ECRI says Recession Unavoidable

[GregLee]

My rose colored glasses came off months ago. I see no green shoots in the global economy and only a lawn that is getting browner by the day.

That's the kind of talk I like to hear. When prospects seem dim, it lowers stock prices for us optimists.

 

[eytonxav]

That's the kind of talk I like to hear. When prospects seem dim, it lowers stock prices for us optimists.

Yep, and I have some dry powder at the ready

 

[obgyn65]

I have felt the same way since 2001, and this is why I have always stayed away from the stock market.

My rose colored glasses came off months ago.

 

[NYEXPAT]

Wow. Real estate bubble in the making...

Exactly!

Unfortunately you can not time RE bubbles or any Mania. I got out of the markets in 2000 and went into RE in NYC. Bought in 2001 doubled my money ( 1 tax free) by 2004 and cashed out of the USA altogether. Much to my chagrin my properties continued to appreciate by another 6 figures until 2006.

I convinced my DW to go into RE in Lima in 2005 as the rental yields were the second highest in the world. I knew in my head prices would rise but did not know by how much and what period of time. I prefer to look at RE as a a dividend paying stock and am not to focused on appreciation (happy with inflation rates).

The condo's were built in 2006.

DW net returns looked like this:
2006= 29%
2007= 29%
2008= 25%
2009= 19%
2010= 16%
2011= 14% after a major renovation (depreciating cost over 5 years).

In the mean time the price DW can sell for represents a 300% gain minus some taxes.

I have recalculated my net returns based on appreciated value.

2006=10.79%
2007=10.79%
2008= 9.29%
2009= 7.08%
2010= 5.84%
2011= 5.24%

DW has several choices.
1. This could be a bubble forming and holding may result in a paper loss in the future which may or may not be offset by rental yield(dividends).
2. 10 year bond yields are 5.8% but incur currency risk. (strong Dollar)
3. CD's yield 8-10.5% (3 year) have currency and credit risk (similar to a municipal bond).
4. Hold a 50% percent Mortgage (10% for 10 years) default risk.

I thought my headaches were over when I got rid of all my assets and no longer paid taxes, but noooo,life keeps sucking you back in!