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  1. #41
    Senior Member ptgatsby's Avatar
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    Quote Originally Posted by Lateralus View Post
    I'd like to hear some of these examples.
    Aie, I'm trying not to derail the thread. However, the classic example is the great depression, down to the boom, and the rapid destruction of wealth, moving into deflation and so forth. I don't think it will be that bad - I doubt the government will make the same mistakes as it did then - but it has a lot of commonality. (Keep in mind that I'm not arguing over what the government role should be, only that things can take a *very* long time to work out. As in a decade+.)

    On that note, the reason to create the buffer is not to consume it to cover your life is anything goes wrong, like an emergency fund. In the bad cases, chances are no amount of savings will help you, but because it gives you time to adapt and unwind your own positions. The assumption goes that if you do lose your job, you'll begin to cut expenses rapidly, no matter what, and money will give you the time to do that (alternatively, time to give you a new job - however, since that is questionable, the attitude should be to minimize expenses, not continue living the way you were on the expectation of getting a job.)

    No matter what political theory or view of the economics... or even what your forecasts are... I don't see why it isn't personally a good idea to buffer yourself now. And the less benefits you have (employment insurance/etc), the more important it becomes... And the more coverage you need (ie: medical insurance for your family), the more important it is, otherwise you risk a serious issue that could permanently hamper you and your family.

    In essence, we are all gambling that things won't be too bad. Saving money won't protect you if it does get bad. Nothing will. But it sure will make life easier for the mid-range of bad outcomes (which are very probable at this point.)

  2. #42
    Senior Member bluebell's Avatar
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    I think we'll be ok unless we're both out of work for a long period of time. I knew from early this year that my country was likely to go into recession probably around mid-next year and had hoped we could pay off the mortgage before that happened to disengage as much as possible from the international financial system. But I hadn't taken into account the possibility of big banks potentially going under, so we've had to revise our plans slightly.

    We've temporarily shifted where we put new savings, just to build up a buffer and spread the risk. Most of our savings are in our mortgage redraw account (different bank to the bank with our day to day bank accounts) and that particular bank is looking a little shaky, so if it goes under or sells off some of its mortgages, we may lose our easy access to our redraw account. I feel uncomfortable if we don't have enough saved up (or available) to pay 6 months worth of expenses/bills/mortgage.

    We've always made defensive plans with multiple 'outs' for worst case scenarios, after having gone through a period of time with very little money. We know how to live very frugally and if needed, we can do that again.
    ...so much smoke pouring out of each chromosome.

  3. #43
    Once Was Synarch's Avatar
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    I'm buying stocks and saving cash. Buying mostly SPY and AMZN.
    "Create like a god, command like a king, work like a slave."

  4. #44
    Senior Member Eileen's Avatar
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    not quitting my job. getting my national boards.
    INFJ

    "I can never be what I ought to be until you are what you ought to be. You can never be what you ought to be until I am what I ought to be. This is the interrelated structure of reality." -Martin Luther King, Jr.

  5. #45

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    Quote Originally Posted by Synarch View Post
    I'm buying stocks and saving cash. Buying mostly SPY and AMZN.
    You may want to consider diversifying to bonds, or something else, or appropriately insuring your stocks with puts.

    Am I the only one still bearish on the stock market? The news still looks bleak for the short term.

    Accept the past. Live for the present. Look forward to the future.
    Robot Fusion
    "As our island of knowledge grows, so does the shore of our ignorance." John Wheeler
    "[A] scientist looking at nonscientific problems is just as dumb as the next guy." Richard Feynman
    "[P]etabytes of [] data is not the same thing as understanding emergent mechanisms and structures." Jim Crutchfield

  6. #46
    Once Was Synarch's Avatar
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    Quote Originally Posted by ygolo View Post
    You may want to consider diversifying to bonds, or something else, or appropriately insuring your stocks with puts.

    Am I the only one still bearish on the stock market? The news still looks bleak for the short term.
    Well, I'm bullish long term, which is the only thing I care about at the moment. We're almost back to 2001 / 2002 levels for the Dow. That is like saying that the last 7 years created no value. Stocks are way oversold.
    "Create like a god, command like a king, work like a slave."

