Is economic downturn stressing you out?

[Big Daddy]

I just received the mortgage payment cupons, and my monthly payment is increased by $80 because of increase in some state/county tax. With my portfolio hitting rock bottom and the cost of everything else going up, I feel that I am in a situation for which I was not prepared. The result is that I am becoming easily irritable. I hate surprises and it seems all the surprises I have got this year were unpleasent ones.

Does anyone one else feel the same way or is it just me?

 

[shack]

You wanna get irritated? Try paying Canadian taxes (income and GST), using a bikini-sized dollar and not having your mortgage payments tax deductible. You guys have it good down there.

I'm assuming you're a Yank due to your reference to state tax.

 

[joebob]

So true - once you understand the Canadian system it's very difficult to work up a good rant down here...

Joebob

 

[Big Daddy]

I was during my first trip to Canada

I was irritated during my first trip to Canada. I never thought of 14% tax on goods. Although I think that the downturn impacts both US and Canada. The thing that is making me upset is that with war clouds hanging there does not seem to be any way out in the future.

 

[drlove]

Look at the bright side...

You're not going to be able to change the way the economy is going, so why waste time worrying about it?? At least when you come to Canada, you're getting a great deal on SP's due to the strength of your dollar.

 

[Big Daddy]

Two weeks to go

Thanks Dr. Love. Two weeks to go and I will be in Canada. The only reason I worry about the economy is that it is taking a bite out of my SP budget

 

[homonger]

Big Daddy,

It's not just you. The current economic downtown has hit me pretty hard too. I have lost a very sizeable sum of money in the last six months. I had actually entertained thoughts of quitting my job, cashing out and being a bum for a while. But forget that now.

I agree with drlove. At least we still have those great Canadian sp's and that great exchange rate to look forward to.

 

[Big Daddy]

Don't get swayed away by low interest rates

I was stupid to buy a house in May because of low interest rates. People will tell you buying is better than renting. One thing I have noticed that the combined cost of property taxes+ home insurance + maintenence (mowing, trimming, snow removal, mulching etc.) itself comes to be higher than or close to renting.

Right now, I am barely surviving. So if anyone is pondering buying a house to hedge against the volitality in the market. Be careful!

 

[drlove]

Re: Two weeks to go

Thanks Dr. Love. Two weeks to go and I will be in Canada. The only reason I worry about the economy is that it is taking a bite out of my SP budget

True... but at least in comparative terms, you're getting a sizable discount when you figure in the exchange rate, so in a manner of speaking, you're still ahead. BTW... have you given any thought as to who you will see when you arrive?? Let me know if you need any recommendations.

 

[drlove]

Re: Don't get swayed away by low interest rates

I was stupid to buy a house in May because of low interest rates. People will tell you buying is better than renting. One thing I have noticed that the combined cost of property taxes+ home insurance + maintenence (mowing, trimming, snow removal, mulching etc.) itself comes to be higher than or close to renting.

Right now, I am barely surviving. So if anyone is pondering buying a house to hedge against the volitality in the market. Be careful!

Actually, here in Canada, the market for condominiums has skyrocketed. They are generally cheaper than buying a house (though not always, depending on what you're looking for).

The convenience factor is a major selling point - at least the maintenence is taken care of for you. While you're still stuck with condo fees at the end of every month, it evens out since you're not spending any money on repairs/upkeep, and you eliminate the need of buying items such as lawnmowers etc. The only real advantage to owning a house is that they tend to appreciate in value more so than a condo over the long term.

 

[drlove]

BTW...

A lot of people are taking their money out of the stock market and investing in real estate, since it holds its value. So in any case it's not that bad a deal.

 

[Big Daddy]

Yes, PM me

Dr. Love,

PM me with your recommendations. I have decided to see Venassa of Ecstasy right now. She looks like a model type and her reviews suggest safe activities.

I will be in Toronto between Oct. 18-Oct. 22. So I will miss the TERB party

 

[Big Daddy]

Re: BTW...

A lot of people are taking their money out of the stock market and investing in real estate, since it holds its value. So in any case it's not that bad a deal.

I think you have to be careful. Don't ignore closing costs and down payment costs etc. When a lot of people are doing the same thing it means that, if you do it, you are paying a higher price in general. When everyone is selling stocks and buying house the prices of homes/condos will go up. This could be a housing bubble and can hurt you. Although the impact may not be as bad as the bursting of stock market bubble.

The biggest challange about buying a house is making 15-30 year monthly payment commitments. If you buy a house and loose your job in about 6 months then you are really screwed. You will loose money equivalent of spending 50-75 hours with a SP (due to the result of closing costs and selling costs of your house). So be careful.

 

[drlove]

Good Points

That's certainly true, but in any case owning is definitely better than renting, if you can avoid it.

