What Is Your Financial Plan For This Meltdown?

[Contrarian Expatriate]

With several major financial markets (equities, crytpo, precious metals) poised to trend downward for the foreseeable future, what is your financial plan to best take advantage of it?

Warren Buffett always advises never to LOSE money and I agree. While certain of portions of your holdings might be going down, your overall portfolio should be going up or, at worst, remaining steady if you have spread your assets wisely enough. Private equity real estate has not been affected (knock on wood) and I have been steadily moving my holdings there for the last year.

I have long considered the stock market to be a legal, regulated Ponzi scheme, and after reading Tan Liu's book, The Ponzi Factor, I decided to go 90% away from stocks. Of those I kept, there are monthly dividend payers only. However, even though the market Ponzi is collapsing as they always do, there will still be opportunities for us vultures to swoop down and pick from among the corpses in the coming months.

Since no one can time the market, I suggest that guys start slowly and methodically dollar cost averaging into the markets starting now. Your time horizon should be at least a year and a half and no more than 3 years so don't over do it early. Again, I recommend dividend paying stocks ONLY so that at least you are getting paid while your vulture strategy comes into fruition.

I am hoping that this is the mother of all buying opportunities in the making and that guys are at least positioning themselves to make even small advantage of it.

When there is blood in the water, that is when you should go diving to get your meat. It's a very contrarian investing strategy and no pun was intended!

[WorldTraveler]

So you recommend Tan Liu's book The Ponzi Factor? We waiting a hell of a long time for this correction. How are you investing in Private Equity Real Estate? What is it: house or REITs or something else.

[Cornfed]

I'm glad I kept my money in a savings account in the bank. Does anyone have any specific recommendations going forward?

[Contrarian Expatriate]

So you recommend Tan Liu's book The Ponzi Factor? We waiting a hell of a long time for this correction. How are you investing in Private Equity Real Estate? What is it: house or REITs or something else.

That book was cathartic for me because it confirmed what I already believed but no one else was talking about or acknowledging. He breaks thru the groupthink that causes investors to go down with the ship like they have been the last few weeks. Consider the audiobook on Audible if you can.

I have been waiting for at least 5 years but now it is here! Once the major indexes reach the -30% point, that's when I'll start lightly dollar-cost averaging back in. The average bear market lasts for 3 years and this one was LOOONG overdue.

I no longer purchase investment properties, so I am spread among Fundrise, Cardone Capital, and AHP Servicing, Cadre, and GoodEgg Investments. Cardone and AHP are great because they pay their dividends each month versus each quarter.

Stay far, far away from publically traded REITS because they move with the same winds as the stock market and they are all significantly down already. Private equity REITS are holding up as strong as ever because they pay their dividends from rents which stand to increase as people will surely stop buying homes as much now.

[Cornfed]

Private equity REITS are holding up as strong as ever because they pay their dividends from rents which stand to increase as people will surely stop buying homes as much now.

So correct me if I’m wrong, but your logic seems to be that people are too poor to buy homes, so they have to rent. This means more renters, thus by the law of supply and demand the rental price must increase, despite there being the same number of dwellings and people in general being poorer?

[xiongmao]

I was too overweight stocks and have lost a lot. However when I was in Thailand I did at least switch into less risky stuff. I'm hoping for a substantial dead bat bounce this week so I will sell into strength.

Actually since I just sold my apartment I have 4 years salary banked which is just as well as it will probably take 4 years to find a job lol.

I could have kept my apartment but who knows if the tenant would pay. Maybe rent holidays are coming?

I think that the market will either tank as corporates go bust and unemployment surges to 20% or they'll print so much money that it will go to the moon but in reality it won't be worth much.

Right now you need 3 things: cash, food and medicine. As anyone who is still in China will tell us, the quarantine will last at least 2 months so that is how much food you need, and you need to accumulate it in the next 2-3 days.

To get the TRUE number of infectees, the magic multiplier is 27. This is based on reported/true infection rates in China.

[Shemp]

I was too overweight stocks and have lost a lot. However when I was in Thailand I did at least switch into less risky stuff. I'm hoping for a substantial dead bat bounce this week so I will sell into strength.

You haven't lost anything until you sell. Market value drops of 20% are frequent with stocks. Bull run since 2009 is an anomaly. Only thing different this time is how fast the drop was. I'm looking to buy more stocks at some point, but USA stocks are still not cheap overall. Some sectors might be cheap, like oil, coal, travel related. Non-USA stocks are approaching cheap.

No need to stockpile food. Either government is trying to kill us all or not. If yes, situation is hopeless. If no, they will ensure a food supply.

Main thing is don't get sick or hurt from something unrelated to the virus so that you are forced into those hellish emergency rooms.

