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How are you investing your money these days?

  • Cash: Mattress sounds best these days.

    Votes: 8 27.6%
  • Bonds: Deflation is just round the corner.

    Votes: 1 3.4%
  • Stocks: Stocks for the long run, right?

    Votes: 18 62.1%
  • Gold: The world is going to pieces.

    Votes: 2 6.9%

  • Total voters
    29
  • Poll closed .
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I was just looking at a chart of how the S&P/TSX Composite Index has been performing. Basically, after last week, it is back to where it was last July and so we have had an entire year with no growth in this index.:mad:
You should count the dividends though.
A lot of the S&P TSX companies are solid dividend payers.
 

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I was watching 'Moneytalk' on BNN and the TD economist on there stated the obvious that there is a tremendous amount of uncertainty in the world today, both economic and otherwise, and that stock markets dislike uncertainty.

He echoed what I have heard elsewhere--that we are facing "several years" of such uncertainty and therefore many years of volatility on the stock markets--both up and down.

Not reassuring for older, buy-and-hold investors.:(
 

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I guess I am actually investing all my money into paying off my Line of Credit presently. I am down to the last $22K again. I was close to retiring it but bought a used car on it and finished off the basement in the house so that set me back a bit.
 

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Consistent cash-flow from an unexpected corner

Good article today in the G&M discussing the investment process of David Driscoll; a favourite value investor of mine and dividend investor. Really liked this quote that was relevant to what I was discussing today in an article I wrote on my blog,

"You don’t have to trade actively to make money."

Something I think a lot of investors overlook in this current market. You don't have to turnover your portfolio to be productive. If anything doing nothing is doing something worthwhile as dividends help to compound your returns.
 

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Hello, new-comer here. Here's my 2 cents: there's a time to buy and a time to sell. And then there's wealth accumulation. Its time to be in cash right now, my very strong feeling.

I think the US is headed into a round of price-deflation, CPI falling etc. They are at 21% real unemployment (or higher) and US RE prices are going to come down, down, down, as inventories wash thru the system, over a year or two, or even three. Meanwhile the USG will continue to print and battle plummeting consumer demand and be awash in bad mortgage paper, with nowhere to turn for a demand.

There is a tri-currency war going on, between the three blocks. Eastern Europe is in even worse shambles, and no one is talking about it because of the PIGS crisis.

USD is starting to climb, like it did last time the market dropped. Earnings are said to be bright, yet factory orders have dropped. Lumber has crashed, along with US housing starts. Bond yields are collapsing. The writing is all over the wall, some of it blinking florescent red, that we are on the eve of asset deflation, where cash will be king.

In spite of that, gold continues to monetize, and is at a dip as the global financial crisis gathers steam. The question now is how far will the market correct down. No body can know, its all a guess as to where it bottoms. And how high will USD be driven up? That uncertainty values a cash position highly.
 

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Still taking 10% off the paycheque into the old Couch Potato. I'll admit to being slightly pessimistic about the state of world financial affairs, but don't know that I can come up with a better concept than buy-and-hold.

To be honest, at this early point in my investing career, the best thing that could happen is a total market crash followed by a lengthy sluggish period in the doldrums just after my mortgage is eliminated and massive amounts of cash become available for investing.

All monthly net cashflow is currently going to mortgage reduction. Good progress is being made on that front, and the ROI is steady, guaranteed and reasonable.
 

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Ah, to be a young investor again!! That long time line can sure let you sleep better at night in the face of all of the economic doom and gloom that is out there now.:(

U.S. and International Indexes have not performed well over many years now and I don't see much on the horizon that is likely to change that scenario any time soon.

With investing, so much seems to come down to luck and timing.

Maybe the next generation will have better luck and timing than that of some of today's older, buy-and-hold index investors.
 

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With investing, so much seems to come down to luck and timing.

Maybe the next generation will have better luck and timing than that of some of today's older, buy-and-hold index investors.
In my view, its like the time honoured aphorism, it's not what you make it's what you keep. And buying anything investment related is the 'keep' part, even if its in a saving account (or maybe especially when). If your stash, that which you have squirreled away can grow on its own, so much the better.

