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Old 10-06-2008, 11:37 AM   #1 (permalink)
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Default Economic Weeeeeeeeeeeeeeeeeeeee!!!

For those of you who have been following this (and not just repeating what the TV talking heads say ) clicky

Very accurate account of the global issue and well as what's going on right now. The dollar is gaining at a lightening pace and this is why. Sucks for right now, especially globally. Sucks for EU countries for a long time to come. Good for US 5-8 years from now. The EU much like the US had a chance to fix this prior to now. For the US that was prior to last monday. Instead everyone decided to play dumb political games and "my party is better than YOUR party" bullshit when they should have just sucked it up and put down the bickering. The 1930's lesson still stands. Isolationism will fuck you.

The best advice I can give anyone is to enjoy the ride. You don't need to cancel vacations or curb spending habits (unless you're already living well above your means). Be smart with your money, budget like you're supposed to. Invest what you can now and don't watch it every day. You don't need to go yanking your money out of the bank. Overall, live life like normal and be thankfull you aren't a day trader. Most importantly, LEAVE ANY MONEY ALREADY INVESTED IN THE MARKET ALONE. If you take it out now I'm going to laugh when you're living in a tent. Oh and don't stop contributing to your 401k.

The capitalist pig in me would like to take a moment to remind everyone that NOW is the time to profit from this mess in a big, big way. Heavy investments now are going to lead to a nice fat pay off in 10 years.
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Old 10-06-2008, 12:16 PM   #2 (permalink)
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+1, im pretty lucky im only in college while this shits hitting the fan.
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Old 10-06-2008, 12:26 PM   #3 (permalink)
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Anyone taking their money out of 401ks and stocks right now needs a serious bitchslapping. The money you lost is gone, and taking it out to stagnate isn't going to help any, the worst is over. This is the exact time when you want to invest any extra cash. Buying stocks during downtrends is how Warren Buffet became mind-bogglingly rich.

Investors tend to follow herd mentalities, just operate the opposite of how all the other numbnuts you know are, and 9 times out of 10 you'll end up ahead.
 
Old 10-06-2008, 12:36 PM   #4 (permalink)
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Buying up properties to rent right now is a great idea, the rental market is doing well. But buy them as rental properties, because you'll be holding onto them for awhile. It's a complete buyer's market right now, so you want be flipping that house any time soon.

If the places are in good locations, you keep ahead of all the repairs and bills, and you find decent renters, they're basically free money.
 
Old 10-06-2008, 12:44 PM   #5 (permalink)
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Soo true. A lot of people right now are dumping properties and letting them foreclose. I love these small minded lemmings. Sure they're the cause of this mess but man can you make a profit.

Here's the deal. People are sitting on a home that they paid 400k for. It's now valued at 250k. In their minds, letting it foreclose saves them the mortgage payment for X months and then they can rent for much much less for a year or so. They actually believe that their credit won't take too huge of an impact and that they'll find someone to give them a home loan in 2-3 years. Epic fail. There are going to be a slew of new regulations once this mess is over. They'll be lucky to get approved for a Home Depot card in 5 years. Which means they'll have to survive without any form of revolving debt for at least 7 years. Good luck with that. I hear there's a special on mac n cheese.

On the plus side, the bank now needs to dump this asset. They can't afford to hold the property and wait for the market to improve. So it'll go to auction and sell for probably 180-200k. The winning bidder gets a house at 180k that he can sell in 5 years for 400k again. Or he can just own it. Forevers! Even if he doesn't live in it, he can rent it out. That's the smart move.

It would be interesting to see if a few banks start buying real estate companies and using them to RENT out the properties they own until the markets improve and selling becomes more favorable. I wonder if it's a regulation that doesn't allow it or if they just don't think outside the box enough to do it.

Sadly I don't currently have the capital for a down payment on a home in my area Too many riding trips eat away at the "buy a friggen house already" fund.
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Old 10-06-2008, 01:01 PM   #6 (permalink)
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Originally Posted by Mooz View Post
It would be interesting to see if a few banks start buying real estate companies and using them to RENT out the properties they own until the markets improve and selling becomes more favorable. I wonder if it's a regulation that doesn't allow it or if they just don't think outside the box enough to do it.
I've wondered that myself. There's no regulation that I'm aware of, although certainly the bank being able to charge people mortgages for years,then kick them out after a few missed payments and be able to turn that property into a lucrative holding would certainly be a conflict of interest, so I wouldn't be surprised. One way or the other,anyone with a mortgage is lucky that the bank doesn't want your house, they want you to pay your mortgage and leave them the f alone. It'd be awfully hard to get a fair shake from a company when it's in their best interest that you fail.
 
Old 10-06-2008, 01:06 PM   #7 (permalink)
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Quite true but if I don't live in it, I lose all the nifty tax breaks for first time home owners. Plus I have to pay my own rent as well as the mortgage. Not to mention I'll have to pay upkeep costs since renters usually abuse properties.

Newp first home you definately want to live in. Maybe rent out a couple rooms to help with mortgage and other costs.
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Old 10-06-2008, 07:32 PM   #8 (permalink)
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Quote:
Originally Posted by Mooz View Post
It would be interesting to see if a few banks start buying real estate companies and using them to RENT out the properties they own until the markets improve and selling becomes more favorable. I wonder if it's a regulation that doesn't allow it or if they just don't think outside the box enough to do it.
Banks already make a great deal of money through lending money and it is far simpler for them to stay in the money market rather than extending themselves to secondary markets. I would believe they would much rather lend someone else money to do the same thing and make money on interest rather than doing it themselves. Well that's my take on it anyway.

As far as you're lemmings remark goes, sure some of them are, but you also have to consider that they simply may not be able to afford their mortgage payments, due to their income taking a hit. However, I definately agree that if you can afford to keep your house even if it has lost value significantly, by all means do so! It will recover, the same goes for stocks. What has to be done is to ride out the storm the best you can, and my no means panic and start pulling your money out of everywhere, as the economy would continue to nosedive for sure. A large loss of confidence is your worst enemy.
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Old 10-06-2008, 09:47 PM   #9 (permalink)
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Banks already make a great deal of money through lending money and it is far simpler for them to stay in the money market rather than extending themselves to secondary markets. I would believe they would much rather lend someone else money to do the same thing and make money on interest rather than doing it themselves. Well that's my take on it anyway.

As far as you're lemmings remark goes, sure some of them are, but you also have to consider that they simply may not be able to afford their mortgage payments, due to their income taking a hit. However, I definately agree that if you can afford to keep your house even if it has lost value significantly, by all means do so! It will recover, the same goes for stocks. What has to be done is to ride out the storm the best you can, and my no means panic and start pulling your money out of everywhere, as the economy would continue to nosedive for sure. A large loss of confidence is your worst enemy.
The banks already stand to lose a lot of foreclosures. I guess it's a moot point now with the fed buying toxic home loans. The lemmings remark still stands though. Incomes have not declined (at least not yet. And no that isn't around the corner either). Some jobs have been cut but unemployment has stayed steady as well. The people bailing on their loans because they couldn't afford it never COULD afford it to begin with. They deserve the impending credit ass rape they're about to get. Folks, if you buy a house and can't save the money to cover ALL your expenses if you were out of a job for 6 months THEN YOU SHOULD NOT BUY A HOUSE. Quit being stupid dammit.
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Old 10-06-2008, 09:54 PM   #10 (permalink)
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^ True enough, you make a valid point. And it certainly didn't help that the banks were loaning out money to virtually anyone. Sure with the housing market on an increase it's all fine and dandy but once it turns the other way they're fucked. And that's exactly what happened.
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