Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Re: Feeling dumb and poor as the market goes up?!
Old 11-17-2006, 10:55 AM   #61
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
FinanceDude's Avatar
 
Join Date: Aug 2006
Posts: 12,484
Re: Feeling dumb and poor as the market goes up?!

Quote:
Originally Posted by dmpi
"Real Work". That's the part I don't like about RE. I have a j*b. I don't need another. Also are the tax issues the same? I've heard that once you go RE you can only trade up or down with like property (more RE), or going to get a big tax hit. Is that ture?
Well, there's the "magic of 1035" and the reality of capital gains..........

Not a huge tax hit, only long-term cap gains rates..........

However, if you got the propert for $100,000 and sold it for $800,000.......that's 15% of $700,000 or MORE than you paid for it to begin with...........
__________________

__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)


This Thread is USELESS without pics.........:)
FinanceDude is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Re: Feeling dumb and poor as the market goes up?!
Old 11-17-2006, 11:13 AM   #62
Recycles dryer sheets
 
Join Date: Apr 2006
Posts: 190
Re: Feeling dumb and poor as the market goes up?!

There are always reasons for the market doing things. They are always quoted after the market does them.

From 2003, coming off the crash of 2000, there was rebound. Then taxcuts kicked in and fueled further advance -- though 2004 and 2005 were 5% and 10% increases -- which are numbers that are hard to call irrational exuberance.

Now, since the May correction this year (of about 8-10%), we have oil falling -- dare I say collapsing -- and still falling. Fuel for the fire.

It's real easy to explain what happened. It's always easy to explain what happened.

Oh, and one of the more difficult things to accept is a somewhat fundamental truth -- that there is little or no benefit to 20 or 30 years worth of observations made of a process that is largely random. There's nothing to be learned from experience with a random process.
__________________

__________________
modlair is offline   Reply With Quote
Re: Feeling dumb and poor as the market goes up?!
Old 11-17-2006, 11:23 AM   #63
Full time employment: Posting here.
Patrick's Avatar
 
Join Date: Mar 2005
Location: Northern, Florida
Posts: 925
Re: Feeling dumb and poor as the market goes up?!

Quote:
Originally Posted by rodmail
Oh, and one of the more difficult things to accept is a somewhat fundamental truth -- that there is little or no benefit to 20 or 30 years worth of observations made of a process that is largely random. There's nothing to be learned from experience with a random process.
Why do we have all these "Monte Carlo" simulations and backtesting? Some people say that it's a "random walk" yet others say there's "persistence." Is it just a best guess as to what will happen in the future?
__________________
Retired in 2006 at age 49.

"Who among us is smart enough to learn from the mistakes of others?" - Voltaire
Patrick is offline   Reply With Quote
Re: Feeling dumb and poor as the market goes up?!
Old 11-17-2006, 11:34 AM   #64
Thinks s/he gets paid by the post
wabmester's Avatar
 
Join Date: Dec 2003
Posts: 4,459
Re: Feeling dumb and poor as the market goes up?!

Quote:
Originally Posted by mathjak107
i dont believe returns on real estate overall came even close to the return on stocks. real estate in most areas averaged only a point or 2 above inflation historically.
You're confusing capital appreciation with returns. Rent = dividends.

Here's a study on the long-term returns from real estate:

thread
__________________
wabmester is offline   Reply With Quote
Re: Feeling dumb and poor as the market goes up?!
Old 11-17-2006, 11:37 AM   #65
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
FinanceDude's Avatar
 
Join Date: Aug 2006
Posts: 12,484
Re: Feeling dumb and poor as the market goes up?!

Quote:
Originally Posted by wab
You're confusing capital appreciation with returns. Rent = dividends.

Here's a study on the long-term returns from real estate:

thread
Stocks: capital appreciaton and dividends

RE: capital appreciation, rent, deductible mortgage interest, deductible capital improvements, etc, and on, and on............
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)


This Thread is USELESS without pics.........:)
FinanceDude is offline   Reply With Quote
Re: Feeling dumb and poor as the market goes up?!
Old 11-17-2006, 12:14 PM   #66
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
dex's Avatar
 
Join Date: Oct 2003
Posts: 5,105
Re: Feeling dumb and poor as the market goes up?!

I haven't been able to keep up with this thread because I was closing on the new house, moving in and spending money!

I do have a plan for my investments it is a bit daunting trying to put so much money to work.

My plan is to set up the funds I will invest in and then average into the market over then next year of so.

Once I have the basic funds set up I'll post them here.

