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re: Being "recession proof"
Posted on 7/8/13 at 3:14 pm to JohnnyKilroy
Posted on 7/8/13 at 3:14 pm to JohnnyKilroy
Recessions are a great time to get rich. People are selling
assets at far less than fair value because of fear or in the case of real estate, because they are over leveraged and afford to make the payments. Their fear, or poor financial planning, is your opportunity.
The best time to buy is when there's blood in the streets, even if the blood is your own.
assets at far less than fair value because of fear or in the case of real estate, because they are over leveraged and afford to make the payments. Their fear, or poor financial planning, is your opportunity.
The best time to buy is when there's blood in the streets, even if the blood is your own.
1
Posted on 7/8/13 at 3:18 pm to rintintin
quote:Read the link I gave in my post from February, 2009. There were some very practical people on this board who thought the end of our economic world as we knew it was happening in 2008/2009. One poster replied to me "There won't be a stock market by the end of March." And he was not really joking.
Did they not think it would rebound ever?
People were panicking. It was the best example of Warren Buffett's investment axiom: "The time to be greedy is when others are fearful." I followed his advice and it worked.
He followed his advice, too. Remember he practically stole billions of dollars in General Electric and Goldman Sachs stock by making mult-billion dollar convertible loans to both of those companies when they needed capital. His investment in GE has more than tripled since he made it about 4.5 years ago.
Posted on 7/8/13 at 3:20 pm to rintintin
quote:
When the stock market crashes who feels the immediate brunt of it? Is it best as a stockholder to simply ride the wave and assume it will eventually recover, because history tells us it will?
An important factor in investing is understanding what you own and what a market shock will do to your holdings. That would include devising investing parameters that you know will keep you from doing detrimental things to your portfolio and keep from panicking.
I have pretty much been a value investor as an adult. It kept me out of the stupidity of the tech binge/pre-revenue IPO's in the late 90's and subsequent implosion, made very good money in the market and sold most of the riskier holdings I had in May, 2008 and invested heavily back into the markets in Dec, 2008 through May/2009 and most of the rest of the money I have put in equities since then have been after significant declines. If you build up significant taxable holdings over the years it almost impossible to entirely sell everything when you have market/valuation concerns due to tax impact. You don't have to become a wizard to make money longer term - patience, rational thought, and capital/good income will serve you well.
Real estate is not recession proof, especially if those holding have to sell or find permanent financing while mortgage lending qualifications change drastically. One can make the points about property cash flow, etc, but many people become wealthy finding great value during times of great stress and illiquidity. That can be applied to the stock market, credit market, real estate, etc, it pays to have a plan and available capital to see it through.
Regardless, if the Fed hadn't taken huge steps the recent Great Recession would have been magnitudes worse, and no one knows how the next event will be handled/managed or bungled. Not a fan of ZIRP forever nor what it has done to/for some, but overall it was likely better than the next best alternative.
Posted on 7/8/13 at 3:25 pm to Vols&Shaft83
quote:Truth.
The best time to buy is when there's blood in the streets, even if the blood is your own.
But human emotion being what it is, buying when everyone else is selling takes some brass 'nads.
When I started buying back in February and early March, 2009 and the market continued to drop for a couple of weeks afterwards, I didn't think I was very smart. I was doing some heavy-duty second guessing of myself.
But, I just kept taking deep breaths and buying more.
Posted on 7/8/13 at 3:26 pm to LSURussian
Buffet gets all the accolades (and rightfully so), but Charlie Munger has always been the one that fascinated me.
Posted on 7/8/13 at 3:28 pm to LSURussian
quote:
I suggested on this board in February, 2009 that the time was near to get back into the market. The U.S. stock market hit its recession low point on March 9, 2009.
Nice call
To the OP: Consumer staples is going to be a sector that performs relatively better. Also, if the economy is slowing and moving towards a recession rates should decrease so bonds theoretically should perform better. Specifically government bonds would be the better option because of the safety.
Posted on 7/8/13 at 3:28 pm to TheLankiestLawyer
quote:Buffett has always said Munger is the brains behind Berkshire's success. Munger is the numbers wonk. Buffett is the promoter.
Charlie Munger has always been the one that fascinated me.
Posted on 7/8/13 at 3:30 pm to gatorsimz
quote:Thanks but as Yogi Berra might say, 90% of that call was half luck.
