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1 minute ago, Clark Griswold said:


Will do, good point (taxes on interest)

As to RE and equities, you may be right but as I just sold my investment property (probably moving so I wanted to start to roll up my footprint) and now have the equity in cash to think about protecting/growing
Equities, nervous about a correction, everything seems overvalued

I’m not pessimistic, but it seems like the late 70s again with potentially stagflation


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I'm not crazy about the parallels between 1990s Japan and 2020's USA, but at least we are still the strongest economy in the world. 

 

The number of people investing is stocks and crypto without a clue as to what either one is scares me a bit too. 

 

The only philosophy behind the current trajectory is "stocks always go up." That didn't work great in 99 for stocks or 08 for houses. But I'm not sure the millennials can sustain the trading volume required at these prices to keep the prices high, especially when the boomers start selling for retirement income... Uncle Sam can keep buying, but for how long? A millennial buying 5 shares of amazon at $2000 will not cover dozens of boomers who bought it at $100 selling to pay the mortgage on their homes... 

 

It has the makings of a cascade, but bubbles always go longer than you expect.

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1 hour ago, Lord Ratner said:

The number of people investing is stocks and crypto without a clue as to what either one is scares me a bit too. 

 

The only philosophy behind the current trajectory is "stocks always go up." That didn't work great in 99 for stocks or 08 for houses. But I'm not sure the millennials can sustain the trading volume required at these prices to keep the prices high, especially when the boomers start selling for retirement income... Uncle Sam can keep buying, but for how long? A millennial buying 5 shares of amazon at $2000 will not cover dozens of boomers who bought it at $100 selling to pay the mortgage on their homes... 

 

It has the makings of a cascade, but bubbles always go longer than you expect.

This raises a few questions that I don't know the answer to: What percentage of boomers' 401k's tied up in equities? The common school of thought is that as you get nearer retirement age, you blend in "safer" investments, typically in the form of bonds. Next, what percentage of boomers are passing away with a substantial sum still in their retirement accounts? If it's high, what are their kids doing with it? Next, what percentage of 401k's have bonds in them and how much? Another theory getting floated is that equities are being driven up because there's nowhere else great to park your liquidity. Interest rates have been so low for so long that the bond market makes hardly any sense to the average investor. If memory serves, even bond funds weren't great during March 2020. There was a big sell off and if you needed the cash in that time frame, you would've taken a haircut (though not as bad as the S&P). Where's @MilitaryToFinance? He's probably got some insight into all this.

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2 hours ago, Royal said:

Another theory getting floated is that equities are being driven up because there's nowhere else great to park your liquidity. Interest rates have been so low for so long that the bond market makes hardly any sense to the average investor.

🎯

 

The fed's attempt to control the economy with near zero interest rates has created a reality where the only place to make money is real estate and equities. But that's only for the ones that have any retirement at all...

https://www.businessinsider.com/personal-finance/baby-boomer-retirees-positive-about-retirement-savings-2020-10#:~:text=According to data from the,use the cash before retirement.

According to this the boomers own half of all equities, but very concentrated at the top.

https://www.cnbc.com/2020/10/17/older-americans-are-selling-the-stock-market-slowly-but-ceaselessly-to-junior-generations.html

 

What I can't tell from that article is whether or not that accounts for pension funds. I'm far more worried about the state and municipal pension funds all across the country that have their money tied up in equities, because they're underfunded and can't grow the funds anywhere else. But it reinforces the problem of retirement savings... The wealthy have all the stocks. 

We'll see. Just seems... Implausible that this ride continues forever

 

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The market will go down at some point.  The question is more how deep and how long? (Sts)

For retirement savings a 10-20% dip for a year or two should be recoverable.  If you get a decade of negative returns, that will hurt people's plans a lot.

 

If you are about to retire, it may be a good idea to have a couple years worth of money in super low risk savings/funds.  That way, you don't have to sell at a loss during a temporary crash.

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4 hours ago, Lord Ratner said:

What I can't tell from that article is whether or not that accounts for pension funds.

 

That's a severe problem; particularly for California. That old adage about 10% of the people pay 90% of the taxes (or whatever the exact figures are, it varies by state) is going to come to a head. It's conceivable that one day the last guy/gal that was helping generate solvency for the state eventually leaves...Then they raise taxes to compensate for the loss...Then more people leave...Then...Profit?

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19 hours ago, Lord Ratner said:

I'm not crazy about the parallels between 1990s Japan and 2020's USA, but at least we are still the strongest economy in the world. 

The number of people investing is stocks and crypto without a clue as to what either one is scares me a bit too. 

