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Post by richardsok on Oct 17, 2021 3:50:11 GMT
Heckuva post, pony, and good questions.
If equities crash, I hope to to be out of the market, at least 50%, before the worst carnage hits. That's why I concentrate on low volatility assets, haunt the charts daily, trade in bear hedges, and never put money into OEFs. If I sell, I want immediate execution. Some day COB might be too late.
Inflation is trickier. I'm hoping values of my real estate properties might rise with inflation -- they probably will if interest rates remain low. But if interest rates rise to combat inflation, real estate might plummet too, along with the dropping market and right at the worst moment.
When things go screwy, assets don't always behave like you'd expect. I know hedging retards portfolio performance, but I think better to acquire some protection when you can comfortably accumulate it, not when you desperately need it.
Right now I've hedged 2% of my port value -- and the position loses money almost every darn day.
It would be great to pick up a post-crash ton of PTY yielding 12% or so. Wouldn't ask for anything more.
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Post by xray on Oct 17, 2021 9:59:26 GMT
uncleharley, Your: 1... If equities crash, I hope to to be out of the market, at least 50%, before the worst carnage hits. That's why I concentrate on low volatility assets, haunt the charts daily, trade in bear hedges, and never put money into OEFs. If I sell, I want immediate execution. Some day COB might be too late. 2... Inflation is trickier. I'm hoping values of my real estate properties might rise with inflation -- they probably will if interest rates remain low. But if interest rates rise to combat inflation, real estate might plummet too, along with the dropping market and right at the worst moment. 3... When things go screwy, assets don't always behave like you'd expect. I know hedging retards portfolio performance, but I think better to acquire some protection when you can comfortably accumulate it, not when you desperately need it. 4... Right now I've hedged 2% of my port value -- and the position loses money almost every darn day. 5... It would be great to pick up a post-crash ton of PTY yielding 12% or so. Wouldn't ask for anything more. ---------- 1... Remember 2008/2009? Good strategy but very hard to implement in a timely manner. Most investors have difficulty in predicting when the worst carnage has been reached. Many of us took a "year" to define the 2008/2009 carnage [lessons learned]. Many of us now are structured not to lose much in any downturn [corrections or worse]. Keep in mind that many investors are dividend players so we can collect very good dividends and ride out many declines in the market [IMHO]. In addition, our portfolio's should be designed "not" to lose any CapGains already received and gained.... 2... Real Estate values have already risen substantially, and with inflation continuing [as is predicted], will increase a lot more but at a slower pace [IMHO].... 3... Protection is "everything" and our [expended excel worksheets] portfolio's should always display the protection [with lessons learned]. Keeping abreast of the current market is always a must [buy & Hold went out with 2008/2009].... 4... Something to evaluate [2% hedge] as a lot of us had a up week.... 5... Some of us have looked at PTY [and others like it] but continue to wait to put it and others on our watch lists. When something looks too good [and many investors are buying it without proper up/down analysis (especially on the probable Mkt downturn side) and following message boards] it remains a security with no upside [currently IMHO].... One single opinion of the many I am sure.... Live Long and Prosper....
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Post by steelpony10 on Oct 17, 2021 12:03:48 GMT
richardsok , I had to come up with an all weather plan quickly in 1999 so our parents portfolios were the “live” test although it was a baby step. Worked great. For us 2019-2021 so far are similar in cash flow. Maybe the Fed’s will mess with CEF’s someday and I’ll be forced to spend down.🙏🏼 All I can add is we received all our initial investment back within 12 years and we committed more cash during 2020’s sale.
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Post by Mustang on Oct 17, 2021 12:41:15 GMT
Interest rates are at historic lows. This has driven a boom in real estate. Everywhere we drive we see new buildings being constructed from developers building communities of 20-30 single family homes to huge 10 acre distribution centers. Lumber prices are at historic highs--if you can find it. I needed pressure treated 1x12s to repair a storm damaged fence. They were out of stock and the lumber yard didn't know when they would get them. Kiln dried 2x4s are running near $20 a board. A kiln dried 1x12 almost $30. Housing prices are at historic highs and so are the cost of building new ones. And no one is expecting the costs to go down. All of the costs associated with building - labor, materials, transportation, etc. are expected to go up.