Nice call
Posted on 7/8/13 at 4:04 pm to rintintin
quote:
When the stock market crashes who feels the immediate brunt of it? Is it best as a stockholder to simply ride the wave and assume it will eventually recover, because history tells us it will?
Maybe I am looking at it wrong, but the way I see it is this. If the market gets to a state where its totally wrecked and not coming up, well, I don't know where you are gonna put your assets anyways. Anytime the doomsayer's bring up the market collapse theory, I think to myself, well, I'm fricked if I kept the money in there, and I'm screwed if I took it out because all hell is breaking loose in the world so how am I going to use that money to buy anything anyways?
So, stay in the market I do.
Posted on 7/8/13 at 4:22 pm to barry
quote:
Um I'm not sure if this is serious.
But....The money doesn't go anywhere till you sell the stock. You technically only lost money if the stock took a dump and then you sold.
Which is what I was wondering in asking that question. Someone who "lost millions" would regain that money if they stayed put until the market rebounded. So the people who lost millions were people who dumped their stock when it crashed. Or people who held onto stock that never rebounded. Which brings up another question:
Which companies never rebounded? Thus leaving stockholders dry whether they held on or not. I know Lehman Brothers and another banking giant were left to crumble.
I told you I was naive to this.
Posted on 7/8/13 at 4:45 pm to rintintin
quote:
Which companies never rebounded?
Alcoa, General Motors, CitiCorp.
ETA: Bank of America
This post was edited on 7/8/13 at 4:46 pm
Posted on 7/8/13 at 4:59 pm to LSURussian
quote:
Alcoa
Yet
Posted on 7/8/13 at 5:01 pm to rintintin
that's what's good about index funds. The stock market WILL rebound. a specific stock may not, but if the entire market doesn't rebound, we have a big problem coming.
Posted on 7/8/13 at 5:02 pm to Vols&Shaft83
quote:You can say "yet" to any stock that is still down, except for those companies who went out of business.
Yet
I assumed the poster asking the question meant "as of now which stocks have not rebounded to their pre-recession levels." Alcoa is one of them.
Posted on 7/8/13 at 5:52 pm to LSURussian
quote:
assumed the poster asking the question meant "as of now which stocks have not rebounded to their pre-recession levels." Alcoa is one of them.
Of those companies, Alcoa has the best chance to recover and right now is trading at a huge discount. Imo.
Posted on 7/8/13 at 5:57 pm to Vols&Shaft83
Did anyone here get hit hard in real estate?
I've watched a few documentaries about how the housing bubble...bubbled, but I still don't understand who were hit hardest when it comes to actual real estate.
I understand the sub-prime mortgage problem, but how did that translate into real estate investors busting?
I've watched a few documentaries about how the housing bubble...bubbled, but I still don't understand who were hit hardest when it comes to actual real estate.
I understand the sub-prime mortgage problem, but how did that translate into real estate investors busting?
Posted on 7/8/13 at 6:06 pm to rintintin
quote:Lehman.
Which companies never rebounded?
Posted on 7/8/13 at 6:13 pm to rintintin
quote:
Did anyone here get hit hard in real estate? I've watched a few documentaries about how the housing bubble...bubbled, but I still don't understand who were hit hardest when it comes to actual real estate. I understand the sub-prime mortgage problem, but how did that translate into real estate investors busting?
It only affected investors who were borrowing too much to buy real estate, or bought real estate just because they thought it would increase in value (even though they had no idea why real estate appreciates, they just heard on some TV commercial that it did.)
Posted on 7/8/13 at 6:14 pm to rintintin
you own a house, or several, that you owe more than they are worth, and nobody will pay even close to what they are worth.
So pretty much everyone, from lenders to owners.
So pretty much everyone, from lenders to owners.
Posted on 7/8/13 at 6:19 pm to rintintin
quote:
Did anyone here get hit hard in real estate?
I know some people here in ATL that got blown up in residential investment RE using ARMs and a lot of homeowners who are still upside down today. I know one woman that bought a bank short sale thinking she was getting a great deal in 2009 and it declined another 30%+. Then again, ATL was home to terrible lending practices and lax oversight which caused the area to have one of the highest bank failure rates in the US. The RE bubble here was easy to see, especially when one looked at terrible loan products like Wachovia was pushing or the insanity of the community bank lending standards. Look up Wachovia's stock price today, you won't find it, either, as WFC took them over. Morons gonna moron.
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