currency fluctuations (1 Viewer)

[Rutledge]

I never said investing was too hard. Neither is painting a house, mowing a lawn or washing a car. But many people dont do those things themselves either. Do you think a professional painter is more or less likely to do a better job than an amateur painter?

When the market goes down en masse, no one is completely safe. Fortunately, there are mutual funds that can go short, or own significant numbers of bonds. Those two areas have fared much better than stocks of late.

There are many good investors who are not millionaires. Should one only take golf lessons from a top pro like Woods or Mickleson? (good luck with those hourly rates!) Was Warren Buffet always a millionaire? Would you have benefitted from investing with him before he became so famous?

We did not get into this mess because people werent managing their own investments. We are here because low income/non-qualified borrowers bought things they could not really afford, possibly at the urging of a real estate person and mortgage provider. Meanwhile, some really really smart people on WS came up with ways to make it so they could. The really smart people thought risk could be, theoretically, layed off and diversified away. Turns out it didnt work when applied on a truly global scale.

There are many many studies about the returns of the average do-it-yourself investor versus the market. The DIY-er always has horrible results! Primarily because they wait to get in the market after it has risen substantially, and then they feel its the right time. Usually, this means they are "buying at the top". A similarly bad result occurs on the other side, when they sell at the bottom usually in despair at their bad fortune. Investing based on one's feelings about where things are going or how a store or product makes you feel is not a sound basis for making investment decisions.

Its odd, most investors who manage their own cant give you their results. They dont know their actual portfolio returns on a year by year basis. Sure they know they bought one or two or three stocks that went up. Buy enough stocks, its bound to happen. But overall, they dont know how they have done versus the market. Without some way of accurately measuring performance versus a valid benchmark, there really is no way of gauging success. With a mutual fund, I can tell you exactly how the manager has performed (after fees) versus its similar competitors and the market at large. I can tell where they had success, what the fund yielded, what its tax liability was, its fees, its absolute and relative level of risk, its correlation to the market, where its concentrated, what areas its avoiding, and so on. All these things are vital to making the best possible decision.

 

[redhugh]

Spare a thought for Iceland Their whole country is going bankrupt apparently!

Iceland teeters on the brink of bankruptcy

http://news.yahoo.com/s/ap/20081007/ap_on_re_eu/eu_iceland_meltdown_1

 

[Njja]

I never said investing was too hard. Neither is painting a house, mowing a lawn or washing a car. But many people dont do those things themselves either. Do you think a professional painter is more or less likely to do a better job than an amateur painter?"

Ah, there will always be far more people looking for someone else to handle

there money, then willing to do it themselves. Mutual Funds prove this.

Others like myself, are out of your reach, so just get used to it.

Using your golf analogy, I would seek the advice of a Pro......not Tiger

Woods.

So asking if your financial planner was a Millionare is reasonable.....your

not requiring he be Buffett.

Selling short, bonds, gold, commodities, trading in currencies, the list goes

on and on are far more then the average family man can deal with.

All would require assistance, generating fees, making someone rich.....but

who?

Personally, I wouldn't want the job at this moment in history.

 

[Ragnar]

Spare a thought for Iceland Their whole country is going bankrupt apparently!

Iceland teeters on the brink of bankruptcy

http://news.yahoo.com/s/ap/20081007/ap_on_re_eu/eu_iceland_meltdown_1

If thats the case then they might start going on a few raids .
im sure there's bound to be a country close by to plunder

 

[Rutledge]

Ah, there will always be far more people looking for someone else to handle

there money, then willing to do it themselves. Mutual Funds prove this.

Others like myself, are out of your reach, so just get used to it.

Using your golf analogy, I would seek the advice of a Pro......not Tiger

Woods.

So asking if your financial planner was a Millionare is reasonable.....your

not requiring he be Buffett.

Selling short, bonds, gold, commodities, trading in currencies, the list goes

on and on are far more then the average family man can deal with.

All would require assistance, generating fees, making someone rich.....but

who?

Personally, I wouldn't want the job at this moment in history.

Well, its a difficult job no doubt in this market. But certainly in high demand at the moment.

