Thanks, that makes sense. So basically, if your mortgage rate is locked and you keep your income the same, you'd only really be effected on paper and then your only issue becomes the potential underwater scenario Rabid laid out? I keep hearing rumors of rate hikes and recessions and blah blah and I know it's possible that I may be buying a house at exactly the wrong time, so I just want to understand what risks I'd be facing.
Rates are still so close to historic lows that it's not a bad time. Housing prices may be higher now than usual but as long as you don't overextend yourself and buy for the right reasons with a fixed mortgage (that's arguable depending but as a conservative play) you should be fine.
Thanks, that's good to know. I'm being relatively conservative with our housing budget (TOTAL housing including all taxes and insurance will be like 26% of net take home pay), and I live in an area where housing prices are reasonable at roughly ~$100/ sq ft so I feel relatively confident, just have those first time buyer jitters I suppose.
If I have a down payment for a house (that I don't plan on buying for another couple years) in VBIAX (a 60/40 bond/stock fund with vanguard) does it make sense to sell it now and buy back in when rates are raised? Or should I just say fuck it and hold my position?
Yup. I've sold 2 condos and my wife sold her house and all were at a loss. The losses were $11k, $15k and $30k with 4, 8 and 6 year holding periods.
I got super lucky on the $11k loss. I sold in April 2008, after prices started to drop but, before things got really bad. The girl that bought mine was actually coming to look at the unit next door, with the exact same floor plan (but ugly carpet and counters). By chance, her realtor ran in to my realtor downstairs and they knew each other from working together in the past. I was priced $1k above the range she was looking at so they didn't even realize mine was available. My realtor told them we'd be flexible on price so they looked at both and put the offer in on mine. The unit next door to mine (lawyer that had taken an out of town job) ending up as a foreclosure sale in 2009 at $70k less than I sold mine for. The girl that purchased it from me sold it this fall, 7.5 years later, for a loss of $27k After accounting for the tax benefits, the $11k loss was probably pretty close what I would have paid in rent.
It depends on a ton of things that you will never be able to find out. Either put it in a cash like instrument or just let it be and don't worry about it.
Been eyeing kinder Morgan(KMI) for a while. Got rocked on Friday and down to 15 today thinking about pulling the trigger today.
Where do you think interest rates head between now and then? I guess my question is, is the fed under too much pressure to raise rates. If rates remain status quo with no raise is your prediction the same?
Slightly up, no more than 150 bps by YE 2016 which is 6 increases between 12/15 and throughout 2016. No increase more than 25 bps.
You'd be considered a leverage risk by your bank. Worst case scenario, they may ask you to make a margin payment to bring your loan back to 80% LTV (for example or whatever you were underwritten for). This is an extreme scenario. The next recession is not expected to be nearly as bad or brutal as the last.
I don't think it matters as I don't think it will be a fed/rates induced recession so no, a move in rates doesn't change my opinion.. To answer the rates question, I think they probably raise them this month. Maybe they get to 1.0-1.5 by the end of 2016 but I'd lean more toward 1.0% or under but like I said, I don't think it matters. I think the recession in the mining and energy sectors is just trickling through to industrials and will just continue through the rest of the economy. It would seem highly unusual for a mortgage loan to have a maintenance covenant that would require the borrower to make a principal payment like that. Normally the borrower would have to be going to the bank asking for something else (HELOC for instance) to have do that.
I have two questions. If anyone has a little time i would appreciate some help. Anyone know anything about Northwestern Mutual or Valic? I'm a school teacher and i want to invest a couple hundred dollars a month into something. I keep hearing 403 b and Roth IRA. Any advice?
I work for a college so we had a 401k, 403b and the 457. However, when i looked into the fees were a lot higher on the 403b. The 457 gave the same early distribution rules as the 403b so you didn't have to wait until 59 1/2. The higher fees may just have been our provider though.
