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Harvey

Harvey

Administrator
Staff member
I'm amazed at the panic I'm seeing among some (not all, or even half) co-workers and associates, with recent events.

How many people:

1 Have a portfolio, 401k or retirement account?
2 Look at it more - during periods of higher market volatility?
3 Have made any changes to stock allocation in the last 30-60 days?
 
people don't seem to understand.. the wild fluctuation in the stock market is not the problem..The real problem is the credit crisis.. this has the potential of collapsing the economy
 
1 yes.
2 yes, but not obsessively, maybe once a week instead of once a month.
3 no, but thinking about trying to find some cases where Mr. Market threw the baby out with the bathwater.

Understand Jason's point completely. But someone who is not personally leveraged much, or needing a new loan in the near term, what personal impact do they see? Thus most of the general public doesn't see the need for the bailout.

I like the preferred stock + warrants model. Feds did this for Fannie/Freddie, Buffett for Goldman-Sachs. How can the Feds possibly figure out what these securities are worth better than the companies holding them? If those companies need more capital, let them issue preferred stock + warrants to the Feds. The more trashy debt they hold, the more potential control they will have to give up. If they went way overboard like AIG, they have to give up 80% and some heads roll.
 
Tony Crocker":1vtwzf5l said:
Understand Jason's point completely. But someone who is not personally leveraged much, or needing a new loan in the near term, what personal impact do they see? Thus most of the general public doesn't see the need for the bailout.
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The problem isn't just normal people with credit cards. It's people/companies taking out loans which has far reaching implications for farmers, supermarkets, car sellers, etc... When it all comes together the credit crisis could have an effect almost every facet of the economy.
 
I agree about potential impact through other sectors of the economy. But some people have been crying wolf about this for a year and it hasn't happened yet. Therefore many are skeptical. I agree that something needs to be done, but based upon what I've read, I'd be more comfortable with the preferred stock/warrant model. Not my idea, just makes the most sense IMHO of the alternatives I've read about.
 
jasoncapecod":1ntq3ulg said:
people don't seem to understand.. the wild fluctuation in the stock market is not the problem..The real problem is the credit crisis.. this has the potential of collapsing the economy
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I think this is exactly right. The stock market is a tangible, measurable number people can easily watch, so they focus on it. You can't track the credit markets in the same way.

That's kind of what I was after with the original post....are FTOers impacted by the market (ie do they own stock) and how are they responding to the volatility.

With regard to the bailout...I don't understand all the nuance. But it does seem like the version of the bill that got voted down on Monday was significantly better than the bill originally proposed by the white house. I'm sure it could be better. The way Monday's bill was written the money would be parsed out in "small" (50 billion) chunks. The thing could be changed by the next president/congress if there is a better idea out there.

What I don't know, and I think many of us don't know, is whether or not we can afford to wait until next year to solve this thing. If it doesn't happen now, it will wait until January. I honestly don't know if it can wait or not.

Part of the president's problem is that he's used the "mushroom cloud" before, so his credibility on this is low.
 
But some people have been crying wolf about this for a year and it hasn't happened yet.
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Agreed, but things just changed significantly in the last two weeks. For example, my company has a LOC through Wachovia and also Citi. The new Citi will not be signing up for the 'double' amount of credit for our company, which leaves us with either half the working capital available or begging a new bank for a new LOC (not an easy task at the moment and for who knows how much longer). And that is a relatively benign example as our LOC's end more than 12 months out (but still causing significant concern in our treasury dept, as well as internal reallocation of our available capital).

What if your LOC for your small company on main street is about to expire at say the end of 08 and you need to re-up (and you'd be working on that literally right now). Who is going to provide that credit to you to make payroll or a new R&D venture or a small expansion or, etc... ?? I suspect a moderate recession is in the cards even if the "big bail-out" occurs at this point. The trigger/cascade is wall street now directly affecting companies, which hits jobs, and then the consumer economy.

