oldguy
Senior Member
Cash: $ 751.85
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Joined: 21 May 2006
Location: arizona
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quote:
So I was just trying to find another strategy to maximize our profit. Do you still think this is a bad method? I'm still on the fence about it :/
I normally match the term of my money supply with the term of the investment. Eg, I invest in an 11%/yr index with 30-yr capital.
And I make certain of my money supply so that all of my risk is concentrated on the investment side. I use only 30-yr fixd rate loans, no designer loans, no adjustable rates, no 15 yr loans, no balloon payoffs, etc. That way a lender cannot call my loan, cannot foreclose due to a missed balloon, cannot raise my rate, my money is nailed down for 30 yrs.
You have interest in 5 rentals, can you refi some of them and build a fund of 30-years capital? (It might be good to start disentangling from your partner/relatives and own some rentals on your own, it gives you freedom to manage). Also the First Law of Landlording applies - "never rent to an acquaintance, a coworker, a friend, and never ever to a relative, you need an arm's length formal agreement with a stranger." This Law also works well with realtors, lawyers, tax people, and so on - do you really want uncle louie's cousin to sell your house? 
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Wed Jan 08, 2014 3:48 pm |
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Radix3d
Preferred Member
Cash: $ 21.60
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It's not a bad idea just wait tell the market dips. Why do something like this when the market is certainly not cheap? If you did something like that back in 2009-2010 you would have made a pretty penny with little risk at that.
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Thu Jan 09, 2014 7:22 am |
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Wino
Senior Member
Cash: $ 113.80
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Joined: 03 Aug 2012
Location: Dubai
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quote:
Originally posted by Radix3d
It's not a bad idea just wait tell the market dips. Why do something like this when the market is certainly not cheap? If you did something like that back in 2009-2010 you would have made a pretty penny with little risk at that.
So, you're recommending market timing, and borrowing to do so? That's a recipe for disaster, if ever I heard one.
And to your second point, results don't change the risks involved.
There is absolutely no way I'd do this scheme. The gains will be minimal, at best, and there is risk that is not necessary. Add to that the administrative oversight necessary, and it becomes more trouble than it's worth. I'd rather put my efforts toward my main job for better results and more bonus.
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Thu Jan 09, 2014 11:05 am |
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Radix3d
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Cash: $ 21.60
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quote:
Originally posted by Wino
quote:
Originally posted by Radix3d
It's not a bad idea just wait tell the market dips. Why do something like this when the market is certainly not cheap? If you did something like that back in 2009-2010 you would have made a pretty penny with little risk at that.
So, you're recommending market timing, and borrowing to do so? That's a recipe for disaster, if ever I heard one.
And to your second point, results don't change the risks involved.
There is absolutely no way I'd do this scheme. The gains will be minimal, at best, and there is risk that is not necessary. Add to that the administrative oversight necessary, and it becomes more trouble than it's worth. I'd rather put my efforts toward my main job for better results and more bonus.
How is it timing the market? I'm not telling him to put any money on the sideline he's 100% invested now. It doesn't take someone with a high IQ to realize when the stock market has fallen off a cliff. If the market goes up 30% like it has recently it wont be insignificant gains. Not recommended for ordinary savers but this guy isn't ordinary.
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Thu Jan 09, 2014 2:04 pm |
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Wino
Senior Member
Cash: $ 113.80
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Location: Dubai
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He's not 100% invested. He's talking about borrowing $7K at a cost of $210 to invest for 18 months. "Waiting for a dip" is timing. What if it goes up 3%, then dips 2%? Do you get in then or wait for "another dip?" If you had "waited for a dip" one year ago, you'd still be waiting or you would have gotten in at a higher price than you could have paid at the beginning. Your timing advice assumes that we'll shortly drop below the point we are now at. There is no guarantee that will happen. Historically, the market has averaged gains, not losses, so statistically, waiting for a dip is a losing proposition.
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Thu Jan 09, 2014 3:17 pm |
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Radix3d
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quote:
Originally posted by Wino
He's not 100% invested. He's talking about borrowing $7K at a cost of $210 to invest for 18 months. "Waiting for a dip" is timing. What if it goes up 3%, then dips 2%? Do you get in then or wait for "another dip?" If you had "waited for a dip" one year ago, you'd still be waiting or you would have gotten in at a higher price than you could have paid at the beginning. Your timing advice assumes that we'll shortly drop below the point we are now at. There is no guarantee that will happen. Historically, the market has averaged gains, not losses, so statistically, waiting for a dip is a losing proposition.
