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School me on investing...

Discussion in 'General' started by noles19, Nov 8, 2017.

  1. auminer

    auminer Renaissance Redneck

    Not really.

    It actually IS different this time. 2008 was spurred by giving NINJA loans at 110% of appraisal to anyone with a pulse.

    Companies that borrowed CHEAP money to build office buildings full of cube farms thought they were being prudent. Who would have thought that WFH would be commonplace (and for many workers, a demand)?

    The 2 decades of cheap money are over. Rates aren't high right now... they're normal. They will still take some getting used to.
    Riot and shakazulu12 like this.
  2. 2blueYam

    2blueYam Track Day Addict

    Jamie Diamond has publicly stated he isn't buying any more after First Republic, so not sure where you are getting your information. It takes time, money, and energy to integrate these buyouts into a bank even as large as JPMorgan. You can't do too many at a time without creating a mess and First Republic is a big one to integrate.
  3. pickled egg

    pickled egg Works with puppies, too

    Oh. Yeah. They never lie.
  4. Venom51

    Venom51 John Deere Equipment Expert - Not really

    The root cause may change but there is still plenty of stupid to go around.
    auminer likes this.
  5. shakazulu12

    shakazulu12 Well-Known Member

    I've given up trying to explain this to anyone:crackup:
    tony 340 and Banditracer like this.
  6. Venom51

    Venom51 John Deere Equipment Expert - Not really

    Those of us that save are happy to see the return of the interest rates.
    Bugslayer and Banditracer like this.
  7. auminer

    auminer Renaissance Redneck

    If only inflation wasn't burning the other end of the candle twice as fast as interest is adding to this end.

    Don't get me wrong, I'm not arguing with you, specifically.

    The best of all possible worlds would have been to see this coming and borrow beaucoup bucks at absurdly low interest rates, purchase a big ass asset that's priced in 2020 dollars then pay that loan back as inflation eats at the purchasing power of the dollars you're paying back and (ostensibly) you earn more money.

    Dave Ramsey (is that dude's name? :confused: ) is dead wrong about being debt free.
  8. Banditracer

    Banditracer Dogs - because people suck

    Jamie Diamond's word is worth as much as Jim Cramer's. :crackup:
    scottn, R1M370, BigBird and 1 other person like this.
  9. Yzasserina

    Yzasserina sound it out

    Jamie Dimon. Jeez.
    BigBird likes this.
  10. Banditracer

    Banditracer Dogs - because people suck

    Hey, don't blame me, I just copied what he posted. :D
    Yzasserina likes this.
  11. Trainwreck

    Trainwreck I could give a heck

    "don't buy anything ever except my books"-Dave Ramsey. lol

    I know that dudes techniques have helped a lot of folks with budgeting and finances, but his bullshit on not financing anything is silly. It seriously makes more sense to finance things instead of blowing $7-10K on a piece of shit used car when you maybe only have $12-15K saved up.. Especially when the chances of said used car being a absolute dud are really high compared to something with a warranty, that may only ding you for $350-$450/monthly payment.. The when he talks about not having to have full coverage, that's also dumb as hell... If you cant total a car and immediately go out and pay cash for an equivalent you BETTER have full coverage. lol Whether it's paid off or not.
  12. Venom51

    Venom51 John Deere Equipment Expert - Not really

    I can't do shit about inflation but I can make sure I am not so leveraged that tipping a server $3 extra bucks will put a financial burden on me. I'm also not looking at a single mechanism to make or break the picture. Put it this way...if the market falls 30% tomorrow and the wife and I both get laid off on the same day it will make almost exactly 0 percent difference in how we behave the following day. If I was leveraged and making payments on most of the shit around here that has an impact on behavior the next day.
    BigBird and SteveThompson like this.
  13. auminer

    auminer Renaissance Redneck

    Let's see... It's 2:27 right now... Yeah, I could probably pay the house off today. Hard to say. I could definitely write the check.

    You seem like you got your house pretty well in order. I've seen you mention the 'third employee' of your household making more than you abd/or the missus.

    I'm probably theoretically in a 'higher risk' category of investor than you, but even when I was managing money full-time, I averaged a 0.5 beta with over a 20 alpha. That's probably meaningless to most people, but basically I made hella returns versus the market with half the volatility. Granted I didn't have the asset bloat or the SEC rules that would have precluded that kinda performance.

    What I'm saying in a roundabout way, is that we agree a lot more than we don't, we just have a different pathway to the objective.
  14. Venom51

    Venom51 John Deere Equipment Expert - Not really

    I suspect I am far more risk averse than you would be. Using debt to your advantage as a tool is not a problem. Treating it as a way of life however seems to get a lot of folks in trouble.
    GRH, tony 340 and auminer like this.
  15. tony 340

    tony 340 Well-Known Member

    The fed reserve and bankers and politicians will be the people to blame the same as every other economic nosedive in history.

