I've been discussing finances with people on this board by PM and thought I would open it up to anyone who is intrerested.
My most recent conversations have been about how to make back the money people have lost on their investments, houses, and possible reduction in income from layoffs.
The first question I propose is: can you do it under the old rules or have things changed so much that you need to do things differently. In other words, are we in a long term bear cycle and will dollar cost averaging into the things you have just be flushing your money down the toilet?
The second question is: if things have changed that much, what do you do?
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Personally, I don't know, but half the economists say we can have a double dip. So, I am investing less money and putting it into things with greater reward. Leaving cash on the table to buy more if things dip and sell if things go up.
To do this I like index ETF's rather than mutual funds. You pay a fee but you can get in and out faster and not ride the waves up and down. Some peole call this market timing, but I don't. The reason is because of the way I do it. I take profits when things are up, buy more when things are down, and leave cash in the account rather than being fully invested. So it is more like re-balancing than market timing.
I've set up several paper trade portfolios to see where things are and the best performing over the past month has been a combination of 60% bonds and 40% ETF's consisting of a 2x Russell 2000 index ETF.
The worst has been a defaltion portfolio constisting of US Treasuries, inverse Euros ETF, Inverse Real Estate ETF, inverse 3x Dow ETF and inverse 3x Russell 2000 ETF.
As far as Real Estate, I'm staying where I am. Not sure if prices have bottomed out or not. So I feel it is a gamble to buy now. The strategy is different for up and down markets. In a down market you sell you place at a loss to buy a bigger place at a bigger loss (which is your gain). In a up market you sell your place at a gain to pocket money and buy a smaller place or just pocket the money and rent for a while.
Not knowing where things stand in Real Estate, I feel it is too risky to make that large of an investment being levereged(mortgage payments), where you could end up owing more than the house is worth.