Like the illusion of Wall Street, with its vast and powerful investment banks, now shuttered, China too is an illusion perpetuated by the Globalists that gave us the 15,000 mile Caesar salad, poisoned cat food and lead based paint on babies' pacifiers. Like the illusion that money would come from thin air to always push housing prices higher, China has spent a generation pursuing its illusion. Pursuing an unattainable dream to be like the West, while 6000 years of its carefully shepherded top soil blows into the sea.
Joined: Dec 07, 2004 Posts: 483 Location: Cheshire, England
Posted: Mon Jun 20, 2005 8:24 pm Post subject: Re: What kind of investment portfolio would you build w/ $10
bobeau wrote:
Option a: Just answer the question in the subject
Option b: Read the following for a (shallow) human element, then answer the question in the subject
Basic story is this:
About a year ago I reserved a loft in an up and coming area in downtown San Diego, which should be ready for move-in by the end of the year. When I sell my current condo in a few months I should walk away with ~$100k, tax-free.
I'm at a crossroads - I'm definitely an optimist when it comes to PO. But at the very least I'm certain there will be a healthy recession ahead which may very well hammer the US housing market. It's hard to walk away from this project as I've been dreaming about buying something like this for years, it's a great deal at this point in time (I'm buying ~20% below current market value based on similar resales in the area), and of course friends and family are giving me a very hard time for even contemplating pulling out. My folks said if the thing tanks, I lose my job, etc, they'll help me out no matter what - like I want to bring them down with me when their own real estate holdings go down the tubes, lol., esp. when they're bumping up against retirement.
So as the days pass this monkey on my back seems to be consuming bananas at an ever increasing rate. If I happen to make the choice to step away from my little dream home, the question is - what would you do if you were in my situation? Guess I'm looking for suggestions to comtemplate and research further to push me over the edge. Emotionally I really, really, don't want to do this, but rationally I feel like I'm being an emotional fool.
Re: What kind of investment portfolio would you build w/ $100k?
No economists this time last year were predicting a 30% rise in crude prices but that's what has happened. As far as I know no economists are currently predicting another 30% rise by next year but obviously that could happen too. Any sensible peak-oiler will be wanting to reduce their debts and minimise their exposure to increases in interest rates. Save save save, or pay off those loans and mortgages.
On the other hand if you genuinely have $100k in cash to invest that's a different story; go wild and reckless. Take a position is as many energy related things as you have the balls to. The markets wont know what's going on and will be all over the place. Just buy anything energy related then wait till what you have is flavour of the month. The more controversial the better. Try companies that deal in coal, oil, plutonium, gas, mining.
A) You keep job untill 70, retire, die...we've found a new energy source, all is well for 100 years...
If you expect this, then go for the flat closest to work. Take your 100,000 FRN and invest it wisely (20% in Gold, 80% bonds or whatever you like).
B)Peak oil "Hits home" and 5-8 years from now your hospitol cuts staff funding etc. You loose job.
If you worry about this, RENT. take your tax free Federal Reserve Notes, and put 20% into GOLD (silver price depends on INDUSTRIAL demand, not just infaltion/deflation), 80% into land, Camping goods, firearm(s), livestock, Euro-zone bonds etc. whatever you feel will help cusion the hard times.
C) You loose job because of "whatever" one day and need to relocate in the USA / California:
The in-between scenario: your stuck with a flat in San Diego. As long as housing does not "crash" or would reasonably recover after the bubble bursts, you wont loose too much, and right NOW you have a job and a life.
Take your 100 grand and invest 50% in value stocks (handpicked energy etc.), ,and DONT let it RIDE...keep tabs on your money. 20% in physical GOLD, and 30% in bank CD.
As you can tell their are LOTS of options, and no one is sure of anything, other than there IS a housing buble...
What and how to invest really should not be totaly dependent on Forum advice, because you DO GET WHAT YOU PAY FOR. That goes for me as well...
I just checked my stocks as the market is jittery. I appear to be doing OK.
Consequently I want to thank you guys who post this invaluable information on this thread for motivating me to rebalance my portfolio. Thanks to reading your comments and joining in on the discussion on PO I have managed to maintain a positive momentum as the market overall goes in the opposite direction. That is money I worked hard for and none of it was given to me as a gift.
I also have gained immensely knowledge wise from varied discussions on seeds, horses ,catching rain etc. This is a really good site.
Thank You _________________ Men argue, nature acts !
Voltaire
"...In the absence of the gold standard, there is no way to protect savings from confiscation through inflation."
Posted: Thu Jul 07, 2005 12:17 pm Post subject: Update
Just wanted to let everyone know - I'm going to stay the course with getting the downtown loft. I had discussions with my supervisor recently and he is fine with me telecommuting 2-3 days/week, plus there is a rail system in place with a dropoff within a mile of work. So there are those advantages at least if the economy somehow holds up.
OTOH, as I think I mentioned, I am doing well enough that I can stash away at least $1000/month with my current standard of living, and if I sacrificed a bit $1500 is doable, plus I've negotiated what should be a sizable pay bump in the near future. I will take the advice from this thread and try to place my money wisely in short term investments, keeping my eye on the market. Fortunately I won't have any other debt than my mortgage, my car was paid off years ago.