Right now if someone sells their home they better have someplace to go. Houses are selling above list price as bidding wars take place. Listings are lucky to stay on the market a week. My wife and I recently downsized. We had a buyer for our old place and needed to find a new one. The day the listing came out our new house had three bids. It really is a great time to sell and we made more than we ever expected on our old place. But here is the thing. All players in this card game, except us, required financing.
I remember large mortgage payments where more was applied to interest than to principal. A buyer either had to have more income to qualify or buy smaller.
Interest rates are not going to stay low. Optimists think inflation is going to be transitory. I don't think so. Our federal government is overstimulating the economy. We do not need more demand at this time. Store shelves are starting to become empty. This is partially to blame on a shortage of dock workers and truck drivers. But there is also a shortage of trucks. Some states require older semi-trucks to be parked.
Wages are increasing across the board and not just for truck drivers. Help wanted signs are everywhere. With the emphasis on free college for worthless degrees we have created a shortage of people in the trades. Construction companies cannot get help. Electricians, plumbers, heating and cooling, even tree removal companies are backlogged. An asphalt company told me last week they could schedule us for next June. The shortage is driving wages and other incentives up. Taco Bell in a nearby town was advertising free college tuition.
Inflation isn't transitory and our government has bigger and better stimulus packages on the way and other government policies are causing energy prices to soar. Everything we buy is built somewhere else and transported to stores locally. The price of diesel fuel which powers the trucks will soar also.
The fed is going to have to fight inflation. What happens to mortgage payments when interest rates go up? What happens to building prices? Who is going to buy these very expensive new buildings when prices fall? There is always a bear market after a boom. A boom always causes over production. I just don't see real estate as being the protection against inflation that some do.
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Post by win1177 on Oct 17, 2021 17:27:42 GMT
Interest rates are at historic lows. This has driven a boom in real estate. Everywhere we drive we see new buildings being constructed from developers building communities of 20-30 single family homes to huge 10 acre distribution centers. Lumber prices are at historic highs--if you can find it. I needed pressure treated 1x12s to repair a storm damaged fence. They were out of stock and the lumber yard didn't know when they would get them. Kiln dried 2x4s are running near $20 a board. A kiln dried 1x12 almost $30. Housing prices are at historic highs and so are the cost of building new ones. And no one is expecting the costs to go down. All of the costs associated with building - labor, materials, transportation, etc. are expected to go up. Right now if someone sells their home they better have someplace to go. Houses are selling above list price as bidding wars take place. Listings are lucky to stay on the market a week. My wife and I recently downsized. We had a buyer for our old place and needed to find a new one. The day the listing came out our new house had three bids. It really is a great time to sell and we made more than we ever expected on our old place. But here is the thing. All players in this card game, except us, required financing. I remember large mortgage payments where more was applied to interest than to principal. A buyer either had to have more income to qualify or buy smaller. Interest rates are not going to stay low. Optimists think inflation is going to be transitory. I don't think so. Our federal government is overstimulating the economy. We do not need more demand at this time. Store shelves are starting to become empty. This is partially to blame on a shortage of dock workers and truck drivers. But there is also a shortage of trucks. Some states require older semi-trucks to be parked. Wages are increasing across the board and not just for truck drivers. Help wanted signs are everywhere. With the emphasis on free college for worthless degrees we have created a shortage of people in the trades. Construction companies cannot get help. Electricians, plumbers, heating and cooling, even tree removal companies are backlogged. An asphalt company told me last week they could schedule us for next June. The shortage is driving wages and other incentives up. Taco Bell in a nearby town was advertising free college tuition. Inflation isn't transitory and our government has bigger and better stimulus packages on the way and other government policies are causing energy prices to soar. Everything we buy is built somewhere else and transported to stores locally. The price of diesel fuel which powers the trucks will soar