I view the market as a very complex betting game, where the mood of the market swings as if at a ball game, especially when it heats up. Its partly rigged, and can be gamed, and is gamed. Nevertheless its irresistible especially when its volatile, when fortunes are made and lost.

Right now the market is very schizophrenic, reflecting how we the masses feel about the future, as we cannot see very far ahead with any confidence whatsoever, its like driving in a blinding snow storm.

I think the next generation will need to contend with a world much different that we all have known, save the 90 year-old's among us.

this world
 

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Cash is more a neutral position than a bearish one. I think being in cash does not really mean you're investing, it means you are afraid to invest/trade.
An active neutral position is selling near-term OTM calls or puts, or both.
An active bearish position would be to short stocks/indexes or to buy puts. Or to enter long in something inversely correlated with the stock market (like some commodities or gold).
 

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Cash is more a neutral position than a bearish one. I think being in cash does not really mean you're investing, it means you are afraid to invest/trade.
An active neutral position is selling near-term OTM calls or puts, or both.
An active bearish position would be to short stocks/indexes or to buy puts. Or to enter long in something inversely correlated with the stock market (like some commodities or gold).
If i were working my portfolio as a day trader, i might agree. However you are still betting, and to classify the state of cash in a savings account as non-productive when its about one point and a half behind Royal Bank stock yields for example, with none of the risk, is perhaps splitting hairs. When all the risk indicators are pointing due south, logic dictates cash is a safer bet. I went to 70% cash, bonds (and metal) in June, trimming all but core equities, because in my view it looks like a strong headwind for all market classes, being as they are priced on future earnings. The buy-and-hold crowd, i assume have a depressionary cycle figured in, at least with some degree of probability.

I don't see a good counter argument to being out of the market right now (options trading or otherwise) unless its an improving jobs picture in the US. On the other hand, we are on the slippery slope of a deflationary economy (its collapsing very fast down south). So my biggest question now, being a forward thinking investor is where to park the cash meanwhile? In cash or in debt? Dept is very tempting. But the DJIA at 7500 might also be.

On a side note, i'm pretty sure i have gold figured out (by not reading the gold bug blogs), and i think it a good buy any time up to $2,400, which i calculated at its approx current real value, by my own spread sheet. But then i am partial to gold for its intrinsic value.
 

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Discussion Starter #33
I don't see a good counter argument to being out of the market right now (options trading or otherwise) unless its an improving jobs picture in the US. On the other hand, we are on the slippery slope of a deflationary economy (its collapsing very fast down south). So my biggest question now, being a forward thinking investor is where to park the cash meanwhile? In cash or in debt? Dept is very tempting. But the DJIA at 7500 might also be.

On a side note, i'm pretty sure i have gold figured out (by not reading the gold bug blogs), and i think it a good buy any time up to $2,400, which i calculated at its approx current real value, by my own spread sheet. But then i am partial to gold for its intrinsic value.
I can supply one for you. What makes you think the market is underestimating the risks you mention? Because, the only way to make market-beating profits is to identify trends the market is mispricing and make bets on it. IMO, deflation, poor jobs picture etc. is already headline stuff and is baked into the price. Why do you think the market is mispricing these risks?
 

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I went to 70% cash, bonds (and metal) in June, trimming all but core equities
...
On a side note, i'm pretty sure i have gold figured out (by not reading the gold bug blogs), and i think it a good buy any time up to $2,400
Your allocation is right on with what I am working toward...

I'm currently at 10% metal (in precious metal mutual fund), and believe the Dow/gold ratio will continue toward 1:1.

May I ask what percentage of your total portfolio you dedicate to metals? Many of my trusted gold gurus (Peter Schiff especially) go as high as 20%+ but my stomach isn't strong enough just yet to make such a move...It's interesting to hear what other gold bugs are doing :cool:
 

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I can supply one for you. What makes you think the market is underestimating the risks you mention? Because, the only way to make market-beating profits is to identify trends the market is mispricing and make bets on it. IMO, deflation, poor jobs picture etc. is already headline stuff and is baked into the price. Why do you think the market is mispricing these risks?
The 200 day average, the price of gold, and the debt:GDP ratios argue that the natural momentum is being masked by talking heads, and essentially mispriced.