Borrowing money and investing it would put him beyond 100%, but he hasn't done it yet, so he's at 100% I'm not sure what you're talking about. I don't need to know how tall someone is to know they are taller than me. I don't need to know exactly where the bottom is to know the stock market is cheap. It has nothing to do with timing anything. I bought some pants today that were on sale, am I timing the market? No.
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Thu Jan 09, 2014 3:50 pm |
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Wino
Senior Member
Cash: $ 113.80
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Location: Dubai
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quote:
Originally posted by Radix3d
Borrowing money and investing it would put him beyond 100%, but he hasn't done it yet, so he's at 100% I'm not sure what you're talking about. I don't need to know how tall someone is to know they are taller than me. I don't need to know exactly where the bottom is to know the stock market is cheap. It has nothing to do with timing anything. I bought some pants today that were on sale, am I timing the market? No.
You are suggesting timing the market. Your obfuscations don't change the fact.
"Waiting for a dip" precisely means timing to buy low/lower. If that's not timing, then there is no such thing as timing. Selling before a suspected dip is timing. Buying after a dip is timing. You're suggesting the latter. Just because you aren't constantly going in and out, doesn't mean that doing it one time isn't timing.
"I only got paid for sex once, so it wasn't prostitution."
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Thu Jan 09, 2014 4:12 pm |
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Radix3d
Preferred Member
Cash: $ 21.60
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quote:
Originally posted by Wino
quote:
Originally posted by Radix3d
Borrowing money and investing it would put him beyond 100%, but he hasn't done it yet, so he's at 100% I'm not sure what you're talking about. I don't need to know how tall someone is to know they are taller than me. I don't need to know exactly where the bottom is to know the stock market is cheap. It has nothing to do with timing anything. I bought some pants today that were on sale, am I timing the market? No.
You are suggesting timing the market. Your obfuscations don't change the fact.
"Waiting for a dip" precisely means timing to buy low/lower. If that's not timing, then there is no such thing as timing. Selling before a suspected dip is timing. Buying after a dip is timing. You're suggesting the latter. Just because you aren't constantly going in and out, doesn't mean that doing it one time isn't timing.
"I only got paid for sex once, so it wasn't prostitution."
No, I'm a value investor I don't time markets. Your criticism and ignorance of investing don't obfuscate that fact.
"Cash combined with courage in a time of crisis is priceless." -Warren Buffett
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Thu Jan 09, 2014 5:03 pm |
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Wino
Senior Member
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Location: Dubai
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quote:
Originally posted by Radix3d
No, I'm a value investor I don't time markets. Your criticism and ignorance of investing don't obfuscate that fact.
If you want to hurl insults, that's fine. It doesn't change the fact that you suggested market timing to others, regardless of your impression of how you invest yourself.
http://blog.ngam.natixis.com/blog/david-lafferty/getting-back-into-stocks-should-you-wait-for-the-dip
You may want to look at that link before you spout in the future. It explains why "waiting for a dip" is a bad strategy, and you should be able to deduce for yourself that it would therefore be market timing. Or, you can continue to only time the market when you get in. I would assume your same logic would apply when you get out, as well. You probably suggest "waiting for a peak." But that's not timing, apparently, because you didn't use the word "time" when you said to time the market to dips that may not occur and to peaks that may not occur.
Wikipedia may not be a definitive source, but it is certainly an independent source:
http://en.wikipedia.org/wiki/Market_Timing
From the above: "Market timing is the strategy of making buy or sell decisions of financial assets (often stocks) by attempting to predict future market price movements."
I'll add, "such as waiting for a dip in the price."
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Fri Jan 10, 2014 3:50 am |
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Radix3d
Preferred Member
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quote:
Originally posted by Wino
quote:
Originally posted by Radix3d
No, I'm a value investor I don't time markets. Your criticism and ignorance of investing don't obfuscate that fact.
If you want to hurl insults, that's fine. It doesn't change the fact that you suggested market timing to others, regardless of your impression of how you invest yourself.
http://blog.ngam.natixis.com/blog/david-lafferty/getting-back-into-stocks-should-you-wait-for-the-dip
You may want to look at that link before you spout in the future. It explains why "waiting for a dip" is a bad strategy, and you should be able to deduce for yourself that it would therefore be market timing. Or, you can continue to only time the market when you get in. I would assume your same logic would apply when you get out, as well. You probably suggest "waiting for a peak." But that's not timing, apparently, because you didn't use the word "time" when you said to time the market to dips that may not occur and to peaks that may not occur.