I am well aware that devoted DIYers will never see the value of a financial advisor. But its typically a control thing, or they just like to play around. Not a one has ever been able to tell me what their results have been, for their entire portfolio. Therefore there is no way to gauge whether they actually have skill.

There are plenty of financial advisors who are millionaires. But that doesnt mean they are THE BEST at financial advice. Sometimes it means they are just good at getting lots of clients.

If every financial advisor had to first be a millionaire, where would we get new ones, I wonder.

Both the client and advisor should make more money, over time, or the client should get rid of the advisor.

I recently advised a client to sell a stock in which there had been a large gain over several years. They were hesitant initally. Gradually, though, after the stock fell in price some more, they came around. Then, the client was unhappy when shortly thereafter the stock rebounded . But after a bit it began falling, and is now over $30/per share cheaper. The client owned thousands of shares. There was a commission to make the trade. A few hundred bucks, give or take. But the client made tens of thousands more that he would have lost had I not persuaded him. Gee, I wonder, was that advice worth what he paid for it?

 

[Njja]

Well, its a difficult job no doubt in this market. But certainly in high demand at the moment.

I am well aware that devoted DIYers will never see the value of a financial advisor. But its typically a control thing, or they just like to play around. Not a one has ever been able to tell me what their results have been, for their entire portfolio."



Why would anyone wish to divulge confidential personal information? I have

laid out a basic market philosophy, named a few stocks Coca Cola, Anheuser

Busch, Home Depot, any one of which could easily have turned a prudent

investor into a millionare.

Home Depot alone created 300 millionares via stock options granted to key

employees. Many others that were in one way or another associated with

the company.

 

[vandilay]

Our currency lost another 8% last night ,
I have the distinct feeling i,ve just been priced out of the
hobby with K and C,s latest SL coming in at $485 kiwi .
Our $ is starting to resemble our national bird [flightless].

 

[Njja]

And ours might not be far behind!

On a positive note we have solved the energy problem, last night they

announced the refineries would not have to make home heating oil this

winter.

It seems the presses at the Treasury are running round the clock printing

money.......so this winter everyone from the Carolinas to Maine will just

have to open their windows to let the "Heat" from the presses in

Washington warm them up!

 

[The Military Workshop]

I think Louis made a spot on assessment when he said
"In this environment, I suspect companies which are both producing large quantities of product and substantially raising their prices are going to be in for a rude awakening".

If I was a TS company I would be seriously assessing future releases and production numbers and how much storage space I have. Buyers having to be more choosy.

A collector who spends a fixed amount of $'s can now only buy two items instead of the previous three and that is assuming he still keeps spending those $'s on his hobby.

Well the good news for you guys in USA is that if you come to Australia now it is about 33% cheaper than it was in July ! Ironic when it appears USA started all these problems.

Going to be a painful few months. Off course the positive way to look at it for Aussie collectors is that their collections have signifcantly increased in value !

For anybody in my neighbourhood the Adult Shop next door has a 50% off sale !!! Either they are closing or their mark ups are too high.

Regards Brett

 

[Peter Reuss]

I think Louis made a spot on assessment when he said
"In this environment, I suspect companies which are both producing large quantities of product and substantially raising their prices are going to be in for a rude awakening".

If I was a TS company I would be seriously assessing future releases and production numbers and how much storage space I have. Buyers having to be more choosy.

A collector who spends a fixed amount of $'s can now only buy two items instead of the previous three and that is assuming he still keeps spending those $'s on his hobby.

I think we've already seen this happening due to changing conditions in China. As the Chinese workers have cut back on hours (due to changing labor laws - they now require [gasp] a day off!), the number of new figures coming off the assembly lines from Britains and K&C is already less than in the past. Items are retiring sooner as reorders are made less often.

Perhaps this decrease in production is due to manufacturers watching the economic times, but I suspect it also has a lot to do with China's decreasing production levels.

With increasing prices, it makes sense that people will buy fewer sets. But from a manufacturer's (or dealer's) perspective, if someone buy one set for $300 or three sets for $100 each, the end result may be the same. As long as they don't overproduce (which they don't seem to be), everyone should be fine.

