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Re: Low interest rates
Old 11-29-2004, 07:04 PM   #21
 
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Re: Low interest rates

Hey brewer.............I don't care what equities will
"probably" do. Not a bit. Just taking the GMAC example,
unless they default (or call the bond) I get 7% in a
monthly check for 20 years. Maybe we won't have inflation. Maybe I'll be dead. Maybe other
investments won't get close to 7% in the next 5 years. Does not matter. What
I want is a predictable cash flow EVERY month.
I wouldn't touch any publically traded common stock
with your ten foot pole either. I can not understand why retired folks with a small pile still invest in common
stocks. I do appreciate your
input. We'll just have to agree to disagree.

John Galt
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Rating-agency politics
Old 11-30-2004, 08:03 AM   #22
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Rating-agency politics

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Is this something to worry about?
Maybe, but it could also mean that GMAC paid S&P instead of Moody's to evaluate their bonds...
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Re: Low interest rates
Old 11-30-2004, 08:58 AM   #23
 
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Re: Low interest rates

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I have COLA'd SS and 50% of my net worth in real estate. I am still waiting to hear SOMETHING
concrete to show me the error of my ways.
Bring it on!
You're right, you are protected by inflation with the 50% in Real Estate.

However, if you are looking for safety, most all financial experts agree that the Real Estate is more risky than a Well Diversified Portfoilo of Stock Mutual Funds.

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Re: Low interest rates
Old 11-30-2004, 02:32 PM   #24
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Re: Low interest rates

Quote:

You're right, you are protected by inflation with the 50% in Real Estate.

However, if you are looking for safety, most all financial experts agree that the Real Estate is more risky than a Well Diversified Portfoilo of Stock Mutual Funds.
Maybe the "experts" agree but in a real melt-down, the real-estate could be a lot more useful. Everyone needs a place to live and a way to get food. A computer entry somewhere that says you "own" a stock index fund might only be good for laughs in some extreme situations...unlikely though that might be
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Re: Low interest rates
Old 11-30-2004, 02:57 PM   #25
 
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Re: Low interest rates

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Maybe the "experts" agree but in a real melt-down, the real-estate could be a lot more useful. Everyone needs a place to live and a way to get food. *A computer entry somewhere that says you "own" a stock index fund might only be good for laughs in some extreme situations...unlikely though that might be *
Risk is not measured only by a 'Melt Down'. Owning 1 stock that goes bust when the economy is doing fine is an example.

Owning Real Estate is like owning one stock. Your real estate could be in a Flood Plain, in a Crack neighborhood or if you are really lucky in an area of very high demand and skyrocketing prices.

I'm not sure what you call a 'Melt Down', but if it's a depression style meltdown, most real estate depreciated to gut wrenching lows during the early 1930's also.

Real Estate is higher on the 'Risk Scale' than Stocks. - Mostly because of Low Liquidity. Also since everyone seems to 'Love' real estate right now, I'll be a Contrarian and 'Love' Stocks.
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Re: Low interest rates
Old 11-30-2004, 04:16 PM   #26
 
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Re: Low interest rates

Hi Cut-Throat! I have "loved" real estate forever,
whereas my dalliances with common stocks convinced
me long ago of their fickle nature. Anyway, real estate
is a lover who never let me down. (there is a metaphor with personification cleverly included ). Any problems I have had with real estate
were strictly my fault.

John Galt
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Re: Low interest rates
Old 11-30-2004, 08:04 PM   #27
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Re: Low interest rates

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I'm not sure what you call a 'Melt Down', but if it's a depression style meltdown, most real estate depreciated to gut wrenching lows during the early 1930's also.
My main point was that no matter how depressed real estate values might become, one can still live in it or plant crops on it etc. It has intrinsic value, unlike a stock certificate which is just paper, or even cash for that matter. It isn't diversified, but then it's utility does not depend upon the whims of Mr. Market. This is a somewhat unique attribute. So, in a severe crash I could still be eating while you contemplate a ruined portfilio. I think it depends how you define risk.
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Re: Low interest rates
Old 11-30-2004, 10:30 PM   #28
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Re: Low interest rates

Quote:
My main point was that no matter how depressed real estate values might become, one can still live in it or plant crops on it etc. It has intrinsic value, unlike a stock certificate which is just paper, or even cash for that matter.
Your "ownership" of that land is nothing more than a "piece of paper" too. Particularly in some of the "doomsday" scenarios that those advocating mason jars of gold coins are worrying about.

Look at the land issues in places like the Phillipines or Nicaragua under the right wing dictatorships they used to have (both sponsored by the US no less). Ownership of the land by "common people" was meaningless and anybody in the inner government circle or foreign companies (generally US companies) could have it for the asking.

Even in a more mundane "doomsday scenario" you're still going to be needing to pay those property taxes.
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Re: Low interest rates
Old 11-30-2004, 11:59 PM   #29
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Re: Low interest rates

Bravo JG,stick with what you know.Id have to say demographics are on your side,location location location is prime concern.but then with your experience Im sure you probably heard that when i was sneakin beers illegally.Everyone has a different risk tolerance.Ask any ENE,WCOM bag holders.I wonder, was this board in exhistence around 3/2000?How many are still holding paper stocks from the wonderfull downdraft years?Theres a piece of mind that comes with tangibles.Enjoy-ak
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Re: Low interest rates
Old 12-01-2004, 06:03 AM   #30
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Re: Low interest rates

Quote:
Hey brewer.............I don't care what equities will
"probably" do. *Not a bit. *Just taking the GMAC example,
unless they default (or call the bond) I get 7% in a
monthly check for 20 years. *Maybe we won't have inflation. *Maybe I'll be dead. *Maybe other
investments won't get close to 7% in the next 5 years. *Does not matter. *What
I want is a predictable cash flow EVERY month.
I wouldn't touch any publically traded common stock
with your ten foot pole either. *I can not understand why retired folks with a small pile still invest in common
stocks. *I do appreciate your
input. *We'll just have to agree to disagree.

John Galt

Fair enough. Good luck with your GMAC bonds.
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