MYTH boomers will crash the market

[randallg99]

If the markets fall below the 2002 price (which I think they will, in a lot of areas) they will be considered shrewd investors.

you might be right, you might be wrong. The area in question is not experiencing a large dramatic sell off like San Diego or Miami is currently experiencing...

Do you know what they did with their profits since they sold? If they bought gold, they are up over 100% since then. There are other things that would have bought them 100% gain too -- so I think it is really hard to call them schmucks.

They said they `saved it` and I have absolutely no idea what they did with the money. ... and that is not necessarily important because everyone needs shelter/home... so the home ultimately should not be viewed as an investment, but these people did just that by thinking they could cash in and make a landlord richer and this is mostly why I consider them schmucks...

They thought they sold at the top, but missed about 60-70% upside... since last summer, the values already diminished 10%+/-, so another 40-50% will get down to their original sale price... their home basically almost doubled in value since they sold it... and if they held onto the property for the duration, they would have even more equity built in from lowering the mortgage and they also lost significant tax advantages... after tax, their lost opportunity is mind numbing...

I bought a lot of gold in 2005 and that gold is up over 65%. That's better than most housing. Gold that I bought earlier than that is up even more.

thats nice, but that is not the point... if this banter was investing in metals, you would have been much better off buying the junior miners instead of the actual metal and your returns would be well into the 100s, or even 1000 percent. That is probably still the case, since the jr miners without hedges are leveraged nicely.

So far, I think people who bought in 2005 thinking they would get a higher price selling are schmucks....

I concur, but this thread is about how to manage our investments, money and financial position in an economic collapse, which according to the CNN article an inevitable event...despite the knowledge that real estate will conceivably deflate, I still bought 2 properties in 05 and 2 more in 06, and I am excercising an option on 5 acres of highway retail that had a negotiated price from 04.... the prices I pay for these pieces does not alone dictate the actual value.

Those who do not weigh risk and rewards properly will get slaughtered and will make huge opportunities for those who understand the dynamics of the markets.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[kimberland]

Okay, I don't really care who crashes the market.
Will the market crash or correct?
Yep.
Part of the cycle.
To not prepare for it is terribly silly
and I try not to be terribly silly.

As for why...
The "experts" can't even agree on what caused the 1929 crash
and that is history.
I'm sure not spending time trying to figure out who will cause the next crash.

And people sell on emotion too
(as with buying)
so I doubt the next crash will make perfectly logical sense.

 

[ProInvestor]

Okay we don't have a fence in Australia - However we do have some of the tightest immigration laws in the world. If your an illegal immigrant and you get on a leaky boat and land in Australia you will be arrested and sent overseas to a processing detention facility (read: jail) where you will spend the next 2/3 years of your life (regardless if you want to leave or not) as our country process the hell out of you. After 3 years we work out your for real (or not... it really doesn't matter) and let you in (We also will make you complete a citizenship test, which requires good level of English to pass and we more than likely to put you in an outback community rather than in a city).
Welcome to Australia!

nomadjanet there was no jab intended (I promise! - I thought I was injecting a bit of cheekiness, it was also 2:39 am here - less brain processing / socializing skills, so I apologize) - my point was that there are a lot of people whom think their business is business, but if you took away the owner (who might have a special skill set) the business will fail. Also there are a lot of people running micro business (such as a small cafe) and are required to work in them to make the business work. Many people say "oh I can sell my business", but few will make enough to retire if they sell their business. However IMHO they will be the ones better off.
However as Dianne Kennedy says many of our (everyone on this forum) friends are investors, however we have to take a look at the bulk of the population.
Most people are NOT investors even if they have have money in a pension fund and they have no protection against catastrophic loss. Look at the subprime meltdown, some people lost it all, in Australia we had a 5% fall in the stock market in one day (which ment a loss of $4000 for every man, woman and child in the country. An instant 5 per cent correction is like being told the value of your home, or your super fund, has just gone from $800,000 to $760,000). And we have almost zero exposure to subprime! (Australia stock market in two weeks fell by 10%).

