Don't sell your stocks

[Bobtheduck]

People are in a panic, trying to make the most of their investments by selling stocks while they are still at a decent level...

THIS IS INCREDIBLY STUPID! People forget what really caused the stock market crash in the '20s. What would have been a recession ended up a depression because people sold off their stocks in a panic.

If everyone keeps their stocks, the value may go down, but your investment will remain (less valuable than before) and you won't destroy the economy by selling off. If the market really crashes, you can't blame a single politician for it, you can only blame people looking out for their own immediate interests rather than the long term damage that will be caused by selling in a panic.

If you or your parents have stocks, tell them to bite the bullet... Accept the declining worth of your stocks rather than selling them off and further injuring the economy.

[Mr. SmartyPants]

I think it's stupid how our whole economy is based on how people in the US own pieces of the economy (along other shenanigans), and if everybody doesn't want it anymore then our economy collapses.

Just doesn't bode with me too well.

[Bobtheduck]

I think it's stupid how our whole economy is based on how people in the US own pieces of the economy (along other shenanigans), and if everybody doesn't want it anymore then our economy collapses.

Just doesn't bode with me too well.

I agree, but that IS how our economy works... Investments are the backbone of a capitalist society. I posted a short, angry video about this via my webcam on youtube... I'll never ever do direct webcam uploads again... THEY TAKE LONGER TO PROCESS THAN REGULAR VIDS! It's been 2 hours so far, for a 2 minute video.

[ich1990]

If no one sold their stocks at the bottom, how would I be able to buy them there?

Seriously, though, if everybody else is doing it, it is probably wrong.

[Roy Mustang]

The bad thing about it is, telling and having people that will listen is two different things. When things look bad, people panic and do things without thinking of the long term damage.



[font="Book Antiqua"][color="Red"]Col. Roy Mustang
[/color][/font]

[Dante]

Here is the catch 22 of a bad economy.

You can:

Help the economy by holding onto your stocks or (if you are a consumer) spending lots of money.

Or you can.

Tell the economy to jump in a lake and save what you still have by selling your stocks, and saving your money.

What it will be worth when its all said and done depends upon how inflation and deflation work... but complaining won't change people's minds, in reality you are asking them to do economic charity work when in reality there are no real gains emotionally or physically from taking such a risk. Certainly though, if someone takes your advice and ends up being the last one on the boat... they're sunk. PS when your stocks get low enough they don't just stick around till the company comes back again, they just merge them together into smaller stocks as the company gets shifted around... thus what you paid several thousand dollars for can then be purchased by other investors for a few quick bucks. You may as well have waited for the stock to crash and THEN invested your money. Plus, there may be economic signs that suggest that you'll only do better in other segments (Often times worthless leaders are thrown in to run these things based off politics and not skill).

Frankly, in capitalism, the motto is: Make yourself rich, who cares about everyone else.

As a nation of capitalists, this motto has managed to dig us all into a hole. Remember that people need to spend to boost the economy up... but the credit card companies have eliminated the ability of the public TO spend (thus killing off the consumers and the problem only grows like its own giant bubble ready to burst (They were only being good captitalists though and lining their own pockets) ). Concerning your investors, they invested their funds pathetically and frivolously in a single market (housing) and then hoped that the tax payers would fit the bubble burst. (They should be banned from ever being allowed to invest their money again).

Frankly I think that stocks should be forced to undergo an intelligence test before they go out on the market. That banks were investing in this so massively was an utterly pathetic thing to do. I think the best thing to do now is to simply drop the housing market on its head and let it shatter and have the banks focus on rebuilding their revenue in a more varied market. Housing is dead, but there are many other markets and their pure focusing on housing is... well let's say that I believe a few people should be fired at will and thrown out onto the street with their briefcase hitting them in the back of the head.

This will make home ownership a far more difficult task, as lenders will be very cautious (but about blooming time). But at the same time it won't cause the rest of the perfectly healthy market to collapse. There aren't enough jobs in housing to singlehandedly shatter the rest of the market, and many of those jobs are transferable to other fields and markets themselves. Thus I think that this would cause only those who put all their eggs in housing to feel the hurt major time... and given that that was inadvisable to begin with, I sadly don't feel any sympathy for them.

