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Novel investment idea to hedge inflation ! ;-)

Posted by willinak (My Page) on
Sat, Apr 18, 09 at 10:58

Joy, etc. please comment! Here in the US, gov spending is running unimpeded. My fear is that there will be unimpeded inflation to pay for all the frenetic bailout and welfare spending.
With some good cash in the bank drawing a whopping 2% intrest, even if I renew these as intrest climbs with inflation (assumption), I will be hard pressed to keep up.
Sure I could go the equities route, and lose even more, but my appetite for equity markets has waned.
Here is my idea: Real Estate, specifically a larger, more expensive primary residence purchased at at at a great price, which are available now. Take that cash from the CD's, and put it into a more expensive house, keeping the debt amount about the same, and then selling (down size) as the market improves, maybe in 4-5 years. There would not be capital gains (after 2 yrs.), so essentially your investment profit would not be taxed, like selling gold (another popular option to beat inflation). Also, instead of staring at your bar of gold or you bank statement, you are living in your investment, which as gold has tangible value.

Other than not being "liquid", what am I not seeing.


Follow-Up Postings:

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RE: Novel investment idea to hedge inflation ! ;-)

Quick google found a very good discussion of this very topic at link below.

Here is a link that might be useful: Real Estate Inflation Hedge


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RE: Novel investment idea to hedge inflation ! ;-)

If you like the idea of investing in real estate, you might consider buying a condo or two, especially in or near a college town, so that your ability to rent the units is, relatively speaking, assured. Assuming you can finance the purchase(s) with a small down payment, you can in due course come out ahead of inflation. But you should not count on selling in X years when you anticipate being able to sell at a profit. This is especially the case with a larger house of the McMansion variety that were overbuilt during the housing bubble. There is every reason to believe they will be in low demand as the emphasis on energy efficiency grows and a more "modest" lifestyle becomes fashionable. Extravagance is out.

The one downside to being a landlord that people don't usually talk about is liability risk. Landlords, even good ones, are disproportionately at risk of being sued.

By the way, inflation is not the worry right now. The opposite -- deflation -- is the real worry, and needs to be stopped aggressively. Worry about inflation later, much later.


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RE: Novel investment idea to hedge inflation ! ;-)

Shadow, check the date of that article, which I would most definately would have agreed on at THAT time. We are in different times now.


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RE: Novel investment idea to hedge inflation ! ;-)

haus proud, I've been a landlord (commercial) and it was a pita. Yes, when I sold, I made a decent profit, and yes the government took capital gains (15%), which if BHO has his way would double. The beauty of the owner occupied residence lies in the "no cap gains" area.

Your point about the "new modest lfestyle" is well taken and probably valid. Not to politicize this thread, but I think the "new" government's role in making sure "everyone" is living modestly is exactly what is keeping the market from rebounding. We Americans have a short memory, don't we. Will the "modest lifestyle" persist.....good question.


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RE: Novel investment idea to hedge inflation ! ;-)

Will the "modest lifestyle" persist.....good question.
I certainly think it will at least for a good long while due to so many losing those big paying jobs, and then losing the McMansions.

Here is my idea: Real Estate, specifically a larger, more expensive primary residence purchased at at at a great price, which are available now. Take that cash from the CD's, and put it into a more expensive house, keeping the debt amount about the same, and then selling (down size) as the market improves, maybe in 4-5 years.
So are you thinking of renting that McMansion? Good luck with that. Hopefully if you find someone to rent it, that it won't need a total remodel if it is destroyed or damaged beyond the damage deposit.

Surely you won't let it set empty, paying tax, insurance and upkeep on it.

If I was going to buy any investment real estate at the moment, I would buy something in demand, like a moderately sized house, or like Haus suggested, maybe a condo in or near a college town. Just where are all those folks who are being forced out of their homes going anyway?

Sue


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RE: Novel investment idea to hedge inflation ! ;-)

Thanks Sue,

No, I would NOT be renting. As I said before, the main advantage is NO CAPITAL GAINS,as a primary residence, hence no tax on the profit. As inflation rises, hasn't yet but will, construction (housing) costs will also rise.

