Throw into the mix that the Baby Boomers are in the process of retiring. After suffering stock losses in 2001 and 2008, they won't be bitten again. I expect many to begin dumping their stocks into income generating safe investments. As the first set starts to sell off, the Boomers set to retire next year and the year after that should be in the same boat and they sell off. Compound that with everything else, and we are in for a bad time.
OT: Stock Market 1/7 Bad News
- Thread starter clob94
- Start date
Did you know that funeral directors have a lobby group in congress? And they have helped create laws regarding how people are buried, where they are buried, and what they are buried in. Probably one of the most effective lobby groups in Washington.
In the end, you might be the only smart one.
The clients I have that wish to say in the market this year, are being guided to portfolios that have lower Beta volatility. ETFs that inverse market risk are great in a bear market, but in a sideways market that doesn't know if it is bull or bear it has little to no traction either. Unless this China thing turns out to be bigger than expected, 2016 is going to be a very volatile year for the market.
The market volatility matched with the looming issues with national debt, out of control government spending, Baby Boomer's retirements, and costs to healthcare and Social Security are going to put us in another Great Depression.
Where can we put money and know we are going to be guaranteed a positive return? The answer is in the one place that rich people used to protect their money in the last great depression.
This is true to an extent, but that can also change. Again, 76% of Americans live from pay check to pay check. 55% of Americans are surviving on less than 40K a year. The breakdown of our social structure won't take long if too many people are put out of work.
I still haven't even mentioned the new housing bubble. Not sure if you knew this but we learned nothing from the housing crisis of 2008. You would think our government would have made changes to how Fannie Mae and Freddie Mack do business. They didn't, we are again offering those crazy sub-prime loans to unqualified buyers and those companies are still only required to keep 1% liquid. Basically if 2% of their loans are defaulted on, they are again bankrupt and the tax payer is again going to bail them out.
That is basically what I'm having my clients do now. I'd rather put them in an Annuity or move their money into life products than see it eroded.
When I ask them, do you want to be rich or guaranteed not to be poor, 99% are saying I don't want to be poor. So that is why I'm moving them over.
Son of Wasatch, I'm no expert. However, I am aware that we learned nothing from the housing crisis. My hobby is studying the market and the events that led to the housing crisis, and responses since.
These are some things that I have learned.
1. Do not follow or trust analyst advice when buying stocks. Leading into the 2008 financial crisis, Wall Street analysts (working for investment banks) were rating stocks & funds a "Buy," while betting against them (to go lower). They do not have to disclose their short positions to consumers.
2. Another stock market crisis, like 2008, will happen again. Derivatives are still unregulated. An unregulated derivative market was the root cause. The root cause still exists.
3. Trading on the stock market is not fair. We all do not have access to the same information. Stocks, commodities, & derivatives trade on information-Wall Street information. The government doesn't care. Bankers become regulators, regulators become bankers, bankers become members of the Federal Reserve and Ivy League college business professors (that sit on the banks' board of directors). They are all the same people.
4. The people that lost the most money (in 2008) were invested in pension plans. What do pension plans invest in? Some invest in derivatives of home loans known as CDOs or collateralized debt obligations. These are the things that caused the market collapse of 2008. AIG provided insurance on these things (but didn't set any money aside to pay) if the underlying loans if the CDOs defaulted (making them worthless). The insurance was called a Credit Default Swap or CDS (a derivative of the CDO). Since AIG couldn't pay and was taken over by the government, everyone that had a pension plan invested in CDOs lost EVERYTHING. I don't invest in pensions (401k plans).
