# The Coming Great Crash of 2010!!



## Belguy (May 24, 2010)

This European debt mess is spreading and getting worse. Get ready for the next financial crisis!!

http://www.aolnews.com/money/article/new-financial-crisis-may-be-brewing-analysts-warn/19516219


----------



## ghostryder (Apr 5, 2009)

Belguy said:


> This European debt mess is spreading and getting worse. Get ready for the next financial crisis!!
> 
> http://www.aolnews.com/money/article/new-financial-crisis-may-be-brewing-analysts-warn/19516219



OMG!!! AOL still exists??


----------



## bean438 (Jul 18, 2009)

The great crash AKA wonderful buying opportunity is coming again? Bring it!


----------



## w0nger (Mar 15, 2010)

i'm definitely much more prepared if it does happen again to take advantage of the buying opportunities...


----------



## mogul777 (Jun 2, 2009)

ghostryder said:


> omg!!! Aol still exists??


lol.


----------



## HaroldCrump (Jun 10, 2009)

w0nger said:


> i'm definitely much more prepared if it does happen again to take advantage of the buying opportunities...


The problem with these types of perpetual "buying opportunities" is that it may never end and there may never be a "selling opportunity" for the securities you are buying on firesale today.
There are two extreme views these days - one, this is the end of the world and everything is going to fall apart. So buy guns, cans of tuna and yes, gold.
Two, this is business as usual and soon everything will be back to normal and we can all go back to sleep again. In the meantime, buy what you can.

I personally think there is a structural shift in the making.
Eventually, the dust will settle and the modern capitalistic, social democratic system will continue.
However, there may be a qualitative change in the dynamics of our social economy.
Therefore, what investment we make today may not represent the growth paths of the future.
They may stagnate or become totally irrelevant.
We make assumptions today about the growing demand for oil.
Will that continue, or will our reliance on oil reduce significantly?
We make assumptions today about high-tech companies continued growth (Apple, RIM, Micro$oft, etc.)
Will that pan out or will this field (and hence the companies) stagnate and wither away?

By buying stocks and industry sectors that have performed well in the last 10 years or so (finance, oil, energy, tech) we may be chasing ghosts of the past.
I obviously don't know the right answer but I am personally wary of considering these market dips as buying opportunities for stocks that have had a bull run for the last 10 years.


----------



## el oro (Jun 16, 2009)

Gold and guns are a hold. Tuna (agriculture) and nat gas are buys! Crash or not, people will eat food and heat their homes... among other bullish factors.


----------



## bean438 (Jul 18, 2009)

HaroldCrump said:


> The problem with these types of perpetual "buying opportunities" is that it may never end and there may never be a "selling opportunity" for the securities you are buying on firesale today.
> There are two extreme views these days - one, this is the end of the world and everything is going to fall apart. So buy guns, cans of tuna and yes, gold.
> Two, this is business as usual and soon everything will be back to normal and we can all go back to sleep again. In the meantime, buy what you can.
> 
> ...


Buy non cyclical common stock with a history of growing dividends at a reasonable price. Focus on companies that provide services or products that people NEED (cross off RIM, Apple, etc), and preferably a non reusable product.

Turn off the TV, and ignore all the end of the world, market crash, etc.

Collect rising income stream, and reinvest in above said companies while in building stage.

I do not know the right answer either, and there are many roads to wealth, but dividend growth investing makes the most sense to me, is easy to implement.


----------



## CanadianCapitalist (Mar 31, 2009)

As an asset accumulator, I'm hoping that stocks do get very cheap and stay there for a long time. Yes, the present portfolio wouldn't look very pretty but cheaper stocks are nothing but welcome news for investors accumulating stocks.


----------



## Belguy (May 24, 2010)

Stocks continually getting cheaper might be the bee's knees for younger investors with a long time horizon.

However, for older investors, with a diminishing time line, stocks that keep declining in value can start to wear on one's nerves!!


----------



## Dr_V (Oct 27, 2009)

Belguy said:


> However, for older investors, with a diminishing time line, stocks that keep declining in value can start to wear on one's nerves!!


Regardless of age, people who are heavily invested in equities should:

(1) be aware of the risks involved in investing in stocks (and therefore, should not be complaining when portfolios lose 50% of their value if they choose this strategy); or,

(2) not invest in equities if they can't assume the risk.


It's not rocket science -- the market giveth and taketh away. Over the long haul, it generally "giveths". If you are no longer in it for the "long haul", then you need to balance appropriately.


K.


----------



## MoneyMaker (Jun 1, 2009)

^^^^^

Great advice. People need to remember that a stock represents a fractional ownership in a tangible company and not just e-paper to be shuffled around and obsessed about every minute.


----------



## Belguy (May 24, 2010)

My point is that when you are in your 70's and 80's, you're no longer in anything for the long haul!!

Does this mean that you should get out of equities by the time that you are in your late 60's??


----------



## Dr_V (Oct 27, 2009)

Belguy said:


> Does this mean that you should get out of equities by the time that you are in your late 60's??


You need to achieve the risk/reward balance best suited to your situation.

