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Peter P
2005 Aug 4, 3:10pm
I don’t quite get the bear position which says a crash is coming, don’t buy, but don’t sell either.
Perhaps I am not just any bear. ;)
Real estate is probably a good investment for the long term if one does not have an absurd entry point. Jack's entry point was pretty good.
Peter P
2005 Aug 4, 3:13pm
Face Reality, would you prefer me to say "sell, sell, sell" or "buy, buy, buy"? ;)
Peter P
2005 Aug 4, 3:19pm
Sell sell sell, and then put your money in the stock market!
Any stock tip?
Peter P
2005 Aug 4, 3:37pm
I would definite recommend selling investment properties in any bubble area. One may keep a primary residence and perhaps a vacaton home depending on his/her comfort level. Selling is not a bad idea either if one feels right about it.
I am using only the consumption view of housing here.
(Not investment advice)
Peter P
2005 Aug 4, 4:10pm
I don’t get all these proposals for letting people invest their social security money in the stock market.
I get the idea... this way, the government can blame the market if the retirees do not have enough money.
Peter P
2005 Aug 4, 4:14pm
I’m always surprised at people’s unrealistic expectations from 401(k).
I share the same surprise. People seem to think that the "average historical return of the stock market" is the return they are going to get in the next 40 years. They have no concept of risk and variance.
Peter P
2005 Aug 5, 2:56am
When I hear about expected returns of 7% or 10% per year, I’m surprised. The market will really need to go up a lot in the not-too-distant future to compensate for the 0% return over 1999-2005, so I still get 7% or 10% per year!
The stock market does seem to have remarkable movements. Actually, much return occurs in just a few days.
However, most people do not realize that if a bear market occurs near their retirement, they will do a lot worse.
Peter P
2005 Aug 5, 3:57am
...but I think it’s irresponsible that 401(k) is being pushed as a way for people to take care of their retirement needs...
I totally agree. Too bad I have highly educated friends who believe in the propaganda. Too me, I rather count on real-estate. (Entry point is important though.)
Peter P
2005 Aug 5, 4:05am
Let me add that there are balanced stocks/bonds/commodities investment strategies that should work though. But they take a lot of work.
I think a "passive" real-estate portfolio should outperform a passive 401(k) account with index funds. However, there are a lot of other possibilities out there.
(Passive means Buy-and-Hope. Not investment advice.)
Peter P
2005 Aug 5, 4:22am
who has the time and expertise to be an “active†401(k) investor?
That's why you have to become a Merrill client. ;)
(Not affiliated with Merrill Lynch)
Peter P
2005 Aug 7, 6:31am
arthur, housing can also be a driver in a downturn as people suddenly realign their projected growth of "wealth" with the reality. This has happend before elsewhere in the world.
arthur, housing can also be a driver in a downturn as people suddenly realign their projected growth of “wealth†with the reality. This has happend before elsewhere in the world.
No doubt. The so-called "multipier effect" also works in reverse. This recent CNN-Money article lends credence to the idea that much of today's consumption is directly related to the housing-price mutliplier effect:
"Cash-out Refis Soar"
tinyurl.com/9ckbe
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At hymie's request:
"So much of the current economy has been dependent on this bubble. So many construction jobs, interior design etc. related to HELOCS, consumer spending in general. I truly believe that the as interest rates rise and the money available dries up, it is really going to saturate the market. When rates adjust, all payments go up. As a result, consumer spending decreases. This is not good for the business climate, but definitely necessary. I think that when consumer spending/confidence shifts, it will have a direct impact on the economy. Perhaps just a matter of time. How many people know friends whose jobs are dependend on the curent housing market? I just went to a Dodger game with a guy whose entire life depends on putting in granite countertops. I honestly would hate to be him in two years. He thinks that the FED should keep the interest rates low no matter what. I don’t get it. Does anyone believe that the current market is codependent on these sorts of things? Once again, we are not PRODUCING!!!"
Housing currently accounts for only 13% of California's overall economy: tinyurl.com/a64pl.
However, it accounts for HALF of all private sector jobs created in the past two years:
"...of the 243,000 private payroll jobs added in the state in the past two years, 122,000 can be directly tied to the housing market, according to UCLA Anderson. “In short, a sector of the economy that makes up 10 percent of total private sector jobs is accounting for 70 percent of the total job gains.†tinyurl.com/dereu
Does this mean when housing prices (and building activity) declines, a recession in CA is unavoidable? Obviously some jobs are more vulnerable to RE than others, but a downturn will no doubt affect us all to some degree. How do you think your job or company will weather the storm? Are there any "housing bubble-proof" jobs? Discuss...
#housing