Sailing in recession ?

[Paul L]

Originally Posted by Dark Horse

First you invest in many power companies. Diversity so all your eggs are not in one basket.



Second I thing PG&E got screwed and I am not a corporatist. Corporations should be responsible for what they do but PG&E was not responsible for the fires.



Bad laws are hard for an investor to defend against.

Yep, first you reduce individual company risk. Then when you are done with that you reduce individual sector risk. Then you reduce market risk. Next thing you know you have a classically diversified portfolio, sans any smart stock picking.

Not sure about the 'laws' issue for PGE, but the US market has such a large number of foreign investors because of its legal stability and security. I'm sure the Toronto exchange is pretty stable too, but I remember the Vancouver exchange before they closed it.

[Sailor 99]

Originally Posted by Paul L

I remember the Vancouver exchange before they closed it.

Ya Vancouver was wild..... and they didn't even wear masks. Just keep selling yourself the same 10,000 stocks till they got high enough to let someone else by them.



Toronto is very safe in comparison.

[daletournier]

Originally Posted by Dark Horse

It always amazes me that people can not tell the difference between investing and gambling.



When you buy blue chip dividend paying stocks that have a history of increasing their dividend your investing. Your buying a pc of a money making company.



When you buy a company like Tesla you are gambling. Also called speculation. This is the same for the dot com stocks of yesteryear and the pot stocks of today.



Of primary importance to my wife and I was that were invested in something rock solid that gave us a retirement income so we could go sailing. The above investment ideas are pretty recession proof. People still need power and they still need natural gas and the banks always come out on top... at least here in Canada.



In less than 7 months we will be leaving the frozen winters of the north behind and spending them somewhere south in the Caribbean.

Once upon a time every company paided dividends, you owned part of the company, now what percentage of public companies pay dividends ? , apparently you own part of the company but you recieve no part of profit, the company has zero obligation to pay you anything at all, you (mostly) have no voting rights, the company can issue more shares and the share price is divorced from the companies success or failure, it's solely driven by demand for the stock. It relies on a constant supply of "investors" coming in from the bottom.

[john61ct]

Originally Posted by daletournier

It relies on a constant supply of "investors" coming in from the bottom.

As does the "main street" economy, the older citizens and long-term residents know how to avoid the worst exploitation, new immigrants and young people are what keeps the engine chugging along.

[Montanan]

Originally Posted by chakil

Hi guys,

You all remember the recession in 2008 when the eurusd dropped to 1,10 from 1,60 just in 3-4 months.
Consider that you bought your cat for 300.000€ before the recession and sailed for 5 years , the boat depreciated almost %30 and another -45.000 usd because of the eurusd. Now you have 150.000€ , half of your money is gone. We may have the same situation for the boat buyers who have their boats since 2010.Europe has many problems now;france,germany,italy ,you name it. If the euro goes down to 0,80 in the coming 4-5 years ,what will you do ?
Would you go and invest your money in a potential depreciating currency now?

I want to hear your thoughts about the topic and ideas to hedge our position.

Thanks,

Simple matter of first identifying your risk / gain exposures / opportunities. There being two clearly identifiable objects or commodities of value.

First there is the intrinsic value of the vessel.
Second there is the value of currency of relevance to the owner(s) and prospective buyer(s). Note what currency the purchase was denominated in is a historical whim, not a factor other than or accounting and taxation but not of wealth. Once the funds have been transferred in exchange for obtaining title to the vessel, the currency utilized to transfer the consideration has no import as now the present owner only owns the vessel and the wealth associated with such vessel is the current market value.

Wealth is a function of the value of the vessel at a point in time. Currencies are mere commodities of exchange for the value of the vessel.

So how do you hedge the future value of a vessel. It is not like their are option markets one can engage with as to models of boats. Albeit the charter fleet companies effectively engage in such; as could a lease method of financing your vessel at time of purchase which lease could have an end of lease purchase value. Future obligations associated with the ownership of a vessel [i.e., loans or leases] are monetary flows that one can "hedge".

Currencies are readily hedgeable, if one feels an exposure to one or more currencies. Of note to long-term cruisers is that you may become a bit of a global nomad and as such become exposed to expenses in local currencies as you move about. And of course as a global nomad, you may become exposed to different currencies and markets for ultimate sale of the vessel when you decide to discontinue your cruising lifestyle or decide to acquire a different vessel.

Your exposure as to commodity values is exactly that, it is yours to define and yours to manage.

