Notices
Results 1 to 51 of 51
Like Tree13Likes
  • 1 Post By kojax
  • 1 Post By babe
  • 2 Post By billvon
  • 1 Post By Ascended
  • 1 Post By wegs
  • 1 Post By babe
  • 1 Post By kojax
  • 1 Post By babe
  • 1 Post By babe
  • 1 Post By wegs
  • 2 Post By billvon

Thread: Gullible Investors

  1. #1 Gullible Investors 
    Time Lord
    Join Date
    Mar 2007
    Posts
    8,046
    When we look at all of the investment scandals that have happened to drive this recession, it seems at the core of most of the big mistakes was simple gullibility. There's a saying "a fool and their money are soon parted", but I don't it's economically beneficial to have droves of ordinary workers handing their money over to slick investment salesmen only to lose it.

    I really don't feel like investing in the stock market right now, because I perceive that of the good investments, the ones that would really make money, are based on gambling on other peoples' stupidity. Hoping they'll create bubbles and then have to short sell their stock, buying up lost estates, or riding upsurges until they level off (knowing the people who stay on that roller coaster after me are going to take losses.)

    It makes me feel sick to make money that way. I would prefer to feel like I was helping/contributing something to the economy. That used to be the way it was. Once upon a time, the best way to make money was to find a company that had potential, invest in it, and watch it grow. Now the game has turned sideways, and you're more likely to make money by screwing up the economy rather than helping it.



    So, this begs the question: why did we ever start telling ordinary people, mom and pop types, to invest in the first place? They only screw it up. They lose their money and then everyone loses. Why not just encourage them to consume? That's a better investment than any investment they're likely to make. At least we know the company that's getting their money deserves it.


    zinjanthropos likes this.
    Some clocks are only right twice a day, but they are still right when they are right.
    Reply With Quote  
     

  2.  
     

  3. #2  
    Time Lord
    Join Date
    Mar 2007
    Posts
    8,046
    Also consumption is just the flip side of investment. The investor makes the loan. The consumer pays the payments on that loan.

    An investor would never invest if they didn't anticipate consumption.


    Some clocks are only right twice a day, but they are still right when they are right.
    Reply With Quote  
     

  4. #3  
    Ascended Member Ascended's Avatar
    Join Date
    Apr 2012
    Location
    UK
    Posts
    3,370
    Quote Originally Posted by kojax View Post
    When we look at all of the investment scandals that have happened to drive this recession, it seems at the core of most of the big mistakes was simple gullibility. There's a saying "a fool and their money are soon parted", but I don't it's economically beneficial to have droves of ordinary workers handing their money over to slick investment salesmen only to lose it.

    I really don't feel like investing in the stock market right now, because I perceive that of the good investments, the ones that would really make money, are based on gambling on other peoples' stupidity. Hoping they'll create bubbles and then have to short sell their stock, buying up lost estates, or riding upsurges until they level off (knowing the people who stay on that roller coaster after me are going to take losses.)

    It makes me feel sick to make money that way. I would prefer to feel like I was helping/contributing something to the economy. That used to be the way it was. Once upon a time, the best way to make money was to find a company that had potential, invest in it, and watch it grow. Now the game has turned sideways, and you're more likely to make money by screwing up the economy rather than helping it.



    So, this begs the question: why did we ever start telling ordinary people, mom and pop types, to invest in the first place? They only screw it up. They lose their money and then everyone loses. Why not just encourage them to consume? That's a better investment than any investment they're likely to make. At least we know the company that's getting their money deserves it.

    You make a valuable point, I sure as heck arn't leaving my money in the bank at 3%, the official rate in the UK is 0.5%, but the banks are so desperate to get your money they'll offer 3%. That said what was the inflation rate 2.6% officially, but much higher for anything meaningful. But there are many many people that don't know what to do with their money and who can blame them given the mess we're all still in.

    Also it seems everyone and his dog are trying to sell you something these days, I've had more adverts come through my door for private health care than I don't know what. Now that would fine in virtually any other country as I there I might need it, here though we pay for the NHS out of our taxes, and to cut a long story short I had a friend that went private and was in a hospital a few months ago, I don't know the exact figure but I think he was paying something like £60 a month. For that he ended up in a NHS in a ward with NHS patients, being seen by the same nurses and doctors. Do you want to know what the difference was between getting treated for free and paying his £60 a month? They gave his tea in a proper china cup and saucer where all the NHS patients got their tea in mugs, that was it!

    So that's why I'm not paying privately for something I'm already entitled to anyway.
    But seriously it does begin to seem at times that no one ends up getting what they've paid for.

    Perhaps I'm being a little cynical I don't know, but right I agree with you and also think your better off spending your money than just waiting to get scammed one way or another.
    Everything has its beauty, but not everyone sees it. - confucius
    Reply With Quote  
     

  5. #4  
    Administrator KALSTER's Avatar
    Join Date
    Sep 2007
    Location
    South Africa
    Posts
    8,232
    Well, on a fixed deposit over 5 years you can get over 7% over here (South Africa). Is there a reason why foreigners don't invest their money here?

    Personally, I am looking at trying out the Forex market. I want to try out a combo hedging and scalping approach with trailing stops and see what happens. Will play around with the trial accounts for a month or so. With the high leverage available, I could potentially make Forex my primary income. I certainly hope so.

    I don't trust stock trading much.
    Disclaimer: I do not declare myself to be an expert on ANY subject. If I state something as fact that is obviously wrong, please don't hesitate to correct me. I welcome such corrections in an attempt to be as truthful and accurate as possible.

    "Gullibility kills" - Carl Sagan
    "All people know the same truth. Our lives consist of how we chose to distort it." - Harry Block
    "It is the mark of an educated mind to be able to entertain a thought without accepting it." - Aristotle
    Reply With Quote  
     

  6. #5  
    Moderator Moderator
    Join Date
    Apr 2007
    Location
    Washington State
    Posts
    8,309
    While individuals investors who build their own stock portfolios don't do as well as the general market, the reasons aren't so much them being subject to scams--its that most people don't have the cold emotional discipline to buy and sell at the right time--the simple mistake of not setting up stop loss accounted for most of their lagging performance.

    Most individuals who invest in stock and bond based mutual funds, something that accounts for almost 50% of Americans, have done fine.

    There's no reason to restrict either---a person can do what they want with their money--it's not the government's job to decide. Where the government can help is enforcing regulations that simplify terms and put agreements in plain language so they know what they're getting themselves into.
    Meteorologist/Naturalist & Retired Soldier
    “The Holy Land is everywhere” Black Elk
    Reply With Quote  
     

  7. #6  
    Forum Radioactive Isotope zinjanthropos's Avatar
    Join Date
    Dec 2005
    Location
    Driving in my car
    Posts
    3,812
    I think you have to factor in greed. Done right, avarice is a skill. Done wrong, you are a fool.
    All that belongs to human understanding, in this deep ignorance and obscurity, is to be skeptical, or at least cautious; and not to admit of any hypothesis, whatsoever; much less, of any which is supported by no appearance of probability...Hume
    Reply With Quote  
     

  8. #7  
    Time Lord
    Join Date
    Mar 2007
    Posts
    8,046
    Quote Originally Posted by Lynx_Fox View Post

    Most individuals who invest in stock and bond based mutual funds, something that accounts for almost 50% of Americans, have done fine.
    Yeah, mutual funds have an advantage that they don't (for the most part) owe anyone any money, so they can't go bankrupt very easily even if they make some bad investments. The fund might go down sometimes, but it won't get wiped out.