The only philosophy behind the current trajectory is "stocks always go up." That didn't work great in 99 for stocks or 08 for houses. But I'm not sure the millennials can sustain the trading volume required at these prices to keep the prices high, especially when the boomers start selling for retirement income... Uncle Sam can keep buying, but for how long? A millennial buying 5 shares of amazon at $2000 will not cover dozens of boomers who bought it at $100 selling to pay the mortgage on their homes... 

It has the makings of a cascade, but bubbles always go longer than you expect.

Yup

An equities market with fake / free / devaluated money = a ponzi scheme.

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  • 3 weeks later...
19 minutes ago, disgruntledemployee said:

Allow myself to quote myself...

Dogecoin - WSJ Article

"A more than 12,000% rally this year in dogecoin, a cryptocurrency that was set up as a joke and serves no purpose, sent its price to a record 69 cents per token this week." 

Time to trade the Camaros in for Vettes.

Out

The C8 Z06 with the flat-plane crank version. 

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  • 1 month later...
On 2/10/2021 at 4:39 AM, Negatory said:

Entirely untrue. ADA, BCH, BNB, XRP, LTC, LINK, XLM. All have fixed max supplies, and those are just the top 10. There are hundreds of cryptocurrencies with similar structures to BTC.

BTC is actually still in the process of inflation, by the way, with 18.6M currently mined and 2.4M still to be produced in the future.

On a side note, tons of people - myself included - hate BTC when compared to many other cryptos. Originally envisioned as “peer to peer cash” that wouldn’t require a bank, it now takes at least 10 minutes to send most transactions and costs $20 regardless of how much you’re sending.

Sending $10 to your bro? That will be $30. Oh, also, the energy costs are INSANE and entirely unsustainable, but that’s another topic.

Elon Musk investing in BTC actually convinced me that it really is dumb money that makes the world go round. But if Tesla can exist with a P/E ratio of 1300, there’s apparently a lot of dumb money. People will pump whatever the mainstream media will talk about. And now that people on BO are speculating about BTC, it’s probably getting close to time to sell.

Another fun fact: it takes approximately 4 times more energy to send a BTC transaction over the network than it does to charge a Tesla.

Source: have a pretty wide crypto “portfolio” and have for years. Was invested in BTC but am ENTIRELY divested from it for the last 4 years. Still made a little over 1100% this year on crypto currencies that aren’t so useless. 

What other crypto are you in? I did a bit of research after speaking to a buddy and recently through $5,000 into 5 different coins with the thought being I won't miss the money, and if something big happens, then great. 

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  • 1 month later...

The leveraging levels are concerning as well. Maybe more concerning than everything else.

 

Right now that leverage only costs 4-6%. If the totally-transient-and-not-concerning inflation eventually forces the Fed to raise the rates...

 

Remember that when the market is over-leveraged, everything loses during the correction. We got a fast-paced glimpse at this in March of 2020. Stocks, bonds, precious metals, crypto, REITS... they all tanked. We're more leveraged now than were were then. Only cash survives the onslaught. 

 

 

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On 8/16/2021 at 12:23 AM, Lord Ratner said:

Only cash survives the onslaught.

Only cash loses if you stay on the sidelines during an inflationary time like we've seen since March 2020. "Time IN the market beats timING the market." 2008 levels were reached late 2013-early 2014 and, if you stayed in the market and kept adding capital, you made out handsomely and solidly beat inflation with one of the greatest bull markets in history. If you cashed out at the wrong time, it really hurt. For March 2020, we were back above those levels within a few months.

I'm not saying you're wrong when the downturn comes that cash is great, or that it's that easy to ride through a downturn. Hell, I'm guilty of not heeding my own advice some, too, because I thought I KNEW it was the correction. It's not easy to watch your money evaporate. But, it's certainly not much easier to watch markets continue up double digit %s while you're sitting in cash earning nothing/next to nothing.

If you're not trying to retire tomorrow or in the next 5 years, you're likely better off just to keep plugging away and not trying to time it. If it does crash, you're getting discounted securities to stuff all that airline retirement money into. If it doesn't, you'll feel awesome that you made all those gains while others sat in cash waiting for the shoe to drop. 

Then again, if it crashes tomorrow and you would have gone to cash but decided not to after this post, I don't want folks hating me. So, the BL is: do what you're most comfortable living with. But, try to not let emotion run your decision making. If the markets really fall off a cliff and everything tanks, we've all likely got bigger problems than worrying about our retirement accounts. 

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On 8/14/2021 at 10:47 AM, di1630 said:

Anyone with good ideas on investments to hedge vs inflation ?

