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Post by Cornflake on Jun 25, 2020 20:10:14 GMT -5
We had our semi-annual meeting with our financial advisors today via Zoom. They're all working from home and will probably continue to do so for a long time. Given the nature of their business, there's no reason not to do so.
I'll skip the stuff peculiar to us. Everybody's poorer. I asked what they expected to happen in the next year or so. The answer was (a) they don't know, but (b) that the economy will be bad until the virus is brought under control, with luck in 2021, and then there may be a fairly healthy recovery. I agreed with both parts of the answer.
I asked why the stock market seemed fairly chirpy (except for off days) while the economy sucked. The answer was multifaceted. The S&P is dominated by high-tech giants that are currently doing very well. Also, markets and the economy are different things. Our advisors look at equity investments from a time frame of about five years. Apparently that's not unusual. If you expect a recovery in the next year or so, it's a good time to get into some currently depressed equities, e.g., energy. Oil companies' prices are very low and they'll probably boom when a recovery begins. Made sense to me.
My questions, as I told them afterwards, were mostly aimed to find out whether they bought into some rosy view of recovery that I didn't share, in which case I'd be looking for new advisors. Not the case.
Talking about money is always a bit touchy but pretty much everyone is interested in it and I thought some might be interested in what those in the money biz are saying.
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Post by Village Idiot on Jun 25, 2020 20:23:19 GMT -5
NPR's Marketplace is a pretty good show for people like me who know nothing about economics. One of the things the host says quite frequently is that "the stock market isn't the economy". His layman's explanation: The economy centers on the moment, the stock market focuses on the future. |
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Post by Chesapeake on Jun 25, 2020 20:53:06 GMT -5
Did your adviser say anything about real estate? The pandemic has killed my B&B business probably for two or three years, probably longer than I can hold out in my little manse near the White House without any income from it. So I'm probably going to have to sell.
The market currently is actually not too bad for sellers: there is diminished stock, pent-up demand, and low interest rates (which help everybody). I'm tempted to play it safe and put it on the fall market, before the whole economy collapses this winter and there are food riots. But on the other hand, if I could hold out until November, I might get in on a boom sparked by a Biden victory. That has been the historical pattern when a new crew comes in, regardless of which party wins: changes of administrations spark real-estate frenzies in close-in DC as new folks look for places near to the action. Of course, on the other hand, a Trump re-election would probably spark a great big meh, and not just for political reasons. There would be little or no turnover.
What to do, what to do.
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Post by dradtke on Jun 25, 2020 21:16:09 GMT -5
I got an email from our financial advisor saying it was time to schedule a review. Haven't gotten back to him yet, but we will. I expect we'll hear the same things Don did.
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Post by Cornflake on Jun 25, 2020 21:17:50 GMT -5
Sorry to hear that, Chesapeake. No, we didn't discuss real estate. Except for our home we're not in it. Good luck in dealing with this.
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Post by epaul on Jun 25, 2020 22:38:03 GMT -5
I'm where I want to be. I want to be 60/40. Every January (or Feb) I re-jigger whatever needs to be jiggered to get there. The Corvid dip has put me closer to 55/45, but that's ok. I won't touch anything until next Jan. (or Feb) and re-balance then .
I just looked at the kids' investments as Anna is back for the summer and we happened to be talking money.
Gus is a money machine. He is still in college, and he has over $30,000 in his Roth and an equal amount outside of it. I had no advice to offer Gus. Instead I asked him for some tips.
Then on to Anna. She just finished her first full year as a teacher. She has her teacher pension and $15,000 in her Roth. I asked her how her Roth was doing. She said she hadn't looked, but it was all in the Fidelity Enhanced Blue Chip fund I had recommended. Well, let's take a peek. We logged on to her account and...
"Anna? You only have a little over $5,000 in the stock fund, everything else is in the Fidelity Holding Fund (a very mediocre money market fund). At your age, you should be 100% stocks. And if you do want a money market, the brokerage holding account is not the one you want."