    There's no reason to restrict either---a person can do what they want with their money--it's not the government's job to decide. Where the government can help is enforcing regulations that simplify terms and put agreements in plain language so they know what they're getting themselves into.
    I don't think "plain language" is ever going to happen. Too hard to define. Too hard to enforce.

    And that's what I'm getting at: if a person finds investment talk to be different from "plain language", then they should probably stay out of it, or do like you suggested and stick with the very safest things, like mutual funds.

    The problem is all these people who think they're ready for the big leagues, and they aren't.
    Some clocks are only right twice a day, but they are still right when they are right.
    Reply With Quote  
     

  9. #8  
    Moderator Moderator
    Join Date
    Apr 2007
    Location
    Washington State
    Posts
    8,309
    I don't think "plain language" is ever going to happen. Too hard to define. Too hard to enforce.
    It already has and was passed into law a few years ago in the US. I think it's in the EU as well. I'm sure can find the specific bills, but it does things like standardizes the phrasing, defines minimum terms that will be covered and specifies they get put up front rather than omitted or buried in 6 font text at the bottom of page ten etc.

    But of course some will still get over their head...but as John Wayne famously said, "Life is hard, its harder if your stupid." Being stupid isn't illegal and shouldn't be regulated against IMHO.
    Meteorologist/Naturalist & Retired Soldier
    “The Holy Land is everywhere” Black Elk
    Reply With Quote  
     

  10. #9  
    Time Lord
    Join Date
    Mar 2007
    Posts
    8,046
    This isn't just a "bleeding hearts" type problem. Or even a matter of fairness or ethics.

    If people are sinking their money into failed investments, there's no useful economic activity coming out of that. They'll recoil and stop consuming. Just focus on paying off their debts and stop buying anything. There's a part of that that is good (less cheap imported crap from China to fill our landfills with.) But most of it is bad (no consumer base to sell to, so harder to start a new business or create lasting jobs selling to it.)

    When you see gold going up, that's de-facto deflation. Back in the Great Depression, when people were throwing money under a mattress, the USD was still on the gold standard, so it was also backed by gold. So what they were really throwing under their mattress was gold. The two situations are just two different versions of the same thing. People are preferring to put their wealth (not really just money - but their overall wealth) in a place that doesn't spur economic activity (other than earning commissions for the gold traders), rather than places that do spur activity.
    Last edited by kojax; September 6th, 2012 at 11:45 PM.
    Some clocks are only right twice a day, but they are still right when they are right.
    Reply With Quote  
     

  11. #10  
    Forum Cosmic Wizard icewendigo's Avatar
    Join Date
    Jun 2006
    Posts
    2,148
    "When we look at all of the investment scandals that have happened to drive this recession, it seems at the core of most of the big mistakes was simple gullibility."
    I disagree.

    ordinary workers handing their money
    Yes, but also remember that finance professionals were also swindled, because they were blatantly lied to and defrauded out of millions and billions. Theres too many cases to go over, but just as example, a Major Bank in the US sold financial products to clients and then turned around and made bets the good product they had sold would crash, thats like selling a defective car without brakes as a 5 star safety rated car, then send email about how crappy the car was and that you didnt tell the client the brakes were sabotaged, then buy an insurance policy on the customer to get money when he does crash his car. States were prevented from making Criminal accusations against fraudulent banks by the OCC. IMO its misrepresenting what happened to say the crisis was due to mom and pop making bad investments.


    Also consider that other factors contribute to the recession, outsourcing, replacing high paid industrial production jobs with Walmart Greeter McJobs, trickle-down economics and all the neoliberal (which would be translated as Reaganomics), etc. Alan Greespan said outright in an interview that he wanted US worker's wages suppressed to levels that can compete with 3rd world workers (with the standard of living that goes with it) and these are the people that were in charge of your economy behind closed doors.


    The entire economic system is BS (from a certain perspective), corrupt and fosters ubiquitous conflicts of interests, we are just so used to it that we have come to think its normal and are unable to step back and see other ways society can be organized. The economic system doesnt have to be corrupt(for a short time) and can be functional with exemplary ethical standards and transparency, but that's not the world we live in and sooner or later, the built-in conflicts of interests dynamic would likely gradually change it back to a corrupt default.

    Also GDP like money economic indicator is a stat that can lead to irrelevant interpretations, detached from the welfare and quality of life of the people. RFK has a decent speech about it.

    but that's just my opinion

    cheers
    Last edited by icewendigo; September 7th, 2012 at 05:30 PM.
    Reply With Quote  
     

  12. #11  
    Time Lord
    Join Date
    Mar 2007
    Posts
    8,046
    Quote Originally Posted by icewendigo View Post
    "When we look at all of the investment scandals that have happened to drive this recession, it seems at the core of most of the big mistakes was simple gullibility."
    I disagree.

    ordinary workers handing their money
    Yes, but also remember that finance professionals were also swindled, because they were blatantly lied to and defrauded out of millions and billions. Theres too many cases to go over, but just as example, a Major Bank in the US sold financial products to clients and then turned around and made bets the good product they had sold would crash, thats like selling a defective car without brakes as a 5 star safety rated car, then send email about how crappy the car was and that you didnt tell the client the brakes were sabotaged, then buy an insurance policy on the customer to get money when he does crash his car. States were prevented from making Criminal accusations against fraudulent banks by the OCC. IMO its misrepresenting what happened to say the crisis was due to mom and pop making bad investments.
    You have to ask yourself why the people who bought those products didn't realize how unsafe they were. It has always looked to me like the majority of people who bought them were out of their depth, not sufficiently educated to be able to analyze the risk properly.

    Now whether that was because of "mom and pop" investors, or because too many MBA's out there didn't learn the basics of risk analysis while in college, - that's an interesting question. I don't know. It could be either, both, a combination of both, or it could be due to something else entirely. Maybe simple greed caused people who should have known better to be less thorough in their analysis?




    Also consider that other factors contribute to the recession, outsourcing, replacing high paid industrial production jobs with Walmart Greeter McJobs, trickle-down economics and all the neoliberal (which would be translated as Reaganomics), etc. Alan Greespan said outright in an interview that he wanted US worker's wages suppressed to levels that can compete with 3rd world workers (with the standard of living that goes with it) and these are the people that were in charge of your economy behind closed doors.
    Yeah. It looks like people even near the top are just following the ticker tape, and have lost the ability to objectively reason without a computer screen in front of them.

