Massive US Bank Run + Investment Strategies

[Rock]

Do you have a reading problem? This isn't about me. On October 3, 2008, years before I joined this forum, you wrote:

Don't chase tail ends. BUY LOW SELL HIGH.

GOLD AND SILVER ARE OVER-PRICED AND YOU SHOULD WAIT UNTIL THEY DROP BEFORE BUYING. Keep a small % of your assets in precious metals (1-2%?) but not everything.

That advice is very simple and straightforward no matter what the context!!! Nothing to do with emergencies man. Come on and own up.

No, you're the one who ignored this part from this very thread:

I tell people to hold a small % of their assets in gold, but I dislike telling folks to sell, because if the purpose is to hold for emergencies, then selling may defeat the purpose. At one time I may have thought "buy low sell high". Now I think "buy low and hold" on gold.

And this earlier post, addressed to you:
viewtopic.php?p=105910&highlight=gold+e ... ies#105910

1. I hold gold as a rabbit hole and thus I do not sell outside of emergencies.
<snip>
I advocate holding a small % of liquid assets in gold and silver as a rabbit hole. If your strategy is to buy and sell gold for a profit in the short term, then that's a different goal. My preference is investments that generate dividend and income over those that do not.

I've been advocating holding 1%-2% of assets in gold on this forum since 2007 (viewtopic.php?p=1049&highlight=gold#1049). In the ~6 years since, I came to the realization that if you're holding it for emergencies, then selling it would defeat that purpose. If it was my intent to tell people to use gold as a primary or major investment, then I wouldn't have said only 1%-2%. My investment strategy today is simple:

1. Invest in cash-flow positive residential real estate for the long term.
2. Keep 1%-2% of your assets in gold for emergencies. (buy low and hold, not sell)
3. You (the target audience) most likely already own mutual funds through 401(k) and IRA accounts.

In other words, buy and hold, buy and hold, buy and hold. Those who follow this strategy will make no profit on their gold. I repeat, no profit. There is no "sell high".

1. The RE investments are cash flow, and thus rising/falling RE prices should not impact you as much. You sit back and collect rent, let your property manager do the work.
2. The gold is held for emergencies and not intended for sale. Rising/falling gold prices should not keep you up at night.
3. Your 401(k) and IRA accounts will most likely be kept until your retirement age (or 59 & 1/2 or whatever). Leave it alone.


If you speculate in gold (or stocks or commodities) and made a bundle, good for you. That is not the financial advice I give to people. The kind of financial advice I give today seek monthly income, which can be put into savings toward buying the next investment property. Those who wish to follow my advice will make NO PROFIT on their gold holdings -- the gold is neither a trade, nor an investment, nor a hedge against inflation. It's simply money for emergencies and preservation of wealth.

If your head is still stuck on the 2008 thread, feel free to bang your head there and feel proud about your investment choices. It's always easier to look back and say "wow I hit the jackpot" or "damn I should have put my money on that". I don't like to play that game. What I want is that stack of rent checks in the mail, every month, month after month.

1. If you've been advocating holding just 1-2% of assets in gold since 2007, your advice lead to people missing out on a huge multi-year bull market with 98-99% of their assets.

2. BTW, I don't own any mutual funds nor do I have a 401K so you're wrong on that front too.

3. Anyone who ignored your advice that "gold and silver are over-priced and you should wait until they drop before buying" by investing heavily into these metals (say 5-20%) and holding all the way until now would be sitting on huge profits, not 'no profits' as you call them. Just because you don't realize gains does not mean they aren't there. It just means they are so far unrealized so you can avoid being taxed on them. Profits can be realized or unrealized. According to your logic, if I bought an asset that later lost most of its value (say one of Donald Trump's casinos back when they first listed on the stock market) and never sold to this day, I would have no losses just because I had not realized them. Sounds like wishful thinking in this case. Enron also pretended a lot of such losses didn't exist but of course, it didn't stop them from destroying the company.

4. I read your earlier post. But it wasn't really very early. It was November 18, 2012 and just a distraction from your original 2008 advice. If you always felt that way, why did you much ever say that gold and silver were overpriced if your strategy is just to accumulate a tiny amount and hold forever or until emergency need arises. That "gold and silver are over-priced and you should wait until they drop before buying" is not consistent with what you are now claiming has always been your own personal strategy and advice to others.

5. BTW, why would you need gold for an emergency? You could always buy it when the need arose on the free market. Since you thought on October 3, 2008 that "gold and silver are over-priced and you should wait until they drop before buying", wouldn't it make sense to buy it later after prices dropped assuming the need arose? After all, that's what your advice suggests even tho it turned out to be so dead wrong. And you also mentioned in another post that if the shit really hit the fan in the USA and civilization ceased to function normally, gold would probably be pretty worthless. I'm not seeing a lot of consistency here.

6. Advising heavy exposure to RE investments (even rental properties) back in 2007 would have set those who followed your advice up for major exposure to the property crash. However, anyone who had 'shorted' your advice - sell all their real estate and buy up silver and gold, in a big way would have made out like a bandit, lol.

[momopi]

6. Advising heavy exposure to RE investments (even rental properties) back in 2007 would have set those who followed your advice up for major exposure to the property crash. However, anyone who had 'shorted' your advice - sell all their real estate and buy up silver and gold, in a big way would have made out like a bandit, lol.

If you had invested in RE in 2007, it's unlikely that you'd have made decent positive cash-flow. Let me clarify the assumptions:

1. The person is being advised to put 20%-25% down on a long-term investment property.
2. 75%-80% of the purchase is being financed with 30 year fixed rate loan.
3. Preferably, the investment property is a SFR in a neighborhood that'd be good for long-term investment, with density of no more than 8 SFR's per acre (approx.. 5,000+ sq ft lot homes).
4. The person's 401(k) account can be applied as asset reserve to qualify for the loan.
5. The property will rent for decent positive cash flow after expenses. If not, then you shouldn't buy it.

If you're a cash investor, flipper, or contractor looking for fixer uppers to fix and sell, this obviously does not apply to you.

Following my advice, say if you purchased a $120,000 property at cost of $30,000, and the monthly rental yield $400/month in positive cash flow after expenses (mortgage, property tax, HOA, insurance, manager, gardener, whatever). The market value of the house may go up or down in any given year.

