patrick.net

Gold actually fell for 20 years. The dow actually fell for only 3 years after 1929.

Had you bought stock in 1932, you'd have done well.

And if you had bought BA real estate in the 1940's you would have done OK too.

My dad bought his little house in Palo Alto on Cowper St. back in 1947 for $10,500 - GI bill, payments around $60 IIRC. The developer tried to talk my dad into buying several more houses on the block as an investment, but my Dad refused. He was scared about "being in debt". But in those days you could get a mortage with no down (GI bill) for multiple properties at fixed rates of around 3%.

That house sold a few years ago for $1.1 million. Check it out. 2545 Cowper St. PA.

Which brokerages are seen as the safest?

Although SPIC guarantees $500K principal, but if your brokerage goes belly up, you'll need to get your money stuck in SPIC processing for months, during which time your stock value could plummet like hell without being able to unload.

I also wonder if SPIC has ever been stress-tested like FDIC. When was the last brokerage crisis?

Gold actually fell for 20 years. The down actually fell for only 3 years after 1929.

Doesn't that make gold more tradable than stocks? ;)

Not investment advice

DennisN - that $60 a month would have been about the same as renting, not 3X=4X. So it was a slam-dunk. Some old OLD neighbors of mine told me you never invested in real estate to make money, that's a very recent thing. And I know Cowper St, that's a fairly nice area. Your Dad did OK.

I am all commodities, PM and foreign currencies, almost 0 exposure to USD bonds or cash. I am comfortable with my investment, but I am not 100% comfortable with where my investment sits.

First of all, I am afraid of a "brokerage run". I have no idea whether our brokerages are well capitalized as they should be, or if they are lending out my stocks without my consent. If Merill, Bear Stearns, Citi, HSBC and Societe General are in the shapes they are in today, I won't be surprised that some of our brokerages have quite a few skeletons in the closets themselves. I was not worried about this before, but as time goes by, everything seems possible.

Second, I don't trust US Treasury. I own Australia Treasury instead, because at least here is a government that is solvent. I think the risk of default for US Treasury, in nominal sense, is ZERO. However, in the sense of loss of purchasing power, it is guaranteed, it's a matter of whether you will lose 5% or 10% a year. I also believe that we are in a gigantic USD bond bubble, so I stay away from USD bonds completely.

What about putting gold in a swiss bank safe deposit box? Will that work?

I think it is more important to take market opportunities.

Optimists get killed because they are fearless.
Pessimists get nothing because they are too fearful.

We should become misanthropic opportunists!

Not career advice

For people who want to short, but don't know how: Google Proshares Short ETFs. The Ultras are an especially risky way to go, but have the highest returns.

For people who like the Euro, may I point out that Spain is going bankrupt at a speed that makes even the Shrub's profligacy seem tame.

For people who like physical gold, please remember that the US Gov't confiscated it last time we got into big trouble.

For people who like Gold ETFs, please remember that they don't necessarily have any gold in the vault, and even if they do, you don't own any of it.

And for those who with to invest in resource-rich countries with little industry (like Australia, Canada and New Zealand), may I humbly suggest that you do a little research on how well they did last recession - say, 1991. Hint: not well.

For people who like Gold ETFs, please remember that they don’t necessarily have any gold in the vault, and even if they do, you don’t own any of it.

Huh? GLD has more gold in the vault than China. You can also own and store gold overseas.

USD is not tied to gold anymore. There is no reason for the government to confiscate gold. They don't care if gold surges to $100000 an ounce so long as median home prices stay high.

However, buy-and-hope strategies do not work. Be cynical and take opportunities!

We need to come up with some standard terminology here:

Inflation = infaltion
Deflation = defaltion

That is all.

Gold is perfectly fine if you measure your lifespan in decades or centuries. For the average human the volatility is a bit much.

What do you folks think,
25 or 50 basis points this week?

A bit OT, but it sounds like 60 Minutes did a bit on the meltdown.

http://www.cbsnews.com/sections/i_video/main500251.shtml?id=3756665n&channel=/sections/60minutes/videoplayer3415.shtml

Well, I guess the proles know now.

I heard that with the new BK law that you could walk away from your house but not your Credit Card debt. I'm sure this has been covered here at one time.
Anyway, how bout refi the house and pay off the cc debt, take any extra and buy gold, then walk away from the house with no CC debt and a pot of gold. Move to someplace cheap like Costa Rica.

Yeah, I saw the housing deal on 60 Minutes. Some of those people pissed me off.

Well, our note reset and the price went down. It doesn't make any scense. Why should we have to keep paying? Whaaaaaaaaa, Whaaaaaaaa.

Because you signed the note and said that you would you snotty little twit !!!!!

I, sooooooo, wanted to use Surfer X's vocab. on my last post.

Remember, Richmond, profanity is the crutch of the inarticulate motherfucker. I do hope that someone watching that is in a position to make an example of that couple.

To your other question, I think 25 is more likely (at present) than 50, especially after the "rogue trader" story. They could also hold rates steady, but then, they are running scared.

requiem,

Paragraph 1: LOL

Paragraph 2: I got a 20 on .25 but Asia is bleeding out again so I don't know.

It should go without saying but paying off debt at this point makes the most sense to me. I'm always amazed at how many people take on debt for investment and don't understand it is very difficult to try to build wealth by outgrowing the debt. Paying unsecured nondeductible debt is the best safe investment you can make. Paying $100 to an 18% credit card balance is equivalent to investing that $100 and earning over 30% before taxes on the same money.

So in a way, yes it is a time in which savers are not rewarded but high income debtors should find this a very good time to prepare for another buying opportunity in real estate or stocks. Instead of using debt as an extension of credit you can look at it as using debt as a tax free savings account.