[Augi]

Originally Posted by chakil

Hi guys,

You all remember the recession in 2008 when the eurusd dropped to 1,10 from 1,60 just in 3-4 months.
Consider that you bought your cat for 300.000€ before the recession and sailed for 5 years , the boat depreciated almost %30 and another -45.000 usd because of the eurusd. Now you have 150.000€ , half of your money is gone. We may have the same situation for the boat buyers who have their boats since 2010.Europe has many problems now;france,germany,italy ,you name it. If the euro goes down to 0,80 in the coming 4-5 years ,what will you do ?
Would you go and invest your money in a potential depreciating currency now?

I want to hear your thoughts about the topic and ideas to hedge our position.

Thanks,

You have way over simplified the effect of the Euro dropping per your example. Of course, it is best to buy a boat that is built in Europe when the Euro is relatively is low. But the effect of buying when the Euro is high then selling 5 years later when the Euro is much lower is over simplified and not as bad as you propose. Probably more important is if we there is a bad recession and there is a lot less demand for used boats similar to what your selling that would have an effect. Plus perhaps there will me good demand for used boats because people cannot afford new during a bad recession. Further the last bad recession you are right the Euro dropped a lot relative to the dollar. All recessions are not created equal and maybe the in the next one the dollar will be weak relative to the dollar.

The point is there are too many variables and no one can predict the future in regards to this type of thing. Educated guess yes based on known facts and what has happened before, but no one gets it perfectly right, unless with luck.

Lastly, if you have to worry about this type of thing you probably should not be buying $500K+ new cat.

It is a freakin' boat. Pick your poison. By definition it is a very expensive, discretionary, depreciating asset that is expensive to maintain and store. It is similar to a car but to the third power, in other words much worse.

The worst possible scenario is you buy too much boat and then don't enjoy it because of the stress of not being able to afford it.

[Adonf46]

Originally Posted by chakil

Hi guys,

You all remember the recession in 2008 when the eurusd dropped to 1,10 from 1,60 just in 3-4 months.
Consider that you bought your cat for 300.000€ before the recession and sailed for 5 years , the boat depreciated almost %30 and another -45.000 usd because of the eurusd. Now you have 150.000€ , half of your money is gone. We may have the same situation for the boat buyers who have their boats since 2010.Europe has many problems now;france,germany,italy ,you name it. If the euro goes down to 0,80 in the coming 4-5 years ,what will you do ?
Would you go and invest your money in a potential depreciating currency now?

I want to hear your thoughts about the topic and ideas to hedge our position.

Thanks,

The reason we bought our power cat was to get away from the rat race and not worry about what seems to preoccupy you , and it has worked , I could not give a rat’s arse about currencies values right now , our present anchorage is beautiful, the lobster grilled on the BBQ smells wonderful and the bottle of Pinot Grigio perfectly chilled

[AJ-SeaChange]

Originally Posted by bobnlesley

No ideas or opinions to offer whatsoever. A major reason for our buying a boat and sailing away was to stop having to spend my days thinking or caring about stuff like that and I'm prepared to bet that I'm not the only one. Oh and it worked

THIS...

[allene222]

I have not read this entire thread, just a sampling. My boat was it is a race a couple of years ago and was dismasted. I spent $40,000 fixing it. I could sell it tomorrow for $1,000 - if I could find anyone foolish enough to buy an old wood boat. A boat is not an investment. Go sailing, have fun. Enjoy life. My friend just lost his dad and said he noticed that his dad was not able to take his money with him.

[lestersails]

Originally Posted by Kenomac

The economy in the USA is roaring ahead, moving forward like it hasn't since the Reagan years. Anyone who wants a job is working and can probably get overtime or two jobs. You won't hear any of this in the news but, it is all thanks to Trump; and hopefully most will have figured it out before the next election in two years time.

I rent office space for a living which was nearly impossible to do during the Obama years, now I have a waiting list, mostly startup businesses.

I LOVE this - the only thing you forgot to invoke is "let them eat cake".

[captaingregger]

Quite frankly, I never considered my boat as any sort of investment, because it’s not. It’s a massively depreciating asset but because I bought it used and for cheap the depreciative hit that I will take is far less than most.

I love the idea of buying a new cat, or a tri like a Neel. But the depreciation hit is just something I cannot wrap my head around. To keep up with the marketplace, in terms of modern design and accoutrements, I bought an older boat, cruised her pretty aggressively for 2 yrs to figure out what I liked and what I would change. I then sailed her to the Philippines for major refit/ remodel. Just a different strategy. Not perfect but it works for me. So the remodel costs is a factor I have to contend with , and ultimately money lost. But depreciation is almost negligible.