    It's like that movie "Idiocracy" where the CEO of Gator Aid calls the president and starts telling him that the funny lights on his screen are all turning red, and he thinks that means there's a problem.

    Nobody stops and thinks that if you lower the standard of living for the workers, then ...... who will you sell the goods to? Doesn't a "low standard of living" mean a standard of living where you don't buy and/or own very much stuff? If people own less stuff, then clearly we must be building less of it, so the workers will still be unemployed even at the lower wage.


    The entire economic system is BS (from a certain perspective), corrupt and fosters ubiquitous conflicts of interests, we are just so used to it that we have come to think its normal and are unable to step back and see other ways society can be organized. The economic system doesnt have to be corrupt(for a short time) and can be functional with exemplary ethical standards and transparency, but that's not the world we live in and sooner or later, the built-in conflicts of interests dynamic would likely gradually change it back to a corrupt default.

    Also GDP like money economic indicator is a stat that can lead to irrelevant interpretations, detached from the welfare and quality of life of the people. RFK has a decent speech about it.

    but that's just my opinion

    cheers

    Globalization is basically an attempt to cobble together 193 different systems and somehow make them all work together without changing any of them to make them compatible.

    It would be like rebuilding your car with parts from 193 different automakers, and then turning the key and expecting it to run. Good luck with that.

    The greed, crime (not called crime, but it's obviously corrupt), and people making money off of others' foolishness - those are all byproducts of a system that is simply collapsing. You see the same kind of behavior when a corporation is going bankrupt (different kinds of looting, embezzlement, and etc). Only in this case, it's the whole system that's collapsing.
    Some clocks are only right twice a day, but they are still right when they are right.
    Reply With Quote  
     

  13. #12  
    Suspended
    Join Date
    Jul 2013
    Posts
    10
    Not some can screw it is it is always up to investors if he/she allows it.Investing in business is a really risky thing that a businessman should know in fact in Helsinki they are use to do riskienhallinta or risk management just to overcome the risk and some are really waiting and studying a lot for their invest,for me even you say it to everyone it is still up to you if you allow them to screw it up.
    Reply With Quote  
     

  14. #13  
    Theatre Whore babe's Avatar
    Join Date
    Jun 2013
    Location
    Resident of Big Island of Hawai'i since 2003, and in Bayside, Ca. since 1981, Humboldt since 1977
    Posts
    12,443
    Never put all your eggs in one basket, and do your homework.

    Works for us.
    Reply With Quote  
     

  15. #14  
    Forum Junior
    Join Date
    Apr 2013
    Posts
    282
    Consumers are just as apt to be misled as investors. Many make purchasing decisions based on slick advertising or other irrelevant factors. I see no reason to prefer consumption as a mechanic to pump money into worthy businesses as opposed to investment.

    The 2007 recession was largely a result of fraud, mortgage companies fast talking home buyers into signing mortgage contracts with impossible terms, then using derived bonds to hand off the risk of default to someone else. These people were all guilty of criminal fraud, but very few if any have ever been punished. The reason they got away with it is simple: many people got fabulously wealthy as a result, and in America, the rich can do whatever they please. As long as we continue to allow our elections to be dominated by paid advertising, which is to say, allow the rich to select whatever candidates they want, this sort of crap is going to happen over and over.
    Reply With Quote  
     

  16. #15  
    Theatre Whore babe's Avatar
    Join Date
    Jun 2013
    Location
    Resident of Big Island of Hawai'i since 2003, and in Bayside, Ca. since 1981, Humboldt since 1977
    Posts
    12,443
    Quote Originally Posted by danhanegan View Post
    Consumers are just as apt to be misled as investors. Many make purchasing decisions based on slick advertising or other irrelevant factors. I see no reason to prefer consumption as a mechanic to pump money into worthy businesses as opposed to investment.

    The 2007 recession was largely a result of fraud, mortgage companies fast talking home buyers into signing mortgage contracts with impossible terms, then using derived bonds to hand off the risk of default to someone else. These people were all guilty of criminal fraud, but very few if any have ever been punished. The reason they got away with it is simple: many people got fabulously wealthy as a result, and in America, the rich can do whatever they please. As long as we continue to allow our elections to be dominated by paid advertising, which is to say, allow the rich to select whatever candidates they want, this sort of crap is going to happen over and over.
    We shall disagree.

    The plunge was also due to people who could NOT AFFORD a second home and bought anyhow, not even CONSIDERING the future of their finances.

    The home buyers were EQUALLY guilty of investing in properties that they could not afford or sustain should their financial situation switch even remotely.

    Sorry...it was GREED ON BOTH SIDES.
    RedPanda likes this.
    Reply With Quote  
     

  17. #16  
    Forum Professor
    Join Date
    Aug 2013
    Location
    San Diego
    Posts
    1,970
    Quote Originally Posted by danhanegan View Post
    Consumers are just as apt to be misled as investors.
    Agreed there!

    The 2007 recession was largely a result of fraud, mortgage companies fast talking home buyers into signing mortgage contracts with impossible terms, then using derived bonds to hand off the risk of default to someone else. These people were all guilty of criminal fraud, but very few if any have ever been punished. The reason they got away with it is simple: many people got fabulously wealthy as a result, and in America, the rich can do whatever they please. As long as we continue to allow our elections to be dominated by paid advertising, which is to say, allow the rich to select whatever candidates they want, this sort of crap is going to happen over and over.
    This is partially true. There were many people guilty of horrendous planning, and lots of banks that put profit ahead of everything else. Many paid the price and have been bankrupted. However, they would not have been able to do this at all if not for the people who took out those ridiculous mortgages.

    Quote Originally Posted by babe View Post
    The plunge was also due to people who could NOT AFFORD a second home and bought anyhow, not even CONSIDERING the future of their finances.
    Well, they were certainly considering the future of their finances. Most people who did this assumed they would "flip" the house; hold onto it for a few years while prices rose, then sell it at a tidy profit before their ARM payments rose. Their error was not a lack of planning, it was just very poor judgment (i.e. "the real estate bubble will continue forever!")

    Sorry...it was GREED ON BOTH SIDES.
    Agreed there.
    Reply With Quote  
     

  18. #17  
    ...matter and pixie dust wegs's Avatar
    Join Date
    Jul 2013
    Posts
    1,924
    Quote Originally Posted by danhanegan View Post
    Consumers are just as apt to be misled as investors. Many make purchasing decisions based on slick advertising or other irrelevant factors. I see no reason to prefer consumption as a mechanic to pump money into worthy businesses as opposed to investment.