    I don't know what kind of lunatic....loans hundreds of thousands of dollars ......for 3 or 4 or 5 %...... but you and I surely would not.

    The automakers started this low interest or no interest bullshit over a decade ago to buy themselves a future.

    Capitalism is a wonderful thing if you leave it the fuck alone.

    Debt is ok under the right circumstances. Some of the richest people on the planet got there by rolling the dice, not paying cash.
  16. zertrider

    zertrider Waiting for snow. Or sun.

    You really think paying $350-450/mth is the way to go on a car? Let's look at this. That is $4200-5400/yr. Having a new car means insurance coverage is also more expensive. Don't know about your area, but.probably another $200/yr. So for a 2 yr period you will be paying between $9 -11g.
    Now look at a $7000 cash purchase. Will it need work over 2 yrs? Sure. Say it needs brakes. $800. And maybe a check engine light comes on. $500 for whatever sensor. And maybe some tires. $800.
    So over 2yrs ownership it cost a total of $9100. None of this takes into account residual value of the vehicle. But after 2 years you are ahead by $9-10g with the used.
    Does this mean never buy a new vehicle? No. But if you are struggling to make ends meet, and new vehicle is not going to help
  17. Sweatypants

    Sweatypants I am so smart! S-M-R-T... I mean S-M-A-R-T!

    The rub is... IF you can get a car financed for 3% and you can take the difference and invest it and make 7%, taking the loan is the smart play. This assumes a lot about a person though, where maybe somebody financing a Corolla is not Mr. Savy investor and instead would just go buy more clothes or something with the money in their hand. But the math says that's what you should do. Also your math in the last part is wrong. After 2 years you'd be ahead by about $1k given your scenario.

    There's also the standpoint of credit making the world go round, whether we all like it or not. Maintaining high credit and Tier 1 status has its benefits, gives you flexibility in other areas of life, etc... Paying cash for everything hits you bad when it comes time to rent an apartment, get a mortgage, buy a toy (bike, boat, etc...) and you have no credit history. It will be rare these days that dudes are out here buying houses cash. If you CAN, or you have a house that's paid off, then fuck yea, why bother... but more likely you're gonna need that mortgage and credit. The difference between an 800+ credit score and a 700 credit score right now from lenders is like half a %. that's not peanuts.

    There's also the INTANGIBLE that is time. Let's say this was a Porsche or Corvette. You always wanted one since you were a kid. You're decently well off, but ponying up for one cash would drain your bank account, OR, it would take you 8 years to save up the money. Depending on how old you are, you might die by then, you might be too old to enjoy. Only live once.

    There's also the intangible of future market/societal risk and maintaining some amount of cash reserves for "what if" or a rainy day. Having the cash to pay for a car and then keeping the cash rather than giving it to the auto company if the % is low enough means flexibility and ability to adapt to change or life events. You know the money's there either way, but you having it instead of them having it has its benefits. You can always let somebody repo your car if you truly had to bail on your expenses/obligations (other problems with doing that aside). You can't get your cash back once you give it to them.
  18. Dan Dubeau

    Dan Dubeau Well-Known Member

    Invest the difference. Therein lies the rub......Nobody ever does that. I mean, lots of people talk about doing it, and say that's why they finance everything at cheap rates, but how many are actually disciplined enough to actually follow through with it?

    All the people I know that talk about that, just spend the difference, and every 5 years pull the newly accumulated equity out of their house to pay it all off and clean the slate. Rinse repeat. The rising interest rates, and debt amounts are about to push them all over a cliff, and they're completely oblivious to it.

    I mean, it's a great concept in theory, and it DOES "math out", but it's not something that the average person with average financial literacy fully understands and can follow. Credit is the carrot the rich dangle in front of the poor.
  19. Tristan

    Tristan Well-Known Member

    Exactly... brings to mind the joke about the non smoker telling his friend "if you didn't smoke and saved the money you're spending you could have a Ferrari". Friend: "so where's your Ferrari?"
    Dan Dubeau, R1M370, auminer and 2 others like this.
  20. Sweatypants

    Sweatypants I am so smart! S-M-R-T... I mean S-M-A-R-T!

    100%. i do finance for a living and i'm guilty of it. or was i guess. i've been saving a lot lately with a new house goal in mind. but i also COULD be trying to invest that at the same time to let the pot double grow over the next 2 years and i haven't, cause i dunno why... psychologically its just nice watching the checking account balance number grow and sit there? but also i'm not over leveraged by any means, so i don't have any of THOSE dude's problems. its hard to maximize those ideals without letting it be obsessive in your day to day for sure.

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