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Risky Mortgage Bonds Are Back and Delinquencies Are Piling Up

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Re: Risky Mortgage Bonds Are Back and Delinquencies Are Piling Up

#81

Post by refurb »

Vysero wrote: post #26
llamataboot wrote: post #22

Earlier quoted context omitted.

As always, depends on your appetite for risk and your timeframe for using the money. Personally, I don't see much upside left in equities for next year or two, but I'm a perma-bear and have been wrong many times before :D Plus there's not a lot of easy places to stuff money at the moment, hence big investors sitting on piles of cash.

I have only been investing for 2 years I am currently 32. So I think most investors wouldn't mind me keeping my stocks but I saw my mother and father loose hundreds of thousands of dollars back in 09 and I am not about to bite that bullet.

You’re young. You can weather the storm. Your parents should have been bond heavy if they were close to retirement.

My portfolio was down 33% in 2008. That loss was quickly reversed with the 8% on average returns over the last 10 years.

Re: Risky Mortgage Bonds Are Back and Delinquencies Are Piling Up

#82

Post by dragonwriter »

skybrian wrote: post #34
H8crilA wrote: post #17

Earlier quoted context omitted.

Bernanke was pitching them this idea. He suggested the Japanses government issues zero-coupon perpetual bonds and the BoJ buys them. Ha, ha, "bonds". As crazy as this sounds I think it makes sense - just admit honestly that the situation is fucked up, monetize, generate stagflation and eventual normalization.

It seems like I'm missing something basic. I would like to understand when the inflation happens and where it comes from. More money chasing fewer goods, sure, but if we already have too much of a money-equivalent, why aren't bondholders chasing goods with it already? And, clearly there isn't any inflation. It seems like demand should have increased when the government sold the bonds and spent the money.

> I would like to understand when the inflation happens and where it comes from. More money chasing fewer goods, sure

It comes from weakening the perceived future security of the currency, which reduces demand for it; once you monetize fiscal needs, your currency is perceived as one more at risk of being devalued to monetize fiscal needs, which itself devalues it.

Re: Risky Mortgage Bonds Are Back and Delinquencies Are Piling Up

#83

Post by maximente »

Vysero wrote: post #69
maximente wrote: post #30

Earlier quoted context omitted.

since jan 2 2019 S&P 500 is up from 2510 => 3074 so if you read a doom porn article and liquidated on 12/30 you missed out on insane growth spurt this is no different. you have to factor in potential lost growth when you go risk averse mode; it's against our loss aversion bias but has to be done when thinking long term.

I think the general trend has been an increasingly healthy stock market since around 09 correct? That was 10 years ago, how much longer can this balloon rise? Currently I am about 70/30 stocks/bonds perhaps I should just stay put considering I really don't know.

don't take this personally, but you don't sound ready to invest in stocks.

losing huge amounts of money is going to happen. there's nothing you can do to avoid it, other than not invest in stocks. the tradeoff is that it always comes back higher.

being risk averse will actually cost you hundreds of thousands of dollars in the long term. research cFIRESim and plug the numbers in yourself: the portfolios most likely to survive long retirements with money left are those with higher stock %s (i'm talking 90% plus).

you can't get enough growth with materially high bond %s to survive long periods of withdrawing. satisfying your risk averse reptile brain will actually generally lead to you drawing 100% of your savings down, which isn't great if you aren't earning via something else.

if you are interested in material long term growth, e.g. enough to outpace inflation, you have to accept the fact that you will lose enormous amounts of cash virtually overnight. your other options are to lose your wealth due to inflation/aversion to risk. it's regrettable, but that's the situation we are in with targeted 2%+ inflation.

best of luck!

Re: Risky Mortgage Bonds Are Back and Delinquencies Are Piling Up

#84

Post by harimau777 »

bryanlarsen wrote: post #62
xwdv wrote: post #35

Earlier quoted context omitted.

Take advice from someone who has been investing for the past 10 years and has made ridiculous money while these perma-bears are still poor. You can’t time the market. Keep buying stocks like they will continue to go up, at the end of the day, if the market crashes and values tank, it’s no big deal. Keep holding your stocks, they will recover, in fact buy while everything is super cheap. If you would have bought back…

> "they will recover" If you invested in 1914 German stock market, it didn't recover until 2014.

Wasn't that more or less a societal collapse situation? I'm not sure that almost any investment vehicle is going to be reliable through two world wars.

Re: Risky Mortgage Bonds Are Back and Delinquencies Are Piling Up

#85

Post by YourMatt »

subsaharancoder wrote: post #64
YourMatt wrote: post #61

Earlier quoted context omitted.

On the other hand, I recently sold a house that received a lot of offers. Only one person actually had the down payment money. Everyone else's loans were approved, but most were people were coming with low cash and lower income than I would have expected. Some looked like irresponsible loans to me.

Mind if I ask which state? I'm asking because I live in CA and all I keep hearing is people being outbid and some times with cash offers.

