Author Topic: Recession coming...  (Read 10536 times)

firelight

  • Pencil Stache
  • ****
  • Posts: 941
Re: Recession coming...
« Reply #50 on: June 23, 2017, 08:04:14 PM »
Regarding the spending, millenials are not really better at saving than prior gens and that is pretty much spelled on in most of your links - they spend less on the big stuff (houses and cars) but more on rent, travel, eating out, entertainment (experiences) than prior gens. This could be bad....not saving much combined with no asset accumulation.  At least the other gens end up with paid off houses at some point typically.

You're failing to take into account both a changing market (houses in areas with decent job markets are astronomical) and changing priorities. Not only are housing prices rather insane but many people see that they're not necessarily the grand investment they're touted to be and wonder, why bother? Frankly, that seems rather sensible. If the purchase price is incredibly high for an indeterminate ROI, why should we be wringing hands over that? Besides, who's to say that millennials won't start buying homes in larger numbers when they actually start families (many are still younger than the median age at which people have children these days) and pay off the student loans so that they can afford a down payment? Added to all of that, with the uncertainties in both the job market and the longevity in any particular job one may take, the flexibility of not being tied to any one location can be seen as a net positive. If you're not going to be tied to a job then being able to take your experience somewhere else is a great thing.

Last, one thing that I've noticed is not necessarily monetarily but ties into what many people deride. The classic brunch out example can be seen as people wasting money on a frivolous expense, or it can be seen as both networking and building community. I don't know of anyone in any age bracket who goes out to brunch once a week, or even once a month. Just because Millennials as a whole "go out to brunch" and order avocado toast doesn't mean that the entire generation is going out every week and ordering expensive items every time they go. It also seems to be a way to catch up with each other, not to dine out for the sake of blowing money. I see a lot of Xers and Boomers who don't have a big circle of friends because they're "too busy", or they were too busy when younger to keep up friendships. That leaves them in middle age and older suddenly at a loss, trying to rebuild relationships or start new ones. Tragic! I think many Millennials have realized that friends are at least as important as any other aspect of life and spend more capital (time, money) on keeping up with relationships than do older people. If all you've got are your friends, and you feel that you can depend on those around you rather than on the future or the markets or ROI or whatever, that's what you're going to invest in. And if you don't have an apartment big enough for entertaining a group of friends and don't want to spend a bunch of money on dinner, then brunch is a sensible maneuver.

Especially when you consider how much of job finding and everything else happens based on word of mouth and networking these days, it's actually quite smart. Hanging out with that friend-of-a-friend, even in a group context, could help you swing into a better paying position or score an apartment with a lower rent in a nicer area of town.

To summarize....you agree that millenials spend a lot but its ok because they spend for different reasons provided they are justifiable by those doing the spending.  Perfect, thanks.

Anecdote.  I'm a late Gen X'er dating a younger millennial.  Her & her group of friends have this obsession with going places over weekends.  After spending a day driving (or worse flying) to the new locale we do exactly what we would have done if we stayed home... Visit the park, grab coffee or drinks, go out to eat, maybe visit a local landmark, then head home for work on Monday.  The only difference is now she/they have a selfie of themselves being at [insert location here].  Personally, I just don't get it.  If you're going to spend a bunch of money and time to travel somewhere, why not actually spend more time at the destination?

It's a good trend to watch for investing, millennials pay tons for travel or "experiences", but not so much for stuff.  lol, Maybe this is why Buffet got back into airline stocks after he swore he wouldn't touch them ever again...
I'm a millennial guilty of going to places on weekends and taking selfies while doing almost the same things I'd have done at home (plus a hike or skiing or whatever is popular there) for four plus years. But now that I have a family, I don't do it any more and I cherish those days when I did the 'going to places and taking selfies' thing. I didn't save as much as I could've but I also got these amazing memories in return. Now with two kids, I can't dream of doing those things. Given a chance to redo, I'd still do those things because the friendships and memories I built then got me through marriage and having kids and the reduced social interaction that comes with it. Some of the friends I made then were very helpful in growing my career. So, no regrets!

kayvent

  • Bristles
  • ***
  • Posts: 460
  • Location: Canada
Re: Recession coming...
« Reply #51 on: June 24, 2017, 04:47:23 PM »
Whenever I read articles like MMM's a slight part of me wonders what if they are wrong. Australia hasn't had a recession in over twenty-five years. It is possible that we are decades away from a recession. I do believe in the domino affect of these things but sometimes that first one doesn't fall.

marty998

  • Magnum Stache
  • ******
  • Posts: 4584
  • Location: Sydney, Oz
Re: Recession coming...
« Reply #52 on: June 24, 2017, 05:21:58 PM »
26 years actually.

We've come close to the tipping point on a number of occasions (2000, 2008, 2012, 2017).

Most economists define a recession as 2 quarters of negative growth... but most households wouldn't notice there's a recession until unemployment rises 4-5% points.

Having said that, for 4 years now real wages growth has been anaemic. For many people it has felt like a recession lately with cost of living going up and wages going back.

doublethinkmoney

  • 5 O'Clock Shadow
  • *
  • Posts: 81
Re: Recession coming...
« Reply #53 on: June 24, 2017, 05:42:12 PM »
The wife and I have been searching for a house, but in the area we want, houses are flying off the market like hotcakes. People are buying houses without even looking at them sometimes. At one open house, we got there 15 minutes after it started and the realtor had already gotten two offers.

Anyway, it has been making things harder for us. We want to take our time and look and not overpay, but that seems to be the opposite of what everyone else wants to do. If this keeps up I can see a bubble bursting in the somewhat near future, or at the very least a bunch of buyer's remorse. After seeing this MMM post, I started thinking maybe we should just hold off for now (no hurry, renting at nice place). Mentioned this to the wife, she got really pissed.

Not sure if I should just bit the bullet and buy a house to make her happy or wait it out and deal with the fallout. She's not as FIRE-centric as me and each time I've brought up a new idea from MMM (or some other financial resource) it has mostly been met with anger or confusion, with her seeming to feel like I'm killing the fun or being a tightwad.
There is nothing fun about the biggest purchase you make tanking in value. Been there and done that. I would be concerned with homes going crazy fast like that too.

I would suggest maybe putting it a better way... "Honey the housing market is getting a bit crazy and hyped up, I think it's false inflation and within the new few years prices will drop. When they do, we should purchase then and we will be able to afford a better location, more space and maybe even the master suite of our dreams " something like that. But it will take patience. That's what separates the "wish I would ofs" and the "yeah prices were so cheap!"

What I do remember from the last recession is cash is king. You can buy dirt cheap property and stocks with cash but you can't sell your property or stocks when everything has dropped.


Sent from my iPhone using Tapatalk

rdaneel0

  • 5 O'Clock Shadow
  • *
  • Posts: 63
Re: Recession coming...
« Reply #54 on: June 24, 2017, 06:02:56 PM »
I'm pretty amped for the next recession. I'm looking to buy property in the next two years but I'm willing to wait a little longer to get a great deal when everyone is selling. 2008 was rough, but we got through it so I'm not worried.

dragoncar

  • Walrus Stache
  • *******
  • Posts: 7167
  • Registered member
Re: Recession coming...
« Reply #55 on: June 25, 2017, 03:19:06 PM »
The wife and I have been searching for a house, but in the area we want, houses are flying off the market like hotcakes. People are buying houses without even looking at them sometimes. At one open house, we got there 15 minutes after it started and the realtor had already gotten two offers.