Basically, I would be upsizing. Living in the investment, swimming against the current flow! That's why I said "novel" ;-)


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RE: Novel investment idea to hedge inflation ! ;-)

I think it's a good idea with a couple caveats.

Real estate moves in cycles - up then down, up then down. Right now, people are doom & gloom; but real estate's star will rise again as always. Afterall, folks have to live someplace.

I believe the viability of McMansions is suspect, however. Between the mortgage debacle & this trend towards greener living & a smaller individual footprint the McMansion's appeal has definitely waned. I don't see that rebounding anytime soon.

However, if you were to purchase say in the 2,500-3,000 s.f. size...that's still a large home but not socially unacceptably large. Then, make sure that home is located in a very desireable location. There are many types of "desireable" locations...great schools, close in to major employment centers, coastal property, etc. I would stay away from golf course communities. Country clubs are tanking all around the country. I'd be concerned that homes built around a defunct golf course would not retain their luster?

Buy a home that needs some TLC that's within your ability to accomplish without incurring debt...cash only. Use sweat equity to bolster your position when it's time to sell. Don't buy the most upgraded & elaborate house in the neighborhood.

Also, keep in mind that what's updated & desireable today is quite likely to change, say in 5-10 years, as new styles hit the market. That being the case, when the time comes for you to sell you may very well find yourself with the dreaded "dated" house suffering from functional obselescense. If you have to spend more to make the house marketable to a younger audience that doesn't want 2009 styles...well, that's going to cut into that profit you're envisioning.

You can't look into a crystal ball & know what will be hot and what's not in 10 years. But, you can make decisions based on the basic tenents of real estate...location, quality, & timeless styling.

As for buying a McMansion though...I'd be glad to see all of today's excess inventory sold off but I'd rather you purchased one of those babies than me! :)

/tricia


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RE: Novel investment idea to hedge inflation ! ;-)

Tricia, yes, the housing market is really a sine wave. My thinking is that is is bottoming, maybe not all the way, but close.

I guess a McMansion is relative term. Currently live in 2900 sq.ft. and it's on the lower end of the scale for the area.

I like what you said about style and trends. Timeless is the name of the game, but guessing what might be cool in 2015 ????

My expectations re: profit are not high. The goal would be to keep up with inflation, pay for expenses (realtor, fix up, ect.) and avoid as much tax as possible. I don't know how to accomplish that in the equities or bond market even if I work at it. My 401K is down 25% from 15 yrs ago.


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RE: Novel investment idea to hedge inflation ! ;-)

willinak: " Not to politicize this thread, but I think the "new" government's role in making sure "everyone" is living modestly is exactly what is keeping the market from rebounding."

The S&P 500 is up 30% in the last six weeks. I think that is one helluva rebound!


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RE: Novel investment idea to hedge inflation ! ;-)

Rebound.....well, It's almost back up to when the new admin took over. Let's 'HOPE' it is sustained.

Here is a link that might be useful: chart of S&P, and volume indicators showing concern


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RE: Novel investment idea to hedge inflation ! ;-)

The S&P 500 is up 30% in the last six weeks. I think that is one helluva rebound!

There were 5 or 6 similar or significantly larger "rebounds" in the three years after the October, 1929 crash as the market pared 90% of it's value.


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Well, that chart to which you linked is from April 3rd. Since that time, the S&P has had two MORE winning weeks and is up ANOTHER 3 1/2% from that close.

But I forgot, Obama was supposed to turn around the economy on January 21 just by his mere presence in the white house.

I'm sure that once this recession ends - you know, the one that had been raging for the last FOURTEEN MONTHS of Bush's term - and we have once again returned to positive year-over-year stock market returns, I'm sure that the Republicans will still find some way to criticize Obama (or BHO as the wingnuts like to refer to him). My guess is that the right-wing pundits will then claim that the economy turned around in spite of this administration's actions, not because of them.


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The shadow knows! I'm not a doom and gloomer, however, the similarites are scary.