The only "guarantee" is that if you have a paying tenant:
1. You'd make $4,800/year in cash flow from your $30,000 investment.
2. You'd likely receive this rent check month after month, year after year.
3. You'd build equity over 30 years by paying off the loan, or in fewer years if you decide to make an extra payment every year.

This means, if your $120k house falls to $80k market value, you should not lose sleep over it as you will continue to receive the rent check every month, month after month, year after year during the highs and lows of RE market.

I read your earlier post. But it wasn't really very early. It was November 18, 2012 and just a distraction from your original 2008 advice. If you always felt that way, why did you much ever say that gold and silver were overpriced if your strategy is just to accumulate a tiny amount and hold forever or until emergency need arises. That "gold and silver are over-priced and you should wait until they drop before buying" is not consistent with what you are now claiming has always been your own personal strategy and advice to others.

What you're doing is gloating over your successful bet on gold. It's always easier to say "you should have bought AAPL at $62/share like I did" when the stock hits $600. Or, "you shouldn't have bought it at $600" when it drops to $300. I don't play that game.

As I've already stated, "at one time I may have thought buy low sell high, now I think buy low and hold", you should come to the conclusion that if I thought it was OK to sell my gold holdings and make a quick profit, I no longer feel that way after coming to the realization that selling defeats the purpose of holding for emergencies, such as the Chinese Civil War scenario that I've already wrote in this thread. If you think you'd have the luxury to buy in a "free market" with currency under such condition, best of luck to you.

For your purpose, it would not have mattered if I wrote that statement in 2012 with gold at $1600, or in 2009 at $1100 or 2010 at $1400. Your purpose is to say "Nayk! You were wrong not to buy at $800 when it's now at $xxxx!" Obviously, you and I buy gold for difference purpose, and anyone who follow my advice today should understand that they will not make a profit in gold, or may ever use that gold in their lifetime. The purpose of having it, is so that when you need passage on a boat in a hurry, and the captain won't accept your money, your house, your farm, or your first born as payment, but will take your gold bar. If you feel all this is a "distraction", feel free to write whatever.

BTW, why would you need gold for an emergency? You could always buy it when the need arose on the free market. Since you thought on October 3, 2008 that "gold and silver are over-priced and you should wait until they drop before buying", wouldn't it make sense to buy it later after prices dropped assuming the need arose? After all, that's what your advice suggests even tho it turned out to be so dead wrong. And you also mentioned in another post that if the shit really hit the fan in the USA and civilization ceased to function normally, gold would probably be pretty worthless. I'm not seeing a lot of consistency here.

In a scenario where you're not bugging out and need to stay, you should maintain a supply of non-perishable food (i.e. Mountain House #10 cans freeze dried foods, 25+ year shelf life) and supplies such as ammunition, water purifiers, medicine, vitamines, hand tools, boxes of nails/screws, etc. to get by and trade for what you need, until civilization returns. If gold is still valuable, great. If not, then you might have to trade for strawberries with a bag of nails or spool of fishing line.

[Rock]

6. Advising heavy exposure to RE investments (even rental properties) back in 2007 would have set those who followed your advice up for major exposure to the property crash. However, anyone who had 'shorted' your advice - sell all their real estate and buy up silver and gold, in a big way would have made out like a bandit, lol.

If you had invested in RE in 2007, it's unlikely that you'd have made decent positive cash-flow. Let me clarify the assumptions:

1. The person is being advised to put 20%-25% down on a long-term investment property.
2. 75%-80% of the purchase is being financed with 30 year fixed rate loan.
3. Preferably, the investment property is a SFR in a neighborhood that'd be good for long-term investment, with density of no more than 8 SFR's per acre (approx.. 5,000+ sq ft lot homes).
4. The person's 401(k) account can be applied as asset reserve to qualify for the loan.
5. The property will rent for decent positive cash flow after expenses. If not, then you shouldn't buy it.

If you're a cash investor, flipper, or contractor looking for fixer uppers to fix and sell, this obviously does not apply to you.

Following my advice, say if you purchased a $120,000 property at cost of $30,000, and the monthly rental yield $400/month in positive cash flow after expenses (mortgage, property tax, HOA, insurance, manager, gardener, whatever). The market value of the house may go up or down in any given year.

The only "guarantee" is that if you have a paying tenant:
1. You'd make $4,800/year in cash flow from your $30,000 investment.
2. You'd likely receive this rent check month after month, year after year.
3. You'd build equity over 30 years by paying off the loan, or in fewer years if you decide to make an extra payment every year.

This means, if your $120k house falls to $80k market value, you should not lose sleep over it as you will continue to receive the rent check every month, month after month, year after year during the highs and lows of RE market.

I read your earlier post. But it wasn't really very early. It was November 18, 2012 and just a distraction from your original 2008 advice. If you always felt that way, why did you much ever say that gold and silver were overpriced if your strategy is just to accumulate a tiny amount and hold forever or until emergency need arises. That "gold and silver are over-priced and you should wait until they drop before buying" is not consistent with what you are now claiming has always been your own personal strategy and advice to others.

What you're doing is gloating over your successful bet on gold. It's always easier to say "you should have bought AAPL at $62/share like I did" when the stock hits $600. Or, "you shouldn't have bought it at $600" when it drops to $300. I don't play that game.

As I've already stated, "at one time I may have thought buy low sell high, now I think buy low and hold", you should come to the conclusion that if I thought it was OK to sell my gold holdings and make a quick profit, I no longer feel that way after coming to the realization that selling defeats the purpose of holding for emergencies, such as the Chinese Civil War scenario that I've already wrote in this thread. If you think you'd have the luxury to buy in a "free market" with currency under such condition, best of luck to you.

For your purpose, it would not have mattered if I wrote that statement in 2012 with gold at $1600, or in 2009 at $1100 or 2010 at $1400. Your purpose is to say "Nayk! You were wrong not to buy at $800 when it's now at $xxxx!" Obviously, you and I buy gold for difference purpose, and anyone who follow my advice today should understand that they will not make a profit in gold, or may ever use that gold in their lifetime. The purpose of having it, is so that when you need passage on a boat in a hurry, and the captain won't accept your money, your house, your farm, or your first born as payment, but will take your gold bar. If you feel all this is a "distraction", feel free to write whatever.

