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  #1  
Old August 2nd, 2015, 10:31 PM
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You know we are back in 2007/2008 when......

Over the past year I have become more and more convinced that we are cresting this economic cycle. Let's keep adding to this.
I'll start with:
You know we are at the end (or close to the end) of this current cycle when......
Boat manufacturers are swooning private equity shops looking for expansion and merger money.

....or when I can't get a contractor to show up for an estimate after 3 phone calls.

.....or 3-handle cap rates on residential multi family apartment acquisitions
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  #2  
Old August 3rd, 2015, 01:57 AM
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I agree however we have so much deferred building maintenance that it all needs doing badly NOW!

Outside construction we have crested the top of the wave and going downhill. Money has been too cheap too long, inflation is coming as is a downturn that will affect many but not all segments of the economy
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Old August 3rd, 2015, 07:52 AM
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we all love sub 5% interest rates on everything under the sun and 3% mortgage rates, but it does create problems in the M1 in my opinion.
A large part of my business depends upon commercial real estate lending activity, so the interest rates have been great, but its not natural and it does cost all of us in terms of cost of goods/services. I know the Fed says there is minimal inflation, but when stupid little personal service items cost 2X what they did in 2010 and everything seems to cost way too much money......
I agree Chris, not everything will be affected (which is god), but we need a reset. We could relate it to many areas, but take investment real estate for example. We are now competing with buyers with ridiculous amounts of cash willing to accept very low returns on investment. Yes, I said cash and we are talking about interest rates, but the cash that they are using to fund acquisitions of 3 and 4-handle cap-rate deals is only there because that money cant generate any income in the bond market. THat amount of cash shouldn't be chasing such low returns.


Now lets talk about toys (cars, boats whatever). I just talked to somebody the other day that fought to pay OVER invoice for a brand new 27' Scout center console because there were people lined up to buy it. This particular individual is pretty saavy and would never have agreed to such bullshit if things weren't the way they were.


It's great that people are making money again but its creating a supply deficit in the goods/services area that results in paying a lot more for the things today.


How about shop rates at garages? Not beating up on the garages/techs at all, there are plenty on this board that have earned the right to charge what they deserve. Plus the government regs have made it increasingly more expensive to properly run a small business. I'm just saying that when I see a local Rover shop charging $135/hr (and people pay it too because they have disposable income again or credit card debt is cheap), it gives me a bit of concern. I don't want to turn this into a discussion of what shop rates are or whether or not they deserve it, I think we can all recognize that stuff is costing lots more money these days.


So, I'm putting my money where my mouth is and starting to simplify. I'm probably way ahead of this (like most times) and I'll probably be trying to buy another 110 next year for $75k. I'm ratcheting back my personal spending and keeping some dry powder. I'm just feeling like things (at least in my orbit) are getting a little spendy and out of control.
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Old August 3rd, 2015, 08:36 AM
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I just turned all my stock/investments into cash...this run aint gonna last, and the down cycle and crash this next time is gonna hurt - real bad. Not if, when.
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Old August 3rd, 2015, 08:51 AM
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The financial architecture/engineering is different this time (no CDOs etc.), but the weak link will reveal itself in time. I'm definitely not involved in higher echelon banking to know, but it definitely involves banking. I feel as though this time around the trigger maybe global economics and US government policy, but who knows.


One thing I do know is that there is a ridiculous amount of foreign capital flooding all US markets. If that principal is withdrawn or even new inflow reduced it will have an impact. The entire world wants its money in the US, even with shitty returns. That cannot possibly last forever and we cannot continue to print money and offer low interest rates forever.
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Old August 3rd, 2015, 08:52 AM
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This isn't something I pretend to know anything about but, I have a friend that is very involved in politics and he is saying the same thing. He talks about the dollar being the currency used to trade oil world wide. He says that the people he speaks to are saying that this will change and when it does that is when we( the U.S.) we really be in trouble. Like a wheel barrow full of money to buy a loaf of bread, kinda trouble.

He has also stated the upper echelon of politicians are investing in foreign currency to sidestep this issue.
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Old August 3rd, 2015, 08:54 AM
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We'll see. It's an interesting situation. It's hard to imagine institutions pulling cash out of the markets to put it in either real estate or fixed income. Seems to me like big homes are out and renting has become very acceptable so real estate doesn't seem logical. Stock Returns will likely be small 2-3% for some time primarily because sales/revenues is trending down and that won't change until there is a meaningful shift of wealth back to the middle income crowd.
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Old August 3rd, 2015, 08:59 AM
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The Dollar has always been the currency of choice for Oil.
The Euro greeced itsself in to a giant skid. (!)
Russia, another energy state, is a pariah. Think Ukraine.
Isis threatens to control many viable oil fields.
China is an economic mess. However the Chinese are still buying smart. They just picked up a brand new airport in China for $11,000, which cost Euros $1.1 billion to build.
Yet much of our debt has been funded by China.So when those bonds are due and aren't renewed.
The pain here will be sure to follow.

Its complicated and a mess.....
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A friend of mine runs a land rover / range rover specialty repair shop. Based on his experience, they are capable of stopping anywhere, anytime, at any cost.

I don't know about the brakes, only their unreliability.
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  #9  
Old August 3rd, 2015, 09:02 AM
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Quote:
Originally Posted by solarguy View Post
This isn't something I pretend to know anything about but, I have a friend that is very involved in politics and he is saying the same thing. He talks about the dollar being the currency used to trade oil world wide. He says that the people he speaks to are saying that this will change and when it does that is when we( the U.S.) we really be in trouble. Like a wheel barrow full of money to buy a loaf of bread, kinda trouble.