Frankly, I don’t see a recession coming (yet). The drone of negativity on Trump is endless. It’s all you hear since the media is far left. But the reality is he’s getting things done to move the US economy forward for a long time to come. The US drives the rest of the world economies. Their currencies are trading at a discount because they were put on notice that the USA gravy train of reciprocal-free trade is over. They’re figuring it all out and will eventually fall in line as life-long trading partners but the point is, they have far more at risk at present moment. If we fall into recession, so does everyone else... so the currency gains is anybody’s guess. Peter Zeihan explains all of this in a few of his hour long presentations, which you can download on YouTube.

In short, I think most of us accept that boating is a depreciation hit and massive cost experience from the economic side. But we don’t get into it for that reason. We stay with it to get out on the water during our off time, see the world, and spend time with loved ones.

What boggles my mind is the thousands of boats you see at US marinas that never get used. I mean if you’re busy, I get it. But at $1,200-$2,200/ mo for a slip in a lot of places and you won’t even use your boat but once every 5 years? I’ll never understand that situation.

[ShawnLeary]

Originally Posted by chakil

Hi guys,

You all remember the recession in 2008 when the eurusd dropped to 1,10 from 1,60 just in 3-4 months.
Consider that you bought your cat for 300.000€ before the recession and sailed for 5 years , the boat depreciated almost %30 and another -45.000 usd because of the eurusd. Now you have 150.000€ , half of your money is gone. We may have the same situation for the boat buyers who have their boats since 2010.Europe has many problems now;france,germany,italy ,you name it. If the euro goes down to 0,80 in the coming 4-5 years ,what will you do ?
Would you go and invest your money in a potential depreciating currency now?

I want to hear your thoughts about the topic and ideas to hedge our position.

Thanks,

I recommend hedging for monetary and market collapse with Bitcoi n.

[AndyEss]

Originally Posted by daletournier

Market returns being a reflection of human productivity is a stretch.

When I looked at Tesla sometime back I remember reading that over a particular period of time their share price had gone from $20 to$380/share, during that same time they had lost 4.2 billion dollars, therefore I'm not really sure what the share price represents... thats one example. I'm really not even sure it represents equity although we are talking equity markets. Faith maybe, that's my best guess at..... anyway we are drifting abit.

The original comment I was responding to claimed that a century's worth of stock market returns was totally explained by inflation - which I objected to.
Your example of one highly speculative stock (Tesla) doesn't "prove" that markets over long periods of time do not respond to value. One of the classic ways to hedge against risk is diversification.
Stock markets have always reflected gains in human productivity.
A current valid economic and political question is how automation of labor and now even intellect (in the form of AI) might fundamentally change the relation between economics and most of the human population on the planet.

[AndyEss]

Originally Posted by blu3534

Nothing to do with recession, but:



what kind of odd statement is this?

Again, my comment had to do with markets reflecting increased human productivity over time. Part of our improvements in productivity is our greatly increased life span, mostly due to medical and engineering improvements during the 19th and 20th centuries. Our improved productivity has allowed many human (e.g.most of CF members) to accumulate enough resources that we can indulge in a hobby or life style which was beyond the reach of nearly all of humanity since the start of history. Further, technology (GPS, electronic communications, highly efficient internal combustion engines, chemical and metallurgical industries capable of developing materials resistant to sea water and sea life) is directly responsible for our lifestyle.
I.E improved human productivity.

[Augi]

Originally Posted by ShawnLeary

I recommend hedging for monetary and market collapse with Bitcoi n.

There are hundreds of securities and commodities, more like 1000's that have a better correlation for hedging a the purchase of catamaran than bitcoin, in case you had to sell in a recession.

To carry a hedge costs money and there is an opportunity cost involved. Plus it is impossible to know, as already discussed, what the next recession will look like. So there is a good chance you will not only lose money on the boat but also the hedge.

Again if you have to worry about any of this you should not be buying even a $300K+ boat.

The way I would suggest approaching buying any boat is estimate what the worst case is that boat is going to cost you all in, at the end of the day then deduct 25% more based on the purchase price. Based on that if that does not bother you, and you can afford it and the benefit is more than the cost for you then proceed and buy. If not find a less expensive boat or just charter. Or get a small, fun inexpensive day sailor and charter when you what to cruise on something bigger.

As far as putting a hedge on as you propose, that does not make any sense for the reasons explained. You would be better off wisely investing the capital that would be needed to put the hedge on.

It is always better to keep your toys / fun separate from your investments. A boat is not an investment. A $300K+ cat is an expensive toy.

If it fits for your usage profile and you can live with the restrictions/rules doing a Moorings or Dream Yachts type deal with guaranteed income. With luck you can break even on the boat and get 6-12 weeks of sailing a year free + the cost of consumables and cleaning, + travel when you are sailing.