are you feeling the pinch

[Alan Wheeler]

The BNZ (bank of NZ) announced today that their Credit card rate is going to 22%. Ouch. Sure glad I got rid of most of my cards. Just one to go.

[muskoka]

And who says there are no more pirates.

[seafox]

Still have the house we live in Rez. Don't owe any money on it and should have sold it but we built the place and like it. It is too much tied up for two people. It is triple the average price of a New Zealand home. We spend half the year on our boat so it is a real waste.

Have a few shares and bought the marina berth but the bulk of our assets are cash.

Been waiting for a crash for some time now.

Really, I am sick of trying to pick markets and have been lazily investing in term deposits. After tax and inflation they still come out on the positive side here. No currency risk as it is our currency.

I don't really care what happens. I will swing with the punches when and if the time comes. At the moment it is settled sunny weather and I would rather go cruising than worry about my investments.

Off to see Wheels again in the weekend. Going to annoy him with my Edson steering questions and wind gauge problems

[seafox]

Originally Posted by Alan Wheeler

The BNZ (bank of NZ) announced today that their Credit card rate is going to 22%. Ouch. Sure glad I got rid of most of my cards. Just one to go.

Credit cards are ok as long as you pay the full amount by the due date. If you pay credit card interest at 22% you are crazy.

[Steve Rust]

Originally Posted by ess105

Agreed. To the extent I am qualified to comment, smart money merely shifts holdings in response to current and anticipated conditions. To be completely out is indicative of gambling rather than investing. There's a lot of people who get in, get out all or nothing and often get it right. Does this make them smart? One by one, sooner or later, each of them makes a bad call and lose big time. Smart money has long term horizons and acts accordingly.

This makes the most sense of anything posted on this thread so far. Raising the specter of 1929 and impending economic disaster as some have seems a little overly dramatic to me. Market timing is notoriusly difficult to do successfully and though you may avoid some downswings in the market you will be just as likely to miss some upswings as well. If your funds are not in qualified accounts much of the money you think you are saving could be eaten up by capital gains taxes and commission fees as you jump in and out of the market. As the market goes sideways for the rest of the year those with a long term outlook may see it as a good buying opportunity.
I try and keep a 50/50 balance between foreign and domestic. I usually only keep about 5% in cash but it may be close to 20% now but it will drop back down as I seek out good buying opportunities this year. I would refrain from offering anything more specific as an anonymous boating website is not the place one should come to for serious financial advice.

Seafox, can I ship you a suitcase full of cash to take advantage of that 9% rate?

[David_Old_Jersey]

Originally Posted by Steve Rust

much of the money you think you are saving could be eaten up by capital gains taxes

Capital Gains Taxes? Yikes. I hope that doesn't catch on

[MarkJ]

Originally Posted by David_Old_Jersey

Capital Gains Taxes? Yikes. I hope that doesn't catch on

LOL too late. What you guys really hope doesnt catch on is a trick being done in Australia where your superanuation funds get gambled on the stockmarket and the winners money goes to someone else and you foot the loosers bill!!!

Read:
Traders plunder super



Adele Ferguson | February 16, 2008

THE Australian Securities Exchange is demanding a review of stock trading rules amid evidence that hedge funds are "borrowing" shares from superannuation funds to force down prices, a practice that is mauling retirement savings. Traders plunder super | The Australian

[seafox]

Originally Posted by Steve Rust

This makes the most sense of anything posted on this thread so far. Raising the specter of 1929 and impending economic disaster as some have seems a little overly dramatic to me. Market timing is notoriusly difficult to do successfully and though you may avoid some downswings in the market you will be just as likely to miss some upswings as well. If your funds are not in qualified accounts much of the money you think you are saving could be eaten up by capital gains taxes and commission fees as you jump in and out of the market. As the market goes sideways for the rest of the year those with a long term outlook may see it as a good buying opportunity.
I try and keep a 50/50 balance between foreign and domestic. I usually only keep about 5% in cash but it may be close to 20% now but it will drop back down as I seek out good buying opportunities this year. I would refrain from offering anything more specific as an anonymous boating website is not the place one should come to for serious financial advice.

Seafox, can I ship you a suitcase full of cash to take advantage of that 9% rate?

9% at the state owned "kiwibank" at the moment. Has to be good. 8.2% on call and 9% 1 year fixed. I will PM you my personal bank account number. All deposits gratefully accepted.

[Ex-Calif]

I rode back from LA with a personal banker type. He was saying how a lot of his (rich) clients are asking him about getting out of certain holdings.

He said as long as he has been doing this he still can't understand why people wait until a stock is at the bottom of its cycle before asking about selling. Some stuff will never come back but we were talking about a specific 'blue chip" with super fundamentals.