Real Estate has in the past been a proven hedge.  Consider new property or the structure of existing property you own.

I currently own six houses, five outright.  I also have a longtime investment property that I am selling and reinvesting via the IRS 1031 provision.  In short, I have owned a property for 29 years and can no longer depreciate.  I am selling and immediately reinvesting in another "like-kind" property which defers the capital gains tax (my son will have to pay it some day).  I have already identified the new property and it already has a rental lease in place.  While I cannot establish a new depreciation schedule, in doing the exchange I am moving that invested capital form a state that is unfriendly to outside investors (South Carolina), to Florida with much lower property taxes and higher rental incomes.  The overall exchange will increase my monthly cash flow by $700.

You may also consider land, particularly land that can be used for farming, they don't make any more of it and depending on the area you can get a big tax break if used for agriculture.

Whatever you do, I would suggest a diversified approach that spreads your risk.

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13 hours ago, FDNYOldGuy said:

Only cash loses if you stay on the sidelines during an inflationary time like we've seen since March 2020. "Time IN the market beats timING the market." 2008 levels were reached late 2013-early 2014 and, if you stayed in the market and kept adding capital, you made out handsomely and solidly beat inflation with one of the greatest bull markets in history. If you cashed out at the wrong time, it really hurt. For March 2020, we were back above those levels within a few months.

I'm not saying you're wrong when the downturn comes that cash is great, or that it's that easy to ride through a downturn. Hell, I'm guilty of not heeding my own advice some, too, because I thought I KNEW it was the correction. It's not easy to watch your money evaporate. But, it's certainly not much easier to watch markets continue up double digit %s while you're sitting in cash earning nothing/next to nothing.

If you're not trying to retire tomorrow or in the next 5 years, you're likely better off just to keep plugging away and not trying to time it. If it does crash, you're getting discounted securities to stuff all that airline retirement money into. If it doesn't, you'll feel awesome that you made all those gains while others sat in cash waiting for the shoe to drop. 

Then again, if it crashes tomorrow and you would have gone to cash but decided not to after this post, I don't want folks hating me. So, the BL is: do what you're most comfortable living with. But, try to not let emotion run your decision making. If the markets really fall off a cliff and everything tanks, we've all likely got bigger problems than worrying about our retirement accounts. 

Agreed, only to add that cash is a party of diversifying. We've gotten so used to the concept that stocks are the only place where your money can make money, because fed policy for the past 15 years has basically made that the truth, barring real estate.

 

How does the phrase go? Bulls get rich, bears get rich, but hogs get slaughtered.

 

There's just too much that doesn't add up, and it looks like inflation is going to be what brings the whole silly plan down. Consider:

- higher than expected unemployment, yet 10 million unfilled jobs

- crippling supply chain issues *still* hitting nearly every industry. Does anyone think it's good for the economy that you can't buy new cars thanks to the chip shortage?

- all of the growth estimates have been off in the wrong direction, and this is after a pandemic set the bar very low. And now China's growth is also slowing.

- the government is literally injecting $120 *billion* per*month* into bonds and mortgage backed securities.

- inflation... The great destroyer. Right now the cost of margin trading is between 4 and 6% depending on how much money you have in the account. That's with interest rates effectively set at zero by the fed. If inflation continues, and you know it's going to because the Fed is now admitting that it's happening and they wouldn't do that if there was any hope that it wasn't, the cost of all of that leverage is going to go up. Fine and well as long as the stock market keeps delivering these eye-watering games that we seem to have completely acclimated to, but if the FED has to admit that inflation is now a concern, how long do you think they'll be able to keep injecting 120 billion per month into the market?

What happens when the biggest support for market prices gets removed, at the exact same time that the cost of leveraging goes up?

I was talking to someone who expects a 50% reduction in the s&p 500. It sounds crazy, until you look at the chart and realize that a 50% drop would only bring us down to 2016 levels.

 

Is it really hard to imagine the market, after enduring a global pandemic that continues to cripple the economies of entire countries, would go back to a level it was at only 5 years ago?

 

I'm not advocating for selling everything and sitting on a pile of cash, but if you're not going to take profits after the most incredible run up in prices under the most unlikely conditions, then you're never going to take profits at all. So many people who are euphoric over the stock markets last five or six years don't seem to have stopped to consider exactly what the implications are if this really is the New Normal. 

 

Now is a really good time for people to look at their bank accounts and make sure they are complying with the common sense financial security measures that no one talks about anymore. Do you have 6 months of expenses in a savings account, ready for an emergency? If you lose your primary income source at the same time that the market takes a giant hit, are you going to be in a pinch? Do you have a mortgage that you can only afford if there's no change to your employment status?

