Catholic Investing
#11
(07-31-2009, 02:32 AM)Iuvenalis Wrote:
Quote:  If Cap and Tax pass, and Obama Care, then I am going to Defcon 3 level and starting a wheat stockpile.
However, I agree with you here. In fact, I'll go on the record and say cap and trade (tax) will pass, but Obamacare won't, at least with a public option. I'm a little terrified of some of the other provisions I'm hearing though. I wish the opponents could filibuster this threat, but there aren't enough opponents to not get overridden. I may see you when we barter your wheat for my powdered milk.

First, off thanks to all the posters here, particularly Iuvenalis and James.  A lot of this I know generally, but it fleshes it out a lot more.  Thanks too to Learning for asking it. 

Second, I bold the part above for this reason:  there are some around here, who continue to make this argument that there is no real difference between Republicans and Democrats.  Here is just one example about why there really is.  By saying this, I am not (a) excusing Republican faults and failures; or (b) forgetting that, as a political party, they can be whores themselves.  But the difference between having Republicans or Democrats in control of Congress is very real.  A bill like cap and trade or the health care stuff would have ZERO chance of getting through if the numbers in Congress were reversed, or even if the Senate had, say, five more moderately conservative members than it has now.  (Granted, if they were truly moderately conservative, it wouldn't matter what party they were in, but the reality is that (a) there are almost no moderately conservative to conservative Democrats in the Senate (or anywhere in Congress) anymore and (b) Democrats face internal party pressure to (1) get a deal on their party's President's initiatives and (b) stay in line for party discipline reasons.  You see this already with the socalled Blue Dog Democrats who are cutting a deal: they want to maintain the perception of fiscal responsibility, but really are just going along with minor modifications.  Republicans don't need to worry about either of these things, esp with a President whose popularity is sinking.)  Sometimes, honestly, I wonder sometimes if a couple of these posters are Democrat Party plants sent here to undermine/neutralize the natural inclination of orthodox American Catholics to vote Republican; that is the potential effect of the constant "there's no difference between the parties" mantra.

Third, back to the topic at hand.  Could I impose on you two, among others who feel knowledgeable, to offer some options on what people should do with funds they've pulled or might pull from the market/mutual funds?  Too many of the pros have a vested interest in saying -- "the recessions over", "get back in now", but I am quite skeptical, and agree with you both that things are not at bottom.  But what are the good options for (a) money you'll need in the next 5-10 years and (b) money you'll need in 10-15 years?  I understand there are no guarantees, and no one's looking to rely solely on your advice, but just seeking thoughts......
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#12
(07-31-2009, 09:16 AM)veritatem_dilexisti Wrote: I should have been clearer: I was not referring to property development, but to acquisition of property for rental purposes, which amounts to purchase of an income.

It is only purchase of an income as long as it is cash flow positive. Rental income must exceed mortgage + upkeep + taxes + all else right? Well, once one takes into account such expenses, one has to really look at their return on cash as well. Assuming they took a loan, how much did they have to put down to get that income. It really depends on where you live as to whether you can buy affordable rentals. I do not live in such a place. :)
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#13
(07-31-2009, 11:34 AM)epalinurus Wrote: Third, back to the topic at hand.  Could I impose on you two, among others who feel knowledgeable, to offer some options on what people should do with funds they've pulled or might pull from the market/mutual funds? 

I think I've been pretty clear that I can't see a clear 'haven' for capital right now. I mean, that's not to say there's no good investments, or that nothing will do well in the next few year, just that it's very, very hard to tell what those will be. As I've said above, I've made a case why almost any investment class can go wrong (including implicitly, cash, if inflation becomes significant-- again, I have no idea if it will).

I also think I've been pretty clear that I a) Hope that no one has already pulled money out of equities (i.e. sold at a loss) and b) I think generally now is not yet the time to pull out either.

However the only correct answer will depend on your cost basis. You must know your cost basis (or bases since you've likely bought over a long period of time), right?

In my case, even if I was going to liquidate half or something, I'd have to specify FIFO not LIFO sales, since the cost basis of more recent purchases (roughly the last 4 years or so) would be higher and I'd be selling at a loss. Anyway, suffice it to say that it can get ugly, especially someone who is close to retirement and may have been making purchases over decades.

Quote:Too many of the pros have a vested interest in saying -- "the recessions over", "get back in now", but I am quite skeptical, and agree with you both that things are not at bottom. 
Well, to clarify, James02 has things will retrace and knock out the 666 low, I said I disagree with him.

I've said that things may retrace, this may even be a sucker rally, but I don't see that low getting kicked out from under us, in fact, it was grossly oversold even then, which is why I suspect much of that panic low came back within only a few months (since March 6) or so. We're not artificially high currently, just relatively high-- 'relative' being relative to the 50 day EMAs etc, and those are usually legitimate psychological supports.

All that being said, things are clearly not at bottom, the bottom was March 6. Had one been prescient enough to be out of the market already, perhaps the same crystal ball would have told them to jump back in March 7. I don't think things will not retrace, but I don't think they'll retrace any lower than today's infamous 52-week low.