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RE: Novel investment idea to hedge inflation ! ;-)

Would you consider buying some RE to rent out and doing a 1031 with *some* of your projected profits? You probably wouldn't sell all your investments on the day you retire. Or do you need to sell your residence to have money to invest?


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I'm sure that the Republicans will still find some way to criticize Obama

"Republican or Democrat" is like asking me whether I want mayo or mustard on my sh_t sandwich.

Contrary to the populist belief, there wasn't much of a choice in the last election. Both parties are set on taking this country to the same dark place, albeit at slightly different speeds.

This isn't just a "President Bush was great, President Obama is bad" belief. Many of us were unhappy with the handling of the economy over the last few years and were just as vocal then.

(or BHO as the wingnuts like to refer to him).

Just like all those wingnuts that refer to the 32nd President as "FDR"? Or "JFK"? Or the previous President simply as "W"?

My guess is that the right-wing pundits will then claim that the economy turned around in spite of this administration's actions, not because of them.

And they will be right. Cap and trade, National Healthcare, etc will act as retarders on the economy. That is not to say that the economy will not recover; it will. The problem is that it will recover more slowly thanks to government policy.

To be clear, the prognosis would no be much different if McCain would have won last November.


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I think the transaction costs are too high for this to be effective. Another concern, from a macro economics perspective, is inflation usually leads to higher interest rates that decreases home affordibility.


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RE: Novel investment idea to hedge inflation ! ;-)

This isnt really a new idea. My maternal grandfather had houses in the Netherlands pre World War 2.

There are lots of things to consider here. One is that for most people real estate is a highly leveraged bet. The big problem with leverage is that when one is certain that things can only move in one direction the pendulum swings into the opposite direction.

Another problem is that real estate is notoriously illiquid. When you are most in need of cash is just when it could be the worst time to sell.

My grandfather who was a successful businessman had a stroke and as a result lost his business sense. My mother had to take care of his affairs as a result. For my mother this seems to have been a very stressful time. My mother, now in her dotage, keeps bringing up attending to these houses.


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RE: Novel investment idea to hedge inflation ! ;-)

Hi Willinak,

You're peaking into the right market... just not quite getting the pieces together in your mind yet...

Real estate *IS* the ultimate "hard asset." All consumer inflation ultimately rolls downhill to the commercial real estate that business occupies, and the residential real estate the owners & workers occupy.

Borrowed money DECAYS IN REPAYMENT BURDEN at the reverse correlation to Inflation. A borrowed dollar gets "lighter" to carry & repay by the rate of inflation.

Borrowing today's dollars (which get lighter by the rate of inflation,) and buying real estate (which appreciates at slightly above the rate of inflation, as long as the U.S. continues to increase in population from immigration,) is the "Most Perfect Inflation Hedge."

FURTHER, it can be PAID FOR by the occupants of the asset itself... by having rental tenants.

THUS, the "key concept" is to;
A) acquire properties today,
B) at the deepest current real-market price,
C) which can be leveraged as highly as desired,
D) and *IS* leveraged to the maximum that tenant net revenue cashflow supports,
E) in properties that get the GREATEST ratios of rental-income-to-acquisition-cost (i.e. "the sweet spot.")

You'll discover that the "sweet spot" is generally 1-4 unit residential homes.

Its precisely what *I* am doing... and over the last consecutive decade, my real estate portfolio has supported and grown my family net worth greater than the combined taxable take-home pay our household has received. And *THAT* has been during periods of "sleeping inflation."

We're now positioned such that Inflation is something we not only do not fear... but we tentatively anticipate... like a surfer getting pulled back paddling as a huge wave approaches to pick us up for the ride of our lives.

Cheers,
Dave


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Whew! Finally out of the class warfare debate.

Dave, thanks for that insight. I'm assuming that you are talking about more properties than your primary residence when you say "Its precisely what *I* am doing... and over the last consecutive decade, my real estate portfolio has supported and grown my family net worth greater than the combined taxable take-home pay our household has received" correct? If you could elucidate here or PM me, I would love to see more into your strategy.