Opened a TD Ameritrade account for fun to play around with. Put about $10,000 in there. I am maxing out my ROTH IRA contributions and putting an additional 6% of my income into my 401k (with a 3% employer match). I do not manage my ROTH or 401k. I would like to play around with day trading on the TD Ameritrade account, but admit that I know very little about the stock market. I watched all of the TD ameritrade videos and have a general understanding of what resistance, support, and trends are, and how to read a line chart (candle charts still confuse the shit out me). Looking for advice on further educational tools. Also, is it realistic for someone like me, with no background in finance or the market, to day trade and see a positive return? Or am I better off throwing my money into a mutual fund and letting it ride?
Don't day trade, but if you really want to day trade do the following: 1) figure out how much you want to trade with each trade 2) find out what the average daily price change is for a stock you are interested in trading 3) figure out what your trading costs will be to both buy and sell that same security 4) plug that information into Excel and see if you make a profit when everything works in your favor
Day trading sounds like a terrible idea for someone who isn't experienced. Most day traders lose money. An inexperienced one is guaranteed to lose money.
Got it. Any advice on the best way to maximize my return. I want to do this mainly to learn and educate myself on the stock market, and in the mean time try to make a decent return. Basically, I want to take an active role in my investments, and don't know the best way to do this without losing my ass.
Many brokerages (not sure about ameritrade) have "paper trading" tools where you basically keep track of trades on paper. If you want to day trade you need to read some books specifically on day trading and come up with a strategy and be extremely disciplined following your strategy. Realize that most people who day trade successfully do it for a living. So you are going to be competing against people who have a lot more information than you and put in a lot more time and effort. If it's not going to be your day job then the odds are stacked against you being successful. It's boring advice but put your money in A few index funds to create a balanced portfolio and then once a year or so rebalance.
Question: My 401k lost 1.43% for the year and my employer isn't matching (oil and gas), should I lower my contribution to 0% and just put it on "hold" until they resume matching and just put the money I was using towards saving? It seems to be counterproductive to be losing money on savings. TIA
leave in there, though you "lost" money from an investment standpoint on the year, your corpus will only get bigger, which means when the stock market does get better, and obviously historical averages and such, you'll stand to make that much more. plus, whats 1-2% gonna do anyway. leave it.
R.I.P low rates yall with student loans and anyone that wanted to re-fi.. you dooooooooooooomed (but holla at me anyway for student loan referral) -- There now is little doubt among private economic forecasters that the Federal Reserve will raise short-term interest rates next week. About 97% of business and academic economists surveyed by The Wall Street Journal in recent days predicted Fed officials will raise the benchmark federal-funds rate Wednesday.
So what's the play here for the experienced investors? Do we keep our money in taxable accounts or get out now and try to buy back in when the recession you're predicting hits? Rabid
The market is pricing in a 72% likelihood of a move on 12/16. It is pricing in an 8.6% chance of a 50 bps move by the January meeting. Rates would still be near historical lows. I don't disagree with your thought but I'm personally not trying to market time anything and I'm sticking with current holdings. That being said, I do have a lot of money on the sidelines that could pounce if we saw markets move significantly lower. As I stated above, my call is recession by 2017.
The Fed will slowly ramp up rates over the next 5 quarters (unless something bizarre like a catastrophe or something happens), probably around .25% at a time.
