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Re: Too Much Savings
Old 07-27-2005, 07:24 PM   #21
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Re: Too Much Savings

Originally Posted by boont
But I am suggesting to buy and hold stocks in this unusual time is possibly not the right course of action.
Don't feel bad boont, buy and hold is nearly a religion among many of the posters here.* Though "nobody knows what is going to happen", some posters somehow seem to "know" that any other plan is folly...there's a logic problem in there somewhere, eh?* *In any case, I'm pretty sure that dissent goes over better without the attitude...

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Re: Too Much Savings
Old 07-27-2005, 10:59 PM   #22
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Re: Too Much Savings

Just to further the discussion a little bit; the numbers I have read suggest that there are about 75 million so called "baby boomers" and the oldest of this group is now approaching sixty years of age. As they do this, they are starting to inherit their parents assets. Inflated value real estate and other long time invested capital. All told this has been said to be the largest transfer of wealth in human history.

One question is, what are these inheritors going to do with this money? The early returns, I suggest, indicate that they are not putting it in the equity markets. I know from my own case and from friends they are not. Of course my immediate knowledge is only anecdotal, however, it is born out in what I read. Thus my original post. Where is this money going and where will it go in the near future? Also, why is this money and the huge surplus of world-wide business cash not going into the equity markets or traditional investments? Why is China only buying bonds and hard assets?

Greenspan says it is a conundrum that he doesn't understand. Buffet says there are no decent returns that he can see except to buy companies outright.

In this light I can understand why a frightened investor might turn to real estate. It is self protection in the best case (well located all cash purchase) foolish in the worst case (nothing down-interest only mortgage). I can also understand a foreign investor trying to protect his American dollars (as they sink in value) by buying American real estate, even at inflated prices.

Something is going on and it is big, maybe huge and some attempt to understand it is going to be useful.


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Re: Too Much Savings
Old 07-27-2005, 11:26 PM   #23
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Re: Too Much Savings

Originally Posted by boont
... [T]he markets have not been doing much for the last several years...
I think most sectors of the market have been doing very well the last 2-3 years. I had a hard time finding a Vanguard index fund that interested me that hadn't gone up a ton when I was shopping recently. If you're talking about 5 year returns, sure, lots of water-treading or slight negative movement, but recently, stocks have been doing well.

It is funny that you think the market is going to "crash". In the back of my mind, I'm concerned about overvalued stocks leading to slow stock price growth over the next 10 years or so. Stocks have gone up so much recently, that we could be near the end of the runup. I have the crash fears that you have. Of course the current runup may last another year or two or ten or 20% or 50% or 200%. Who knows. Bottom line, I'm continuing my dollar cost averaging plan regardless of "market indicators" and talking heads on tv, advice from wise posters on this board, market crashes, etc.
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Re: Too Much Savings
Old 07-28-2005, 12:39 AM   #24
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Re: Too Much Savings

Boont; first of all; your You sound like a guy that lost quite a bit of money and is making excuses. /sup] is the reason people don't take you serious. Any good argument will certainly be taken serious.
Then you quote some other people without any comment from yourself.
Then you mention than Greenspan's conundrum is about why increased liquidity does not mean more investments? I believe he used the word in connection with the strange lack of connection between long and short term bonds.

I will give you the benefit of the doubt but....

What is your investment strategy? What are you invested in today? What do you use to get in/out of the market as you did in 2000 so well? Are you retired and live of your investments? Please share a bit more - do not only bring doom-gloom theories but also some solutions (you did mention RE in your defense - anything else?).

As to the subject; over the last 5 years a well diversified portfolio have actually done just fine. The 2000 "crash" was an IT/US large cap "crash" only. The future might however see a more global crash and to have positions beyond the traditional stock/bonds might make very good sense. RE, commodities, precious metals(as a seperate from commodities) Etc.

Also it makes good sense to ensure that one is well diversified currency wise - in the good old days it was easy to stick with home country currencies, but with our more global world, many of our nessesities (not just champagne and German cars ) are made/paid elsewhere before we buy them.

There is also a risk that oil/other commodities might be priced in a basket of currencies in the future - seems to be the trend these days?


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