Comments on: 4 lessons from the financial crisis http://moremoney.blogs.money.cnn.com/2008/11/17/4-lessons-from-the-financial-crisis/ Money Magazine looks at a wide range of personal finance issues and asks for your feedback. Tue, 22 Dec 2009 00:19:01 +0000 http://wordpress.com/ hourly 1 By: Tom Wilkins, Grand Rapids, Michigan http://moremoney.blogs.money.cnn.com/2008/11/17/4-lessons-from-the-financial-crisis/#comment-15386 Tom Wilkins, Grand Rapids, Michigan Fri, 24 Apr 2009 15:13:58 +0000 http://asktheexpert.wordpress.com/?p=353#comment-15386 Is NAR inflating memeberships? http://www.viewmylisting.com/is_nar_inflating_membership.htm Is NAR inflating memeberships?

http://www.viewmylisting.com/is_nar_inflating_membership.htm

]]> By: Kara, Ft. Lauderdale, Fl http://moremoney.blogs.money.cnn.com/2008/11/17/4-lessons-from-the-financial-crisis/#comment-13547 Kara, Ft. Lauderdale, Fl Sun, 01 Feb 2009 20:20:10 +0000 http://asktheexpert.wordpress.com/?p=353#comment-13547 I have been in the market since the late 90's and today I am no better off than when I began. On the other hand, I have made wise real estate investments that may be down in value, but still profitable to the upside. I am generating cash flow from my 3 rental properties, have a primary residence in Fl and a vacation home in NC. All of these properties will slowly appreciate in value over time and I have the ability to enjoy using them and at the same time they are providing me with some income and tax advantages. As I told my stock broker when he wanted to invest more of my cash. NO! When I look out the window, I can still see my real estate; however, I cannot see my lost investments in the stock market...most are gone, never to return. After I've tapped all of my savings in retirement, I will still have my equity in my real estate holdings to carry me through my remaining years. I'm not suggesting that one abandon the stock market completely, but choose safe investments and clearly diversify into real estate...particularly now when the prices have adjusted to an all time low along with interest rates. I have been in the market since the late 90's and today I am no better off than when I began. On the other hand, I have made wise real estate investments that may be down in value, but still profitable to the upside. I am generating cash flow from my 3 rental properties, have a primary residence in Fl and a vacation home in NC. All of these properties will slowly appreciate in value over time and I have the ability to enjoy using them and at the same time they are providing me with some income and tax advantages. As I told my stock broker when he wanted to invest more of my cash. NO! When I look out the window, I can still see my real estate; however, I cannot see my lost investments in the stock market…most are gone, never to return. After I've tapped all of my savings in retirement, I will still have my equity in my real estate holdings to carry me through my remaining years. I'm not suggesting that one abandon the stock market completely, but choose safe investments and clearly diversify into real estate…particularly now when the prices have adjusted to an all time low along with interest rates.

]]> By: Matt Malinowski, Lethbridge AB http://moremoney.blogs.money.cnn.com/2008/11/17/4-lessons-from-the-financial-crisis/#comment-13538 Matt Malinowski, Lethbridge AB Wed, 19 Nov 2008 05:04:41 +0000 http://asktheexpert.wordpress.com/?p=353#comment-13538 I just want to caution everyone that before jumping back into the market that everyone has their credit cards paid off. Too quickly we forget that one of the lessons out of all of this is that we cannot live beyond our means. I just want to caution everyone that before jumping back into the market that everyone has their credit cards paid off. Too quickly we forget that one of the lessons out of all of this is that we cannot live beyond our means.

