I wonder how many such investors are aware of potential steep declines in valuations but simply assume they will be bailed out in one way or another. I see this attitude even in seemingly shrewd investors such as those in the Bogleheads forums who assume that when things get "too bad," the politicians will naturally have to step in and save everyone. Do you see similar assumptions in your daily work, or perhaps I am wrong?
No doubt about it. A lot of "investing" today is just front-running fiscal and monetary policy. The Greenspan/Fed Put, which started in the late 1980s as a pacifier for the stock market every time there was a downturn, is alive and well and has moved into many other asset classes including real estate (which is also heavily subsidized through Fannie, Freddie and HUD).
Markets are simply unable to correct because sustaining asset bubbles is now a political imperative. Sad!
Greenspan was steeped in free market philosophy, the gold standard, etc., yet decided to betray everything he knew in order to fit into the mould of an establishment economist. To say he is/was a villain would be an understatement.
Thinking people should always look for the silver lining in every dark cloud. Those struggling to pay exploding rents should move to rural communities with declining populations combined with low rates of crime. Look for a modest fixer-upper on a larger piece of land to allow expansion. Live there modestly, pay cash as much as possible, and enjoy building your castle with your family. Most such communities are thrilled with new faces and have low levels of government meddling. Christian home schoolers have the greatest flexibility as they are not tied to a government building or government school calendar, and will have immediate contact with new friends through the countless Christian home school groups that exist today. Buy, don't rent. Land is cheap in rural communities. Fixer uppers or a pre-fab kit house are really inexpensive. Look at cabin kits or SIPs construction.
Great advice, Kent. In addition to the lower cost of living, there's often natural beauty in these areas and plenty of opportunities for families to actually get outside and do something (ride horses, tend cattle, hunt, fish, etc.).
Precisely. There is a quiet migration already, eg homesteaders, people home schooling and working from home where they please. It is easy to review county demographics, election results, and crime statistics to find safe havens. Home school communities provide a lot of information. There are countless vacant, solid buildings in towns affected by NAFTA and other bone-headed government treaties that encouraged manufacturers to outsource. Many buildings in small rural towns are built of stone and brick, and include apartments where a business owner can work and live.
I wonder how many such investors are aware of potential steep declines in valuations but simply assume they will be bailed out in one way or another. I see this attitude even in seemingly shrewd investors such as those in the Bogleheads forums who assume that when things get "too bad," the politicians will naturally have to step in and save everyone. Do you see similar assumptions in your daily work, or perhaps I am wrong?
No doubt about it. A lot of "investing" today is just front-running fiscal and monetary policy. The Greenspan/Fed Put, which started in the late 1980s as a pacifier for the stock market every time there was a downturn, is alive and well and has moved into many other asset classes including real estate (which is also heavily subsidized through Fannie, Freddie and HUD).
Markets are simply unable to correct because sustaining asset bubbles is now a political imperative. Sad!
That is especially ironic since Greenspan wrote about the Fed's role in inflating the stock market bubble in the 1920s. Good for thee but not for me.
Greenspan was steeped in free market philosophy, the gold standard, etc., yet decided to betray everything he knew in order to fit into the mould of an establishment economist. To say he is/was a villain would be an understatement.
Thinking people should always look for the silver lining in every dark cloud. Those struggling to pay exploding rents should move to rural communities with declining populations combined with low rates of crime. Look for a modest fixer-upper on a larger piece of land to allow expansion. Live there modestly, pay cash as much as possible, and enjoy building your castle with your family. Most such communities are thrilled with new faces and have low levels of government meddling. Christian home schoolers have the greatest flexibility as they are not tied to a government building or government school calendar, and will have immediate contact with new friends through the countless Christian home school groups that exist today. Buy, don't rent. Land is cheap in rural communities. Fixer uppers or a pre-fab kit house are really inexpensive. Look at cabin kits or SIPs construction.
Great advice, Kent. In addition to the lower cost of living, there's often natural beauty in these areas and plenty of opportunities for families to actually get outside and do something (ride horses, tend cattle, hunt, fish, etc.).
Precisely. There is a quiet migration already, eg homesteaders, people home schooling and working from home where they please. It is easy to review county demographics, election results, and crime statistics to find safe havens. Home school communities provide a lot of information. There are countless vacant, solid buildings in towns affected by NAFTA and other bone-headed government treaties that encouraged manufacturers to outsource. Many buildings in small rural towns are built of stone and brick, and include apartments where a business owner can work and live.