Quote:But what are the good options for (a) money you'll need in the next 5-10 years and (b) money you'll need in 10-15 years?  I understand there are no guarantees, and no one's looking to rely solely on your advice, but just seeking thoughts......

:laughing: If I knew that, well....

a) Seriously, I can tell you what are not good investments, regardless of climate. In my opinion, no one should have .01$ in equities (stocks) who needs that penny within the next 10 years. Period. Stocks' time horizon is 10 years and up. That is all. That's my story, I'm sticking to it.

If it's 5-10 years, stay out of stocks, regardless of what you think they're going to do, assuming you need or may need that money.

So, that leaves:
-shorter term gov't and/or investment grade bonds (but interest rates can only go up from this low, which will reduce the value of things like Ginnie Maes etc),
-cash, but cash will suffer if there's inflation,
-so there's TIPS in that case
-not real estate either clearly due to the time horizon...
-CDs, but the rates on those and other deposit accounts are absurdly low right now
-gold (no comment)

Basically, the least likely to crap is TIPS, IMHO of course. This is not investment advice and I am not liable for any losses you may incur. Consult a qualified investment professional before investing.

b) 10-15 years, I like small caps, assuming you're talking about purchasing now-ish. This advice will become stale fairly soon, and I'd have to re-evaluate. This is not investment advice and I am not liable for any losses you may incur. Consult a qualified investment professional before investing.
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#14
i love all this information, thank you guys.
I'm relatively young, (25) and i have an early but growing 401k.
i also have a Roth IRA on top of this which the company guarantees will never have "negative growth" (i know this is impossible, but i have it in writing at least.  It's under

I intend to ride this out with the possibility of hope that the market will at least recover and maintain some future positive until i retire.

Thoughts on this?  I assume/hope that the US isnt going to collapse into chaos and we'll start seeing some positive trend EVENTUALLY, right? *nervous chuckle*
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#15
(08-01-2009, 02:57 AM)Deusdark Wrote: i love all this information, thank you guys.
I'm relatively young, (25) and i have an early but growing 401k.
i also have a Roth IRA on top of this which the company guarantees will never have "negative growth" (i know this is impossible, but i have it in writing at least.  It's under
Such a promise sounds like an annuity. I hope for your sake it's not some bastard child of a IRA and an annuity policy.

(08-01-2009, 02:57 AM)Deusdark Wrote: I intend to ride this out with the possibility of hope that the market will at least recover and maintain some future positive until i retire.

Thoughts on this?  I assume/hope that the US isnt going to collapse into chaos and we'll start seeing some positive trend EVENTUALLY, right? *nervous chuckle*
Why not? If you're 25, you have 40 years until you're 65 (unless you were thinking earlier of course).

Look, the thing people are forgetting is that there's really no other option but to assume an eventual recovery:

-If things eventually recover, you'll be in good shape
-If things turn into Mad Max, then our currency won't be worth any more than a stock certificate would, so why save it? Banks would be crumbled, and your cash, if you could get to it, would be meaningless. The apocalyptic doomsday scenario means you might as well invest as well, since the cash ain't gonna be any good either.

-If it's something in the middle, a decade or more of sideways movement (Japan is oft-cited, but we too did something like that from 1964-1984 where the market stayed between 750 and 1000, that's 20 years!!) then stocks won't lose nor gain much, admittedly they'll be more volatile than investments that preserve value like bonds or deposit accounts, but there's no reason stock moving sideway for a decade is any worse than any other investment producing no capital appreciation for a decade or two.
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#16
Quote: Third, back to the topic at hand.  Could I impose on you two, among others who feel knowledgeable, to offer some options on what people should do with funds they've pulled or might pull from the market/mutual funds?  Too many of the pros have a vested interest in saying -- "the recessions over", "get back in now", but I am quite skeptical, and agree with you both that things are not at bottom.  But what are the good options for (a) money you'll need in the next 5-10 years and (b) money you'll need in 10-15 years?  I understand there are no guarantees, and no one's looking to rely solely on your advice, but just seeking thoughts......

I personally would sell all stock and stay in cash.  However, I advise you sell half of all stock and park it in cash.  And commit to keeping it in cash for 1 year.  The risk of a crash is huge.  Being out of the market with half of your nest egg for only one year won't kill you.  And if we do crash, you will have half of your nest egg in cash ready to buy high quality blue chip stocks at bargain prices.  If we don't crash, half your nest egg takes part in the ride.  Don't get greedy.  Bulls make money, bears make money, pigs get slaughtered.

For 10-15 years, you need some gold.  Social Security will be a big crisis and the government will print.  For gold, I like bullionvault.com.  Very cheap way to own physical gold.

First priority though is to acquire $500 cash in hand, stashed away in your house where you can get it.

For me,  I have most of my money very safe.  I also have my casino money.  I will be shorting the market with short ETFs and long dated puts on the SPY.  Currently I am market neutral with my casino money and also I have a large cash position.  I think we get a blow off top, maybe a 10% rally after Obama Care crashes.  This is for casino money only.  I can lose every penny of it.  DON'T do this with your nest egg.