1) Yes -several accts
2) No - a bit less actually so I don't drive myself nuts with daily fluctuations and so I don't do something stupid/rash to my long term asset allocations
3) See #2. Actually When I think the market has finally figured it out, I hope to buy with cash I have on the sidelines (can never be perfect trying to time, but buying large chunks now would not be prudent for example)
 
My take on how all this can affect the ski industry , especially in the east. In the summer and fall ski areas are tight on cash. Their cash flow is basically shut off.
I am sure all the major resorts have a line of credit they tap into to start up winter operations. Now that banks are running out of cash to lend or just unwilling and scared to lend it . Some of these areas might be finding out that their credit lines have been pulled or that the interest rate on them is so high they can't afford to use them. In the east where we have to make snow. This will be a major problem. Out west the start up costs are lower.
 
Harvey44":2sqpjlc7 said:
I'm amazed at the panic I'm seeing among some (not all, or even half) co-workers and associates, with recent events.

How many people:

1 Have a portfolio, 401k or retirement account?
2 Look at it more - during periods of higher market volatility?
3 Have made any changes to stock allocation in the last 30-60 days?
Click to expand...

1: Yes. I have several.
2: No. I have not looked in quite a while.
3: No.

For a while, I've had half my net worth in cash. I only have around 20% in the stock market.
 
Not sure if Geoff is older than I am or a great market timer, or just conservative by nature.

If I was 25, I'd be rejoicing. I'd have 90% in stock and buying more as fast as I could.

If I was 65, I'd be 70% in bonds and my portfolio might actually be up this year.

I'm in that middle zone. 50 years old. Not enough saved to have a low risk (bond/cash) portfolio yet. And I still think, that even with current conditions, there is more danger from taking too little risk as opposed to taking too much.

So far...I'm watching closely, as always....but haven't made any changes.

I'm not even afraid. Yet. Maybe I'm nuts.

Time will tell.
 
jasoncapecod":frlzg8n9 said:
it is times like these , that great wealth is made.....
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Well I definitely don't have the stones for that. To MAKE great wealth now, You'd have to sell all the bonds and buy stock with the proceeds. I'm just trying to keep from loosing a bundle.
 
1. yes. i only put in 5% of my pay as it's the max amount that my employer will match at 25%. 5 funds split evenly at 20% each, some foreign/domestic, small/large. i figure it's all pre tax so what the heck.
2. no
3. no

less than 2% of my net worth is in my 401k. the rest is cash earning 3-5.25% depending on mma or cd and i have zero loans and owe nothing to anyone. no mortgage, no car insurance, no car payment, a delta amex card that i earn miles on that i pay off every month. the only way i'll invest to make money is real estate and there are some good deals to be had out there. i'm still waiting for better deals and will be more likely to put 1/2 down or just pay cash when the time comes. cape cod is still the target market for me, but i'd like to see it bottom then up swing slightly. time will tell and there's no rush, but the barrel is always cocked and ready. there is somethin so nice about pure liquidity and living simply. WINTERS COMING!
rog
 
Harvey44":34dtbn2p said:
Not sure if Geoff is older than I am or a great market timer, or just conservative by nature.

If I was 25, I'd be rejoicing. I'd have 90% in stock and buying more as fast as I could.

If I was 65, I'd be 70% in bonds and my portfolio might actually be up this year.

I'm in that middle zone. 50 years old. Not enough saved to have a low risk (bond/cash) portfolio yet. And I still think, that even with current conditions, there is more danger from taking too little risk as opposed to taking too much.

So far...I'm watching closely, as always....but haven't made any changes.

I'm not even afraid. Yet. Maybe I'm nuts.

Time will tell.
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I'm 50 and naturally financially conservative. I was renting in Portsmouth, NH during the housing bubble. I didn't like the looks of it so I sat it out. I just moved out of the rental house after my startup company folded with no prospects of employment locally. If I had bought, I'd be completely screwed now. I flipped my biggest fraction of 401-K assets to cash a while ago so I'm 50/50 cash in my retirement portfolio. My liquid assets are 100% cash and similar in size to my 401-K. My vacation ski condo has tanked in value comparable to the equity part of my 401-K portfolio. I also have a bunch of Lucent (Alcatel) stock as a reminder to sell stock whenever I can and diversify my assets.
 