]]> By: Kevin Rathdrum, Idaho http://moremoney.blogs.money.cnn.com/2008/11/17/4-lessons-from-the-financial-crisis/#comment-13537 Kevin Rathdrum, Idaho Wed, 19 Nov 2008 04:18:10 +0000 http://asktheexpert.wordpress.com/?p=353#comment-13537 Why would anyone advise someone to invest in the stock market now. In 1929 there was a major down turn in the market. And in the end the stock market DOW dropped over 80%. We are in a worst crisis than in 1929. The dollar is about to slide over a cliff. And the tax base is being eroded away so the government won't be able to pay the interest on our loans. Next year we won't be able to have foreigners buy our bonds. Because the feel they would be too risky because of all our debt. The credit rating of the US will be downgraded. With all the spending we are looking at a hyperinflation senario similar to Wienmar Germany. The article is dreamland. Tell the kid to invest in silver/gold. In the depression you could buy a house for a couple of ounces of gold and in Wienmar germany you could buy a house for one quarter ounce of gold. Why would anyone advise someone to invest in the stock market now. In 1929 there was a major down turn in the market. And in the end the stock market DOW dropped over 80%. We are in a worst crisis than in 1929. The dollar is about to slide over a cliff. And the tax base is being eroded away so the government won't be able to pay the interest on our loans. Next year we won't be able to have foreigners buy our bonds. Because the feel they would be too risky because of all our debt. The credit rating of the US will be downgraded. With all the spending we are looking at a hyperinflation senario similar to Wienmar Germany. The article is dreamland. Tell the kid to invest in silver/gold. In the depression you could buy a house for a couple of ounces of gold and in Wienmar germany you could buy a house for one quarter ounce of gold.

]]> By: Ramundo A, Lincoln, Nebraska http://moremoney.blogs.money.cnn.com/2008/11/17/4-lessons-from-the-financial-crisis/#comment-13536 Ramundo A, Lincoln, Nebraska Wed, 19 Nov 2008 02:53:10 +0000 http://asktheexpert.wordpress.com/?p=353#comment-13536 Save at least 10% of everything you earn. Like Buffett says, be greedy when others are fearful and fearful when others are greedy. Learn and follow the Elliot Wave Theory. Read and learn about investing. Develop and strictly adhere to a long term investment plan. Learn and apply the dynamics and psychology of market swings and how they work and learn how to make them work for you. In essence, educate yourself and apply your knowledge on a long term basis. Save at least 10% of everything you earn. Like Buffett says, be greedy when others are fearful and fearful when others are greedy. Learn and follow the Elliot Wave Theory. Read and learn about investing. Develop and strictly adhere to a long term investment plan. Learn and apply the dynamics and psychology of market swings and how they work and learn how to make them work for you. In essence, educate yourself and apply your knowledge on a long term basis.

]]> By: Anonymous http://moremoney.blogs.money.cnn.com/2008/11/17/4-lessons-from-the-financial-crisis/#comment-13535 Anonymous Wed, 19 Nov 2008 01:02:35 +0000 http://asktheexpert.wordpress.com/?p=353#comment-13535 I'll tell you what, its been black friday for a few weeks now and I'm loading up on these bank stocks. In a few years it'l rebound and I believe what I put in it over the next year will at least double my value. at least. its on sale! citi for example is 75% off! ;) I'll tell you what, its been black friday for a few weeks now and I'm loading up on these bank stocks. In a few years it'l rebound and I believe what I put in it over the next year will at least double my value. at least. its on sale! citi for example is 75% off! ;)

]]> By: Dave, Houston, TX http://moremoney.blogs.money.cnn.com/2008/11/17/4-lessons-from-the-financial-crisis/#comment-13534 Dave, Houston, TX Wed, 19 Nov 2008 00:26:24 +0000 http://asktheexpert.wordpress.com/?p=353#comment-13534 Nice article. Sad to see all these people near retirement that had more than half of their stash in stocks and real estate. What's even sadder is considering the moral hazard of the government now helping "too much." Stock Market has some interesting features, not widely advertised, like a real return since 1871 less than 2% on price appreciation alone (most people don't believe this, but take the SP500 data since it started and calculate it yourself). On the other hand, including dividends, real return is 6.4%. Kind of like a bond, to support the argument of another writer to this post (but a bond with a heckuva a lot of volatility). It also seems to have a 35 year oscillation in peaks and troughs, and the next trough is 2018. Hopefully past performance doesn't predict future results! Nice article. Sad to see all these people near retirement that had more than half of their stash in stocks and real estate. What's even sadder is considering the moral hazard of the government now helping "too much."

Stock Market has some interesting features, not widely advertised, like a real return since 1871 less than 2% on price appreciation alone (most people don't believe this, but take the SP500 data since it started and calculate it yourself). On the other hand, including dividends, real return is 6.4%. Kind of like a bond, to support the argument of another writer to this post (but a bond with a heckuva a lot of volatility).

It also seems to have a 35 year oscillation in peaks and troughs, and the next trough is 2018. Hopefully past performance doesn't predict future results!