If you want to hedge some of your money, take a look at a bear mutual fund like BEARX.  I trade ETFs, so I haven't looked at BEARX in awhile.  It should be cheap.  Perhaps you put 5-10% in some bear funds as a hedge.

A good advisor that does well in bear markets is Sitka Pacific.  Check them out on the web.

Finally, I completely disagree about looking at your purchase price.  What you originally paid for a stock is completely meaningless.  The stock does not care.  What matters is your target price, and whether the stock is behaving like you thought.  The important question is "would I buy this stock at this price today".  If the answer is "NO", then sell it immediately.

I am not an investment advisor.  If you follow my advise you will become so broke you'll commit suicide.  Later.
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#17
Here's some good contrarian resources for investing:

Bear case, deflationist: http://globaleconomicanalysis.blogspot.com/
Mike Shedlock.  Austrian.  Investment advisor to Sitka Pacific.

Bear case, deflationist:  http://market-ticker.denninger.net/
Denniger's blog.  Not much investment advise, but he keeps an eye on Fed open market activity.  When they start doing weird stuff, he's one of the first to catch it.
Also check out: http://www.youtube.com/user/kdenninger

Bear case, deflationist: http://www.zerohedge.com/
Very technical stuff.  He gets a lot of inside information from Wall Street.  Kind of like the Drudge Report of the investing world.

Bear case, inflationist:  http://www.europac.net/
Peter Schiff.  Austrian.  If you were reading him, then in 2005 you sold everything and bought gold.  However, he advised his clients to invest in Europe also.  Very bizarre since as an Austrian he should be appalled at the socialist policies of Europe.  He and Mike Shedlock are both Austrians, but one is predicting inflation, the other deflation.

Bull case:  http://www.decisionpoint.com/ChartSpotli...31_pb.html
Carl Swenlin.  You have to pay to get advise from Carl Swenlin.  However, he always posts stuff for free.  Usually he posts once a week on financialsense.com.  Very level headed.  Currently bullish.  I don't subscribe to his service, but I always read his free reports.

So if you are currently watching CNBC, and other bullish media, check out some of these contrary sites so you get both sides.
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#18
James --

thanks for the thoughts; it's all very helpful.  As I said, my concern is that too many financial types have an interest in pumping the market.  Plus, I feel like something else is afoot in a spiritual sense, like there is a spiritual element to these difficulties, that the financial types don't reckon.  That's why I was interested in hearing your opinion and those of some others here who obviously understand that element.  I think that recognizing that that element is there tempers both undue optimism and depair. 

I pulled about 80% of my funds out of mutual funds in mid Sept 08, just before the worst of the decline.  Totally providential.  I figured I was weighing a -- what? -- 10% gain against losing half or more of my value.  So that was good.  But the key of course is what to do next.  You've given me a lot to read and look over.  I appreciate the time you took.  Many thanks.

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#19
(08-01-2009, 01:59 AM)Iuvenalis Wrote:
(07-31-2009, 09:16 AM)veritatem_dilexisti Wrote: I should have been clearer: I was not referring to property development, but to acquisition of property for rental purposes, which amounts to purchase of an income.

It is only purchase of an income as long as it is cash flow positive. Rental income must exceed mortgage + upkeep + taxes + all else right? Well, once one takes into account such expenses, one has to really look at their return on cash as well. Assuming they took a loan, how much did they have to put down to get that income. It really depends on where you live as to whether you can buy affordable rentals. I do not live in such a place. :)

Why should the rental income have to exceed the mortgage, since the property is eventually sold? Such an investment would otherwise make no sense, as one would have to wait, say, twenty years, before seeing any profit!
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#20
(08-01-2009, 08:36 AM)epalinurus Wrote: James --

thanks for the thoughts; it's all very helpful.  As I said, my concern is that too many financial types have an interest in pumping the market.  Plus, I feel like something else is afoot in a spiritual sense, like there is a spiritual element to these difficulties, that the financial types don't reckon.  That's why I was interested in hearing your opinion and those of some others here who obviously understand that element.  I think that recognizing that that element is there tempers both undue optimism and depair. 

I pulled about 80% of my funds out of mutual funds in mid Sept 08, just before the worst of the decline.  Totally providential.  I figured I was weighing a -- what? -- 10% gain against losing half or more of my value.  So that was good.  But the key of course is what to do next.  You've given me a lot to read and look over.  I appreciate the time you took.  Many thanks.

Yes-thanks so much for all the info and thoughts.  I am curious about what other Catholics are doing, but not something you can always ask easily without looking nosy.  My gut has been telling me to get out of the market, but I guess I have been a greedy pig-not wanting to sell until I regained my crash losses. I think some gold and $500 cash is not a bad idea for everyone-just in case.

epalinurus-I agree with you about financial types pumping the market.  401k seems like a bit of a pyramid scheme to me.  It keeps ignorant people like me blindly pumping $ into the market. 
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