Anyone here think there's a good chance that there will be a 50% crash in the market next year? Any thoughts on this and how this is going to impact us in real estate?
CPA · Raleigh, NC · Member since 2013 · 1k+ posts · 2k+ votes
11y
@Peggy Liu Paul Farrell has been "predicting" a stock market crash for years. His logic is likely: if every year I predict a crash will occur, eventually I'll get it right and be called a genius.
You need to remember what his main goal is - to garnish viewers for his publisher. He likely gets paid on a "per click" basis so he writes sensational articles that will be quickly shared and drive up his income. Anytime you see a journalist write something, take a few minutes to verify and also seek out second opinions and differing opinions.
There is always a chance that the market could crash and you can always take measures to mitigate downside risks. Specifically, you can buy put options or invest in volatility funds so that you can earn on the downside (especially if you don't want to deal with short selling). People that don't know how to utilize these vehicles are the ones that get burned badly.
You can make money in any economic environment, so instead of being fearful, figure out how to do it. Take the emotions out of your investing and be prepared for various scenarios and market movements. Take Floyd Bostwick Odlum for example. The guy made millions during the Great Depression. There was also another trader who made millions during the Depression though his name is eluding me right now.
Anyway, to prove my point that Paul Farrell is likely a nut job, here are a few of his articles over the past few years "predicting" the upcoming crash:
1. Article written in 2008 predicting a 2011 crash:
Investor · Apple Valley, MN · Member since 2013 · 281 posts · 94 votes
11y
Did you feel this way when the housing bubble crashed and your properties weren't worth anywhere near what you had invested? But they have come back almost to where they were in 2006. So really you didn't gain anything in equity over that 8 year span. I know I didn't. I bought a home in 2006 for 224k and just sold it for 220k. This was my primary and luckily we had paid off around 60k and got that money back.
All markets are reciprocal so what your worrying about isn't necessary so long as your have minimal debt and are diversified. Trust me if your in it for the long haul, then the sky isn't falling.
Salem, OR · Member since 2013 · 701 posts · 159 votes
11y
No one can predict where the stock market is going. It has gone up for 6 years straight years which is quite a feat. I believe it to be high because it is harder and harder for me to find individual companies that I think are undervalued. If you tell me when interest rates are going up I will tell you when the market is going down.
My unscientific view is that the market will correct up to 10% each year with a 10%-15% correction every two years and a 15%-25% every 5 years. I time my purchases on that view.
Since I think our current low interest rates will affect the market if they rise I think it will also impact real estate in a negative way. For the most part rents will stay the same so buy and hold investors will be able to find better deals but those who want to sell will be faced with lower values.
I have 20+ rentals and will hold them. Since I have flipped properties for awhile I found it difficult to make money only at the inflection point where prices stopped going up and started going down. Once it was well-knowned that they were going down I could make money flipping again.
Since I am no good at timing the stock market or real estate market I don't waste my time trying. I do have more money in real estate than stocks at this time.
Anyone here think there's a good chance that there will be a 50% crash in the market next year? Any thoughts on this and how this is going to impact us in real estate?
i hope so. I made a killing buying stocks low in 2008-2011. All 'crashes' are buying opportunities. The real estate we bought during the last recession has appreciated tremendously.
Investor · Los Angeles, CA · Member since 2013 · 354 posts · 98 votes
11y
Thanks for the feedback guys. I was just wondering what you folks thought about the article. I did buy a property in early 2007 and it hasn't done well in the past 8 years but oh well... I have learned and I know that in the long haul, it doesn't really matter. This time, I want to position myself better and possibly take advantage of investing after the crash.
CPA · Raleigh, NC · Member since 2013 · 1k+ posts · 2k+ votes
11y
@Peggy Liu Paul Farrell has been "predicting" a stock market crash for years. His logic is likely: if every year I predict a crash will occur, eventually I'll get it right and be called a genius.
