The Market Has Turned

[GorillaToast]

Originally Posted by maxingout

It may be a good time to surrender and get a small yacht and sail over the horizon.

That's my plan. Unfortunately, even a small (28') yacht is 5 yrs down the road.

I hope there are a few boats left by then, and that those who sail them aren't being charged by the NM for their use.

[hellosailor]

"A 2010 dollar has approximately 3% of the purchasing power of a 1913 dollar. "

And you're thinking...exactly what other currency has done any better? Since the Fed only (arguably) controls the U$D, what's the explanantion for every other currency?

[rourkeh]

Seems like everyone is looking for somewhere to place the blame for the current economic meltdown. The blame belongs to Golman Sachs and their hired stooges the American Govenment. Read this
Taibbi

[sailorboy1]

After I read this thread yesterday I went and looked at boats on yatchworld.com that I was "watching" last year. These are boats up to $120,000 US.

90% of them are still on the market and the prices have come down. So it doesn't look to me the boat market has really improved in way worth talking about. Maybe more are being bought, but it pales in light of the huge inventory for sale.

[boatman61]

Originally Posted by rourkeh

Seems like everyone is looking for somewhere to place the blame for the current economic meltdown. The blame belongs to Golman Sachs and their hired stooges the American Govenment. Read this
Taibbi

Good ole 'Stone'... sock it to em
Havn't read that in years... Whoa... Flashback

[TaoJones]

Originally Posted by hellosailor

And you're thinking...exactly what other currency has done any better? Since the Fed only (arguably) controls the U$D, what's the explanantion for every other currency?

Without a doubt, all central banks have signed onto the concept of engineered inflation, which is to say devaluing their currency while spouting platitudes about how they are in favor of a strong _______ (insert currency here - dollar, pound, yen, euro, et alii). The result is that in a floating currency scheme, the relative value of currency pairs generally changes too gradually to be noticed, another way of saying, "too gradually to become a political problem."

The effect of this strategy is that all currencies drift lower together, but since it isn't a constant rate of change, some currencies lose value against other currencies more rapidly than others. This is the very definition of the notorious "race to the bottom" that you may be familiar with, but in this context it serves to benefit one country's exports at a competing country's expense.

The Federal Reserve can "print money" (not literally what they do) without limitation if they so choose. This dilution of the money supply effectively lowers the purchasing power of all dollars - the goods and services those dollars purchase haven't increased, only the supply of dollars, so if the supply increases by 100%, for example, it will take exactly twice as many to purchase the same amount of goods and services as it did before the money supply increase.

Who gets hurt, you may ask? Only those who choose to save rather than consume, those on fixed incomes, and those with no capacity to increase their earning power.

Who benefits? Those who get to use the "money" first, while its purchasing power is closest to 100%. Over time, as it trickles through the economy, its purchasing power continues to sink toward its intrinsic level, which is 0%. This phenomenon is the very essence of government power and lies at the heart of all consumption.

But to return to your question, hellosailor, as to what other currency has done better than the US dollar, there are many, actually. The reason you haven't noticed is that it's so gradual, and unless you need to spend your dollars to buy another currency, it's virtually invisible.

TaoJones

[hummingway]

Fritz Schumacher rules!

[Pete7]

Originally Posted by simonmd

Here in Europe, the main factor that is holding the market back is lack of finance. Even people with a good credit rating and a reasonable income are getting turned down. You used to be able to get a proper 'boat mortgage' but that has all but been stopped now.

Having moved house last month (downsized) I was astonished at the hoops we had to jump through to get the bank to agree to continue to lend us the mortgage and we are low risk, good jobs and credit record. I have no idea how young buyers get on the market now, or anyone with less than a perfect credit record.

Whilst raging hyper inflation might suit us, it would kill my retired parents finances.

I have no idea if we are at the bottom yet but really fear what will happen if the UKs QE stops, it could really go pear shaped and I don't think we have seen anything yet.

Interestingly UK second hand boat sales have held up over the last couple of years due the exchange rate £ / Euro enabling foreign buyers to pick up bargins in the UK compared to the their own country.

Pete

[qwer5r]

Originally Posted by speakeasy

... Over half of US homes are underwater with inventory not shrinking. ...

Actually, according to this article:

RPT-One in five US mortgages underwater in Q4 -Zillow | Reuters

The number is actually about 20 percent. Very high, of course, but a long way from over 50 percent.

[Southern Star]

As usual, Tao has it right. Having said that, the exchange rate of various currencies has also been fairly volatile of late. The Canadian dollar has recently been trading at, or virtually at par with the USD and the Australian dollar has also come very close to par. This is a significant change from even this spring, when my wife visited Oz and the USD had about a 12% premium. Alternatively, the USD has done much better of late as against the Euro.