Anyway, it has been making things harder for us. We want to take our time and look and not overpay, but that seems to be the opposite of what everyone else wants to do. If this keeps up I can see a bubble bursting in the somewhat near future, or at the very least a bunch of buyer's remorse. After seeing this MMM post, I started thinking maybe we should just hold off for now (no hurry, renting at nice place). Mentioned this to the wife, she got really pissed.

Not sure if I should just bit the bullet and buy a house to make her happy or wait it out and deal with the fallout. She's not as FIRE-centric as me and each time I've brought up a new idea from MMM (or some other financial resource) it has mostly been met with anger or confusion, with her seeming to feel like I'm killing the fun or being a tightwad.

First time buyer?  I find that typically first timers stress too much about every little thing about a house and more experienced buyers look at the big picture.  That's not to say you should waste money on something you will regret - it's a great strategy to wait until you get a smoking deal.  But just be aware that if a house has good location, "bones," and layout, most problems that crop up will be minor compared to the home price.  I'm talking specifically about expensive markets - if the home is $1 million, even a new roof, windows, flooring, etc.  is only a small fraction of that price.  So know what you are getting into but don't sweat the small stuff.  When we were house shopping I always had to remind my wife that a particularly ugly carpet or countertop was really just an opportunity for us to bid against fewer buyers

dragoncar

  • Walrus Stache
  • *******
  • Posts: 7167
  • Registered member
Re: Recession coming...
« Reply #56 on: June 25, 2017, 03:19:56 PM »
None of us can really do anything about recessions coming. They will do what they do. However, it's one of the main reasons that you should save every possible penny you have. You never know when you are going to have to lean on your savings due to disaster. It could happen to anyone and the people who aren't prepared are going to get it the worst.

But why save my money just to lose it in the stock market, when I can spend and enjoy it now?

dragoncar

  • Walrus Stache
  • *******
  • Posts: 7167
  • Registered member
Re: Recession coming...
« Reply #57 on: June 25, 2017, 03:20:47 PM »
But you seem to think that just because people are under 40 they weren't affected by the 2008 recession. Even if you didn't have anything invested at that time, I'd say that coming of age in a time with so much financial uncertainty and fear has a great impact on people. The millennials saw the financial mistakes of their parents and, in many ways, metrics have shown that they're far more risk-averse (here and here, to cite just two sources) and save money at higher rates than other generations, despite student loan debt. (Here, here, and here.) Despite all the hand-wringing over avocado toast, most millennials are, by many metrics, better with their money than their parents are. The fact that they save at high rates and do so in ways different from their parents is, I would argue, a direct reaction to having grown up in the midst of the Great Recession. To brush that off as not affecting people because they weren't of a certain age is silly.

This is a great point. I'm one of the unlucky Generation X who graduated college in 1999 and entered the job market just as the tech bubble burst. I didn't have a single $ in the market, but I saw graduates just a year or two ahead of me get laid off from their $90,000 consulting gigs and lived with stagnant wages and slim hiring prospects for years.

That was definitely a factor that drove me to be (relatively) frugal and read Your Money or Your Life in my 20s.

Yeah, the 2008 crash is what got me interested in ERE.

dragoncar

  • Walrus Stache
  • *******
  • Posts: 7167
  • Registered member
Re: Recession coming...
« Reply #58 on: June 25, 2017, 03:22:49 PM »

Anecdote.  I'm a late Gen X'er dating a younger millennial.  Her & her group of friends have this obsession with going places over weekends.  After spending a day driving (or worse flying) to the new locale we do exactly what we would have done if we stayed home... Visit the park, grab coffee or drinks, go out to eat, maybe visit a local landmark, then head home for work on Monday.  The only difference is now she/they have a selfie of themselves being at [insert location here].  Personally, I just don't get it.  If you're going to spend a bunch of money and time to travel somewhere, why not actually spend more time at the destination?

It's a good trend to watch for investing, millennials pay tons for travel or "experiences", but not so much for stuff.  lol, Maybe this is why Buffet got back into airline stocks after he swore he wouldn't touch them ever again...

... are you dating my wife by any chance?

SisterX

  • Handlebar Stache
  • *****
  • Posts: 1558
  • Location: 2nd Star on the Right and Straight On 'Til Morning
Re: Recession coming...
« Reply #59 on: June 26, 2017, 09:39:25 AM »
Unless they are saving a good chunk of their income (20% or more), they are just as dumb as every other generation.  Not more dumb and not less dumb.  Equally as dumb.

Frankly, I think avocado toast is less stupid than SUVs (which became popular before Millennials, or most of them at least, could drive--and certainly before they were the ones buying vehicles). At least avocado toast is healthy. I'm not going to justify it beyond that, because I agree that spending too much of your money is stupid no matter how you do it.

I just think the hand-wringing over the fact that Millennials spend differently from Xers and Boomers is silly and stupid. So what? Values have changed. Deal with it. It doesn't make them better or worse than other generations, just different, and it's a direct reaction to what they've seen growing up. People make too much of a big deal over it, and point to stupid Millennial spending as if a) it's the sole factor that will tank the economy one day and b) other generations don't spend their money just as stupidly. Yeah, get self-righteous. Go for it.

talltexan

  • Pencil Stache
  • ****
  • Posts: 747
Re: Recession coming...
« Reply #60 on: June 26, 2017, 01:45:56 PM »
Whenever I read articles like MMM's a slight part of me wonders what if they are wrong. Australia hasn't had a recession in over twenty-five years. It is possible that we are decades away from a recession. I do believe in the domino affect of these things but sometimes that first one doesn't fall.

The problem is that Australia is a very small economy (35 million people?) that benefits from selling natural resource products to much larger economies, like the US and China. When China has a "recession", they're still growing at 5.8%, so there's ample growth in demand for Australian products.

Cwadda

  • Handlebar Stache
  • *****
  • Posts: 1708
  • Age: 23
Re: Recession coming...
« Reply #61 on: June 26, 2017, 02:15:54 PM »

WhiteTrashCash

  • Pencil Stache
  • ****
  • Posts: 545
Re: Recession coming...
« Reply #62 on: June 26, 2017, 02:20:34 PM »
Unless they are saving a good chunk of their income (20% or more), they are just as dumb as every other generation.  Not more dumb and not less dumb.  Equally as dumb.

Frankly, I think avocado toast is less stupid than SUVs (which became popular before Millennials, or most of them at least, could drive--and certainly before they were the ones buying vehicles). At least avocado toast is healthy. I'm not going to justify it beyond that, because I agree that spending too much of your money is stupid no matter how you do it.

I just think the hand-wringing over the fact that Millennials spend differently from Xers and Boomers is silly and stupid. So what? Values have changed. Deal with it. It doesn't make them better or worse than other generations, just different, and it's a direct reaction to what they've seen growing up. People make too much of a big deal over it, and point to stupid Millennial spending as if a) it's the sole factor that will tank the economy one day and b) other generations don't spend their money just as stupidly. Yeah, get self-righteous. Go for it.

I would like to point out that Millennials have made a successful industry out of selling 3D pancake printers on Amazon and selling grilled cheese sandwiches over the internet. It confuses me because it's brilliant on the part of the entrepreneurs and idiotic on the part of the consumers.

kayvent

  • Bristles
  • ***
  • Posts: 460
  • Location: Canada
Re: Recession coming...
« Reply #63 on: June 26, 2017, 07:55:23 PM »
Unless they are saving a good chunk of their income (20% or more), they are just as dumb as every other generation.  Not more dumb and not less dumb.  Equally as dumb.

Frankly, I think avocado toast is less stupid than SUVs (which became popular before Millennials, or most of them at least, could drive--and certainly before they were the ones buying vehicles). At least avocado toast is healthy. I'm not going to justify it beyond that, because I agree that spending too much of your money is stupid no matter how you do it.

