How can I be mayor of Hooverville?
September 26, 2008 3:58 PM
I have a good, stable job with a disposable income. What should I be doing to take advantage of the troubled economy?
Buying stocks at a discount and/or putting money away in a (Roth) IRA. If you don't know anything about investing you should read up on it or get a fee-based (not commission-based) financial advisor.
posted by limeonaire at 4:19 PM on September 26, 2008
posted by limeonaire at 4:19 PM on September 26, 2008
Do whatever Warren Buffett does.
If you can't afford to buy a power company, then don't do that exactly.
posted by Airhen at 4:36 PM on September 26, 2008
If you can't afford to buy a power company, then don't do that exactly.
posted by Airhen at 4:36 PM on September 26, 2008
I hate to say this but if you have to ask this question here, then you don't know enough to really take advantage of what's going on in the economy right now.
Don't take advice on this stuff off the internet, you'll get hosed.
posted by 517 at 4:38 PM on September 26, 2008
Don't take advice on this stuff off the internet, you'll get hosed.
posted by 517 at 4:38 PM on September 26, 2008
Invest. Index funds. The more they talk about how bad the market is doing, the better a time it is for you to be putting money in to it.
posted by zazerr at 4:40 PM on September 26, 2008
posted by zazerr at 4:40 PM on September 26, 2008
So, first, do what jonmc sez.
Second, I assume you're looking to buy distressed assets. I expect we'll see a rise in bankruptcy auctions, the first cousin of the foreclosed home. You may be able to pick up hard goods for a discount, but there will be plenty of competition for them so expect to put in some time as well. But the most obvious distressed asset you could buy are homes. Cars, TVs and industrial machinery won't retain much value long-term unless you're looking to start a bakery with the assets of another bankrupt bakery or something similar.
Finally, buy stocks. Is AAPL really worth $40 less than it was 3 months ago? if you have a company that you feel you can go long on, now is the time. GOOG is down about 18%. I mostly follow tech, but it's a great time to look for bargains on the markets.Just don't expect it to make you rich in a week.
posted by GuyZero at 4:40 PM on September 26, 2008
Second, I assume you're looking to buy distressed assets. I expect we'll see a rise in bankruptcy auctions, the first cousin of the foreclosed home. You may be able to pick up hard goods for a discount, but there will be plenty of competition for them so expect to put in some time as well. But the most obvious distressed asset you could buy are homes. Cars, TVs and industrial machinery won't retain much value long-term unless you're looking to start a bakery with the assets of another bankrupt bakery or something similar.
Finally, buy stocks. Is AAPL really worth $40 less than it was 3 months ago? if you have a company that you feel you can go long on, now is the time. GOOG is down about 18%. I mostly follow tech, but it's a great time to look for bargains on the markets.Just don't expect it to make you rich in a week.
posted by GuyZero at 4:40 PM on September 26, 2008
Some ideas:
1) Buy mid-level luxury goods that you previously couldn't afford, because the demand for them has decreased. High-end luxury is probably recession-proof though.
2) Even better, travel above your means. Hotels and resorts cannot decrease the # of rooms if less people can afford to travel, so the only way for them to fill up is to decrease their prices. Note that this is helped by a worldwide depression, not just the US.
3) Buy a used SUV to keep around as a spare car. Foreclosures + high gas prices = selling for huge discounts. If you don't drive it much, what do you care how much gas costs?
4) Find places where people have likely been burned by people who reneged on debts or went bankrupt. Especially small businesses that can't take a hit like that. Walk in with cash and ask for a 25% discount. Contractors are the best place to do this normally... during a recession they'll be even better.
posted by smackfu at 4:45 PM on September 26, 2008
1) Buy mid-level luxury goods that you previously couldn't afford, because the demand for them has decreased. High-end luxury is probably recession-proof though.
2) Even better, travel above your means. Hotels and resorts cannot decrease the # of rooms if less people can afford to travel, so the only way for them to fill up is to decrease their prices. Note that this is helped by a worldwide depression, not just the US.
3) Buy a used SUV to keep around as a spare car. Foreclosures + high gas prices = selling for huge discounts. If you don't drive it much, what do you care how much gas costs?
4) Find places where people have likely been burned by people who reneged on debts or went bankrupt. Especially small businesses that can't take a hit like that. Walk in with cash and ask for a 25% discount. Contractors are the best place to do this normally... during a recession they'll be even better.
posted by smackfu at 4:45 PM on September 26, 2008
Stuff it beneath your mattress for a year or so and then in 2010 when the housing market completely craters (we ain't seen NOTHING yet), start snapping up rental properties and become a slumlord.
That's my plan, anyway.
posted by BitterOldPunk at 5:03 PM on September 26, 2008
That's my plan, anyway.
posted by BitterOldPunk at 5:03 PM on September 26, 2008
I would do a high yield checking account with a solvent bank. Schwab comes to mind. or a money market fund in a stable investment firm. Vanguard comes to mind.
I would avoid stocks, bonds, CD's, just get it in a place (see above) where you get like a 2.5% return.
Don't play around. These are scary times for the uninformed. Keep it real simple.
