CitricAcid
Full time employment: Posting here.
- Joined
- May 12, 2008
- Messages
- 546
CA, that requires people to have a crystal ball and engage in market timing. You say people can do well if they "play" it correctly. But that's the antithesis of the passive investing promoted by most here. I don't know what Japan's culture and economy is like, but even in the US few retirees eagerly imagine themselves back in the transitory position of renting (moving is a bitch when you are 20, imagine at 70..). What if their predictions are wrong and they have just sold at a bottom?
I think it's a pretty grim affair if the only way to make money is by selling off the roof over your head in a declining market. At that point you might as well do a reverse mortgage: less trauma, no?
It is also that if a greater percentage of your net worth is in many other non-deflationary assets, such as cash. The idea is not so much that they could have had a great retirement, or that people weren't hurting, quite the opposite. It is more that with a situation like Japan's in the early 90's, they had started selling 100-year loans (hmmm, seems a lot like the interest only/negative amortization loans we have now) the real estate bubble was inevitable, so many people were hurt in the fall of the stock market. But, some of the effect of the nominal fall was mitigated by an increase in the value of the yen because of that. Just saying it was mitigated, and comparing the situation to America's now is a little premature.