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Hi Willinak,

Yes, this is more properties than my primary residence... but that's how we actually started out, with just our primary 2 bedroom, 2 bath condo primary residence. NOW... Joanne & I could both easily live on very little space & resource. She grew up in communist poverty (literally,) and a small amount of high quality space was luxury for her (and I've lived a travelling athlete's life, followed by a travelling corporate trainer's life... so a bed, a kitchen & a phone stand are all I felt I needed.) We both spent our leisure time at the gym, or out walking & enjoying life... we've never been lounge rats or major party throwers.

When we got our first place together... each bedroom had its own private "master" bathroom. I initially had "privacy issues" and wanted to keep our place as only "OUR" place, and use the 2nd bedroom as a spare office & visitor/guest bedroom... but my far-wiser half said "uhhh... I think we can get $350-400 for it from a roommate! YOU can pay ME that money if you want... or else I can advertise and get a roommate and we'll aplit the money toward our bills!"

SO, that is what we did for about 2.5 years... and frankly it was an OUTSTANDING 'landlord's kindergarten step' for us. We studied all the "how to be a landlord" materials we could get our hands on, *and* we learned how to carefully screen & select our QUALITY 'tenants' based on if they were "good enough to live WITH us." (A value we have kept in our process ever since!)

After a while rents improved slightly, financing costs dropped continually (and I was fortunate enough to eat/live/breathe the credit markets & kept my GF's panic-levels calmed down to take advantage of the lowest-rate financing,) and we realized that the going rents for the ENTIRE condo would not only cover *ALL* the costs of the mortgage, condo dues, taxes & "slush fund reserves"... it would ALSO throw off a good extra $250-300 a month positive cashflow/income.

SO, we hunted around & found a great deal on a split-level 4 bedroom, 3 bath house. Of course, we took the master bedroom/bath... we brought along with us our most-valued tenant from the condo to rent one of the other bedrooms, and we advertised for roommates for the two other rooms (and filled them.) We rented out the old condo for the positive cashflow. Between the condo rents, and the roommate rents, we now owned our condo and a 4 bed, 3 bath house at ZERO monthly personal out of pocket to us.

After a year of that, we (Joanne actually) found a GORGEOUS lake-view 2 story home, in the West Of Market neighborhood of Kirkland (one of the poshest high-end neighborhoods of the area,) that had a great additional mother-inlaw 'house' out back accessible from the central alley. In addition, the two-story home was segmentable (the prior owner ran a small administrative business office on the ground floor & closed-off access to the mail living quarters on the top floor.) SO...

A) we refinanced some of the equity from our condo & current house, and negotiated a kickarse deal on the West-Of-Market show-home... and got into it for zero-down (100% financing... some on that house, some from the other houses.)
B) we renovated the mother-inlaw unit, & rented it out at top dollar.
C) Brought along TWO of our preferred "roommates" and plopped them into their own private downstairs units.

We then owned 3 homes, and after all costs and rents were sorted out we "paid" about $300/month out of pocket for the privilege.

THIS STRATEGY is what I call the "hermit crab" strategy... you keep your old shell & fill it with a tenant, and move into another one for a while, with the intentions to do it all over again.

In the following years hence, we've stayd in our W.O.M. home as our primary residence... but with the encouraging track record we've ventured out & bought several more condo units, and another single-family house, all at desperado firesale prices, and all for the sole purpose of immediately filling with renters who cover the costs of owning.

Its been about 2 years now since our last purchase... we've taken a break while the markets turmoil sort themselves out a bit (it has been extremely difficult in the interrim because sellers and banks are so confused... good deals have simply been difficult to structure.)

We ARE NOW, however, VERY excited about the current markets again. Everyone is starting to "get a grip" on what it all means... banks are willing to negotiate to discount existing financing... sellers are releasing their "dream prices" to come down to earth in reality... and renters have given up false hopes of becoming owners with conventional means & financing (and thus are willing to pay standard rents to us... or our competitor landlords.)

All in all... it is probably a far better environment to get started in NOW, than it was when Joanne & I got started... but for "time"... YESTERDAY is always the better time to have begun.