And, goes without saying, FIRST pay off all your unsecured debt, credit cards, and then buy out your car loan, any other lines of credit.
just do that. do not listen to any of the above posts.
Seriously
good luck, don't get fleeced. You will if you don't do the right thing, and you will not be happy.
Index funds suck unless you have a 25 year growth window, and you can feed it every week. WTF is an index gonna do to a poor hapless ignorant investor who buys into a market fund, initial 10000k investment, and the Dow goes to 700.? If you can't keep buying into it, you're f'd
posted by cvoixjames at 5:26 PM on September 26, 2008
I would avoid stocks, bonds, CD's, just get it in a place (see above) where you get like a 2.5% return.
Don't play around. These are scary times for the uninformed. Keep it real simple.
And, goes without saying, FIRST pay off all your unsecured debt, credit cards, and then buy out your car loan, any other lines of credit.
just do that. do not listen to any of the above posts.
Seriously
good luck, don't get fleeced. You will if you don't do the right thing, and you will not be happy.
Index funds suck unless you have a 25 year growth window, and you can feed it every week. WTF is an index gonna do to a poor hapless ignorant investor who buys into a market fund, initial 10000k investment, and the Dow goes to 700.? If you can't keep buying into it, you're f'd
posted by cvoixjames at 5:26 PM on September 26, 2008
What should I be doing to take advantage of the troubled economy?
Well, if you want to be literal to the question, and both cynical and risk-taking, you could always buy distressed and foreclosed real estate.
But I'd stick with the well-balanced set of assets that provide mid-range returns and the miracle of compound interest.
posted by Cool Papa Bell at 5:30 PM on September 26, 2008
Well, if you want to be literal to the question, and both cynical and risk-taking, you could always buy distressed and foreclosed real estate.
But I'd stick with the well-balanced set of assets that provide mid-range returns and the miracle of compound interest.
posted by Cool Papa Bell at 5:30 PM on September 26, 2008
It's hard to give you a clear answer without you describing what your current position and end-goals are. Different people have different definitions of advantage. However, I'm in the same position, so let me share what I've done.
1) I've paid down all my debt by saving money, being frugal with my spending, and paying off (or ahead) all of my debts. I've got $3500 left to go on my car. It will be gone by Xmas.
2) I'm saving six months of take-home income in a high interest savings account. If the interest rates of six-month CDs in an institution I trust ever passes the amount of interest that this savings account gets by more than 1% APY, I'll start doing a CD ladder with the money.
3) I'm continuing to contribute a couple hundred bucks a month to an IRA. The more money I can put in while the market's down, the better I'll be. I'm very conservatively positioned in index funds and value funds that have historically outperformed others in their category and the indexes themselves.
posted by SpecialK at 5:56 PM on September 26, 2008
1) I've paid down all my debt by saving money, being frugal with my spending, and paying off (or ahead) all of my debts. I've got $3500 left to go on my car. It will be gone by Xmas.
2) I'm saving six months of take-home income in a high interest savings account. If the interest rates of six-month CDs in an institution I trust ever passes the amount of interest that this savings account gets by more than 1% APY, I'll start doing a CD ladder with the money.
3) I'm continuing to contribute a couple hundred bucks a month to an IRA. The more money I can put in while the market's down, the better I'll be. I'm very conservatively positioned in index funds and value funds that have historically outperformed others in their category and the indexes themselves.
posted by SpecialK at 5:56 PM on September 26, 2008
I see two possibilities.
1) In a few (or ten) years, things will be more or less back to normal. Maybe we're just reliving the 1970s. In that case, index funds of stocks are a reasonable choice. They'll stand up better to inflation than cash or bonds because they're a stake in a real asset. There's less risk than in picking individual stocks unless you can afford to pick quite a few of them--but you're unlikely to beat the market anyway. My impression of metals and commodities are that they're for people who know a lot more about what they're doing than either of us. HDTVs and SUVs are also unlikely to hold their value (except as compared to the dollar-hah!), and given the risk of the next few years sucking shit through a tube, I'd postpone those purchases.
2) The world as we know it is coming to an end. Buy guns, watch Mad Max and take notes, weld armor plating to your car.
I think #1 is more likely than #2, but then I suppose Romans would have written the same thing here if Metafilter and index funds had existed in 409 AD.
posted by jewzilla at 6:30 PM on September 26, 2008
What should I be doing to take advantage of the troubled economy?
Invest in canned goods and shotguns.
posted by AsYouKnow Bob at 8:21 PM on September 26, 2008
Invest in canned goods and shotguns.
posted by AsYouKnow Bob at 8:21 PM on September 26, 2008
>Do whatever Warren Buffett does.
You can do that automatically by buying share of Berkshire Hathaway. The A side is at 135,000 per share. The B is 4,400 per share.
posted by megatherium at 8:34 PM on September 26, 2008
You can do that automatically by buying share of Berkshire Hathaway. The A side is at 135,000 per share. The B is 4,400 per share.
posted by megatherium at 8:34 PM on September 26, 2008
How about you don't take advantage, but give back? If your income is truly disposable, then why not find out what worthy causes exist in your area and contribute what you can?
posted by The Light Fantastic at 2:30 AM on September 27, 2008
posted by The Light Fantastic at 2:30 AM on September 27, 2008
There's no perfectly safe investment in this economy (or any other). Consider the following scenarios:
1.) The economy slows, people stop spending, money gets tight and the stock market tanks. In this scenario, the correct strategy would have been cash.
