This Time

[boont]

I was saying to the wife the other day that I thought this downturn might be a little different than the real old ones. For instance, I think that it may harm the Harvard endowment crowd a lot more than the working stiff. I always judge this against the last several episodes.

Like in 1987 and 2001, when I looked out over the Sausalito Yacht Harbor and wondered how many of these customer's yachts were owned by doctors, lawyers, and business executives who had recently just lost nearly half of their net worth. While the firemen testing the hydrant,the cop on the beat and the guy skin diving for lost eye glasses had come out comparatively well.


After the dot-com-bomb,which has been widely misunderstood as a failure of new technologies to change the world, as opposed to yet another Wall Street caused implosion I pointed to the fact that the new technologies did change the world. Amazon and Ebay and Google and many others have changed the business world forever. No over-hype there.I well remember when it was a novelty to see a telephone brought to a table in the Polo Lounge of the Beverly Hills Hotel. Who needs a house phone anymore,they've got a fax machine in their Mercedes and a cell phone permanently attached to their ear.


Yet, once again another smash-up.

I went for dinner at, "Jeanty at Jack's" in San Francisco recently. Alfred Hitchcock ate there so much, when it was just called "Jacks", that he had his own private wine cellar.I certainly didn't need the reservations I'd made. Very slow Saturday night. Yet,the pub across the bay in Berkeley was packed. Has everyone just moved down scale? Perhaps, but I think it's more than that.

I think this time rich folk are going to get hurt big-time and the long haul trucker, if he can keep his job, which is a big if, will be all right.

As I told my buddy the other day. "I am going to name a job that is bullet proof. Not vulnerable to hi-tech or off-shore replacement in any way shape or form. What is it? Beer truck driver. They aren't ever going to stop drinking beer and you can't ship it over the Internet."

boont

 

[FIREd]

Bet against the rich folks at your own risk... The rich folks I know don't seem to suffer too much right now. For them it's business as usual. They always seem to land on their feet no matter what. Now, the people who lived like they were rich, buying things they couldn't afford, those are the people who are going to take a bath...

 

[Nords]

I was saying to the wife the other day that I thought this downturn might be a little different than the real old ones.

It's always really different this time...

 

[dex]

I think this time it is different than the 1970s and earlier. There are several issues coming together at once.
1. The number of people invested in stock/bond etc markets is greater
2. Debt load of all levels of society greater
3. Debt load of the all levels of government greater
4. Everyone will be affected by housing market decline - even if they have their house paid in full
5. Expectations of what is expected out of life is greater
6. We don't know what will happen next
7. The seeds of a greater problem are being sowed now.

http://www.jeantyatjacks.com/jeanty-dinner.pdf
nice menu - how did you know about the place?

 

[Meadbh]

6. We don't know what will happen next

How is that different from the 1970s?

 

[d]

I think this time it is different than the 1970s and earlier. There are several issues coming together at once.
1. The number of people invested in stock/bond etc markets is greater
2. Debt load of all levels of society greater
3. Debt load of the all levels of government greater
4. Everyone will be affected by housing market decline - even if they have their house paid in full
5. Expectations of what is expected out of life is greater
6. We don't know what will happen next
7. The seeds of a greater problem are being sowed now.

can't this be said of most every downturn?

 

[Gone4Good]

Well it's certainly true that rich people have more money to lose so they'll end up losing the most in absolute dollar terms . . . but I'm not sure that is the right way to judge things. Who's in better shape, the guy who started with $2MM in the bank and just lost 50% or the single mom with $202.00 in the bank and just lost her job?

Remember also that this isn't a 1987 style stock market crash, or even 2001. This started because millions of people can't afford their mortgage. And those that still can are seeing their home values go down by historic proportions. When you talk about the balance sheet of a typical family, you're looking mostly at residential real estate on the asset side of the ledger. As much as this may seem like a Wall Street centric crisis, these "Joe Six Pack" cops and plumbers are getting hurt pretty badly, even if they manage to keep their jobs.

 

[harley]

After the dot-com-bomb,which has been widely misunderstood as a failure of new technologies to change the world, as opposed to yet another Wall Street caused implosion I pointed to the fact that the new technologies did change the world. Amazon and Ebay and Google and many others have changed the business world forever. No over-hype there.

Personally, I don't think I ever heard anyone say the dotcom meltdown was a failure of technologies to change the world. I've always heard (and thought) that it was just another bubble situation. They are all caused by new technologies being created, and then too many people getting too excited over the opportunities to make money, because "it's different this time".

I think this time rich folk are going to get hurt big-time and the long haul trucker, if he can keep his job, which is a big if, will be all right.

As I told my buddy the other day. "I am going to name a job that is bullet proof. Not vulnerable to hi-tech or off-shore replacement in any way shape or form. What is it? Beer truck driver. They aren't ever going to stop drinking beer and you can't ship it over the Internet."

