Post subject: Re: The Stock Market/Personal Finance Thread
Posted: Tue Nov 10, 2009 4:45 pm
Yeah Yeah Yeah
Joined: Mon Apr 25, 2005 5:15 pm Posts: 3875
I'm 15 years from retirement, what mix between real estate, money markets and sticks should I have? Currently at about 50% real estate, 10% money markets and 40% stocks.
Post subject: Re: The Stock Market/Personal Finance Thread
Posted: Tue Nov 10, 2009 4:46 pm
statistically insignificant
Joined: Mon Jan 21, 2008 10:19 pm Posts: 25134
tyler wrote:
I'm 15 years from retirement, what mix between real estate, money markets and sticks should I have? Currently at about 50% real estate, 10% money markets and 40% stocks.
I think I've identified the flaw in your current investment strategy.
Post subject: Re: The Stock Market/Personal Finance Thread
Posted: Tue Nov 10, 2009 4:47 pm
Yeah Yeah Yeah
Joined: Mon Apr 25, 2005 5:15 pm Posts: 3875
thodoks wrote:
tyler wrote:
I'm 15 years from retirement, what mix between real estate, money markets and sticks should I have? Currently at about 50% real estate, 10% money markets and 40% stocks.
I think I've identified the flaw in your current investment strategy.
Would I be better off if I invested in Styx memorabilia?
Fine. I think the U.S. is fucked. I can't pinpoint when it will happen but there is no way out of our financial mess. Basically, I look at our finances (U.S. Government) just like I look at a companies. We have a balance sheet and we have an income statement. At some point, we will not have the the revenues (tax receipts) to cover our interest on the debt. I can't pinpoint when that will happen but it is going to happen. 10 years? 20 years? Dunno. When that happens we will see a rapid devaluing of the dollar that will be...painful.
So my answer is hyper inflation/stagflation but I don't know when it will happen. It doesn't affect the way I invest. I own good companies that should be able to pass through any inflation so my assets will rise as the U.S. dollar falls.
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I'm 15 years from retirement, what mix between real estate, money markets and sticks should I have? Currently at about 50% real estate, 10% money markets and 40% stocks.
Unfortunately, this is one of those areas I'm not well versed in. I know it's probably the most important question, too.
What I can say is Real Estate and Stocks are so general that you can be in ultra conservative Real Estate or very risk Real Estate (usually leverage is what distinguishes that). I assume that you might be referring to your home in that bucket. Regardless, I have no idea what the proper allocation should be except that as you get closer to retirement you should be almost completely out of stocks and in all fixed income/lower risk assets.
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Post subject: Re: The Stock Market/Personal Finance Thread
Posted: Tue Nov 10, 2009 4:54 pm
statistically insignificant
Joined: Mon Jan 21, 2008 10:19 pm Posts: 25134
given2trade wrote:
I own good companies
What is your criteria for determining what is (and what isn't) a sound company? How big of a role does their balance sheet play? What are your red flags?
Post subject: Re: The Stock Market/Personal Finance Thread
Posted: Tue Nov 10, 2009 5:08 pm
Yeah Yeah Yeah
Joined: Sun Oct 17, 2004 7:36 pm Posts: 3271 Location: Chicago
thodoks wrote:
given2trade wrote:
I own good companies
What is your criteria for determining what is (and what isn't) a sound company? How big of a role does their balance sheet play? What are your red flags?
Debt Asset Ratio is a good one.
_________________ strobe lights and blown speakers.
What is your criteria for determining what is (and what isn't) a sound company? How big of a role does their balance sheet play? What are your red flags?
A difficult question to answer generically. The balance sheet is tremendously important. In the fall of 2008, I owned no companies with any debt. That was an extreme situation and investors were not getting rewarded for taking any kind of risk. Some elements of what makes a company "good":
1) Cash Flow is equal to or greater than Net Income. Cash is king. I care little about economic earnings. I want to see money going into the bank.
2) Good, healthy margins. If revenues decline by 5 of 10 percent, will the company still be profitable?
3) Stable/low vol earnings through an entire cycle. I have little interest in highly cyclical companies, no matter how inexpensive they might be off of "normalized" earnings.
4) Long operating history with a management team that is incentivized with shareholders. Those are two different things. The management team can be new but should not be there to take a paycheck, primarily. Hopefully they will make multiples of their pay in stock/options should things go as planned.
5) RE: balance sheet. When is debt due? What are the balance sheet risks? In normal times, I have no problem with a little debt. You want an optimal capital structure. Some businesses should have debt. However, it's a fine line.