You need to remember what his main goal is - to garnish viewers for his publisher. He likely gets paid on a "per click" basis so he writes sensational articles that will be quickly shared and drive up his income. Anytime you see a journalist write something, take a few minutes to verify and also seek out second opinions and differing opinions.
There is always a chance that the market could crash and you can always take measures to mitigate downside risks. Specifically, you can buy put options or invest in volatility funds so that you can earn on the downside (especially if you don't want to deal with short selling). People that don't know how to utilize these vehicles are the ones that get burned badly.
You can make money in any economic environment, so instead of being fearful, figure out how to do it. Take the emotions out of your investing and be prepared for various scenarios and market movements. Take Floyd Bostwick Odlum for example. The guy made millions during the Great Depression. There was also another trader who made millions during the Depression though his name is eluding me right now.
Anyway, to prove my point that Paul Farrell is likely a nut job, here are a few of his articles over the past few years "predicting" the upcoming crash:
1. Article written in 2008 predicting a 2011 crash:
Investor · Los Angeles, CA · Member since 2013 · 354 posts · 98 votes
11y
@Brandon Hall Thanks for the feedback and the references to the other traders as well as Farrell's previous articles. Ha.. I guess many writers try to sensationalize the subject at hand. I agree with you. Like you said, if you keep saying it's going to crash, it is just a matter of time. After all, it is the stock market..
Investing is actually quite boring and not exciting like an Athlete or Celebrity who make millions and buy new cars and fancy homes. Using any compound interest calculator, it will show you that if you max out a Roth IRA for 30 years in the S&P 500 index fund from Vanguard each month which is $458, you'll have amassed 1.2 million if you just achieve the average return. So there really isn't anymore to it then just depositing monthly for 30 years and you'll be just fine.
Investor · Los Gatos, CA · Member since 2015 · 42 posts · 15 votes
11y
@Marcus JohnsonI love moneychimp.com! I thought I was the only one who played around on that site. The stock market can be boring, especially "dollar cost averaging." My mutual funds make me feel like a total wussy!
@Peggy LiuI believe your intuition is serving you right. You mentioned a property that you bought in 2007 and haven't seen much appreciation. I like your idea of trying to plan for future changes in the market. Being prepared to take advantage of a market drop is a great idea. There are so many people retiring each day. More and more money being taken out of the stock market than ever before through retirement accounts... I wish you luck and think your wisdom is showing when you mention wanting to buy at the right time.
Vail, AZ · Member since 2015 · 64 posts · 17 votes
11y
I actually hope it does crash in 2016 because than i will have made enough money in 2015 to buy in for the long holds... I play the market all the time but I am young and far from wealthy so I'm a gambler and stick to options and go in and out very fast i have gone in and out of higher and lower tax brackets over night....
the market could crash this year and many say we are in for an earnings recession and in my view it could be any day bc if you just google S&P500 and look at the chart in max view you will see from as far back as it will show up up up up down down up up up up down down up up up up etc...... we are due for a major correction soon although i think markets will rally some more this year and this coming earnings will generally be poor but not as poor as predicted so the market will be looking good and the FED will raise rates at the end of the summer than yea after the holidays things will be super slow higher rates higher costs and with the oil prices and political movements more volatile than shares of tesla maybe yea a big crash and some people will lose it all while some people will be buying it all waiting for the next upswing its the cycle of life...
Craziest thing i ever read about the stock market was that SEC halted trading on a bunch of medical marijuana stocks that were trading on the OTC market and i said WAIT WTF theres public pot corps lol i mean who would buy a medical marijuana stock... forget cooking the books what happens when the DEA burns the books so how does that work.... so aslong as there are people dumb enough to invest publicly in a company that is operating in a risky federally illegal business than yea the stock market can crash any day of the week for just about any reason...
