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Housing Bubble Bursting?

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If things are this bad at this stage, what is going to happen when things really get bad in the 4th quarter and into 2008? The money printing presses are running full throttle but I wager can't keep up with demand.
As I said a couple hundred pages back in this thread: Deflation will be the bottom line and a 1% interest rate with 10% deflation is the same is a 9% return on cash for those who happen to have some. :flowers: You can pay me either way, upside or downside, makes no difference. Let the good times roll!
 
CASH will Talk & BS will walk, looking forward to this coming cycle.
 
I wonder how Mike S. is doing in this market?
 
Austin said:
If things are this bad at this stage, what is going to happen when things really get bad in the 4th quarter and into 2008? The money printing presses are running full throttle but I wager can't keep up with demand.
As I said a couple hundred pages back in this thread: Deflation will be the bottom line and a 1% interest rate with 10% deflation is the same is a 9% return on cash for those who happen to have some. :flowers: You can pay me either way, upside or downside, makes no difference. Let the good times roll!
Click to expand...

Would anyone care to expand on this a little? I just stumbled on this thread and backtracked through the past dozen or so pages.

I'm extremely concerned about the current state of our economy and see the house of cards swaying...and it's making me queezy.

My wife and I recently bought a house that we have some sweat equity in and a fairly decent amount of money invested in our 401k's (we grew up with very little money so once we got good jobs we continued to live poor while maxing them out)

I am admittedly young, naive and paranoid. I'm curious to hear how people feel this is playing or will play out. I was too young to understand what occurred during the S&L scandal in the 80's, but I don't see how our bankrupt government can bail us out of this situation. How badly did the economy tank during that time and how did people protect their assets?

Again, I am paranoid over here and a bad day away from cashing in my 401k with penalties, filling my mattress with cash and precious metals and fortifying my home. Not really...but almost.

Anyone care to talk me off the ledge?
 
Brian,

I am more in the chicken little camp so I'll not be the one to talk you away from this particular ledge. I know nothing about investing, so don't allow me to push you off, either.

I do know this: investment advisors have some sort of ingrained mind set about what it is exactly that constitutes a conservative investment position. You tell them what your investment goals are and they respond with their rote formula. They talk about a "third" in fixed, a "third" in value, a "third" in growth, etc.

But don't forget that they are salesmen. Their job is to sell you investments. Their understanding of the long term investment is that even really big and lengthy dips in the DOW will even out with the big gains in the long view (decades).

If they put some of your money into a "managed" account, they never look at it again. Their job is done once they have "sold" you on that manager. Their strategy is to make your accounts self-servicing so that they don't have to be bothered with re-evaluating it again, ever.

The problem with that is that a really big and really lengthy dip in the DOW is usually accompanied by some corporations going bankrupt. Money lost to those investments are never recovered in later periods of gain.

I have friends who had a "third" of their pension rollover IRA invested in tech at the peak of the dotcom bubble who saw that "third" simply vanish without their advisors ever even pretending to take another look at it.

When they retired the conventional wisdom was that historically, you never had two bad DOW years in a row. Well, surprise.

My point is, that even though people like me (and I assume you) have very little knowledge about investing, it still falls only on us as individuals to make sure we are getting the level of conservatism we really need.

You can't just allow your advisor to call the shots.

But, like I said, I'm a chicken little and have already taken my money out of all stocks and corporate bonds. Treasuries only, for me. Since I am so ignorant, I don't trust mutual funds or money market funds, either. If I can't tell what securities those funds are invested in, how can I feel safe?

I have one friend who has his life savings in money markets and he has been watching it melt away these last two weeks.

As far as I'm concerned, conventional wisdom in this arena is on suspension.
 
Brian,
My only advice to you is that always have a plan B in case if plan A didn't work. No matter what is your decision, choosing your profession or investing, you always should have a plan B in mind. Don't put all your eggs in one basket. The problem that most homeowners and lenders have today in dealing with defaults and foreclosures is because they had only one plan and that was based on home value appreciations. They didn't make a plan for home value decline. They never thought what they are going to do if home prices started to come down. don't be paranoid but be cautious and alert. Be positive but never ignore the negative and be ready for it to tackle it because it is there.
 
Thursday at 1:55 pm I sold all stocks. I didn't touch 401k cuz I can't use it for 14 yrs. I am going to wait a few months and start buying houses when and if the GRM'S make sense here in the Bay Area. I'm just to nervous about being in U.S stock market right now. Maybe I'll stick a portion in a international mutual fund. With money markets and cd's paying over %5 w/ no risk I think that's the place to be now. Anyone agree or doing something different?
 
MARK JOLLIFF said:
Thursday at 1:55 pm I sold all stocks. I didn't touch 401k cuz I can't use it for 14 yrs. I am going to wait a few months and start buying houses when and if the GRM'S make sense here in the Bay Area. I'm just to nervous about being in U.S stock market right now. Maybe I'll stick a portion in a international mutual fund. With money markets and cd's paying over %5 w/ no risk I think that's the place to be now. Anyone agree or doing something different?
Click to expand...
Cash is looking very good with this market. The dollar, depending on what the FED does and the economy going forward, may continue its decline. That will show up as inflation since we import more than we export. I would wait until January 2008 before making any new investments. That should give enough time to see how these hundreds of billions of dollars of mortgage resets play out. It also may reveal how much worse the secondary mortgage market will get. If it gets too bad, I am sure Congress will act and raise the portfolio limit on the GSEs and loan limits. It is an election year.
 
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