And we are just talking about 5% loss. What about a 25% loss?

My worry is that there are number of issues which are going to create (in my opinion) the perfect storm in the economy.

1. Most people have not saved enough - period.
2. Most people are forced into one type of savings product - pension fund (so no real diversification) which invests 40%-70% of money into stock market.
2. Most people have no protection if the stock market suddenly loses 20%.
3. US Government is in deficit and will need to do something very drastic to pay for promises, and this applies to almost every other western Gov!
4. People are spending too much now, and not saving enough, and debt levels are rising (when they should be falling).

And this is a world wide issue! And while one country may have 'answers' to some of these issues', those 'answers' don't apply to rest of the world.

Yes, the US can change the 401K laws, but people will have to withdraw to pay for their lifestyle - they cannot make enough just on dividends alone. Now the stock market can only go up when there are more buyers than sellers, now say there is no 'crash' and people putting money into stocks are quite happy to and are replacing the baby boomers selling (and this is the wildly optimistic scenario in my opinion), after a while those people putting money in will stop because they are not making any money (capital gains) - all they are doing is just replacing the baby boomers, so they start to invest less money, and a fall will happen (just because there are less buyers).
[Think of capital gains vs income debate - if the stock market doesn't make money through cap gain then focus will the go onto income and that will have to rise to keep the yields the same, so to raise an income yield you either 'create' more income OR the price of the security has to fall].

Yes there are doom and gloom predictions, however I think this one has a lot more 'legs' than most other doom and gloom predictions. Yes scientist did work out that the world would run out of resources (to feed population), however we've had many technological advances - however I don't think technological advances will save the economy.

As Diane Kennedy says:
The GAO did a special study of economic trends and he identified that one of two things must happen, immediately he said:

(1) All Social Security and Medicare benefits must be cut by 2/3's.
OR
(2) All taxes must double.

Even if GAO is wrong by a massive 50%, taxes must rise by at least 50% OR benefits will be cut by 33%, just as more people are retiring. And thats just for the US Gov, and the baby boomer problem is a world wide problem!

Nomadjet - how to profit from crises - look at post #22 (just scroll up).
When we get a wiki we should perhaps add it to the wiki (so please add thoughts).

At the end of the day the scenario I could be painting might be a figment of my imagination (and I pray it is), however there is more than enough there to cause me to have some serious concerns. I cannot say that the statement the boomers will crash the market is a MYTH - Because in my opinion, everything points to the opposite conclusion.

Rgds.
ProInvestor

 

[RAiMA]

This report was in the Australian news the other day which seems to be a band aid fix to the financial crissis the general population are in. The idea seems to be spreading across nations.

Think-tank: Raise retirement age to 67
October 10, 2007 09:38am

RAISING the retirement age to 67 will save the Federal Government $800 million a year, a national economic think-tank says.

The report by the Committee for Economic Development of Australia (CEDA) recommended the pension age be raised to 67 by 2015, saying it could be done because people were living longer.

CEDA's chief executive David Byers said the Government needed to encourage more people to stay in the workforce to maintain economic growth.

"We want to encourage increased labour force participation rates at those older ages so that we can maintain economic growth by boosting labour force participation," Mr Byers said on ABC radio.

The report estimates that lifting the age would save around $800 million per year.

"It would save the Federal Government around about $800 million per year in pension payments," Mr Byers said.

It would also give workers better superannuation when they did reach retirement, Mr Byers said.

The report said lifting the age could be justified because people were living longer.

When the pension was introduced in 1909, four per cent of Australians were 65 or over, and by 2001 this had increased to 15 per cent, the report said.

Mr Byers said other countries had already linked pension age to life expectancy.

"It is not a radical proposal when you compare to other countries around the world," he said.

"The United States, The United Kingdom, Germany and Denmark are already moving their pension age to 67 or 68.

"Norway already has a pension age of 67, and as Australians live longer and healthier lives, the way they work and prepare for retirement is going to change."

The report recommended a safety net for people who were 65 and could not work because of ill-health.

Source

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Diane Kennedy]

This is probably not the right thread, at least with the original premise...but it just kind of goes along with the theory of predictions.