I just think the hand-wringing over the fact that Millennials spend differently from Xers and Boomers is silly and stupid. So what? Values have changed. Deal with it. It doesn't make them better or worse than other generations, just different, and it's a direct reaction to what they've seen growing up. People make too much of a big deal over it, and point to stupid Millennial spending as if a) it's the sole factor that will tank the economy one day and b) other generations don't spend their money just as stupidly. Yeah, get self-righteous. Go for it.

I would like to point out that Millennials have made a successful industry out of selling 3D pancake printers on Amazon and selling grilled cheese sandwiches over the internet. It confuses me because it's brilliant on the part of the entrepreneurs and idiotic on the part of the consumers.

I saw one of those sandwiches in a box last Friday at work. It was kinda neat that you could order them online. The coworker was given three month subscription dozen for a Father's Day presents.

tyort1

  • Handlebar Stache
  • *****
  • Posts: 1508
  • Age: 45
  • Location: Denver, Colorado
Re: Recession coming...
« Reply #64 on: June 26, 2017, 09:00:54 PM »
Unless they are saving a good chunk of their income (20% or more), they are just as dumb as every other generation.  Not more dumb and not less dumb.  Equally as dumb.

I just think the hand-wringing over the fact that Millennials spend differently from Xers and Boomers is silly and stupid. So what? Values have changed. Deal with it. It doesn't make them better or worse than other generations, just different....

I think this is exactly what I said...
Frugalite in training.

talltexan

  • Pencil Stache
  • ****
  • Posts: 747
Re: Recession coming...
« Reply #65 on: June 27, 2017, 07:42:31 AM »
Part of why Millennials spend differently is that prices have changed: education is MUCH more expensive, and more necessary (yes, even graduate degrees). Health Care has deservedly earned a whole different thread. And housing is far more expensive relative to their meager incomes, which are lower at the same age in spending power terms.

tooqk4u22

  • Handlebar Stache
  • *****
  • Posts: 2023
Re: Recession coming...
« Reply #66 on: June 27, 2017, 12:11:38 PM »
Part of why Millennials spend differently is that prices have changed: education is MUCH more expensive, and more necessary (yes, even graduate degrees). Health Care has deservedly earned a whole different thread. And housing is far more expensive relative to their meager incomes, which are lower at the same age in spending power terms.

All those things are not entirely true or in any event somewhat stereotyped.  Education doesn't have to be more expensive (community college, living at home or w roommates, going to secondary schools) but it is more expensive if you live in luxury student housing and you go to an overpriced school with a BS degree that doesn't translate into a cost appropriate salary.

Homes are ONLY more expensive in gateway markets (SF, NYC, Boston, etc) but this applies to everyone that lives in these areas regardless of age - go to other markets (even just going to the suburbs of the aforementioned markets makes a huge difference) and homes are actually a bargain but the jobs may be less robust.

Healthcare applies to everyone, at least the millennials could stay on parents insurance until 26 so that helped. 

I think the bigger issue is that millenials should be subcatoregized into urban vs. suburban/rural as I think most of the spendy stereotype issues that come up seem to be related more to urban dwelling residents. I know plenty of millennials, even of the younger range, that own houses and cars, have started families, and seem to be financial prudent but they all are in the suburbs - Those in the city not so much.

As usual, it comes down to choices more than anything else.

SisterX

  • Handlebar Stache
  • *****
  • Posts: 1558
  • Location: 2nd Star on the Right and Straight On 'Til Morning
Re: Recession coming...
« Reply #67 on: June 27, 2017, 02:57:33 PM »
All those things are not entirely true or in any event somewhat stereotyped.  Education doesn't have to be more expensive (community college, living at home or w roommates, going to secondary schools) but it is more expensive if you live in luxury student housing and you go to an overpriced school with a BS degree that doesn't translate into a cost appropriate salary.

Homes are ONLY more expensive in gateway markets (SF, NYC, Boston, etc) but this applies to everyone that lives in these areas regardless of age - go to other markets (even just going to the suburbs of the aforementioned markets makes a huge difference) and homes are actually a bargain but the jobs may be less robust.

Healthcare applies to everyone, at least the millennials could stay on parents insurance until 26 so that helped. 

I think the bigger issue is that millenials should be subcatoregized into urban vs. suburban/rural as I think most of the spendy stereotype issues that come up seem to be related more to urban dwelling residents. I know plenty of millennials, even of the younger range, that own houses and cars, have started families, and seem to be financial prudent but they all are in the suburbs - Those in the city not so much.

As usual, it comes down to choices more than anything else.

You're right! College can be so cheap if you do all those things that Boomers never had to do to afford college! ... ... Also, the fact that you can't pay for a year's worth of college based on a summer's worth of work (barring outliers, naturally, because they're outliers and not the average) means that the cost of college tuition has gone up far faster than the price of a person's labor. So, you're wrong.

Also, I know plenty of young Xers and early Millennials who are thrifty homeowners in an expensive city. What's your point, other than "I know what I'm talking about, without needing pesky data"? Plus, in my expensive city the suburbs are actually even more expensive than the city prices, and that's on top of ridiculous commutes. You either rent, fight it out with a million other people for the affordable houses, or live an hour+ away from work. Those are fantastic choices. And why do people continue to live here? Well, perhaps because this is where the jobs they want to work in are. You know, those fantastic tech jobs we're all told we have to get to survive.

You make a lot of assumptions and gloss over a lot of reality.

marty998

  • Magnum Stache
  • ******
  • Posts: 4584
  • Location: Sydney, Oz
Re: Recession coming...
« Reply #68 on: June 27, 2017, 03:53:32 PM »
Whenever I read articles like MMM's a slight part of me wonders what if they are wrong. Australia hasn't had a recession in over twenty-five years. It is possible that we are decades away from a recession. I do believe in the domino affect of these things but sometimes that first one doesn't fall.

The problem is that Australia is a very small economy (35 million people?) that benefits from selling natural resource products to much larger economies, like the US and China. When China has a "recession", they're still growing at 5.8%, so there's ample growth in demand for Australian products.

25 million. We are also in the top 15 (#13?) economies in the world, so we are hardly tiny.

We don't benefit much from the sale of natural resources*. Our companies set up "marketing hubs" in Singapore and transfer price the products there. Why pay 30% corporate tax in Australia when you can negotiate with the Singapore Government to pay 1-5%?

Our governments are too afraid to raise taxes and royalties because the mining lobby screams "sovereign risk" all the time. It's a hollow threat - it's not like the big mining companies can take the billion tonnes of iron ore to another country and start mining there, the mine will always be in Australia and will still be relatively cheap to dig out of the ground.

China is huge... everyone is wringing their hands at 6% growth in China... but 6% today in absolute terms is orders of magnitude higher than 8% of 10-15 years ago.

China will very soon be stuck with max growth of 2-3% like every other developed country... it won't be the end of the world because it'll still be massive in absolute terms.

* I have always found it funny that we ship a tonne of iron ore to Japan for $150, and Japan builds a car with that and sells it back to us for $15,000 and we think we're the smart ones.

AnswerIs42

  • 5 O'Clock Shadow
  • *
  • Posts: 59
Re: Recession coming...
« Reply #69 on: June 29, 2017, 01:17:37 PM »
I do find it painful buying stocks at these prices :( - everything does look pretty toppy now.