5. This is how buying a house worked going into the financial crisis. A buyer (you or me) purchases a home from a lender (bank). The lender repackages a bunch of home loans, car loans, etc (people with credit rating from poor to great). This repackage instrument is called a CDO. The lender obtains a new credit rating for the CDO of AAA (the same as US treasury bonds). The credit raters (S&P, Moody's, or Fitch) trust the bank to tell them what's in the CDO & how to rate it; and they get paid more for giving AAA ratings instead of BBB ratings. Then, the lender sells the CDO to an investor (Fannie Mae, Freddie Mac). A speculator believes the CDO will default and they take out insurance in the form of a credit default swap (CDS)-another type of derivative, from AIG. If the loans in the CDO default, the CDO becomes worthless and the CDS contract has to be paid. It is a Ponzi scheme.
6. There was so much predatory lending going on because the lenders didn't own the loans. They were not liable if the loans weren't paid (AIG was left holding the bag, and the taxpayers paid their bill). The original lender collects the 30 year mortgage money by reselling the loans a few days later. This process hasn't changed.
7. TARP bailed out the banks because they owned so much CDOs that they would have become insolvent otherwise. AIG was bailed out because they are the last guys in the pyramid scheme. Otherwise, the whole financial sector would have shut down causing a larger depression than the 1930's.
8. The US financial sector is more deregulated today than in the 1930's, Our government authored this crisis by starting the deregulation in the 1980's and repealing legislation enacted after the Great Depression. This allowed mergers for the big banks we have now and the trading of unregulated derivatives. None of this has changed today.
1. Do not follow or trust analyst advice when buying stocks. Leading into the 2008 financial crisis, Wall Street analysts (working for investment banks) were rating stocks & funds a "Buy," while betting against them (to go lower). They do not have to disclose their short positions to consumers.
2. Another stock market crisis, like 2008, will happen again. Derivatives are still unregulated. An unregulated derivative market was the root cause. The root cause still exists.
3. Trading on the stock market is not fair. We all do not have access to the same information. Stocks, commodities, & derivatives trade on information-Wall Street information. The government doesn't care. Bankers become regulators, regulators become bankers, bankers become members of the Federal Reserve and Ivy League college business professors (that sit on the banks' board of directors). They are all the same people.
4. The people that lost the most money (in 2008) were invested in pension plans. What do pension plans invest in? Some invest in derivatives of home loans known as CDOs or collateralized debt obligations. These are the things that caused the market collapse of 2008. AIG provided insurance on these things (but didn't set any money aside to pay) if the underlying loans if the CDOs defaulted (making them worthless). The insurance was called a Credit Default Swap or CDS (a derivative of the CDO). Since AIG couldn't pay and was taken over by the government, everyone that had a pension plan invested in CDOs lost EVERYTHING. I don't invest in pensions (401k plans).
5. This is how buying a house worked going into the financial crisis. A buyer (you or me) purchases a home from a lender (bank). The lender repackages a bunch of home loans, car loans, etc (people with credit rating from poor to great). This repackage instrument is called a CDO. The lender obtains a new credit rating for the CDO of AAA (the same as US treasury bonds). The credit raters (S&P, Moody's, or Fitch) trust the bank to tell them what's in the CDO & how to rate it; and they get paid more for giving AAA ratings instead of BBB ratings. Then, the lender sells the CDO to an investor (Fannie Mae, Freddie Mac). A speculator believes the CDO will default and they take out insurance in the form of a credit default swap (CDS)-another type of derivative, from AIG. If the loans in the CDO default, the CDO becomes worthless and the CDS contract has to be paid. It is a Ponzi scheme.
6. There was so much predatory lending going on because the lenders didn't own the loans. They were not liable if the loans weren't paid (AIG was left holding the bag, and the taxpayers paid their bill). The original lender collects the 30 year mortgage money by reselling the loans a few days later. This process hasn't changed.
7. TARP bailed out the banks because they owned so much CDOs that they would have become insolvent otherwise. AIG was bailed out because they are the last guys in the pyramid scheme. Otherwise, the whole financial sector would have shut down causing a larger depression than the 1930's.