My prediction is that in 2010/2011, the US will either have a balanced budget or will make a huge inroad on cutting down the deficit.

A little history - does anyone else remember the huge deficits from the Reagan years as we tried to outspend the Russians in the Cold War and the tax cuts? Then we switched to the Clinton years and suddenly we had a balanced budget? What changed?

Well, one big, unintended result came with the new Roth account. There were projections back then on how much revenue would be generated when this new tax-free account hit the marketplace. People had a window of a few years to roll their tax-deferred (tax later) pensions into tax-free (tax never) plans. The deal was, though, they had to pay tax on the amount of the rolled over amount. There was a projection of how many people would do that, and millions more dollars rolled than was expected. That meant a big influx of tax revenue for 4 years (you could spread out the payments on the roll-over). This also sets up for yet another tax problem that I'll come back to.

But, now let's look at 2010. For the first time EVER and for one year only, the rich can do the same roll. They can take their tax defered accounts and roll to tax free. You pay tax now, but then your money grows tax free forever. There is no minimum distribution requirement and once it's in the account, the sky's the limit on how much you can make. For good investors, this will be manna from heaven. The roll occurs in 2010, but you have two years to pay the tax on the roll. That's why the benefit will spread over 2 years. I predict that we'll see fewer people taking advantage of this BUT the people who do will be rolling millions from their personal pension plans. So, the overall benefit will be bigger.

Whoever is in office in 2010-2011 will be a hero to the American public. BUT the true cost was that by sucking tax revenue into a current year you do so at the risk of the future. When the money starts coming out of the Roth it is completely untaxed. (Unless we go to to a national sales tax, similar to Europe's VAT.) That's one more reason I think ultimately the US tax system and benefits is set up to cripple the working public and business owners in 20 years or so. Tax is a drag on economic growth...which will further limit companies ability to grow. Or, it will force them all overseas to different taxing structures.

I know I'm being pretty US-centric in my tax rant. I've got concerns of a different nature for the Superannuation Fund and RSSP. In general, though, the Western nations are facing similar issues, which are exacerbated by the "pig in a python" of the baby boomer generation. Interestingly enough, Mexico and some African nations have INCREASING populations. Their baby boomer generations are occuring now. Does that mean the economic power will shift in the next generation to other countries?

 

[mglshark]

One other book comes to mind - the follow up to "Stocks for the long run" - Jerry Siegel if I spelled it right - called "Future of the Stock Market" or something similar - talks about overseas crowd (China, India, New Europe) buying into our markets as the baby boomer's leave. A compelling statement that makes me believe really no crash nor the end of the US.

Marc

 

[Diane Kennedy]

As others above have said, the real point is what will each of us individually do as a result of the information.

Option A: Pontificate:smxF:

Option B: Get depressed. Build a bomb shelter. Store water and canned foods. Other things along that line.

Option C: Drink:smx6:

Option D: Realize that you are in control, you get to choose. You have the skills and ability to make money in up markets and down markets. :banana:

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[CRBFL]

Option C: Drink:smx6:

Option D: Realize that you are in control, you get to choose. You have the skills and ability to make money in up markets and down markets. :banana:

Hmm, C and D- looks like I'll be diversified.

 

[kidgas]

I've read that most people, especially kids, will pick the third option in a series of choices. Thanks for that third option Dianne.

 

[mglshark]

Good question - He address it over several chapters in his book. You really need to read the whole book since he backs it up with footnotes, references, etc. Based on my fuzzy memory the price of too much growth in third world countries (India, China) or here such as the late tech stocks or cheap RE tends to bubble, hits above a certain number (6-8% for countries, certain P/E for stocks) they blow up and crash! He shows so many examples in history. The new middle class overseas wants the slower but more stable US stocks / RE because they are safer here then in their own home country!

Hence the Chinese/ Saudis loading up on our T Bills more recently, overseas investors with US stocks / RE still like our stable place & cheap prices. he accounting (as flawed as it is) still is head & shoulders above buying stocks anywhere else. Some of the stories coming out of china with factories funded by US $$$ by day making cheap products, at night making the same stuff or the black market!

