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Unrest has investors questioning risk fundamentals
Market turmoil leaves investors wondering whether lessons about risk still apply
For the record, lessons about risk still apply. I'm fairly confident that hasn't changed. In fact, I'd bet large amounts of other people's money on it using 30-1 leverage just like a typical financial institution would. It's such a sure thing!
No matter how close they are to retirement, many are considering getting out of the stock market entirely by shifting to cash or even gold, believing the market is so shaky they're willing to take the potential tax and inflation erosion they'll suffer from a quick pullout.
Yeah, I had those exact thoughts back in the summer of 2004. I even acted on those very thoughts. Go figure..
Welcome to the party, pal! - Bruce Willis, Die Hard
Some habits "die hard" though.
"Right now, it is just a loss on paper. If I pull out now, it becomes an actual loss," says Deborah Allen, a 51-year-old administrative assistant at a Royal Oak, Mich., school district who's trying to protect a nest egg she's relying on to take early retirement next year.
Picture my head banging down repeatedly on my desk. Seriously. Picture it. My forehead hurts.
She has a persistent attitude about her nest egg though (i.e., that it's only a loss on paper so far). I'll give her that. In fact, it reminds me a bit of how banks are treating their own mark-to-market waste. It's only a loss on paper.
Thursday: Unemployment Claims, Philly Fed Mfg, Existing Home Sales
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[image: Mortgage Rates] Note: Mortgage rates are from MortgageNewsDaily.com
and are for top tier scenarios.
Thursday:
• At 8:30 AM ET, The *initial weekly ...
56 minutes ago
4 comments:
Stag,
Questioning risk? That's a problem. If everyone did that, the illusion of our "ultra" prosperity could be questioned.
Caution! Faith is a fragile thing.
http://en.wikipedia.org/wiki/Project_MKULTRA
Sometimes, I think the CIA actually suceeded here.
MAB,
From your link...
Substances which will produce "pure" euphoria with no subsequent let-down.
Subsequent let-downs cannot be tolerated!
Buy to let
http://en.wikipedia.org/wiki/Buy_to_let
The phrase buy-to-let can refer either to the investment strategy of buying a residential property to be let for profit; or to a particular category of mortgage used to purchase a property for letting.
The subset of let-downs otherwise known as buy-to-let-downs can therefore not be tolerated either!
Also, buy-to-let landlords would suffer along with all property owners should prices fall.
Yeah, but how many people risked doing that? Who'd buy real estate AFTER it exploded in price higher?
This type of investment has become very popular in the UK over the last five years or so, as house prices have dramatically increased.
I'm not sure I like the answer much.
The basic ideas behind buy to let (according to this analysis) are "How do I get someone else to work for me?", "How do I get money without having to work?" and "How may I leverage my privileged position to enable me to make further gains at the expense of my fellow citizens?".
I wonder if anyone's thought of expanding this idea to the outsourcing of jobs to China combined with a government very willing to print money. That would seem like the best of all worlds.
"How do I get someone else to work for me?" - Outsource!
"How do I get money without having to work?" - Drop it from helicopters!
"How may I leverage my privileged position to enable me to make further gains at the expense of my fellow citizens?" - Become the Fed Chairman and invest in Canadian Treasury Bonds!
I wish I was joking, especially on that last point.
Fed's Bernanke holds Canadian Treasury bonds . . . just in case?
http://www.latimes.com/business/investing/la-fi-bernanke22-2008jul22,0,6434143.story?track=rss
If Federal Reserve Chairman Ben S. Bernanke leads the U.S. into financial ruin, he'll still have his Canadian Treasury bonds to fall back on.
I've commented on this in the past. I find it ridiculous that the guy in charge of our monetary printing press owns CANADIAN treasury bonds instead of our own. That investment worked out pretty darned well for him as he helped toxify our own currency to keep us consuming.
He also listed Canadian Treasury bonds as an asset. That might lead some of his critics to wonder, tongue in cheek, whether he has an emergency plan to cross the border if things get really bad.
I wish that was a joke too, and my tongue is nowhere near my cheek when I say it.
I find it ridiculous that the guy in charge of our monetary printing press owns CANADIAN treasury bonds instead of our own
It's all about relative efficiency. Bernanke knows his printing press can print faster than Canada's outdated printing press. Probably much faster.
It's just business. It's not personal. Or professional. Or moral. Or ...
MAB,
It's all about relative efficiency.
Speaking of relative efficiency, how did we end up with a George Bush as president from 1989 to 1993 and a George Bush as president from 2001 to 2009?
Please tell me there aren't any more of them lined up. I don't think our country can handle much more relative efficiency.
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