    The 2007 recession was largely a result of fraud, mortgage companies fast talking home buyers into signing mortgage contracts with impossible terms, then using derived bonds to hand off the risk of default to someone else. These people were all guilty of criminal fraud, but very few if any have ever been punished. The reason they got away with it is simple: many people got fabulously wealthy as a result, and in America, the rich can do whatever they please. As long as we continue to allow our elections to be dominated by paid advertising, which is to say, allow the rich to select whatever candidates they want, this sort of crap is going to happen over and over.
    Actually, the mortgage lenders weren’t guilty of anything. Being pushy? Being aggressive? Is that a crime now? The home buyer should know whathe/she can afford. There were no ‘impossible’ terms. The mortgage lenders tookadvantage of a section of the population who actually STILL BELIEVES that onecan get rich quick. Plus, did people really think real estate would just keep soaring with no ceiling? Lol I mean, if you want to play the game, you need to UNDERSTAND VERY WELL, the rules. Unfortunately, many didn’t grasp the terms oftheir ARMs or thought they would magically be earning more money by the time the ARM's 'teaser period' was over …that’s not the lenders’ fault.

    This is why society will never learn its lessons and will be destined to repeat them.
    Reply With Quote  
     

  19. #18  
    ...matter and pixie dust wegs's Avatar
    Join Date
    Jul 2013
    Posts
    1,924
    .....deleted comment, for it was an unfair assessment. :/
    Last edited by wegs; August 23rd, 2013 at 07:30 PM.
    Reply With Quote  
     

  20. #19  
    Forum Professor
    Join Date
    Aug 2013
    Location
    San Diego
    Posts
    1,970
    Quote Originally Posted by wegs View Post
    Actually, the mortgage lenders weren’t guilty of anything. Being pushy? Being aggressive? Is that a crime now?


    No, those weren't. But lenders who were guilty of fraud (misrepresenting the terms of the mortgage, intentionally altering documents submitted by applicants etc) were - and many of them have since gone to jail for it.
    Reply With Quote  
     

  21. #20  
    ...matter and pixie dust wegs's Avatar
    Join Date
    Jul 2013
    Posts
    1,924
    Yes, there were ''predatory'' lending tactics, and underwriting ''standards'' started to slip. Our government and big business (banks) were scratching each others backs and mortgage companies felt the pressure to loan money to people who couldn't afford the loans. I shouldn't have said they didn't do 'anything' wrong, but the real estate bubble didn't blow up because of that. It was part of the storm, but I still put the onus on people who had ''no assets, no income'' who thought they could afford these enormous loans? I mean, people need to take responsibility for what they are getting into. My mistake above is saying the mortgage lenders by and large were 'innocent.' I know they weren't, but they are being blamed for the entire scandal, and homebuyers are made to look like victims. In some cases, I'm sure that was the case, but the real estate bubble bursting as it did, shouldn't rest on the shoulders of the banks.
    Reply With Quote  
     

  22. #21  
    ...matter and pixie dust wegs's Avatar
    Join Date
    Jul 2013
    Posts
    1,924
    I've always believed and sometimes have failed to heed the advice myself.."when something is too good to be true, it is."Predatory tactics only go so far. A red light should go off to someone who has no income, no assets, as to how are they being approved for a loan three times their salary? Or higher? How is this possible, they should ask?I would love to drive a Maserati but I know that I can't afford it. And I would question any lender who somehow managed to "fit" me into one. The other thing to is ppl thought the markets would keep climbing and they could flip their house if need be.Again, gambling is left best at the casino ...ppl shouldn't gamble with their homes and futures.I didn't think that the lenders had no fault, it was poor wording on my part above lolBut they are being blamed nearly exclusively.That's all I'm saying.
    Reply With Quote  
     

  23. #22  
    Ascended Member Ascended's Avatar
    Join Date
    Apr 2012
    Location
    UK
    Posts
    3,370
    Quote Originally Posted by wegs View Post
    Actually, the mortgage lenders weren’t guilty of anything. Being pushy? Being aggressive? Is that a crime now? The home buyer should know whathe/she can afford. There were no ‘impossible’ terms. The mortgage lenders tookadvantage of a section of the population who actually STILL BELIEVES that onecan get rich quick. Plus, did people really think real estate would just keep soaring with no ceiling? Lol I mean, if you want to play the game, you need to UNDERSTAND VERY WELL, the rules. Unfortunately, many didn’t grasp the terms oftheir ARMs or thought they would magically be earning more money by the time the ARM's 'teaser period' was over …that’s not the lenders’ fault.

    This is why society will never learn its lessons and will be destined to repeat them.
    I would disagree here, it needs to be clearly understood by all parties for contracts to be both legally enforceable and legitimate. Now since it was the mortgage companies and there representatives that were responsible for drawing up these mortgage contracts they also had the responsibility to make sure their clients actually understood them. It wasn't as if people applying for mortgages ever turned up having drawn up their own contracts and legal terms, no the mortgage companies were making money off of ordinary people, they knew what they were doing alright and it was blatantly irresponsible for them to sell mortgages to people who clearly didn't understand the terms of their contracts. Contract law stipulates quite clearly that for a contract to be legally binding then all parties need to be aware of all the terms pursuant to that contract, yet many got into difficulties because they clearly weren't.

    Also lenders actively advertised and encouraged people to borrow money that they could never hope to pay back, on the premise that the value of their property would rise and they could make money, the reality was that the cost of property was being artificially inflated by people being persuaded to buy properties they didn't need and couldn't afford. It was the lenders who were making money from the fact that as property prices rose then the amount of money people needed to borrow to buy them also rose but crucially so did the interest which people had to pay. People were losing out with having to pay higher prices whilst lenders made even more money off them. This wasn't the fault of ordinary people, this was the fault of greedy lenders and agents. Your average Joe just didn't get up one morning and completely off his own bat thought I need to go and buy a second and third house, this is not what happened at all. Ordinary people were bombarded with advertising to make them think if they didn't own that 6 bedroom mansion or that holiday condo and weren't hocked up to the eyeballs with mortgage debt then were failing financially and letting their families down.

    People did what they thought was right simply because they were told it was right, yet it is many of those people that have lost their homes as a result.
    Everything has its beauty, but not everyone sees it. - confucius
    Reply With Quote  
     

  24. #23  
    ...matter and pixie dust wegs's Avatar
    Join Date
    Jul 2013
    Posts
    1,924
    While I know deceptive practices went on, what motive do banks have to lend money to ppl whom they know can't pay the loans back?
    Reply With Quote  
     

  25. #24  
    ...matter and pixie dust wegs's Avatar
    Join Date
    Jul 2013
    Posts
    1,924
    I live in a state that suffered greatly from the real estate collapse. One of the key catalysts to the whole thing too was houses were not priced properly. The market kept soaring. I remember thinking...these houses aren't "worth" what these people are hoping to sell them for. A house in 2007 going for $300k is now on the market for $125k.And that is probably the right price for it.So, you are thinking of buying a home or a few and flipping them, don't you wonder if the market is getting close to its ceiling?So many lost multiple homes ...shocked at how the market plummeted.In reality, the market became flooded with foreclosures and short sales...so if you do own a home and are paying your mortgage, it's not worth selling because ppl can still buy homes for a lot less than five years ago. Nice homes.I feel sad for anyone who loses a home. But many shouldn't have been given home loans from the onset.America is in debt ...it is no wonder its citizens are as well. It is a government mindset to borrow and figure it all out later.I'm just saying...there are lots of moving parts to the whole thing. The banks are not the reason for the collapse ...although they were part if it.
    Reply With Quote  
     