 

[Rutledge]

Why would anyone wish to divulge confidential personal information? I have

laid out a basic market philosophy, named a few stocks Coca Cola, Anheuser

Busch, Home Depot, any one of which could easily have turned a prudent

investor into a millionare.

Home Depot alone created 300 millionares via stock options granted to key

employees. Many others that were in one way or another associated with

the company.

There are also many stories that went the other way. Enron and Worldcom, lately Lehman, Wachovia, etc.

Those who maintain concentrated positions in individual companies whom they may admire but dont really understand or know that well, are taking significant risk. It can bite back hard. Investing in stocks SHOULD BE about preserving and growing one's wealth over time, not getting rich of a fortunate trade. The latter approach usually ends badly.

And of course any time a company gives you lots of shares for free, that CAN BE a great way to build wealth! Its a whole different story when you can only buy a few of them yourself

 

[Canadian Samurai]

Just catching up on this thread.

There are clear indications that consumers are already slowing their discretionary spending. Meaning, consumers' percent of expenditures on things that are vital to their lives i.e., "staples", has increased, while spending on that things that arent absolutely necessary to their lives has decreased. (some of you may see toy soldiers as essential -- others perhaps not

Certainly this hobby, as well as other like "non-core" activities, will likely experience "demand destruction" among their customer base. The depth to which people will lower their purchases of discretionary products and services is not possible to know, but most expect it to be fairly significant, and to last for some time.

However, there may be some relatively good news. In an environment where GLOBAL economic activity is slowed, deflationary pressures will dominant. We may therefore see price decreases going forward, certainly in terms of new products. There may also be fewer new releases. Of course the bad news is that the same downward pressure may exert its influence on re-sale items via ebay, etc.

The toy soldier market is also likely to experience a more defined bifurcationation. Meaning that manufacturers will choose to focus on either the low end or high end. Meanwhile the middle may become largely ignored.

Very good post, you definitely have some knowledge about economics.

For many collectors, does the effect the downturn in the economy has on many collector's spending derive from a perception that there will not be money available to purchase or from a reality that there is now not as much money available to purchase toy soldiers?

Good question. For most collectors in the US, probably a combination of both issues. For those of us in other countries, in the last week or two we have seen a massive hit to our currencies relative to the US dollar which means anything imported from America is suddenly 10-30% more expensive TODAY. Now why the US dollar would be rising as US debt levels reach astronomical levels and the US economy crumbles, defies any sort of logical explanation! I can only think that US investors who were scared out of other securities markets by the financial meltdown, are now trying their hand at currency gambling. Of course, these are some of the same looney speculators who caused this mess in the first place so watch out for some crazy days ahead in the currency markets. Ultimately the US dollar has nowhere to go but down relative to other world currencies. There's hardly anything left to back it up anymore but hope and prayers.

Spare a thought for Iceland Their whole country is going bankrupt apparently!

Iceland teeters on the brink of bankruptcy

http://news.yahoo.com/s/ap/20081007/ap_on_re_eu/eu_iceland_meltdown_1

I don't mean to sound cold-hearted (pardon the pun ), but Iceland kind of deserves what they're getting. They made the rather dubious decision to become a tax haven a few years back to attract foreign investment. The problem is the rest of us in other countries pay the price when the rich and the corporations of our countries set up in Iceland so they can avoid paying government taxes like the common man.

So while our tax revenues dropped because of this, Iceland enjoyed over 5 years of unimaginable income growth as their financial sector grew to ridiculous size and started buying up banks in other countries. So don't feel too bad for them, they had their time in the sun. Now that the bubble has burst they will have to come back down to reality and live within their means and stop providing an unethical safe haven for tax cheaters.

I hope the economies of the Cayman Islands and the British Virgin Islands, and other tax havens also take a beating over this. Same with Ireland (and I say this being part-Irish myself), though at least Ireland is a country with a long history that produces something of value to the rest of the world instead of these little islands in the middle of nowhere that do nothing except act as exclusive playgrounds for the rich.

