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Old 01-24-2009, 09:04 AM   #21
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This has nothing to do with the 1970's. It rhymes more with the 30's, but will be it's own variation (not nearly as bad). People must love inflation though, because they keep predicting it!

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I hope you guys are right and it is 1974 all over again. In Dec '74 the Dow was 570 and peaked in Sep '76 at 1025 which was an 80% gain.
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Old 01-24-2009, 10:03 AM   #22
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Let me know when the 80% gain begins, so I can RE then. Meanwhile I'll just keep DCAing into cheap stocks.
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Old 01-24-2009, 10:14 AM   #23
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I think that if the Federal budget deficit really does approach the 2 trillion people are suggesting, we are going to see that inflation sooner rather than later.

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This has nothing to do with the 1970's. It rhymes more with the 30's, but will be it's own variation (not nearly as bad). People must love inflation though, because they keep predicting it!
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Old 01-24-2009, 11:28 AM   #24
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Perfect! I started investing in 2000, and would like to retire around 2020. If those predictions hold true (new expansion phase starting in 2016-2018), then I will have invested my money at the best time (during a secular bear market) and retired at the best time too (at the beginning of a new secular bull market). Off course, first, I have to survive Kondratieff's phase 4 (depression)...
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I'm with the "that would be perfect!" crowd in regards to the anticipated timing of our retirement.

As long as the wife and I can stay employed with an income high enough to continue saving aggressively thru what later proves to be the downpoint of a cyclical economic wave it should prove to be a positive thing down the road.
True. People still working are accumulating cheap equities. Then, as you will live into your 80s and 90s, chances are you will see another downturn like this one. So, be prepared. Will you know to go to all cash next time?

Another point to ponder is that with gummint intervention all around the globe, will their action shorten the business cycle length? I'd vote for that, as I don't want to become too old to take 3 european trips a year as I did in the last market bull run.
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Old 01-24-2009, 11:48 AM   #25
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I think that if the Federal budget deficit really does approach the 2 trillion people are suggesting, we are going to see that inflation sooner rather than later.
I just hope my portfolio re-inflates with real dollars first. After that, I could probably tolerate some normal inflation.

It would be heaping insult onto injury to lose 20-40% of ones' savings only to "recover" with dollars that are worth 20-40% less (or worse, for ones' portfolio to not recover and have the reduced total be transformed into worthless dollars too!).
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Old 01-24-2009, 11:51 AM   #26
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...have the reduced total be transformed into worthless dollars too!.
A sobering thought! Just as I tried to inject some positive spin into the situation.
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Old 01-24-2009, 12:02 PM   #27
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A sobering thought! Just as I tried to inject some positive spin into the situation.
Sorry. We're all in this together. I vote for that proverbial "V"-shaped recovery, even if it's a little tardy, with governments and nations world-wide coming out ahead. Yes, that will do just fine!
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Old 01-24-2009, 12:33 PM   #28
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True. People still working are accumulating cheap equities. Then, as you will live into your 80s and 90s, chances are you will see another downturn like this one. So, be prepared. Will you know to go to all cash next time?
But of course!

The way I figure it out, if you go by the secular bull/ secular bear market cycle trend, then I'll accumulate cheap equities until say 2020, then retire, enjoy a nice bull market until say 2035. By then I'll be 60 and so rich that most of my money will be in bonds, so by the time the next secular bear market rolls around the corner, I'll be mostly out of the market! No need to time the market exactly... Voila!
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Old 01-24-2009, 04:28 PM   #29
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Being a bit older than you, I don't know if I will be around when you turn 60 to see your market maneuvers. Do we know if this thread can still be looked up to reference, or if this Web site still exists?

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Old 01-24-2009, 04:40 PM   #30
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I read most if not all the threads on the economy and such on here. Seems like the figure for total Mortgages outstanding is $10 trillion. The delinquency rate for mortgage loans on one-to-four-unit residential properties stands at 6.99 percent of all loans outstanding.

Now it seems that it was delinquencies in Residential properties that got us into this problem. With the $1 trillion dollars government is proposing to spend, seems like we could buy up all the properties in trouble, and then a few more just for fun! I hear that this is the worst depression since the Great Depression..... well I don't hear any economist saying it but hey, all the talking heads are so it must be true! We have a 7% unemployment rate... worst since... well the 1980! Not even as bad as 1974 yet.

IMHO, this is a reason for Congress to do what it likes to do. SPEND MONEY, not your and my money, no your and my grand kids money! For me the major problem is consumer spending stopped, because they got scared! What is going to start them spending again? I don't know. My guess, is we will start seeing 'Good' news in six months to a year and things will turn. All ready reports in the Houston paper about how oil companies are beginning to get credit back.
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Old 01-24-2009, 09:16 PM   #31
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Compare the total credit deflation to the federal spending. Hint, imagine Ben Bernanke as a boyscout peeing into a forest fire.

