Investment strategies in the current economy

[ClairJordan]

I doubt I am alone when I admit that the past two years in my finanical life have been about reorganizing, liquidating and cutting the fat. Assests which became a liability are gone, and I have managed to reposition what is left. Here's the tricky part: how to cautiously move forward in today's volitile investment world. You are such an intelligent, informed bunch. Anyone want to share thoughts and strategies as to how you plan to prosper long term in today's unpredictable economy?
Unfortunatly, I won't be able to bottom feed in the RE market anytime soon due to a Vegas liquidation.

[atlcomedy]

If ever a thread on here should contain a disclaimer about being for entertainment purposes, please consult your financial advisor, etc. it is this one...

Reminds me of the old tale (how much of it fact vs. legend I don't know) of Joe Kennedy getting stock market advice from his cabbie just before the market crash and deciding to get out saving a good chuck of his fortune...

[ClairJordan]

If ever a thread on here should contain a disclaimer about being for entertainment purposes, please consult your financial advisor, etc. it is this one...

I will, of course, do my own d+d! just looking for some input and thought others might find it valuable as well. Confusing times out there. What we thought was sure-fire ain't...

[Rudyard K]

My thoughts are probably worth what you are paying for them…but nevertheless, here they are.

1) For the next 3-4 years (maybe shorter if you see a change) be defensive. That means maturities that mature in that 3-4 years with yields that may not be all that attractive. But the goal is to “conserve the asset” for the short term. A return of your capital is more important than a return on your capital.

2) Once this period of uncertainty is over…I believe inflation is going to be fairly rampant. In an inflationary environment?...you want your capital in hard assets…not cash. Hard assets are real estate, inventory, mineral resources, etc.

3) There are a lot of people who claim that Gold is the way to go…and I certainly can’t argue with its performance here over the last few years. But I am not smart enough to see what inherent value there is in a bar of gold, so that is not my cup of tea.

4) If one has an interest in having a component of risk during this next 3-4 years…my suggestion would be primarily mineral resources and MLPs. The MLPs are primarily transportation related enterprises (gas transmission, electric transmission, oil transmission, etc) and are not reliant upon commodity prices. They strictly transport for a fee. The transmission facilities themselves are also considered to be hard assets. MLPs also have attractive tax treatment for their dividends. I personally like mineral resource companies too, because I believe the commodity pricing for minerals (primarily oil and gas) is going to move consistently higher. But that is a riskier bet.

5) The primary thing to consider is quality. Class A companies…Class A real estate…Class A everything will hold its value, or achieve a better return than taking on a Class B property because it is cheaper. There’s a reason it is cheaper.

[Camille]

..but an investment nonetheless. Education.

If anyone has been thinking of going to/going back to school, now is a time to give it some serious thought. As well as keeping you gainfully employed for the short term whilst adding to your resume, admissions and financing folks in school are bending over backwards to get people in. Two or three years ago, I couldn't get a response from schools abroad in under two weeks if I tried. Now they are actually picking up the phone and calling me to answer my questions. Half the pain of starting school is navigating all the red tape of admissions and finance...so much easier now. Payment plans are incredibly flexible compared to what they used to be. An example of that is that instead of paying a lump sum each semster, many schools now allow you to pay monthly...which makes it more manageable for some. I bagged a partial scholarship that I'm pretty sure I wouldn't have got..or would have had to work much harder to get in a more buoyant economic climate. The point is that educational institutions have realized that loans (even student loans) are harder to qualify for these days..so they are trying to create some slack internally.

It doesn't have to be something as committed as a degree either..lots of diplomas etc out there with much more flexible payment terms. I ended up where I am because I had started looking at photography courses as a source of enjoyment and interest. One thing led to another...

C

[charlestudor2005]

I would never promote this kind of investment, but crime has always had a pretty good return, whether it be organized or single user. Even conduct that is on the edge of crime does pretty well (witness the entertainment industry; Vegas; Atlantic City).

It almost never sees fluctuation from a downturn in the economy, but tends to remain stable.

The main downside is the violence involved. But high return involves high risk.

Most of the economically smart guys here (RK, PJ, Atl, TTH, DG, .. & others) might stick to the conventional investment strategies, but desperate days require desperate measures.