 

[Rutledge]

Good question. For most collectors in the US, probably a combination of both issues. For those of us in other countries, in the last week or two we have seen a massive hit to our currencies relative to the US dollar which means anything imported from America is suddenly 10-30% more expensive TODAY. Now why the US dollar would be rising as US debt levels reach astronomical levels and the US economy crumbles, defies any sort of logical explanation! I can only think that US investors who were scared out of other securities markets by the financial meltdown, are now trying their hand at currency gambling. Of course, these are some of the same looney speculators who caused this mess in the first place so watch out for some crazy days ahead in the currency markets. Ultimately the US dollar has nowhere to go but down relative to other world currencies. There's hardly anything left to back it up anymore but hope and prayers.

The markets often move in seemingly mysterious ways. Otherwise what a great and easy game it would be!

It does seem the US$ would have to be in a position of weakness. However, there are mitigating factors:

- Its all relative; Remember, this is a global crisis. When all the world seems under duress, the US, as its largest single economy, still offers a degree of RELATIVE safety. As the saying goes, in the world of the blind, the one-eyed man is king.

- The US$ had been weak for nearly 8 years prior. So there was tremendous negative sentiment built in. over that time other currencies gained ground perhaps a bit too quickly. Now, it appears that trend is finally easing. The Euro may be especially overvalued.

- Investment speculation using leverage is now nearly kaput. Hedge funds are facing huge margin calls, and prime brokerages are reining in aggressive traders. Risk taking via leverage has become anathema. More trades/positons are being unwound than are being put on. So I do not think speculators are behind the dollar's move -- perhaps even the opposite.

- The US$ remains the world's reserve currency. If only because frankly there isnt another one waiting in the wings. While this may change over time, it wont do so overnight. If not the US$, then what currency, afterall? Note: In the midst of the crisis last week, some were projecting the Eurozone would disband because it couldnt get all the many parties to agree on a single comprehensive solution. Didnt happen but certainly raises questions about the Euro's viability as a base currency.

- The dollars being introduced into the system by the bailouts) are being (at least partially) offset by the rapid decline in (a broad range of) asset prices. Net net, there is likely a decline in overall US money suppply. Keeping in mind that deflation is actually a worse problem than inflation, there are few options left. (Note US inflation numbers were released today that were FLAT!)

- Despite all the turmoil, an economci meltdown remains unlikely (though not impossible). Given that traditional safe havens like gold dont appear to be making huge gains, it seems most of the world is still betting that we work our way out of this thing, over time.

 

[Njja]

There are also many stories that went the other way. Enron and Worldcom, lately Lehman, Wachovia, etc.

Those who maintain concentrated positions in individual companies whom they may admire but dont really understand or know that well, are taking significant risk. It can bite back hard. Investing in stocks SHOULD BE about preserving and growing one's wealth over time, not getting rich of a fortunate trade. The latter approach usually ends badly.

And of course any time a company gives you lots of shares for free, that CAN BE a great way to build wealth! Its a whole different story when you can only buy a few of them yourself

Rubbish, I started with 100 shares of Coca Cola hardly a large amount.

No one "Gave me" anything for free! I had a small stake in the company

which grew over time to 2400 shares. Any investor starting at any level

could acquite 100 shares of a company he knows, and learn about them and

if he chooses correctly enjoy a nice return.

The idea that it is nearly impossible is incorrect, as is the idea that as an

investor you are being "Given" anything when a company splits a stock.

Should some people use Financial advisors, sure. It is the only way, certainly

not. If you took the time to earn your money, why not take time to learn

how to best invest it?

 

[Rutledge]

Rubbish, I started with 100 shares of Coca Cola hardly a large amount.

No one "Gave me" anything for free! I had a small stake in the company

which grew over time to 2400 shares. Any investor starting at any level

could acquite 100 shares of a company he knows, and learn about them and

if he chooses correctly enjoy a nice return.

The idea that it is nearly impossible is incorrect, as is the idea that as an

investor you are being "Given" anything when a company splits a stock.