8. The US financial sector is more deregulated today than in the 1930's, Our government authored this crisis by starting the deregulation in the 1980's and repealing legislation enacted after the Great Depression. This allowed mergers for the big banks we have now and the trading of unregulated derivatives. None of this has changed today.
The primes are the repackaged AAA derivative instruments or CDOs. The subprimes (loans with low credit scores) are the CDOs with less than a AAA rating. But, they are phony ratings. Since the credit rating agencies compete against each other for business and get paid more for handing out a higher credit rating, they are effectively being paid off to hand out false AAA scores to CDOs that deserve to be subprime. This CDO is guaranteed to default.
The prime CDOs pay a lower interest rate than the subprime CDOs. Pension plans wanted the higher interest rates and added the subprime CDOs to their portfolio. It bit them in the a$$.
The prime CDOs pay a lower interest rate than the subprime CDOs. Pension plans wanted the higher interest rates and added the subprime CDOs to their portfolio. It bit them in the a$$.
Ha! 4MN if you had ANY idea what's going on now regarding hedge funds in the market........ you'd probably either A. Lose your mind or B. Grab your gun. It's THAT bad/illegal.
It sucks that they got no jail time. Knowingly rubber stamping a risky instrument as the safest and best AAA rating you can get is criminal.
7. The government attempted to help stimulate small businesses by rolling out the SBLF plan. The Small Business Lending Fund was an attempt to spur economic growth by providing loans to the backbone of our country. Well, since the banks consider themselves small businesses, those "F"ers used a lot of that money to pay back TARP money that was costing them a higher interest rate.
8. I won't pretend to be thoroughly informed on this whole interesting topic. But, the argument that makes the most sense to me is the repeal of the Glass-Steagall Act from the 1930s. Essentially, investment banks and commercial banks were no longer required to be separate. These banks were now able to use depositor's money for whatever risky investments they wanted. You and I have to make risk/benefit investments in a house, business or whatever. If we risk too much in the hopes of high reward, we may lose our ass and downsize our life or go bankrupt. It is a real consequence to investing. These banks nowadays get no penalty for their bad risk investments and furthermore, they are made whole by the government because they believe the American people are too helpless against these TBTF institutions.
Clob, you should let us know. What's your level of risk for doing so?
1. We don't have the tens-of-millions to invest which is a requirement to participate in this derivative market.
2. We don't manage the tens-of-millions which is an alternate requirement to participate in this derivative market.
3. No investor or banker from the United States was successfully prosecuted for the 2008 financial crisis.
4. Academic papers were presented to Alan Greenspan, warning him of the impending financial collapse that was created from the derivatives market. His response was, we could not understand it if we had a PhD in mathematics. They don't care.
1. We don't have the tens-of-millions to invest which is a requirement to participate in this derivative market.
2. We don't manage the tens-of-millions which is an alternate requirement to participate in this derivative market.
3. No investor or banker from the United States was successfully prosecuted for the 2008 financial crisis.
4. Academic papers were presented to Alan Greenspan, warning him of the impending financial collapse that was created from the derivatives market. His response was, we could not understand it if we had a PhD in mathematics. They don't care.
Westx, you nailed it. The repeal of the Glass-Steagall Act was initiated under Fed Chairman Alan Greenspan. It was illegal for Citicorp and Travelers to merg in the late 1990's-to create Citigroup (the world's largest bank). Alan Greenspan agreed to a 1-year grace period for the merger. During this grace period, Congress drafted a new law that repealed Glass-Steagall. The banks have went crazy ever since. The big banks started bringing internet companies public on the stock exchange, even though they knew the companies were worthless. The big banks' analysts announced buy ratings on these internet junk stocks (on TV, in print, and on-line). The average investor bought these junk companies (driving prices up) and the investment banks that brought the companies public started selling the stock (at the same time their hired analysts were telling people to buy). Hence, we ended up with the dot.com crash.