Whoever suggested watching the "Closing Escrow" movie, thanks. The mainstream wouldn't find it that great but readers here will find it very amusing.

I just read an article that used the term "Fed Cat Bounce"....

That strikes me as funny....

Savings in "too big to fail" banks and funds. We covered that when the banking system first started to crack. The US government *will not* allow money funds or other cash equivalents to fail at large institutions. This would be perceived as a failure of the banking system in total. Remember that the problem isn't just "savers" as we usually talk about them. It's also every retirement fund, pension fund, government fixed-income fund and most entitlements that are dependent upon these cash vehicles.

Take on currency hedging or speculation at your own risk. Most will lose money trying (but a few will get lucky and come out fabulously).

If you have a relatively high taxable income -- which is most folks in the BA simply due to our local inflation basis -- then I am a big advocate of exploiting tax vehicles to gain returns. Look into tax exempt money markets and munis (at too big to fail institutions). You may be able to offset a lot of your shrinking cash returns with simple tax savings. Especially as taxes are almost guaranteed to rise in the near future.

Most of all, don't worry. The world isn't ending (despite the fact at least a few here are cheerleading the end of times). Remember, you're on the right side of this all. You may not squeeze every last penny out of your position. But you have already saved yourself 90% of what you stood to lose by not buying an overpriced bubble home.

@OO

How could one purchase Australia Treasury ?

Maybe @@ DS. He'll know.

For those who think LTCM proved the "too big to fail" theory, well, I have a new theory for you:

Too Big to Bail

It's like "too big to fail", only bigger. Much bigger. That $2 Trillion in Iraq has almost cracked us - but the housing crash is going to be AT LEAST $8 Trillion, and almost certainly more, once it shakes out.

Too Big to Bail.

I cant eat, drink, burn for fuel or hump gold,,,,,,

No, but I assure you, as long as you're willing to trade gold coins for it, all four will come to you.

60 minutes piece BLOWS LID OFF the bubble

the whole segment is here

http://tinyurl.com/374fh5

its ALL there, the fraud, the cash back at close, the no lending standards, the look the other way fraud everywhere. Even bay area speculators are mentioned. 60 minutes is where the smart sheeple watch.

RE: Goldbugs and doomsday wet dreams

If your dreams come true and you end up holding gold after the apocalypse, and that gold is valuable, then I hope you enjoy using it exactly once for whatever trade you think you're going to do with it.

Remember, the penitentiaries and jails will probably empty out after this rapture occurs. No matter how big of a badass you fancy yourself, you won't be wanting to flash your gold around the Thunderdome crowing about how shrewd you are.

"two men enter,one man leaves" what a great flick. Mel Gibson during his glory(pre insanity) days.

HelloKitty Says:
January 27th, 2008 at 10:16 pm
"60 minutes piece BLOWS LID OFF the bubble"

I love how now the mainstream media is acting like they have unraveled the mystery of the century. OMG! It is so laughable. Just like during the bubble, everyone is now an expert on 'what went wrong.' I need some Pepto.

Bap33 Says:
I cant eat, drink, burn for fuel or hump gold,,,,,, I dont need it.

As an inter-generational store of wealth, it has done pretty well. About 120 years ago, my great-grandfather's father was rewarded in gold by some monarch. He left the gold in a safe-deposit that my dad and uncles inherited. Considering all the cr*p that went down in those hundred years, I can't think of much else the old man could have saved that would have retained value, least of all some paper currency.

As for eating, drinking, burning and humping, the gold-punani exchange rate has always been favorable to the gold holder...

I don't know if gold is a good short- to medium term investment at this point. However, if you plan to leave an inheritance for your grandkids, you should consider gold instead of some crappy fiat currency.

Not advice of any kind.

Regarding FDIC limits, is it true that the $100,000 limit is per depositor per account? i.e. if a couple has a joint account, they are covered to 200,000?

It seems to make sense, but I can't quite imagine a government guarantee to be so logical.

SP :

I was told once by someone well versed in financial matters that I can summarize as following.

"Simply do not put more than 100K with any bank. Forget about per account, per depositor types of clauses. If you have more than 100K, use more than one bank."

Just be ultra-cautious as this is some f*cking serious amount of money.

If you want to preserve nominal value of your savings a money market fund that invests in short term treasury notes will be quite OK. Leave aside the doom talk on bubble blogs. US Govt will not default on short term treasury bonds. If that occurs, there will be so much sh1t happening that your alternative investments will hardly comfort you.

I have several accounts each with about $101K in them - just enough over to get the higher interest rates for accounts above $100K. Then I go around and "harvest" the interest from them every few months for living expenses. I'm willing to risk that extra $1K but not any more than that.

Banks want your business. Trade around and move money when you get better offers. I "fired" State Farm Bank last summer when Banner Bank offered a 13 month CD at 5.55% apy and moved my money there. Read the newspaper....often banks run "promotional" rates every so often. Right now the best CD deal is at WaMu but I don't trust that bank right now.

Now that I think about it, my dad's house in PA was at 2521 Cowper.

Not bankster advice. :)

Hmm...looks like Warren Buffett got cold feet about a nuke plant.
www.idahostatesman.com/newsupdates/story/277514.html

Not nuclear advice.

If you're relatively young (i.e. less than a year from retirement), just leave your stocks 'as-is' and try not to look at your overall valuation. It will come back. As for new investments, I say anything OTHER than real estate is wise investment. We know that Oil, Gold and the S&P will rise again, and within the next year or so. For the more savvy investor, short sales may prove a nice return. Housing however may be a lost cause for a while. We've got at least another 20% decline to go. What goes up must go down, as the tried-and-true saying goes. Don't buy. Just wait the greedy little FB's out and you'll win in the end.

I meant "more than a year from retirement" as relatively young.