Of course, how each individual interprets this reply will vary. As a simple example, Warren Buffett's multi-billion dollar fortunes allowed him to "play" for quite a long time in the equities market with little need to worry about his ability to afford food if his portfolio dropped by 25%. But someone with a $100k portfolio which has to last for the next decade could be adversely affected by a 25% drop.


K.


----------



## MoneyGal (Apr 24, 2009)

The issue is that when you are withdrawing from your portfolio, the _sequence_ in which you achieve your returns - the order in which the returns occur - has a dramatic effect on the sustainability of your income flow in retirement. This is known as the "sequence of returns risk" and the impact can be proven mathematically. 

So unless you are willing to dramatically downgrade your withdrawals in retirement (i.e., live on less), you likely should move some/most/all of your investments out of equities and into less volatile instruments. 

The question of what the optimal asset and product allocation is in retirement depends entirely on a series of basic factors: your expected lifetime, your spending rate, the size of your portfolio, and how it is invested - including whether you have longevity-, inflation- and sequence-of-returns protected income. 

The question of "how much in equities?" is not as simple as it sounds. Moving all of your nest egg to bonds and ratcheting down your spending to as low to zero as you can tolerate isn't necessarily any "better" or more rational than keeping some fraction of your nest egg in equities for the long haul (although you would eliminate the risk of leaving lots of unspent capital on the table, when you don't necessarily have any bequest motive)...the problem is how to find the optimal spot on the legacy-sustainability frontier, incorporating both the right asset allocation and the right product allocation. 

But: at a basic level: if you cannot tolerate variability, don't invest in products that have a high level of it.


----------



## brad (May 22, 2009)

One of the things that bugs me about the idea of a person's "risk tolerance" profile is that an individual's tolerance for risk or variability can change dramatically when they become more educated about investing. I know this was true for me: in my 20s I had a deep suspicion of investing in stocks, which was based purely on ignorance, and my investment profile was very conservative. As I got older and started learning more, my risk profile changed. 

So I think one's tolerance of variability and risk is a moving target and should be revisited every few years to make sure it hasn't shifted.


----------



## MoneyGal (Apr 24, 2009)

You COULD even revisit your "risk tolerance" based on how stock-like or bond-like your human capital is.


----------



## Belguy (May 24, 2010)

I have a possibly unique problem that some of the rest of you may not face--I don't know when I am going to die!!

This makes many investing decisions rather difficult. I also don't know how much I can spend and when.

How is one expected to know what to do when you don't know how much longer one has to live?

It's a real bummer!!!


----------



## osc (Oct 17, 2009)

Belguy said:


> I have a possibly unique problem that some of the rest of you may not face--I don't know when I am going to die!!
> 
> This makes many investing decisions rather difficult. I also don't know how much I can spend and when.
> 
> ...


Plan to spend all your money by 95. If you're broke at that age (and still alive), the government will take care of you and/or you won't care.


----------



## mogul777 (Jun 2, 2009)

Belguy said:


> I have a possibly unique problem that some of the rest of you may not face--I don't know when I am going to die!!
> 
> This makes many investing decisions rather difficult. I also don't know how much I can spend and when.
> 
> ...



Huh? So most people know when they're going to die?? Somehow I don't think your "problem" is unique. Of course if you keep stressing over stuff like this you can knock a few years off your lifespan.


----------



## Belguy (May 24, 2010)

What if I plan to live until 95 but end up croaking much sooner???

It's a problem!!!


----------



## Potato (Apr 3, 2009)

Belguy said:


> What if I plan to live until 95 but end up croaking much sooner???
> 
> It's a problem!!!



A possibly unique one!

There are lots of solutions to not knowing when you'll die, such as letting an insurance company worry about it, or planning to live an absurdly long time, while also making contingency plans for who gets your money if your first plan fails. Offspring, spouses, and charitable organizations will all vie for a piece of that pie.

This is conventional thinking though, and you have a decidedly unconventional, potentially unique problem. Conventional logic says that you can't take it with you, but why is that thinking accepted so blindly? So, consider the ways in which you might take it with you.

Paper money on your person may not survive the transition to another plane of existence, particularly if you are sent on your way via cremation. So that leaves heavy metals and gems as the storehouses of wealth most likely to transfer to the great beyond. The question is just then a matter of form.

The Greek tradition is focused on proximity to the eyes, so you should get a pair of solid-gold sunglasses and wear them all the time, just in case. Best to design them with a lattice-work design which can double as break lines so that you can break off small, fungible pieces of gold for your afterlife shopping needs.

However, the afterlife may be a place of strife and violence, as suggested by the Vikings. In that case you'll need a sword and shield to carry with you. The last shield I made I included adjustable arm straps which, when at their maximum length could double as shoulder straps. With some removable storage pouches, it could conceivably become an only-mildly-impractical backpack for everyday use. The surface can be impregnated with semi-precious stones to also serve your transactional needs between battles, while also providing protection against the flaming arrows of skeleton archers. Of course, traditionally one paints their family's coat of arms on the shield so that you can easily find your clan in the melee, but if your family isn't close then it's not a big loss.


----------



## MoneyGal (Apr 24, 2009)

Potato! This is possibly the best post I have ever read, anywhere!