icelanticskier":49nb8ew9 said:
less than 2% of my net worth is in my 401k. the rest is cash earning 3-5.25% depending on mma or cd and i have zero loans and owe nothing to anyone. no mortgage, no car insurance, no car payment, a delta amex card that i earn miles on that i pay off every month. the only way i'll invest to make money is real estate and there are some good deals to be had out there. i'm still waiting for better deals and will be more likely to put 1/2 down or just pay cash when the time comes. cape cod is still the target market for me, but i'd like to see it bottom then up swing slightly. time will tell and there's no rush, but the barrel is always cocked and ready. there is somethin so nice about pure liquidity and living simply. WINTERS COMING!
rog
Click to expand...

You should write a book. :-s
 
jamesdeluxe":2yaqp7gc said:
icelanticskier":2yaqp7gc said:
less than 2% of my net worth is in my 401k. the rest is cash earning 3-5.25% depending on mma or cd and i have zero loans and owe nothing to anyone. no mortgage, no car insurance, no car payment, a delta amex card that i earn miles on that i pay off every month. the only way i'll invest to make money is real estate and there are some good deals to be had out there. i'm still waiting for better deals and will be more likely to put 1/2 down or just pay cash when the time comes. cape cod is still the target market for me, but i'd like to see it bottom then up swing slightly. time will tell and there's no rush, but the barrel is always cocked and ready. there is somethin so nice about pure liquidity and living simply. WINTERS COMING!
rog
Click to expand...

You should write a book. :-s
Click to expand...

write a book huh? that sounds like too much hard work and i don't like to work hard or much which is why i do what i do. my money is much better at making money than i am anyway. cd rates are up slightly though, may have to move some real paper around tomorrow. someones gotta pay the rent, might as well be the cd's. killer mtbing weather this week, play first-work later.
rog
 
Did you look?

Although the Canadian Economy is more solid due to lack of deficit, 80% of our trade is with the US. The high Canadian dollar has hurt mainly the manufacturing sector in the East. Resources like Oil have been helping the economy with the high gas prices. But now, gas prices are falling, the Toronto Stock Exchange is falling faster...and the Canadian Dollar is nose diving. Yesterday, the dollar lost close to 3 cents, a record. Last November the Canadian $ and worth $1.10 US, the dollar was worth 90 cents on Wednesday. The dollar closed at 84.67 cents US yesterday.
 
I think Patrick's got the right idea. Instead of investing money in the stock market and watching it evaporate before our eyes, it's better to cash out and use it for extravagent trips to South America.
 
Yeah, I did see that the Canadian dollar was tanking. What I don't understand is why? Maybe I slept through this part in my economics class, but when our economy is in shambles and the Fed lowers interest rates (like it just did)...shouldn't that make our currency even weaker against foreign currencies??? Canada can't be in much worse shape than we are now.

But I'm not complaining. I was sitting on the fence about booking a 4-day ski trip to Banff this February. But with the exchange rate as favorable as it is now, I went ahead and booked it on Friday. I got 1.17 CAD for a US dollar. And using airline miles and the early booking discounts here: http://skircr.com/vacations/early_incentives.asp, I booked the whole trip for about $850 USD. Two weeks ago it would have cost a grand.
 
Final payment for Chatter Creek is due at the end of the month, so it looks like I'll get modest discount vs. last year.

Strength of Canadian currency is most sensitive to commodity prices, particularly oil. U.S. dollar tends to strengthen during any geopolitical turmoil. Interesting this is happening when the U.S. is the main source of the current problems. But currencies of countries exporting much here (including Canada) rate to decline if our recession is deep or prolonged. The euro is somewhat of a surprise, but evidently their financial institutions invested in questionable securities as much as ours did, and it's more difficult for their governments to fashion a coordinated response.

http://www.wiegele.com/helispecials2.htm This is tangentially related to both economic issues and the Canadian dollar. I have not investigated details; the 2-day offer at $1K/day may be just early season. But as some of you know from my trip in 2007, Wiegele has been willing to accept short-notice stays of 2-3 days when they are not full upon inquiry. But this is the first time I've seen it offered publicly.
 
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