I'm had a large percentage of my money in foreign currencies due to the good interest rate I'm getting and the potential for foreign currency appreciation. I think that will happen once the Fed begins to lower interest rates - timeframe early to mid next year.

Thanks for the comments - we all need a kick in the but sometimes.
__________________
Sometimes death is not as tragic as not knowing how to live. This man knew how to live--and how to make others glad they were living. - Jack Benny at Nat King Cole's funeral
dex is offline   Reply With Quote
Re: Feeling dumb and poor as the market goes up?!
Old 11-17-2006, 01:48 PM   #67
Thinks s/he gets paid by the post
tryan's Avatar
 
Join Date: Mar 2005
Posts: 2,449
Re: Feeling dumb and poor as the market goes up?!

Quote:

Also are the tax issues the same? I've heard that once you go RE you can only trade up or down with like property (more RE), or going to get a big tax hit. Is that ture?
Capitol gains are now taxed the same whether it's stocks or property (got to hold it a year for the 15% rate). Thanx to GWB. That's federal ... state level might vary.
__________________
FIRE'd since 2005
tryan is offline   Reply With Quote
Re: Feeling dumb and poor as the market goes up?!
Old 11-17-2006, 01:57 PM   #68
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
donheff's Avatar
 
Join Date: Feb 2006
Location: Washington, DC
Posts: 8,642
Re: Feeling dumb and poor as the market goes up?!

Quote:
Originally Posted by rodmail

Oh, and one of the more difficult things to accept is a somewhat fundamental truth -- that there is little or no benefit to 20 or 30 years worth of observations made of a process that is largely random. There's nothing to be learned from experience with a random process.
I don't think anyone argues that the market is completely random. If that were the case, there would be no long range upward trend. It could be expected to as likely trend down an average of 10%/yr over a 40 year period as to trend up 10% over that period. Complete randomness would do away with the concept of "stocks for the long term." True randomness would make equities a fool's game and almost all of us fools.
__________________
Every man is, or hopes to be, an Idler. -- Samuel Johnson
donheff is offline   Reply With Quote
Re: Feeling dumb and poor as the market goes up?!
Old 11-17-2006, 07:43 PM   #69
Thinks s/he gets paid by the post
FIRE'd@51's Avatar
 
Join Date: Aug 2006
Posts: 2,315
Re: Feeling dumb and poor as the market goes up?!

Quote:
Originally Posted by donheff
I don't think anyone argues that the market is completely random. If that were the case, there would be no long range upward trend. It could be expected to as likely trend down an average of 10%/yr over a 40 year period as to trend up 10% over that period. Complete randomness would do away with the concept of "stocks for the long term." True randomness would make equities a fool's game and almost all of us fools.
You can have a random process with a non-zero mean. That's what the EMH is all about.
__________________
I'd rather be governed by the first one hundred names in the telephone book than the Harvard faculty - William F. Buckley
FIRE'd@51 is offline   Reply With Quote
Re: Feeling dumb and poor as the market goes up?!
Old 11-17-2006, 07:53 PM   #70
Thinks s/he gets paid by the post
Sheryl's Avatar
 
Join Date: Apr 2004
Posts: 1,459
Re: Feeling dumb and poor as the market goes up?!

Quote:
Originally Posted by FinanceDude
Well, there's the "magic of 1035" and the reality of capital gains..........
Did you mean 1031?
__________________
Sheryl is offline   Reply With Quote
Re: Feeling dumb and poor as the market goes up?!
Old 11-18-2006, 03:39 AM   #71
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2005
Posts: 5,412
Re: Feeling dumb and poor as the market goes up?!

stocks trend almost randomly daily but the longer you go out the more the trend is up. 2/3 of the time in fact stocks are up. thats far more than random. thats why market timing is sooooo hard, the house is stacked against you catching a downturn just right
__________________
mathjak107 is offline   Reply With Quote
Re: Feeling dumb and poor as the market goes up?!
Old 11-18-2006, 11:51 AM   #72
Thinks s/he gets paid by the post
FIRE'd@51's Avatar
 
Join Date: Aug 2006
Posts: 2,315
Re: Feeling dumb and poor as the market goes up?!

Quote:
Originally Posted by mathjak107
stocks trend almost randomly daily but the longer you go out the more the trend is up.
That's because the mean of the distribution (i.e., the return) increases linearly with time, while the standard deviation (volatility) increases with the sqare root of time. Thus, the ratio (return/volatility) increases with the square root of time.