MMM does have a point. Obviously I'm not going to be selling any equities I currently own, but I think this is an ideal time to be improving my cash position. I have almost zero cash and bonds at the moment, so it's time to deleverage a bit, put new money into lower risk investments, and build up an emergency fund. I might still buy small amounts of equities in my Pension that's going to be locked away for a couple of decades.

dividendman

  • Pencil Stache
  • ****
  • Posts: 967
  • Age: 35
Re: Recession coming...
« Reply #70 on: June 29, 2017, 01:36:19 PM »
I do find it painful buying stocks at these prices :( - everything does look pretty toppy now.

MMM does have a point. Obviously I'm not going to be selling any equities I currently own, but I think this is an ideal time to be improving my cash position. I have almost zero cash and bonds at the moment, so it's time to deleverage a bit, put new money into lower risk investments, and build up an emergency fund. I might still buy small amounts of equities in my Pension that's going to be locked away for a couple of decades.

If stocks go up another 10% or 20% over the next year or two will you continue with your current reasoning? What will make you switch back to buying stocks? And if it's a price drop of x% what if that never occurs?

AnswerIs42

  • 5 O'Clock Shadow
  • *
  • Posts: 59
Re: Recession coming...
« Reply #71 on: June 29, 2017, 01:48:11 PM »
If stocks go up another 10% or 20% over the next year or two will you continue with your current reasoning? What will make you switch back to buying stocks? And if it's a price drop of x% what if that never occurs?

Good questions. It's entirely possible that the current run could continue for that long, and never drop below today's values. Once my cash position has improved (I wouldn't want to be over 3% cash), I'd slowly move back into investing in equities with new money, regardless of prices (through gritted teeth!).

Also, equities are not the only game in town... I have about 8% of my net worth in a P2B lending site, and I've consistently made nearly 15% PA on that since about 2010. Sadly that's currently taxable, but a tax-free ISA version is coming soon (hopefully). I plan on increasing my investments in that too when that happens (although that's effectively junk bonds, so just as risky as equities, really).

dude

  • Handlebar Stache
  • *****
  • Posts: 1761
Re: Recession coming...
« Reply #72 on: June 30, 2017, 10:52:47 AM »
I cant wait to visit this site again after a equities meltdown.    Its going to be interesting to see who is left in the RE wagon after such a long bull market and I honestly don't think many people on this forum have experienced such an event.     

Most of you will need to re-adjust your FIRE date several years since you will freak and sell out of fear....that's a fact

Sounds like you disagree with the general advice here for investing and are now actively hoping that people fail so that you can say "I told you so".  That's pretty shitty.

Not necessarily -- the Dalbar study shows, year after year, how poor people are at making investment decisions.  And while there may be some reason to suspect that folks on this site skew toward the more rational when it comes to investment decisions, I would guess it does not skew that far and in general people here (esp. with the explosion of followers here in the past few years) will be representative of the population as a whole when things go south.

A Definite Beta Guy

  • Stubble
  • **
  • Posts: 237
Re: Recession coming...
« Reply #73 on: June 30, 2017, 10:54:05 AM »
Regarding the spending, millenials are not really better at saving than prior gens and that is pretty much spelled on in most of your links - they spend less on the big stuff (houses and cars) but more on rent, travel, eating out, entertainment (experiences) than prior gens. This could be bad....not saving much combined with no asset accumulation.  At least the other gens end up with paid off houses at some point typically.

You're failing to take into account both a changing market (houses in areas with decent job markets are astronomical) and changing priorities. Not only are housing prices rather insane but many people see that they're not necessarily the grand investment they're touted to be and wonder, why bother? Frankly, that seems rather sensible. If the purchase price is incredibly high for an indeterminate ROI, why should we be wringing hands over that? Besides, who's to say that millennials won't start buying homes in larger numbers when they actually start families (many are still younger than the median age at which people have children these days) and pay off the student loans so that they can afford a down payment? Added to all of that, with the uncertainties in both the job market and the longevity in any particular job one may take, the flexibility of not being tied to any one location can be seen as a net positive. If you're not going to be tied to a job then being able to take your experience somewhere else is a great thing.

Last, one thing that I've noticed is not necessarily monetarily but ties into what many people deride. The classic brunch out example can be seen as people wasting money on a frivolous expense, or it can be seen as both networking and building community. I don't know of anyone in any age bracket who goes out to brunch once a week, or even once a month. Just because Millennials as a whole "go out to brunch" and order avocado toast doesn't mean that the entire generation is going out every week and ordering expensive items every time they go. It also seems to be a way to catch up with each other, not to dine out for the sake of blowing money. I see a lot of Xers and Boomers who don't have a big circle of friends because they're "too busy", or they were too busy when younger to keep up friendships. That leaves them in middle age and older suddenly at a loss, trying to rebuild relationships or start new ones. Tragic! I think many Millennials have realized that friends are at least as important as any other aspect of life and spend more capital (time, money) on keeping up with relationships than do older people. If all you've got are your friends, and you feel that you can depend on those around you rather than on the future or the markets or ROI or whatever, that's what you're going to invest in. And if you don't have an apartment big enough for entertaining a group of friends and don't want to spend a bunch of money on dinner, then brunch is a sensible maneuver.

Especially when you consider how much of job finding and everything else happens based on word of mouth and networking these days, it's actually quite smart. Hanging out with that friend-of-a-friend, even in a group context, could help you swing into a better paying position or score an apartment with a lower rent in a nicer area of town.

To summarize....you agree that millenials spend a lot but its ok because they spend for different reasons provided they are justifiable by those doing the spending.  Perfect, thanks.

Anecdote.  I'm a late Gen X'er dating a younger millennial.  Her & her group of friends have this obsession with going places over weekends.  After spending a day driving (or worse flying) to the new locale we do exactly what we would have done if we stayed home... Visit the park, grab coffee or drinks, go out to eat, maybe visit a local landmark, then head home for work on Monday.  The only difference is now she/they have a selfie of themselves being at [insert location here].  Personally, I just don't get it.  If you're going to spend a bunch of money and time to travel somewhere, why not actually spend more time at the destination?

It's a good trend to watch for investing, millennials pay tons for travel or "experiences", but not so much for stuff.  lol, Maybe this is why Buffet got back into airline stocks after he swore he wouldn't touch them ever again...


Also, "authenticity."

What the heck is this authenticity thing?

This drove me up a wall when someone said I should like the soggy fries at some local joint because it's authentic. Get out of here, they are crappy fries. Freshly made McDonald's fries are the best.
Even the Serious Eats guy says so: http://aht.seriouseats.com/archives/2010/05/the-burger-lab-how-to-make-perfect-mcdonalds-style-french-fries.html

There's plenty of crappy "authentic" food. Also, I am not going to eat in an "authentic" restaurant that's just a collection of code violations. I sure as fuck don't want to die in a fire for some "authentic" Cuban/Ethiopian/Martian food.

If I ever get famous, I am going to save all my shits, and sell them online as "authentic ADBG shits." I'm sure someone will buy them. It's authentic.

dougules

  • Pencil Stache
  • ****
  • Posts: 814
  • Location: AL
Re: Recession coming...
« Reply #74 on: June 30, 2017, 11:17:58 AM »
Regarding the spending, millenials are not really better at saving than prior gens and that is pretty much spelled on in most of your links - they spend less on the big stuff (houses and cars) but more on rent, travel, eating out, entertainment (experiences) than prior gens. This could be bad....not saving much combined with no asset accumulation.  At least the other gens end up with paid off houses at some point typically.