[Technomancer]

Here is the catch 22 of a bad economy.

What it will be worth when its all said and done depends upon how inflation and deflation work... but complaining won't change people's minds, in reality you are asking them to do economic charity work when in reality there are no real gains emotionally or physically from taking such a risk.

Not so much, if your time horizon is fairly long, and you've invested in the right things, you can realize at least some gain. As with some mutual funds, if you reinvest your dividends to buy more, you will gain. With a lower unit price, your dividends are worth correspondingly more in terms of reinvestment. In the short term though, it is a bit of a gut punch, especially emotionally.

Thus I think that this would cause only those who put all their eggs in housing to feel the hurt major time... and given that that was inadvisable to begin with, I sadly don't feel any sympathy for them.

Of course that's part of the problem. However, a lot of people who didn't know better got conned into this people who *should* have followed through on their duty to be both upfront about risks, and to ensure that customers didn't take on too much debt. If you're someone who doesn't know much about the market, or about finance, you need to be able to get advice you can trust.

[Etoh*the*Greato]

Also not such a bad time to be BUYING stocks. The Market last week was not just a downturn. It was unstable. Ups and downs.

[Bobtheduck]

To Pascal: The jist of what I'm trying to say is that these people trying to "help themselves" are, in the long run, hurting themselves more than they are helped by bailing out and taking the now money, catch my drift?

Also not such a bad time to be BUYING stocks. The Market last week was not just a downturn. It was unstable. Ups and downs.

But people using those ups and downs as platforms to make a quick buck are just as bad, if not worse, than those selling off in a panic. They are more fuel to this already blazing fire.

Of course that's part of the problem. However, a lot of people who didn't know better got conned into this people who *should* have followed through on their duty to be both upfront about risks, and to ensure that customers didn't take on too much debt. If you're someone who doesn't know much about the market, or about finance, you need to be able to get advice you can trust.

Yes... I think THIS is the catch 22 of capitalism... Without the "get rich quick" type of folks who are into the market for the gamble of it rather than for real investment, we wouldn't have as much as we actually do in the biggest times, but maybe without them we'd actually stay stable, albeit at a lower level than the good times with them.

The gambling nature of the stock market is a blessing and a curse (right now it's a curse)

Perhaps if the stock market was only made up of long term investors, we wouldn't have these kind of problems, or rather they'd be tied more directly the performance of companies and not to the investors, but there are too many people that like to play the market, rather than those into it for real investment.

[minakichan]

Hmmm... I think I want to buy some stock... My savings are all in Countrywide, which gives a good rate, but once it gets all BoA-ized, I'm sure that rate will go down.

I don't know if I should, though. I only have like $10K in savings and $5K in checking (which includes my spending money)... what stocks/industries might y'all suggest, particularly for a young person with little money who isn't in a hurry for a risky return?

I have to admit that I don't know much about this stuff. AND TO THINK I WAS GOING TO BE A FINANCE MAJOR before the Dow decided to epicfail 777(.68!) points.

[ich1990]

Hmmm... I think I want to buy some stock... My savings are all in Countrywide, which gives a good rate, but once it gets all BoA-ized, I'm sure that rate will go down.

I don't know if I should, though. I only have like $10K in savings and $5K in checking (which includes my spending money)... what stocks/industries might y'all suggest, particularly for a young person with little money who isn't in a hurry for a risky return?

I am a big promoter of no-load mutual funds. For the causual investor, I don't think that there is a better way to go. A mutual fund is basically a stock consisting of many other stocks. When you purchase a share of a mutual fund, you are basically buying a tiny sliver of many (sometimes hundreds) other stocks. This gives you the advantage of diversification. In other words, if one of the stocks takes a big hit or goes belly up, the mutual fund's share price will not be greatly effected. This is a big plus for the small investor.