[cuckold4u]

Originally Posted by ClairJordan

I doubt I am alone when I admit that the past two years in my finanical life have been about reorganizing, liquidating and cutting the fat. Assests which became a liability are gone, and I have managed to reposition what is left. Here's the tricky part: how to cautiously move forward in today's volitile investment world. You are such an intelligent, informed bunch. Anyone want to share thoughts and strategies as to how you plan to prosper long term in today's unpredictable economy?
Unfortunatly, I won't be able to bottom feed in the RE market anytime soon due to a Vegas liquidation.

yes you have to love what 30+ years of supply side economics has given us...what it has always done throughout history...destroy economies. Poppy Bush has raised 2 sons that have cost the US taxpayers almost $5B in the S&L scandal...thank god George W was too drunk and high to be a part of that...what Poppy Bush got right is during the 1980 party nomination he called Reagan's plans for the economy...voodoo economics...on that count he was correct.

[WTF]

Include me in the mix that think so too. I've seen it first hand. Students that will not be able to pay back their loans.

http://www.businessinsider.com/chart...ces-cpi-2010-7

The price of a college education, compared to the CPI, has risen dramatically since 1980. It has outpaced the housing bubble, and has many of the same characteristics, including a government sponsored credit bubble.

[atlcomedy]

Originally Posted by WTF

Include me in the mix that think so too. I've seen it first hand. Students that will not be able to pay back their loans.

Although we know how "hard" you have played to help as many young ladies as possible make their tuition payments...

On a serious note, I do think we will see serious changes in the delivery and content of "higher education." The notion of a 4-year residential campus based degree for learning's sake (e.g. liberal arts) will no longer be a prerequisite for a lot of opportuntities. Instead there will be more emphasis on skills developed and the ability (aptitude) to develop new skills.

[Camille]

The number of American students now going to England to the the GDL (graduate diploma in law) instead of staying in the US to do the JD is on a sharp rise. The GDL is one year f/t...followed by a vocational year of differing sorts depending on whether you wish to go the barrister or solicitor route. Even the costs of being a foreign student do not compare with the costs here. Medicine is another route.

Britian has just announced its steepest spending cuts in 60 years; $130 billion by 2015. It's a matter of time before the fees for foreign students are yanked up significantly which would still keep them competitive with the US, but increase revenue significantly.

[Rudyard K]

Originally Posted by cuckold4u

yes you have to love what 30+ years of supply side economics has given us...what it has always done throughout history...destroy economies. Poppy Bush has raised 2 sons that have cost the US taxpayers almost $5B in the S&L scandal...thank god George W was too drunk and high to be a part of that...what Poppy Bush got right is during the 1980 party nomination he called Reagan's plans for the economy...voodoo economics...on that count he was correct.

Such billiance.

A real question asked...and this answer?...nothing, nada, zippidty doo da, zilch. But all the wisdom of Soloman as to the causes of our economic plights.

[atlcomedy]

Originally Posted by Rudyard K

.

2) Once this period of uncertainty is over…I believe inflation is going to be fairly rampant. In an inflationary environment?...you want your capital in hard assets…not cash. Hard assets are real estate, inventory, mineral resources, etc.


5) The primary thing to consider is quality. Class A companies…Class A real estate…Class A everything will hold its value, or achieve a better return than taking on a Class B property because it is cheaper. There’s a reason it is cheaper.

I'm long Barack Obama Inauguration Collectibles. But only the really good limited edition stuff. Plates, coins, newspapers, dolls, t-shirts, pen sets, coffee table books, pins, stamps, coffee mugs. You know, none of the cheap stuff that the masses bought. I got a good deal on a whole warehouse full of them. Sure I had to invest in shipping and I got the monthly warehousing expense but as soon as this "Hope & Change" deal picks up I'm going to be flush.

[pjorourke]

Originally Posted by WTF

Include me in the mix that think so too. I've seen it first hand. Students that will not be able to pay back their loans.

http://www.businessinsider.com/chart...ces-cpi-2010-7

The price of a college education, compared to the CPI, has risen dramatically since 1980. It has outpaced the housing bubble, and has many of the same characteristics, including a government sponsored credit bubble.

I know this will sound strange, but I agree with WTF. Higher education is the next bubble.

[cuckold4u]

Originally Posted by pjorourke

I know this will sound strange, but I agree with WTF. Higher education is the next bubble.

the other potential crash that could be worse than the stock market is the bond market...many are saying it could be next...states, cities and counties would be in real trouble...as if they are not already.

[pjorourke]

You mean Muni bonds? Greece anyone?