Where are you investing in outside of real estate at the moment?

Question

Five years ago it seemed more obvious to me where to invest in paper assets but these days the market seems like a roller coaster and unpredictable. I am tempted to start taking positions in shorting long term treasury bonds. I know Bill Gross predicted the bottom in treasury bonds about a year ago. I agree with his call, but just think he was premature calling the bottom of interest rates?

Have any of you started to take short positions in treasury bonds? I just can't see how we can have these low rates continue for another 12 - 18 months.

Outside of REI where are you currently investing at the moment?

Have any of you started to take short positions in treasury bonds? I just can't see how we can have these low rates continue for another 12 - 18 months.

Outside of REI where are you currently investing at the moment?

James Park · Answer

Ned, 
I guess your investment advice outside of real estate would be..
1. Short Gold and Silver
2. Short the DOW and S&P
3. Short the long term treasury bonds

and go long real estate right? I know you are right about real estate being the only asset class that is undervalued right now. I just like to diversity and not put all my eggs in one basket.

Do you think in the next 5-8 years we will see real estate and interest rates moving up slowly at the same time?

Kenneth LaVoie · Answer

I use rrpix vs the short treasuries but I'll have to check those out. I also htink shorting LT treausuries is good, as long as the timing deosn't kill the profits (i.e. waiting) -- i also use lendingclub.com - peer to peer lending -- my return over past 2 years has been mid 8's to mid 9%. I consider it low risk because i have it spread over many $50-$100 loans. other than that I have an IVY LEAGUE type portfolio - stock, bond, commodities, private equity, lumber, etc.

Jeff Thompson · Answer

Whats that old quote? "the market can remain irrational longer than you can remain solvent."  Betting against the trend can be risky...

Ned Carey · Answer

I don't know and neither does anyone else. I do see inflation and therefore  higher interest rates coming. So much money has been pumped into the economy it has to cause inflation at some point. We could even have hyper inflation.

Inflation generally helps hard assets. But with hyper inflation expenses can rise faster than rents and hurt returns in real estate. It would probably kill prices on fixed interest instruments.

The problem with shorting is in the short run anything can happen, in the longer run inflation could wipe out profits from the short.

Ned Carey · Answer

I personally think there is no better investment than real estate right now.

Buy Low - Sell High
Gold is at or near all time highs
Stocks at or near all time highs
interest rates near all time low (meaning prices are high)
 
Real estate is just about the only asset class or investment that is low right now.

However if you want paper assets tax liens or discounted or defaulted paper could offer some good opportunities.

Steve K · Answer

James - id suspect you're right and I think it will happen much sooner than 4-5 years.  Probably next year would be my uneducated guess and it will probably be pretty necessary to combat inflation.

James Park · Answer

Steve K.

I looking to make some big bets on TBT and TBF - two ETFs that short the long term treasury bonds. I think these 2 ETFs would do well in the long run. I mean ... I just don't see how it is possible to a 30 mortgage under 4% in the next 4-5 years. Do you?

Steve K · Answer

Have some small stakes in a few small solar developments.  Returns are between 8-11 % but it's truly passive income.  No tenants, no toilets, just keep hoping the sun shines as much as possible.  Otherwise it's just the annual amount to retirement / brokerage accounts and real estate.

Its only a matter of time before rates start moving upwards.  I'd be nervous shorting, but I'm a low risk investor in that arena.

Steve Luo · Answer

Good morning James.  Yes, they are very similar.

And lessons I learned over there can be easily applied over RE.

James Park · Answer

Steve, hahaha.. domains are a lot like virtual real estate aren't they? You can buy them, build on them, flip them, and sell them. One of my best friends in SoCal bought the domain eromance.com for $40k for his dating website.

I was scratching my head.... "How can you buy just the domain for $40k?" The most I've ever paid for a domain is $12.95 at godaddy.com.

Where are you investing in outside of real estate at the moment?

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