]]> By: Jason Stoons, Austin TX http://moremoney.blogs.money.cnn.com/2008/11/17/4-lessons-from-the-financial-crisis/#comment-13533 Jason Stoons, Austin TX Wed, 19 Nov 2008 00:10:46 +0000 http://asktheexpert.wordpress.com/?p=353#comment-13533 I think what Walter is trying to say is : Keep it simple to keep it manageable. Meanwhile: There has been a phrase bandied about in the press "too big to fail". I think that phrase needs to be changed to "too big for their britches" because "Wall Street" has been demanding "more liquidity" from the Federal Government for years. I think that was a cover-up for "we gambled and made some bad bets so we need to borrow more money even cheaper so when we win a big one we can pay you back but meanwhile we need to pay ourselves several million dollars because we are such darn smart and clever people." So when you do your own investing, don't get too big for your britches thinking you are smarter than "Wall Street" because they have more OPM than you do. OPM being "Other People's Money" I think what Walter is trying to say is :

Keep it simple to keep it manageable.

Meanwhile:

There has been a phrase bandied about in the press "too big to fail".

I think that phrase needs to be changed to "too big for their britches" because "Wall Street" has been demanding "more liquidity" from the Federal Government for years.

I think that was a cover-up for "we gambled and made some bad bets so we need to borrow more money even cheaper so when we win a big one we can pay you back but meanwhile we need to pay ourselves several million dollars because we are such darn smart and clever people."

So when you do your own investing, don't get too big for your britches thinking you are smarter than "Wall Street" because they have more OPM than you do.

OPM being "Other People's Money"

]]> By: Nairb Sreoom, Biloxi, MS http://moremoney.blogs.money.cnn.com/2008/11/17/4-lessons-from-the-financial-crisis/#comment-13532 Nairb Sreoom, Biloxi, MS Tue, 18 Nov 2008 22:21:38 +0000 http://asktheexpert.wordpress.com/?p=353#comment-13532 One fundamental problem with our economy and Government is the unhealthly focus on the spenders--we bend over backwards to encourage people to go into debt, while at the same time practically eliminate all incentives to save our money (painfully low savings rates)--America's problems will continue to worsen as long as we continue to spend beyond our means...and I'm talking about both Government and personal spending. One fundamental problem with our economy and Government is the unhealthly focus on the spenders–we bend over backwards to encourage people to go into debt, while at the same time practically eliminate all incentives to save our money (painfully low savings rates)–America's problems will continue to worsen as long as we continue to spend beyond our means…and I'm talking about both Government and personal spending.

]]> By: Don Miner, San Francisco, http://moremoney.blogs.money.cnn.com/2008/11/17/4-lessons-from-the-financial-crisis/#comment-13531 Don Miner, San Francisco, Tue, 18 Nov 2008 21:41:09 +0000 http://asktheexpert.wordpress.com/?p=353#comment-13531 The current economics is really a paradigm shift to some basics, that will really develope into a new reality, a new way of looking at things. The promoters of sliced and diced investment "opportunities" have been found out. The repercussions of this failure are yet to be determined. Your article really tells us that it is back to basics, keep your investment strategy simple and understandable. I think the future will be the best time in our history, but only after a lot of lessons are learned and pain obsorbed. If the government bails us out too much, we won't have learned anything. The current economics is really a paradigm shift to some basics, that will really develope into a new reality, a new way of looking at things. The promoters of sliced and diced investment "opportunities" have been found out. The repercussions of this failure are yet to be determined. Your article really tells us that it is back to basics, keep your investment strategy simple and understandable. I think the future will be the best time in our history, but only after a lot of lessons are learned and pain obsorbed. If the government bails us out too much, we won't have learned anything.

]]> By: John, Phila PA http://moremoney.blogs.money.cnn.com/2008/11/17/4-lessons-from-the-financial-crisis/#comment-13530 John, Phila PA Tue, 18 Nov 2008 20:56:47 +0000 http://asktheexpert.wordpress.com/?p=353#comment-13530 It's a shame that there is no TV show about simple, sensible investing principles: keeping costs low, tax efficiency high, diversification high, and allocation appropriate. Although they are the optimal strategy for nearly everyone, can you imagine watching a show that told you to do the same basic thing every week for years on end? LOL They could call it "Don't just do something, stand there"! It's a shame that there is no TV show about simple, sensible investing principles: keeping costs low, tax efficiency high, diversification high, and allocation appropriate. Although they are the optimal strategy for nearly everyone, can you imagine watching a show that told you to do the same basic thing every week for years on end? LOL They could call it "Don't just do something, stand there"!