In addition, mutual funds are typically managed by a team of professionals who buy and sell individual stocks (and therefore tiny slices of your share) to keep the fund at what they think is the optimum mix of different stocks. That is, by purchasing shares of a mutual fund, you are hiring a team of professionals to manage a portfolio of stocks for you. Typically, the management fee for this service is under 2%.

Mutual funds come in all sorts, some of them consist of exactly the same stocks as the S&P 500, DOW, etc. (index funds). Some consist of stocks from certain parts of the world market, like electricity, China, agriculture, or metal, these are called sector funds. You also have specific need funds, these focus specifically on high growth or low risk. These types may trade in dozens of sectors depending on the managment team's predictions.

Finally, a new type of fund that has become popular recently, is the fund of a fund. In other words, by purchasing a share of this fund of a fund, you are buying tiny slivers of mutual funds, which themselves have tiny pieces of stocks. If you wanted too, you could simply invest all your money into a fund of a fund that focussed on diversity and growth, and you would not have to worry about any one area of the market doing bad. Housing sector flopped? Enron went bankrupt? Dollar is worth half of what it was a year ago? Japan wiped off the face of the earth? Chances are, none of these things would significantly hurt a diversified fund of a fund.

To conclude, the best way (I believe) for an individual investor to get maximum safety, maximum returns, minimum fees, and minimum headaches, is to purchase shares from a fund of a fund that has its money spread over multiple sectors, has a good 5+ year track record, and is in tune with the investor's desired risk/reward ratio. Most fund of funds have a 1k-2.5k dollar minimum investment. Happy hunting!

[ChristianKitsune]

o.o

I'll just say this: I don't own stocks.
And the economy is like one REALLY big math problem... a math problem that I can't figure out. >_<

Yah...sorry to waste posting space...but I'm just really confused about this whole mess... I just keep seeing the stock market go down...down...and down. I saw the government try to bail out the economy...and it didn't work.

I THINK from what I've heard on the news and stuff this all originated because of Fannie Mae and Freddy Mac and them giving loans to people who didn't pay them back? And because of that we have this huge mess?

So yeahs. What happens if the stock market hits zero?

And I've also noticed this thing is world-wide...so what's the deal? Is it because we have a "world Market" or something? ^^;

At least gas prices are falling! 8D

[Technomancer]

As a general comment, before doing anything beyond bonds/GICs, I would seriously recommend picking up (or borrowing from the library) a good introductory level textbook on investing and how markets work.

Yah...sorry to waste posting space...but I'm just really confused about this whole mess... I just keep seeing the stock market go down...down...and down. I saw the government try to bail out the economy...and it didn't work.

To be fair, none of the money from the bailout has actually been spent yet, so any effect from that will take time. Also, it's important to note that a of banks beyond the United States have been badly effected by this mess. Announcements from elsewhere in the world will still impact North American markets as well.

I THINK from what I've heard on the news and stuff this all originated because of Fannie Mae and Freddy Mac and them giving loans to people who didn't pay them back? And because of that we have this huge mess?

Not exactly, the primary cause has to do with what happened next. Basically, it's standard practice to bundle the mortgages together and sell them as bonds. Normally, these sorts of bonds are fairly safe investments since the default is low, and risk is spread thinly based on how the bonds are structured. However, in this case these bad bonds were falsely packaged with good risk ratings and then sold to other investors. When the homeowners defaulted, the seller couldn't make the bond payments to the clients, who then found that their assets were no longer worth anything.

[ClosetOtaku]

Allow me to first reference a post I made back in March that explained why we were about to get into the mess that we are currently in. That post is here.

Now, my take on stocks and investments:

After 10 years of investing, I got out of the Stock Market in 1999. Among other things, I decided all the factors were pointing to an overvaluation of stocks. Several months later, the dot com bubble burst, and with it went the wealth of many. The stock market has not returned to that level of performance since then. I haven't gone back, and doubt I ever will.

After 9 years of home-owning, I decided to get out of Real Estate all together in 2005 (I've rented since then). Among other things, I decided all the factors were pointing to an overvaluation of houses and property. Several months later, the housing bubble burst, with housing prices not returning to previous levels in any market anywhere. I won't go back (for a while).

