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Short and long term ramifications of current events
Old 04-10-2020, 04:42 AM   #1
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Short and long term ramifications of current events

Good Morning
I find myself feeling "unsettled" and want to "talk it out" with you folks.

I know JUST enough about economics to feel insecure but not enough to really understand the ramifications of all the stimulus, fed easing, conspiracy theories about transfer of wealth, etc. I want to be able to sleep at night with a 60/40 portfolio of index funds. We're working on a goal of building up 3 years worth of living expenses in cash (1 year now).

On one hand my brain says, "Never bet against the US economy, it alwasy trends up." But on the other hand, another part of my brain is saying, "Everythings' different these days...there's lots of conspiracy theories, everything's stacked against the little guy, etc. etc." Plus the 2T dollar aid package and other fed stimulus...what sort of effect can we "end users" expect over the next few years? Inflation? Deflation? negative interest rates? huge jump in taxes? I know no one has all the answers, but I used to always be "smug" and just think, "hey, don't pay attention to the noise, everything always turns around in our great country. Put your money in index funds, ride out the ups and downs, rebalance every year, etc.

So I just want to do my best to make sure our overall wealth is positioned well. 54 years old, "semi retired". We have about 1M 60/40 with a financial advisor (10% of that I manage, in things like crypto, p2p, physical gold and silver etc.) but nothing that will have meaningful effect if it all goes to hell. We have one year's living expenses in cash, and about 60% of our net worth is in mid level apartment units in our home town, almost all paid off, which fund 100% of our living expenses and usually more (1.4M value, 250K owed). I would think this would put us in a great place in terms of higher inflation, no?

Sorry for rambling. It's just that the older and richer I get, the more I have to worry about!
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Old 04-10-2020, 07:09 AM   #2
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Definitely valid concerns, and no one can be sure about long term outcomes. I was a bit comforted though by an interview I heard a couple weeks ago during the debate about the virus bailout bill. A Fed governor was saying that in retrospect to the actions taken in 2008 for the financial crises, it was the Fed's collective belief that they should have done more, faster to stem the decline. Much has been feared from the QE back then, but so far (and it has been 12 years), we have not seen the inflation and other downsides that were feared.
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Old 04-10-2020, 07:55 AM   #3
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Definitely valid concerns, and no one can be sure about long term outcomes. I was a bit comforted though by an interview I heard a couple weeks ago during the debate about the virus bailout bill. A Fed governor was saying that in retrospect to the actions taken in 2008 for the financial crises, it was the Fed's collective belief that they should have done more, faster to stem the decline. Much has been feared from the QE back then, but so far (and it has been 12 years), we have not seen the inflation and other downsides that were feared.
IMO, the inflation form the 2008+ QE was all in the stock and bond market.
Follow the money. $ went to banks who loaned to companies that bought back stock. The closer an entity is to the fed spigot, the more they got. Relatively speaking, companies didn't invest in capex or growth. So stocks bonds were up. The $ didn't go to consumer to drive up prices on "living expenses".

Look at today's market... news is crap but stocks are up because the Fed is printing and buying any and all to prop up markets while the actual economy is shut down.
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Old 04-10-2020, 07:58 AM   #4
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I would not want 60% of my net worth in a single-type of real estate in a single geographic location... too much concentration risk IMO. If your area ends up with a Flint, MI type event then you are screwed.

Did you get all of your April 1 rent payments?
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Old 04-10-2020, 08:04 AM   #5
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I would not want 60% of my net worth in a single-type of real estate in a single geographic location... too much concentration risk IMO. If your area ends up with a Flint, MI type event then you are screwed.

Did you get all of your April 1 rent payments?
Rents collected: Yes we are very fortunate. I do understand that geographic concern. In fact that's why we pared down from 53 units to 29.
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Old 04-10-2020, 10:00 AM   #6
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Quote:
• The US economy was vulnerable even before the virus struck with millions lacking emergency savings, sick leave or health insurance.

• Look for more trillion-dollar spending bills this summer and fall as Congress tries to fill gaps and, eventually, make long-term reforms.

• When the economy restarts it will be at half-speed consumption, trade and growth.

• Record unemployment (see chart on slide 20) could jeopardize Trump re-election hopes.

• A new psychology will change economic attitudes from risk to safety, and from abundance to austerity.

• The “4th Industrial Revolution” will accelerate, with faster manufacturing and shorter supply chains.

• Central bank policies will entice investors into riskier bets.
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Old 04-10-2020, 10:37 AM   #7
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Our local "leaders" are worse than national.
Its like they took social virtue signaling and no apply it to social distancing in a game of one-up-manship. They seem to be in a contest of who can impose the most draconian restrictions going way beyond what the CDC, WHO, Drs., etc recommend.


Look at the unintended consequences... truckers can't find parking, food, nor toilets. Now they closed off the gardening sections of stores as "non-essential" (if you wanna eat this fall you gotta plant this spring).
"You can go to the store, but you can only buy what we allow you to buy".
One yokel was in the news for shutting down the clothing section at a wal-mart".... Personally I've lost 23lbs since this BS started early March and NEED a smaller pair of jeans and a belt. I go in the store and their they are... behind yellow tape and a sign.
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Old 04-10-2020, 10:55 AM   #8
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Look at the unintended consequences... truckers can't find parking, food, nor toilets. Now they closed off the gardening sections of stores as "non-essential" (if you wanna eat this fall you gotta plant this spring).
"You can go to the store, but you can only buy what we allow you to buy".
One yokel was in the news for shutting down the clothing section at a wal-mart".... Personally I've lost 23lbs since this BS started early March and NEED a smaller pair of jeans and a belt. I go in the store and their they are... behind yellow tape and a sign.
+1

Like I said in another topic, eventually things like clothing and shoes do become essential. Congrats on the weight loss!


During yesterday's press conference, the governor was asked about allowing food trucks at truck stops. He's going to look into it. I thought truck stops already had reliable food sources. Maybe I misunderstood.
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Old 04-10-2020, 11:53 AM   #9
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......... Personally I've lost 23lbs since this BS started early March and NEED a smaller pair of jeans and a belt. I go in the store and their they are... behind yellow tape and a sign.
You might want to check out this new source. They will actually deliver stuff right to your house.
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Old 04-10-2020, 05:13 PM   #10
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You might want to check out this new source. They will actually deliver stuff right to your house.
Got a pair on order. But they're considered non-essential so delivery is in June.
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