ARRT, RT(R) / Rental Property Investor · Newport Beach, CA · Member since 2017 · 360 posts · 242 votes
Not sure if I mentioned that today. Yes, I am 100% invested in Index Funds , and yes, I am staying the course (Probably take years to recover the losses), and yes I believe in "Buy and Hold". It just stinks to see tens of thousands of dollars evaporate before your eyes, day after day after day.
2019 cometh!!! Come 2019, I will be dumping 95% of my investments in REAL ESTATE, at least it takes time to lose money, if there is a loss. Ugh, learning, growing, licking my wounds... Thoughts on today? (The good news is, my offer got accepted and I just purchased my first parcel of vacant land, a really beautiful lot with a view! Maybe I will buy a tent and go live on the lot. Ha!)
The only thing I hate about the stock market right now is that I don’t have more money to invest right now while stocks are on sale☹️ I’m hoping the (bear market) sale persists until at least February/March... I should have some extra cash by then...
I’m a stock market agnostic & have been since 2006. I’ll invest fully in recession proof real estate like mobile home parks any day over tech stocks or even Berkshire or an index. My rents in Oklahoma went up during & after the 2008 crisis & I made more money. That’s what being a contrarian investor is all about!
Enjoy this current & more coming downturn & just buy silver to be a hedge against your real estate portfolio be it mobile homes, apartment or single family & whether your active or passive!
There are strategies you can use in stocks to enjoy gains and limit losses. Explore trend following (just google it, you’ll get the basics). The strategy is systematic, based on current price only, no emotions and no guessing.
I challenge common logic that stocks will always go up. US stocks certainly have, however look at other countries. There is no reason the stocks HAVE to go back up again.
All investing is about you and what you’re trying to accomplish. Viewed this way, you always have control!
This is why I LOVE real estate. You're more in control. You can increase the value of a property. You can't increase the value of a stock unless you're the CEO or one of the board members.
Having said that, it could be time to buy stocks...or maybe I should wait a bit more.
Thank you, @Eric Nurmi, @Adrian Stamer, @Account Closed, for the expertise you have given, it is interesting to note that some are for real estate only, others are solely invested in the market, and still others are invested in tangible real estate and the market (among other things, for sure!). A ton of different ways to skin a cat! It seems one invests in the things that will allow them to sleep peacefully at night . Thank you, Joel!
Excellent input from many investors from all walks of investing, so much priceless information!
You can dollar cost or cash out or short or combine etc...Some stock pros are likely looking for buying opps in 2019 is my guess. The pre announcement of raising interest rates suggests things are normal. Buffet recently loaded up on Apple and JP Morgan and is down 20%? He says he buys value. I will be messing around with some shorts until the dust clears.
To become wealthy , one has to take (Calculated!) BIG RISKS!>>
I would say I probably disagree. Think of Warren Buffett; he never took what he would consider to be a big risk. In fact, he never invested in tech during the recent tech bubble (the 90s) or derivatives in the run-up to 2008 because "If i can't figure out what a company does, I don't feel comfortable investing in it." What he is saying is, take low risk because you calculate it to be worth the return. One doesn't need to "go for broke" to make 10% a year on their money. That's all one needs to do to slowly double and then double again their assets. Alternatively, one could make 5% a year and stay ahead of inflation with very, very low risk. As well, one could use leverage and obtain 15%+ growth per year. As you know, investing up at that high a success level doubles your principal in like 5-8 years. Who could complain that doubling their money every 7 years is not fast enough? This isn't magic, you know. It's investing. And one can do this with what I would consider to be "low risk."
Think of "the tortoise and the hare": who wins that race?
No, unless someone drops a million or two of capital in your lap (like, say, happened to Donald Trump when he was EIGHT YEARS OLD), you're not going to become filthy stinking rich. But as we can see from Mr. President, who values money that greatly as to be willing to take the foolish, reckless, and immoral steps that would be required to try to become filthy rich?