]]> By: Spock_rhp, Miami, FL http://moremoney.blogs.money.cnn.com/2008/11/17/4-lessons-from-the-financial-crisis/#comment-13529 Spock_rhp, Miami, FL Tue, 18 Nov 2008 20:10:27 +0000 http://asktheexpert.wordpress.com/?p=353#comment-13529 forgetting reality because you are chasing pie in the sky is a tough one. Any reference librarian can help you look up the long term advantage that large cap stocks have delivered over government bonds -- it is only about 5%. Every time you think you're going to do significantly better than that 5% [before taxes, too] you have to know that you're chasing pie in the sky. Can it be done? sure -- by experts. Then you have to ask yourself if you're an expert. something like 99.95% of us are not. If you're not an expert, can you hire an expert? Absolutely -- if you have millions to invest. However, for the average family, the expert needs to get paid so much that you can't afford him or her. That means you'll get average results. period. Build your plan as if you'll get average results. Then start becoming an expert and maybe you'll be able to do better than your plan. forgetting reality because you are chasing pie in the sky is a tough one. Any reference librarian can help you look up the long term advantage that large cap stocks have delivered over government bonds — it is only about 5%.

Every time you think you're going to do significantly better than that 5% [before taxes, too] you have to know that you're chasing pie in the sky.

Can it be done? sure — by experts. Then you have to ask yourself if you're an expert. something like 99.95% of us are not.

If you're not an expert, can you hire an expert? Absolutely — if you have millions to invest. However, for the average family, the expert needs to get paid so much that you can't afford him or her. That means you'll get average results. period.

Build your plan as if you'll get average results. Then start becoming an expert and maybe you'll be able to do better than your plan.

]]> By: BIZ, Dunedin Florida USA http://moremoney.blogs.money.cnn.com/2008/11/17/4-lessons-from-the-financial-crisis/#comment-13527 BIZ, Dunedin Florida USA Tue, 18 Nov 2008 19:11:42 +0000 http://asktheexpert.wordpress.com/?p=353#comment-13527 Good Points. On the whole we forgot about risk. We forgot that trees DO NOT grow forever into the sky. The signs were there for the Dot Com bust and not the housing/sub-prime bust. We forgot to look both ways before crossing the 'street' and got blind-sided. I'm 55 years old and have been investing since the early 1980's and went through the crash of 1987, but this time I see with different eyes. All of my equities will remain fully invested, and will be left alone "to fend" for themselves...hopefully their value will rebound in the next 10 or 20 years. I was 80/20 stock to bonds...that's now become 70/30 ratio. I plan to continue to save 21% of my income, but these monies are going into a GIC fixed instrument within my company 401(k). The other thing that I am doing differently, is to get back (sold my house in April 2008)into Real Estate, and make it a larger percent of my investments. Good luck to all! Good Points. On the whole we forgot about risk. We forgot that trees DO NOT grow forever into the sky. The signs were there for the Dot Com bust and not the housing/sub-prime bust. We forgot to look both ways before crossing the 'street' and got blind-sided.

I'm 55 years old and have been investing since the early 1980's and went through the crash of 1987, but this time I see with different eyes. All of my equities will remain fully invested, and will be left alone "to fend" for themselves…hopefully their value will rebound in the next 10 or 20 years. I was 80/20 stock to bonds…that's now become 70/30 ratio. I plan to continue to save 21% of my income, but these monies are going into a GIC fixed instrument within my company 401(k). The other thing that I am doing differently, is to get back (sold my house in April 2008)into Real Estate, and make it a larger percent of my investments.

Good luck to all!

]]> By: Pat Savu Maplewood, MN http://moremoney.blogs.money.cnn.com/2008/11/17/4-lessons-from-the-financial-crisis/#comment-13526 Pat Savu Maplewood, MN Tue, 18 Nov 2008 19:10:00 +0000 http://asktheexpert.wordpress.com/?p=353#comment-13526 All this advice is great if you have a pension to fall back on in hard times IN ADDITION to your 401K. If you don't, you can't save enough for a comfortatble retirement before turning 70 with all this brutal cycling. All this advice is great if you have a pension to fall back on in hard times IN ADDITION to your 401K.
If you don't, you can't save enough for a comfortatble retirement before turning 70 with all this brutal cycling.