BTW, why would you need gold for an emergency? You could always buy it when the need arose on the free market. Since you thought on October 3, 2008 that "gold and silver are over-priced and you should wait until they drop before buying", wouldn't it make sense to buy it later after prices dropped assuming the need arose? After all, that's what your advice suggests even tho it turned out to be so dead wrong. And you also mentioned in another post that if the shit really hit the fan in the USA and civilization ceased to function normally, gold would probably be pretty worthless. I'm not seeing a lot of consistency here.

In a scenario where you're not bugging out and need to stay, you should maintain a supply of non-perishable food (i.e. Mountain House #10 cans freeze dried foods, 25+ year shelf life) and supplies such as ammunition, water purifiers, medicine, vitamines, hand tools, boxes of nails/screws, etc. to get by and trade for what you need, until civilization returns. If gold is still valuable, great. If not, then you might have to trade for strawberries with a bag of nails or spool of fishing line.

1. When you write about buying rental real estate, it at least seems you are talking from experience and have a solid well thought out strategy in place.

As for gold and silver, you can pretend all you like that you have a decent valuation technique. But at the end of the day, you know and I know that you were talking out of your ass. Silly to make such a bold call when you were just guessing. Of course pride will probably prevent you from ever admitting to this.

2. Once again, you are making wrong assumptions - me owning a 401 K, me owning mutual funds, and now, me gloating over a successful bet on gold. Did I ever recommend anyone buy gold here? Did I ever say that I bought gold back then? No and no! But I have warned repeatedly that market timing is a suckers game for most.

3. Yes, it matters very much when you wrote that statement. Timing is everything cus it was a timing call - don't buy now, buy later. If you had written the same thing before a gold and silver correction, major sell-off, or long term bear market, we wouldn't be having this conversation.

Instead, you probably would have piqued the curiosity of certain people who would be wondering, did you just get lucky or are you on to something. They'd be wondering how your other calls fared?

4. How do you know what I buy gold for or that I even buy gold at all? And by the way, your call on silver was even more off-the-charts wrong than your gold blunder. Nothing is obvious regarding my own strategies cus I've been pretty quiet so far. But at least I know better than to pretend I know something I don't nor go on to make bold predictions with certainty like I see some here doing.

5. Dude, do you really think you think that bit of gold you have saved up is going to get you passage on a slow boat to China when the shit hits the fan, lol? You've been reading too much of Taco's stuff.

[momopi]

1. When you write about buying rental real estate, it at least seems you are talking from experience and have a solid well thought out strategy in place.
As for gold and silver, you can pretend all you like that you have a decent valuation technique. But at the end of the day, you know and I know that you were talking out of your a**. Silly to make such a bold call when you were just guessing. Of course pride will probably prevent you from ever admitting to this.
2. Once again, you are making wrong assumptions - me owning a 401 K, me owning mutual funds, and now, me gloating over a successful bet on gold. Did I ever recommend anyone buy gold here? Did I ever say that I bought gold back then? No and no! But I have warned repeatedly that market timing is a suckers game for most.
3. Yes, it matters very much when you wrote that statement. Timing is everything cus it was a timing call - don't buy now, buy later. If you had written the same thing before a gold and silver correction, major sell-off, or long term bear market, we wouldn't be having this conversation.
Instead, you probably would have piqued the curiosity of certain people who would be wondering, did you just get lucky or are you on to something. They'd be wondering how your other calls fared?
4. How do you know what I buy gold for or that I even buy gold at all? And by the way, your call on silver was even more off-the-charts wrong than your gold blunder. Nothing is obvious regarding my own strategies cus I've been pretty quiet so far. But at least I know better than to pretend I know something I don't nor go on to make bold predictions with certainty like I see some here doing.
5. Dude, do you really think you think that bit of gold you have saved up is going to get you passage on a slow boat to China when the shit hits the fan, lol? You've been reading too much of Taco's stuff.

1. When I see my clients do large layoffs, I'll look into gold again. In the mean time, the higher prices means my clients are loaded, and I'd be happy to break wind out of my arse. If you or anyone else is buying gold at current prices, I thank you for supporting my industry.

2. 401(k) account is one of the most commonly used assets for asset reserve to qualify for mortgages. This also assumes that the person has a full time job with income to qualify for the loan, and the employer usually offer 401(k) accounts. If this doesn't describe your situation, then obviously you do not fit in the demographic group. I will correct myself by referring to the investor in the 3rd person instead of "you".

3. You think in terms of "huge profits", "unrealized gains", "huge multi-year bull market", and "pretending losses doesn't exist".

The investment strategy that I advocate, produce steady monthly passive income from residential properties. I advocate holding RE for long-term instead of flipping. Anyone who follow my advice will lose out on "huge multi-year bull market profits" because I tell them not to sell or refi for play money (like folks using their home equity as ATM in 2005). They may also lose value in their investments in a down market. The only somewhat guaranteed profit is from the rental income, which will arrive month after month, year after year in the mail box (or direct deposit). The investor can sleep soundly in the turbulence of RE markets, knowing that you'd receive monthly income like a pension check, in an era where 401(k)'s have replaced pensions.

While market conditions do affect the value of the property, the investor can safely ignore such things, and simply sit back, let the property manager deal with tenants, and collect the rent check every month. If the investor lives long enough, he/she might even pay off the loan. And what about the gold in the safety deposit box? Again, the investor can mostly ignore volatile market prices, since the small holding in gold is not intended to be sold for a profit. The gold is held for an unlikely emergency that may never occur in the investor's lifetime. Investors who are used to the idea of making "huge profits" in "huge multi-year bull markets" may be horrified at my suggestion that it's OK to be a knife catcher in the down market, so long as the investor continues to profit from rental income and doesn't sell the assets.

4. As stated, I will correct myself by using "investor" instead of "you".

5. "A bit of gold" bought passage for my grandfather's family, on a slow boat from China to Taiwan. In your case, it might buy passage from TW to PH if you need to bug out by boat in a hurry. If I read 'too much" into Taco's posts, then I probably wouldn't suggest investing in local RE. However, that doesn't preclude me from stocking adequate munitions and provisions either.