The move out of the city and get a farm thing just won't work for me. Simply lack the social network and experience to pull off such a thing. Just have to count my blessings I guess and try to enjoy what I can as long as I can.
regarding buying a 3 month CDs in New Zealand dollars.
Keep in mind that FDIC insurance protects your insured deposit against bank failure but not against currency fluctuations. You may earn the published returns or higher if the currency appreciates against the dollar, but you have to keep in mind that the currency risk isn't insignificant even in a short-term CD.
Personally, i think that there will be deflation when PO hits. Therefore i would insure that it is somewhere secure enough that although it won't go up very much, it won't go down to much either. then, if the deflation is really bad, that 100K will be worth much more then it is today. If the deflation isn't really bad after, lets say 5 years (no reason for that specific number. i'm just thinking thats enough time to figure out what PO's effects are going to be in a more precise way. i'm a bit of a pessimist.), THEN you invest in slightly riskier ventures.
Heres an idea. Wait for the housing bubble to collapse. once it collapses and houses lose most of their value, buy a couple small houses, and rent them out to people. because of the lower costs in buying the house, the expenses in maintaining ownership of it will be lower. However, as to the tenants are most likely accostomed to paying more in the way of expenses, it may be semi-affordable to them. It shouldn't be to hard to get tenants at that point, because after it crashes, people will be worried about prices going down even more. Supply and Demand dictate that because everyone is selling, due to the aforementioned worry, and no one is buying, for the same reason, they should be VERY cheap. Eventually, if mankind does make it past PO relatively intact, u have ur own house, as well as a rental house or 2 that will slowly rise in value.
Joined: Jun 12, 2005 Posts: 4189 Location: 1st territorial capitol of AZ
Posted: Tue Jul 12, 2005 4:20 pm Post subject:
I'd buy farmable land with it. No contest. Immediate payoff would be no more rent, mortgage, etc. Next perk is, if you can grow a lot of your own stuff, no more or at least greatly decreased food costs. For the food you can't grow, grow a cash crop and pay with that, or just do odd jobs, crafts, etc and there you go. When your cash needs go down from $50k a year say, to less than $5k a year, that's a huge payoff.
For those of us at the bottom of the financial food chain, with no assets and little savings, (yeah, I know we're screwed, but..), is there a great incentive to save like a madman? I mean, if the anticipated inflation erodes the value of savings, and there's a banking collapse, etc.. cash strikes me as a risky asset. I want to buy property but not without a substantial deposit, after the bubble bursts - which means saving my butt off in the meantime.
An interesting question as I have just invested around 100k. I keep a weather eye on the financial markets and recently a few things really got my attention. 1. OPEC said that the price of oil is basicall out of their hands.... wow... this may be old news to all here but I'm new to this whole PO idea. 2. China wants to trade their dollars (and they have lots) for oil. 3. With the twin deficits exploding even before the demographic nightmare of the babyboom retiring, the value of the dollar has nowhere to go but down (ask W. Buffett) in the long run against the currencies of countries that actually produce things ( China, Canada....China) Makin the price of oil in dollars soar. 4. Big institutional buyers have all started piling into domestic oil and gas stocks since May.... the moneyflow into some of them has been incredible. 5. Gold ..... doesn't get used up. Isn't NECESSARY as an economic input. And may (or may not?) fall in price in a delationary environment. Don't get me wrong, I like gold (though not necessarily shares in mining companies) But I like oil (not coal, not gas...oil) that is right here in North America better... JMHO.
If you believe in Peak Oil, then you need to buy Canadian tar sands oil and NG shares. We own CNQ, ECA, SU, UTS_u.to etc.
When crude rises, we smile.
We have 5% in gold coins.
We have also worked hard to become mortgage-free and essentially debt-free.
And we live in a 3,000 sqft home on five acres in a semi-rural area about 6 miles from the Interstate.
According to one survey by a WSJ reporter, 86% of us believe in at least one if not many more bubbles. I too expect difficult changes ahead. And I think we are well prepared for the future challenges.
Posted: Fri Aug 12, 2005 7:12 am Post subject: Re: What kind of investment portfolio would you build w/ $10
bobeau wrote:
Option a: Just answer the question in the subject
No one knows exactly what is going to happen in the next 6-12 months. In uncertainty, I believe it is best to stand aside and preserve capital.
In that vein :
50% 6-12month CD (can get near 4% rate of return atm).
40% cash in an interest bearing liquid account
10% precious metals (gold, silver)
I should quantify that I believe gold/silver will go down in the next 6 months - a result of deflation which is typical after bursting bubbles. However, if the economy starts to unravel and the Fed decides to step in (esp with helicopter Ben in charge of the fed) they may significantly devalue the dollar (and hence, drive the value of gold/silver way up).
The CD guarantees you a return. The cash gives you the ability to quickly move into different investments (or even, different currencies) if opportunity arises. The gold/silver is basically a hedge in case 'this time is different' and deflation doesn't occur after the bubble pops.
I dont believe that bonds, stocks, or real estate will be a good investment for at least another year, probably 2. _________________ Welcome to the Kondratieff Winter
On another invetment topic, does anyone have any good information on where the oil producing countries (particularly the Saudi) are putting their increased gains from oil ? Any particular industry or country seeing that investment?
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That is money I worked hard for and none of it was given to me as a gift.