Quote:
Originally Posted by mathjak107
2/3 of the time in fact stocks are up. thats far more than random.
It can still be random. It just that the distribution is centered around a positive mean.

Quote:
Originally Posted by mathjak107
thats why market timing is sooooo hard, the house is stacked against you catching a downturn just right
I agree with you on this.
__________________
I'd rather be governed by the first one hundred names in the telephone book than the Harvard faculty - William F. Buckley
FIRE'd@51 is offline   Reply With Quote
Re: Feeling dumb and poor as the market goes up?!
Old 11-18-2006, 01:46 PM   #73
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2005
Posts: 5,412
Re: Feeling dumb and poor as the market goes up?!

oooooooooooh baby i love that talk.
__________________
mathjak107 is offline   Reply With Quote
Re: Feeling dumb and poor as the market goes up?!
Old 11-18-2006, 02:46 PM   #74
Thinks s/he gets paid by the post
FIRE'd@51's Avatar
 
Join Date: Aug 2006
Posts: 2,315
Re: Feeling dumb and poor as the market goes up?!

__________________
I'd rather be governed by the first one hundred names in the telephone book than the Harvard faculty - William F. Buckley
FIRE'd@51 is offline   Reply With Quote
Re: Feeling dumb and poor as the market goes up?!
Old 11-19-2006, 08:22 AM   #75
Recycles dryer sheets
 
Join Date: Jul 2006
Posts: 151
Re: Feeling dumb and poor as the market goes up?!

Quote:
Originally Posted by wab
Exactly! Why do people dis real estate investors and then pimp stock investments as superior? Stocks are less stable and less predictable than real estate, yet the historical returns are very similar.
Good question. I have seen over and over where equity hawks compare the returns of equities and real estate. They usually (tee hee :) omit the income component of the real estate return, preferring instead to reference data pertaining to the rate of appreciation (only) of single family homes. Now generally, these are not stupid people, so why do they resort to such chicanery?

Perhaps it is because they realize that no one actually has to own equities. The demand for such investments therefore has to be created and maintained artificially. It helps if you can perpetuate the fiction that "stocks outperform all other asset classes" (yawn) or that real estate is too illiquid or too much work. It is the very liquidity of stocks that allows many investors to take actions which are contrary to their own best interests. Of course the idea that unlimited riches are available without requiring any effort has always had broad appeal.

I don't own equities but I don't care if others do. I don't mind if the equity hawks like to downplay the attractiveness of real estate and hype the (mostly theoretical) returns available from stocks. I don't need the competition. My temperament is not well suited to equities. My real estate activities have always been more productive for me. I marvel at the machinery in place to convince the average Joe that ownership of equities is the only hope they have for a solvent retirement. I don't believe it though . . . . and I have this persistent niggling feeling that in the time frame of the boomers retirements, that equities are going to be a major dissappointment. I like the idea that real estate has real value and utility no matter what happens to the capital markets.

I hope that equities perform well, but good or ill, the gyrations of the equities markets are for me just a matter of passing interest.
__________________
Hellbender
hellbender is offline   Reply With Quote
Re: Feeling dumb and poor as the market goes up?!
Old 11-19-2006, 10:37 AM   #76
Moderator Emeritus
Nords's Avatar
 
Join Date: Dec 2002
Location: Oahu
Posts: 26,617
Re: Feeling dumb and poor as the market goes up?!

Quote:
Originally Posted by hellbender
I don't own equities but I don't care if others do. I don't mind if the equity hawks like to downplay the attractiveness of real estate and hype the (mostly theoretical) returns available from stocks.
I don't need the competition. My temperament is not well suited to equities. My real estate activities have always been more productive for me. I marvel at the machinery in place to convince the average Joe that ownership of equities is the only hope they have for a solvent retirement. I don't believe it though . . . . and I have this persistent niggling feeling that in the time frame of the boomers retirements, that equities are going to be a major dissappointment. I like the idea that real estate has real value and utility no matter what happens to the capital markets.
I hope that equities perform well, but good or ill, the gyrations of the equities markets are for me just a matter of passing interest.
I think it should be acknowledged that some people are more comfortable with stocks and others are more comfortable with real estate. I think it's certainly better to focus on why RE works for you-- and less on why stocks shouldn't work for the rest of the world. Just because stocks don't work for some people is no reason that they should work for others-- or won't. And just because RE works for someone is no reason that it should work for everyone. Your fears over boomer retirement vs the equity markets are no more rational (or irrational) than others' fears over the overbuilt & overhyped RE markets.