The book is worth a read, you may not agree with it but it does give you quite a different view on all the doom & gloom stuff out there.

On Social Security, just raise the retirement age by 5 years adds years (to 2050) before the problem hits. Putting excess back into the system rather then just taxing it is a good but unpopular idea . I like to see the gov offer tax credit or deduction for giving up your SS check, since you are a high income earner you would like this.

I bet the gov will lowers benefits, raises the age, takes back "excess" amount making SS the last safety net before becoming homeless. Look at the heat Bush took trying to tackle the problem now head on. The seniors wanted to do him in!

On those rabbit fences, I saw a movie base on the real deal. Stop the infected rabbits from coming over, in the land down under, 1930's, longest fence ever done. Good movie too - " Rabbit fences" I do believe.

Marc

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[china]

Right up front: I confess I did not read all the posts in this thread.

One of the problems with stock valuations is that keeping prices up depends on buyers. In other words, a stock could have 35,000,000 shares. One person decides to sell 1,000 shares. The stock previously sold for $20 a share. However, now, the only buyer wants to pay $2 a share.

Market makers could take those 1,000 shares -- OR, they could let them fall to the guy who wants to pay $2 a share. If the guy who wants to pay $2 a share gets them, then remaining 34,999,000 shares are now only worth $2 a share because that is all anyone wants to pay for them.

If we have a huge stock market collapse, like the housing collapse, I don't see the market makers stepping in to take up the slack. The government has already said that it will not intervene with the housing collapse except on the most basic level.

Regardless of what people want to believe, the USA is wallowing in debt. Some of that debt is going to have to default. It's going to make most asset classes smaller in dollar denominated terms simply because the dollar isn't worth that much. You are either going to suck it up because your dollars are going to be worth less, or you suck it up in the fact that the items you bought with dollars are worth less. One way or the other, dollar assets drop.

 

[randallg99]

I'm not sure how old you are, but your comments belie a basic misunderstanding of the American socioeconomic/political process.

When I was a kid (35+ years ago), I read all kinds of 'doom and gloom' predictions that by 2010, the world would be unable to support itself because of the population explosion. .

BINGO!!!! we will always manage to get caught up in the hype and get sucked in for a bunch of BS. peoples natural behavior is to dwell on negative energy (watch the news or read the papers) ... worst case scenarios are played out by the bobble heads and those masses glued to the screen are worried about anything that threatens their security becomes the most captivated audience available

however, regarding this thread- one thing will change - foreign countrys ability to purchase American assets (not via stocks) such as real estate, companies, resources, etc will dramatically increase with the devaluing dollar and deflating asset valuations... but people are confused because this fact alone will not change our standard of living but it will change dynamics of political control on a macro scale.

however, on a micro scale, the American family will have to make more sacrafices as more foreign investments swallow up American assets because they will carry with them a currency that is harder for the dollar to match up with...

probably will be a segmented struggle among various classes, but not an economic bust.

wish I could spend more time on this subject, I could write a book ...

 

[randallg99]

If they swarm the US with investments, won't that put upward pressure on the USD?

depends on several factors, one of the major ones is whether the US still the boatload of debt to pay off or not... China and India have proven they are become much more economically self reliant and as some of these foreign economies become less dependent on the American consumer, just the very notion of whether or not the US can pay the debt off is nowhere nearly as important as it is today....

another factor is in which currency will the investments be bought with ... American institutions will gladly at this juncture accept foreign currency ie Yen, Euro, A$, Loonie, etc...

hell, if someone was willing to buy all of my real estate and businesses with Euro a few years ago, I may as well have peed in my pants laughing too hard... today, I would take a second look.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[kimberland]

Well Canada has a more immediate challenge
and that it is a lack of skilled (or otherwise) workers.
We can't grow because we don't have the workforce.
With the boomers retiring,
this will become even worse.

'Course I figure that solving the worker shortage
will likely solve the market issue.

LOL
Just adding another variable to the discussion.

