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Thread: finance

  1. #1
    Custom Title skateluvr's Avatar
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    finance

    u r all saavy educated, diverse people. is there about to be another market bubble burst? bonds? is anthing safe? please lets talk about what you expect....gold took huge dip..why? is it buying time?

    lets have a free wheeling exchange. gs has so many bright, educated people.

    Should people go to cash? I have bonds and lost 3 percent-worried sick re money...whats the prognosis?

  2. #2
    Custom Title Mathman's Avatar
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    I am far, far, far from an expert, but here are my thoughts. (Disclaimer: Don’t do anything I recommend! )

    First, are you planning for the long term? Second, can you tolerate the risk of temporary loss against the expectation of later recovery?

    If yes to both…

    1. Inflation will eat up all “safe” money (like cash, money market vehicles, etc.). This is true even for the moderate amount of inflation that we have now. In the future, sooner or later we will have to address the seventeen trillion dollar national debt. I do not see any way of paying it down, or even of servicing it, except to print more money. This could cause huge inflation in the future, seriously affecting the buying power of people on fixed incomes (like an annuity). Also, Social Security is in big trouble and may not be able to keep up with inflation by cost-of-living increases in the future.

    2. Right now the Fed is keeping interest rates unnaturally low in order not to disrupt the fragile recovery. In general, low interest rates are good for stocks and bad for bonds. So right at this moment the Dow is at an all-time high and bonds are not earning anything. This will change as the Fed gradually raises interest rates over the next couple of years.

    3. Just speaking for myself, I would not invest in gold (much less in specialty stocks, commodities futures, etc.), because I know nothing about what economic conditions make these vehicles go up or down. It is just a crapshoot to a non-expert.

    4. In the very long run common stocks have historically returned pretty close to ten percent, handily beating all other forms of investment. But in the short run, they are up one year, down the next. If you are depending on dividends or systematic withdrawals from equity accounts for day-to-day living, you need some kind of guaranteed floor.

    In the next decade or so the baby boomer generation will be entering retirement. The reason the stock market has done so well over the last several decades is that the baby boomers acquired an immense amount of collective wealth and had nothing to do with it but invest in the stock market. When they all retire they will take their money out if the stock market and use it to live on. This could cause the market to underperform in a big way.

    But maybe not. The new millionaires will have the same problem as everyone else – what to do with their money. They might decide that there is no better option than to plow it back into the market.

    For the long haul I do not see any better option than to create the most diverse portfolio you can come up with. Mutual funds that invests in a broad mixture of large and small cap and growth and income common stocks, international equities (not too long ago the U.S. markets did about two-thirds of all the trading in the world, now it is about one-third), municipal and utility bonds (don’t buy any city of Detroit bonds, though ), fixed-rate principle-guaranteed money market offerings, even U.S. treasury notes. IMHO I trust the managers of these funds to be able to keep my holdings balanced and in tune with current trends better than I can (plus, I don’t want to spend the time or to endure the headaches of managing my own money). Diversify, diversify, diversify.

    Anyway, that’s what I think. YMMD.

  3. #3
    Custom Title skateluvr's Avatar
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    ty mm!

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    That sounds like a good way to plan, Mathman. Everyone I've talked to seems to feel that this approach makes for the best outcome in an uncertain world. And, as you say, a reputable and trustworthy financial company has people who spend their time doing the requisite homework that most of us can't do, so a mutual fund or other plan from one of those institutions can be one way of keeping one's nest egg well nourished.

  5. #5
    Wicked Yankee Girl dorispulaski's Avatar
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    A direct bet on the market can be made by buying into an index fund, which is one of the options in my 401K. I've used it for years and since as MM pointed out, when interest rates are low, people have no choice but to buy into the market.

    Right now, you can get better interest on your money by storing it under the bed or in a safe deposit box. Bank interest is so low that your resulting gain every year is a loss, since you keep paying the bank from time to time to take your money out via ATM's, not to mention checking charges & other fees. Not that I recommend keeping money under the bed. But it's sad. Under the bed storage is a 0% rate of return, a safe deposit slightly lower due to the yearly charge.

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    Custom Title Mathman's Avatar
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    IMHO for a moderate investor the twin hobgoblins are fear and greed. If your holdings go down on Tuesday, don't rush to sell on Wednesday. (You should have sold on Monday, but who knew? )

    Steady as she goes.

  7. #7
    Wicked Yankee Girl dorispulaski's Avatar
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    Old saying about the stock market:

    Bears make money.
    Bulls make money.
    Hogs get slaughtered.

  8. #8
    and... World Peace! Tonichelle's Avatar
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    Quote Originally Posted by dorispulaski View Post
    A direct bet on the market can be made by buying into an index fund, which is one of the options in my 401K. I've used it for years and since as MM pointed out, when interest rates are low, people have no choice but to buy into the market.