You're failing to take into account both a changing market (houses in areas with decent job markets are astronomical) and changing priorities. Not only are housing prices rather insane but many people see that they're not necessarily the grand investment they're touted to be and wonder, why bother? Frankly, that seems rather sensible. If the purchase price is incredibly high for an indeterminate ROI, why should we be wringing hands over that? Besides, who's to say that millennials won't start buying homes in larger numbers when they actually start families (many are still younger than the median age at which people have children these days) and pay off the student loans so that they can afford a down payment? Added to all of that, with the uncertainties in both the job market and the longevity in any particular job one may take, the flexibility of not being tied to any one location can be seen as a net positive. If you're not going to be tied to a job then being able to take your experience somewhere else is a great thing.

Last, one thing that I've noticed is not necessarily monetarily but ties into what many people deride. The classic brunch out example can be seen as people wasting money on a frivolous expense, or it can be seen as both networking and building community. I don't know of anyone in any age bracket who goes out to brunch once a week, or even once a month. Just because Millennials as a whole "go out to brunch" and order avocado toast doesn't mean that the entire generation is going out every week and ordering expensive items every time they go. It also seems to be a way to catch up with each other, not to dine out for the sake of blowing money. I see a lot of Xers and Boomers who don't have a big circle of friends because they're "too busy", or they were too busy when younger to keep up friendships. That leaves them in middle age and older suddenly at a loss, trying to rebuild relationships or start new ones. Tragic! I think many Millennials have realized that friends are at least as important as any other aspect of life and spend more capital (time, money) on keeping up with relationships than do older people. If all you've got are your friends, and you feel that you can depend on those around you rather than on the future or the markets or ROI or whatever, that's what you're going to invest in. And if you don't have an apartment big enough for entertaining a group of friends and don't want to spend a bunch of money on dinner, then brunch is a sensible maneuver.

Especially when you consider how much of job finding and everything else happens based on word of mouth and networking these days, it's actually quite smart. Hanging out with that friend-of-a-friend, even in a group context, could help you swing into a better paying position or score an apartment with a lower rent in a nicer area of town.

To summarize....you agree that millenials spend a lot but its ok because they spend for different reasons provided they are justifiable by those doing the spending.  Perfect, thanks.

Anecdote.  I'm a late Gen X'er dating a younger millennial.  Her & her group of friends have this obsession with going places over weekends.  After spending a day driving (or worse flying) to the new locale we do exactly what we would have done if we stayed home... Visit the park, grab coffee or drinks, go out to eat, maybe visit a local landmark, then head home for work on Monday.  The only difference is now she/they have a selfie of themselves being at [insert location here].  Personally, I just don't get it.  If you're going to spend a bunch of money and time to travel somewhere, why not actually spend more time at the destination?

It's a good trend to watch for investing, millennials pay tons for travel or "experiences", but not so much for stuff.  lol, Maybe this is why Buffet got back into airline stocks after he swore he wouldn't touch them ever again...

I used to go on a road trip every holiday weekend, but cut way back when I realized I could save my pennies, FIRE, then travel at a sane pace.  I do miss traveling, but I don't at all miss hurrying there, rushing to just see a small sliver of what I want to see, then hurrying back. 

Assuming you're talking about the US, it may be related to wanting to travel, but living in a culture where taking any serious time off work is viewed as a lack of commitment. 

dividendman

  • Pencil Stache
  • ****
  • Posts: 967
  • Age: 35
Re: Recession coming...
« Reply #75 on: June 30, 2017, 11:35:55 AM »
Also, "authenticity."

What the heck is this authenticity thing?

This drove me up a wall when someone said I should like the soggy fries at some local joint because it's authentic. Get out of here, they are crappy fries. Freshly made McDonald's fries are the best.
Even the Serious Eats guy says so: http://aht.seriouseats.com/archives/2010/05/the-burger-lab-how-to-make-perfect-mcdonalds-style-french-fries.html

There's plenty of crappy "authentic" food. Also, I am not going to eat in an "authentic" restaurant that's just a collection of code violations. I sure as fuck don't want to die in a fire for some "authentic" Cuban/Ethiopian/Martian food.

If I ever get famous, I am going to save all my shits, and sell them online as "authentic ADBG shits." I'm sure someone will buy them. It's authentic.

You got it right! Authentic means not eating at a chain even if the food is way better than the place you end up eating.

gentmach

  • 5 O'Clock Shadow
  • *
  • Posts: 78
Re: Recession coming...
« Reply #76 on: July 01, 2017, 06:44:21 AM »
Regarding the spending, millenials are not really better at saving than prior gens and that is pretty much spelled on in most of your links - they spend less on the big stuff (houses and cars) but more on rent, travel, eating out, entertainment (experiences) than prior gens. This could be bad....not saving much combined with no asset accumulation.  At least the other gens end up with paid off houses at some point typically.

You're failing to take into account both a changing market (houses in areas with decent job markets are astronomical) and changing priorities. Not only are housing prices rather insane but many people see that they're not necessarily the grand investment they're touted to be and wonder, why bother? Frankly, that seems rather sensible. If the purchase price is incredibly high for an indeterminate ROI, why should we be wringing hands over that? Besides, who's to say that millennials won't start buying homes in larger numbers when they actually start families (many are still younger than the median age at which people have children these days) and pay off the student loans so that they can afford a down payment? Added to all of that, with the uncertainties in both the job market and the longevity in any particular job one may take, the flexibility of not being tied to any one location can be seen as a net positive. If you're not going to be tied to a job then being able to take your experience somewhere else is a great thing.

Last, one thing that I've noticed is not necessarily monetarily but ties into what many people deride. The classic brunch out example can be seen as people wasting money on a frivolous expense, or it can be seen as both networking and building community. I don't know of anyone in any age bracket who goes out to brunch once a week, or even once a month. Just because Millennials as a whole "go out to brunch" and order avocado toast doesn't mean that the entire generation is going out every week and ordering expensive items every time they go. It also seems to be a way to catch up with each other, not to dine out for the sake of blowing money. I see a lot of Xers and Boomers who don't have a big circle of friends because they're "too busy", or they were too busy when younger to keep up friendships. That leaves them in middle age and older suddenly at a loss, trying to rebuild relationships or start new ones. Tragic! I think many Millennials have realized that friends are at least as important as any other aspect of life and spend more capital (time, money) on keeping up with relationships than do older people. If all you've got are your friends, and you feel that you can depend on those around you rather than on the future or the markets or ROI or whatever, that's what you're going to invest in. And if you don't have an apartment big enough for entertaining a group of friends and don't want to spend a bunch of money on dinner, then brunch is a sensible maneuver.

Especially when you consider how much of job finding and everything else happens based on word of mouth and networking these days, it's actually quite smart. Hanging out with that friend-of-a-friend, even in a group context, could help you swing into a better paying position or score an apartment with a lower rent in a nicer area of town.

To summarize....you agree that millenials spend a lot but its ok because they spend for different reasons provided they are justifiable by those doing the spending.  Perfect, thanks.

Anecdote.  I'm a late Gen X'er dating a younger millennial.  Her & her group of friends have this obsession with going places over weekends.  After spending a day driving (or worse flying) to the new locale we do exactly what we would have done if we stayed home... Visit the park, grab coffee or drinks, go out to eat, maybe visit a local landmark, then head home for work on Monday.  The only difference is now she/they have a selfie of themselves being at [insert location here].  Personally, I just don't get it.  If you're going to spend a bunch of money and time to travel somewhere, why not actually spend more time at the destination?

It's a good trend to watch for investing, millennials pay tons for travel or "experiences", but not so much for stuff.  lol, Maybe this is why Buffet got back into airline stocks after he swore he wouldn't touch them ever again...

I'm a millennial and I don't get it. In high school people would say "Let's go to the IHOP." Why? We are just going to sit there.