[Rock]

1. When you write about buying rental real estate, it at least seems you are talking from experience and have a solid well thought out strategy in place.
As for gold and silver, you can pretend all you like that you have a decent valuation technique. But at the end of the day, you know and I know that you were talking out of your a**. Silly to make such a bold call when you were just guessing. Of course pride will probably prevent you from ever admitting to this.
2. Once again, you are making wrong assumptions - me owning a 401 K, me owning mutual funds, and now, me gloating over a successful bet on gold. Did I ever recommend anyone buy gold here? Did I ever say that I bought gold back then? No and no! But I have warned repeatedly that market timing is a suckers game for most.
3. Yes, it matters very much when you wrote that statement. Timing is everything cus it was a timing call - don't buy now, buy later. If you had written the same thing before a gold and silver correction, major sell-off, or long term bear market, we wouldn't be having this conversation.
Instead, you probably would have piqued the curiosity of certain people who would be wondering, did you just get lucky or are you on to something. They'd be wondering how your other calls fared?
4. How do you know what I buy gold for or that I even buy gold at all? And by the way, your call on silver was even more off-the-charts wrong than your gold blunder. Nothing is obvious regarding my own strategies cus I've been pretty quiet so far. But at least I know better than to pretend I know something I don't nor go on to make bold predictions with certainty like I see some here doing.
5. Dude, do you really think you think that bit of gold you have saved up is going to get you passage on a slow boat to China when the shit hits the fan, lol? You've been reading too much of Taco's stuff.

1. When I see my clients do large layoffs, I'll look into gold again. In the mean time, the higher prices means my clients are loaded, and I'd be happy to break wind out of my arse. If you or anyone else is buying gold at current prices, I thank you for supporting my industry.

2. 401(k) account is one of the most commonly used assets for asset reserve to qualify for mortgages. This also assumes that the person has a full time job with income to qualify for the loan, and the employer usually offer 401(k) accounts. If this doesn't describe your situation, then obviously you do not fit in the demographic group. I will correct myself by referring to the investor in the 3rd person instead of "you".

3. You think in terms of "huge profits", "unrealized gains", "huge multi-year bull market", and "pretending losses doesn't exist".

The investment strategy that I advocate, produce steady monthly passive income from residential properties. I advocate holding RE for long-term instead of flipping. Anyone who follow my advice will lose out on "huge multi-year bull market profits" because I tell them not to sell or refi for play money (like folks using their home equity as ATM in 2005). They may also lose value in their investments in a down market. The only somewhat guaranteed profit is from the rental income, which will arrive month after month, year after year in the mail box (or direct deposit). The investor can sleep soundly in the turbulence of RE markets, knowing that you'd receive monthly income like a pension check, in an era where 401(k)'s have replaced pensions.

While market conditions do affect the value of the property, the investor can safely ignore such things, and simply sit back, let the property manager deal with tenants, and collect the rent check every month. If the investor lives long enough, he/she might even pay off the loan. And what about the gold in the safety deposit box? Again, the investor can mostly ignore volatile market prices, since the small holding in gold is not intended to be sold for a profit. The gold is held for an unlikely emergency that may never occur in the investor's lifetime. Investors who are used to the idea of making "huge profits" in "huge multi-year bull markets" may be horrified at my suggestion that it's OK to be a knife catcher in the down market, so long as the investor continues to profit from rental income and doesn't sell the assets.

4. As stated, I will correct myself by using "investor" instead of "you".

5. "A bit of gold" bought passage for my grandfather's family, on a slow boat from China to Taiwan. In your case, it might buy passage from TW to PH if you need to bug out by boat in a hurry. If I read 'too much" into Taco's posts, then I probably wouldn't suggest investing in local RE. However, that doesn't preclude me from stocking adequate munitions and provisions either.

1. Just as I anticipated, you are pretending to be on top of the gold game and acting smug about it instead of owning up to your public wealth destruction recommendations of 2007-8. BTW, what's your excuse for your 'silver is overvalued' call of October 3, 2008. For you, supply and demand doesn't seem to matter. Only extraction and other costs? Any price over those levels is over-valued, eh?

2. Only in the USA. By now, you like most other regulars here must know that I've lived my working life outside of States making money in non-US companies and lines of business. And when I've bought US real estate, I've done so with cash.

3. As far as investing is concerned, I think in many terms. I don't ignore supply and demand nor do I pretend that profits, unrealized gains, multi-year bull markets, or unrealized losses don't exist if they do. I never worked for Enron nor Donglong, lol. The concept of realized vs. unrealized is critical, not only for secondary market valuations, but also because actions can be taken on the unrealized parts of a portfolio to minimize long-term taxes in an incremental income tax system such as that in the USA. Effective tax minimization is one important tool used in wealth maximization.

You're talking a lot now about producing steady monthly passive income. Actually, that is also what I strive for personally. I'm not trying to win the lottery by buying the next Apple. As I've said, I believe market timing is suckers game for most. So I focus on accumulating assets which should in theory last almost forever (not much wasting like you get with something that pays dividends in excess of real earnings or has a short finite life) and can be expected to generate stable or growing income - farmland (back when it had a decent yield), structured financial products (I have one that generates 9.5%), low risk relatively high yielding long corporate and sovereign bonds in certain non US markets (both US$ and foreign currency) sometimes levered up modestly with low cost yield enhancing loan, and of course high yielding overseas real estate in strong rental markets (sometimes procured at opportunistic depressed prices). I also use brokerage accounts with big leverage to diversify out of currencies and assets to which I am overexposed to. Diversification is never perfect but it often helps.

So if you are really an income man like me, why did you ever go out on a limb and pretend to know that silver, and gold, were over-valued back in 2008 when he had no clue? Do you really think anyone here gives a damn what extraction costs are or whether your clients are laying people off? All that matters to secondary investors what their assets are worth on the open market.

4. Thank you. Please don't forget again.

5. Cycles and the like are never quite the same, especially major booms and catastrophes. Back in 2009, which some consider the worst crisis since the Great Depression, US$ gained a huge amount of value for several months (due to unwinding of leverage) and Treasuries went through the roof. Gold may or may not be of practical value to you when you have an emergency.

[Rock]

And what about the gold in the safety deposit box? Again, the investor can mostly ignore volatile market prices, since the small holding in gold is not intended to be sold for a profit. The gold is held for an unlikely emergency that may never occur in the investor's lifetime. Investors who are used to the idea of making "huge profits" in "huge multi-year bull markets" may be horrified at my suggestion that it's OK to be a knife catcher in the down market, so long as the investor continues to profit from rental income and doesn't sell the assets.

