Why not go to cash?

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Submitted by carlsbadworker on March 4, 2021 - 10:20pm

Just finished reading Rich's latest investing article, I concur.

My answer to "Why not go to cash" is much simpler though.

Four words: I could be wrong.

Submitted by gzz on March 5, 2021 - 12:29pm.

I also read it and agree. Rich and I think mostly alike, I know we independently looked at Euro blue chips a while ago and bought in for example, we purchased our homes within a few months and 5 miles of each other at the very bottom of the market.

Relatedly, the Chad Value Investor vs the Virgin Growth Investor. Vulgar but I laughed.

http://www.creditbubblestocks.com/2021/0...

Submitted by Rich Toscano on March 5, 2021 - 12:57pm.

carlsbadworker wrote:
Just finished reading Rich's latest investing article, I concur.

My answer to "Why not go to cash" is much simpler though.

Four words: I could be wrong.

I agree with that, but I think it goes beyond that... even if you're right (ie there's a bubble and it eventually bursts) there are a lot of ways the "go all to cash" thing could backfire.

Certainly, though, your four-word summary is a great thing to always keep in mind.

Submitted by Rich Toscano on March 5, 2021 - 1:04pm.

gzz wrote:

Relatedly, the Chad Value Investor vs the Virgin Growth Investor. Vulgar but I laughed.

http://www.creditbubblestocks.com/2021/03/the-chad-value-investor-vs-virgin.html

Great writing... that was awesome. :-D

Submitted by evolusd on March 5, 2021 - 10:46pm.

I took this exact action in mid-March last year when pandemic hit. Didn't work out so well. Damn hindsight.

Submitted by scaredyclassic on March 5, 2021 - 10:57pm.

Pretty much the only thing ive learned over my life is that im usually wrong.

Submitted by Coronita on March 11, 2021 - 9:34am.

Funny, I had a conversation with my old neighbor about this. Tongue and cheek. He's of the opinion that now that both China and US are printing more fiat money, he's of the opinion to buy as many different kinds of investment as possible (equities, real estate ,etc). Because in his opinion, staying in cash for an extended period of time will be a losing proposition.

So he's trying to rack and stack more investment properties, even at current prices...Shifting some of his holdings from China to the US.

I asked him if I was crazy wanting to cash out refi my old primary and take the equity to buy more houses. His exact words was. "Yes, because that's what I'm doing to let the banks eat the depreciating dollar later..."

Feel sorry for the new home buyers that is just starting out...People spending the same amount some of us spent on a SFH years ago for a condo now... That's pretty sad....

Submitted by The-Shoveler on March 11, 2021 - 1:18pm.

I am seeing inflation at Costco IMO.
Seems everything is .50 to 1.00 more than around 6 months ago.

Not thinking of getting out yet but I do feel stocks that touch the sky will fall eventually LOL just never know when.

Disclosure, I am not currently putting new money in stocks, seems a bit frothy IMO .

Submitted by Coronita on March 12, 2021 - 8:04am.

I think besides putting money into international index etfs like vxus, Im going to camp out in boring consumer staples.

I figure if we have more inflation, companies like P&G can get away with charging more for things like diapers and toilet paper...

Meanwhile, Im not so sure tech companies can do the same thing without consumers balking....

I applied for a $750k conforming plus cash out refinance. Will see how it goes....

Interesting times

Submitted by gzz on March 12, 2021 - 5:22pm.

My consumer staples are KHC KMB WBA T and VZ. They’ve done well, mainly because I got them in March and April 2020 when any pick would have done well.

I also have a lot of GO, which I purchased because I adore that store and was an instant convert. They have a changing variety of fancy euro-cheeses at Velveeta prices! I am not the only one, store count is growing about 10% a year and SSS are consistently excellent.

Submitted by Coronita on March 12, 2021 - 5:26pm.

gzz wrote:
My consumer staples are KHC KMB WBA T and VZ. They’ve done well, mainly because I got them in March and April 2020 when any pick would have done well.

I also have a lot of GO, which I purchased because I adore that store and was an instant convert. They have a changing variety of fancy euro-cheeses at Velveeta prices! I am not the only one, store count is growing about 10% a year and SSS are consistently excellent.

I just get an etf XLP

Submitted by gzz on March 15, 2021 - 11:55am.

XLP has a lot of weight in Coke, Pepsi, and Walmart: junk food and B&M retail. None of those are going to disappear, but I think they're in terminal decline.

My own experience: I like visiting Wally World at night when it isn't crowded, I don't have Amazon Prime, and I have a slight anti-Amazon bias because they are so big.

Yet I still shift more and more spending from Wal-Mart to Amazon and to a smaller extent to Target and Home Depot. I think I only go 2-3 times a year now versus 8-10 when I moved here.

California's soft-on-shoplifting policy has also resulted in a large increase in the portion of Wal-Mart that is walled behind glass. It isn't just liquor and electronics anymore. That degrades the shopping experience and reduces order sizes.

Submitted by Coronita on March 26, 2021 - 8:18pm.

I dropped by my old house to drop of some stuff and ran into my old neighbor and had a nice chat with him. One of thing i brought up was I wasnt sure whether i should continue renting out my house out or sell and cash in on the crazy insane home prices right now.
What he said stuck in my mind. His opinion, both China and the US were both beyond the point of no return, the only real option for both was to print their way out and devalue both currency. It was interesting that he said he was doing just about everything except staying in cash. He was curious why I was thinking about selling my house and I mentioned well this one in Carmel V, rent isnt great, tenants are a pain in the ass and dont stay that long, and right now with Carmel V homes costing more than $600+ per square ft, seems like appreciation is way better than rental income will be over many years...

He sort of chuckled and said well, just about the worst thing anyone could have done is stayed in cash for so long. If someone did in san diego, counted solely on their wages, never took on higher risk in assets/investments, and stayed renting all these years...there is no doubt...they are most likely priced out of the San Diego housing market right now and probably indefinitely...if you sell your house, you might want to think about doing so to obly buy real estate that cash flows better elseehere in dan diego, otherwise yoi might ever be able to reenter the market again short or something else keeping up with the printing that will happen...

In hindsight. All those people thst boufht houses in say 2005-6. Was it rrally a bad decision if they were able to hold on? Maybe not...

Submitted by Rich Toscano on March 26, 2021 - 8:50pm.

Buy real estate now or you'll be priced out forever... hmm, when did I last hear that? :-D

Submitted by Coronita on March 26, 2021 - 9:43pm.

Not sure if i belief in being priced out forever, but I certainly wouldnt want to be a first time home buyer right now here, unless i was one of those Bay Area tech workers paid Bay Area comp packages with the option to work remotely from san diego. I guess some of them figured out spending $1.5+million here is still a better deal than spending $1.5million in a hole-in-the-wall place in Santa Clara. that or maybe banks relaxed lending standards and its easy to get stated alt-a loans again?

Submitted by Rich Toscano on March 27, 2021 - 8:31am.

Agree on all that... but that's kind of my point, the more expensive it gets, the less likely that prices will keep going up at a rate that would price you out forever.

Submitted by sdrealtor on March 27, 2021 - 1:44pm.

Rich Toscano wrote:
Agree on all that... but that's kind of my point, the more expensive it gets, the less likely that prices will keep going up at a rate that would price you out forever.

Rates will do that once prices stabilize

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