  26. #25  
    Forum Professor
    Join Date
    Aug 2013
    Location
    San Diego
    Posts
    1,970
    Quote Originally Posted by wegs View Post
    While I know deceptive practices went on, what motive do banks have to lend money to ppl whom they know can't pay the loans back?
    They issue the loan, then sell it at a tidy profit to another lender. They make money and they take none of the risk. The other lender can then package them into mortgage backed securities, which can then be traded by investors. Often such sales are very lucrative. Those investors/purchasing banks then protect themselves by buying CDS (credit default swaps) which in turn can be sold and traded by OTHER investment houses. At one point the market in CDS'es was over 60 trillion dollars, and investors were making billions by trading swaps intended to protect other investors from losing money on mortgages that yet another investor bought from the initial lender.

    If this all sounds like a lot of financial trickery - it is. It's a way for large investors to make money on byzantine financial instruments, in a way that is completely unregulated. Which is why the banks bear a large share of fault for the collapse.
    Ascended and wegs like this.
    Reply With Quote  
     

  27. #26  
    Ascended Member Ascended's Avatar
    Join Date
    Apr 2012
    Location
    UK
    Posts
    3,370
    Quote Originally Posted by wegs View Post
    While I know deceptive practices went on, what motive do banks have to lend money to ppl whom they know can't pay the loans back?
    The banks motives were quite simple, they stupidly believed that they could keep pushing the prices of property up by lending more and more money to people to buy property, they worked on the premise that if a customer couldn't afford to make their mortgage payments then they could sell their property and pay off the mortgage, or failing this the banks would foreclose and end up with a property worth more than the mortgage debt, either way the banks believed there investment to be safe, all the while they were making a fortune from recieveing interest payments.
    wegs likes this.
    Everything has its beauty, but not everyone sees it. - confucius
    Reply With Quote  
     

  28. #27  
    ...matter and pixie dust wegs's Avatar
    Join Date
    Jul 2013
    Posts
    1,924
    I realize reading your posts billvon and ascended that there was an entire side I was unaware of; I guess I should know the full picture before I speak out about it, next time. :/Thank u both.I knew banks sold loans but not at that "rate."
    Ascended likes this.
    Reply With Quote  
     

  29. #28  
    Theatre Whore babe's Avatar
    Join Date
    Jun 2013
    Location
    Resident of Big Island of Hawai'i since 2003, and in Bayside, Ca. since 1981, Humboldt since 1977
    Posts
    12,443
    Quote Originally Posted by billvon View Post
    Quote Originally Posted by danhanegan View Post
    Consumers are just as apt to be misled as investors.
    Agreed there!

    The 2007 recession was largely a result of fraud, mortgage companies fast talking home buyers into signing mortgage contracts with impossible terms, then using derived bonds to hand off the risk of default to someone else. These people were all guilty of criminal fraud, but very few if any have ever been punished. The reason they got away with it is simple: many people got fabulously wealthy as a result, and in America, the rich can do whatever they please. As long as we continue to allow our elections to be dominated by paid advertising, which is to say, allow the rich to select whatever candidates they want, this sort of crap is going to happen over and over.
    This is partially true. There were many people guilty of horrendous planning, and lots of banks that put profit ahead of everything else. Many paid the price and have been bankrupted. However, they would not have been able to do this at all if not for the people who took out those ridiculous mortgages.

    Quote Originally Posted by babe View Post
    The plunge was also due to people who could NOT AFFORD a second home and bought anyhow, not even CONSIDERING the future of their finances.
    Well, they were certainly considering the future of their finances. Most people who did this assumed they would "flip" the house; hold onto it for a few years while prices rose, then sell it at a tidy profit before their ARM payments rose. Their error was not a lack of planning, it was just very poor judgment (i.e. "the real estate bubble will continue forever!")

    Sorry...it was GREED ON BOTH SIDES.
    Agreed there.
    Nothing in real estate, that I can recall, has never stopped. I have seen it go crazy, dump, go crazy, dump, etc at least 3 or 4 times in my lifetime! Difference is, is you didn't try to buy it if you couldn't afford it and the banks would NOT qualify you and ESPECIALLY w/o a down payment! what in the world were people thinking!

    I should rephrase that....greed doesn't THINK!!!
    wegs likes this.
    Reply With Quote  
     

  30. #29  
    Time Lord
    Join Date
    Mar 2007
    Posts
    8,046
    Quote Originally Posted by wegs View Post
    I realize reading your posts billvon and ascended that there was an entire side I was unaware of; I guess I should know the full picture before I speak out about it, next time. :/Thank u both.I knew banks sold loans but not at that "rate."
    Another dimension to it is the real estate salespeople themselves pushing people to invest by telling them they'd be able to resell. A real estate salesperson earns a commission on the sale. They get to keep that commission whether the buyer later defaults or not.

    Too many people trust the middle man, and forget he'll get paid just as much if you lose as if you win.
    wegs likes this.
    Some clocks are only right twice a day, but they are still right when they are right.
    Reply With Quote  
     

  31. #30  
    ...matter and pixie dust wegs's Avatar
    Join Date
    Jul 2013
    Posts
    1,924
    Quote Originally Posted by kojax View Post
    Quote Originally Posted by wegs View Post
    I realize reading your posts billvon and ascended that there was an entire side I was unaware of; I guess I should know the full picture before I speak out about it, next time. :/Thank u both.I knew banks sold loans but not at that "rate."
    Another dimension to it is the real estate salespeople themselves pushing people to invest by telling them they'd be able to resell. A real estate salesperson earns a commission on the sale. They get to keep that commission whether the buyer later defaults or not. Too many people trust the middle man, and forget he'll get paid just as much if you lose as if you win.
    Great point, yes. During the time when this happened, I worked for a large insurance broker and while that didn't cause me to be bias per se, some of these larger banks were clients of my firm. Looking back, there was a subtle bias passed down from the "powers that be" about what to believe and what not to...isn't that interesting? I remember that now during quarterly investor calls. So, this shouldn't cause someone to not search for the full story on his/get own, but it did cause me to take their word and not really dive into the matter a bit further. I do think that homeowners need to accept some blame but I honestly had no idea the degree of deception going on in the mortgage industry. There are stringent checks and balances in the insurance biz, so I know there exists the same for all companies in the financial services industry. So, it just boggles my mind to read that not only did this go on, but to the degree it did.

