Nate: I've been in cash 18 months. I rode the rally for 3.5 years and decided to step off the train. Since then, I've definitely missed some huge gains. It's painful to look at some of the ticker symbols I let go. Hence my earlier statement: I don't know which hurts worse, the losses I've taken over the years or the gains I miss out on.
You're 100% correct on the house. I've got a growing family, and we have to live somewhere. As I was running the numbers prior to purchase, I actually projected the total 30-year cost of owning my proposed home versus the 30-year cost of renting the equivalent property (even though there is no simple equivalent). For my home costs, I added up principle, total interest costs, taxes (accelerating at just above inflation), home owners insurance (accelerating at inflation), remodeling costs that were equal to 50% of the purchase price of the home, and $300 per month of general upkeep. I then backed out the interest and real estate tax deductions from a federal bracket of 25%. For the rental option, I used a rent that seemed market appropriate (accelerating at inflation) and renter's insurance (accelerating at inflation).
The numbers were interesting. In short, owning was cheaper than renting over the 30-year period by approximately $500,000. The best part is that I own the home, and if home values appreciate at the 100-year rate of inflation (a modest 3.24% annually), I will have a nest egg worth well north of one million dollars in 30-years. Posted: July 27th, 2014 @ 6:00AM
I'm interested in the moral decisions people will make to survive. In a catastrophic CME scenario, most folks won't even know the scale of the problem for days or even weeks because communications would be dead. They'll think they can just hunker down and wait it out. Only when they're approaching starvation will they do things like loot and kill to survive. It really becomes a question of how quickly folks reach the moral breakpoint. In a city like NYC, with over 10 million population in the metro area, I imagine that widespread civil disorder would start within 3-5 days. It would probably be total anarchy inside a month. Even if order is restored in months or years, I think it's likely that most people who commit criminal acts (including murder) would get away with it. The job of investigating and trying those crimes would be too much. In a sick sort of way, those who are unafraid to push past moral boundaries and societal norms might be the inheritors of the earth. To further expand on this point, what happens when a hardened urban dweller meets a suburbanite who was prepared? If I've been living well because I'm prepared, am I less likely to pull the trigger on a stranger who is walking through my yard, peering in my windows? That guy might already be determined to kill anyone who stands in his way. Posted: July 25th, 2014 @ 1:42PM
1. My IRA, 401k, and deferred comp are 94% un-invested (cash) at the moment. I'm basically losing money through inflation. The only thing I'm holding is some CCJ (Cameco-a uranium company), but even that is less than 6% of my retirement funds. I have a multitude of reasons for being in that stock. Suffice to say, I'm a believer in the future of nuclear (I bought in AFTER Fukushima).
2. A good chunk of my liquidity is going into a house that I'm buying for my family. I have mixed feelings about buying a home right now. I'm getting a killer rate (3.75% 30-year fixed VA), but I have to wonder what will happen to home prices as rates rise. Most people (including myself) evaluate what kind of house they can afford based on the monthly principle, interest, taxes, and insurance payment. What happens if mortgage rates move to between 6-7% over the next decade? Given that 6-7% is middle of the road from an historical basis--my parents financed at 9% in 1986 and there have been mortgage rates over 10% in the past--I think such a move is likely. What happens to the ability to afford a home when rates double? Right now, the principle and interest for the home I'm buying is about 70% of the monthly payment. If the amount of interest doubled, it stands to reason that there would have to be a reduction in the amount of principle financed to compensate for the increased monthly interest expense. The only way to reduce the principle financed is through either 1) lower home prices or 2) a much larger down payment. Given that most people are cash strapped, I think home prices are going to take a shit once the interest rates rise. Knowing this in my head and living it, however, are two separate things. I can have a theory about the future of housing prices, but at some point I want to own something for my growing family. It might be a six of one, half dozen of the other kind of problem if I stay in the home for 30 years and pay it off. Falling prices only become a problem if I have to sell in the next 10-15 years. I'd hate to bring $100,000 to the closing table in order to unload my house. Posted: July 25th, 2014 @ 1:07PM
Smoking Joe - That second link you provided was pretty interesting. Lots of deep dives and links to explore regarding nuclear plants, the economy, recovery, etc. There's also lots of talk of water purification, dried goods, and guns at the individual level--which is where my head is at right now. Posted: July 25th, 2014 @ 11:54AM
Gee, thanks Trash, I never thought of doing that. I usually just read headlines and make ill considered comments. Now that I'm straightened out and see the light, my life will be forever changed.
I got about 1:30 into the video, after the traffic stop happened, and figured the rest wasn't relevant to the violation. It wasn't clear that the bicyclist was the one being tailgated. I thought it was the car in the left lane being tailgated, hence my original comment. Posted: July 25th, 2014 @ 8:46AM
I think we're in a bubble Killer, that's why I've been out of the market for over 18 months. There's just a ton of funny money floating around, and there aren't a lot of places to put it. No need to invest in capital production since demand isn't that high. Bonds are a terrible investment due to historically low rates. Real estate has recovered somewhat, but no one is in a hurry to bum rush back into that sector. Consequently, I think people have been piling into equities (stocks).
