Investing Money

tabs · 06-24-2004, 01:13 AM

This is a bit closer to home and not on the grand geopolitical scale. I had an hour discussion with my Portfolio manager today.

We talked about asset classes, of which there are basically 3.

1. Bond market...which has enjoyed a 20 year bull market. Remember in the early 1980's interest rates were 16%...since then interest rate have fallen and the price of bonds have risen. At this point in time we are at the end of that cycle as interest rates have gone as low as they are going to and are now going to rise. Which means any money/principle invested in bonds is going to be a losing propostion. You will be able to recoup the initial investment when the bonds are called in. However the way to invest in Bonds is when their current value is less than the par value...U then get both a capital gain and the interest on the bond when it's called. I can safely say that Bond mutual funds are going to be death. So money/capital is going to be looking for an investment catagory where the risk to reward ratio is greater.

2. Real Estate...based upon a 5 year business cycle RE has enjoyed a dramatic rise in value, and with rising interest rates the affordabilty is going to be reduced thus with the higher inherent prices for entry into the RE market the risk to reward ratio is again not favorable. Money will begin to flow out of RE into another asset class where a better return can be obtained.

3. The Stock Markets...again based upon the 5 year business cycle the stock markets have lost money in 3 of the last 5 years, and this year is treading water for a variety of factors. Two of which are the uncertainity of the Presidential election and the geopolitical situation. Therefore the risk to reward ratio is favorable, and money will be coming into the Stock markets from the above 2 mentioned asset classes especially as earning reports are strong.

On the tactical level we are in a trading range market...where you have to look for stocks which are at the lower end of their ranges. Watch for the 8% to 15% bump and take your profit.

Well I'm off to the casino now....wish me luck.

84porsche · 84porsche's Garage

Quote:

Originally posted by tabs
Well I'm off to the casino now....wish me luck.

A great way to invest. Your odds are probably a lot better than any of your other choices. Play nickels, they will last you a few decades.

EDIT: By the way, good luck.

tabs · 06-24-2004, 11:31 AM

Everybody thinks investing money is a gamble. That comes out of ignorance. They aren't knowledgeable, so the way the system works remains a mystery to people. Therefore sinces ones choichs are not knowledgeable one has random success or failure, leading one to ascribe investing as luck or gambling.

There is virutally no human endevor, life as it maybe that is not without risk. Life is finite. Therefore if you educate yourself about how the markets work you cut your risk down, which maximizes your potential for reward.

However the way I like to do it is buy high and sell low....no problem, no risk...I am assured of losses everytime....

I think I'm gona go out an invest in RE...man eveybody is making a ton of money in it...think I can sell my trailer, use the money to buy 3 houses and make a coupla hundred thou on each in 6 months and have it made.....7 come 11....

Bill Douglas · 06-24-2004, 01:24 PM

I suspect collectables may be a good investment. Things such as antique firearms, certain cars (gulp), Royal Doulton, shrunken heads - joke. I'm not going to do anything for a year and see if I can pick up some more good buys in real estate. I'd hate to buy real estate now and be somebody elses fool.

turbo6bar · 06-24-2004, 01:31 PM

I ain't making a ton of money in real estate. I'm paying down debt and waiting for bargain foreclosures to come along. As long as you realize all foreclosures are not bargains, you'll be alright.

I feel anyone can make money in any branch of investing as long as they have the right gameplan. I consistently see 20% returns on my investments, but the investments are indeed hands-on. On the other hand, when the rentals are owned free and clear, my return will be lower, but I'll have zero debts and steady income stream.

http://www.mountainwings.com/past/3244.htm

turbo6bar · 06-24-2004, 01:45 PM

Quote:

Originally posted by Bill Douglas
I'd hate to buy real estate now and be somebody elses fool.

I agree. While rates are still crazy low, the prices are still shocking. The only deal I have this year is a 3 bedroom/2 bath single family home. Purchase price $55,900. After 1 month of rehab + $3500 in materials, it will be worth around $85,000 and will be rented at $825-850/month. Everything else is being gobbled up by homeowners at crazy prices. I only got lucky because this property is a junker (needs spit polishing). I've learned patience is a great virtue in investing. You gotta roll with the punches sometimes. good luck, Douglas. jurgen

tabs · 02:00 PM

Turbo thats sensible advice.

Collectable like anything other investment needs to be bought at a reasonable price. The way to make money at them is to constantly turn them over with a incremental price increase. If you truly love what you collect this sometimes maybe hard, however after many years of doing it, in my case after decades of hoarding you begin to think...do I really need all this stuff. At which time you begin to pair down. With the exception of a few select items the appreciation rate on collectables is not really that great. You'd be far better off in a good stock Mutual Fund. Things go into favor and out again, with those few exceptional items that always maintain favor. So my advice is to keep the truly rare and interesting/desirable item (rarity doesn't always translate to high price...especially if it is not perceived as being a desirable item) and turn the rest over after the novelity of ownership wears off.

PS. I view collectables as being a store house of value rather than an appreciating investment. Automobiles as a Collecable investment has one big strike against it to begin with. Over time they tend to detoriate and need constant maintence not to mention insurance. Those costs eat deeply into profit margins.

fintstone · fintstone's Garage

I am partial to real estate investing because of the tremendous leverage and relatively low risk if one is reasonably patient and careful. With a rental house...if times are tough, you can always live in it...unlike most collectables.