better strap up Junk bond panic signals new stage in crisis of world capitalism 14 December 2015 There are many indications that last week’s selloff on stock and bond markets signifies a new and explosive stage in the world capitalist crisis. Amid plunging prices for oil and other basic commodities (the US oil benchmark sank below $36), a further contraction in trade by China and worsening economic conditions in the “emerging markets,” stock prices in the US, Europe and Asia fell sharply. The major US stock indexes declined by more than 3 percent, bringing the Dow and the S&P 500 into negative territory for the year. Even more ominous was the continued rout of US high-risk, high-yield corporate bonds, or “junk bonds.” In the course of the week, investors removed $3.8 billion from junk bond funds. Prices of high-risk securities fell to levels not seen in six years—in the aftermath of the 2008 Wall Street crash. The yields on these low-rated bonds, which move in the opposite direction of price, continued to soar, as did the cost of credit default swaps purchased to hedge against bond defaults. Further roiling the markets was the prospect of the Federal Reserve raising interest rates for the first time in nearly a decade when it meets this week. Even though Fed Chair Janet Yellen has repeatedly assured the markets that any increase will be small and rates will remain well below normal for an indefinite period, any increase will tend to further depress junk bond prices. Jeffrey Gundlach, head of the Doubleline Total Return Bond Fund, expressed the fears on Wall Street, declaring, “We’re talking about raising interest rates with the credit markets in corporate credit absolutely tanking. They’re falling apart.” The most threatening development was the collapse Thursday of Third Avenue Management’s Focused Credit mutual fund, which invests in energy-related junk bonds. Facing mounting debts, declining revenues, rising borrowing costs and a wave of redemption orders by clients, the fund suddenly announced that it would not redeem customers’ withdrawal orders and would block them from getting access to their money. This follows Stone Lion Capital’s suspension of redemptions in its credit hedge funds and the partial suspension of redemptions by a Carlyle Group asset management fund. Black Rock’s junk bond exchange-traded fund, the largest of its kind, fell Friday to its lowest level since 2009. This is merely the tip of the iceberg. Standard & Poor’s Rating Service recently warned that 50 percent of energy junk bonds could default, along with 72 percent of bonds in the metals, mining and steel industries. Distressed debt in the US is at its highest level since the official end of the recession in June of 2009. Corporate defaults have topped 100 this year, nearly one-third being oil, gas or energy companies. There have been 40 bankruptcy filings by North American oil and gas producers this year, and more than $1 trillion in US corporate debt has been downgraded. The mounting crisis in the junk bond market has profound and convulsive implications for the entire credit system, in the US and internationally, because these bonds, particularly those tied to the oil and energy industry, have mushroomed in volume since the collapse of the subprime mortgage bubble in 2007-2008. High-yield bond assets at US mutual funds hit $305 billion in June 2014, triple their level in 2009. Outstanding debt in the US junk bond market has soared to more than $1.2 trillion from less than $700 billion in 2007—an increase of 71 percent.
i doubt we see it at 1% by the end of 2016. they are gonna feel bad doing .25% this wk... too many technical questions
Lots of simple macro issues they're needing to rectify. In a perfect world they would do it all at once. It's a much different world since the last hike. Things have never been more reactionary. Fed needs to find the right balance. They've been dragging their feet on this too long. Has created uncertainty. Glad they're moving forward.
This would be the reaction if they didn't ease things in. A quarter point isn't gonna have much of a reaction.
At least he didn't remind people to hit him up for a student loan refi referral link for the 396th time.
I refi-d my student loan but it was to a variable rate. It's not worth trying to sneak in a re-refi to a fixed rate at this point right? Higher rates probably already priced in. Edit: I'll be paid off in August at my current rate so I feel like its probably not a huge deal.
We likely won't see more than 100 bps increase by next August so likely doesn't matter depending on fees, etc.
Ended up getting in on KMI at $16 for a long hold. Looked at it as a growth play Obviously not for the div. Looks like I jumped a little too soon. Will be interesting to watch how kinder adjusts to everything that's been going on/ oil and gas Struggling at the same time.
Billionaire Sam Zell Says Recession Likely in Next 12 Months Fed rate hike should have happened six months ago, he says Investor seeking opportunities to buy distressed energy assets http://www.bloomberg.com/news/artic...-zell-says-recession-likely-in-next-12-months
"In other areas of investing, Zell said he’s more focused on natural gas than oil and is buying distressed energy assets in areas such as Colorado and the oil-rich Permian Basin beneath Texas and New Mexico" What kind of instrument would that be? What would be the best way for the retail investor to invest in distressed energy assets?