Anyone who followed your advice back in 2008 to NOT buy gold and NOT buy silver but wait for price to come down would still be waiting to this day. So their safety deposit boxes would still be empty and if that gold necessary emergency were to come, they would be caught empty handed. In way, you were the one recommending one engage in the knife catching game (or inverse of it). Why didn't you just recommend they accumulate some gold (1-2% of assets) right away and not worry about price. At least that would be consistent with what you are now claiming has been your strategy from the start. What you are going on and on about now contradicts what you recommended.

[momopi]

1. Just as I anticipated, you are pretending to be on top of the gold game and acting smug about it instead of owning up to your public wealth destruction recommendations of 2007-8. BTW, what's your excuse for your 'silver is overvalued' call of October 3, 2008. For you, supply and demand doesn't seem to matter. Only extraction and other costs? Any price over those levels is over-valued, eh?

Feel free to add the following to my "public wealth destruction recommendations":

1. Investors following my advice will make NO PROFIT on gold holdings
2. Investors following my advice will likely NEVER use their gold holdings in their lifetime (for emergencies)
3. Since the gold cost money to buy, safety deposit box cost money to rent, and gold doesn't generate dividends or income by simply holding it, the investor is likely to actually LOSE MONEY (like an expense) and never realizing the gains.
4. IMO silver is heavy to carry in event of emergency when the investor needs to bug out, so gold would be preferable. In other words, the investor would miss out on any profits from silver bull runs.
5. Investors following my advice would likely not sell RE holdings making cash flow, exposing them to potential sharp declines in RE market and losing hundreds of thousands of dollars in equity gains. Or, if the property is deep in negative cash flow, the investor might sell it and potentially lose out on gains from a bull market later.
6. Investors following my advice would also not buy and sell RE as flippers in a bull market, therefore missing out on potentially hundreds of thousands of dollars in flipper profits.

Hmm. let me add some more wealth destroying advice:

7. Investors following my advice would not use loan products such as 5/1 ARM loans, interest-only loans, etc. The only loan product that I recommend is fixed rate loans of 30 years or less (15, 10, whatever). Therefore, the investor may miss out on maximizing their investment potential in a bull market and flip a bunch of houses for quick profit.
8. Investors following my advice would seek SFR's with certain specifications, and miss out on attached condos which enjoy higher appreciation rates in an up market, missing out on the quick equity gains.
9. Investors following my advice would only buy if the property would generate decent cash flow, which means they would potentially miss out on properties that could be flipped for a quick profit. Instead, they'd have kept their cash in the bank, like those who might have followed my advice on gold, and miss out on making a profit in the bull run.


The ONLY profit that someone following my advice may receive, is a small stack of rent checks, with pitiful few hundred dollars of positive cash flow from each property, month after month, year after year. Hopefully, the investor will not use their RE equity like an ATM, and will save the additional income toward buying additional properties. Ideally, the RE investor should buy homes in need of some improvement, and bring value of the community by improving such properties instead of just profiting from it. However, for new/inexperienced RE investors, I think turnkey properties are OK to avoid the risks involved with home improvements.

Anyone following my wealth-destroying financial advice will miss out on the opportunity to reap hundreds of thousands of dollars in profit from violatile, speculative RE and precious metal markets. They will go to bed at night and pretend that unrealized gains, multi-year bull markets, and unrealized losses don't exist in the bull/bear makret. All they will get is maybe $4,800/year cash flow from a house, less if the house needs a new roof. They will also lose money by putting some gold bars in a bank safety deposit box that they may NEVER USE and NEVER PROFIT from.

2. Only in the USA. By now, you like most other regulars here must know that I've lived my working life outside of States making money in non-US companies and lines of business. And when I've bought US real estate, I've done so with cash.

My investment strategy assumes that the buyer will be putting 20%-25% down. This is what my broker sent me last night on current rates:

"With 20% down on investment there is a 3% fee being absorbed in the pricing below;
3.875% has a 1.046% discount, or $3,054 fee from Fannie
4.0% has a .546% discount or $1,594 fee from Fannie Mae.
4.125% has a .17% discount or $496 discount from Fannie Mae"

With 20%-25% down it's much easier to generate a higher rate of return vs. all cash purchase. There are banks that offer 30 year fixed rate loans for foreign income, which you probably have already looked into.

For others following this thread, take note that the 20% down for investors from Fannie Mae may not be avail later this year.

For you, supply and demand doesn't seem to matter. Only extraction and other costs? Any price over those levels is over-valued, eh?
<snip>
Why didn't you just recommend they accumulate some gold (1-2% of assets) right away and not worry about price.

1. As previously mentioned, cost of extraction, processing, and retail premium.

In RE I look at buy vs rent, and when it's cheaper to buy, it's probably a good time for me to start looking. Anyone following this smug wealth destroying advice will miss out on potentially huge profits from flipping homes in a speculative RE bull market.

In gold I look at the costs vs. price. When price falls toward cost, or even below cost, it's a good time for me to start looking. Anyone following this smug wealth destroying advice will miss out on potentially huge profits from a speculative gold bull market. Also, anyone following my advice will likely make NO PROFIT from the gold that they buy.

2. It's always easier to say "should have", "could have". Why couldn't I have told people to buy AAPL at $62/share? Why couldn't I have told people to invest in SFR's in Norwalk when they were $250k last year and now selling for $350k? No, I don't play that game.

Cycles and the like are never quite the same, especially major booms and catastrophes. Back in 2009, which some consider the worst crisis since the Great Depression, US$ gained a huge amount of value for several months (due to unwinding of leverage) and Treasuries went through the roof. Gold may or may not be of practical value to you when you have an emergency

Gold may not be of any practical value when you need to trade for strawberries with a bag of nails or spool of fishing line. Or, if you were in Zimbabwe in 2009, the guy selling bread may only accept gold. Or, after a major disaster, you might not be able to buy food with any currency, with local market shelves looted and empty.

[Rock]

1. Just as I anticipated, you are pretending to be on top of the gold game and acting smug about it instead of owning up to your public wealth destruction recommendations of 2007-8. BTW, what's your excuse for your 'silver is overvalued' call of October 3, 2008. For you, supply and demand doesn't seem to matter. Only extraction and other costs? Any price over those levels is over-valued, eh?