Of course I have been branded as "antisocial" for such views.
Financial Independence Blog and Project Blog
www.gentlemanmachinist.com

dragoncar

  • Walrus Stache
  • *******
  • Posts: 7167
  • Registered member
Re: Recession coming...
« Reply #77 on: July 01, 2017, 06:24:21 PM »
Also, "authenticity."

What the heck is this authenticity thing?

This drove me up a wall when someone said I should like the soggy fries at some local joint because it's authentic. Get out of here, they are crappy fries. Freshly made McDonald's fries are the best.
Even the Serious Eats guy says so: http://aht.seriouseats.com/archives/2010/05/the-burger-lab-how-to-make-perfect-mcdonalds-style-french-fries.html

There's plenty of crappy "authentic" food. Also, I am not going to eat in an "authentic" restaurant that's just a collection of code violations. I sure as fuck don't want to die in a fire for some "authentic" Cuban/Ethiopian/Martian food.

If I ever get famous, I am going to save all my shits, and sell them online as "authentic ADBG shits." I'm sure someone will buy them. It's authentic.

You got it right! Authentic means not eating at a chain even if the food is way better than the place you end up eating.

I don't think authentic means better, necessarily, but I can see the appeal to at least try an authentic version of something.  For example, I love all the Americanized Chinese food and TexMex around here.  But it was really interesting to try authentic versions of those cuisines... usually, authentic just meant a bit healthier (less sugar, less tasty).

Jamese20

  • 5 O'Clock Shadow
  • *
  • Posts: 76
Re: Recession coming...
« Reply #78 on: July 02, 2017, 07:14:13 AM »
I felt this last post from Mmm to be really poor and misguided

Yes its great If you have enough money that even a 50% :reduction won't make you nervous but even for people just reaching fi with their stashes will hate the thought of a big recession just as they are about to hit the eject button

For people with jobs a recession is a disaster especially if you are in a  sector where it will directly be effected

Even if you put plans in place I can't see any good from hoping for a recession where many plans will be ruined for alot of people trying to reach fi

Classical_Liberal

  • Pencil Stache
  • ****
  • Posts: 714
  • Age: 41
Re: Recession coming...
« Reply #79 on: July 02, 2017, 09:58:41 PM »
Also, "authenticity."

What the heck is this authenticity thing?

This drove me up a wall when someone said I should like the soggy fries at some local joint because it's authentic. Get out of here, they are crappy fries. Freshly made McDonald's fries are the best.
Even the Serious Eats guy says so: http://aht.seriouseats.com/archives/2010/05/the-burger-lab-how-to-make-perfect-mcdonalds-style-french-fries.html

There's plenty of crappy "authentic" food. Also, I am not going to eat in an "authentic" restaurant that's just a collection of code violations. I sure as fuck don't want to die in a fire for some "authentic" Cuban/Ethiopian/Martian food.

If I ever get famous, I am going to save all my shits, and sell them online as "authentic ADBG shits." I'm sure someone will buy them. It's authentic.

You got it right! Authentic means not eating at a chain even if the food is way better than the place you end up eating.

I don't think authentic means better, necessarily, but I can see the appeal to at least try an authentic version of something.  For example, I love all the Americanized Chinese food and TexMex around here.  But it was really interesting to try authentic versions of those cuisines... usually, authentic just meant a bit healthier (less sugar, less tasty).

IMO it has nothing to do with the food itself, rather its they want to "feel" like they are "experiencing" something new & unique that others haven't.  In the same way boomers "feel" good by having a Mcmansion (now maybe RV-mansions). 

It doesn't matter whether or not it sucks to clean and maintain a 5000 sq ft home, or whether the food tastes bland and soggy. What matters is how having the thing or experience makes you "feel".  These feelings are personal, but also social, so peer comparison is inevitable. Keeping up with the Jones's experiences is the real deal for millennials and social media is certainly at least partially culpable for this trend. 

@dragoncar
I spent the weekend with my GF in another city with new selfies, if your wife was home this w/e we know they are not the same woman!

SisterX

  • Handlebar Stache
  • *****
  • Posts: 1558
  • Location: 2nd Star on the Right and Straight On 'Til Morning
Re: Recession coming...
« Reply #80 on: July 03, 2017, 09:25:26 AM »
I felt this last post from Mmm to be really poor and misguided

Yes its great If you have enough money that even a 50% :reduction won't make you nervous but even for people just reaching fi with their stashes will hate the thought of a big recession just as they are about to hit the eject button

For people with jobs a recession is a disaster especially if you are in a  sector where it will directly be effected

Even if you put plans in place I can't see any good from hoping for a recession where many plans will be ruined for alot of people trying to reach fi

If your FI money won't withstand one recession, even a big one, then you need to rethink your FI plan. The point is to be able to weather ups AND downs in the market, not just retire when all is well and assume that will be the pattern that follows forever after.

I also don't see an upbeat, not doom-and-gloom reminder that, at some point, sometime in the future, there will be a recession as being a negative. That's something that we should keep in mind during the booms. I know that being in an unstable economy (or at least feeling like it) makes me, at least, more focused on saving up "just in case". It makes me want to reach true FI all the more, because then I will truly be free from worry about money and the economy.

Jamese20

  • 5 O'Clock Shadow
  • *
  • Posts: 76
Re: Recession coming...
« Reply #81 on: July 03, 2017, 11:30:37 AM »
I felt this last post from Mmm to be really poor and misguided

Yes its great If you have enough money that even a 50% :reduction won't make you nervous but even for people just reaching fi with their stashes will hate the thought of a big recession just as they are about to hit the eject button

For people with jobs a recession is a disaster especially if you are in a  sector where it will directly be effected

Even if you put plans in place I can't see any good from hoping for a recession where many plans will be ruined for alot of people trying to reach fi

If your FI money won't withstand one recession, even a big one, then you need to rethink your FI plan. The point is to be able to weather ups AND downs in the market, not just retire when all is well and assume that will be the pattern that follows forever after.

I also don't see an upbeat, not doom-and-gloom reminder that, at some point, sometime in the future, there will be a recession as being a negative. That's something that we should keep in mind during the booms. I know that being in an unstable economy (or at least feeling like it) makes me, at least, more focused on saving up "just in case". It makes me want to reach true FI all the more, because then I will truly be free from worry about money and the economy.

Hi

Even according to. Mmm.. Assume you use 4% rule and you get hit by a big recession or market drop when you just FIRE this puts you in alot of danger to recover

It's quite simple really.. Say you have 600k and we see a market drop of 300k straight after you retire then you would have to make some big adjustments to survive... I don't see how going back part time work as an answer as I'm sure most who want to fire actually don't want to go into that as they may aswell have jsut kept doing their normal job until there is. Enough cushion or flexibility to be able to withstand such a drop

Few of the many reasons I find the article poor to be honest

tyort1

  • Handlebar Stache
  • *****
  • Posts: 1508
  • Age: 45
  • Location: Denver, Colorado
Re: Recession coming...
« Reply #82 on: July 03, 2017, 11:42:03 AM »
I think the consensus around here is that the biggest danger to ER is poor returns during the first 10 years.  My plan is to have a buffer, plus a fully paid off house before ER, plus plan for $50k/year lifestyle, which I can dial back to $30k without any problems if there's a bad hit.  My wife 'just' started to work as a realtor, so that work may continue even after I RE.  We'll see.  But I'm OK with One More Year (or 2), because at that point because I know for certain it won't turn into "Five More Years".  With enough of a stash and low enough spending and the ability to dial down expenditures and also make side income if needed, all makes things pretty darn recession proof. 
Frugalite in training.