I agree with Firedreamer. The rich tend to stay that way. It's usually second or third generation rich that lose the fortune, and they don't lose it in the stock market. More like Vegas, or maybe up their noses. And as far as the beer truck driver, just wait until I get me teleporter working...

 

[samclem]

"People who go broke in a big way never miss any meals. It is the poor jerk who is shy half a slug who must tighten his belt."
-- Robert Heinlein, "Notebooks of Lazarus Long (Time Enough for Love)"

 

[Notmuchlonger]

I think the future looks bright for me. For the rest I dont know. But in the end ill do okay Maybe its different this time

 

[dex]

can't this be said of most every downturn?

"I think this time it is different than the 1970s and earlier."
This is a key term - that I may not have been clear about.
In the 70's and earlier, most of the items I mentioned were not true.

 

[dex]

How is that different from the 1970s?

In the 70s we knew that the problems were caused by the oil shocks.

We did not know, so much, that is was because our factories were out of date.

We also knew it was because of the guns & butter policies of the 60s.

In other words; we could understand the why and how it could play out.

Now, it is difficult to understand the causes and how it will play out.

Bottom line, this time we are not willing to take the medicine we need and sowing the seeds of future and worse problems.

That is why I will be focusing on investments outside the USA in the future.

 

[boont]

Chowhound

"Jeanty at Jack's" "how did you know about the place?" dex

Well, I'm a long time San Francisco restaurant buff so I keep up with this stuff. Also, like to read "Chowhound" which is like Zagat's guide except on the Internet.

boont

 

[CuppaJoe]

I've always thought that Jeanty at Jack's was a place for an old-fashioned "businessman's lunch" not a Saturday night place. My company had its holiday lunch there last year but couldn't get reservations the year before.

 

[boont]

Oh yeah?

"It's always really different this time..." Nords

Nords, this is really getting tiring. In the school yard the bully always says, "Oh, yeah?" to everything the other kid says.

Well, my answer to your "Oh yeah"? Is... "Yeah".

If you don't think it's different this time then you are not paying attention. When do you recall every major bank in the U.S. being technically bankrupt?

When were all three major automakers at or near bankruptcy?

When was it that all financial institutions world-wide from Switzerland, to Germany, to Saudi Arabia, to China, to Japan all on the ropes?

Here is the latest news...

"[FONT=Verdana,Sans-serif] WASHINGTON (AP) - Rolling out powerful new weapons against the financial meltdown, the Bush administration and the Federal Reserve pledged $800 billion Tuesday to blast through blockades on credit cards, auto loans, mortgages and other borrowing. Total bailout commitments, loans and pledges of backing neared a staggering $7 trillion."

Without these massive government bailouts you and me and ever one else is sunk. Do you deny this?

Nords, when did this happen before?

Be specific. We are long past funny lines like "psst..." and "it's different this time, yeah right?"

b.
[/FONT]

 

[DblDoc]

It is always different each time. The underlying causes vary from bubble to bubble, the social and economic factors also vary. And each time the pundits scream it is different this time and you must do things differently investing wise. They have always been proven wrong in the long term. Now you can glue yourself in front of the TV and listen to CNBC or whatever flavour of news you like and make investing decisions based on the "sky is falling" or you can ignore that which you cannot control, assume that the US and global economy will recover and invest as you have been and it will most likely work out OK for all in the end. If it doesn't all these discussions about how to survive/profit from the bear market will be pointless and you should invest in guns, bullets, gold and a usefull end-of-the-world-as-we-know-it skill...

DD

 

[boont]

Novelty of Early Retirement

DblDoc, your reply is so full of red herrings about guns, bullets and the sky is falling that I can hardly understand what you are saying. I certainly don't recognize my own comments in your version.

I mentioned none of that. Yes, it will come back, I assume that. That is not the point.

The point is to understand what the hell is going on. And this stupid pig headed refusal to admit the obvious is not only dangerous it borders on being irresponsible.

Someone is going to have to take responsibility for telling people on this site to not protect themselves with enough ready cash for the near term.

No one I know of is advising dumping out at this point. Again, that is not the point.

But to continue to goad and pretend "buying opportunities" just because stocks are cheaper than they were at the peak is going to cause some poor fool to lose their retirement options.

I joined this site to share in the wonders and the novelty of early retirement from a life time of work. So I strenuously object to the regular suspects here who regularly brow beat anyone who doesn't agree with them.

boont

 

[OAG]

DblDoc, your reply is so full of red herrings about guns, bullets and the sky is falling that I can hardly understand what you are saying. I certainly don't recognize my own comments in your version.

I mentioned none of that. Yes, it will come back, I assume that. That is not the point.

The point is to understand what the hell is going on. And this stupid pig headed refusal to admit the obvious is not only dangerous it borders on being irresponsible.

Someone is going to have to take responsibility for telling people on this site to not protect themselves with enough ready cash for the near term.

No one I know of is advising dumping out at this point. Again, that is not the point.