 

[Russ H]

. . .one thing will change - foreign countrys' ability to purchase American assets (not via stocks) such as real estate, companies, resources, etc will dramatically increase with the devaluing dollar and deflating asset valuations... but people are confused because this fact alone will not change our standard of living but it will change dynamics of political control on a macro scale.

On a micro scale, the American family will have to make more sacrafices as more foreign investments swallow up American assets because they will carry with them a currency that is harder for the dollar to match up with...

Excellent points.

We've manipulated the dollar downwards to help pay off debt (American products are a better deal now, overseas). So we sell more, and get more $$ (which are now worth less overseas, pushing up the price of imports here).

Ironically, with a low dollar we could also benefit from international tourism, but our anti-terrorism policies are now so strict that we really don't get that many international visitors (at least in the Napa Valley, international tourists have *really* decreased since 9/11).

Jack up the dollar and the dynamics all change.

As Robin Williams says, "America. What a country!"

-Russ H.

 

[andviv]

I just read ALL the comments in this thread....

a) I still don't see more than one or two answers to the really important question: "HOW do we profit/benefit from this?"

b) I thought this is the type of 'discussions' that we should be having in the RDPD forum, not here. And that is why many completely left or don't visit often that forum anymore.

c) All here have their own opinion, and no matter what others say/explain/justify, they will change their own beliefs/opinions.

but hey, that's just me.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Russ H]

andviv-

I think the most important take-away from this thread should not be "how can I profit from this?", but rather, "Will this really happen?"

If it's not going to happen, why bother planning for it?

-Russ H.

PS I do agree w/you, BTW, that the long, meandering going-nowhere-ness of this thread is reminiscent of what's found on the RD forums these days.

-Russ H.

 

[RAiMA]

Hence the Chinese/ Saudis loading up on our T Bills more recently, overseas investors with US stocks / RE still like our stable place & cheap prices. he accounting (as flawed as it is) still is head & shoulders above buying stocks anywhere else. Some of the stories coming out of china with factories funded by US $$$ by day making cheap products, at night making the same stuff or the black market!

I came across an interesting read where it said China is no longer supporting the USD due to the incredible debt that the US has accumulated (Over 10 trillion dolllars I think). The questions on their mind is like:

how much more foriegn debt can the US accumulate before it can no longer meet the payments?
How much more are foreign countries willing to support it?
What happens if they don't support it?
What happens when they stop supporting it?
How will the US decrease the debt?
Will the USD value decline?
Will US inflate the dollar to wipe out the debt?
Is going bankrupt an option for the US?
How will this impact foreign investment?

Lots of questions to think about and also interesting to see what's currently happened in the US. Particulary the devaluing of the USD. Hmm, something to think about...

 

[Russ H]

RAiMa-

Please read some economist's accounts of why the USD was *intentionally* devalued to deal w/trade deficits (we-- the US-- did it).

andviv is right-- this is turning into a RD thread. Lots of speculation, and little direct knowledge.

God help us. :bgh:

-Russ H.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[reipro]

Any market is driven by supply and demand! You have to look at the market and determine what the supply and demand is. Is the stock market really do that well or is there just excess money right now that is being pumped into the market?

Look at Real Estate right now. What is driving the prices down? There are as many closing now as there have ever been, but prices are going down. WHY because there is excess supply on the market right now. Why are stock prices going up? There is excess money going into the Market right now!

Look at the underlying facts of the market and make your own decisions!

 

[Russ H]

There are as many closings now as there have ever been, but prices are going down. WHY because there is excess supply on the market right now.

Have to disagree with ya, reipro.

Median home prices are actually *UP* in most areas (teeny tiny bits, but they are up).

Number of units sold are *DOWN*.

There is MUCH MUCH less residential RE moving (closing) than before.

Our mortgage broker (biggest in the area) has laid off staff.

Our title co. had to lay off 4 employees JUST LAST WEEK.

The reason there are so many units on the market, here, is that it's taking so much longer to sell things. Days on the market is weeks or months, not days (as it was in 01,02,03, 04.05).