This was in Colorado. The market's hot, and I think that's in part because people are afraid that Colorado is going full California on real estate. They want to get a piece while they still can.

Re: Risky Mortgage Bonds Are Back and Delinquencies Are Piling Up

#86

Post by ehvatum »

roenxi wrote: post #53
dageshi wrote: post #29

Earlier quoted context omitted.

I was one once, they may sort of be right. Gold will never become a "standard" again, but it could be extremely useful for preserving wealth from one standard to another. Gold has always been touted as a hedge against inflation, it's not, it's a hedge against financial system instability, inflation being a major symptom of such instability.

Since around 1970 (US leaves the gold standard) gold has slightly outpaced inflation according to the US BLS inflation calculator [0]. Calculator thinks $6,000/kg => $41,000/kg, actual price $6,000/kg to $48,000/kg. That makes sense because 'true' inflation (consumer goods + assets) probably outpaces official inflation (consumer goods only). Gold can't exactly get more or less valuable over time. It is a rock. We hav…

Gold can't exactly get more or less valuable over time. It is a rock. We have no practical uses for it.

My impulse to point out that it's a very useful metal is tempered by my surprise that only 10% of gold production goes to applications where gold does something other than look golden or just exist as a physical store of value. It seems a little silly. Gold mining is quite destructive; environmentalists should fly around the world, giving speeches on the worthlessness of gold, but where's the glamor in that?

Re: Risky Mortgage Bonds Are Back and Delinquencies Are Piling Up

#87

Post by DuskStar »

richardknop wrote: post #40
DuskStar wrote: post #36

Earlier quoted context omitted.

Why gold and not 22 LR or 556 NATO? At least for me, there's not a huge gap between "all the other investments crater to the point that my 10% in gold is useful" and "oh boy looks like things are collapsing now", if that makes any sense.

It’s a very risky bet for sure. But there is a very small possibility central banks will go back to gold standard to instil confidence during a Great Recession when markets fall by 50+% in a very short time.

Personally, I'd take central banks heading back to the gold standard as a massive signal that things were about to get worse, not better. It'd be like having your oncologist suggest enrollment in a phase-one study - they aren't doing that because the outlook of a patient in a phase-one study is good, but because the alternative is worse, and now they're reduced to trying for a hail mary.

Re: Risky Mortgage Bonds Are Back and Delinquencies Are Piling Up

#88

Post by [deleted] »

toomuchtodo wrote: post #6
mc32 wrote: post #5

Earlier quoted context omitted.

So if the USD becomes weak, who out there could be in a position to become stronger? I don’t see any candidate. Euro growth is weak. CN bookkeeping’s suspect...

India, still a youngish population compared to China but with 1.4 billion people and still rapidly developing. Also helps they're strong in service industries, deliverable to the world.

[deleted]

Re: Risky Mortgage Bonds Are Back and Delinquencies Are Piling Up

#89

Post by s3r3nity »

jstewartmobile wrote: post #55
H8crilA wrote: post #2

Mortgage debt will probably not be a problem in this cycle. People have this bias to remember most recent event, but it's rarely the same thing twice in a row: https://imgur.com/a/0dT7iHK Corporate debt may be: https://imgur.com/a/b54hMSg And frankly with the amount of outstanding US govt debt and underfunded pension & healthcare liabilities the USD may either get dethroned and devalued or sent into the negative inte…

I'd put my bets on student loan debt. The push for forgiveness is so strong, there must be some other force at play--something more than just pandering to millenials.

Looking at the data, the best estimates peg student loans to be consolidated to ~10-12% of the US 18+ population.

Not saying it _isn't_ part of the story, but I don't think it's as big of a factor as folks might initially (or anecdotally) believe.

Re: Risky Mortgage Bonds Are Back and Delinquencies Are Piling Up

#90

Post by roenxi »

ehvatum wrote: post #86
roenxi wrote: post #53

Earlier quoted context omitted.

Since around 1970 (US leaves the gold standard) gold has slightly outpaced inflation according to the US BLS inflation calculator [0]. Calculator thinks $6,000/kg => $41,000/kg, actual price $6,000/kg to $48,000/kg. That makes sense because 'true' inflation (consumer goods + assets) probably outpaces official inflation (consumer goods only). Gold can't exactly get more or less valuable over time. It is a rock. We hav…

Gold can't exactly get more or less valuable over time. It is a rock. We have no practical uses for it. My impulse to point out that it's a very useful metal is tempered by my surprise that only 10% of gold production goes to applications where gold does something other than look golden or just exist as a physical store of value. It seems a little silly. Gold mining is quite destructive; environmentalists should fly…

Yeah, it would have lots of uses if we had industrial quantities of it.

> Gold mining is quite destructive; environmentalists should ...

If it makes you feel better, it is common for gold to be found as an enriched layer sitting on top of a copper deposit. So a big chunk of gold mining isn't gold-for-gold's sake, it is something mined on the way to a much more practical substance - copper.

Actual gold mines doing environmental damage are a thing (cyanide ahoy!) but the footprint is small and hopefully not important.

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