Find a way to make 10% a year and watch your money double in 7 years. That's a huge success, and is low to low-medium risk. Like on the order of a 1-3% risk of loss per year. Beyond that, life is calling you. Money is only so valuable, my friend.
Two additional things: 1) I believe I am correct in saying that studies show that a loss of money hurts more, proportionally, than a gain does. That is, playing defense when it comes to money might not sound all that sexy, but I bet there are 10,000-20,000 investors who would have given their kidney to not have lost their shirts in 2008. Which leads to my second point: here is a recipe for crashing and burning that everyone should be familiar with because it happened repeatedly in '08-'10. 1) Buy houses with 15% down in neighborhoods that have a lot of competition for rentals and would face downward pressure on rents in a bad economy; 2) hire property managers for about 10% of the take because the houses are more than you can handle personally, 3) make sure the cash flow is below $400 a month, and preferably right around $0; 4) have few assets in the bank or liquid; 5) wait for an economic crisis.
Point being, you can be on too fast a track such that when the music stops, you have no place to sit. People kill themselves over such things. I would rather have five properties with 25% equity in each than six properties with 15% in each for safety reasons. Frankly, I am fairly risk-averse when it comes to leverage. I don't think there is anything wrong with putting 50% down on investments and having at least $500 in cash flow per unit. You won't have as many, but they'll be sturdier investments.
Being on the younger side myself, I see the current market as a great opportunity. Since I don't have a whole lot invested and I've just recently started aggressively funding my retirement savings, I don't have a lot to lose. For now I'll get to buy low and let the market recover.
For yourself though there's really nothing wrong with the current market unless you are (were) planning to sell. If your still funding your stocks this is just a little speed bump in your portfolio. It sucks watching thousands of dollars disappear over night, but they'll be back in time and then some. Oh and congrats on the property purchase :)
Let's review!!! The high for the Dow Jones Industrials was on October 3rd, 2018 at 26,828.39. The Dow closed today at the level of 21,792.20. Just shy of 3 months, and the Industrials have lost 5,036.19 points. The excellent information that @Joel Owens shared is starting to carry great weight. I am not panicking, nor will I ever, we have all been through this before, it really is how one reacts to it. BUT, I am almost persuaded to invest in real estate ONLY. I am just trying to put "Thoughts to Paper" and figure out my best course of action on investing over the next 25 years.
I like the way Joel Owens has friends that are invested in real estate only, but there are many, many, asset classes in which to invest. Forgive my yammering, but I think it is therapeutic, plus it is an awesome thread for all of us to learn a little bit, no matter if you are just starting in RE or are a multimillionaire!
@Daniel F. Harb. Why do you view real estate as a superior investment? I just don’t understand that. The stock market AND real estate (some combination of both) is the best way to go. Why would you just do one or the other? Yes the market has corrected and is a bear market. That doesn’t mean the sky will just fall forever. We are up 300 percent (last I checked from 2009 lows). The party can’t last forever in the stock market or with real estate. Prices correct in every asset class at some point. The market has returned 7-9 percent on average for the last 100 years. A 3 month dip isn’t likely to change that long term. Real estate gives you more control but is highly illiquid. Leverage is great until you experience pro longed vacancy and lose all your propeties to the bank. There are pros and cons to both investments. Stock market is passive but you have no control. That’s a pro or a con depending on the person. I’m not trying to pick on you, I just wish I didn’t see so much dubious investing advice on some of these websites. Totally ignoring the stock market isn’t a good idea for MOST people.
True, @Caleb Heimsoth. I am just trying to get some solid footing so as to make wise decisions going forward. Looking at all of my Index Funds, the returns over the past 20 years has been about 8%. That is actually not too shabby. It is not that I view RE as superior, I don't have enough expertise for that, I simply desire to invest my money in the best possible places that will give me the best possible returns. And I know that is different for everybody.
Thank you for your input, I really appreciate your time, Caleb.