 

[alphaBIT]

??????

What economic downturn are you all talking about? Unemployment is at record lows, the housing market is red hot, and many companies seem to be doing quite fine. Sure, some earnings reports sound gloomy, and the bear market as leading indicator is a bit worrisome - but I guess the bear bites mainly those who got greedy in the 90s and who abandoned the wisdom of a conservatively balanced portfolio. I for one am still having a blast... enough to see my fav SPs about three times a week.

 

[Gentle-man]

The past few years has come as a rude awakening to many young people who had never before in their adult lives experienced a serious downturn in the markets. Just one big never ending gravy train where everyone was making tons of money and driving BMW’s, hobbying several times a week and by a large having a grand old time. In times like those it is not fashionable to be conservative with your investments while stocks like NORTEL triples in value in a matter of months.

As an experienced Ontario licensed, Independent Investments and Insurance broker, I can tell you that many conservative investors not only have not lost money but have actually been holding mutual funds which during the past 12 months have generated a return of about 20% and in fact have been doing that on average for ten years or more. Nor do I believe that Warren Buffett has lost any amount of money during the past twelve months. But then again he does not even own a computer mainly investing in things he understands.
Like that most people have to eat every day.

I guess the above is not news to anyone but I thought I would point out that not everyone is crying the blues. Some of us are still driving BMW’s and vacationing overseas. Even in Canada with our Monopoly funny money. Maybe some of you guys and gals too for that matter should listen to your Financial Advisors when they advise caution and conservatism or if your advisor does not, look around for one who does. The trouble is that many financial advisors remember only the good times too, so ask a lot of questions before you decide on one.

Personally I do most of my business in the Barrie area and the GTA. If anyone needs help feel free to PM me. I would not normally mention this but since the subject came up I decided to make an exception.

 

[drlove]

the stockmarket is stressing me out, not because i've lost moola, but because it effects other areas of the economy

and dont kid yourself if you think real estate holds its value. my house has only appreciated 50% in total (less than tax and inflation) in the last 20 years. i could have tripled my moola compounding in tbills during the same time. take out living expenses and i'd still have a double over that period

my question to you all. do you feel the pain in the economy. its hard for me to judge cause i sorta live on fixed income. or is it true what the media says..consumers are spendin blah blah

and most of all..where are people gettin the moola to buy all these houses..one theory i have is wealth transfer cause the boomers and their parents are startin to die off

Another way of doing it is to take out a mortgage on a house and then rent it out. In effect, it's the tenants who finance it, and after it's paid off, the house is yours. Then you can take the money and re-invest. I realize that it will take time, but it's a good idea for someone who is in their early 30's, let's say.

 

[Hornet]

The economic downturn has hit one industry very hard and has caused a titlewave effect on the whole market. The high-tech industry is being ravaged lately with huge layoffs, financial instability and potential insolvency the has caused the stock markets to plummet. If you had virtually any Canadian Mutual fund it had some holdings in Nortel, JDS, RIM, Celestica or other high-tech industries and these stocks have taken a beating. Combine that with companies in the US like Enron that are cheating and Arthur Anderson the Auditors (who should spot any wrong doing and protect the investor) not catching their cheating and investor confidence is at an alltime low.

Yes, the overall economy is still healthy (except for high-tech) but how long can that last without a turnaround whereby businesses start to invest again (in high-tech) and begin hiring. All those people being laid-off will contract on their spending until they find new jobs. Less people spending then the consumer that is keeping the economy afloat will no longer be able to do so. Until investor confidence comes about and we see improvement in the High-tech field then we are still going to be in some troubling times for the next while. Don't think we've seen the bottom yet.

 

[Gentle-man]

Originally posted by tbill it up

what gentle-man said above about some people earning 20% is a complete lie,a 20% gain no way

I do not make statements like that unless I can back it up with facts. I very much doubt that tbill, his name not withstanding, has any idea what he's talking about.

There are in fact many mutual funds that have managed to make money for their conservative investors not just last year but over extended periods of time. There are many conscientious and highly skilled mutual fund managers who take a lot of pride in doing better than the indexes, something which the majority of mutual funds sadly fail to do.

Anyone who would like additional information is welcome to contact me. In the meantime it is a simple matter to research the top earning mutual funds on the web by anyone who wants to see for themselves and who has any idea at all of how to find things on the web.

----t-bill---- just DO NOT call me or anyone else a liar, unless YOU can prove that I am. I do not appreciate that. Let us all try to act civilized and keep this web site as the normally enjoyable and useful conduit for the better things in life that it can be.

 

[alphaBIT]

The overall market decline was anticipated by many as early as three years ago, and the devaluation of overpriced stock like Nortel entirely predictable. It was and is quite straightforward to get substantial returns using options and short selling of equities in this environment.