I agree with HouseMD that this virus will be here indefinitely, added to the long list of existing viruses such as the various flus that can kill weaklings. So don't let yourself get weak. Get plenty of sleep, in particular. (Plenty of sleep is exactly what those doctors and nurses in the Italy emergency rooms are not getting, I might add. Once the panic is over, I expect those overworked doctors and nurses to get blamed for not doing enough and killing all the old people with negligence.)

[Light]

Private equity REITS are holding up as strong as ever because they pay their dividends from rents which stand to increase as people will surely stop buying homes as much now.

So correct me if I’m wrong, but your logic seems to be that people are too poor to buy homes, so they have to rent. This means more renters, thus by the law of supply and demand the rental price must increase, despite there being the same number of dwellings and people in general being poorer?

In America's version of capitalism that's how the economic system works. More people will be poorer and there are already many people too poor to ever buy a home in America. Some people that become too poor will not be able to afford to rent but it doesn't matter to the businesses.

Germany's DW News made a documentary not too long ago about the homeless crisis in California and the United States. Some homeless in California have jobs but cannot afford to rent a place and are forced to live in their car.

[jamesbond]

Get plenty of sleep, in particular. (Plenty of sleep is exactly what those doctors and nurses in the Italy emergency rooms are not getting).

I agree, sleep rejuvenates your immune system which in turn keeps you healthy and able to fight viruses. Too many Americans are sleep deprived and only get about six hours of sleep a night.

A good thing to do (especially on the weekends when you don't have to work) is put ear plugs in your ears, darken your bedroom and don't set your alarm. You will wake up when your body has gotten all the sleep it needed (you might wind up sleeping 10 or 12 hours but that's OK, your body needed it).

[Shemp]

Trying to buy/sell stocks on the basis of value is hopeless. The crowd ALWAYS bids prices up too high when euphoric, then drives prices too low during panic. So be alert for signs of capitulation before buying. That is several months off, IMO. When you see signs of total capitulation, and values are excellent, then go 100% in. Prices might drop further but it doesn't matter, they will rebound because they will be way below fair value. Dollar cost averaging doesn't protect from this and distracts from looking for capitulation. And no, dividends mean nothing. Total shareholder yield (dividends plus undiluted buybacks plus increase in book value) is the metric of interest. In another words, as long as the company didn't piss their profits away on pay to top execs or bad investments, shareholders still own all those profits. It's quite stupid to prefer dividends if you're a taxable investor. The reason you hear small investors chattering about dividends is that most small investors are quite stupid.

[WorldTraveler]

Trying to buy/sell stocks on the basis of value is hopeless. The crowd ALWAYS bids prices up too high when euphoric, then drives prices too low during panic. So be alert for signs of capitulation before buying. That is several months off, IMO. When you see signs of total capitulation, and values are excellent, then go 100% in. Prices might drop further but it doesn't matter, they will rebound because they will be way below fair value. Dollar cost averaging doesn't protect from this and distracts from looking for capitulation. And no, dividends mean nothing. Total shareholder yield (dividends plus undiluted buybacks plus increase in book value) is the metric of interest. In another words, as long as the company didn't piss their profits away on pay to top execs or bad investments, shareholders still own all those profits. It's quite stupid to prefer dividends if you're a taxable investor. The reason you hear small investors chattering about dividends is that most small investors are quite stupid.

I agree 100% with you that the market is almost always at extreme level. I used to try to use fundamentals and found nobody else one. People were still buying when the market or a company when it was way overpriced. So it's very easy to get out way too soon. Now everyone is selling the market like the world is coming to an end. Yes once we hit a bottom their will be tremendous opportunities.

So how do you determine Total Shareholder Yield. Is their a published figure of this, or a way to screen for it? Is their an ETF or mutual fund that buys stocks like this? I'm holding dividend producing stocks and they dropped 15% in the last two weeks.

How far do you think the market will fall from peak to trough? Will it be bigger than 2001 and 2008. Will it be as big as 1929? Anybody have any thoughts? Long time Bears Jim Rogers and Ray Dalio didn't predict the crash. Nouriel Roubini did predict it. The people on this board probably know as much as the experts.

[Contrarian Expatriate]

I used to try to use fundamentals and found nobody else one. People were still buying when the market or a company when it was way overpriced.

I think you would be likely most benefit from Tan Liu's book. Fundamentals and valuations do not determine stock prices. That is just how Wall Street PREACHES so there is some measure of predictability in an otherwise unpredictable market.

So how do you determine Total Shareholder Yield. Is their a published figure of this, or a way to screen for it? Is their an ETF or mutual fund that buys stocks like this? I'm holding dividend producing stocks and they dropped 15% in the last two weeks.