2.) The economy slows, people stop spending, so the government literally pours money into the economy with negative real interest rates and helicopter drops. The economy picks up (at least in nominal dollars) but at the cost of high inflation. In this scenario, cash (and fixed interest investments) were the wrong investments.
My advice would be to make sure you have several months of emergency funds, then start maxing out your Roth IRA.
posted by justkevin at 8:10 AM on September 27, 2008
1.) The economy slows, people stop spending, money gets tight and the stock market tanks. In this scenario, the correct strategy would have been cash.
2.) The economy slows, people stop spending, so the government literally pours money into the economy with negative real interest rates and helicopter drops. The economy picks up (at least in nominal dollars) but at the cost of high inflation. In this scenario, cash (and fixed interest investments) were the wrong investments.
My advice would be to make sure you have several months of emergency funds, then start maxing out your Roth IRA.
posted by justkevin at 8:10 AM on September 27, 2008
I hear they're used to deliver emergency piles of cash to banks, box, since it's become too dangerous these days to land a C-130. The mobs of bankers are simply impossible to contain.
Humberto Cruz: Now's a good time to save money
I am as certain as I am of anything that if had I religiously followed Cruz's advice over the years I would now be rich. He's a former Orlando Sentinel editor who built up a very comfortable nest egg for his retirement using simple, low-risk methods such as really truly socking away money in bank accounts for years on end. You know, the way people used to get rich before they could HELOC their way to three SUVs and a backyard pool.
posted by dhartung at 2:52 PM on September 27, 2008
Humberto Cruz: Now's a good time to save money
I am as certain as I am of anything that if had I religiously followed Cruz's advice over the years I would now be rich. He's a former Orlando Sentinel editor who built up a very comfortable nest egg for his retirement using simple, low-risk methods such as really truly socking away money in bank accounts for years on end. You know, the way people used to get rich before they could HELOC their way to three SUVs and a backyard pool.
posted by dhartung at 2:52 PM on September 27, 2008
to the OP: I don't think you mean "Disposable" income!
I think you mean "Discretionary." As in at your discretion you can spend it, cuz you are "above water," bills paid, house paid, no debt, no liens, no obligations.
this thread is really not making sense, in that We don't know if you are really aware of what your extra money represents.
anyway, a place like this is not a source for answers relating to financial advice. You have not even chimed in on any of the responses, so I guess you just are sorta fishin' for fun, trolling the waters.
" I have a 100k dollars which I don't care about, how do I dispose it"
posted by cvoixjames at 3:48 PM on September 27, 2008
I think you mean "Discretionary." As in at your discretion you can spend it, cuz you are "above water," bills paid, house paid, no debt, no liens, no obligations.
this thread is really not making sense, in that We don't know if you are really aware of what your extra money represents.
anyway, a place like this is not a source for answers relating to financial advice. You have not even chimed in on any of the responses, so I guess you just are sorta fishin' for fun, trolling the waters.
" I have a 100k dollars which I don't care about, how do I dispose it"
posted by cvoixjames at 3:48 PM on September 27, 2008
no flame intended, bingo.
I wish I was in your position. I am learning the hard way what a bear market can do to your money invested in stocks. I have lost about 15k this year just by not paying attention, chasing sectors, feeding an index fund that just would evaporate as the market dropped, and now we have the fear factor. So my discretionary cash is gone. If I knew now what I did not know then, I would have bought a Jeep and a plasma TV.
At least I can enjoy those items, but the money is gone. Tuition for school of investing. I have learned, its like Vegas, you just can't beat the house
posted by cvoixjames at 7:35 AM on September 28, 2008
I wish I was in your position. I am learning the hard way what a bear market can do to your money invested in stocks. I have lost about 15k this year just by not paying attention, chasing sectors, feeding an index fund that just would evaporate as the market dropped, and now we have the fear factor. So my discretionary cash is gone. If I knew now what I did not know then, I would have bought a Jeep and a plasma TV.
At least I can enjoy those items, but the money is gone. Tuition for school of investing. I have learned, its like Vegas, you just can't beat the house
posted by cvoixjames at 7:35 AM on September 28, 2008
A helicopter drop is an economists' term for injecting money into the economy via more direct and non-traditional means when normal monetary policy tools like interest rates fail. It's meant to conjure up the visual of throwing fistfuls of money from a helicopter, but is not meant literally. See the wiki on Liquidity Trap.
posted by justkevin at 8:25 AM on September 28, 2008
posted by justkevin at 8:25 AM on September 28, 2008
« Older No TV! Online streaming for the presidential... | I really don't want to go over my limit. Newer »
This thread is closed to new comments.
(It couldn't hurt)
posted by jonmc at 4:15 PM on September 26, 2008