Stocks and homes are discounted..who's buying? (real estate, rental)

[deuterdu]

If my income wasn't reliant on real estate I would feel much more comfortable about buying up some long term holdings like stocks and additional real estate. Are those of you who are W2 with little to no debts buying or thinking of buying now?

[ViewFromThePeak]

gold. silver. some more gold. some more silver. guns. ammo. oil/natural gas stocks. Wait, isn't this supposed to be on an investment forum?

I'd wait on real estate, esp triangle real estate. I sold my house in anticipation of decline. But, maybe a super deal on something already hard hit out in CA/FL/Las Vegas as they were the first areas the storm passed over. Countdown to polyanna replies...3...2...1...

[starla]

I lucked out in that I had just unloaded a bunch of shares in a mutual fund before the crash because I wanted to reallocate, and hadn't decided what to reinvest the money in. It represented about half of the money in my "liquid investments" account, which is where I park money that I don't need and don't have any other plans for (basically, savings that's not retirement money, and beyond my "emergency fund", which I keep in safer savings/CD accounts). Of course, the other half of that account lost ~50% of its value, so I have a lot of making up to do.

I don't plan to reinvest it for at least another month or two. I'd like to see a round of earnings reports before picking new investments.

If I didn't already have a house right now, I'd pick up one of the many multi-unit rental houses that have hit the market in my neighborhood recently. They probably need a lot of work, but they're dirt cheap (compared to more updated, single-family places) and once converted back to single family would be worth a whole lot more.

[rory breaker]

Waiting on the market, I dont think weve seen the worst yet. I bet we've got another 10-20% to go before things bottom out.

[VSB]

Originally Posted by deuterdu

If my income wasn't reliant on real estate I would feel much more comfortable about buying up some long term holdings like stocks and additional real estate. Are those of you who are W2 with little to no debts buying or thinking of buying now?

1. If you didn't get the chance to read Warren Buffett's opinion piece in the NY Times, give it a read: "Buy American. I am." In my opinion, it essentially boils down to this:

"Let me be clear on one point: I can’t predict the short-term movements of the stock market. I haven’t the faintest idea as to whether stocks will be higher or lower a month — or a year — from now. What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up. So if you wait for the robins, spring will be over."

The article appeared in the October 16, 2008 NY Times. The most popular exchange traded fund (ETF) which tracks the S&P (ticker: SPY) closed at $93.77 that day. Today, it posted a near 7% gain and still closed at only $85.03, 9.3% lower than it was nearly a month ago.

Similarly, the DOW closed at 8,979.26 on 10/16, and 8,443.39 today, a 6% decline.

If you're an optimist, you'll be encouraged by the piece. Consider the following:

"Over the long term, the stock market news will be good. In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497."

2. If you try to time the market to its "absolute bottom," you'll almost surely miss it. Anyone who thinks they can reliably do this is wrong or purposely misleading others for their individual benefit. Now is a good time to buy, so long as you don't need the money in the short-term. Obviously, there's wide disagreement on what defines "short-term," but most advisors and economists seem to agree that a two-year horizon is reasonable.

Good luck and buy American. I am, and so is Warren Buffett. That's company I'd like to keep.

PS. I'm not trying to start an argument with this, but historically, equities are a better investment over the long-term, than real estate. There's an excellent article in the Wall Street Journal regarding real estate as a long-term and retirement investment. Give it a read.

[Exit MA Now]

Originally Posted by deuterdu

If my income wasn't reliant on real estate I would feel much more comfortable about buying up some long term holdings like stocks and additional real estate. Are those of you who are W2 with little to no debts buying or thinking of buying now?

Yep. It's a great time to buy many long term investments, including real estate, IMO. IMO, locking in a house in this area should be done within the next few months, as interest rates will be going up, up and away not to far down the road. Regardless of what some doom & gloomers may want to think, real estate values have not and will not plummet here, so it is a good investment in the long run, IMO. You can score real good deals on remaining builder inventory. The coming interest rate hikes are of more concern, IMO.

[geoff2v]

I bought three houses and seven shares of stock, just last week!

More seriously, though, no one knows whether this is a good time to buy. Stocks may not reach early November levels for 15 years. Houses may not appreciate enough for it to be worth your while. Interest rates may go up, they may go down. So if you've been searching for a house to buy and the market makes it so you can actually afford one that you like, then go for it! But don't think that the market has reached the bottom or that interest rates are going to go up or whatever, because you really have no idea.

Otherwise I agree with VSB -- excellent post there.

[cas965]

kudos to VSB, I couldn't agree more!! If timing did work there would be a whole lot more extremely wealthy people out there, history has proven that it doesn't. Buy in what you believe and you won't go wrong....I believe those are words spoken by Peter Lynch of Fidelity.