  7. #47
    Senior Member "?"'s Avatar
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    Quote Originally Posted by Lateralus View Post
    I think once these inefficiencies (Big 3 go bankrupt, etc.) are flushed out, the economy will start recovering. The problem is the government is slowing this process down because people want them to "do something". There's nothing they can do, except make it worse.
    Quote Originally Posted by ptgatsby View Post
    I wish I could agree, but history seems full of examples where things don't work out too easily without something to create aggregate demand.

    However, in the context of this thread, it really comes down to being able to weather the storm, if there is one. Having a buffer for job loss, for when it comes time to remortgage, etc. is a good idea, no matter what actually happens.
    Part of me agrees that the Big 3 going bust will open opportunities, however I am in agreement with Pgat. Furthermore I thoroughly believe that the demise of the Big 3 will not start us on recovery, but will be begin the downward spiral to depression. Consider the ripple effect of initially losing three million jobs. You will vendor businesses go under, raw material businesses go under. This does not affect Michigan alone.

  8. #48
    Senior Member ptgatsby's Avatar
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    Quote Originally Posted by ygolo View Post
    Am I the only one still bearish on the stock market? The news still looks bleak for the short term.
    I'd be buying if I had regular income coming in. I'm not a fan of DCA, but regardless, I don't make timing calls. I'd invest what money I have, and can commit for well over 10 years.

    I would, however, not be buying individual companies (as a large portion of my portfolio, so I'd need probably some 200k+ before I would - always less than 5% in any single purchase.)

  9. #49
    Senior Member bluebell's Avatar
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    Quote Originally Posted by ptgatsby View Post
    In essence, we are all gambling that things won't be too bad. Saving money won't protect you if it does get bad. Nothing will. But it sure will make life easier for the mid-range of bad outcomes (which are very probable at this point.)
    Yep, pretty much. I mentally ran through the worst case scenario and it's not pretty. But, even with that, there are things that can help (I'm assuming we'll keep our house given how we've structured things - mortgage should be paid off by end of next year, all going well). I've thought about things like converting the garden to growing vegies, and I've expanded the range of things I can cook, including bread. I haven't changed our current lifestyle. It's more just broadening available options in the future.

    I'm aware this probably all sounds overly paranoid. It's kinda along the lines of people who lived through the Great Depression being permanently frugal ever after. Certain experiences can change how you plan for the future.
    ...so much smoke pouring out of each chromosome.

  10. #50

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    Quote Originally Posted by Synarch View Post
    Well, I'm bullish long term, which is the only thing I care about at the moment. We're almost back to 2001 / 2002 levels for the Dow. That is like saying that the last 7 years created no value. Stocks are way oversold.
    What value did the las 7+ years create?

    I think value was destroyed.

    But, I am no investment expert.

    Quote Originally Posted by ptgatsby View Post
    I'd be buying if I had regular income coming in. I'm not a fan of DCA, but regardless, I don't make timing calls. I'd invest what money I have, and can commit for well over 10 years.

    I would, however, not be buying individual companies (as a large portion of my portfolio, so I'd need probably some 200k+ before I would - always less than 5% in any single purchase.)
    Yeah, I think the <5% on any investment that doesn't have its own diversified portfolio is a good policy. Also, good to not have them be correlated.

    You've probably guessed, I do dome amount of market timing. I don't do it often, and not in large numbers, because over-trading is identified as the reason people loose money (due to fees, omissions, and missed gains) without ever really benefiting from the trading decisions.

    I know there is no proof it is sustainable, but there are many people who do it professionally, and the proffesionals all seem to use similar methods--methods that seem to work. Essentially it is a massaging of the distribution to create a long tail-up and short tail down. The stochastic process is a net gain for this approach; this is rather different from averaging the same decision over time-- the mean may actually be less.

    ----

    Oh. Also, on another note. Getting yourself as healthy as possible is probably a good decision. These days I get really scared every time I go through long periods of illness. My employer has taken note of my tendency to get sick a lot --like I am today.

    Accept the past. Live for the present. Look forward to the future.
    Robot Fusion
    "As our island of knowledge grows, so does the shore of our ignorance." John Wheeler
    "[A] scientist looking at nonscientific problems is just as dumb as the next guy." Richard Feynman
    "[P]etabytes of [] data is not the same thing as understanding emergent mechanisms and structures." Jim Crutchfield

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