Should some people use Financial advisors, sure. It is the only way, certainly

not. If you took the time to earn your money, why not take time to learn

how to best invest it?

For every story like this, there a 1000 others that did not work out so nicely. Buying shares in a company like KO takes no investment savvy. For that matter, one should just buy an index based on the DJIA and be done with it. That would probably give as good returns, with less individual stock risk.

At one point KO did not see its share price move for over 10 years. You perceive your results to be adequate, but you have no relative measurement. In other words, what would your money have done if invested in the broader market? Or some other stock? If owning it makes you feel good every time you buy a twelve pack of diet coke, fine, but that is not really the point.

Do you study their results? Do you know what its expected earnings are, what risks they see in the market, and how they compare to other similar firms? Just because one buys shares in a company in whicnh they are familiar with their product and the stock does OK does not mean they understand investing.

Not everyone has or will use a fianncial advisor. I definitely get that. But if the market is telling us anything right now, its that spreading our your investments across as many places as possible is about the only way to ensure at least some portion of the portfolio should do OK.

The question for you is, what was the value of those shares at the end, compared to what you invested, and what implied annual return does that equal. Once you have that, you can get a sense of how that particular investment has done. Of course, ideally, you need to have an idea of how the entire portfolio has done, relative to risk taken, in order to truly know if you are getting good bang for your buck.

Whether its using Schwab, watching MSNBC, listening to Jim Cramer or some other method, its easy to come to believe investing is doable by the average person.

To give you an idea, I DONT EVEN INVEST IN INDIVIDUAL STOCKS (except occassionally purely for fun). I know how difficult it is to do it well, and also know that I cant possibly grasp all that is out there, from small and mid caps muni and govt bonds, international, REITS, commodities, alternatives, etfs, and so so. The investment landscape is vast beyond any single person's comprehension and ability to keep up. To believe otherwise is some combination of need to control, naievete and hubris.

 

[Canadian Samurai]

While I don't invest in stocks personally, everything I've read is that Rutledge's approach is the one often recommended. It's apparently very very difficult (and largely a game of chance) to pick out winning stocks by yourself, and at the end of the day people who instead choose funds that are indexed to the overall growth of the stock market will typically see higher returns than those who are constantly buying and selling.

That said, now would be a great time to invest in oil and gas stocks I wager, with prices low and nowhere to go but up.

 

[Njja]

For every story like this, there a 1000 others that did not work out so nicely. Buying shares in a company like KO takes no investment savvy. For that matter, one should just buy an index based on the DJIA and be done with it. That would probably give as good returns, with less individual stock risk.

At one point KO did not see its share price move for over 10 years. You perceive your results to be adequate, but you have no relative measurement. In other words, what would your money have done if invested in the broader market? Or some other stock? If owning it makes you feel good every time you buy a twelve pack of diet coke, fine, but that is not really the point.

Do you study their results? Do you know what its expected earnings are, what risks they see in the market, and how they compare to other similar firms? Just because one buys shares in a company in whicnh they are familiar with their product and the stock does OK does not mean they understand investing.

Not everyone has or will use a fianncial advisor. I definitely get that. But if the market is telling us anything right now, its that spreading our your investments across as many places as possible is about the only way to ensure at least some portion of the portfolio should do OK.

The question for you is, what was the value of those shares at the end, compared to what you invested, and what implied annual return does that equal. Once you have that, you can get a sense of how that particular investment has done. Of course, ideally, you need to have an idea of how the entire portfolio has done, relative to risk taken, in order to truly know if you are getting good bang for your buck.

Whether its using Schwab, watching MSNBC, listening to Jim Cramer or some other method, its easy to come to believe investing is doable by the average person.

To give you an idea, I DONT EVEN INVEST IN INDIVIDUAL STOCKS (except occassionally purely for fun). I know how difficult it is to do it well, and also know that I cant possibly grasp all that is out there, from small and mid caps muni and govt bonds, international, REITS, commodities, alternatives, etfs, and so so. The investment landscape is vast beyond any single person's comprehension and ability to keep up. To believe otherwise is some combination of need to control, naievete and hubris.