Rental Property Investor · Upstate, NY · Member since 2012 · 3k+ posts · 3k+ votes
11y
We were at the bank & an elderly lady was handing the teller next to me a paper bag full of cash still in the original bank bands. She needed a bank draft made out to a local car dealership for a new vehicle.
The teller laughed & said "Wow this one is marked Sept., 1998 the year I got married".
Then she offered some advice. "You should talk to one of our annuity experts to invest your money instead of just hiding it".
The elderly lady replied "No thanks. I haven't lost a penny doing it my way".
Anyone here think there's a good chance that there will be a 50% crash in the market next year? Any thoughts on this and how this is going to impact us in real estate?
Would have to take a very close look at the market and various indicators to determine if there is any pending doom. Are you hoping for this correction or just curious? That would be quite a hit.
, it doesn't appear there is a direct credible correlation between the performance of both markets:
...there's no confirmation of causation between stock market indexes and demand for homes or their prices....The strength or weakness of the U.S. and global economy appears to influence both stock and home prices. While this is not surprising, it does not display any other direct relationship between the two measures.
but then again, it is not unusual to have a different report or article that would claim there is a correlation.
You could always look at the historical returns of both the stock market and the real estate market during a certain horizon to see it there is an actual correlation. The trick with real estate is that the returns in various markets could vary substantially.
If we go as far back (or recently) as 1974 to review the consecutive positive yearly stock market returns, 8 (82 through 89), 9 (91 through 99), 5 (03 through 07) and 6 (09 through 14) has been some of the streak of positive returns; so technically, it can be another 8 or 9 years before there is a negative return or sooner or longer.
Contractor · Cleveland, OH · Member since 2014 · 317 posts · 181 votes
11y
I worked in oil & gas for a long time, and I think the fact that oil prices are still low is supporting the market. That being said, if things take a turn for the worst in the Middle East, oil prices go up, and we are in an election year (unpredictability) Things could get real bad for the stock market next year. Hopefully that pushes alot more private money into the real estate sector :)
Visalia-Fresno, CA · Member since 2009 · 1k+ posts · 863 votes
11y
The stock market is much more manipulated by computers and government than it has ever been. It would be foolish to have all your equity tied up in the market.
Investor · Atlanta, GA · Member since 2014 · 132 posts · 40 votes
11y
I love stock market but I have to admit it's very hard to get very good returns in the long run. By good I mean 10%+ annually. I usually buy dividend stocks with good valuation, good companies in some distressed situations. It is hard to find but not impossible. I see it the same as finding good real estate deals because I am a disciple of value investing.
I also use dollar cost averaging and value averaging so a crash won't bother your much (and some times benefit).
Overall I like real estate better because it is much easier to get leverage to boost returns and also the tax benefits. You can also actively add value to your properties to create wealth instead of leaving that to others who you can not control. But stock market is a good place to diversify your assets, the only thing is it does not guarantee income in short term.
Real Estate Investor · Augusta, GA · Member since 2013 · 19 posts · 5 votes
11y
Peggy, for the record, there is usually an article that says the stock market will crash, (Every Year), and even if it does, smarter SM Investors usually just brace and go defensive in the market, they do not pull out like allot of people think. I like SM Corrections, and Crashes, and I hope your article is correct. Millions are lost, and created afterwards.
Real Estate Investor · Los Gatos, CA · Member since 2014 · 226 posts · 89 votes
11y
Definitely it's time for (another) correction. The signs have appeared all over the place in both stock market and real estate. I'm piling up cash for next wave of distressed inventory :-)
Investor · Los Angeles, CA · Member since 2015 · 50 posts · 20 votes
11y
I've used the stock market to adequately make money but it is clearly more volatile than real estate. 2016 will be the year the vanguard of the baby boomers (first born in 1946) will reach 70 1/2 years old. That is the age that mandatory withdraw from retirement accounts begin. That is going to be a big shifting of demand from buyers to sellers of equities for the elders as the subsequent years pass. I read about it at www.optionsforcash.com on their January 2015 posting.