Down goes the Dow

Ghost of Igloi wrote:

You were the one that highlighted the "22% risk free rate" when there was plenty of other data/comments in the articles that showed other wise. Did you forget?

Oh, I highlighted it alright. Are you now saying you don't believe that? So why did you post those links then? Can you also highlight some of these plenty of data/comments from your articles that show otherwise? Thanks.

I'll take a look at those links GOI, grazie

geez I hate these awful little rallies after big drops. I am not encouraged.

"More than one in five homes in China's urban areas is vacant, and a current housing-price correction is putting additional pressure on the owners of such empty properties, according to a nationwide survey by researchers from China's Southwestern University of Finance and Economics."

In China homes, essentially condominium apartments, were a preferred investment over the last decade. In China if those properties are occupied (with renters) they lose their value. So, you had a massive bubble in unoccupied investment property in major Chinese cities. The government encouraged investment in stocks as a way to relieve pressure on this large segment of the Chinese economy. This is done in part by shifting liabilities held by the banking sector in the form of bond debt, to individuals in the form of stock equity. The construction boom in China is trending downward and that is why you have seen a dramatic drop in many commodity prices.

If I may...

Ghost is right about Chinese property ownership, and the attitude toward it held by both Chinese citizens, and the government.

******************

Recent events have pointed out a couple of important things to more astute observers:

1) don't believe the government when it comes to finances. Governments can, and do, change their minds. Look at the capital controls in Greece at the moment. Look at the illiquidity in Shanghai. You don't think they will come after "your" retirement accounts, and your wealth, under the guise of "capital control"? Think again.

2) diversify. And by that I mean really diversify, not the faux diversification pushed by the know-nothings. Out of the Chinese situation, what comes off looking good? Gold. Yes they are selling it because they need to make a buck, but that is the whole point--it is a different market. Diversify markets, not "securities". Buy art, if you can. Hold currencies. Hold metals. Hold productive land, if you can. You get the picture.

3) Different conduits are of critical importance, and each different market should have its own conduit. Trying to get around Greek capital controls by using Paypal? Good luck, it is shut down in Greece, except for receipt of incoming payments. The ease with which this channel, and other electronic channels, is controllable to the point of shutdown is not shocking, but it is definitely frightening. Where are you going to sell all that gold? How are you going to get actual currency? How do you hook up buyers and sellers for anything? What can be hyper-local and beyond easy regulation and control, like productive land and junk silver? At the very least, if you have any resources, diversify among jurisdictions. Hold some things here, some there. Spread things around, I mean really spread things around.

I feel for those of you who are "locked" into so-called "tax-deferred retirement accounts". I do, I feel for you--but never in history has actual diversification been easier to understand, easier to do, or cheaper to do.

It will also be important to hold things in places that large concerns cannot easily or quickly reach, while still making sure that you can secure them, and they can be managed for yield if need be.

I'm no right-wing nutjob...but then again neither are all those public-sector union hacks and retirees in Greece, and look at the situation they are in. China won't even let certain entities trade, and a whole bunch of stocks have suspended trading--this, after net gains of something like 40% IN ONE OR ONE-AND-A-HALF YEARS. Are you kidding me? I make 40% in one year, I want to realize some of those gains, and the government locks me out?

Yes I know it's China, but it doesn't matter. America criticizes China at the moment, because some of the big concerns are experiencing problems with their orders, but America would do the exact same things, the liberal elites thinking they know better than the unwashed masses.

And maybe they do, but ONLY IN THE AGGREGATE, and not at the individual level. China's efforts may work on the whole. BUT I am still an individualist. OK maybe I'm a throwback, but that's how it is. I don't care so much for the average general welfare, as I do for my own. I don't want to be dragged down the drain with a bunch of suckers, or have the fruit of my sacrifices and efforts distributed according to somebody else's decisions.

These are, and will continue to be, tough times. What is tough is to arrange one's affairs with an eye toward carnage, while still putting them to useful work.

It's tough. Although this is not the big one, recent events are not encouraging, at all.

Oh, 2 things I forgot:

1) always beware transaction costs; and

2) how are those static "investments" working out for everyone?

DJIA closes:

31 Dec 14 17,823

09 July 15 17,548 for a YTD loss of 1.54%

SP500 closes:

31 Dec 14 2,058

09 July 15 2,051 for a YTD loss of 0.34%

Oh, yes, I know, dividends. Or for those of you smart enough, world stocks. But how are your US equities doing?