Alan Cottrill · Alan Cottrill's Garage

My favorite thing about real estate (besides the fact that it appreciates and generates income) is that I can insure it to 100% of it's replacment cost. it's the only investment I've found that does all 3.

ronin · 06-24-2004, 10:47 PM

Quote:

Originally posted by turbo6bar
I agree. While rates are still crazy low, the prices are still shocking. The only deal I have this year is a 3 bedroom/2 bath single family home. Purchase price $55,900. After 1 month of rehab + $3500 in materials, it will be worth around $85,000 and will be rented at $825-850/month. Everything else is being gobbled up by homeowners at crazy prices. I only got lucky because this property is a junker (needs spit polishing). I've learned patience is a great virtue in investing. You gotta roll with the punches sometimes. good luck, Douglas. jurgen

wow, your real estate market is now where ours was 20 years ago! perhaps I should move to Tennessee

kach22i · kach22i's Garage

The stock market sucks, the big game players play the little guys.............might as well go to the casino.

They are expecting another big stock market "adjustment".

Combine this with the real possiblity of another terrorist attack on US soil this summer and it's looking risky to stay in.

Real Estate will cost you in taxes unless it's investment/money making rental property. Become a Landlord and it's like working a second job, ain't nothing free baby.

turbo6bar · 06-25-2004, 07:02 AM

The cost of NOT investing far outweighs the costs and risks of investing. Anyone who thinks otherwise is a fool, and I mean that is the kindest way. I've taken 5 vacation days in the last 2 years, but the last 2 weeks I've put in roughly 4 hours on my rental properties, and in 10 years I'll be semi-retired. It's all a question of sacrifice. How much do you want it? When is enough , enough?

ronin, you should visit Tennessee in July. It will be around 95 degrees and high humidity. It makes you question your sanity. On the other hand, for rental real estate, the Midwest and Southeast can be incredibly lucrative.

ronin · 06-25-2004, 08:28 AM

lol, I'll be enjoying a little of said insanity in a few weeks when I go to Houston. heat-wise, I'm glad I don't live in Texas anymore. I have considered the southeast for property investments and found a few places around Florida that I liked. the trick is finding a place with reliable renters

tabs · 06-25-2004, 11:23 AM

One thing about a Big Terrorist attack this summer. Let me clue U...if one does take place...every investment class is up the excrement creek. The problem with RE is that it's not LIQUID. What is going to happen to RE values if a major city goes up in flames...the risk factor of owning something that can be blown up decreases it's value..it's not like my Trailor where I put the wheels back on and move it. Further with a large attack the economy will tank and foreclosers will skyrocket making your property unsaleable and your renters without a job can't pay you the rent. With Bonds, sure it is a safe haven in times of distress, but if the USa proves not to be a safe haven for capital investment, foreign capital with be leaving...bye bye Bonds....Stock Market...economy and business will slow...and who wants an asset that can go out business or physical plant can disapear up in smoke. Not me. So now U know why a major Terrorist atrtack will be the end of US all.

Gold, Diamonds ehh, Guns....will be the only comodities other than food and water that will mean anything.

tabs · 06-25-2004, 11:39 AM

Quote:

Originally posted by kach22i
The stock market sucks, the big game players play the little guys.............might as well go to the casino.

They are expecting another big stock market "adjustment".

Combine this with the real possiblity of another terrorist attack on US soil this summer and it's looking risky to stay in.

Real Estate will cost you in taxes unless it's investment/money making rental property. Become a Landlord and it's like working a second job, ain't nothing free baby.

I've addressed the Terrorist attack issue. The Stock Market is primed and ready for an advance, it is being kept in check by the Presidentail election and Irwreck/Terrorist worries...those issues have been priced into the market. But if a big one goes off all bets are off on everything....

Th big guys play the little guys....Little guys with KNOWLEDGE of how the system works can do OK, why because they know about the games being played. My Portfolio manager sometimes has 300,000 to 400,000 share blocks of certain companies at any one time. When she lays them off, she does them a few at a time so as not to effect the price of the stock. Another thing that you missed is the fact that when you buy into a Mutual Fund (which I BTW detest) you are in a sense a big guy....economy of scale.

Sometimes rental property after all the hidden or your labour costs sometimes just doesn't add up on a per hour basis. But at the end of the day you got somethin thats has value even if you got it at a $1.25 an hour. (ouuu RE boyz did you just feel me bite your a$$ with that comment..that why I am a man of.....).

ronin · 06-25-2004, 02:54 PM

see! see! I knew those survival kits would come in handy someday!! yeah, you laughed at Y2K but when those commie pinko terrorists come to blow up my 'hood this summer, I'll be the one with the last laugh!! ha! I'm all stocked up. 200 cases of doggie biscuits (the good beef ones) buried under the house, plenty of water in the rain barrel, and daddy's (t)rusty old shotgun. that'll keep 'em at bay. so when the ***** hits the fan at 2:47 p.m. on the 4th of July, don't come knockin' at my door 'cause I'll be blasting anything that moves. you had yer chance, now live with the reality... slackers!

RoninLB · 06-25-2004, 07:18 PM

The terrorist didn't prevent many Israel companies from being great performers and a worthy investment. RE cycles historically. There is little correlation from general business economic performance and the returns from the stock mkt. A key gauge of measuring the amt of available action is liquidity. If no liquidity then no action. You can't determine the flow of this liquidity from a distance in time. Liquidity will flow from one area to another being determined by the changing conditions. The value of an investment is always determined by supply and demand.

tabs · 06-26-2004, 12:45 AM

Those changing conditions are the risk to reward ratio....