Stocks with good yields that I track in my stock app are: $SIX-4.22%, $GM-4.23%, $T-5.58%, $CAT-$4.53%, $VTR-5.17%, $CVX-4.76%, $VZ-4.89%, $DUK-4.62%, $F-4.26%, $PFF-5.8%.
The stock tickers above represent the following: Six Flags Theme Parks, General Motors, AT&T, Caterpillar, Ventas, Chevron, Verizon, Duke Energy, Ford, and iShares US Preferred Stock.
The stock tickers above represent the following: Six Flags Theme Parks, General Motors, AT&T, Caterpillar, Ventas, Chevron, Verizon, Duke Energy, Ford, and iShares US Preferred Stock.
I'm careful about reading and believing on the internet, but just wanted to say thanks for posting all this information. Just sold my home due to Houston housing bubble and need to invest. Seeing this raised questions I didn't know I had. Appreciate it.
If American money does leave the market as you predict, which is conventional wisdom, stock prices will be lower for foreigners who know that the USA is the safest place for equity capital. So, this could partially offset that. Also, if Boomers sell off stocks, they spend that money. If they spend that money on stuff in the USA, those companies will have increased value. What goes around comes around.
High yielders are immensely risky if they have weak balance sheets. You can find high yielders in the oil industry right now, but many won't survive this year's low oil prices.
I can't answer for Clob, but as someone who is registered with FINRA. Were I or anyone who is licensed to make a recommendation over a forum like this, we could get in serious trouble were it to be found out.
Back in the late 90's there were lots of investment forums, I used to belong to one called Raging Bull (or something like that). People were giving stock tips left and right, and as it turned out many of those tips were done by Advisors looking to turn up interest in stock that were floundering or these people had bad positions on.
FINRA stepped in and has basically said making recommendations on a site like this under alias names is a big no no and we can get in big trouble if found out.
How can they find out, well someone just has to invest and lose money and then blow the whistle.
Every-bodies floundering, the damn stock markets down bad! If ya got money invested , then ya better get it out before the thing crashes again, look at gas, predicted to go to a dollar a gallon...if ya got money then ya better keep in at home buried in back yard. better than losing it shootin dice on some stock...That's why the brokers get fees, if it bust , they still get their money and you get a handshake..
Hook'em
Hook'em
Thanks, sorry asked. Don't want to endanger brother that bleeds burnt orange
I wish I could give advise on what to do. But in a forum like this I cannot. What I can say is that there are places to put your money that does not have market risk. However those places offer other types of Risk such as Inflation Risk or Tax Risk.
Again, I have been moving my clients over to investment vehicles that remove market risk from the equation. This is not advise for everyone, keep in mind each person is different, and I treat all my clients differently. The important thing is to you are comfortable with your situation.
Again, I have been moving my clients over to investment vehicles that remove market risk from the equation. This is not advise for everyone, keep in mind each person is different, and I treat all my clients differently. The important thing is to you are comfortable with your situation.
Geez, take it from an old guy who's done well--dollar cost average in an index funds portfolio made up up of large, small, and mid-cap stocks in equal amounts. Then add about 20% international. Maximize your 401(k), get a 15 yr. mortgage putting 20% down. Work your nuts off and don't get divorced, and save for your kids college from day one. Be sure to have disability insurance. Minimize debt, and stay the course with I've just outlined. Been doing it since the late 70s. Own a little estate and a little gold. Ignore what goes on in the markets or around the world. It's not that hard, people. Oh, and make a lot of money and own your own business if at all possible.
I just read that the 4 largest U.S. Banks (too big to fail) are trading stocks in China. Bottom line: do not purchase a bank stock. These are the banks with the largest exposure to China.
1. Citigroup
2. JP Morgan Chase
3. Bank of America
4. Wells Fargo
http://realmoney.thestreet.com/arti...l&utm_source=linkedin.com&utm_campaign=buffer
1. Citigroup
2. JP Morgan Chase
3. Bank of America
4. Wells Fargo
http://realmoney.thestreet.com/arti...l&utm_source=linkedin.com&utm_campaign=buffer
Well I'm not as knowledgeable as these guys on here. This isn't even a hobby, it's just trying to keep my eyes open while living in the city.