Feel free to add the following to my "public wealth destruction recommendations":

1. Investors following my advice will make NO PROFIT on gold holdings
2. Investors following my advice will likely NEVER use their gold holdings in their lifetime (for emergencies)
3. Since the gold cost money to buy, safety deposit box cost money to rent, and gold doesn't generate dividends or income by simply holding it, the investor is likely to actually LOSE MONEY (like an expense) and never realizing the gains.
4. IMO silver is heavy to carry in event of emergency when the investor needs to bug out, so gold would be preferable. In other words, the investor would miss out on any profits from silver bull runs.
5. Investors following my advice would likely not sell RE holdings making cash flow, exposing them to potential sharp declines in RE market and losing hundreds of thousands of dollars in equity gains. Or, if the property is deep in negative cash flow, the investor might sell it and potentially lose out on gains from a bull market later.
6. Investors following my advice would also not buy and sell RE as flippers in a bull market, therefore missing out on potentially hundreds of thousands of dollars in flipper profits.

Hmm. let me add some more wealth destroying advice:

7. Investors following my advice would not use loan products such as 5/1 ARM loans, interest-only loans, etc. The only loan product that I recommend is fixed rate loans of 30 years or less (15, 10, whatever). Therefore, the investor may miss out on maximizing their investment potential in a bull market and flip a bunch of houses for quick profit.
8. Investors following my advice would seek SFR's with certain specifications, and miss out on attached condos which enjoy higher appreciation rates in an up market, missing out on the quick equity gains.
9. Investors following my advice would only buy if the property would generate decent cash flow, which means they would potentially miss out on properties that could be flipped for a quick profit. Instead, they'd have kept their cash in the bank, like those who might have followed my advice on gold, and miss out on making a profit in the bull run.


The ONLY profit that someone following my advice may receive, is a small stack of rent checks, with pitiful few hundred dollars of positive cash flow from each property, month after month, year after year. Hopefully, the investor will not use their RE equity like an ATM, and will save the additional income toward buying additional properties. Ideally, the RE investor should buy homes in need of some improvement, and bring value of the community by improving such properties instead of just profiting from it. However, for new/inexperienced RE investors, I think turnkey properties are OK to avoid the risks involved with home improvements.

Anyone following my wealth-destroying financial advice will miss out on the opportunity to reap hundreds of thousands of dollars in profit from violatile, speculative RE and precious metal markets. They will go to bed at night and pretend that unrealized gains, multi-year bull markets, and unrealized losses don't exist in the bull/bear makret. All they will get is maybe $4,800/year cash flow from a house, less if the house needs a new roof. They will also lose money by putting some gold bars in a bank safety deposit box that they may NEVER USE and NEVER PROFIT from.

Point 1: That's true cus you told em not to buy, that it was overvalued, lol So yes, NO PROFIT

Point 2: Investors who followed your advice as on October 3, 2008, would have no gold (or silver) for emergencies cus you told em - buy low, sell high and both are overvalued!

Point 3: Now you're really flatulating here. If I bought a ton of gold back on October 3, 2008 when you told us not too, do you think I've lost money just because I've had to pay a bit for storage and received no dividends since then? The broader issue here is wealth creation, not fiat cash payments or disbursements. An investment portfolio has a certain value no matter what it's comprised of - cash and otherwise. Most would say I made a huge amount of money if I had done that, not lost money.

The fact that I had not sold any of the gold would only make matters better because I would not have had to pay any taxes on it so far. If I died, my beneficiaries would get it with a re-set base (permanent elimination of taxes) up to the multi-million dollar inheritance tax exemption.

Point 4: Yes, but remember, you also told em' gold was too expensive so they don't have any of that either.

5 - 9: Agree or not comments

[Rock]

Or, if you were in Zimbabwe in 2009, the guy selling bread may only accept gold.

Highly unlikely. Most people on the streets of Zimbabwe in 2009 would have no idea what physical gold looks like nor how to value it or gauge whether its even real or not. But they would know what a US$, a Euro, or even a South African Rand looks like and would be prepared to accept any of those currencies as payment as long as they could get away with it (not get caught by agents of government).

[momopi]

Point 1: That's true cus you told em not to buy, that it was overvalued, lol So yes, NO PROFIT

And if I had advised people to buy, following my wealth-destroying financial advice they would store it in a bank vault somewhere, never earning interest or dividend on it, and in 30 years they might say "your advice suck! I could have put that to better use here an there! You should have known better!" Or, if an emergency situation actually happened where the gold is needed, the same investor might say "your wealth destroying advice suck! why did you advise me to put so little in gold! You should have known better" That, is a game that I won't play. I'd rather tell people today that they'd make NO PROFIT with my method and have them call my words "a tale told by an idiot, full of sound and fury, signifying nothing."

On financial forums there is a divide on certain stocks, funds, precious metal, etc. On one side you have gold bugs yelling "look at the rising demand from Asia! Indian housewives for the win!", on the other you have log-cabin types yelling "gold should be valued at the historical value of xxx loafs of bread! Look it up on the Bible!" Hmm. How does a loaf of bread in Biblical times compare to a loaf of sliced white bread today? I have no idea. But I do know that people's behaviors are learned and mimicked from others, and in competitive societies people want to side with bulls so they can be winners. Wealth obtained through speculative bubbles are often treated like lottery winnings, of which 9 out of 10 power-ball lotto winners burn through their winnings in 5 years or less.

Ignorance (or pretending it doesn't exist) of unrealized gains is a good thing when our consumerist society teach people to think like this:
Apperciation is income
Credit is savings
Debt is wealth

When the flood gates are opened and any borrower is allowed to manage their interest rate risk with adjustable loans, the end result speaks for itself. But if I had advised someone to not buy an investment condo in 2003, what do you think he/she would've said to me in 2005? I was on the other side of the fence once (viewtopic.php?p=26454&highlight=roller#26454) and learned the hard way. Fortunately I only used 30 year fixed rate loans, which helped to limit the damage that I'd have inflicted on myself. I also stopped looking at gold as a speculative investment, and started treating it as paid catastrophic insurance.

Or, if you were in Zimbabwe in 2009, the guy selling bread may only accept gold.