It's not that 100x more people decided to sell their homes. It's that a lot less folks are buying them.

Supply of homes for sale is *twice* that of what it was a year ago:

http://www.realtor.org/Research.nsf/files/EHSreport.pdf/$FILE/EHSreport.pdf

Latest news on # of homes sold: http://news.yahoo.com/s/ap/20071024/

-Russ H.

 

[randallg99]

a) I still don't see more than one or two answers to the really important question: "HOW do we profit/benefit from this?"

apparently we all have to form our own road of execution since there are a lot of differences of ideas. I think we can all agree to disagree, but one thing I think we can all agree for sure is that American assets will continue to be quite the value, if not the buy of the century to the overseas herd.

so to answer the question with the most obvious answer- invest in foreign equities or in American companies via stocks that vastly reaps profits from overseas to offset any damage done by declining US$... along with commodities that are associated with a growing economy, all of the corresponding industries that participate in booming economies... ie Cat and other equipment builders, Ocean drillers for commodities, dry bulk shippers, oil tankers, etc...

I do not have a high opinion of the pharmas and health related industries due to the over-litigation and government interference... I gather there are some tremendous values, but I do not understand them and dont have the time to learn the sectors.

lastly, in my opinion, I do believe that real estate as an asset class will suffer momentarily due to a population shift which is currently driven by the baby boomer segment... if anyone read Harry Dents Roaring 2000s, they will remember the premise of the book was an economy driven by the population... we later find out in hindsight where Harry was wrong was that its not just the population that will drive the economy, but rather the population with the money... as the boomers disperse their money and leave it behind, it will be at a diminished value than what they saved it at due to deflating dollar. Also combined with the fact the heirs are faced with unprecedented inheritances who have not proper training in handling finances...

all in all, we are an economy of end-users where the monies are channelled into foreign control and this ultimately lies the problem...

b) I thought this is the type of 'discussions' that we should be having in the RDPD forum, not here. And that is why many completely left or don't visit often that forum anymore.

actually, I think this conversation was a intellectually and academically stimulating which is something I dont remember seeing on RDPD and am pressed to admit I dont see too much here... but I admit I did not read all of the posts... or maybe I am guilty as charged, but nontheless this conversation definitely has me critically thinking about future possibilities

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[randallg99]

Hence the Chinese/ Saudis loading up on our T Bills more recently, overseas investors with US stocks / RE still like our stable place & cheap prices.

now that some of the oil is traded using other currencies besides the dollar, the Chinese and Sauds have not been buying as much of the US notes...

 

[tchandy]

As a few people have already mentioned and since I started the post, I think we should move on from the current topic of "Will boomers crash the market" and branch off to answer how we respond to the question. Many people have already provided their input on the market dropping due to boomers retiring and pulling out their money, etc, etc, etc...

So what are you doing to prepare in case this will happen in the near future? What are you currently investing in that you believe will survive a possible crash? Real Estate- SFH, Commercial? A specific sector in the Stock Market?

For example, I have some money invested in health care which I think will be a long term winner.

Tom

 

[piranha526]

So what are you doing to prepare in case this will happen in the near future? What are you currently investing in that you believe will survive a possible crash? Real Estate- SFH, Commercial? A specific secotr in the Stock Market?

Tom

How's this for an idea: Follow your plan and don't panic if and when things start to crumble. I am not going to change my methods based on a theory. The stock market has never crashed, ever! We had 1929, 1987 and 2000 but it has always rebounded. It runs in cycles. These things happen and are normal.

Follow your system, follow your rules and don't be surprised. If you have rules to follow, do what they tell you when specific situations arrive (whether up or down). If you know how to handle up, down and sideways situations, you will be fine. Don't be surprised - the best advice I can give.

Sounds easier said than done but just do it. Don’t make decisions during a crisis or in unfamiliar territory. Continue to follow what you do best now and always plan for the worst case scenario. Have rules that will allow you to protect you downside (maximum risk). Whether this be RE, Stocks, Business, etc…

What am I doing now? I will continue to buy growth stocks as long as they lead the way! Accumulating commodities is another strategy I have been employing. I don’t buy gold en mass but the gold stocks and ETF’s have been excellent. Currency plays are something I trade. My family has RE assets in Portugal and bank accounts based in the Euro so I will accumulate on dips over there and strength over here.