That said, the average Houston home price went up almost 30% in desirable areas over the past 3 years. The growth was spurred by the thriving O&G market, which created one of the lowest home inventories on record. So we had record high prices with record low supply of homes on the market. I remember there were 30 offers on a property sight-unseen. I was priced out and stayed where I was.
Builders flocked to Houston to build and bought up a ton of undesirable properties looking toward the future. If you're in Houston and you take a look around, you will see lots of "small footprint" properties coming up. There are a lot of 3 and 4 story townhomes nestled together in mini-communities and a sht ton of apartment complexes (many of them luxury-level) that came up in the last 2 years. Some of these are still being built. So they're trying to get as much population in a small area as possible, raising their profit levels. This is a great strategy for builders in good times. Except...
O&G tanked. Don't let the mayor fool you. O&G is responsible for 30% of Houston's economy. Layoffs have started and will not be ending anytime soon. All of a sudden that home you convinced yourself was worth 30k over asking is not selling as quick as 2 years ago when you practically begged to get the contract. People do not want to buy a new house in an economically uncertain time.
Now we're seeing home prices falling. Apartment complexes are sitting half empty. Hell, I sold my house last year and moved to an apartment complex being built. Got a great deal with 2 months free on a 9 month lease with no deposit & no app fee. Guess what? It's still 30% capacity and this is in the heights (not exactly an undesirable location).
Spoke to a tradesman and he said that all the carpenters, plumbers, electricians, etc... have moved on to other cities.
The only way this bubble doesn't pop is if there is war between Saudi Arabia and Iran. Otherwise, look to buy a house when oil is low if you can afford it. This is what the rich do. Buy low, sell high. We can't do it with millions but we can do it with thousands.
Again, I'm not a pro. Actually just an engineer in O&G but this is my money, so I try to pay attention and stay informed. Best of luck to ya!
That's interesting. Thanks for your insight. The O&G has been brutal in West Texas (which includes the panhandle in my book) as well. Companies have really slowed down drilling since oil went to $60/barrel early last year. It has only gotten worse as oil has gone down even further. El Paso is an exception, however. El Paso's local economy has always been pretty independent of the major fluctuations like oil busts, 2001, and market crashes. It does seem to be affected, but, by a much smaller percentage.
Elcapitan-- I went to a board meeting yesterday in Houston for an O&G engineering firm based in the Woodlands that I serve at the pleasure of the board for, and after they showed me the end of the year P&L's one of the other board members who owns a huge construction company in Houston made mention of what you're talking about. He said they were 6-12 months away from the Houston housing market just tanking.
I saw a segment on bloomberg where oil going to $20 was the topic. They are predicting a high likely hood of it occuring. They didn't discuss much about the collateral damage which is what interests me the most. Here are a few tidbits: (I am always cautious of anything Goldman Sachs has to say-ulterior motives)
-Malaysia stands to lose 300 million ringgit ($68 million) for every $1-a-barrel decline in crude, according to government estimates. ConocoPhillips is losing $1.79 billion in net income each quarter for every $10 drop in prices, according to analysts at Barclays Plc.
-The U.S. Energy Information Administration reduced its forecast for WTI prices for 2016 by 24 percent to $38.54 a barrel. In its monthly Short-Term Energy Outlook, the agency said the oil market would come back into balance in 2017.
-The call for oil in the $20s has grown louder. Goldman Sachs Group Inc. gave a 50 percent chance of oil falling to $20 in September and Morgan Stanley said Monday that a strong dollar could drop oil below $30. Morse was first with the $20 call, although he said last February that it could happen in the first half of last year followed by the market balancing.
There is no bad news, there is only news. If you have a plan in place you can take advantage of any situation that happens.