Despite the negative trends being "headline", the true severity of this problem is being minimized by government manipulation of employment numbers, interest rates and stimulus spending/bailouts. I have no doubt that the current ups/downs (i.e. rise of the Euro this week) are reflections of how ignorant most are to the money supply, the national debt (in both USA and Canada) and how bad things actually are worldwide.

The fact that world indices continue their run this high in spite of the "real" unemployment and inflation numbers makes me believe that many investors and those on Wall st. are in a fantasy land...
 

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The fact that world indices continue their run this high in spite of the "real" unemployment and inflation numbers makes me believe that many investors and those on Wall st. are in a fantasy land...
So are there any investing avenues that you'd recommend or are you staying in cash?
If there is hyperinflation, cash will lose its value as well.
 

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So are there any investing avenues that you'd recommend or are you staying in cash?
If there is hyperinflation, cash will lose its value as well.
Cash certainly has its disadvantages, which is why I have diversified into real-return bonds and precious metals to combat inflation-risk. I hold no more than 5% cash at anytime given it's poor defense against inflation. Things are obviously in flux and catastrophe hasn't hit yet, but I have found myself pulling out of the market gradually and sinking more into gold/RR bonds with each passing month.

If hyperinflation takes hold, investing likely wouldn't matter anymore and it becomes a darwinian fight for survival. For this situation it's down to my peanut butter and tuna stockpiles, a generator, some silver bars, and a rifle :eek:
 

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Discussion Starter #38
The 200 day average, the price of gold, and the debt:GDP ratios argue that the natural momentum is being masked by talking heads, and essentially mispriced.

Despite the negative trends being "headline", the true severity of this problem is being minimized by government manipulation of employment numbers, interest rates and stimulus spending/bailouts. I have no doubt that the current ups/downs (i.e. rise of the Euro this week) are reflections of how ignorant most are to the money supply, the national debt (in both USA and Canada) and how bad things actually are worldwide.

The fact that world indices continue their run this high in spite of the "real" unemployment and inflation numbers makes me believe that many investors and those on Wall st. are in a fantasy land...
It's not clear to me what your argument is. Are you saying that inflation is a threat that the market is ignoring. If so, your opinion is in direct contrast to the poster I was responding to, who is holding cash because he is worried about deflation.
 

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I can supply one for you. What makes you think the market is underestimating the risks you mention? Because, the only way to make market-beating profits is to identify trends the market is mispricing and make bets on it. IMO, deflation, poor jobs picture etc. is already headline stuff and is baked into the price. Why do you think the market is mispricing these risks?

Its not hard to argue that the market failed to correctly identify the crash of 2008 coming, otherwise so many people would not have lost 50% of their portfolio assets (as the people are the market) in such dramatic fashion. The world's top economists, who mostly seem to work for financial institutions, did not see 2008 coming, and these are the same people advising policy makers now on the cure.

The other answer is, i think the markets are behaving irrationally. For example, why would BP rise 8 points based on the idea that the GOM oil disaster damage is quantifiable? (when it is clearly not).

For another example, i'll quote a BMO economist on the CBC news 4 weeks ago who said (paraphrasing) ' Canadians are going to have to adjust to the (new) reality that consumption is no longer going to be the main driver of the US economy going forward' .

I find myself in agreement with the above noted economist, but try as i may, i can't think of what will replace consumption as the main driver. Can anyone? Its not going to be manufacturing any time soon. My conclusion is that the market does not have an answer for this problem, and is buying into the idea that it will sort itself out going forward. I think the bulk of the market today is only looking 3 months ahead.
 

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It's not clear to me what your argument is. Are you saying that inflation is a threat that the market is ignoring. If so, your opinion is in direct contrast to the poster I was responding to, who is holding cash because he is worried about deflation.
I foresee both deflation (we are likely in the beginning now), followed by a sudden phase of inflation. Regardless of which phase we're in, it's a bad time to be invested, which is the point I made in line with James_57's opinion.

The markets are being held back temporarily from larger, more catastrophic corrections. Most investors are being misled by their advisors and government about the big picture.
 
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