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Old 09-26-2010, 02:56 AM   #1
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Default Money matters

Yup, money matters.

I am curious to here from forum members re: their views on the markets, investing, gold, real estate etc. I think I fall into the ultra-conservative category. Certificates of deposit are the safe way to go for your core requirements in my opinion.

Gold seems to be getting a fair bit of attention in the media lately. Some see it as a doomsday hedge. I suspect if doomsday comes then gold will let you down as everyone tries to sell. You can't eat it and a paper certificate showing you have gold in a far off place might be problematic on doomsday. Perhaps I just don't get it. Arable land seems like a better doomsday hedge to me.

Bonds are great for the institutions that get first pick. The returns in the markets I have access to don't seem to be worth the trouble. If you have many millions then government bonds is a "safe" place to park it. Certificates of deposit or GIC's will suffice for those with less than that. Still able to get 3.3% guaranteed and paid monthly here in Canada so maybe we are lucky.

Dividend paying "blue chip" stocks might be the way to go. I am not convinced that we have purged our credit excesses yet though. If you are nearing retirement or retired you can't afford to lose any capital no matter what the dividend rate is.

Some people say corporations have lots of cash on hand. The curious thing is that most of them keep offering "notes" or "bonds" or "preferreds" or new "stock". I stopped counting with one company at 9 billion in outstanding notes. Maybe they should pay off some of that debt with the "cash" on hand.

What is your opinion?
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Old 09-26-2010, 05:27 PM   #2
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Default Re: Money matters

I wonder right along with you, Mark. My father lectured me long to put money into land before venturing into anything that was a risk, such as the market and, more lately, the gold/silver/platinum bullion markets. Like you, I'd want my investment in my hands if it were a precious metal. And you can't eat the stuff. Nor can anyone else, so what's the point? And CDs have had such a small return for the past several years that I just got out of my last two this week when they came up for action. I put the money back into a savings account. Many are suggesting that is a better way to keep the cash close at hand as its value dwindles too and the banks, big and little, don't seem to be doing such a good job of money management for their investors either.

Sustainabile living and survival web sites discuss conversion of some of your extra cash into tradables is a good idea. They mention bullets in most popular sizes, hand tools, basic genetic seeds for food, and things like that. I haven't done much along those lines but the ideas make sense.

I look to my home-brew Class B as a hedge investment in these days. It is always out there, stocked with food and seasonable clothes and ready to go any time for any where within 600 miles if I really pushed it to the bottom of the fuel tank. And, with its solar power to the refrigerator and the generator for microwaving beyond what the solar battery could stand and propane backup with plenty of fuel bottles for the other stove, etc. I have the sense I could be anywhere for a month or so while watching and listening (via scanners and ham radio, etc.) as the world sorted itself out or the weather got better.

That's my take on it.
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Old 09-28-2010, 12:07 AM   #3
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Default Re: Money matters

I retired in 2007 at the very peak of my company's stock and 401(k) savings and converted my 401(k) investment to a stable value fund. It has grown since. I had faith in Apple back in 1996 when I first purchased a stock as an investment when my stockbroker advised against. You do the math on that one.

I avoided real estate speculation because I thought it was all overpriced. Arable land with a woods would be an ideal doomsday investment. I know I can design a zero energy home. I practically have that now.

Even though I am retired and boondocking so to speak (savings drain with a trickle charge) rather than being plugged in (job income) I often think some kind of independent income stream would be nice like residuals for a book, patent, etc. That's just a dream. One has to have the talent or luck like the guy who invented the aerosol spray can cap and gets a residual for every one of those little plastic pieces spitting out on an assembly line. Ker-chunk, ker-chunk. The odds on that are about as good as winning the Powerball lottery.