Companies publish their stock yields and ETFs do as well. Most financial websites carry this information. You are actually smart to hold dividend paying stocks because of the extra shares you'll be buying now (so long as you reinvest).

How far do you think the market will fall from peak to trough? Will it be bigger than 2001 and 2008. Will it be as big as 1929?

I think it will fall much, much farther because this is way early in the game. Once we are at about 50% down, I will begin to dollar cost average back in because no one can call the bottom accurately.

Anybody have any thoughts? Long time Bears Jim Rogers and Ray Dalio didn't predict the crash. Nouriel Roubini did predict it. The people on this board probably know as much as the experts.

No one can predict crashes accurately and those who were correct were simply lucky. Peter Schiff "predicted" the crash in 2008, but he has been very incorrect about everything ever since.

[WorldTraveler]

I used to try to use fundamentals and found nobody else was. People were still buying when the market or a company when it was way overpriced.

I think you would be likely most benefit from Tan Liu's book. Fundamentals and valuations do not determine stock prices. That is just how Wall Street PREACHES so there is some measure of predictability in an otherwise unpredictable market.

So how do you determine Total Shareholder Yield. Is their a published figure of this, or a way to screen for it? Is their an ETF or mutual fund that buys stocks like this? I'm holding dividend producing stocks and they dropped 15% in the last two weeks.

Companies publish their stock yields and ETFs do as well. Most financial websites carry this information. You are actually smart to hold dividend paying stocks because of the extra shares you'll be buying now (so long as you reinvest).

How far do you think the market will fall from peak to trough? Will it be bigger than 2001 and 2008. Will it be as big as 1929?

I think it will fall much, much farther because this is way early in the game. Once we are at about 50% down, I will begin to dollar cost average back in because no one can call the bottom accurately.

Anybody have any thoughts? Long time Bears Jim Rogers and Ray Dalio didn't predict the crash. Nouriel Roubini did predict it. The people on this board probably know as much as the experts.

No one can predict crashes accurately and those who were correct were simply lucky. Peter Schiff "predicted" the crash in 2008, but he has been very incorrect about everything ever since.

I watched the video and it was excellent. I plan to watch all his other video too.
"The scheme runs into problems when just enough investors try to get their money out at the same time." This is what is happening now to the Ponzi scheme. Don't you think that Crypto-currency (Bitcoin, etc) is a giant Ponzi scheme?

Yes, I agree the market is unpredictable. It's all emotion. I will check out Tan Liu's book.

So "Total Shareholder Yield" is just the "Yield" on the stock summary page?

I think you are smart buy back in once it is down 50%. I probably will too. I believe the market will fall that far. We may get there pretty soon. The longer this last, the further the market will fall. Peter Schiff is always a bear like Jim Rogers and Nouriel Roubini so eventually they always get it right and call a bear, because they are always bearish even when the market is in a new bull market. Kind of like a broken clock is right twice a day. Did you ever read Robert Prechter, "Conquer the Crash" in 2003? He believed we were at the end of a Super Cycle. He made me more bearish than anyone and of course he was wrong and we had many up years since his book.

Do you think those Private Real Estate investments won't be effected by the crash? Right now Gold is also falling too. Just about everything is.

[Contrarian Expatriate]

So "Total Shareholder Yield" is just the "Yield" on the stock summary page?

Yes. In only rare cases do stocks pay out anything in addition to dividends and most of them lump it all under yield percentage.

Do you think those Private Real Estate investments won't be effected by the crash? Right now Gold is also falling too. Just about everything is.

The entire economy will be affected by the crash. However, purely RESIDENTIAL rental income investments are likely to go up because fewer people will be buying houses and the higher demand for rentals will lift the prices. Commercial real estate holdings will likely go down because businesses are already closing operations and there will be less demand.

[Shemp]

So how do you determine Total Shareholder Yield. I

Of course they don't publsh this, because the difference between E/P and total shareholder yield reflects stealing (excess pay to executives, whether cash pay, pay via shares, deferred pay, share options, etc), incompetence (bad investments) and bad accounting (under depreciation) on the part of executives. Nor does dividend yield help screen, like all these stupid small investors think, because the company can simply borrow to pay big dividends, even when actual total shareholder yield is negative. This is exactly what those shale oil MLPs did, for example.

Anyway, only professionals should own individual stocks. Just buy indexes. Suffice to say that the whole USA market continues to be expensive and has been since 2016 at least. Non-USA stocks are cheaper, but I'm just waiting until the whole world is cheap. If you want cheap USA stocks now, look at coal, oil and gas, travel.and hospitality, etc.