But to continue to goad and pretend "buying opportunities" just because stocks are cheaper than they were at the peak is going to cause some poor fool to lose their retirement options.

I joined this site to share in the wonders and the novelty of early retirement from a life time of work. So I strenuously object to the regular suspects here who regularly brow beat anyone who doesn't agree with them.

boont

I really think we can all identify many, many things that were wrong, are wrong, or now going wrong and, potentially some that could go wrong, in the near to mid-future. But being, more or less, "ordinary" people, just what can we do other than what we think is prudent and right for ourselves? And, after all, we have our opinion(s), and are entitled to them, IMHO. One of the things I have liked about this board, usually, most read others opinions, and if they do not agree they just "let it slide" or at least provide, respectfully, their own differing one. Frankly, identifying a problem is, more or less, easy, it is the solutions that are difficult. And it is ALWAYS different, IMO history does not repeat itself; it just seems that way.

 

[Gone4Good]

The point is to understand what the hell is going on. And this stupid pig headed refusal to admit the obvious is not only dangerous it borders on being irresponsible.

Someone is going to have to take responsibility for telling people on this site to not protect themselves with enough ready cash for the near term.

Frankly I haven't seen much of that on this site. I have, however, seen several comments about "having 5 years of cash" etc. etc. It's worth considering that much of these basics (such as having an emergency fund; or maybe "buckets" of investments; or an asset allocation that fits your tolerance for risk) have been covered extensively on this site. So much so that repeating them as a preamble to every post is not really necessary.

I read the "It's different this time" comments as an admonishment to stick with the plan you started with and not abandon historically sound investment principals during a market panic. Sage advice, in my view. It's also a reminder that every crash (and bubble too) is accompanied by people who claim that "this time is different". Those people have invariably been proven wrong and will again in this crisis, unless of course . . . this time is different.

 

[Gone4Good]

I'd also add that there is no such thing as a "safe" self financed retirement plan. It's an exercising in balancing risks. Chief among these is the risk of losing purchasing power vs the risk of losing principal. These risks are compounded by the risk that emotionally driven investing almost always leads people to protect against one when they should be protecting against the other.

 

[dex]

It's also a reminder that every crash (and bubble too) is accompanied by people who claim that "this time is different". Those people have invariably been proven wrong and will again in this crisis, unless of course . . . this time is different.

It all depends upon how you define "Different" and what you do with that information.

It is NOT different to those that say; It isn't different because:
- the market went down and in the long run it will go up, therefore not different.
- the causes are due to greed and fear, therefore not different.

It IS different to those that say: It is different
- from a previous an occurrence and this is why - the reasons
- and due to the differences this downturn will be longer or shorter than the previous occurrences
- and due to the differences, the short, medium, and long term affects will be ...
- and due to the differences, X is a financial plan to take advantage of the situation

The second scenario can be helpful for the insights it provides, suggested actions and how others view the situation.

 

[2soon2tell]

DD - I agree that each bubble has a different sequence of events that create it in the first place. It's not different this time because the undrerlying human emotions of fear and greed never change.

boont - Judging by the emotion in your post I suspect we are approaching an intermediate bottom in the market. I continue to believe that we are in a secular bear market that will continue for several more years. Within the long term trend we will have cyclical bulls and bears.

My crystal ball is very cloudy but I think your AA is the key to long term success. I have tried timing the market and have the scars to prove I'm not very good at it.

Happy Thanksgiving,
2soon2tell

 

[samclem]

Someone is going to have to take responsibility for telling people on this site to not protect themselves with enough ready cash for the near term.

Why? Why must someone "take responsibility" for the opinions offered here? Do you come here to be "told" what to do? I don't.

This is a forum. People present their ideas here, sometimes even with some background/justification. If a person can't hold their financial advisor (someone they actually hired for the purpose of advising them about finances) responsible for losses in their portfolio, why should anyone think that someone here can "take responsibilty" for failure to read the tea leaves correctly.

People are responsible for their own decisions. Just make your case and trust people to decide wisely.

 

[Gone4Good]

It all depends upon how you define "Different" and what you do with that information.

Context is important (not every sentence can, or should be, parsed to argue what the meaning of "is" is.). And in every case I've seen the phrase "this time its different" used as a pejorative (including this one) the intent was pretty clear.

Nords can correct me if I've misinterpreted his intent.

And I also think the sentences immediately preceding the quote you used from me pretty clearly demonstrates MY intent as well . . . .

I read the "It's different this time" comments as an admonishment to stick with the plan you started with and not abandon historically sound investment principals during a market panic. Sage advice, in my view.

 

[HFWR]

[FONT=Verdana,Sans-serif]Be specific. We are long past funny lines like "psst..." and "it's different this time, yeah right?"[/FONT]

[FONT=Verdana,Sans-serif]b.[/FONT]

Unclemick is a seasoned veteran at this FIRE thing, not to mentioned a certified curmudgeon. So, if he says "psst", it might be worth listening...