The BIG investing thread

[Qarzan]

"Buy low, sell high." In other words, buy when everyone else is getting out. Sell when everyone else is going in.

Some indicators that the bubble is about to burst: high mortgage rates, higher LTV (loan-to-value) requirements, low cap rates (ratio of rent potential and property cost). In 2007, there were high mortgage rates (8-9% was considered a good rate back then) given for 100% of the purchase price, and in some places it was actually cheaper to buy a house and pay the mortgage than to rent it. These are all red flags, and a smart real estate investor would have sold at that time.

Now the indicators are: low mortgage rates (3-4% is typical now, and the fed is lending at 0% or near 0%), lower LTV requirements (3 years ago, which was the last time I checked, it was 75% maximum LTV for investors), and high cap rates (buying a house yields more rent than the mortgage costs). These are indicators of growth, which means now is the time to buy!

Actually, 3 or 4 years ago was the time to buy. Things are heating up now, and it's nearing the time to sell, if your strategy is to sell the properties. I've switched over to buy & hold, which means I'm going to keep these properties potentially forever.

 

[arkham]

What do you guys think about investing at stock market in IT companies, energy or chemicals?

 

[camaro]

I wouldn't unless you are very well informed or have insider info.They go up and down at the drop of a hat.

I forgot to mention, government bonds are a great long term investment as well.No risk and fairly high returns.

 

[second lensman]

Wow. You may want to rethink that advice. In 2008 many people lost most of their equity in R.E. and many lost all of it.
I have personally done very well in this area but I started in 1972 when you could buy the biggest house in town(S.F.) for 20k. There are cycles up and down and there always will be. As always timing is everything.
For the average investor, the best advice I could give would be to save all you can and invest in well managed mutual funds that are diversified in all areas, be it national, international, bond and stock funds.

 

[arkham]

In my country government bonds for 2y give 3%, 3y-3.5% 4y-3,8% 10y-4%..... The inflation is always around 3.2% (mostly higher).

Thats why I need to think about alternatives.

 

[second lensman]

Government bonds are usually considered by old folks as they are traditionally very safe investments.
Talk to your friends and find a fee based investment adviser that has a track record of about 10% annual returns over the past few decades. Save all you can and stick with it for the long haul.

 

[camaro]

I guess your government offers lower rates than mine!!

As i said earlier in the thread, mutual funds for me.

 

[Qarzan]

Wow. You may want to rethink that advice. In 2008 many people lost most of their equity in R.E. and many lost all of it.
I have personally done very well in this area but I started in 1972 when you could buy the biggest house in town(S.F.) for 20k. There are cycles up and down and there always will be. As always timing is everything.
For the average investor, the best advice I could give would be to save all you can and invest in well managed mutual funds that are diversified in all areas, be it national, international, bond and stock funds.

2013 - 4 = 2009

Market crashed in 2008, hit bottom in 2009. 2009 was the ideal time to buy.

Also know that some markets are still going down. Here in the Bay Area, inventory is low and buyers are having a hard time getting anything. Real estate is always local.

 

[TheSperminator]

I wouldn't unless you are very well informed or have insider info.They go up and down at the drop of a hat.

I forgot to mention, government bonds are a great long term investment as well.No risk and fairly high returns.

Well, the no risk part .. If you look at Greece, Spain, Italy, etc.

Bonds from emerging markets are a good option nowadays ..

 

[not2big]

US interest rates are starting to increase. Accordingly, the value of US bonds will start to decline as we go forward. The value of a quality bond will not be diminished by the time it is ready to mature (10, 15, 30 years, etc.); however, if you need to sell them prior to maturity, you will loose value. Right now, if you are interested in bonds as a short term investment, you should be looking at short maturity dates. Bond funds with short average maturity dates are also not a bad idea.

 

[Bnip]

There is some good advice on here and some that is a bit sketchy. This is my job so I will give my 2 cents. The following is in no way a recommendation to buy or trade on the information given. Investing is risky so do your own research before investing. (There you go FINRA...that was my disclosure)

Diversification

Everyone thought diversification would prevent you from losses when the stock market would fall. How did that work for you in 2008?

Asset Class Diversification.... Most people were or are diversified among one asset class...such as mutual funds or stocks...These have no downward floor when the market drops unless you are using options and a few other advanced strategies that the general public doesn't know. So in 2008, people lost their ass because they weren't completely diversified.

Different Asset Classes

Stocks, Bonds Mutual Funds
Managed Funds
Annuities
REITS
Precious Metals
Land
Home owning/renting
CDs,Money Market
etc.

Ex: Not diversified among asset classes...Small Cap, Mid Cap, Large Cap, International, Tech, Google, Apple, Ford...This is diversification among one asset class.

Diversified among asset classes....Managed Funds, Fixed Indexed Annuity (not variable because its separate account is only the above mentioned),Non-Traded REIT,Money Market

The managed funds are invested in mutual funds, stocks and bonds... They are managed by a professional that should have an options hedge for downward pressure. This will limit losses to lets say 5%. FIA work as follows..when the market drops you don't lose a penny, when the market goes up, you get a portion of the gains. Non-Treaded REITS (Alternative Investments)-They may be invested in lets say storage units across the country. They take a pool of small investors and lump the money together to buy and sell Storage units across the country as a large investor would. They typically pay a dividend around 7% and each share is 10 bucks and since its not traded, it remains at 10. When the markets drop, these investments typically aren't affected because people still pay rent to these types of investments. Then you need your emergency money...cash, savings, money market for emergencies. This is diversification among asset classes.