Wikipedia may not be a definitive source, but it is certainly an independent source:
http://en.wikipedia.org/wiki/Market_Timing
From the above: "Market timing is the strategy of making buy or sell decisions of financial assets (often stocks) by attempting to predict future market price movements."
I'll add, "such as waiting for a dip in the price."
Where is the insult? I said you are ignorant about investing. It's no more an insult than when you said I'm "obfuscating" which someone might interpret as intentionally deceiving or lying.
Markets are somewhat predictable in the long run, for example buying a house while prices are cheap and the cost of borrowing is low is a path to building wealth. There is little difference in principal between borrowing money to buy a real asset and borrowing to buy a financial asset. There is a smart way to do it, a dumb way to do it, and there is always some level of risk involved. The ENTIRE financial system is built on investing borrowed money and it's been that way for hundreds of years.
I guess that is all timing the market by your definition though.
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Fri Jan 10, 2014 12:34 pm |
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Wino
Senior Member
Cash: $ 113.80
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Location: Dubai
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OK. Waiting for a dip" is not market timing.
Ignorance is strength. Freedom is slavery. War is peace.
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Fri Jan 10, 2014 1:00 pm |
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oldguy
Senior Member
Cash: $ 751.85
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Joined: 21 May 2006
Location: arizona
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quote:
Markets are somewhat predictable in the long run, for example buying a house while prices are cheap and the cost of borrowing is low is a path to building wealth. There is little difference in principal between borrowing money to buy a real asset and borrowing to buy a financial asset.
I agree with the last sentence - both are assets, in one case you get a deed, in one case you get a cerficate of ownership for your little corner of a corporation. Legally, your rights to own property in the US are protected in both cases.
But IMO you're missing the point about market timing. When you buy a stock or a house because you like today's price that is not timing. But if you wait for the price of a house/stock to come down, that is 'timing' (predicting a future price).
"Somewhat predictable in the long run" - if you mean that house & stock prices trend ever upward over decades - yes, that is predictable. But waiting for better price so that you can either buy or sell - that's 'timing'.
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Fri Jan 10, 2014 1:28 pm |
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Radix3d
Preferred Member
Cash: $ 21.60
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quote:
Originally posted by oldguy
quote:
Markets are somewhat predictable in the long run, for example buying a house while prices are cheap and the cost of borrowing is low is a path to building wealth. There is little difference in principal between borrowing money to buy a real asset and borrowing to buy a financial asset.
I agree with the last sentence - both are assets, in one case you get a deed, in one case you get a cerficate of ownership for your little corner of a corporation. Legally, your rights to own property in the US are protected in both cases.
But IMO you're missing the point about market timing. When you buy a stock or a house because you like today's price that is not timing. But if you wait for the price of a house/stock to come down, that is 'timing' (predicting a future price).
"Somewhat predictable in the long run" - if you mean that house & stock prices trend ever upward over decades - yes, that is predictable. But waiting for better price so that you can either buy or sell - that's 'timing'.
That would be a good criticism if he were say, hoarding cash waiting for the right time to get in, and missing any intermittent gains. But that is not the case we're talking about something that is completely elective. He doesn't have to use the credit that part is completely elective and he wont lose anything on his current investments. He can afford to be patient, and if the opportunity doesn't come along so what? I would invest cash in 100% stocks right now but I also wouldn't borrow money to do it, at least not at this time. But there will come another time the market always has an occasional crash.
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Fri Jan 10, 2014 2:19 pm |
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oldguy
Senior Member
Cash: $ 751.85
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Location: arizona
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quote:
I would invest cash in 100% stocks right now but I also wouldn't borrow money to do it, at least not at this time. But there will come another time the market always has an occasional crash.
Maybe the Market will chug along until it gets to about Dow 22,000 in a couple years, then it will do an occasional crash to maybe 18,000 (a 4000 point crash is fairly substantial). So then he can jump in and buy at 18,000. Or - he could buy today at 16,400?
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Fri Jan 10, 2014 3:31 pm |
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Brownsfan2k5
Full Member
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Location: Military
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Well this has been an interesting discussion! Ha. I do appreciate all the feedback. Question: if I use the check (provided in the letter mailed to me) to invest the whole $7,000 limit will that get considered a cash advance (not supported by the 0%) or will that she count as 0% for 18 months? I feel the best way to use this credit would be to invest the whole $7000 upfront otherwise I won't see much gains, if any.
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Fri Jan 10, 2014 9:21 pm |
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