In light of the crisis on Wall Street- I don’t think this stock market will bottom until house prices bottom on a national level. That might not be for six to 24 months. Until then- it may be wise to get out of the stock market. I know your broker is telling you that you can’t “time the market” and that if you miss the top 4 days in a 200 day year- you will miss all the uptick in the stock market- but these are some unprecedented times.
These are some of the most amazing financial times in a generation or more. Get to cash if you can. If it costs too much to get to cash then hold on- but if you own liquid assets- use that liquidity. It’s easier to sell stocks than real estate right now- even if you are taking a loss.
Average americans are losing tens of thousands per day- wealthy americans are losing hundreds of thousands per day in this market. It has been estimated that close to 1.5 Trillion has been lost this week.
I really believe that a good long term solution and investment is lowly leveraged real estate bought at a discount. When I say low leverage I mean- 50% loan-to-value or less. When I say discount- I am saying at least 25% off today’s retail price. If you can’t take the risk of losing money or having your money locked up in an illiquid asset (and real estate is not liquid)- than keep it in a bank.
One thing to remember- if another 4 banks fail- the FDIC might run out of reserves. What happens then? I have no clue- but if you have more than $100,000 in any account- take it out and either open another one at that same bank under your spouse’s name or open one up at a different bank. I heard of an investor who lost $330k because they had money in IndyMac. What did they do- speculate in stock market or real estate- no- their only crime was that they left their money in a bank. So get to cash- but make sure your bank is not on the brink.
i like the practical advice. buy why do you suggest getting out of the market? even if the market comes back in 2 years wouldn’t be better to hold your positions? that is unless you own a company that will go belly up. even then, your reaction time, from when you learn the company will go bell up to when you’re able to sell may be too delayed.
i’m not exactly sure how much certain equities have dropped, but i trust discount propositions exist for quality companies. buffet’s recent purchase of Constellation an energy company is an example. the return (or loss) will most likely be greater than in real estate. i like a mix of both real estate and equities. equities also has the advantage of liquidity.
i like the practical advice. buy why do you suggest getting out of the market? even if the market comes back in 2 years wouldn’t be better to hold your positions? that is unless you own a company that will go belly up. even then, your reaction time, from when you learn the company will go bell up to when you’re able to sell may be too delayed.
i’m not exactly sure how much certain equities have dropped, but i trust discount propositions exist for quality companies. buffet’s recent purchase of Constellation an energy company is an example. the return (or loss) will most likely be greater than in real estate. i like a mix of both real estate and equities. equities also has the advantage of liquidity.