Luck!
Dave


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RE: Novel investment idea to hedge inflation ! ;-)

A problem I see in your initial post is that you'd be selling RE in this down market. I'd rather see you invest your maturing CD's, etc. in some RE that you would rent out. Now is a time to buy, not sell, RE -- if we think (and we do) -- that RE will appreciate over your five-year time frame.

You don't have to pay capital gains on rental RE that you 'turn over', i.e. invest in another rental property. You can shelter all or just some of the gains; it's up to you. You can even eventually make a rental property your primary residence -- further tax shelter from your 'shelter'.

This plan is only good if you would still have adequate liquid reserves after buying the rental property.


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RE: Novel investment idea to hedge inflation ! ;-)

It's hard to tell what will be 'in fashion' by 2015. One architectural style I think is already falling out of fashion is the builder's concept of huge, 2-story entryways. Everyone I know that has one, hates it. Energy-wasting and noisy.

No matter what you do with your money, there's a risk assumed with it. Good luck with whatever you decide to do.


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RE: Novel investment idea to hedge inflation ! ;-)

Oh Dave - West of Market. I envy you. We had a WOM but sold it for 285k to help our children through college and to reduce our RE taxes. The house recently sold for 1 1/2 million


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RE: Novel investment idea to hedge inflation ! ;-)

Dave and devorah, even if you had some good knowledge of wall street, you couldn't have beaten the investment you have seen in RE. Devorah, what if you had refinanced to get the college cash? It just seems the primary residence is THE springboard for financial independence.


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RE: Novel investment idea to hedge inflation ! ;-)

The house sold for enough to purchase another house without a mortgage. That made life so much easier. The hard part was moving back to the same area and finding we could no longer afford to live in beautiful downtown Kirkland with a view of Lake Washington. We still believe in RE. We recently bought two tri-plexes and one house in a college town.


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Ahhh yes.... I have a love/hate relationship here in the PacNorthWET.

A) I LOVE how gorgeous the environment is here... However HATE the 8 months of cold pissy slog we endure in order to have it as beautiful as it is the rest of the time ;~)

B) LOVE the easy-going granola-crunching tree-hugging culture here. (Nothing to dislike about it, period, as far as I am concerned... being that I am a reformed Los Angelenian expat ;~)

Did I mention that I casually looked up from my car as I was driving on Sunday afternoon and saw a gorgeous bald eagle dive down & cruise 3 feet above the surface along the street at full speed, and then swoop up to perch on a street lamp? Right here in the "middle of suburbia."

A buddy of mine with a beach house a bit north of us (in Skagit county) regularly gets Orca wales that stand on their tails & "spy" at him as he sits on his water-front deck sipping a beer...

THIS concrete-jungle city-kid (still in the city, really) never fails to get inspired & awed by the beautiful magic here. (I *DO* miss the sultry far-less-bundled southwest beach culture though.)

Cheers,
Dave

PS. Willinak... back on topic... don't doubt yourself, get in the game! Luck!


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RE: Novel investment idea to hedge inflation ! ;-)

willinak, the big problem with your op... it is not a novel idea. Many others before you have done this successfully.
Listen to DD, it is good advice. With adequate income/cash for the long term you will do well as long as you don't live in some of our country's "pits"..

DD - I agree with all your points and buy investment property also. In the past we did trade up to our present house to beat inflation/appreciation. My problem with your concept buying small doors for a minimum and good cash flow. I live in your old neighborhood. Not in the city of Long Angeles, but the county, in the Southbay, I own properties in Manhattan Beach, Hermosa Beach and Redondo Beach. The prices are high (sale price and rents). I've found buying the maximum doors makes the best return in the long term, but can't afford to buy more in this area. I have negative on some of them right now, that should faze out in a year or two.
One question, we bought/refied when financing was easy, I wonder how difficult it will be to purchase in the future. We only have investment income, not W2's, I've heard that in the future it will be difficult getting a loan for investment property without a guaranteed source of income.
I'll be visiting your neighborhood in July, but in the meantime I'll be looking for the sultry culture you remember.


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shadow: "Just like all those wingnuts that refer to the 32nd President as "FDR"? Or "JFK"? Or the previous President simply as "W"?"