Investment 101 wrote:

Buffett makes - or loses - money when he sells stocks. In between buying and selling, he may make money from dividends. But the big $$ isn't realized until the stock is sold.

Buffett has never sold a share of Berkshire Hathaway in his life.

Buffett has never received a single dividend from his Berkshire Hathaway stock.

Most (over 99%) of Buffett's assets are held within Berkshire Hathaway.

Guess Buffett never, ever made a single Billion (despite being worth $60+B), according to you guys.

"Common sense", and Investment 101, lmao. Keep studying.

Maserati wrote:

How are those static "investments" working out for everyone?

DJIA closes:

31 Dec 14 17,823

09 July 15 17,548 for a YTD loss of 1.54%

SP500 closes:

31 Dec 14 2,058

09 July 15 2,051 for a YTD loss of 0.34%

Oh, yes, I know, dividends. Or for those of you smart enough, world stocks. But how are your US equities doing?

Were you trying to make some sort of point?

Noper doper wrote:

Investment 101 wrote:

Buffett makes - or loses - money when he sells stocks. In between buying and selling, he may make money from dividends. But the big $$ isn't realized until the stock is sold.

Buffett has never sold a share of Berkshire Hathaway in his life.

Buffett has never received a single dividend from his Berkshire Hathaway stock.

Most (over 99%) of Buffett's assets are held within Berkshire Hathaway.

Guess Buffett never, ever made a single Billion (despite being worth $60+B), according to you guys.

"Common sense", and Investment 101, lmao. Keep studying.

Like other neophyte investors, you hold a common misconception that "worth" is the same as cash. It's not. To realize the worth of something, it must be sold. Buffett's stock is worth billions, but it's not money until he sells it.

Maserati,

Good post. Remember capital controls in Cyprus; accounts over 100k Euro 40% of the assests were confiscated. I remember an interview of a wealth Hong Kong gentlemen who lived through the Japanese occupation in WW II. He was asked about gold as an asset at that time. He replied diamonds were better because they could be more easily transported. Also they were handy as gifts to the ladies.

When you look at the full spectrum of government liabilities, current, future, and entitlements, one can easily hypothesize how events could progress toward a Greek like scenario. We already have it in one form or another with Detroit, Illinois and Puerto Rico to name a few.

Most people assume that institutions today will function in a similar way. That assumes we address the challenges that lie ahead and we learn to live within our means. I am skeptical about it being addressed prior to a crisis forcing some form of austerity. Our culture has turned from one of thrift and savings to " one life to live, live it."

Pointing Out the Obvious wrote:

Ghost of Igloi wrote:

You were the one that highlighted the "22% risk free rate" when there was plenty of other data/comments in the articles that showed other wise. Did you forget?

Oh, I highlighted it alright. Are you now saying you don't believe that? So why did you post those links then? Can you also highlight some of these plenty of data/comments from your article that shows otherwise? Thanks.

After yesterday's nearly 5% rise in the SCI, it looks like GOI might be able to save some face after stepping in shit earlier.

For you information I purchased YANG at 52.127 on 4/24 and sold half my position on 7/08 at 104.64. So you are again wrong.

How was I wrong. Your post actually supports my point.

OK. For your information on Wednesday 1350 of the 2900 listed companies were halted in trading by the companies themselves another 750 were halted by 10% limit down rules. The PBOC was buying stocks, and companies were forced to buy their own stock back. So I think it is naive to think it is over. But exercise your conviction and buy YING.

Yes, there was a point.

The point is to think, and act, for yourself.

Everything's OK...until it isn't.

And when it isn't, nobody will be there for YOU.

Of course it's not over. Did you even bother to read the articles you linked earlier? The whole point was government and industry intervention would TEMPORARILY cause a rebound.

Maybe if you'd read them, you wouldn't be a day late and a dollar short. Try to keep up, man!

if this *(ing rally *(*ing fades away to ^&^&ing nothing again I'll ^&^&ing &*&* ^&%%^

OK. That's how I doubled my money on my REALIZED investment. Thanks for pointing out the obvious.

It was certainly obvious to anyone who read that particular article you linked. But when I pointed it out to you, you acted as if it was heresy and accused me of cherry picking information from the article (the hypocrisy here is just too funny, but that's a story for another time). Anyway, I'm happy that you've seen the light.