At some point, quantitative easing will come to an end, so the funny money train will be off the rails. Around the same time, I have to believe businesses will see that this recovery is weak sauce. The number of people who are unemployed, underemployed, on disability, or have simply stopped looking for work is staggering. What happens to stock prices then?
I realize this is an overly simplistic viewpoint fraught with gaps in understanding, and I could be dead wrong. Still, I can't wrap my mind around the current valuation of the market. Something isn't right. Posted: July 25th, 2014 @ 8:37AM
If I had the time, I would probably find about 20 financially solid companies with widely recognized products whose combined market capitalization does not equal that of Facebook. Trading at over 80x earnings is absurd. There's no way FB can grow its earnings at a rate to match that multiple.
As an aside, I've been out of the market since the beginning of 2013. What a kick in the balls the last 18 months have been. I don't know what hurts worse, the losses you take or the gains you miss? I look around and my eyeballs are telling me something different than what the S&P500, Dow, and Nasdaq charts are claiming. The lows of Feb 2009 were too low, but I don't know how the market can justify current price levels. I'm actively hoping the market tanks such that the DJIA goes back down to about 12-13k. Posted: July 24th, 2014 @ 2:25PM
I don't think the tailgater in this video would have been pulled over in the Philadelphia area. Was he violating the 2-second rule? For sure. But if that is an example of tailgating, well, about 95% of motorists around here tailgate. Posted: July 24th, 2014 @ 2:17PM
This really puts Ukraine in a bad spot. They can't strike back with counter battery fire. Doing so would just give Russia the excuse for an outright invasion. Besides, I'm not sure Ukraine's military is powerful enough or well trained enough to effectively execute counter battery. Posted: July 24th, 2014 @ 1:48PM
For me, it's a combination of all the factors cited above:
-Prohibitive cost of movies and incidentals
-Cost/inconvenience of arranging babysitting
-Availability of alternatives (Redbox/On Demand, etc).
Most of the movies that are worth seeing on the big screen are either action, sci-fi, or fantasy. Generally, my wife hates all those genres. So even if there is a movie that is worth the expense and hoop jumping to go see on the big screen, chances are good that my wife won't want to go see it with me. I have no problem going to see a movie by myself, but who has the time for that when you have kids? Posted: July 24th, 2014 @ 1:44PM
Content and comments on this site are king. The format is fine. As mentioned above, the focus of the site has evolved over the years and it's more about the community. If you're looking to monetize the site, I don't know what to tell you. I think you've been kicking different ideas around for a decade with little to show for it, unfortunately. Posted: July 18th, 2014 @ 5:15PM
This really is terrible. It's going to be hard to sort through the misinformation that will be pumped out by both Russia and Ukraine. I'm sure both countries will do their best to paint the other as responsible--or shift blame to a third party. In this day and age, it's hard to believe something like this could be a mistake. Malaysian Airlines is really taking it on the chin this year.
Two other notable mistakes were when the Soviet Union shot down KAL 007 (a civilian Boeing 747) and when the USS Vincennes shot down Iran Air Flight 655 (a civilian Airbus A300). Both of those incidents were definitely avoidable (KAL 007 more so). I can't believe that 26 years after IA Flight 655 that something like this would happen again.
Also, after many, many years of great flying, the 777 has been involved in three very notable crashes in the last 14 months (SFO crash upon landing, MH 370, and this). The jury is still out on the MH 370 crash, but the SFO crash and this incident are definitely not the fault of the airframe.
Ah, caffeine. My friend and sworn enemy. Every so often, I go through a caffeine cleanse whereby I stop drinking caffeinated products for 4-5 days. During that time, I have a couple days of splitting headaches and generally decreased energy level / mental acuity. After those first days though, I really start feeling pretty normal. My sleep improves and my waking alertness improves.
Then I start up my overnight shift work again. I think, "just one cup of coffee to perk me up a bit." After a few weeks, I'll be back to 30-40 ounces of coffee a day. Then it's time for the cleanse all over again.
This guy's experience with quitting coffee was interesting and somewhat informative:
First picture in that article: look at the woman's hair and nails. I wonder if she has a smartphone? Her water got cutoff because she makes bad choices. Good for Detroit! Posted: June 29th, 2014 @ 12:15PM
I see more and more pharma companies in the Philadelphia area that are either domiciled in Ireland or in the process of re-domiciling to Ireland. The company and its shareholders win because the company gets a lower tax rate. Ireland wins because it gets tax revenue where there was none. The citizens of the United States get screwed. The only way to prevent this would be to pass stricter laws governing these sorts of tax dodges. Now consider how invested members of Congress are in the stock market and how much they reap in corporate campaign donations, and ask yourself how likely this is to happen. Posted: June 29th, 2014 @ 6:17AM
It's a bit hard to make a compelling thriller when the ending is known. Also, it's hard to root for the conspirators considering that their success might have meant a conclusion to WWII that didn't include the utter destruction of the Third Reich. A negotiated peace might have led to a whitewashing of the Holocaust and continuation of Nazi idealogogy (in some form or fashion). Posted: June 28th, 2014 @ 6:14AM
I thank God I was born in the United States and for the opportunities I've been given. With that said, it's time to pull up the ladders on the life boat--we're getting dangerously full. Posted: June 23rd, 2014 @ 11:40AM