    What you don't know CAN hurt you, in this case.
    :/

    I'm not an avid current events news watcher, but think I need to follow it a bit closer. My problem is what network or publication to believe? Seems like they all just compete for ratings and the facts of a story get watered down...and the networks political bias takes over.
    Reply With Quote  
     

  32. #31  
    Forum Professor
    Join Date
    Aug 2013
    Location
    San Diego
    Posts
    1,970
    Quote Originally Posted by babe View Post
    Difference is, is you didn't try to buy it if you couldn't afford it and the banks would NOT qualify you and ESPECIALLY w/o a down payment! what in the world were people thinking!
    They were thinking "I can get rich!" And the problem was that a lot of people actually WERE getting rich. A friend of mine bought a house in a community about an hour outside LA for $210,000 in 2000, then sold it for $750,000 in 2006. Over a 3x return in just over 6 years.

    Problem is then he tried to do it again . . .
    Reply With Quote  
     

  33. #32  
    ...matter and pixie dust wegs's Avatar
    Join Date
    Jul 2013
    Posts
    1,924
    To go further to my point above, sadly deception and fraud goes on in big business but on a smaller scale but how were these banks able to get away with all of this, on a grander scale?How did all of this altered paperwork make it past all the checks and balances for so long?
    Reply With Quote  
     

  34. #33  
    ...matter and pixie dust wegs's Avatar
    Join Date
    Jul 2013
    Posts
    1,924
    Quote Originally Posted by billvon View Post
    Quote Originally Posted by babe View Post
    Difference is, is you didn't try to buy it if you couldn't afford it and the banks would NOT qualify you and ESPECIALLY w/o a down payment! what in the world were people thinking!
    They were thinking "I can get rich!" And the problem was that a lot of people actually WERE getting rich. A friend of mine bought a house in a community about an hour outside LA for $210,000 in 2000, then sold it for $750,000 in 2006. Over a 3x return in just over 6 years.Problem is then he tried to do it again . . .
    But why did the prices ever soar to that extent?I live in a town home and the going prices during the real estate peak for a unit in my neighborhood were $300k ...now if I were to sell it, I would be lucky to get half that.I understand, but I don't understand.I also don't understand why the banks didn't work with the homeowners who were upside down in their loans? What benefit does a bank get out of foreclosing on a home when they could have just adjusted the loan to fit with current market prices? I know it's not that simple but doesn't make sense why a bank will foreclose and then turn around and give a loan to a new buyer for the same house? Hello?
    Reply With Quote  
     

  35. #34  
    Forum Professor
    Join Date
    Aug 2013
    Location
    San Diego
    Posts
    1,970
    Quote Originally Posted by wegs View Post
    [But why did the prices ever soar to that extent?
    Irrational exuberance coupled with a sensationalist media and a fondness for get-rich-quick schemes. Such bubbles are positive feedback phenomenons - if people get overly excited that prices will rise, they actually _will_ rise.

    I also don't understand why the banks didn't work with the homeowners who were upside down in their loans?
    Some do, some don't. Some see the greater profit they could get by foreclosing and lending to a more responsible homeowner.
    Reply With Quote  
     

  36. #35  
    ...matter and pixie dust wegs's Avatar
    Join Date
    Jul 2013
    Posts
    1,924
    Quote Originally Posted by billvon View Post
    Quote Originally Posted by wegs View Post
    [But why did the prices ever soar to that extent?
    Irrational exuberance coupled with a sensationalist media and a fondness for get-rich-quick schemes. Such bubbles are positive feedback phenomenons - if people get overly excited that prices will rise, they actually _will_ rise.

    I also don't understand why the banks didn't work with the homeowners who were upside down in their loans?
    Some do, some don't. Some see the greater profit they could get by foreclosing and lending to a more responsible homeowner.
    Understandable, ok. But, one of the main reasons many lost their homes (in addition to many losing their jobs in this economy) is they couldn't afford the higher interest rate, when the loan terms 'changed.' Correct me if I'm wrong on that. So, it might be likely, not 100% of the time, but in many cases...that people would be able to afford the lower monthly mortgage payments if they were adjusted.
    Reply With Quote  
     

  37. #36  
    Forum Professor
    Join Date
    Aug 2013
    Location
    San Diego
    Posts
    1,970
    Quote Originally Posted by wegs View Post
    Understandable, ok. But, one of the main reasons many lost their homes (in addition to many losing their jobs in this economy) is they couldn't afford the higher interest rate, when the loan terms 'changed.'
    Right. That's an ARM; adjustable rate mortgage. The rates vary depending on some benchmark (like the US prime lending rate) so they can go up or down with time.

    Correct me if I'm wrong on that. So, it might be likely, not 100% of the time, but in many cases...that people would be able to afford the lower monthly mortgage payments if they were adjusted.
    That's often true. But keep in mind that it's generally not the lender you got the loan from that's making such decisions; often it is the fund manager who is holding the mortgages, and whose job it is to get the fund the best return possible. And that fund manager is getting pressure from all his investors, some of whom are thinking "I can't afford to have my investments lose value! If that happens I could lose my house, because I can't afford it on just my salary."

    Which is one of the problems in bubbles; a lot of things are interdependent. Bubbles allow people to make a lot of money, but generally that money depends on the bubble staying, well, bubbled.
    Reply With Quote  
     

  38. #37  
    Time Lord
    Join Date
    Mar 2007
    Posts
    8,046
    Quote Originally Posted by billvon View Post
    Quote Originally Posted by wegs View Post
    [But why did the prices ever soar to that extent?
    Irrational exuberance coupled with a sensationalist media and a fondness for get-rich-quick schemes. Such bubbles are positive feedback phenomenons - if people get overly excited that prices will rise, they actually _will_ rise.
    The ideal case of a deliberate bubble would be a Ponzi Scheme.

    Ponzi scheme - Wikipedia, the free encyclopedia

    In reality all bubbles conform to the same basic description as a Ponzi scheme. The difference is that in an economic bubble situation, nobody is deliberately creating it. It's like a spontaneous Ponzi scheme that has started on its own.

    Investors then fall into three categories:

    1) - Naive individuals who don't realize it's a bubble.

    2) - Even more naive individuals who think they'll be among the lucky few who dump their shares just before collapse

    3) - Individuals who have some kind of a plan for when and how they're going to get in and out, and how they're going to curb their own greed so they don't just keep reinvesting after they've made their first profits.

    Clearly group #3 are a very rare breed of investor.



    I also don't understand why the banks didn't work with the homeowners who were upside down in their loans?
    Some do, some don't. Some see the greater profit they could get by foreclosing and lending to a more responsible homeowner.
    Also I think if they foreclose it's easier to go to the government trough and beg for bailout money.

    "Look how many of our customers defaulted on their loans!!!" is a stronger argument than "Look how many of our customers we ended up deciding to readjust the loan for!!!"