    Right now, you can get better interest on your money by storing it under the bed or in a safe deposit box. Bank interest is so low that your resulting gain every year is a loss, since you keep paying the bank from time to time to take your money out via ATM's, not to mention checking charges & other fees. Not that I recommend keeping money under the bed. But it's sad. Under the bed storage is a 0% rate of return, a safe deposit slightly lower due to the yearly charge.
    Get thee to a credit union. Unless you're a billionaire or bigger business you don't need to have a bank. A credit union has all the same "fail safes" as a bank, yet they answer to the members (account holders) not share holders (As you are a shareholder).

    the rates suck interest wise at the credit unions, too, but at least you're not being charged outrageous fees like if you were with Wells Fargo or other prominent banks.

  9. #9
    Wicked Yankee Girl dorispulaski's Avatar
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    Actually my local bank Webster Bank, (which is a real local bank) gives me a better deal than the credit union I used formerly but neither has interest that amounts to anything.

  10. #10
    and... World Peace! Tonichelle's Avatar
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    Quote Originally Posted by dorispulaski View Post
    Actually my local bank Webster Bank, (which is a real local bank) gives me a better deal than the credit union I used formerly but neither has interest that amounts to anything.
    each establishment is different, I would just be sure to do your homework with every way you go. I know of all the options any of the credit unions in Alaska will do better than the banks for their account holder.

  11. #11
    Wicked Yankee Girl dorispulaski's Avatar
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    My credit union quit giving free checks, and it had very few ATM sites, so I kept finding myself paying ATM fees. Then it started holding checks that we deposited for over a week without crediting them.

    That was that.

    However, for various reasons, we need a local bank. Most of our real stuff goes through the old IBM credit union in Vermont, but we've switched to Webster for local stuff in CT.

  12. #12
    and... World Peace! Tonichelle's Avatar
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    Quote Originally Posted by dorispulaski View Post
    My credit union quit giving free checks, and it had very few ATM sites, so I kept finding myself paying ATM fees. Then it started holding checks that we deposited for over a week without crediting them.
    ugh, that's probably a sign that they aren't doing well... probably a good idea to get out. The one I'm with is pretty small nationally but with shared branching I can go into most credit unions in the country and at least get basic needs met when I can't get to my regular CU.

  13. #13
    Wicked Yankee Girl dorispulaski's Avatar
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    That sort of works. Supposedly credit unions give free ATM privileges to members of other credit unions, but I haven't had much luck with this option in FL. Often it appears that everything in FL is set up to gouge the visitor, including the banks. We set up a small account there to get free ATM, which seemed to work OK.

  14. #14
    and... World Peace! Tonichelle's Avatar
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    Quote Originally Posted by dorispulaski View Post
    That sort of works. Supposedly credit unions give free ATM privileges to members of other credit unions, but I haven't had much luck with this option in FL. Often it appears that everything in FL is set up to gouge the visitor, including the banks. We set up a small account there to get free ATM, which seemed to work OK.
    I wouldn't doubt that is exactly what's happened. I would have to look up the shared branching info from my CU to see if we get coverage in FL. I know in California where there are several branches of my CU you have to sometimes drive an hour out of your way to find an ATM or CU that will work with you. It really depends on the state, I suppose, and what type of banking you do on a regular basis.

    But for most nickel and diming fees that banks have CUs *typically* don't have them. As long as you keep the min balance in the account at mine (which is a whopping 5 bucks in the basic account) you are a member in good standing and you don't get hit with any fees.

  15. #15
    Custom Title skateluvr's Avatar
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    Folks-is a crash imminent? my brother has a 401 k. he feels he will go to cash, as he can. i have an MS trust with diff rules. Bonds did ok, but know they are losing and several econs says bond is next big burst. I see Newsmax videos and its terrifying. There is no way to pay off the debt, the dollar has lost 40 percent of purchase power since 2008. My brother reads zerohedge.org and it speaks truth.

    He is now the trustee but wants me to make decisions I have no knowledge of. MM, Im sad to say I was excellent at all but Math, but memory issues since age 28 derailed my magna cum degree. I have never taken economics. It seems that some other currency could become the world currency? How soon? it seems if you know how to bet against things-options-that will be where money is made.

    I am worried sick, alone, and wonder if the govt shuts down, what happens to me alone. I really wonder if it is time to be agressive, as the Banksters plan to steal what they can find. Please read zero hedge....it seems a matter of time-there is no way to deal with the debt? or is there?

    Please continue discussion as we are all affected and in mostlt same American/global boat. Bless you.

    Does anyone understand how gold had 35% yanked overnight? My 10 little pieces lost about 6,000.00. Is it now the only thing to buy? Who had power to cause this and why? MM, can you research and give a best guess? Are you a math prof or econ? TY.

    I am looking to relocate to a skating family house. If you need money, see the collapse imminent, I want to leave this state and start over. Share house? Rent room? I will have to do it. Lord bless us and protect our nest egs for there go we as poverty cases.

    Skate fans are the best-music/dance/sport...no one like us GS die hards! And everyone here seems so knowledgeable. When is the predicted market crash? I admit I'm so afraid, alone and-u know.

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