nikak: ::weird question:: fishing for responses...

So I don't know if this will get any replies, but it at least will let you guys know where my mind has been lately. I only bring this up for an interesting discussion and because I just dropped a crapload of cash on it. Also, it helps me to summarize all that I've been studying and get some other perspective. I hope this forum is okay for this type of discussion....

I've been learning more and more about investing/stock market stuff lately, and I think we're on the verge of something interesting in America. Americans are up to their eye-balls in debt, both housing and credit cards. Companies are just as bad. Meanwhile the european and chinese economies are on the rise. There are almost twice as many americans in their fifties than in their twenties, and the fifty-somethings will start to retire in 2007. It will be a major burden on the stock market and gov't as those ppl withdraw from 401k's or Social Security (an expected 20 billion a month withdrawal).

Combine that with the strength of the euro and the yen, and you can start to see a major downturn of the american economy taking shape. All of the factors are in place and it's already starting. The american stock market goes up and down in 40 year cycles, and it's time to decline for a while.

So what do you guys think? Did I convice you and possibly myself that this is what is happening?

Feel free not to respond or even read this post....just fishing i guess for some validation.

-maximus

4 Comments:

At 01 June, 2006 07:22, bla said...: I'd say you definately have a good point dod. I've been hearing about China's economy rising from so many sources that it's pretty much impossible to ignore. Most of the talk was circulating around the oil usage and how if they start using cars like Americans do, we just might see four digits on the price of gas! As far as Europe goes I was just thinking about it and it seems like Europe has always been just doing its thing. I mean take out the couple wars and stuff they've always been doing good and there was never really a huge "boom!" like in the States. And by that I mean at some point American economy developed extremely fast making people from everywhere want to move down here and such, whereas Europe has been just steadily doing its thing. Not sure if that makes sense (I haven't had much sleep was moving out till 2am, then slept on the floor till 7 lol) but China in a way is attempting to develop in a quick way like the US.

As far as the US economy and the whole thing with the Social Security - that's being canceled right? The baby boomers are now all old! The economy here definately will take a hit, but I'm usually an optimist and like to think that with all that and if social security is really being cancelled new programs might rise to change things up a bit and keep it stable. But if you want the pessimistic view - It's time to move to Europe! (:

Hope there was anything valid in all that junk I threw up there lol
At 01 June, 2006 14:27, Unknown said...: i don't see a downturn coming... americans over spend while their european and asian counterparts save to investe.

however, the chinese, japanese, etc., don't invest in their local markets, they invest in the U.S. market because it's safer, and because there's almost 300 million americans that love to spend and keep the economy going.

that's how i see it. i hope your investements goes well. personally, i've always been heavy on international stocks in my 401k, but i have other accounts that are 100% U.S stocks.
At 01 June, 2006 15:41, Anonymous said...: Be carefull with the stock market though, don't forget to diversify! I'm telling that because stock market falls or recesses about every 8-10 years (next one should be coming up pretty soon).

Also there is a trend among the baby boomers to continue living and working rather than waiting for their time to die. Many of them come out of retirement and invest in the economy (either spending or actual investing). An example of that could be Vespa Scooters marketing not only to 20 year olds but also to baby boomers (it's ofcourse a more luxurious model).

Another way to go is ofcourse to keep up with the market and look for companies (exceptions) like Google and buy their stock right when they start first round of IPO. But market for that is also very crazy right now since investors are once again believing in startups.

Btw, related question for you. Do you think that real estate prices will crash or not (my personal opinion is they will not)?
At 04 June, 2006 19:14, Random said...: Thanks for all of the input! I didn't know what to expect....

As far as real estate prices go, there really has only been one "crash" in the last 50 years, and that happened in certain markets in the 80's. However, some markets do show top-heavy prices that leads to short-term decline. One example of that is happening right now in St. George. The homes there appreciated 35% last year but for the last 6 months prices have been dropping. But they will not drop below the level that they began at. So the bubble burst slightly, but overall they are still up.

Real estate is the last great investment, and will always go up as it is a finite commodity. But small hiccups lie along the way. I bought a property last year in Draper that has gone up $100,000 since I bought, but because of rising interest rates/inflation it will not go much higher than that in the next year.

Overall, I think the real estate market is tied heavily to interest rates. As rates go up, the market goes down. That doesn't mean home values go down, just that home-buying is decreased, and the rental market gets better. I think we are due for that phenomenon, so my advice is buy as many rentals as you can for the next year, and then ride out the high interest rates.

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