited overvalued positions.

When the stock market has fallen off its high (and the corrections have started last week and are continuing, but expect a few dead cat bounces) then get back in.

Anyone investing needs to do at least some research. If you’re not willing to do that, you’re basically gambling, not investing.

There is no such thing as a risk-free ride. I am losing money in my 5% CD, to inflation. Stocks are even riskier. Remember 1987? Remember 2000-2001? Stocks are just now getting back to the prices they were 5 years ago. Not a very good ride, in my opinion.

It’s too bad that most young people have been brainwashed by Wall Street mutual funds to think that stocks are the best investment. It’s only good for the mutual funds, who earn billions each year, managing your money. Not good for you!

[powayseller]

doofrat, now is not the time to be in the stock market. The stock market is poised for a major correction. All the investor services to which I subscribe recommend a 100% cash position. When Warren Buffett started investing, his returns were 14% annually. They’ve reduced 2% per year, and now it’s at 6%. As he says, it’s harder these days to find good bargains.

Historically, the stock market returned x%, depending on the time frame you choose you can make this number look big or small.

Those of us in cash are waiting on the sidelines for a good buying opportunity.

I sold most of my stocks last month, and am 95% in cash.

It’s true that my 5% CD is not outpacing inflation, but if I lose 25% in the stock market, I am even worse off.

Just curious – where is your money now?

[powayseller]

Good find! GMAC’s Money Market is FDIC insured and pays 4.75% APY. Their CD pays 5.35%, but I think it is for 5 years.

I opened a CD at World Savings, 4 months, 5.11% APR. It is the highest in the country, but I have to lock up my money for 4 months. If you like the 24/7 access, you only give up .35% for GMAC. For me, I earn several hundred dollars a year more at World Savings, so I go with the highest rate. I will not need my money for 3-5 years. For asianautica, it is more important to have 24/7 access, so he found a very good rate for his needs.

The advice I give is very general. I do not feel comfortable giving you specific advice, because I do not know your tax situation. For example, a few months ago when I met with my CPA, he told me to do a Roth IRA instead of a regular IRA.

That said, there are several options for cash. You can buy Treasury notes from treasurydirect website. As long as you get a 90-day, or 6 month, and hold until expiration, you will not lose any principal. If you sell before maturity and the interest rates have gone up, your note is worth less.

Money markets are another option, but many are not FDIC insured, and may hold mortgage backed securities and short term corporate debt, and could be at risk if Fannie Mae becomes insolvent. I fully expect Fannie Mae to become insolvent in the next 3 years, but the government will bail them out, so look for either a tax increase or more dollar printed, probably $300 billion, to pay for it. My brother who has studied this more, said if 3% of Fannie Mae’s loans become insolvent, they become insolvent too and it would set off a derivatives and banking crisis. The government would quickly step in to avoid a banking crisis. Nonetheless, I would rather avoid that whole scenario, because who knows how it all finishes? And it’s not hard to imagine that 3% of loans will become insolvent in the next few years.

[powayseller]

Search the archives – this one has been discussed and dismissed before. Also check out previous discussion on housingbubblecasualty.com.

The paper is full of problems. For one, it does not recognize CLTV. Fannie Mae, as well as lenders, only have to report the 1st loan, not the 2nd.

On an 80/20 loan, Fannie Mae, as well as the author of this paper, count is as a 20% down.

The correct number to track is the Combined Loan to Value, which makes an 80/20 loan a 100% CLTV. But it is only a 80% LTV. Notice the paper didn’t even bother to inform you it is LTV they are using. They don’t want to point out the distinction. Idiots!

Can you see why this paper is worthless???

[powayseller]

My husband’s boss and daughter purchased a downtown condo for long-term appreciation, thinking that the downtown area would become more desireable.

When I heard of this last September, at a time when everyone was still saying RE can only go up, I was doubtful. The daughter bought and lives in a condo in Little Italy. She should know the market.

As far as I know, even after I warned them to get out, they still own the condo.

I’m going to quote from a friend: it’s like telling your friend to stop dating that guy because he’s a loser but she won’t listen and ends up marrying him anyway. Years later, she finally divorces him. You wonder, and now she does too, why she didn’t listen… People buying RE now are like that rosy-eyed girl.

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