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I think that if the Federal budget deficit really does approach the 2 trillion people are suggesting, we are going to see that inflation sooner rather than later.
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Old 01-24-2009, 09:20 PM   #32
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I think that if the Federal budget deficit really does approach the 2 trillion people are suggesting, we are going to see that inflation sooner rather than later.
It's already there (2 trillion), you can take that to the bank....umm..bad choice of words.
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Old 01-25-2009, 06:52 AM   #33
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For me the major problem is consumer spending stopped, because they got scared! What is going to start them spending again? I don't know. My guess, is we will start seeing 'Good' news in six months to a year and things will turn. All ready reports in the Houston paper about how oil companies are beginning to get credit back.
A summer of $4 a gallon of gas and $5 a gallon diesel fuel might have had something to do with slowing or stopping consumer spending. We seem to forget that prior to fall's market race to the bottom we had an oil shock.

Seems to me there is a trend here '73 - '74 oil shock followed by hard times, '79 - '80 oil shock, followed by hard times, 2008 oil shock followed by hard times. I am not much of a market timer but I think next time there is an oil shock that should be an indicator to go to cash.
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Old 01-25-2009, 08:42 AM   #34
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I agree, however, the consumer was still spending. They were just spending on transportation, rather than entertainment. They were not, as I remember, fearful of loosing their jobs.

I do completely agree that the oil shock of the 70's was a primary cause for the slow down in the economy and high inflation that followed. The oil shock of 08 was fairly short but may have led to the financial crisis as it could have been one of the causes for the bad real estate mortgages. However on that thought, I can't help but go back to the guy in CA that made less than $25,000 a year and bought a $750,000 home, no money down. There was certainly something more going on there.
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Old 01-25-2009, 12:00 PM   #35
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The CW would tell us that the older you are, the more devastating any loss. Why? Because the recovery time is short.
Just griping about the writing here: if "...the recovery time is short" then that's good. If the market recovers in a short period of time, the retiree will be fine.

Does Burns mean "Because the retiree only has a short period of time available to wait for a recovery?" I think that's what he means, but that's not what he says.
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Old 01-25-2009, 12:06 PM   #36
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Ok I'll bite. So does this mean we can expect about 14% return in the next four years, per the article? Is that annually or total for the 5 years?
Annually.
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Old 01-25-2009, 02:16 PM   #37
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Sigh.

I'm of a mind that there are too many random, interconnected influences, from the tiny to the gargantuan, on the world economy, to allow generalization from the 1930's, the 1970's, or any other period. The time we are in is unique to itself, and will play out accordingly.

I wish I could believe otherwise, since that might allow me to grasp at some theory that'll tell me what to do next about my family's finances. The fact is, I have no more clue than I did at age 21. All I can do is hope the time-honored strategies that I already knew about back then (work hard, LBYM) and learned about years later (DCA) won't be undone by some unpredictable event, or set of well-meant policies.

Wait, they already have been undone to some extent.

Amethyst, feeling discouraged. (I think I need chocolate).
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6.99 percent in default could mean just a few payments missed!
Old 01-25-2009, 02:48 PM   #38
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6.99 percent in default could mean just a few payments missed!

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Originally Posted by Rustic23 View Post
I read most if not all the threads on the economy and such on here. Seems like the figure for total Mortgages outstanding is $10 trillion. The delinquency rate for mortgage loans on one-to-four-unit residential properties stands at 6.99 percent of all loans outstanding.

Now it seems that it was delinquencies in Residential properties that got us into this problem. With the $1 trillion dollars government is proposing to spend, seems like we could buy up all the properties in trouble, and then a few more just for fun! I hear that this is the worst depression since the Great Depression..... well I don't hear any economist saying it but hey, all the talking heads are so it must be true! We have a 7% unemployment rate... worst since... well the 1980! Not even as bad as 1974 yet.

IMHO, this is a reason for Congress to do what it likes to do. SPEND MONEY, not your and my money, no your and my grand kids money! For me the major problem is consumer spending stopped, because they got scared! What is going to start them spending again? I don't know. My guess, is we will start seeing 'Good' news in six months to a year and things will turn. All ready reports in the Houston paper about how oil companies are beginning to get credit back.
Your math is correct. Remember also that just because a mortgage is in default does not mean that the value of the mortgage is now $0.

If someone gets sick or loses a job they may be five payments behind. The mortgage is in default. Let's say it is a $500,000 mortgage with a $4,000 monthly payment. It would only take $20,000 to bring everything back to OK.

The "bailout" has nothing to do with sub-prime mortgages.

[Insert Kool-Aid comment here]
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Old 01-25-2009, 02:48 PM   #39
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Amethyst, feeling discouraged. (I think I need chocolate).
What's a girl to do?



Here, no calories!
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Old 01-25-2009, 03:28 PM   #40
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What's a girl to do?



Here, no calories!
Hmmm, could be a good time to buy some shares of HSY (Hershey)!
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