He and several other "big" firms have a standing buy order in and his individual clients are asking about a sell. Crazy...

[seafox]

Dont mention "blue chip" over here. A company by that name has just defaulted and owes millions to investors.

[imagine2frolic]

POGO,

I kept hearing this voice in my ear. Whispering...go, go, go don't be part of the insanity. My mother never liked the way I lived, but I have ended up doing OK. All my friends thought I was insane to live the way I did. They have mostly WHAT IF'S.

I once met a friend in the market just before I sold my business, and left Ca. He was saying how envious everyone was, because I would quit, and sail away once again. I advised him to sell his cars, and home, and he too could go. He looked at me kind of sad, and said" John I just don't have the juevos to do that."

It takes all kinds in the world, and if it weren't for those that lived safely. I would be coming back to chaos.......LOLOLOLOLOL

[Eleven]

Made up my mind last autumn. House on the market, boat picked out. Credit cards up to 30k, house, I hope, 190k mortgage and costs 70k. Leaves 90k to set sail.
Life Assurance in two years pays 45k which will leave us in the med for a few years.
If we work these next 2 years and live on board we'll do alright but we'll be mooring in Southampton UK prime spot to 8k a year.
The boat I like is 80k, doesn't leave much of a safety margin but there are always cheaper boats but - Well, life to enjoy / life with a risk / no life. Hindsight is a wonderfully accurate system.

[Maren]

Originally Posted by Weyalan

You chaps all seem to know what you are talking about. So, leaving aside the sagacity/insanity issues of asking for financial advice from anonymous individuals on a sailing related web-forum...

My potential cruising kitty is currently about $100,00 (Oops; I just checked - about $90,000) which is currently invested in a managed fund (Skandia). Given that:
a) I probably won't be "cutting the lines" for about another 6 years, so I don't need the fund right now
b) That, economically, things are, apparently, going to get worse before they get better

Should I be sitting tight and leaving the money where it is, on the premise that the market will have recovered and then some in 6 years or so, or should I be cashing up a.s.a.p and putting my money elsewehere? For example, I could pay a chunk off my mortgage...

P.S. Rest assured that I am not going to take any opinions as gospel; this is more of a straw poll, to see what the gut feel is from y'all.

This is my first post and I know you all don’t know me from Adam, but I felt compelled to take a stab at this. Unfortunately, there are at least 15 posts in this thread I wanted to comment on, but I’ll try to roll things up succinctly.

1) If you aren’t already pretty adept at managing you investments, you should probably find somebody who is and have them do it for you and then, you should go sailing. I wouldn’t do my own brain surgery and it would be worth paying a really good surgeon and staff for their skill and time.

2) But you still aren’t out of the woods as you still need to find that really good investor. Or continuing the analogy, you need to separate the great brain surgeon from the one who has turned so many patients into vegetables he could start a salad bar.

3) If you can’t find somebody who can consistently beat the markets, just mirror the market and go with ETFs. That is (at least in part) what Muskova does by having stock in Berkshire Hathaway. By the way, Berkshire Hathaway has a B class of shares that’s a mere $4500(or so)/share. The two classes of shares track identically.

4) If you look back at post #41 (plus several others) you’ll see the markets are correlated. A friend of mine has a bunch of charts he makes freely available that he occasionally updates. His section on lessons (section 4) is quite good. Chart 4.1 and its commentary address correlation of markets pretty clearly and the problems with investements like mutual funds. A picture is worth a thousand, after all.

5) If you look at a really long term chart I think you can see how a rule of just ‘buy’ would work well enough. And if you could forever and just wait to time things, then buy at the trend line. Since Weyalan’s timeframe is about six years, the important thing to figure out if the market is going to be more like 1965 to 1985 period when things were pretty much flat. I would say not, but who knows.

6) What I do know is how I invest is not for everybody. That, and it took me years to get it right.


Well, longer than I wanted ...but at least it rambles

[muskoka]

Maren,

Good first post and great advice.

I'd very much second your opinion to go with ETF's for those who don't feel comfortable selecting individual shares. ETF's have inexpensive management fees and they are by definition, expertly managed as they track indexes like the DOW or FTSE of which the constituent companies have been selected for their excellence. They are de facto 'funds' but the management costs are significantly cheaper.

I recently read an interview with John Bogle, one of the prime innovators of the mutual fund industry, and he was very positive on ETF's. And, he was rather scathing in his opinion regarding much of the fund industry.

That being said, you still have to beware of buying into overinflated valuations in any market. Hence the dollar cost averaging strategy is a solid way to avoid buying too much at the peak and too little at the trough.

Cheers.