About 2 1/2 years ago I purchased a (for me) large amount of USD when the Cdn dollar hit 90 cents US (I know, I should have bought a ton in that brief window when we hit $1.08). However, after my purchase we dropped to about 78 cents, at which point I was able to make various purchases for my project at less real cost to myself. Now, of course, the remainder of the dollars in my US account (fortunately not many) that were purchased at a cost $1.11 CDN are worth about 11% less than at the time of purchase.

In any event, if you need to purchase foreign currencies you can always try to hedge when you think the exchange rate is favourable - but the time to spend it profitably is likely going to be quite short.

What are the prospects for the USD in the near future (and this is an important question for cruisers as in many parts of the world, it is still the currency of choice)? Very difficult to predict, but the betting here is that both the Australian and Canadian dollars are going to continue to do quite well as against the USD and Euro (like it or not, the continued worsening of their deficits will have an impact even in the short term).

Brad

[garymcg]

Powerboat sales, which drive roughly 80 percent of the brokerage market, were up 3 percent, with 1,504 boats sold; sales of sailboats dropped 3 percent, to 434 boats. The difference in total valuation of sales was more dramatic, with powerboat valuation up 105 percent and sailboat valuation down 31 percent.


For the year to date, the two market sectors are more closely aligned, with powerboat sales up 10 percent in units, compared with sail, which is up 7 percent. Most of the gain in valuation, however, has been in powerboat sales, which are up 22 percent for the year. Sailboat sales are up only 7 percent.

[Southern Star]

Thang gary for getting us back on track (and apologies for contributing to some thread drift). Yes, it does seem that the resale market in the US has not only bottomed, but is on the way back up. Will this trend continue? If the USD remains low in relation to various other currencies, you will see an increasing number of people from countries with stronger currency purchasing boats in the US. Anecdotally, there seems to be an increasing number of Canadians once again buying in the US (I personally am aware of two in the last year and another couple who are seriously shopping in FLA as we speak). We are also starting to see threads here from people in OZ who, seeing the much lower (relative) prices stateside, are starting to look into the prospect of buying in the US.

I, for one, suspect that this trend will continue so long as these currencies are relatively strong in relation to the greenback. This subtle rise in prices in the US (even if partially fueled by foreign buyers) will also likely cause Americans to consider buying now, rather than holding off. The result - I would bet on a continued strengthening of the market in the US, even if it is only incremental.

Brad

[CarlF]

Geez guys. Many of you evidence the reason that so many individuals are such lousy investors (e.g. scare themselves silly so they buy high - sell low)

- The markets (and most other things in life including the ocean) move in cycles. While it is hard to be sure of the amplitude or frequency of the wave, a wave it is. People, on the other hand, don't think in cycles. They always expect things to keep going in the same direction. The boat market was on a down cycle. It was going to turn. No amount of skepticism will keep it down forever.

- While the cycle is going on, boat markets are also subject to supply and demand. The prices of high quality brands that have been well maintained always seem high. You can always get a great deal on a piece of junk.

- If you are absolutely sure that the US dollar is going down, you can easily be a very rich man by putting everything you have and can borrow in a short position against the dollar. You've done that, right? Over the last 20 years, there's actually very little long term trend of the US dollar against other currencies so its "purchasing power" is about the same.

- That said, I am more worried about the US dollar than I've been in a long time due to the large budget deficit. It sure seems like it should suffer. But I've learned my lesson - painfully - I am not smarter than the market. Anyone who can prove they are - please PM me.

Carl

[Southern Star]

Carl, nobody is 'smarter than the market'. Having said that, it is also not purely a game of chance. if you need to deal in different currencies, it is often wise to buy that other currency when you think yours (hopefully after some research) is currently at a favourable rate of exchange. The same holds true if you are buying an item such as a boat in a foreign country; heck, on major purchases we all should at least try to consider the market, shouldn't we?

Brad

[CarlF]

Every day thousands of very smart, very experienced and very well paid people do nothing else but try to gain an advantage in the market for themselves and their clients. The prices for everything from a share of Apple, to a ton of zinc, to the dollar is the price where an equal number (of dollars not people) think it's under priced as the number that think it's overpriced. Supply and demand are balanced and the market "clears".

Your idea of buying a local currency to purchase a boat is a good one - and I've done it myself - if an unexpected drop in the currency (and it will always be unexpected) would make it impossible to complete the transaction. You are as likely to lose money as gain while holding the currency but you will absolutely be able to buy your boat. A good thing

Carl