This in my opinion is exactly what is wrong with the market today.

Some people do, others teach.

The people that do (actually have companies, employing people and making

products) allow themselves to be influenced by those doing neither.

You ask me what I really know about Coca Cola. I know I have received my

initial investment back many times over. I currently enjoy a 33% return on my

original investment yearly, and it has grown to 1,100% of investment.

I'm not going to go into other companies I mentioned because they dwarf

this return by comparison.

If you want to tell people its a good idea to invest through financial planners,

and by mutual funds fine.

Just don't tell them its the only way or they have no chance, thats simply

not true.

As is your 1,000 to 1 odds. Based exactly on what fact? Pure thin air.

 

[Njja]

While I don't invest in stocks personally, everything I've read is that Rutledge's approach is the one often recommended. It's apparently very very difficult (and largely a game of chance) to pick out winning stocks by yourself, and at the end of the day people who instead choose funds that are indexed to the overall growth of the stock market will typically see higher returns than those who are constantly buying and selling.

That said, now would be a great time to invest in oil and gas stocks I wager, with prices low and nowhere to go but up.

If you currently don't invest in stocks, you should probably keep it that way.

Anyone willing to turn their hard earned cash over to someone else, that is

going to charge them fees with NO PROMISE OF SUCCESS might as well invest

in lottery tickets.

Investing takes two things, cash, and knowledge.

You shouldn't invest with borrowed cash, or someone else's knowledge.

 

[Canadian Samurai]

:

If you currently don't invest in stocks, you should probably keep it that way.

Anyone willing to turn their hard earned cash over to someone else, that is

going to charge them fees with NO PROMISE OF SUCCESS might as well invest

in lottery tickets.

Thanks for the advice, yeah that's pretty much why I don't. If I ever do, I'll be making the decisions myself, not relying on the stock broker. A year or two ago, people would have said: look at all the money you're missing out on by not playing the stock market. Now I can say to those same people: look at all the headaches I've avoided in the last few months so I have time for more important things, like you know, posting on these forums.

 

[OzDigger]

For every story like this, there a 1000 others that did not work out so nicely. Buying shares in a company like KO takes no investment savvy. For that matter, one should just buy an index based on the DJIA and be done with it. That would probably give as good returns, with less individual stock risk.

At one point KO did not see its share price move for over 10 years. You perceive your results to be adequate, but you have no relative measurement. In other words, what would your money have done if invested in the broader market? Or some other stock? If owning it makes you feel good every time you buy a twelve pack of diet coke, fine, but that is not really the point.

Do you study their results? Do you know what its expected earnings are, what risks they see in the market, and how they compare to other similar firms? Just because one buys shares in a company in whicnh they are familiar with their product and the stock does OK does not mean they understand investing.

Not everyone has or will use a fianncial advisor. I definitely get that. But if the market is telling us anything right now, its that spreading our your investments across as many places as possible is about the only way to ensure at least some portion of the portfolio should do OK.

The question for you is, what was the value of those shares at the end, compared to what you invested, and what implied annual return does that equal. Once you have that, you can get a sense of how that particular investment has done. Of course, ideally, you need to have an idea of how the entire portfolio has done, relative to risk taken, in order to truly know if you are getting good bang for your buck.

Whether its using Schwab, watching MSNBC, listening to Jim Cramer or some other method, its easy to come to believe investing is doable by the average person.

To give you an idea, I DONT EVEN INVEST IN INDIVIDUAL STOCKS (except occassionally purely for fun). I know how difficult it is to do it well, and also know that I cant possibly grasp all that is out there, from small and mid caps muni and govt bonds, international, REITS, commodities, alternatives, etfs, and so so. The investment landscape is vast beyond any single person's comprehension and ability to keep up. To believe otherwise is some combination of need to control, naievete and hubris.

Good advice, it's a real gamble to invest significant amounts of money into a handful of companies. Thousands of people in Australia have lost huge amounts by investing most of their money in what they believed to be top performers only to suffer significant loses due to unforeseen factors such as changes in government policies. Telstra being a prime example.