Boghie
Well-known member
To me this does not feel like 2008.
In 2008 there was an obvious bubble in loans - mortgage, auto, credit, etc. Everybody was a real-estate grinder or a real-estate loan broker. Every radio show had ads on 'No Money Down' loans and 'Interest Only' loans. Financial talk radio was all in on 'this market is different' yammer. I bailed on much of my equity holdings in late 2007 after a close relative in real-estate told me that housing prices could never go down and her husband just became a loan broker. That made a 20% correction a sure thing:laugh:
Anyway, there is a bubble in real-estate that will have to correct. And, there was a bubble in crypto and technology that had to correct and have. However, other than crypto, the bubbles were not overly excessive and were manageable by the FED. Just raising interest rates by a couple of points over a year or two would have done it. It would have probably resulted in a 20% drawdown in equities and a bit less in housing value.
But, we chose poorly and are now stuck in a FED induced deflation while concurrently living a Treasury and Regulatory induced inflation.
Hard to do, but we have succeeded!!!
In sports, we call this 'an unforced error'
What I would watch out for is annuities. Those were the bubbly ads that I kept hearing on financial talk and by financial talking heads. Buy this annuity and you will have guaranteed income for life, buy this annuity and you will never have a down year, by this annuity and you will share in market gains... Whatever. An annuity is nothing more than a managed cash/property/bond/equity account. Properly managed and conservatively allocated it can weather downturns because it is multi-generational. Poorly managed and on the edge and it is AIG. If equities, bonds, and property values decline concurrently with inflation and this mess lasts for some duration of time than the number crunching backbone of annuities will fail. And, math does not care about you or me or anybody else.
GLHF
In 2008 there was an obvious bubble in loans - mortgage, auto, credit, etc. Everybody was a real-estate grinder or a real-estate loan broker. Every radio show had ads on 'No Money Down' loans and 'Interest Only' loans. Financial talk radio was all in on 'this market is different' yammer. I bailed on much of my equity holdings in late 2007 after a close relative in real-estate told me that housing prices could never go down and her husband just became a loan broker. That made a 20% correction a sure thing:laugh:
Anyway, there is a bubble in real-estate that will have to correct. And, there was a bubble in crypto and technology that had to correct and have. However, other than crypto, the bubbles were not overly excessive and were manageable by the FED. Just raising interest rates by a couple of points over a year or two would have done it. It would have probably resulted in a 20% drawdown in equities and a bit less in housing value.
But, we chose poorly and are now stuck in a FED induced deflation while concurrently living a Treasury and Regulatory induced inflation.
Hard to do, but we have succeeded!!!
In sports, we call this 'an unforced error'
What I would watch out for is annuities. Those were the bubbly ads that I kept hearing on financial talk and by financial talking heads. Buy this annuity and you will have guaranteed income for life, buy this annuity and you will never have a down year, by this annuity and you will share in market gains... Whatever. An annuity is nothing more than a managed cash/property/bond/equity account. Properly managed and conservatively allocated it can weather downturns because it is multi-generational. Poorly managed and on the edge and it is AIG. If equities, bonds, and property values decline concurrently with inflation and this mess lasts for some duration of time than the number crunching backbone of annuities will fail. And, math does not care about you or me or anybody else.
GLHF
I don't like it but just don't want to put in a high-risk play....at least not yet!