The smartest thing to do is simplify your lifestyle and get rid of all debt. I don't plan to ever borrow money again if I can manage it and I spend a lot less than when I was employed yet I spend more money on quality things like travel and food. Since this is a B forum, the B really does make a lot of sense. It can be your every day transportation and home if push ever came to shove.
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Old 09-28-2010, 12:38 AM   #4
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Default Re: Money matters

with the current thieves and morons in congress, it would also be a good idea, finances permitting, to locate a nice cave in a wooded area near a water source, far away from any interstate highway. stock it with at least three years of mre's, guns and ammo (include black powder guns, in case there is a long dry spell) and stick a nice , fully equipped fifth wheel inside the cave. get a sun generator ( generator powered by a freon cycle sterling engine..needs only sunlight) shortwave radio, bank of solar cells and a boy scout handbook !!

if you are more optimistic , you could simply vote all the current corrupt useless idiots out of office. don't vote party lines....just vote for the new guys/ gals. it won't fix it, but, it will slow the corruption so you can see who the real problems are ( think bribery here ) if you buy gold, there is a problem in how you use it/ convert it/ trade it/ protect it/ store it.

take care of your friends, don't let them go to the "dark side".........even if they do have cookies.
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Old 09-29-2010, 12:19 AM   #5
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Default Re: Money matters

I have to go along with the voting!!! "If they are in - they are out." If folks will do their own investigation and check out the platforms, etc., and make a candidate answer the question clearly....not their evasious rhetoric, then progress will start there. Have been watch Glen Beck, and he has some very validate things people need to be aware of; whatever and whomever we vote fore, just be informed. Safe travels.
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Old 09-29-2010, 03:07 AM   #6
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Default Re: Money matters

Good question.
My take is as follows....
GICs? - too little return for lending someone else your money for anywhere from 6 months to 10 years.
Government bonds a safe investment? - Michigan, California, Greece, Portugal, Ireland, etc., etc. - sorry, not for me.
Corporate bonds? - riskier, but better rates of return are available. Stick with blue chips where possible.
ETFs can be great short term plays if you have a crystal ball for most of them. The ones I like are REITs.
They don't fluctuate much in price, can pay a decent return (around 6 % disbursed monthly), and can actually
also increase slightly in unit price, most particularly during the latest rise in the major markets.
Income trusts, primarily energy and r/e. I like them because they make money even when the markets aren't.
They can pay decent distributions, the ones I own at around 6-8%/annum paid monthly, and most of them will
continue to pay me to own them after they either convert to corporations, or remain as IT's and deal with the
tax changes. Either way, energy makes the world go round, imo, and there's always a demand for it somewhere.
Real estate also is always either owned, leased, or rented, by someone somewhere so there's always a revenue
stream available to tap.
Blue chips that pay a decent dividend are also favorites, but they tend to be expensive and the cost/return
percentage is usually not that good, unless you bought them when they were still fledglings.
Davydd, good guess on Apple, btw!

By way of personal disclosure here,
I do sometimes think that a cabin in the woods somewhere might be a nice idea, that the current gang of idiots
in the various governments should be removed as quickly as possible, and that gold is neither edible nor useful for
anything except bullets, if you like to make your own. And Glenn Beck and Bill O'Reilly are 2 of my favorite TV
personalities. I find them both entertaining. I also watch TLC, HGTV, DiscoveryCIV, Animal Planet, History, and
the Military Channel, too. Just to confuse you even more.

I'm sure I've missed some stuff I actually believe is useful in terms of money managing/matters.
The stuff I mentioned above is the Coles' Notes version.
If I think of anything else, I'll update this posting.
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Old 09-29-2010, 06:13 AM   #7
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Default Re: Money matters

What to do... the politicans are no good as other post have mentioned but you also have to blame corperate executives. Back in the 70's they had a pay that was about 30 times the average worker. Today it is probably 300 times that. Sometimes I question if they should be able to set their own pay or possibly limit it according to the lowest or possinly average workers pay that they employed. Coupled with lower paying jobs the average person cannot afford to many luxuries and many cannot afford any at all. Those executives are only going to buy so much in the economy whereas if the money was spread around more people would be able to buy more things stimulating the economy. Don't get me wrong I am not against some people getting paid more than others depending on the job but get serious there should not be a need for million dollar salaries year in and out especially if they are paying low wages so they can take that much pay. But then again it also raises the cost of goods so others may not be able to buy them, decreasing the economy.
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Old 12-26-2010, 11:17 PM   #8
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Default Re: Money matters

Margin Debt Soars to Highest Levels Since September 2008
http://globaleconomicanalysis.blogspot. ... evels.html

Stuff like that makes me nervous.