Highly unlikely. Most people on the streets of Zimbabwe in 2009 would have no idea what physical gold looks like nor how to value it or gauge whether its even real or not. But they would know what a US$, a Euro, or even a South African Rand looks like and would be prepared to accept any of those currencies as payment as long as they could get away with it (not get caught by agents of government).

This was in circulation in early 2009, but I cannot say how prevalent it was across the country:

[Rock]

Point 1: That's true cus you told em not to buy, that it was overvalued, lol So yes, NO PROFIT

And if I had advised people to buy, following my wealth-destroying financial advice they would store it in a bank vault somewhere, never earning interest or dividend on it, and in 30 years they might say "your advice suck! I could have put that to better use here an there! You should have known better!" Or, if an emergency situation actually happened where the gold is needed, the same investor might say "your wealth destroying advice suck! why did you advise me to put so little in gold! You should have known better" That, is a game that I won't play. I'd rather tell people today that they'd make NO PROFIT with my method and have them call my words "a tale told by an idiot, full of sound and fury, signifying nothing."

On financial forums there is a divide on certain stocks, funds, precious metal, etc. On one side you have gold bugs yelling "look at the rising demand from Asia! Indian housewives for the win!", on the other you have log-cabin types yelling "gold should be valued at the historical value of xxx loafs of bread! Look it up on the Bible!" Hmm. How does a loaf of bread in Biblical times compare to a loaf of sliced white bread today? I have no idea. But I do know that people's behaviors are learned and mimicked from others, and in competitive societies people want to side with bulls so they can be winners. Wealth obtained through speculative bubbles are often treated like lottery winnings, of which 9 out of 10 power-ball lotto winners burn through their winnings in 5 years or less.

Ignorance (or pretending it doesn't exist) of unrealized gains is a good thing when our consumerist society teach people to think like this:
Apperciation is income
Credit is savings
Debt is wealth

When the flood gates are opened and any borrower is allowed to manage their interest rate risk with adjustable loans, the end result speaks for itself. But if I had advised someone to not buy an investment condo in 2003, what do you think he/she would've said to me in 2005? I was on the other side of the fence once (viewtopic.php?p=26454&highlight=roller#26454) and learned the hard way. Fortunately I only used 30 year fixed rate loans, which helped to limit the damage that I'd have inflicted on myself. I also stopped looking at gold as a speculative investment, and started treating it as paid catastrophic insurance.

Or, if you were in Zimbabwe in 2009, the guy selling bread may only accept gold.

Highly unlikely. Most people on the streets of Zimbabwe in 2009 would have no idea what physical gold looks like nor how to value it or gauge whether its even real or not. But they would know what a US$, a Euro, or even a South African Rand looks like and would be prepared to accept any of those currencies as payment as long as they could get away with it (not get caught by agents of government).

This was in circulation in early 2009, but I cannot say how prevalent it was across the country:

Your advice was a lot worse than just 'no profit'. Anyone who followed it would have lost out on a great wealth enhancing opportunity and not have any gold for emergencies to this day. Why didn't you just bite your tongue instead of pretending to know gold and silver were over-valued back in 2008?

Gold can be valued in terms of loaves of bread, oil, silver, the Dow, bushels of corn, US$/CHF/Euro, kernels of rice, or lots of other commodities, currencies, precious metals, foodstuffs, etc. They are all valid means of measuring the value but of course these measures are fluid as all items trade to some extent in secondary markets.

Your view of profit as just a cash dividend or realized capital cash gain is very myopic. If someone had bought gold 30 years ago, their US$ nominal wealth would have appreciated about 5% per annum on average. When they needed to use some cash from that nest egg, they could simple sell-off a tiny portion, the way my aunt used to do with her Microsoft shares which she bought way back (she's from Redmond),. Presto, there's your dividend. Or, for people who like to use options, they could sell some deep-out-of-the-money covered call options on their gold holdings with a 1-3 month duration for more virtual dividends. Of course, if the gold price ran-up and exceeded strike price plus premium, they would be covered but just miss out some extra wealth (gold holdings x (close price + premium - strike price)).

Remember something very important
Appreciation is not taxable as long as you don't realize it (or exchange it within certain period of time in case of certain qualified assets), but income is. Why pass on an estate which has been heavily taxed over the decades when it's possible to avoid most of these taxes? Tax minimization is a critical component of long term wealth creation. Get your head out of the short-term.

Credit is the mirror image of savings

Debt is negative wealth

Did you advise people not to buy investment condos in 2003? If so why? And why did you advise people not to buy gold and silver in 2008? I still don't know your direct answer to that?

Speaking of LT mortgages, wouldn't anyone who took out one of those when interest rates were a lot higher be hurting on the liability side? Longer term loans (those with higher durations) are actually riskier. Remember all the pain suffered by life insurance companies in Taiwan who issued guaranteed rate life 20 year policies in 80s and 90s when interest rates were a lot higher. If you take out a 20 year fixed rate mortgage and interest rates go down hard after that, the value of your liability shoots up. Now if you're lucky, the value of your collateral (the asset) will move up commensurately. But that's not always the case. OTH, an ARM interest rate would adjust down if interest rates fell (well not much room to fall now). But, longer term mortgages are also priced at a premium to shorter term ones (higher rate), right? Even with interest rates as low as they are now, you're not going to get anything much below 5% 30 year even if you have stellar credit and are using it for your own residence, right?

OK, you got me on Zimbabwe. I stand corrected.

[momopi]

Your advice was a lot worse than just 'no profit'. Anyone who followed it would have lost out on a great wealth enhancing opportunity and not have any gold for emergencies to this day. Why didn't you just bite your tongue instead of pretending to know gold and silver were over-valued back in 2008?.

"Losing out on a great wealth enhancing opportunity" is exactly what I'm preaching. And if we were to critique based on "could have", "should have" after the fact, then the investor should also complain "OK you said $828 was too much on Oct 3rd 2008, but why didn't you say buy at $712 on Oct 24?" In order to generate large speculative gains , you need a pool of buyers who'd move from calm -> enthusiasm -> greed -> mania. As I've previously stated, I look at gold from cost of production, processing, and retail premium. IMO looking at the cost of digging, crushing, and processing rocks is more grounded than looking to make a quick buck.