He has also stated the upper echelon of politicians are investing in foreign currency to sidestep this issue.
So...I gotta ask, when is this going to happen? The USD accounts for ~60% of the world foreign exchange reserves, as it has-for decades. Could it change? Sure, but to what is the best question. The next largest currency is the Euro...and with all do respect to those across the pond I don't see anyone jumping off the USD to run to the Euro right about now. Everything else accounts for less than 15% (and that's being generous).

So while its feasible, I wouldn't drop the dollar just yet.

Of course my optic on this isn't from a financial perspective, so take that with a grain of salt.
r-
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Old August 3rd, 2015, 09:12 AM
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all true and all mostly anecdotal, but we all have our instincts so.....
I know wealth managers who are perpetually rosy and they mock me by suggesting that a broken clock is correct twice a day. True, I admit that I have remained a skeptic since things started accelerating and cant quite understand how things made such a run (other than pent-up demand and cheap money), but this is ridiculous again. I'll admit that I had no idea that a there would be such a bullish run from 2012-present. So of course its easy for guys like me to say "it will end". Of course it will end I don't mean to sound like Capt. Obvious.
I just didn't like feeling leveraged (even to the limited extent that I was) in 2009 so I want my wagons circled before the Indians show up.
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Old August 3rd, 2015, 10:08 AM
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I lost a shit ton last time - aint happening again. I have been fortunate enough that those who manage my funds have done a great job recouping $$$ over the last 5yrs, we have all been fortunate with the tsunami we are currently riding. But when that wave hits I want to be off it. Which is why I am cutting now. On the advice of some guys in the know...not just my own speculation.
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Old August 3rd, 2015, 10:31 AM
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Originally Posted by Ray_G View Post
So...I gotta ask, when is this going to happen? The USD accounts for ~60% of the world foreign exchange reserves, as it has-for decades. Could it change? Sure, but to what is the best question. The next largest currency is the Euro...and with all do respect to those across the pond I don't see anyone jumping off the USD to run to the Euro right about now. Everything else accounts for less than 15% (and that's being generous).

So while its feasible, I wouldn't drop the dollar just yet.

Of course my optic on this isn't from a financial perspective, so take that with a grain of salt.
r-
Ray
I totally agree. Its human nature I'm sure but we are I worst enemy. Our ADDHD for change just for change sake hurts more than we probably realize.
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Old August 3rd, 2015, 10:49 AM
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Originally Posted by Jonesy View Post
I lost a shit ton last time - aint happening again. I have been fortunate enough that those who manage my funds have done a great job recouping $$$ over the last 5yrs, we have all been fortunate with the tsunami we are currently riding. But when that wave hits I want to be off it. Which is why I am cutting now. On the advice of some guys in the know...not just my own speculation.
I wish I knew some guys in the know. I go through financial advisors like toilet tissue. I give these "my advisors" 50% of my savings and if they can't beat what I do on my own I break camp and move on. Over 5 years I have done no better than market but the cash incentives for jumping to a new ship pays their commissions/fees.
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Old August 3rd, 2015, 12:12 PM
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I wish I knew some guys in the know. I go through financial advisors like toilet tissue. I give these "my advisors" 50% of my savings and if they can't beat what I do on my own I break camp and move on. Over 5 years I have done no better than market but the cash incentives for jumping to a new ship pays their commissions/fees.

I wouldn't sweat it. The reality is that no one really knows, no matter who they are.
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Old August 3rd, 2015, 12:19 PM
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This is kind of like when have you had enough to drink at the pub. Should you switch to Coors Light or water. I'm thinking Coors light may not be a bag idea but that works for me and may not work for you.
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Old August 3rd, 2015, 12:28 PM
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I think the clear solution is to 'invest' in Land Rovers. -Jeff
Exactly! LR Advisors = Lets diversify your portfolio Clay. Given your retirement horizon I'd suggest a NAS, three D2's, a couple ROW's with a 25 year maturity and balance the rest of your asset base with small cap LR2's.
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Old August 3rd, 2015, 12:32 PM
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Originally Posted by Jonesy View Post
I just turned all my stock/investments into cash...this run aint gonna last, and the down cycle and crash this next time is gonna hurt - real bad. Not if, when.
Agreed, and I took 50% of all our stock investments into cash in May 2014...when the DJIA was around 16,500. DJIA is roughly 7% higher than that now
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Old August 3rd, 2015, 12:39 PM
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Originally Posted by solarguy View Post
Like a wheel barrow full of money to buy a loaf of bread, kinda trouble.
The ramifications of this on American soil are unbelievably scary.

Quote:
Originally Posted by solarguy View Post
He has also stated the upper echelon of politicians are investing in foreign currency to sidestep this issue.
Would be interesting to know which currency...the Euro, Norwegian Krona, Swiss Krona or Franc??...aside from the USD, where does one go?
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Old August 3rd, 2015, 12:39 PM
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Agreed, and I took 50% of all our stock investments into cash in May 2014...when the DJIA was around 16,500. DJIA is roughly 7% higher than that now
It could be 7% lower and you would have been a genius. The market is legalized gambling, not a science.
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Old August 3rd, 2015, 12:42 PM
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Originally Posted by Jackie Treehorn View Post
I'm ratcheting back my personal spending and keeping some dry powder. I'm just feeling like things (at least in my orbit) are getting a little spendy and out of control.
You are not alone.
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