Originally Posted by e1618978
It looks to be kind of a dangerous time to invest - if you invest in the US what if the dollar keeps on dropping? If you invest overseas what if the dollar rebounds? What about recession, inflation, rising interest rates, bad loans and problems borrowing money as a result (even for good companies)?
I am looking at commercial REITs - they seem low now, provide income, and have average returns greater than the stock market. The only stocks that look like good buys right now are Cisco and Starbucks.
What are you investing in/thinking of investing in?
It is a dangerous time to invest. I think that no matter where you invest you need to insure you have some sort of hedge against inflation because while the U.S. Dollar is a reserve currency and one we worry about depreciating quite a bit, there are no other currencies in the world that are not fiat. Every government is playing the paper money game and so it really comes down to which government lies the least. I know this sounds like a suck position and it is one. You note a lot of bad variables coming down the road here and what I want you to realize is that it likely isn't possible to traverse them all and keep the net-worth number going forward. Sometimes all you get to do is grab a bigger piece of a less expensive pie and then when things rebound, it is worth even more than before.
If you've been following the fed, you will note that they have dumped loads of dollars out there and even worked with other banks to insure the dollar hasn't been dumped. It still could be of course but as I'm fond of saying, you can turn the United States into Argentina, but those who attempt this end up being the Philippines. They can basically tolerate a slight negative return for now or take massive huge negative return when attempting to dump it.
A lot of good investing involves being a bit contrarian, at least in my view. You can Google and there were a number of articles recently noting that the Chinese economy was overstated by forty percent in size. To me this shows how BRIC ROW cannot save the U.S. from recession. We are going to sneeze, the world is
going to catch a cold. We are going to have a bout of stagflation for a while.
I'm looking for things that cash flow for me, hopefully and possibly in inflation adjusted currency. I've grabbed some Citibank(C), HTE and ABR along with cash earning interest. I hear a lot of played up talk about dividends being cut but I think a good chunk of that has already been priced in to companies that pay a good dividend and also I think it partly scaring off the sheep so others can jump in.
I've also been and I am still invested in real estate. Sure it is hard watching the net-worth number drop for now, but the properties I have cash flow and will continue to do so whether we live in inflationary, deflationary, dollar destroyed or whatever other times we live in. I'm looking to probably purchase another apartment building in 12-24 months.
I think it very important to have something paying you when the chips come down with regard to an economic downturn. A downturn by definition is basically a game of attrition. We are all going to see who can hold their breath the longest and the ones who can get to stay in the pool.
In rentals for example, I am seeing loads of houses on the market right now. Because I bought at the low end of the market, I can still under price these new landlords (home owners who can't sell) while providing better service AND still making more each month. This will probably be the first time in several years I cannot raise rents. However I can survive this because I am not the guy going -$200 to -$1200 a month on a house. Does it suck to still keep making the same amount when there is clearly inflation evident. Absolutely but my homes aren't the ones going back to the bank and if I can tighten that belt properly in terms of savings, I'll be buying those houses and apartment buildings from that bank for pretty cheap in 12-24 months. When the flush times return I'll have even more properties to give me an even more massive net-worth and when the lean times return after that, I'll be even better set up to survive yet again in terms of cash flow.
A lot of this is abstract. I hope it made some sense because it is some hard stuff to wrap your head around at times.