Oh, please. Even you can't believe that pile of B.S. you just wrote. I'm sure that you are intelligent enough to discern the difference.

FDR, JFK, & W were not used in a pejorative manner to refer to the POTUS. Only the "dittoheads" who need to have their beliefs spoonfed to them by Limbaugh, Hannity, Beck, O'Reilly, et al., use BHO.


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I don't know about that. I think I always said dubya in a pejorative manner.


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RE: Novel investment idea to hedge inflation ! ;-)

cmarlin20, I said "Novel" with my tongue pressed firmly in my cheek! That said, I am surprised that there are not more folks doing it in this market. Maybe it's a bit premature, but it's hard to hit the exact bottom.

bethesda+mad+man, aptly named, please don't politicize the thread. It's obvious that you are still in post election euphoria, so just let it be. A few of us still believe in capitalism, the bankruptcy system, personal liberty, and that America has actually done some good in the world. ;-)

Thanks to all for the constructive comments. Only time will tell, but I cannot see a compelling reason to keep my money in the bank. Inflation probably won't really start for a year or two, but then I will have missed the train.


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RE: Novel investment idea to hedge inflation ! ;-)

cmarlin20, I said "Novel" with my tongue pressed firmly in my cheek! That said, I am surprised that there are not more folks doing it in this market. Maybe it's a bit premature, but it's hard to hit the exact bottom.
Your big problem may be remembering to ignore the people who tell you NEVER buy a house, you are wasting your money.
You are right in not trying to time the market.
Certainly, there are investors in the market right now.


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Hi cmarlin,

(Of course... that's what I do when I go to Cabo; See Marlin ;~)

One question, we bought/refied when financing was easy, I wonder how difficult it will be to purchase in the future. We only have investment income, not W2's, I've heard that in the future it will be difficult getting a loan for investment property without a guaranteed source of income.

Weeelllll..... here's the thing;

Financing will *always* be doable....
SOMETIMES its findable from banks,
SOMETIMES its findable from sellers,
SOMETIMES its best secured from private individuals,
USUALLY your best deals are a combination!

I'll be visiting your neighborhood in July, but in the meantime I'll be looking for the sultry culture you remember.

Ping me whenever you're up here! I love meeting my online friends for coffee, lunch, beer, or a combination ;~)

Meanwhile... soak up the short-skirt & fitness-reigns culture of the South Bay on my behalf!

Cheers,
Dave


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And now, to lighten thisngs up bit, a lesson on derivitives:

Heidi is the proprietor of a bar in Detroit. In order to increase sales, she decides to allow her loyal customers - most of whom are unemployed alcoholics - to drink now but pay later. She keeps track of the drinks consumed on a ledger (thereby granting the customers loans).

Word gets around about Heidi's drink now pay later marketing strategy and as a result, increasing numbers of customers flood into Heidi's bar and soon she has the largest sale volume for any bar in Detroit.

By providing her customers' freedom from immediate payment demands, Heidi gets no resistance when she substantially increases her prices for wine and beer, the most consumed beverages. Her sales volume increases massively.

A young and dynamic vice-president at the local bank recognizes these customer debts as valuable future assets and increases Heidi's borrowing limit. He sees no reason for undue concern since he has the debts of the alcoholics as collateral.

At the bank's corporate headquarters, expert traders transform these customer loans into DRINKBONDS, ALKIBONDS and PUKEBONDS. These securities are then traded on security markets worldwide.

Naive investors don't really understand the securities being sold to them as AAA secured bonds are really the debts of unemployed alcoholics. Nevertheless, their prices continuously climb, and the securities become the top-selling items for some of the nation's leading brokerage houses who collect enormous fees on their sales, pay extravagant bonuses to their sales force, and who in turn purchase exotic sports cars and multimillion dollar condominiums.

One day, although the bond prices are still climbing, a risk manager at the bank (subsequently fired due his negativity), decides that the time has come to demand payment on the debts incurred by the drinkers at Heidi's bar.