"But, I wanted the money to go to my stock fund."
"Did you tell Fidelity that?"
"No. I thought that's where it would go because that's where my start up money went"
"Anna, when you send Fidelity money, it goes to your brokerage account, where it sits until you offer Fidelity specific instructions."
"Oh."
"Do you want to move it to your stock fund, which has been going up like a rocket while you haven't been in it?
"Yes. I'll move it all over right now (Anna starts clicking)"
"Wait. Anna, the market is a little screwy right now. Why don't you meter it in? You don't want risk putting all your money in on the day the Dow chooses to go up 700 only to see it drop 900 the next day and then go into a three-month nose dive. You can set up an automatic investment plan that will meter your money into the market over a year, or six months, or whatever time frame you want. Smooth out the bumps. Shoot for average. It is a more prudent way to get where you want to be, fully invested."
"Oh, I like that. A thousand a month?"
"Make it $1200. Interest rates suck."
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Post by jdd2 on Jun 26, 2020 0:56:51 GMT -5
Talked to my older sis this morning, catching up. She's downtown chicago (near NW campus) and had worked real estate around there for years before retiring last fall (with @properties, for the chicagoans). She said the market/prices appeared stable, but that nothing was moving, which made it hard for agents to get those commissions. But I guess real estate is all local, or so they say, and chicago is certainly not DC.
The friend whose B&B I helped manage while he was gone a couple summers ago (hawaii) hasn't had a customer for several months. But as small farm he's always had coffee and nuts to sell, and has used the lull to do some remodeling.
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Post by robjh22 on Jun 26, 2020 7:07:18 GMT -5
My opinion, which is worth what you are paying for it, is that if you are up over 20-25% on any security, and you have held it at least a year, you won't regret selling, even if it keeps going up after you sell. Everyone in the market is up 25% on SOMETHING, since March anyway.
But ... I cannot bring myself to sell certain stocks, like Apple and Visa, because I don't need the cash and the products will be in hugh demand for as far as I can see into the future.
I hope Don is right about oil going up when the crisis ends. But I think Biden will be elected, and he is "not friendly to capital," as Jim Cramer puts it. So there's that to factor in.
If you own funds, you are already diversified, and some are holding Apple and Amazon, and the fund managers are having the same conversation we are having. Let them handle all this hedging and juggling. If you don't have confidence in them, you shouldn't be in the funds anyway, so sell and buy a 1968 Brazilian rosewood D-28.
As the brilliant Ben Stein advises, "Stay diversified and don't worry too much, because nobody gets it perfect." Warren Buffet STILL owns boring KO, as do I. I bet he is buying bank stocks now, or soon. He bought tons of BoA for about $7.00 during the subprime crisis.
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Post by brucemacneill on Jun 26, 2020 7:37:53 GMT -5
Had my yearly review a few weeks ago. Although they think I'm in pretty good shape financially I let them talk me into a 50/50 mix rather than 60/40 because at my age I should want stability more than growth. I'm diversified all to hell, a little heavy in internationals for my liking but I let them handle it. I think they're Democrats. Just lately they seem to be going to cash but maybe there's something they want to buy. They said they didn't care who won the election but I think they're planning for a market crash.
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Post by Marshall on Jun 26, 2020 8:41:25 GMT -5
I'm sure B&Bs are suffering. Same for resort property. We were going to rent a house in Michigan City IN on the lake for a week this summer. All the kids and grandkids with us in a big house with a golf cart, a public pool, and the Lake Michigan shore line. But with the COVID crap we backed out forfeiting our $500 down payment. Nobody wanted to risk it.
We just got a notice from VRB (AirB&B) that there are still houses available in that development this summer. Bigger ones than the one we had signed up for, for less money. These are rental homes in a resort development all owned by individuals who are needing rental money to cover their costs. The woman we were going to rent from is a single parent school teacher who expects this place to supplement her income. Not be a drain.
Tough times for some.
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Post by theevan on Jun 26, 2020 8:44:01 GMT -5
Yes, B&Bs are suffering.
Me, BTC. (Dog-whistle for our Nebraskan binder man)
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Post by Cornflake on Jun 26, 2020 9:56:29 GMT -5
"As the brilliant Ben Stein advises, 'Stay diversified and don't worry too much, because nobody gets it perfect.'"
I'm not really familiar with Stein but I think that's good advice. We're diversified out the wazoo and I don't sweat the short-term ups and downs. I also don't second-guess our advisers' decisions about investments. There was one exception where the problem with the investment had nothing to do with financial expertise and I found that I knew more about the industry and the problems involved than they did, but that was an anomaly.
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Post by majorminor on Jun 26, 2020 10:18:40 GMT -5
I've been buying guitars and amps high and selling low for years now. I'm set.
....and have any of ya'all just considered dying at work?
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Post by epaul on Jun 26, 2020 11:56:20 GMT -5
It's too late now. I had some great chances earlier.
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Post by aquaduct on Jun 26, 2020 11:59:55 GMT -5
I've been buying guitars and amps high and selling low for years now. I'm set. ....and have any of ya'all just considered dying at work? That's my plan. Either dying at work or dying when I'm forced to stop working. Works either way. |
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Post by epaul on Jun 26, 2020 12:04:13 GMT -5
I just finished listening to a fellow talking about cruise line stocks.
Norwegian Cruise Lines is now at $15. It was at 55 in January. Norwegian Cruise Lines is thought to be the healthiest of a in inll the cruise lines. The industry well consolidate. Norwegian Cruise may be the survivor, buying up competitors like Carnival. Like all Norwegians, it will be sitting pretty.
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Post by epaul on Jun 26, 2020 12:05:21 GMT -5
You need to lead the duck, Jack.
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Post by Marshall on Jun 26, 2020 12:31:22 GMT -5
Yeah. How would you like to be holding paper on a cruise ship? Even a piece of one.
How about airliners? Many of the planes United and all fly are owned by investors and leased to the airlines. Those deals have got to be hurt bad. (Not me I'm too small a fish for any of that junk).
And movie theaters are hurting. Build a mega-screen mega complex and let it sit there vacant for 6 months. See how that affects your pro-forma.
Lot of pain going around. But I worry for the smaller scale investors like the lady who owns the house we were going to rent (and our Don Chesapeake). Gotta be real tough on a personal level.
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Post by Rob Hanesworth on Jun 26, 2020 12:33:07 GMT -5
I just finished listening to a fellow talking about cruise line stocks. Norwegian Cruise Lines is now at $15. It was at 55 in January. Norwegian Cruise Lines is thought to be the healthiest of a in inll the cruise lines. The industry well consolidate. Norwegian Cruise may be the survivor, buying up competitors like Carnival. Like all Norwegians, it will be sitting pretty. Carnival operates nine brands (Princess Cruises, Holland America Line, Seabourn, P&O Cruises (Australia), Costa Cruises, AIDA Cruises, P&O Cruises (UK) and Cunard.) If they are bought by Norwegian that will be a significant consolidation. |
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Post by RickW on Jun 26, 2020 12:35:29 GMT -5
The biggest hit on real estate that's been going on is the destruction of the AirBnB market. It's believed that in some major cities, the number of suites that were bought to be used as AirBnb was in the double digits. Both Vancouver and Toronto have seen hits in the price of apartments downtown because of it. No one is traveling, so all those units are not making money, while making their normal outrageous mortgage payments. There hasn't been a full on sell off yet, but if travel continues to be suppressed, and there's every indication that that's so, could be a gigantic kick in the nuts for that area of real estate. Which won't bother me at all, but damn, it's going to hurt a lot of folks.
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