The biggest losers in any crash are always the retail investors. Always. Meme stocks and cryptocurrency have the institutional investors on edge. Sure they'll get on CNBC and tell you how they're buying Bitcoin, but they're surprisingly quiet when they sell after all the retail investors follow their lead and buy something they don't understand. 

 

And of course I could be wrong, I probably am. But my family and friends who have everything in the market right now I'll admit that none of this makes any sense. And when I ask them when, if not now, is their trigger to take profits, they have no answer.

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I completely agree, @Lord Ratner; this market is nuts and I have no clue how it keeps going up. It's all built up on cheap debt that corps are taking on to buy back their own stocks/competitors or individuals are using to purchase higher and higher priced assets (cars and housing being huge). Interest rates are in the basement, P/E ratios are crazy by historical standards, and debt ratios are high. Not to mention a lax Fed monetary policy that's fed all of this. 

But, I've been saying that since 2014 and shocked yearly as it just continues up. The only "saving grace" to all of this is that the entire world is going through the same thing, so if it is all built up on debt and free money, is it just the new normal and we're going to experience a big bump in inflation?

Either way, you're 100% correct on getting back to the basics. Have an emergency fund, diversify your holdings, and be cognizant of your expenses to not be under water if income drops due to unforeseen circumstances. And, keep saving for retirement.

None of us (including the experts) can predict the future. A few "geniuses" will have called it, but it's more the broken clock is right twice a day level than someone actually knowing. So, just be as financially healthy as you can.

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On 8/18/2021 at 1:01 PM, FDNYOldGuy said:

But, I've been saying that since 2014 and shocked yearly as it just continues up. The only "saving grace" to all of this is that the entire world is going through the same thing, so if it is all built up on debt and free money, is it just the new normal and we're going to experience a big bump in inflation?

The new normal is exactly what the World Economic Forum is pushing for with The Great Reset. Klaus Schwab is a literal Bond movie villain in real life. Watch some of the videos from last year's World Economic Forum. Get ready for what they claim will be a massive cyberattack.

KlausSchwab.jpeg

World Economic Forum.jpeg

villian.jpeg

 

@ClearedHot@Lord Ratner
If you're not stacking silver YNGMI. Follow @FDNYOldGuy's advice and have the basics to include holding actual precious metals, not owning them in a stock.

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  • 4 weeks later...

https://www.cnbc.com/2021/09/13/house-democrats-propose-new-retirement-plan-rules-for-the-wealthy.html

Not good for those of us in the civilian sector…

Democrats’ legislation would end the mega-backdoor Roth by prohibiting all after-tax contributions in workplace plans and prohibiting after-tax IRA contributions from being converted to a Roth account.”

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8 hours ago, LJ Driver said:

https://www.cnbc.com/2021/09/13/house-democrats-propose-new-retirement-plan-rules-for-the-wealthy.html

Not good for those of us in the civilian sector…

Democrats’ legislation would end the mega-backdoor Roth by prohibiting all after-tax contributions in workplace plans and prohibiting after-tax IRA contributions from being converted to a Roth account.”

Prohibiting after-tax contributions in workplace plans... so no more Roth TSP?

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29 minutes ago, pawnman said:

Prohibiting after-tax contributions in workplace plans... so no more Roth TSP?

 

No, Roth TSP/401k would still be a thing.  It's just saying you can't convert after tax monies into a Roth IRA.  This would mean most of us "rich" guys wouldn't be able to contribute to our Roth IRAs via the "back-door" or "mega back-door," like we do now.  It's simply a money grab by the dems...something we've all known they've wanted to do for a long time.

A lot of us Delta guys (not sure what other companies have the option) use this to stuff our Roth IRAs to the gills. As an example, last year I used the "mega-back door roth," to convert 30k into my Roth IRA and was still able to contribute 6k into a traditional IRA (after tax), the convert that into my Roth IRA.  So even though I made too much to directly contribute to my Roth IRA, I was still able to put 36k into it.  That option would go away.  Not the end of the world, but certainly a loss in a very nice benefit.

This is just the start of what they really want to do, because us rich guys are so greedy and "we didn't earn that."  Means testing SS, eventual taxing of our currently "tax-free" Roth TSP/IRAs will likely be the next things in their sites.  I'm certainly not planning on getting SS as part of my retirement plan, if it's there, cool more beer money.

 

If that still doesn't make sense, check this out. It's different than the standard back-door roth.

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