Overall, I am doing what I always do! I don’t trade in present times for "what if scenarios" but I have a plan to know what to do with my positions, cash and equity if “what if†starts to unfold.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[mglshark]

Okay let us see if this works - I got side track with a call, finish my message and submit, got time out / log in screen! Lost the whole thing! Forgot rule #1 always copy your message before hitting submit button!

Difference between world-wide market crash (depression) or slump (recession). Crash means I am sharing a bread-line spot with old money (old Rich) guy that BK up. Time to walk away from the home, pitch a tent in the park, buy a gun and pray I remember boy scout survival training! The banks / government can't / won't lend money which makes the markets crash, hide money under your mattress and bury gold in the backyard. Only people that do okay live on a farm and trade with us city slickers.

A world-wide slump is more likely since Bush's tax cuts (Stock / RE) is shrinking the deficit even with the war going. Our falling dollar vs Euro is also reducing the trade imbalance. Hard to believe, reported in the back page of the paper. So assuming Hilary over Rudy (I think so) with tax raises, reduce presence in middle east, health care reform and oil / gas going up.

I have already big cap drug / bank / financial / Reits / home builders / oil / oil drillers / stocks, all are up except the Reits (and PFE) in the current market. Sniffing around the bargains I will get more Reits, health care & mortgage companies (Countrywide is getting pounded yet again). Buffet feels the Reits can go lower even now.

As a value investor I love big cap bargains to slowly nibble on, with a five year window of buy and hold in mind. Hence my big winners even with market craziness, buy right now for future profit. Of course limit your stock buys to no more then 5% of the portfolio and do your own research first.

Other big caps of interest is AIG, Wallmart, & Home Depo. With the San Diego fires all around me, RE tumbling in the sub prime mess future bargains would be bank, insurance, home improvement and stock brokers (Merill Lynch, etc.) I already have positions, just add more to them.

San Diego RE will be cheap for next 2 - 5 years I believe, as Joe Lunch Bucket bails out.
A local crash of RE with cycle of money going down for now. However you still cannot cash flow a rental yet so another 20 - 30% off the top is in order.

Even with the big H taking office I think congress will block her like they did with Bill back in the 90's for health care reform, then this stocks will rally and do well even in a recession.

A patient of mine that repo cars says he has big increase at work chasing folks for non payment of their BMW, Mercedes, etc. The tide is turning, people are dumping their play toys. I know I am happy not re-leasing the company Mercedes (two of them!), instead cash and credit union car loan for two super MPG econo boxes. Gas now costs half as much and I drive twice the distance before refueling!

My sister has a home grown business of cleaning out peoples crap and selling on crags list, e bay, amazon etc. She takes 30% of profit. She did my business and sold tons of currently unused equipment gathering dust. Cash on the barrel head! She researches first what stuff is worth before taking it. Smart cookie, old sis, all cash no overhead "hobby"!

I am phasing out of chiropractic, going all cash, combing several businesses under one roof to split overhead. Now we are starting a collection business, insurance billing, skip tracing, mostly going for the insurance vs insurance market. You crash the rental car, no rental insurance, we get your insurance to pay the other insurance co. the money owed.
A recession proof ( I believe) business! Now I need to buy back some of that office equipment my sister sold....

Marginal businesses go under or get sold cheap at a time like this, remember RK said the FASTEST way to a fortune is through owning a growing business. If you know how to grow one you can do quite well (side note I experience this several years ago, made a ton of money for two years before government / insurance laws change which killed it). Snoop around for business bargains!

Big picture (IMHO) no world-wide crash (get the guns, honey), just local crashes with slump at the national level, you need to get rid of the big price toys, go cash, use good credit to buy good assets (RE / Stocks / Businesses) at bargain prices and keep your overhead DOWN, cash flow UP. The best position of all!

Best

Marc