Heidi demands payment from her alcoholic patrons, but being unemployed they cannot pay back their drinking debts. Therefore, Heidi cannot fulfill her loan obligations and claims bankruptcy. DRINKBOND and ALKIBOND drop in price by 90 %. PUKEBOND performs better, stabilizing in price after dropping by 80 %. The decreased bond asset value destroys the banks liquidity and prevents it from issuing new loans.

The suppliers of Heidi's bar, having granted her generous payment extensions and having invested in the securities are faced with writing off her debt and losing over 80% on her bonds. Her wine supplier claims bankruptcy, her beer supplier is taken over by a competitor, who immediately closes the local plant and lays off 50 workers.

The bank and brokerage houses are saved by the Government following dramatic round-the-clock negotiations by leaders from both political parties. The funds required for this bailout are obtained by a tax levied on employed upper-class non-drinkers.
Finally an explanation I understand ....


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RE: Novel investment idea to hedge inflation ! ;-)

and you wanted other people to lay off politics?


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RE: Novel investment idea to hedge inflation ! ;-)

Heidi still in business?

Or has she closed the bar and is now working as a business consultant on the internet, helping people learn how to make big money?

o j


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RE: Novel investment idea to hedge inflation ! ;-)

OK, devorah, I should have stated "partisan politics", but you were right to call me on that one!


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RE: Novel investment idea to hedge inflation ! ;-)

or has she closed the bar and moved to the internet, helping people to learn how to make big money on McMansions, a housing style that will be completely out of fashion in 5-15 years? Young people who have no money of their own today, who have moms and dads with lesser funds to gift/lend, and who definitely value the green/earth movement more than middle aged folks will want no part of monster homes.

What's plan B in the event that runaway inflation doesn't occur? Any good decision making addresses ALL possible outcomes - have you?


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RE: Novel investment idea to hedge inflation ! ;-)

FDR, JFK, & W were not used in a pejorative manner to refer to the POTUS.

I don't know where I could have gotten that idea from.


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RE: Novel investment idea to hedge inflation ! ;-)

kec01, "Young people who have no money of their own today, who have moms and dads with lesser funds to gift/lend, and who definitely value the green/earth movement more than middle aged folks will want no part of monster homes", ........
Do you have data to support? I'd really be interested in reading said info., because if correct, that would be a factor to consider.

Plan "B", is to post back here and ask "what do we do now"! ;-)
Another issue is what about continued de-flation. Problem is the events of 9-11, and last fall have rendered conventional theory pretty useless. No one schooled in economics can agree on much these days.


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If you google "entitlement generation and mcmansions", you'll get tons of articles. Or substitute generation Y for entitlement - same result.


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RE: Novel investment idea to hedge inflation ! ;-)

kec01, how do you define McMansion?
I've seen it defined as a very large house maybe over 5k sq ft, or very big with cheap construction, or much bigger than surrounding houses.
How are you using the term?
The OP said he is considering buying a more expensive house? Have you concluded the OP is considering buying a McMansion . I wonder how the discussion has turned into such a discussion.
In my area more expensive may or may not not mean bigger house.


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The OP said he's currently in a 2900 sq ft house and wants to go to a larger, more expensive house. I'm using the term to refer to a suburban, monster sized home that was not built by the finest of custom builders. Very big with cheap construction would qualify, bigger than surrounding houses would qualify, something big just for the sake of being big would qualify...ie if one has 3 kids and is in a 6 bedroom home with 5 baths - it's a McMansion to me.


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RE: Novel investment idea to hedge inflation ! ;-)

This thread has taken on a life of it's own!!!

kec01, then by your definition, it's a McMansion. Well, not by my definition, because it is among the best of design, workmanship and landscaping that I have ever seen. However, yes, it surrounded by McMansions, my wife fondly refers to as "the big uglys". But getting back to the point, where do *you* have *your* nestegg invested, and how do you plan to beat, or even come close to the inevitable inflationary spiral?

I was watching some of the "financial guru's" talking about how our economic condition doesn't look like 1929, or the Japanese meltdown, but more like the Weimar Republic of 1919. (kec01, you can google that also!) If that is the case, I'd better start looking for a deserted island with space to grow a crop!


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