    So, indirectly, the decision to bail the banks out probably also triggered them deciding to foreclose on a lot of people they would have been willing to work with otherwise.
    Some clocks are only right twice a day, but they are still right when they are right.
    Reply With Quote  
     

  39. #38  
    Theatre Whore babe's Avatar
    Join Date
    Jun 2013
    Location
    Resident of Big Island of Hawai'i since 2003, and in Bayside, Ca. since 1981, Humboldt since 1977
    Posts
    12,443
    Quote Originally Posted by billvon View Post
    Quote Originally Posted by babe View Post
    Difference is, is you didn't try to buy it if you couldn't afford it and the banks would NOT qualify you and ESPECIALLY w/o a down payment! what in the world were people thinking!
    They were thinking "I can get rich!" And the problem was that a lot of people actually WERE getting rich. A friend of mine bought a house in a community about an hour outside LA for $210,000 in 2000, then sold it for $750,000 in 2006. Over a 3x return in just over 6 years.

    Problem is then he tried to do it again . . .
    That is where GREED and IGNORANCE came in.

    You did it once. Take the money and run..I knew people who bought up tons of property and wound up belly up...If they had done one or two...they'd have made probably around 1.5 bu that wasn't enough

    I also know people who were contractors, who SPENT every dime that they made! One is almost 70 and hasn't a pot to piss in.....sorry Mods but is IS a legitimate expression!
    Reply With Quote  
     

  40. #39  
    Theatre Whore babe's Avatar
    Join Date
    Jun 2013
    Location
    Resident of Big Island of Hawai'i since 2003, and in Bayside, Ca. since 1981, Humboldt since 1977
    Posts
    12,443
    Quote Originally Posted by wegs View Post
    Quote Originally Posted by billvon View Post
    Quote Originally Posted by babe View Post
    Difference is, is you didn't try to buy it if you couldn't afford it and the banks would NOT qualify you and ESPECIALLY w/o a down payment! what in the world were people thinking!
    They were thinking "I can get rich!" And the problem was that a lot of people actually WERE getting rich. A friend of mine bought a house in a community about an hour outside LA for $210,000 in 2000, then sold it for $750,000 in 2006. Over a 3x return in just over 6 years.Problem is then he tried to do it again . . .
    But why did the prices ever soar to that extent?I live in a town home and the going prices during the real estate peak for a unit in my neighborhood were $300k ...now if I were to sell it, I would be lucky to get half that.I understand, but I don't understand.I also don't understand why the banks didn't work with the homeowners who were upside down in their loans? What benefit does a bank get out of foreclosing on a home when they could have just adjusted the loan to fit with current market prices? I know it's not that simple but doesn't make sense why a bank will foreclose and then turn around and give a loan to a new buyer for the same house? Hello?
    Times were good...economy was doing well, and people got cocky!
    Reply With Quote  
     

  41. #40  
    Theatre Whore babe's Avatar
    Join Date
    Jun 2013
    Location
    Resident of Big Island of Hawai'i since 2003, and in Bayside, Ca. since 1981, Humboldt since 1977
    Posts
    12,443
    Quote Originally Posted by billvon View Post
    Quote Originally Posted by wegs View Post
    [But why did the prices ever soar to that extent?
    Irrational exuberance coupled with a sensationalist media and a fondness for get-rich-quick schemes. Such bubbles are positive feedback phenomenons - if people get overly excited that prices will rise, they actually _will_ rise.

    I also don't understand why the banks didn't work with the homeowners who were upside down in their loans?
    Some do, some don't. Some see the greater profit they could get by foreclosing and lending to a more responsible homeowner.
    Also supply and demand...

    I know in Hawai'i they are demanding that the banks work with the people....and things are evened out. Prices dropped, now stabilizing and rising slightly.....properties in demand are still in demand......but hell I am not about to buy a 12 million dollar home! My home is MODEST in comparison to my neighbors....I don't WANT a huge house....I just wanted what worked for us. I don't live with my husband most of the year, so I also wanted a place that I loved.....and I do.
    wegs likes this.
    Reply With Quote  
     

  42. #41  
    Theatre Whore babe's Avatar
    Join Date
    Jun 2013
    Location
    Resident of Big Island of Hawai'i since 2003, and in Bayside, Ca. since 1981, Humboldt since 1977
    Posts
    12,443
    Quote Originally Posted by wegs View Post
    Quote Originally Posted by billvon View Post
    Quote Originally Posted by wegs View Post
    [But why did the prices ever soar to that extent?
    Irrational exuberance coupled with a sensationalist media and a fondness for get-rich-quick schemes. Such bubbles are positive feedback phenomenons - if people get overly excited that prices will rise, they actually _will_ rise.

    I also don't understand why the banks didn't work with the homeowners who were upside down in their loans?
    Some do, some don't. Some see the greater profit they could get by foreclosing and lending to a more responsible homeowner.
    Understandable, ok. But, one of the main reasons many lost their homes (in addition to many losing their jobs in this economy) is they couldn't afford the higher interest rate, when the loan terms 'changed.' Correct me if I'm wrong on that. So, it might be likely, not 100% of the time, but in many cases...that people would be able to afford the lower monthly mortgage payments if they were adjusted.
    You are speaking of variable rates and those with balloon payments?
    Reply With Quote  
     

  43. #42  
    Theatre Whore babe's Avatar
    Join Date
    Jun 2013
    Location
    Resident of Big Island of Hawai'i since 2003, and in Bayside, Ca. since 1981, Humboldt since 1977
    Posts
    12,443
    Quote Originally Posted by billvon View Post
    Quote Originally Posted by wegs View Post
    [But why did the prices ever soar to that extent?
    Irrational exuberance coupled with a sensationalist media and a fondness for get-rich-quick schemes. Such bubbles are positive feedback phenomenons - if people get overly excited that prices will rise, they actually _will_ rise.

    I also don't understand why the banks didn't work with the homeowners who were upside down in their loans?
    Some do, some don't. Some see the greater profit they could get by foreclosing and lending to a more responsible homeowner.
    Well said
    Reply With Quote  
     

  44. #43  
    Theatre Whore babe's Avatar
    Join Date
    Jun 2013
    Location
    Resident of Big Island of Hawai'i since 2003, and in Bayside, Ca. since 1981, Humboldt since 1977
    Posts
    12,443
    Quote Originally Posted by kojax View Post
    Quote Originally Posted by billvon View Post
    Quote Originally Posted by wegs View Post
    [But why did the prices ever soar to that extent?
    Irrational exuberance coupled with a sensationalist media and a fondness for get-rich-quick schemes. Such bubbles are positive feedback phenomenons - if people get overly excited that prices will rise, they actually _will_ rise.
    The ideal case of a deliberate bubble would be a Ponzi Scheme.

    Ponzi scheme - Wikipedia, the free encyclopedia

    In reality all bubbles conform to the same basic description as a Ponzi scheme. The difference is that in an economic bubble situation, nobody is deliberately creating it. It's like a spontaneous Ponzi scheme that has started on its own.

    Investors then fall into three categories:

    1) - Naive individuals who don't realize it's a bubble.

    2) - Even more naive individuals who think they'll be among the lucky few who dump their shares just before collapse

    3) - Individuals who have some kind of a plan for when and how they're going to get in and out, and how they're going to curb their own greed so they don't just keep reinvesting after they've made their first profits.

