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Stock market crashes are to be expected like Nascar crashes. Just anticipate downtime for repairs and keep going.
LOVE this comment..lol.... Crashes are just part of the game. They just effect people differently. Im 41, so I have a lil ways to go before retirment. Personally, I really would not mind another recesssion or for the markets to take a big hit. You win in the markets by buying low and selling high. I would love another oppurtunity to buy low and a recession could give me that oppurtunity. However, if I were someone 12 months or so from retirement, I probably would not feel this way.
One thing I would like to add about the housing crisis and bank regulation and/or the lack their of. Not all banks are governed by the CRA. In fact very few banks are regulated by the CRA. It should also be noted that institutions, other than banks, whom also are not governed by the CRA, are able to write mortgages. A study was done, and it was found that about 93% of all foreclosures during the crisis originated from non CRA regulated institutions. Of all the institutions that failed during the crisis only a few were CRA regulated institutions. I say this to make a point. Capitalism is fine, but it aint perfect. NON CRA regulated institutions are who originated just about all the mortgages that defaulted. These banks had no government mandate to make, or not make, those loans. It can be argued that this is what happens when government moves out of the way and lets the free market play by their own rules.
LOVE this comment..lol.... Crashes are just part of the game. They just effect people differently. Im 41, so I have a lil ways to go before retirment. Personally, I really would not mind another recesssion or for the markets to take a big hit. You win in the markets by buying low and selling high. I would love another oppurtunity to buy low and a recession could give me that oppurtunity. However, if I were someone 12 months or so from retirement, I probably would not feel this way.
One thing I would like to add about the housing crisis and bank regulation and/or the lack their of. Not all banks are governed by the CRA. In fact very few banks are regulated by the CRA. It should also be noted that institutions, other than banks, whom also are not governed by the CRA, are able to write mortgages. A study was done, and it was found that about 93% of all foreclosures during the crisis originated from non CRA regulated institutions. Of all the institutions that failed during the crisis only a few were CRA regulated institutions. I say this to make a point. Capitalism is fine, but it aint perfect. NON CRA regulated institutions are who originated just about all the mortgages that defaulted. These banks had no government mandate to make, or not make, those loans. It can be argued that this is what happens when government moves out of the way and lets the free market play by their own rules.
You don't need a recession for the market to take a dump. You can expect a decent correction with attendant buying opportunity fairly soon, like in the next year or two. Look what happened when the Saudis took down the twin towers. I was sitting in cash then, waiting for the dotcom bust to shake out, when the market went into a death spiral. There was no recession, just a market crash.
The biggest lesson I learned is to seek out more ways to make more income. For example stocks, options, investments.
Not to rely solely on a job. Because you may lose your job or not be able to work.
LOVE this comment..lol.... Crashes are just part of the game. They just effect people differently. Im 41, so I have a lil ways to go before retirment. Personally, I really would not mind another recesssion or for the markets to take a big hit. You win in the markets by buying low and selling high. I would love another oppurtunity to buy low and a recession could give me that oppurtunity. However, if I were someone 12 months or so from retirement, I probably would not feel this way.
One thing I would like to add about the housing crisis and bank regulation and/or the lack their of. Not all banks are governed by the CRA. In fact very few banks are regulated by the CRA. It should also be noted that institutions, other than banks, whom also are not governed by the CRA, are able to write mortgages. A study was done, and it was found that about 93% of all foreclosures during the crisis originated from non CRA regulated institutions. Of all the institutions that failed during the crisis only a few were CRA regulated institutions. I say this to make a point. Capitalism is fine, but it aint perfect. NON CRA regulated institutions are who originated just about all the mortgages that defaulted. These banks had no government mandate to make, or not make, those loans. It can be argued that this is what happens when government moves out of the way and lets the free market play by their own rules.
You can also look at the financial news and see which companies are doing badly. Buy Put options on them. And when their stock price takes a dump you made money.
Bad news is good news.
One thing I would like to add about the housing crisis and bank regulation and/or the lack their of. Not all banks are governed by the CRA. In fact very few banks are regulated by the CRA.
Well, there are indeed many non-bank financial institutions that are not covered by CRA, but banks and S&Ls that carry FDIC insurance are all covered, so there are quite a lot of those as well.
Quote:
Originally Posted by bigman123
It should also be noted that institutions, other than banks, whom also are not governed by the CRA, are able to write mortgages. A study was done, and it was found that about 93% of all foreclosures during the crisis originated from non CRA regulated institutions.
The numbers will vary from one study to another, but by significant margins, non-CRA lenders wrote more tricked-out loans to more poorly-qualified borrowers than CRA lenders did.
Quote:
Originally Posted by bigman123
Of all the institutions that failed during the crisis only a few were CRA regulated institutions.
Depends how and what one counts. FDIC likes to sweep in after hours on a Friday when they are going to close a local bank. They've done that just five times so far this year, but they were doing up to a dozen a week at the peak of things in 2008-2010. These were mostly small town, sort of backwater banks that had ended up holding some bad paper. Few people outside their local burgs would have been aware of anything.
Quote:
Originally Posted by bigman123
NON CRA regulated institutions are who originated just about all the mortgages that defaulted. These banks had no government mandate to make, or not make, those loans. It can be argued that this is what happens when government moves out of the way and lets the free market play by their own rules.
Markets are NOT wise enough to regulate themselves.
You can also look at the financial news and see which companies are doing badly. Buy Put options on them. And when their stock price takes a dump you made money.
Bad news is good news.
PLEASE don't try this at home. It's what hedge fund managers do all day, they're good at it, and by the time you've figured out which stocks are going down, they've driven the prices of the put options up (and/or the stock down) to the point where you're more likely to lose than win.
Buy and hold index funds for the long term. If you can't stand to do that, buy and hold an actively managed fund for the long term.
You can also look at the financial news and see which companies are doing badly. Buy Put options on them. And when their stock price takes a dump you made money.
Bad news is good news.
Ya , cause the stock market is a great thing. Invest in the same thing that is responsible for recessions and bubbles and shipping jobs overseas. Lots of integrity there.
The Wall Street cowboy capitalists didn't cause the big wave of mortgage defaults. The leading edge of that was people who bought far more house than they needed at an inflated price, planning to flip it for a big profit. When the market dropped, they just walked away. Many real estate markets have not recovered at all.
It's true that speculators borrow money to speculate, but they know in advance that a margin call will wipe them out. Speculating on borrowed money is for people who don't worry about bankuptcy. If you guess right you get rich, and if you guess wrong your creditors get to fight over the crumbs. That is only common, ordinary and rational in a society of sociopaths, AKA MBAs.
There certainly are ways of determining the underlying fundamentals of any investment. If you abandon due diligence in favor of the market, you are just following the crowd instead of using your head.
Greed on both sides is never a good thing. Obviously more regulating is in order. This is where the fed has a purpose but drops the ball every time and the joke is on the middle class.
me being 24 and manage to see how my parents struggle by losing their business and savings. I saw it as an opportunity to wake up and not suffer from another rainy day. I save/max both traditional IRA and Roth and i have a Barclay dream account where 1k gets saved at 1% interest and every 6 months it doubles if i don't withdraw money to 2%. i have spare cash in a watch box somewhere in my closet. I spend on what i need only and 2 most important rules to always follow. Don't live above your means and always pay off any debt. if you can't afford college, take 1/2 course at the time instead of taking those absurd loans, yes you might not graduate in 4 years or so but heck, i'm debt free and i have 1 more year to graduate with an associate with "0" debt. In case anyone wonders i manage a restaurant in NYC and the pay is just enough for me to live and save for a house and/or school.
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