also. The fed is going to have to fight inflation. What happens to mortgage payments when interest rates go up? What happens to building prices? Who is going to buy these very expensive new buildings when prices fall? There is always a bear market after a boom. A boom always causes over production. I just don't see real estate as being the protection against inflation that some do. Mustang, I too am worried that “transitory inflation” will last longer than the Fed chair and others suspect. Inflation has been pretty high for months, and with rising wages, increased fuel costs, supply chain disruptions, etc., I don’t see it moderating anytime soon. We’ve never seen govt. support like this, and don’t know the LONG term effects on the economy. I think one has to invest with that consideration in mind. One thing “good” about equities is they help offset inflation as good companies (profitable) can increase their prices to offset any rising costs. So I believe all retirees should have some exposure to equities. As you said, I also suspect that we will (sooner or later) see increased rates in order to reign in inflation. Real estate has appreciated A LOT in our area, and I suspect much of the “gains” have already occurred. I am planning on holding a slice of our portfolio in “safer” higher quality bonds, enough to last ~7- 10 years of spending, that will serve as our “safe” capital. This will AT BEST just keep up with inflation (probably slowly lose value), but serves as a store of value in case things “go to heck” in the markets. The rest will be in a MIX of higher quality US and foreign equity, EM equity slice, real estate (REITs), our tree farm, and other diversified assets. We have NO debt, pay everything in full. May hold a small slice in gold/ precious metals, but historically they have been relatively poor holders of value over the long run. If rates go up significantly, I may put more in bonds, but at these current levels, bonds do NOT offer much in terms of appreciation potential. Win
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Post by richardsok on Oct 17, 2021 19:58:26 GMT
Just came from Lowes in eastern PA. Eight foot 2x4s, premium, were $7.98. The commons were $3.98.
As an amateur woodworker/furniture maker, wood prices are troublesome. Have virtually given up on oak or quality cypress. In recent projects I have been fiddling with designs that let me use scrap or reclaimed boards. Bookcases are almost impossible unless I resort to plywood.
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Post by Mustang on Oct 18, 2021 1:12:12 GMT
I just looked at the receipt. One 12' long pine 1x12 and two shelf brackets were $38.49. I was at Lowes just last week looking for a bathroom cabinet. All they had was cheap particle board kits. I have no problem with assembling kits but I stopped buying particle board furniture after I graduated from college. Home Depot only had the same thing. We bought one and assembled it. It was heavy and it broke trying to move it into place. The screws stripped out and the particle board split. Since Home Depot is over an hour away it wasn't worth taking back.
I might have to drive down and see an Amish cabinet maker I've heard about.
P.S. I love Oak furniture. I sit here typing this complain on a computer sitting on an Oak roll top desk.
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Post by richardsok on Oct 18, 2021 2:03:26 GMT
Yeah, particle board is dreck. won't last a decade, and "tires" in appearance long before that, corners working loose, chipping, sagging, etc. Some of the better plywoods can be a reasonable compromise, though. Good luck with your project.
(Sorry to drift off thread topic. Ending here.)
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Post by alvinthechipmunk on Nov 15, 2021 10:09:54 GMT
....................******** Just comparing notes with you. You never use OEFs. You want "instant execution." OEFs are my main thing. Whenever I put money into a single stock, that's the catalyst for the stock price to turn into snail snot. I'm glad there are simple, straightforward OEFs I can invest in, with great Managers who know what to do, a lot better than myself.
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Post by Norbert on Nov 15, 2021 13:51:46 GMT
Mustang(Sorry, OT.) I've had good luck using marine-grade plywood for kitchen cabinets. High quality material can even be used for the drawer or cabinet fronts, though solid oak or mahogany for the front is very nice (and more expensive). Will never use particle board or melamine.
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Post by Chahta on Nov 15, 2021 15:15:21 GMT
Mustang (Sorry, OT.) I've had good luck using marine-grade plywood for kitchen cabinets. High quality material can even be used for the drawer or cabinet fronts, though solid oak or mahogany for the front is very nice (and more expensive). Will never use particle board or melamine. Thought I wandered into the Home Depot site by accident for a moment.
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