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Post subject: Re: The Stock Market/Personal Finance Thread
Posted: Tue Nov 10, 2009 5:21 pm
statistically insignificant
Joined: Mon Jan 21, 2008 10:19 pm Posts: 25134
given2trade wrote:
The balance sheet is tremendously important. In the fall of 2008, I owned no companies with any debt.
Dumb question, but is there some sort of repository of firms' balance sheets? I can't just type "companies without debt" into google and expect to find anything meaningful. And there are so many companies out there I wouldn't know where to start.
I guess my question is if I held a similar investment strategy, where would I go to start analyzing balance sheets and income statements?
Post subject: Re: The Stock Market/Personal Finance Thread
Posted: Tue Nov 10, 2009 5:22 pm
Former PJ Drummer
Joined: Sun Oct 17, 2004 4:01 am Posts: 19477 Location: Brooklyn NY
given2trade wrote:
Fine. I think the U.S. is fucked. I can't pinpoint when it will happen but there is no way out of our financial mess. Basically, I look at our finances (U.S. Government) just like I look at a companies. We have a balance sheet and we have an income statement. At some point, we will not have the the revenues (tax receipts) to cover our interest on the debt. I can't pinpoint when that will happen but it is going to happen. 10 years? 20 years? Dunno. When that happens we will see a rapid devaluing of the dollar that will be...painful.
So my answer is hyper inflation/stagflation but I don't know when it will happen. It doesn't affect the way I invest. I own good companies that should be able to pass through any inflation so my assets will rise as the U.S. dollar falls.
lol
_________________
LittleWing sometime in July 2007 wrote:
Unfortunately, it's so elementary, and the big time investors behind the drive in the stock market aren't so stupid. This isn't the false economy of 2000.
Post subject: Re: The Stock Market/Personal Finance Thread
Posted: Tue Nov 10, 2009 5:25 pm
Former PJ Drummer
Joined: Sun Oct 17, 2004 4:01 am Posts: 19477 Location: Brooklyn NY
"Everybody else is fucked but I'm not because I invest wisely!"
I'm glad you can't get laid
_________________
LittleWing sometime in July 2007 wrote:
Unfortunately, it's so elementary, and the big time investors behind the drive in the stock market aren't so stupid. This isn't the false economy of 2000.
Post subject: Re: The Stock Market/Personal Finance Thread
Posted: Tue Nov 10, 2009 5:26 pm
statistically insignificant
Joined: Mon Jan 21, 2008 10:19 pm Posts: 25134
glorified_version wrote:
given2trade wrote:
Fine. I think the U.S. is fucked. I can't pinpoint when it will happen but there is no way out of our financial mess. Basically, I look at our finances (U.S. Government) just like I look at a companies. We have a balance sheet and we have an income statement. At some point, we will not have the the revenues (tax receipts) to cover our interest on the debt. I can't pinpoint when that will happen but it is going to happen. 10 years? 20 years? Dunno. When that happens we will see a rapid devaluing of the dollar that will be...painful.
So my answer is hyper inflation/stagflation but I don't know when it will happen. It doesn't affect the way I invest. I own good companies that should be able to pass through any inflation so my assets will rise as the U.S. dollar falls.
Post subject: Re: The Stock Market/Personal Finance Thread
Posted: Tue Nov 10, 2009 5:32 pm
Former PJ Drummer
Joined: Sun Oct 17, 2004 4:01 am Posts: 19477 Location: Brooklyn NY
thodoks wrote:
glorified_version wrote:
"Everybody else is fucked but I'm not because I invest wisely!"
I'm glad you can't get laid
What's wrong with not wanting to get caught on the wrong side of a monetary meltdown (or meltup, as the case may be)?
I save but "investing" doesn't really interest me
_________________
LittleWing sometime in July 2007 wrote:
Unfortunately, it's so elementary, and the big time investors behind the drive in the stock market aren't so stupid. This isn't the false economy of 2000.
The balance sheet is tremendously important. In the fall of 2008, I owned no companies with any debt.
Dumb question, but is there some sort of repository of firms' balance sheets? I can't just type "companies without debt" into google and expect to find anything meaningful. And there are so many companies out there I wouldn't know where to start.
I guess my question is if I held a similar investment strategy, where would I go to start analyzing balance sheets and income statements?
This is hard. There are companies that offer screening services where you can put in a gazillion variables and it will pop out a list of companies. None of it is free, however. I'm sure you can find something online that will let you search basic things.
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