Jamese20

  • 5 O'Clock Shadow
  • *
  • Posts: 76
Re: Recession coming...
« Reply #83 on: July 03, 2017, 12:45:10 PM »
I think the consensus around here is that the biggest danger to ER is poor returns during the first 10 years.  My plan is to have a buffer, plus a fully paid off house before ER, plus plan for $50k/year lifestyle, which I can dial back to $30k without any problems if there's a bad hit.  My wife 'just' started to work as a realtor, so that work may continue even after I RE.  We'll see.  But I'm OK with One More Year (or 2), because at that point because I know for certain it won't turn into "Five More Years".  With enough of a stash and low enough spending and the ability to dial down expenditures and also make side income if needed, all makes things pretty darn recession proof.

Yes I don't see any other way personally... So 10 years seems unrealistic to me

One breath a post says all you need is 25 times your expenses to FIRE whilst getting 5% returns and that's all you need.. Yet if a recessions hits that's great too because we can get lots of cheap stocks? With what money? Your wealth is halved and according to another post don't sit. On cash so how would you take advantage on this just before FIREING? Just don't add up to me

Itchyfeet

  • Bristles
  • ***
  • Posts: 296
Re: Recession coming...
« Reply #84 on: July 03, 2017, 01:16:21 PM »
I felt this last post from Mmm to be really poor and misguided

Yes its great If you have enough money that even a 50% :reduction won't make you nervous but even for people just reaching fi with their stashes will hate the thought of a big recession just as they are about to hit the eject button

For people with jobs a recession is a disaster especially if you are in a  sector where it will directly be effected

Even if you put plans in place I can't see any good from hoping for a recession where many plans will be ruined for alot of people trying to reach fi

If your FI money won't withstand one recession, even a big one, then you need to rethink your FI plan. The point is to be able to weather ups AND downs in the market, not just retire when all is well and assume that will be the pattern that follows forever after.

I also don't see an upbeat, not doom-and-gloom reminder that, at some point, sometime in the future, there will be a recession as being a negative. That's something that we should keep in mind during the booms. I know that being in an unstable economy (or at least feeling like it) makes me, at least, more focused on saving up "just in case". It makes me want to reach true FI all the more, because then I will truly be free from worry about money and the economy.

Hi

Even according to. Mmm.. Assume you use 4% rule and you get hit by a big recession or market drop when you just FIRE this puts you in alot of danger to recover

It's quite simple really.. Say you have 600k and we see a market drop of 300k straight after you retire then you would have to make some big adjustments to survive... I don't see how going back part time work as an answer as I'm sure most who want to fire actually don't want to go into that as they may aswell have jsut kept doing their normal job until there is. Enough cushion or flexibility to be able to withstand such a drop

Few of the many reasons I find the article poor to be honest

You may feel that you would need to make big adjustments, but technically you probably wouldn't need to.

In all of the other big crashes in history, a person retiring the day before a big crash and withdrawing 4% of their pre-crash stash annually, plus inflation, has not run out of money in 30 years.

The fact is for the stash to last 30 years it only needs to average returns of 1.3% above inflation, but historically equities have generated much more than this. The 4% SWR is the worst outcome arising from worst case sequence of returns, including a major crash the day after you FIRE. If you don't have major bad news in the first years post FIRE then it is likely you could be withdrawing more than 4%.

If you are properly prepared mentally, and properly diversified you don't need to be overly fearful.

Naturally I would think that nearly all people would react to such a major depletion of their stache by taking some drastic action. But if you hold an appropriate amount outside equities in property, cash and bonds then it is not likely you would see your stash drop 50% ever except in Armageddon. In such a scenario having a job is not likely to feel secure either.

sufjork

  • 5 O'Clock Shadow
  • *
  • Posts: 17
Re: Recession coming...
« Reply #85 on: July 03, 2017, 05:40:15 PM »
I found this line interesting as I've always considered this to be true of many forum members here:

"If you’re a sagely 27 years old right now, you may have never experienced a recession in your adult life – all you have ever seen is the good times. You’re in for an interesting surprise.

This is the line that made me stop in my tracks. I'm 27 and I currently freelance as an artist/painter/event designer. It's generally ok money-wise, but I've been thinking about going back into the "workforce" for a while, especially after I discovered MMM. This line basically sealed the deal.
Do you use Ibotta? Come join the MMM team for greater cashback!
You can use my referral code if you don't yet have it: tmdxgyv

I use YNAB to track my spending. Want a free month? Use my referral! :)

Classical_Liberal

  • Pencil Stache
  • ****
  • Posts: 714
  • Age: 41
Re: Recession coming...
« Reply #86 on: July 03, 2017, 06:35:15 PM »
I think the consensus around here is that the biggest danger to ER is poor returns during the first 10 years or periods of high inflation.

Recency bias has most forgetting about the very real possibility of double digit inflation at some point in the future.  In fact, this is what caused all the mid 1960's failures of the 4% rule, double digit inflation in the late 1970's/early 1980's, more than 10 years after a mid-60's retiree started their journey.

WhiteTrashCash

  • Pencil Stache
  • ****
  • Posts: 545
Re: Recession coming...
« Reply #87 on: July 04, 2017, 06:16:22 AM »
I found this line interesting as I've always considered this to be true of many forum members here:

"If you’re a sagely 27 years old right now, you may have never experienced a recession in your adult life – all you have ever seen is the good times. You’re in for an interesting surprise.

This is the line that made me stop in my tracks. I'm 27 and I currently freelance as an artist/painter/event designer. It's generally ok money-wise, but I've been thinking about going back into the "workforce" for a while, especially after I discovered MMM. This line basically sealed the deal.

I'm a little older, but I only started my financial education about the time of the Great Recession's crash, so I've never "lost" assets from a recession before (the "loss" in the markets being imaginary as we know now, though.) It'll be interesting to see how I handle a recession considering I've never owned any serious level of possessions during one before.

sufjork

  • 5 O'Clock Shadow
  • *
  • Posts: 17
Re: Recession coming...
« Reply #88 on: July 05, 2017, 04:13:19 PM »
I found this line interesting as I've always considered this to be true of many forum members here:

"If you’re a sagely 27 years old right now, you may have never experienced a recession in your adult life – all you have ever seen is the good times. You’re in for an interesting surprise.

This is the line that made me stop in my tracks. I'm 27 and I currently freelance as an artist/painter/event designer. It's generally ok money-wise, but I've been thinking about going back into the "workforce" for a while, especially after I discovered MMM. This line basically sealed the deal.

I'm a little older, but I only started my financial education about the time of the Great Recession's crash, so I've never "lost" assets from a recession before (the "loss" in the markets being imaginary as we know now, though.) It'll be interesting to see how I handle a recession considering I've never owned any serious level of possessions during one before.

Same! I at least know not to freak out and make sudden moves during a recession - I'm glad I'm educating myself now, before it comes. Let's just see how much can be put into practice... :p
Do you use Ibotta? Come join the MMM team for greater cashback!
You can use my referral code if you don't yet have it: tmdxgyv

I use YNAB to track my spending. Want a free month? Use my referral! :)

DarkandStormy

  • Stubble
  • **
  • Posts: 236
  • Age: 28
  • Location: Columbus
Re: Recession coming...
« Reply #89 on: July 06, 2017, 02:41:35 PM »
Your wealth is halved

How is your wealth halved?  By the time you FIRE, you should be in a mix of stocks & bonds - I've seen 60/40, 70/30 splits, but point being you're not entirely in stocks. 

