The Money Mustache Community
Learning, Sharing, and Teaching => Investor Alley => Topic started by: FrugalSaver on March 22, 2020, 01:38:44 PM
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For this great, first acknowledging that the health and safety of loved ones and everyone is more important than money. That said, money and financial security can help ensure health and safety or at least give a fighting chance.
As we’re all reading dire headlines that get worse by the day, “millions will die”, “people over 60 will be denied treatment (wait what?!? My parents and grandparents and many colleagues and friends are over 60!!!), and on and on.
While I believe more pain is ahead near term, for those that have prepared and those that can in any small way make investment choices that are smart in the face of fear and panic, can BEFORE YOU KNOW IT, come out ahead of the pain we’re dealing with now.
I’ve been through multiple of these type of scenarios. Putting aside my obvious concern for the safety and health of my family and everyone, I find myself very excited about the opportunity this presents from an investment perspective.
Keep your head about you when all others are losing theirs. Be smart and make wise hooves and help others and you may just be able to, in a few
Months from now, greatly expanded the number of people you can help by expanding your resources in these times of chaos.
Let’s stay positive.
Share any ideas of what you’re doing.
I’m acquiring assets that doubled and tripled within a year or 3 that pay great cash flow and are inappropriately beaten down.
Best of luck and be well to everyone!
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How’s everyone doing out there?
No responses on this so hopefully there’s still some hope and optimism
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Tons of hope I will be able to buy real estate for 70% off in a year when 35% of workers are unemployed. I want to build a solar farm.
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I’m acquiring assets that doubled and tripled within a year or 3 that pay great cash flow and are inappropriately beaten down.
How can you be so sure you are acquiring assets that will double or triple within 3 years? If that were the case, everyone would be doing it.
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Didn't y'all get the memo?
Bottom Is In!
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I have not been through anything quite like this before and I have been investing for a long time. I am not quite as excited about buying right now. I am waiting another two weeks to see what things are looking like in our country in our efforts to defeat the virus and to see if we start to come out of the lockdowns.
I am not confident that things will go up from here, they could go up or down from here. So I am waiting and watching and I might buy, I might sell, I might refine what we are holding.
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I have not been through anything quite like this before and I have been investing for a long time. I am not quite as excited about buying right now. I am waiting another two weeks to see what things are looking like in our country in our efforts to defeat the virus and to see if we start to come out of the lockdowns.
I am not confident that things will go up from here, they could go up or down from here. So I am waiting and watching and I might buy, I might sell, I might refine what we are holding.
Of course the market can go down from here, but that is true on any day the market trades, and from whatever level the market is at. The risk in holding equities is ever present, whether or not you choose to focus on it.. so decide how much risk you are happy to sleep on, and structure the asset allocation in your portfolio accordingly.
If the idea of the market dropping another 20% a week after putting your money in is enough to prevent you from doing so, then I would suggest that you need hold at least 25%-33% fewer equities in relation to everything else.
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These days are not quite the same as any day the market trades, because our economy is shutting down. It feels quite different and I am thinking about how this affects our future.
Timelines are interesting. I am solidly middle age, there is still time to live, and yet there is not quite enough time to recover from disasters or foolishness.
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I had a conversation with my sister last week (works emergency dispatch) and explained that this is a time in history to be thankful to have a good job, take any extra shifts that are available and save like crazy as this is a defining moment in history that can either propel you forward up the ladder of wealth or cause you to move down it.
She lucked out already as she was looking to buy a house (not ready financially IMHO) in February but the person’s retirement plans fell through due to travel restrictions so it did not happen and was for the best as far as I am concerned.
Hoping that she can work and save like crazy for a little while and be able to get a house later this year at a good price.
She has a good head on her shoulders so I have faith, unfortunately she like many others her age missed out on buying a house for a decent price before real estate doubled or tripled from 2008 in our area.
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These days are not quite the same as any day the market trades, because our economy is shutting down. It feels quite different and I am thinking about how this affects our future.
Timelines are interesting. I am solidly middle age, there is still time to live, and yet there is not quite enough time to recover from disasters or foolishness.
Equities carry more risk that most other asset classes. That is why they outpeform most other asset classes over a long timeframe - but of course, only with the caveat that you can hold on and are not shaken out of the market.
IMO trying to follow a strategy that is more risky that you are comfortable with (ie too equity heavy) and only being able to stick with it when times are good will have inferior results to following a lower risk strategy that you can stick to through all the ups and downs.
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Tons of hope I will be able to buy real estate for 70% off in a year when 35% of workers are unemployed. I want to build a solar farm.
What makes you think this ? you honestly believe 35 % of people will be unemployed. What country are you in ?
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Tons of hope I will be able to buy real estate for 70% off in a year when 35% of workers are unemployed. I want to build a solar farm.
What makes you think this ? you honestly believe 35 % of people will be unemployed. What country are you in ?
35% might be high. but, not by too much.
US employed is ~155M
in the last 2 weeks, 10M filed for unemployment. 6.5%
add to the previous 4% and you're at 10%
now, in the next 2 weeks, we'll surely add another 10M, easily, without breaking a sweat. then you'll be at 17%.
then there will be second and third-order effects that will grow it to the mid 20%.
and from there... ???