How it's said makes all the difference. In your quoted paragraph, try replacing "equities" with "gold" or "beaver ch33ze futures" or "real estate" and see if you're objectively analyzing an asset class or just using pejorative terms to try to lessen its credibility. While you marvel at equity-marketing machinery, I marvel at the companies marketing NNN leases with TIC ownership boosted through 1035 exchanges. I wish more of them were publicly traded because I'm sure that their stocks would be zooming on the hype.

RE is an asset, and so are corporations who own hard assets (even RE) or cash flows. Those assets can be held in good places or in bad places, and they'll all go through periods of undervaluation, downright fear, and irrational exuberance. I suspect that their value over time will largely go up.

I think that I understand stocks and I understand real estate, and I choose to own both. I haven't done much work on gold or beaver ch33se futures or options, so I don't think that I'm ready to compete for my future in those arenas... especially when the surf's up. What doesn't make much sense to me is avoiding an asset class just because it's populated by hucksters... and then casting aspersions on those who do own it.
__________________
*
*

The book written on E-R.org, "The Military Guide to Financial Independence and Retirement", on sale now! For more info see "About Me" in my profile.
I don't spend much time here anymore, so please send me a PM. Thanks.
Nords is offline   Reply With Quote
Re: Feeling dumb and poor as the market goes up?!
Old 11-19-2006, 01:41 PM   #77
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
kcowan's Avatar
 
Join Date: Jul 2006
Location: Pacific latitude 20/49
Posts: 5,717
Send a message via Skype™ to kcowan
Re: Feeling dumb and poor as the market goes up?!

Quote:
Originally Posted by Nords
... What doesn't make much sense to me is avoiding an asset class just because it's populated by hucksters... and then casting aspersions on those who do own it.
I think it is an indication of uncertainty in the choices being made. I have experienced it in other areas such as where I live and whether I am married with children. People often need to undermine the reasons why I made the choices that I did in order to reinforce their own different choices. It takes a high degree of confidence in one's own direction to be able to accept that other's choices make sense for them when they are dramatically different.

I have known many people who are comfortable with real estate because it seems more tangible to them than stocks. In some of my small cap holdings, I have visited the company and talked to the CEO and his team. This makes the investment more tangible to me. But it also makes me less objective about the holding.

So recognizing this lack of objectivity, I can relate to others who also display lack of objectivity about other classes of investment. It is helpful to review this definition of huckster:
Quote:
Originally Posted by Wikipedia
A huckster is a seller of small articles, usually of cheap or shoddy quality, or one engaged in haggling or making petty bargains, that is, a certain type of peddler or hawker.
to gain a better appreciation of the thinking of the person that uses it. This is not intended as a slight against any of our fellow posters here but simply an attempt to understand the causes of certain human behaviour.
__________________
For the fun of it...Keith
kcowan is offline   Reply With Quote
Re: Feeling dumb and poor as the market goes up?!
Old 11-20-2006, 10:48 AM   #78
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
FinanceDude's Avatar
 
Join Date: Aug 2006
Posts: 12,484
Re: Feeling dumb and poor as the market goes up?!

Quote:
Originally Posted by Sheryl
Did you mean 1031?
Oops.....my bad.............
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)


This Thread is USELESS without pics.........:)
FinanceDude is offline   Reply With Quote
Re: Feeling dumb and poor as the market goes up?!
Old 11-20-2006, 11:32 AM   #79
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
HFWR's Avatar
 
Join Date: May 2005
Location: Lawn chair in Texas
Posts: 12,964
Re: Feeling dumb and poor as the market goes up?!

The "1035" is a proprietary maneuver available only to clients of snake oil salesmen financial planners... :P
__________________
Have Funds, Will Retire

...not doing anything of true substance...
HFWR is offline   Reply With Quote
Re: Feeling dumb and poor as the market goes up?!
Old 11-20-2006, 12:08 PM   #80
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
FinanceDude's Avatar
 
Join Date: Aug 2006
Posts: 12,484
Re: Feeling dumb and poor as the market goes up?!

Quote:
Originally Posted by HFWR
The "1035" is a proprietary maneuver available only to clients of snake oil salesmen financial planners... :P
Really? I know for a fact that Vanguard annuities accept 1035 exchanges from most providers, so your point is

Yes, Vanguard sells annuities......funny how noone wants to comment on that on here.................

__________________

__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)


This Thread is USELESS without pics.........:)
FinanceDude is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


 

 
All times are GMT -6. The time now is 11:18 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.