If you're invested in 2/3 bonds, 1/3 stocks, the absolute worst you could have done in a given year since 1985 was lose ~9%.  Your non-inflation adjusted CAGR from 1985 to 2016 would have been ~8%.  It's 5% if you adjust for inflation.  Some of that, of course, is skewed by a bull bond market that is no longer there with the extremely low inflation rates, so going forward it might not be as easy as 67% bonds/33% stocks.
The Chase Trifecta:

Earn 50,000 Ultimate Rewards points with Chase Sapphire Preferred - $4k spending in 3 months.
https://www.referyourchasecard.com/6/2MOVOLZCEJ

Earn a $150 bonus with Chase Freedom Unlimited - only $500 spending needed in 3 months.
https://www.referyourchasecard.com/18/ENYF0FTS66

Earn a $150 bonus with Chase Freedom - only $500 spending needed in 3 months.
https://www.referyourchasecard.com/2/DBOP9XI9XT

daverobev

  • Magnum Stache
  • ******
  • Posts: 2645
  • Location: Canada
Re: Recession coming...
« Reply #90 on: July 06, 2017, 08:59:25 PM »
Your wealth is halved

How is your wealth halved?  By the time you FIRE, you should be in a mix of stocks & bonds - I've seen 60/40, 70/30 splits, but point being you're not entirely in stocks. 

If you're invested in 2/3 bonds, 1/3 stocks, the absolute worst you could have done in a given year since 1985 was lose ~9%.  Your non-inflation adjusted CAGR from 1985 to 2016 would have been ~8%.  It's 5% if you adjust for inflation.  Some of that, of course, is skewed by a bull bond market that is no longer there with the extremely low inflation rates, so going forward it might not be as easy as 67% bonds/33% stocks.

If you're FIREd and want money when you're old, you will not likely be two thirds bonds.

(Edit: Removed 'early' after FIREd... because... that's RAS syndrome).
« Last Edit: July 06, 2017, 09:01:35 PM by daverobev »
Tangerine Canada $50 free chequing sign up bonus, use Orange Key: 48322202S1

PayTM on Android/iOS - Pay property tax/bills with credit card for free (for the time being!). $10 signup bonus, use referral: PTM9691063. Alternative to Plastiq, great for reaching minimum spend.

Amex Canada referral - $350+ in sign up bonuses

WoodStache

  • 5 O'Clock Shadow
  • *
  • Posts: 18
Re: Recession coming...
« Reply #91 on: July 07, 2017, 07:08:17 AM »
All those things are not entirely true or in any event somewhat stereotyped.  Education doesn't have to be more expensive (community college, living at home or w roommates, going to secondary schools) but it is more expensive if you live in luxury student housing and you go to an overpriced school with a BS degree that doesn't translate into a cost appropriate salary.

Homes are ONLY more expensive in gateway markets (SF, NYC, Boston, etc) but this applies to everyone that lives in these areas regardless of age - go to other markets (even just going to the suburbs of the aforementioned markets makes a huge difference) and homes are actually a bargain but the jobs may be less robust.

Healthcare applies to everyone, at least the millennials could stay on parents insurance until 26 so that helped. 

I think the bigger issue is that millenials should be subcatoregized into urban vs. suburban/rural as I think most of the spendy stereotype issues that come up seem to be related more to urban dwelling residents. I know plenty of millennials, even of the younger range, that own houses and cars, have started families, and seem to be financial prudent but they all are in the suburbs - Those in the city not so much.

As usual, it comes down to choices more than anything else.

You're right! College can be so cheap if you do all those things that Boomers never had to do to afford college! ... ... Also, the fact that you can't pay for a year's worth of college based on a summer's worth of work (barring outliers, naturally, because they're outliers and not the average) means that the cost of college tuition has gone up far faster than the price of a person's labor. So, you're wrong.

Also, I know plenty of young Xers and early Millennials who are thrifty homeowners in an expensive city. What's your point, other than "I know what I'm talking about, without needing pesky data"? Plus, in my expensive city the suburbs are actually even more expensive than the city prices, and that's on top of ridiculous commutes. You either rent, fight it out with a million other people for the affordable houses, or live an hour+ away from work. Those are fantastic choices. And why do people continue to live here? Well, perhaps because this is where the jobs they want to work in are. You know, those fantastic tech jobs we're all told we have to get to survive.

You make a lot of assumptions and gloss over a lot of reality.

Aren't you're doing some of the same stuff? Just like you said - it's hard to afford houses close to the places people want to work, but the truth is you don't have to work in a large corporation in a big city. I, personally, would not be in the location I am in were it not for my job. I like where I am, I wouldn't live in Siberia just to make an extra $15 grand or something, but there are definitely places around the country I'd enjoy more. And should we retire early we'll consider moving away.
 
The fact that Boomers didn't have to go to CC doesn't mean anything. Education costs are way out of control, you're absolutely right. The continued rise is ridiculous and, really, unsustainable. But still, with a large number of majors college is still a great investment, and it's certainly not the only option in the first place.

I'm not trying to start a huge back and forth, I just think you both can be right here. Certain costs can suck, it can be annoying to hear boomers say "Back in my day!" over and over again and yet it can still largely come down to personal choices.

The world is still pretty great for the majority of us lucky enough to be born in 1st world countries. Our actual needs are met with a ridiculously low amount of money relative to most any time in human history. You'd never think that after 15 minutes of perusing in internet, and that goes for all generations.

thesvenster

  • Bristles
  • ***
  • Posts: 372
  • Location: Palmer, Alaska
    • My MMM Forum Journal
Re: Recession coming...
« Reply #92 on: July 07, 2017, 11:06:56 AM »
A crash isn't the only option for an economic recession. Prolonged stagnation is an option too, one that would likely effect people aiming for FIRE worse than a crash.

Never heard of Zero Hedge. Looks like your typical kooky, conspiracy theory site. Can't say I'll be going back for any of their brilliant advice.

Conspiracy theory sites are actually pretty good IF you pick through the information. Often they call attention to unusual or interesting facts. Where they go wrong, of course, is when they draw insane or unknowable conclusions from the said interesting facts.

DarkandStormy

  • Stubble
  • **
  • Posts: 236
  • Age: 28
  • Location: Columbus
Re: Recession coming...
« Reply #93 on: July 28, 2017, 07:01:38 AM »
https://finance.yahoo.com/news/consumers-businesses-likely-spurred-u-051201367.html

Quote
Gross domestic product increased at a 2.6 percent annual rate in the April-June period, which included a boost from trade, the Commerce Department said in its advance estimate on Friday.

So by definition, we will not experience a recession until 2017 Q4 (reported end of January '18) at the earliest.
The Chase Trifecta:

Earn 50,000 Ultimate Rewards points with Chase Sapphire Preferred - $4k spending in 3 months.
https://www.referyourchasecard.com/6/2MOVOLZCEJ

Earn a $150 bonus with Chase Freedom Unlimited - only $500 spending needed in 3 months.
https://www.referyourchasecard.com/18/ENYF0FTS66

Earn a $150 bonus with Chase Freedom - only $500 spending needed in 3 months.
https://www.referyourchasecard.com/2/DBOP9XI9XT

talltexan

  • Pencil Stache
  • ****
  • Posts: 747
Re: Recession coming...
« Reply #94 on: July 31, 2017, 07:54:23 AM »
But if we're worried about a recession because of the preceding market correction, this type of reasoning won't help you.

Classical_Liberal

  • Pencil Stache
  • ****
  • Posts: 714
  • Age: 41
Re: Recession coming...
« Reply #95 on: August 01, 2017, 07:05:58 PM »
Inverted yield curves as recession predictors?