    Clearly group #3 are a very rare breed of investor.



    I also don't understand why the banks didn't work with the homeowners who were upside down in their loans?
    Some do, some don't. Some see the greater profit they could get by foreclosing and lending to a more responsible homeowner.
    Also I think if they foreclose it's easier to go to the government trough and beg for bailout money.

    "Look how many of our customers defaulted on their loans!!!" is a stronger argument than "Look how many of our customers we ended up deciding to readjust the loan for!!!"

    So, indirectly, the decision to bail the banks out probably also triggered them deciding to foreclose on a lot of people they would have been willing to work with otherwise.

    Were the banks at fault yes, but the buyers were also. They were looking to "flip" houses they couldn't afford, and it blew up in their faces.
    Reply With Quote  
     

  45. #44  
    ...matter and pixie dust wegs's Avatar
    Join Date
    Jul 2013
    Posts
    1,924
    Curious, what do you all feel is the best investment for the times we're in? Best ROI?

    I still think if your company offers one, a 401k is a pretty sound way to go for long term planning, if you stay cautious during these volatile economic times. I'm not a risk taker even in the best of times. Lol But that's me.

    Real estate is slowly making a come back and I still think there's money in scooping up houses that are dirt cheap and if you're a handyman/woman...fix it up and flip it.I'm not handy lol but that's a good deal if you can swing it.

    But imma thinkin' that a house isn't the investment it used to be. (as the main residence)
    Reply With Quote  
     

  46. #45  
    Theatre Whore babe's Avatar
    Join Date
    Jun 2013
    Location
    Resident of Big Island of Hawai'i since 2003, and in Bayside, Ca. since 1981, Humboldt since 1977
    Posts
    12,443
    Quote Originally Posted by wegs View Post
    Curious, what do you all feel is the best investment for the times we're in? Best ROI?

    I still think if your company offers one, a 401k is a pretty sound way to go for long term planning, if you stay cautious during these volatile economic times. I'm not a risk taker even in the best of times. Lol But that's me.

    Real estate is slowly making a come back and I still think there's money in scooping up houses that are dirt cheap and if you're a handyman/woman...fix it up and flip it.I'm not handy lol but that's a good deal if you can swing it.

    But imma thinkin' that a house isn't the investment it used to be. (as the main residence)
    Real Estate and plain cash in hand...for right now..

    Market is getting too high....something has to fall
    wegs likes this.
    Reply With Quote  
     

  47. #46  
    Theatre Whore babe's Avatar
    Join Date
    Jun 2013
    Location
    Resident of Big Island of Hawai'i since 2003, and in Bayside, Ca. since 1981, Humboldt since 1977
    Posts
    12,443
    Buy it and don't flip it...use it for income...if you can pay it off and then the expenses should be offset by the income...but choose wisely just in case you want to flip it.....then remember...you can't flip a dump.....
    Reply With Quote  
     

  48. #47  
    ...matter and pixie dust wegs's Avatar
    Join Date
    Jul 2013
    Posts
    1,924
    Quote Originally Posted by babe View Post
    Quote Originally Posted by wegs View Post
    Curious, what do you all feel is the best investment for the times we're in? Best ROI?I still think if your company offers one, a 401k is a pretty sound way to go for long term planning, if you stay cautious during these volatile economic times. I'm not a risk taker even in the best of times. Lol But that's me.Real estate is slowly making a come back and I still think there's money in scooping up houses that are dirt cheap and if you're a handyman/woman...fix it up and flip it.I'm not handy lol but that's a good deal if you can swing it.But imma thinkin' that a house isn't the investment it used to be. (as the main residence)
    Real Estate and plain cash in hand...for right now..Market is getting too high....something has to fall
    Cash in hand, yes true.Size Orman used to say often to callers on her show: "You need to enjoy saving money as much as you do spending it."She talked a lot about how unhealthy views of money stem from how we were raised.She'd say "money shouldn't be controlling you, you need to control your money."I always thought she had good old fashioned common sense advice for how to manage one's finances.
    Reply With Quote  
     

  49. #48  
    Theatre Whore babe's Avatar
    Join Date
    Jun 2013
    Location
    Resident of Big Island of Hawai'i since 2003, and in Bayside, Ca. since 1981, Humboldt since 1977
    Posts
    12,443
    Quote Originally Posted by wegs View Post
    Quote Originally Posted by babe View Post
    Quote Originally Posted by wegs View Post
    Curious, what do you all feel is the best investment for the times we're in? Best ROI?I still think if your company offers one, a 401k is a pretty sound way to go for long term planning, if you stay cautious during these volatile economic times. I'm not a risk taker even in the best of times. Lol But that's me.Real estate is slowly making a come back and I still think there's money in scooping up houses that are dirt cheap and if you're a handyman/woman...fix it up and flip it.I'm not handy lol but that's a good deal if you can swing it.But imma thinkin' that a house isn't the investment it used to be. (as the main residence)
    Real Estate and plain cash in hand...for right now..Market is getting too high....something has to fall
    Cash in hand, yes true.Size Orman used to say often to callers on her show: "You need to enjoy saving money as much as you do spending it."She talked a lot about how unhealthy views of money stem from how we were raised.She'd say "money shouldn't be controlling you, you need to control your money."I always thought she had good old fashioned common sense advice for how to manage one's finances.

    You have to be willing to lose money to make money.
    Reply With Quote  
     

  50. #49  
    ...matter and pixie dust wegs's Avatar
    Join Date
    Jul 2013
    Posts
    1,924
    Babe, yeah I think she meant it more in terms of trying to encourage ppl to stop spending their money, frivolously.From a business venture perspective, yes one needs to assume some risk in order to gain.
    babe likes this.
    Reply With Quote  
     

  51. #50  
    Forum Professor
    Join Date
    Aug 2013
    Location
    San Diego
    Posts
    1,970
    Quote Originally Posted by wegs View Post
    Curious, what do you all feel is the best investment for the times we're in? Best ROI?
    A year ago it was real estate, hands down. Now real estate is climbing so it's not as stellar but it still hasn't recovered yet so it's not a bad choice.

    Right now small cap stocks are probably a reasonable investment. Plenty of small cap funds out there, and they are probably going to be beating average returns as the economy recovers. (They're more volatile, which during recoveries is a good thing.)
    Last edited by billvon; August 26th, 2013 at 11:32 AM.
    babe and wegs like this.
    Reply With Quote  
     

  52. #51  
    ...matter and pixie dust wegs's Avatar
    Join Date
    Jul 2013
    Posts
    1,924
    Good advice, thanks ^^
    Reply With Quote  
     

Similar Threads

  1. Getting investors for a computer game.
    By mmatt9876 in forum Business & Economics
    Replies: 5
    Last Post: January 17th, 2012, 06:38 AM
Bookmarks
Bookmarks
Posting Permissions
  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •