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Old 02-19-2018, 03:36 AM
 
11,315 posts, read 5,839,816 times
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Quote:
Originally Posted by aridon View Post
Fed is unwinding tons of debt

Current administration is spending like drunken sailors, which is a massive issue most folks are ignorant about.

General bias towards rising rates.

The combination is not conducive for the status quo and in fact act as an accelerant for interest rates to rise even if inflation remains tame which is unlikely.

Odds of a soft landing are very very low.

The combination of these items and the current fairly high valuations in real estate and the market in general make me believe we are approaching a lost decade.

I'd bet we'll start hearing about credit downgrade as well soon enough with all the extra debt spending being pushed.

What is happening right now is completely crazy. We are setting ourselves up for some serious self inflicted pain.
Think about what 6% mortgage rates do to a housing market that has grown accustomed to 3.75%. With the huge deficit we’re running in good times and the soaring debt to GDP ratio, fiscal stimulus won’t be possible when the economy cycles into recession. Soft landing? Unlikely. With “adult daycare” in the White House, I just hope it holds off for another three years.
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Old 02-19-2018, 04:05 AM
 
64,576 posts, read 66,100,109 times
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Rates do not go up in a vacuum. To get that high the economy has to be humming along pretty well . Historically best real estate appreciation is at the 6-7% mortgage rate level . The big bubble in 2007 was at 7%.
So rates play second fiddle to a whole lot of other factors including most important local markets.

All that generally happens is people just adapt to buying a tad bit less house to accomadate higher financing until rates are much higher . I bought my first investment proprerty during a real estate boom at 8-1/4% in 1987

Last edited by mathjak107; 02-19-2018 at 04:33 AM..
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Old 02-20-2018, 06:06 PM
 
Location: Oregon, formerly Texas
5,242 posts, read 3,395,295 times
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Quote:
Originally Posted by GeoffD View Post
Think about what 6% mortgage rates do to a housing market that has grown accustomed to 3.75%. With the huge deficit we’re running in good times and the soaring debt to GDP ratio, fiscal stimulus won’t be possible when the economy cycles into recession. Soft landing? Unlikely. With “adult daycare” in the White House, I just hope it holds off for another three years.
The Fed is out of tools, but congress is not. If a recession hits and Trump is president, I would expect various forms of stimuli to start humming from the legislature. Heck, the economy is good right now and people want building projects.

They have already proven that deficits do not matter to them.
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Old 02-22-2018, 04:24 PM
 
Location: Cleveland, OH
452 posts, read 705,299 times
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Ray Dalio: 70% chance of recession before 2020 election - Feb. 22, 2018


70% in the next few years according to this gentleman.

How would you all prepare for a coming recession?
Sit on cash and be ready to buy?
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Old 02-22-2018, 04:32 PM
 
64,576 posts, read 66,100,109 times
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ho hum .... business as usual .. riding the cycles has always produced better results than thinking you can bail and get back in . more money has been lost or given up in preparation for or in anticipation of the next downturn than has been lost by markets in the down turns .
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Old 02-22-2018, 07:15 PM
 
Location: Upstate, NY
453 posts, read 187,488 times
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Quote:
Originally Posted by MDCB View Post
Ray Dalio: 70% chance of recession before 2020 election - Feb. 22, 2018


70% in the next few years according to this gentleman.

How would you all prepare for a coming recession?
Sit on cash and be ready to buy?
Probably quoted here elsewhere, but didn’t Dalio just say about a month ago you’ve got to be feeling pretty stupid to be holding cash right now? Lol. Anyway, if rates go high enough I’ll be shopping CD’s again.
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Old 02-23-2018, 02:56 AM
 
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if rates go high enough it means inflation is going higher .cd's would not be a good idea as you will always be behind the curve
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Old 02-23-2018, 04:19 AM
 
Location: Copenhagen, Denmark
9,865 posts, read 8,003,412 times
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Look for large market bubbles forming and interest rate acceleration.
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Old 02-24-2018, 08:39 PM
 
2,138 posts, read 1,150,540 times
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Quote:
Originally Posted by MDCB View Post
Ray Dalio: 70% chance of recession before 2020 election - Feb. 22, 2018


70% in the next few years according to this gentleman.

How would you all prepare for a coming recession?
Sit on cash and be ready to buy?


Personal details are everything.

Plenty of boomers have shorted their retirement contributions over the years and are going balls deep into what is now likely an over bought market.

Plenty of Gen X's and Millenails are slowly dollar cost averaging every 2 weeks.

20-30% hair cut and relatively stagnant markets for 3-6 years impacts each of these very differently.

If you got the money to ride out half a decade of uncertainty you'll be just fine.

If you're the kind that has been using the ridiculous gains of the last few years to try and catch up from decades of funding neglect then you'll be in a different situation.


Allocation and your personal situation are everything.
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Old 02-25-2018, 04:19 AM
 
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the recession wild card is that while gdp is projected to be 2.50% which is pretty far from a recession . it you subtract the fall in savings rate and the existing credit card debt it really knocks that number down to about 1.25% .

that can be pretty close to recession territory if increased rates slow us to much .
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