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Tons of hope I will be able to buy real estate for 70% off in a year when 35% of workers are unemployed. I want to build a solar farm.
What makes you think this ? you honestly believe 35 % of people will be unemployed. What country are you in ?
35% might be high. but, not by too much.
US employed is ~155M
in the last 2 weeks, 10M filed for unemployment. 6.5%
add to the previous 4% and you're at 10%
now, in the next 2 weeks, we'll surely add another 10M, easily, without breaking a sweat. then you'll be at 17%.
then there will be second and third-order effects that will grow it to the mid 20%.
and from there... ???
The end of this month (april) and middle to end of next month will be very telling.
It's not outside of the realm of possibility but i really hope it doesn't come into fruition...
Now as far as a 70 % decline in real estate - where is the facts on this ? In the 2008 market / housing bubble - real estate saw a 33 % drop. I don't see how it will drop down another 30-40 % in this current market with a (hopefully) temporary market decline due to this virus. Unless i'm missing something all together (very possible) ?
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i never said 70% drop in RE prices. just backing up the UE guesses.
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Real estate is local. My last two investments were 70% off in 2011ish time frame. They have appreciated about 70% from that price for a couple million. Don't you think it is possible that can happen again? 35% is a bit high, but when you shut off demand like this, there are many businesses that are just not coming back and even the ones that hang in there will be cautious to hire. Most big companies in my area started freezes and talks of layoffs. Many of those jobs won't come back for several years. If everyone could file unemployment would be approaching 20% today, but old computer systems cannot handle the filing volumn.
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Wil be interesting to see if any of these conjectures are remotely accurate. A few weeks till the big reveal
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Tons of hope I will be able to buy real estate for 70% off in a year when 35% of workers are unemployed. I want to build a solar farm.
What makes you think this ? you honestly believe 35 % of people will be unemployed. What country are you in ?
35% might be high. but, not by too much.
US employed is ~155M
in the last 2 weeks, 10M filed for unemployment. 6.5%
add to the previous 4% and you're at 10%
now, in the next 2 weeks, we'll surely add another 10M, easily, without breaking a sweat. then you'll be at 17%.
then there will be second and third-order effects that will grow it to the mid 20%.
and from there... ???
Short-term I think we'll see falling growth in new unemployment claims. Most of the people affected by the quarantines have filed or will do so in the next week or two. I think we'll peak at less than 20%.
Once things open back up some of those jobs will come back quickly i.e. waiter at a national chain restaurant with relatively deep pockets. The waiter at the local restaurant that was marginal to begin with will probably be looking for a new job.
It's those second and third order effects that are the wildcard. That same local restaurant that's never going to reopen - at some point the landlord won't be able to pay their mortgage and the bank will foreclose. Multiply that by the hundreds of thousands or million of residential and commercial properties and you'll have a similar repeat of 2008-2009 with overleveraged lenders going out of business, MBS, CMBS, and other structured debt vehicles collapsing, etc. Now the business that made it through mostly unscathed won't be able to borrow money for payroll and working capital. Plus all the businesses hurt by other closures - i.e. restaurant suppliers, services for entertainment venues, etc.
If things start to recover in a month or two many of those more severe second and third order effects will be lessened. If most of the country/world is still in quarantine in June then we're probably looking at a much deeper and more severe recession than 2008.
Meanwhile, I'll still be plugging away at work and putting 25% of my paycheck into index funds in my 401k.
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Tons of hope I will be able to buy real estate for 70% off in a year when 35% of workers are unemployed. I want to build a solar farm.
What makes you think this ? you honestly believe 35 % of people will be unemployed. What country are you in ?
35% might be high. but, not by too much.
US employed is ~155M
in the last 2 weeks, 10M filed for unemployment. 6.5%
add to the previous 4% and you're at 10%
now, in the next 2 weeks, we'll surely add another 10M, easily, without breaking a sweat. then you'll be at 17%.
then there will be second and third-order effects that will grow it to the mid 20%.
and from there... ???
Meanwhile, I'll still be plugging away at work and putting 25% of my paycheck into index funds in my 401k.
x2 - thinking about when and how do put more cash into my roth right now...
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Trump talking about forcing states to lift stay at home orders will definitely help stop the bleeding economically... Many will die but we will reach immunity faster and have less damage to economy.
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I converted 7/10 of my holdings to cash on February 5th. Started to get back in on March 23rd and have steadily invested back up to 7/10 being in index funds again. I currently am up 5% for the year (before today) from what I started with (not including new contributions) and have 30% in cash right now. Planning on just dumping it all back in Monday.
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Normally we have a small drop for weeks or months before a crash. After the crash, there’s a retest of the low before the uptrend is sustained back to new highs.
This drop never gave traders and investors a chance to get out. It went straight from all time highs to 35% crash. Therefore, I believe (and have thrown my chips on the table to back up my beliefs) we will not see a retest of the low. The drop wasn’t normal, and the recovery won’t be normal as well.
These are my thoughts after getting a good nights sleep and pondering about the markets this morning.