----------



## brad (May 22, 2009)

MoneyGal said:


> Potato! This is possibly the best post I have ever read, anywhere!


Ditto that, and all the more impressive given that it was written _before_ 5pm on a Friday.


----------



## Sampson (Apr 3, 2009)

brad said:


> Ditto that, and all the more impressive given that it was written _before_ 5pm on a Friday.


World Cup!


----------



## mogul777 (Jun 2, 2009)

Belguy said:


> What if I plan to live until 95 but end up croaking much sooner???
> 
> It's a problem!!!


Not for your heirs.  And at that point you wouldn't really care would you? You could always go on a wild spending spree and then not have any money to worry about... which may be your best solution. Of course Potato does make some very interesting points you should also factor into your ever-growing dilemma.


----------



## Belguy (May 24, 2010)

I don't trust charities and I certainly don't want to leave my fortune to my no-account heirs.

I may therefore pursue some of potato's great suggestions. 

Taking it to the afterlife has a certain appeal to me.

I earned it and I should be allowed to keep it!!!


----------



## peterboro31 (May 11, 2010)

If you are serious Belguy, try the internet for actuary life tables; but of course you might be attacked by a Geico, and croak or your old adversary MoneyGuy
might give you a fatal stroke. Anyway refer to the link, using your 60's age to get the actuarical data. I'm just drawing minimum for my age from my RIF's.

So far(for 16 years of withdrawals) the RIF is not giving me sleepless nights.



http://www.socialsecurity.gov/OACT/STATS/table4c6.html


----------



## Toronto.gal (Jan 8, 2010)

Potato said:


> .....pieces of gold for your afterlife shopping needs.


LOL. 

I just read this; fantastic post!!!


----------



## MoneyGal (Apr 24, 2009)

The Social Security reference population tables linked will overstate your probability of dying in any particular year if you are at or near retirement; the conventional table to use for healthy retirees is the "healthy annuitants" section of the RP2000 life table.


----------



## peterboro31 (May 11, 2010)

Belguy: If you are still around perhaps you will reconsider leaving. On the old 50 Plus you made some good points on your investing style but as you will recall I was always after you to be a bit more flexible . Why not hang around and lighten up a bit . There is room for everyone on these boards - nobody owns them. Cheers.From Dogleg.

Totally agree with Dogleg; room for you on both forums Peterboro31


----------



## Belguy (May 24, 2010)

Thank you for your kind words, peterboro31. Maybe I am just a bit too sensitive but I have felt welcome on this forum while experiencing quite a bit of criticism and hostility as a result of my postings on the other forum that I have been trying. And so, I will continue to participate in this forum while not so much so on the other one.

There, there seems to be a lot of albeit experienced investors, who are ready to snipe at other posters. They have also established a rule that you must look through all of the previous postings to see if the topic has been covered previously before bringing it up again. This, I can't be bothered doing.

However, I will practice 'listening' more to others and trying to be more flexible and open in my views and, as you say, "lightening up" a little.

I don't want to participate in any financial forum where I have to be so careful and weigh every word before posting.

Thankfully, this hasn't happened on the Canadian Money Forum and I appreciate the decorum shown here by the other members and for the feeling that an open discussion of ideas is welcome without the need to criticize and belittle others for their thoughts and ideas.


----------



## kcowan (Jul 1, 2010)

What is your annual spend budget? How much of that is covered by CPP & OAS? If there are no other sources, then the remainder must be covered by your portfolio. If the portfolio is making zero interest or capital gains, then divide your remainder into the portfolio. That will give you your die broke year.

Anything you make on your protfolio above zero will extend your die broke age. When you have those two numbers, come on back and solicit our ideas.


----------



## kcowan (Jul 1, 2010)

The 3 C’s of portfolio theory: Clarity, Conviction & Consensus:


> 1) Clarity: Right now, there is none. By our metrics, we are not at a major bottom. Nor can we say that the data supports the argument that we are at or near a top. Indeed, we are now more than 15% away from recent highs.
> 
> Nor are we in any sort of trend. There is no clear momentum in any direction.
> 
> ...


From The Big Picture


----------



## Belguy (May 24, 2010)

I have always been confused as to whether trying to time the markets is a good portfolio management tool or a mug's game????

Generally, this doesn't seem to be a very good time to be an investor.

The daily news reports seem to be getting gloomier and gloomier.

Only a rosier job picture is going to turn things around but there is little optimism on that front these days.

What will it take to bring the jobs back?


----------



## Addy (Mar 12, 2010)

Belguy said:


> There, there seems to be a lot of albeit experienced investors, who are ready to snipe at other posters. They have also established a rule that you must look through all of the previous postings to see if the topic has been covered previously before bringing it up again. This, I can't be bothered doing.


I know exactly what forum you are talking about, and believe me, even if you search and don't find what you're looking for... Lord help you if you ask a question! I agree with you that there are a fair number of experienced investors there, but the few who are total pompus asses had me leave after constantly being extremely rude to newbies for simply asking questions... not even "stupid" questions... valid questions that were asked politely!

I'm glad you and I both have found CBF instead


----------