Quote:
Moreover, mutual fund cash levels have been near record lows since September, and topping it off, a respected friend tells me NYSE cash levels are negative $35 billion.
What does negative $35 billion mean? Please, somebody explain it to me.............
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Old 12-27-2010, 01:50 AM   #9
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Default Re: Money matters

I interpret what he says as, there's less cash sitting on the sidelines to the extent that people
have borrowed/hedged to make their investments. I read some of the gibberish at the Sitka
website and it sounded fairly non-committal like that spoken by Bernanke and Geithner
in recent months, when uncertainty rules. I also think he means even the mutual fund managers
have spent all their cash reserves buying into riskier investments aka stocks/commodities,
because everyone is seeing the only decent returns are in the markets now. They all want a
return well over basic safe investments like some bonds, treasuries, and money markets,
and their risk tolerance is rising. (btw, who is this guy Mish? never heard of him - fakir?)

So, wanna know what else I think? (too bad, I'm telling you anyway )
This relates to my feelings and opinions about the Canadian economy only, btw.
I think everyone wishes they could get >5%/annum on a basic, safe, bank-booked savings account, right?
Well, that might be very unlikely for some time. It all started in 2008 with Lehman Brothers, US housing
meltdown, mortgage backed securities vanish back into thin air from whence they came, stock markets
retreat 50% over a week, interest rates are lowered to all time lows to try to get money moving again,
and "stimulus" is the buzzword that makes everyone edgy and nervous. The US is in trouble, and so are
we because generally, as they go, so do we, just not as far this time, luckily.
Ok, fast forward 2 years...... things are slowly improving worldwide (the current EU problems are
a different issue which were exacerbated by the global financial crisis, but which would have appeared
eventually anyway even without the aforementioned crisis).
I think there will be a very slow and measured rise in the BOC's interest rates over the next
few years, because of the unintended effects of historically low interest rates for the last 2
years. We dropped interest rates like the USA, but unlike them, it boosted our personal mortgage
applications as it made the money cheap for many who were waiting, and have now probably bought
more house than they can afford, the second our rates rise. So, to keep us from having our own
housing meltdown, we're gonna be stuck with low rates for a while. They tried to reduce our exposure
when they got rid of the "0 down" mortgage last year, but too many others got cheap money before
they could turn off the tap. It also means basic treasuries, and money market accounts, some bonds,
and everyday savings accounts will suffer low rates of return as well. If you want to make any kind
of return on your money now as I already said, you have to invest in risk, aka the market or
trade ETFs or buy into high MER mutual funds (our banks have to gouge, too, don't they? ).
I think you'll see Carney raise the rate 1/4 point and then watch the number of defaults, and if it looks low,
raise it another 1/4 point and so on, over a longish time. I think some people are already seeing the writing
on the wall and trying to bail while they can. I get MLS listings daily and I'm seeing a lot of high end resales
of properties which were likely purchased in the last 2 years with variable rate mortgages, which may now be
subject to tiny little interest rate hikes. Those who bit off more 2 years ago, are trying to spit, before they
have to swallow a major interest rate bump.
That's how I see it if things stay relatively stable elsewhere.
The wild cards are the US and Chinese economies, and what happens with them while we're doing our thing
up here. India maybe too, but they tend to be generally pro-USA and less of a threat to disrupt things,
than China could be. Iran may be a problem short term, as China apparently has a lot invested there,
as well as their undeclared interest in North Korea. The Chinese will probably make the first move, if it
comes to a standoff, and the US will have to respond.
And that's the way I see it.
Also, don't buy electric cars. They're a gimmick, just like the Edsel and the Pacer.
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