Some classes will be negative but the other classes will help off set those losses. So instead of losing 30-50%, you may lose 5% or even 0.

Accumulation vs Income Phase

Accumulation is when we all make our money and use more risk. But the same principles cant be used when we transfer to the income phase. That is taking your nest egg and finally turning it into income. Like someone said above...when you invest regularly in the MARKET you buy low more often then you buy high and over time you will acquire more money. However, if you use the same principles in the MARKET while in retirement....YOU TAKE MORE MONEY OUT LOW MORE OFTEN THEN YOU DO WHEN IT IS HIGH. This can devastate your portfolio in retirement. Again, this is when asset diversification comes into play. Realize there are two different periods in your life. You obviously want to play it safer and be less invested in the market the older you get

I could go on and on, but I may lose some people. We can talk about taxes or using life insurance as investments, the different types of annuities and when to use them, fees, indexing, etc. The bottom line...educate yourself before you invest. Its your money. People near retirement, talk to a retirement advisor or educate yourself on the shift into retirement. Young people...start now and educate yourself on general investment. You will be surprised how fast you can pick it up.

I am a registered investment advisor, insurance agent and stock broker which means I can buy and sell any investment out there. I am not pushing a specific type of investment. This is as unbiased as it gets. Not all investments are bad, most people use them in the wrong way. Thanks for hearing me ramble

 

[camaro]

Please ramble on.

 

[TheSperminator]

Please ramble on.

+1

 

[arkham]

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[namsokiek]

Arkham, really good advice has already been posted. Anything else, for example specific stocks to invest, will not come or be bad advice. Referencing my previous post, if your have already done Poland's equivalent of 1-3 or they are not available, then do 4. Research some companies on the list and buy into one.

 

[Bnip]

Media Market vs Market

I sat in an interesting call today talking about the perceived market through the media and the REAL market.

The media portrays the market as essentially the S&P and the DOW. If those indexes went up 5% after listening to the media, people believe they should have gained 5% today. The media likes to talk about these two right now because the S&P is up 15% this year and out performing any index out there. It is a hell of a year for the S&P. However, very few people are invested exclusively in one index. They are diversified among many. They have emerging markets,international, precious metals, gas and oil trading in their portfolios.

So it is important to understand that up or down, your portfolio will not mimic those indexes unless you are exclusively invested in one. The S&P is used as a bench mark to see how the US is doing but I am sorry but this isn't the 80 and 90s anymore. The US is not the market!

The world is the MARKET. More then ever, people are looking away from the US and investing in other countries and companies across the world. Their portfolios change constantly and the US is not always the meat of the portfolio. When comparing ROR to your own portfolio or a money manager....understand that the S&P is not the whole picture anymore... It is part of the picture. Don't be fooled and assume your portfolio is up just because the S&P and DOW are up. Know what is in your portfolio and measure accordingly.

Right know the World Economy/World Market is like this.....

A 4 engine plane U.S. China, Japan, Europe.

The US is moving along and every once an a while we hit a bump and we may see the rpms fall a bit but shortly the engine is running fine. (Until Bernake pulls back E3

China's is similar except China's rpms drop more and stay dropped a bit longer. Yes they are trying to slow their economy down, but China is a very young economy and they are experiencing issues and there are many more to come for that nation. (labor laws, pollution, wages,etc)

Japan has been smoking bad for years and years and until recently we werent sure if they were going to catch on fire. But they have actually reduced the smoke coming from the engine as of late.

Europe is on FIRE! They keep postponing issues that needs to be addressed now. Kicking the can down the road will bite you in the ass hard...(US needs to pay attention to how this is handled or we might suffer the same fate down the road)

4 economies at this time flying the plane. It isn't a smooth ride but the world market is holding its own. I didn't mention Brazil or India and a few others because at this time they don't have as much pull as the big 4. They are doing well and will be a force to be reckoned with.

So from here on out think of the market as a global force not a national market anymore. Understand that just because one received a negative or positive doesn't mean your portfolio should suffer the same fate.

Again, I dont try to come across as a know it all but rather I would like to share some of the in the industry's topics and tools to people who actually care about their retirement.

 

[stealth114]

This is a great thread and I know as an individual you learn as time goes by. These are skills and knowledge set that you dont learn in school. You go to school, get a degree, work for your life but it is also imperative to have your money work for you 24/7. Anyone can recommend various resources so youngsters like myself can gain the incite over time on how to continue being secure . Thank you so much for all the invaluable info !

 

[TheSperminator]

@Bnip: what are your thoughts on trading and trying to make a profit out of algoritms?

Softwares that calculate and predict algoritms and automatically buy at low and sell at high points .. A friend of mine is investing in that way at the moment. His starting budget was 15000 euros and now he's at 17000 euros. In only 2 months ..

Luck?

I study investing btw but I'm not that familiar with all the English terms of some products.. Let me know what you think!