Your view of profit as just a cash dividend or realized capital cash gain is very myopic. If someone had bought gold 30 years ago, their US$ nominal wealth would have appreciated about 5% per annum on average. When they needed to use some cash from that nest egg, they could simple sell-off a tiny portion, the way my aunt used to do with her Microsoft shares which she bought way back (she's from Redmond),. Presto, there's your dividend. Or, for people who like to use options, they could sell some deep-out-of-the-money covered call options on their gold holdings with a 1-3 month duration for more virtual dividends. Of course, if the gold price ran-up and exceeded strike price plus premium, they would be covered but just miss out some extra wealth (gold holdings x (close price + premium - strike price))..

There are many different claims on the rate of return on gold. In one claim, the 35 year (1975-2010) rate of return, adjusted for inflation, is 1.56%/y. In another claim, gold has returned 4.6%/y since 1929. My wealth-destroying advice today is to not look at any rate of return or selling it for cash. The investor who holds the gold should curse me from beyond the grave for holding it until they died, passing it to their ungrateful spoiled brats. The said ungrateful spoiled brats should curse me for advising their parents to hold too much or too little gold (depending on current market price).

In the rare chance that the investor actually got to use the gold for its intended purpose (bugging out?), the investor should curse me for advising him/her to hold so little. And after bugging out, there is no guarantee that things will be better than staying, so if things didn't work out for the better, the investor should curse me for suggesting bug out as an option. In my earlier post, I mentioned about my grandfather bugging out of Manchuria for Taiwan with some gold. Back in Liaoning, Liaoyang he was from a prominent family and the kids were sent to Japan to study medicine at Kyoto Imperial University. After leaving for Taiwan he worked in a construction company and did OK. His sibling, who also studied medicine in Japan and opted to stay behind in Communist China became a prominent surgeon. Perhaps the communist party did not like the education background, but when you need surgery, you called him. He became somebody who was important and respected. My father's cousin would later follow the same footstep, went to study in Japan and return to work as a heart surgeon. My father, on the other hand, was counting inventory in the back of a supermarket.

As I've already stated, it's always easier to comment after the fact. Yes your aunt did great with Microsoft stocks, but Microsoft's success rests on top of the corpses of numerous other companies that have fallen. In early 1990's Word Perfect had half the world processing market, and in 1991 they had sales of $600 million with $200 million in profit. The company's future looked bright and they hired more employees. But very quickly the company went downhill and rest is history. As pensions have been largely replaced by 401(k) accounts, investors are told to manage their own retirement and given a selection of funds that leans heavily toward equity funds. Since companies usually offer matching funds on 401(k), it'd be a waste not to take it, but at the same time the investor is also exposed to volatile market conditions.

I recommend cash-flow RE because I think the only reliable (but imperfect) measure of residential RE is rental income. A house that can be rented to produce $400/month in income is better than one that breaks even, and one that breaks even is better than one that loses money every month.

Remember something very important
Appreciation is not taxable as long as you don't realize it (or exchange it within certain period of time in case of certain qualified assets), but income is. Why pass on an estate which has been heavily taxed over the decades when it's possible to avoid most of these taxes? Tax minimization is a critical component of long term wealth creation. Get your head out of the short-term.
Credit is the mirror image of savings
<snip>
Speaking of LT mortgages, wouldn't anyone who took out one of those when interest rates were a lot higher be hurting on the liability side? Longer term loans (those with higher durations) are actually riskier. Remember all the pain suffered by life insurance companies in Taiwan who issued guaranteed rate life 20 year policies in 80s and 90s when interest rates were a lot higher. If you take out a 20 year fixed rate mortgage and interest rates go down hard after that, the value of your liability shoots up. Now if you're lucky, the value of your collateral (the asset) will move up commensurately. But that's not always the case. OTH, an ARM interest rate would adjust down if interest rates fell (well not much room to fall now). But, longer term mortgages are also priced at a premium to shorter term ones (higher rate), right? Even with interest rates as low as they are now, you're not going to get anything much below 5% 30 year even if you have stellar credit and are using it for your own residence, right?

My wealth-destroying financial advise dislike chasing speculative appreciation. In Orange County, 2006, ~80% of the loans were ARM or interest only. When lending requirements were lowered and financially irresponsible folks are allowed to take greater risks with even bigger loans, it can be assumed that they'd spend it irresponsibly. Our culture today rewards financially irresponsible folks with victim status, with government bailouts paid for by the rest of the tax payers. While the lenders were responsible for giving money to anyone who is breathing, the borrowers should have known better than to buy something that they could not afford. I could go on and on here but it's pointless after the fact. I'll just say that I preach cash-flow and not "huge unrealized gains".

(See current rates at bankrates.com)

Did you advise people not to buy investment condos in 2003? If so why? And why did you advise people not to buy gold and silver in 2008? I still don't know your direct answer to that?

I 2003 I was the person on the receiving end of that advise, which I did not take and ended up selling couple properties that were negative cash flow later. I've already stated how I valued gold. If you refused to accept it, that's really your problem and not mine. And if you have your own predetermined answer, you're free to write the reply to your own question. Just as I thought my mentor was nuts in 2005, it's futile to tell someone that gold was overpriced when the price has risen significantly from greed.



Does my wealth-destroying financial advise make people lose out on "great wealth enhancing opportunities" and "huge unrealized gains"? Yes, that's exactly what I preach. I can't even guarantee that the gold would have any use in an emergency, or if it did have its use, the investor would be better off with or without it.

Is my wealth-destroying financial advise myopic? Of course it is. The investor's investment house should preferably generate cash flow from the first rent check. I don't guarantee that the home value or rent will go up next year. All I can suggest is that so long as the investor have a paying tenant, the investor can make cash flow today, next month, next year, year after year. Hopefully the investor will choose the neighborhood wisely instead of beach front by the Salton Sea. If the investor buy SFR in neighborhood with density of no more than 8 homes per acre, then maybe he'd dodge a bullet with condos when market crashes and owners are stuck with HOA special assessments.

Will my wealth-destroying financial advise cause the investor to get long-term, fixed rate mortgages at higher interest rate? Very possibly! If the investor bought a property with ARM loan he'd get lower interest rate and maybe buy bigger house, which may result in bigger unrealized gains in an up-market. Following my advice, the investor would lose out on such great wealth enhancing opportunities. But the investor's monthly payment will stay the same from year 1 to year 30.