]]> By: kate, boston, MA http://moremoney.blogs.money.cnn.com/2008/11/17/4-lessons-from-the-financial-crisis/#comment-13525 kate, boston, MA Tue, 18 Nov 2008 18:50:09 +0000 http://asktheexpert.wordpress.com/?p=353#comment-13525 The present meltdown has also shown us how unethical many of the financial corporations are. From the companies that rated AIG "AAA" to the derivatives that were "invented" for fast profits and big bonuses, we have learned that Wall Street lies, cheats and steals, without penalty. The present meltdown has also shown us how unethical many of the financial corporations are. From the companies that rated AIG "AAA" to the derivatives that were "invented" for fast profits and big bonuses, we have learned that Wall Street lies, cheats and steals, without penalty.

]]> By: Jack Thomas, Tucson, AZ http://moremoney.blogs.money.cnn.com/2008/11/17/4-lessons-from-the-financial-crisis/#comment-13524 Jack Thomas, Tucson, AZ Tue, 18 Nov 2008 17:55:24 +0000 http://asktheexpert.wordpress.com/?p=353#comment-13524 The author is wrong about "much of the excess wrung out" - PE ratios are still excessive and there's more downside to come. The author is wrong about "much of the excess wrung out" – PE ratios are still excessive and there's more downside to come.

]]> By: mansoor ,moradabad ,india http://moremoney.blogs.money.cnn.com/2008/11/17/4-lessons-from-the-financial-crisis/#comment-13523 mansoor ,moradabad ,india Tue, 18 Nov 2008 17:30:52 +0000 http://asktheexpert.wordpress.com/?p=353#comment-13523 It is well written , it truly is the fact , putting the bad to the past , thought the worst could not be over yet , you could expect another 20 % lower values in the stock market , look out for the DOWJONES to come to level of 7000 to 7400 to enter the market and stay in the stock of atleast 6 months .to get real returns , if one can stay invested longer , better returns are expected . the market will come back to its original level in 3 years , there could not be a better time to get in to the market if one has the cash liquidity , It is well written , it truly is the fact , putting the bad to the past ,
thought the worst could not be over yet , you could expect another 20 % lower values in the stock market ,
look out for the DOWJONES to come to level of 7000 to 7400 to enter the market and stay in the stock of atleast 6 months .to get real returns , if one can stay invested longer , better returns are expected .
the market will come back to its original level in 3 years , there could not be a better time to get in to the market if one has the cash liquidity ,

]]> By: Anonymous http://moremoney.blogs.money.cnn.com/2008/11/17/4-lessons-from-the-financial-crisis/#comment-13522 Anonymous Tue, 18 Nov 2008 17:29:47 +0000 http://asktheexpert.wordpress.com/?p=353#comment-13522 Excellent article Excellent article

]]> By: Bernie Blyth , Australia http://moremoney.blogs.money.cnn.com/2008/11/17/4-lessons-from-the-financial-crisis/#comment-13521 Bernie Blyth , Australia Tue, 18 Nov 2008 17:28:23 +0000 http://asktheexpert.wordpress.com/?p=353#comment-13521 Great aticle , the only way i can recover capital losses is by jumping back in and yousing my capital gains as tax write offs , it will take some time im not going to miss the rebound ive lost to much . Great aticle , the only way i can recover capital losses is by jumping back in and yousing my capital gains as tax write offs , it will take some time im not going to miss the rebound ive lost to much .

]]> By: Lee, Shreveport, La http://moremoney.blogs.money.cnn.com/2008/11/17/4-lessons-from-the-financial-crisis/#comment-13520 Lee, Shreveport, La Tue, 18 Nov 2008 16:18:57 +0000 http://asktheexpert.wordpress.com/?p=353#comment-13520 I think these are all good and positive ideas, but if we continue to think that the stock market will again go upwards like it did in the dot com peak and the housing market boom, we may be in for a surprise. With all of these bailouts and the companies not doing what they are supposed to do with taxpayer's money, big business has learned nothing from this. All they will do is blow it and then turn to the government for help...AGAIN. I think these are all good and positive ideas, but if we continue to think that the stock market will again go upwards like it did in the dot com peak and the housing market boom, we may be in for a surprise. With all of these bailouts and the companies not doing what they are supposed to do with taxpayer's money, big business has learned nothing from this. All they will do is blow it and then turn to the government for help…AGAIN.

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