Currently, the market is undergoing a long-needed correction. I'm fervently hoping for continued deflation, with housing prices dropping like a stone while commodity prices stay stable due to the drop in demand that accompanies a recession/depression.

This period of deflation will not last long. The Federal Reserve is printing money like mad; already this year monetary supply has increased at twice its normal rate. The inevitable result of the monetization of debt is inflation -- and likely hyperinflation. When this happens, may forms of paper (the dollar, and perhaps many lackluster stocks) will become increasingly worthless by the day (and, when it really takes hold, by the hour).

I would caution against a "hold" strategy for stocks. Your mutual funds have gone a long way to making fund managers rich, but a lot of people who have been saving for years are now being burned big-time. If I had to shift investments, I would look towards precious metals and commodities -- things that hold value despite the fact that the economy is collapsing about them. Stocks have gone from an "investment" vehicle to a "speculation" vehicle; this is no time to be speculating.

That's just my opinion, of course, but I really haven't been that wrong about market forces in the past decade, and have gotten out of risky ventures (stocks, real estate) before they went bust. I have no confidence in the current system (it is hopelessly rigged), and have less confidence in the stability of the dollar in the coming months.

[ich1990]

ClosetOtaku's investment advice

A while back there was a thread that discussed the benefits and detriments of the gold standard (something I am still in favor of). On that thread, I posted a link to the video "Money as Debt", it is a great introduction to, as ClosetOtaku says, our hopelessly rigged system. In that respect I totally agree with you, our system is not based on a sound foundation. If radical corrections (read: political suicide) are not made to the fundamental way that our monetary and financial systems operate, they will collapse.

You can watch that video here http://video.google.com/videosearch?q=money+as+debt&hl=en&emb=0#

That said, I do not think that the day has come when the American economic system has failed. We will likely have significant turbulence through the coming years as places like China suck our jobs and currency like the Euro become more valuable compared to the Dollar, but the economy still has many weapons to use to combat total economic collapse. If, for instance, a heavy tax was placed on Chinese goods until they "unstick" their currency, that would help the jobs aspect alot. Additional measures could be taken such as placing taxes on gasoline (=major political suicide) to encourage independence (read: less debt) from oil nations. Further, a switch to the gold standard would stop inflation completely in its tracks, or, if it came to it, they could institute a new monetary unit. All of these things would solidify the economy, but they are not done because situations have not become radical enough for politicians to justify it. It is my opinion that, given imminent threat of economic failure, these practices (and whatever else they can come up with) will be enacted and save the economy. Take that how you will.

Finally, I think the American economy will survive because it is still needed. Americans gorge themselves on things. We are a gigantic buyer of products, we purchase things in extreme disproportion to other countries. What would happen if our economy collapsed and we didn't buy things? Well, at the very least it would trash the other world economies (some more than others). China and other countries who have major exports would go into major depressions. The fact is, nobody wants that. It is not just in our interests to save the U.S. economy, it is everybody elses. Therefore, it is my opinion that, if things got bad, we would be supported by other countries, even if they don't really like us. Take that how you will.

Between the rock (now) and the hard place (economic failure) I think that we will hit a sort of uneasy equilibrium during which normal investments will hold out fairly well. When the so called "economic holocaust" comes, there will likely be a few years of economic disturbence, but, if you have a properly diversified mutual fund, this downturn will likely be temprorary until the markets have time to re-stabilize and re-adjust to the new world order, whether it be dominated by the Euro or by a reformed U.S. economy. If you would like to ride out these shockwaves in precious metals, more power to you (however, I would like to point out that precious metals are spiking due to the "financial meltdown", it would be wise to buy after the panic has subsided). I do not claim to be an expert in economics, but my Dad and I are armchair economists. I am an amateur investor and he is a professional one. Take my opinions with a grain of salt, I don't claim to be smarter than those who make economics their life-long career.

Best of luck to you all no matter how it goes.

EDIT: I have an addendum.

I realize, after reading over my post, that I seem rather sure of the future. I am not, there is a million factors that influence the market, there is no possible way to know how it is going work. Further, politicians like to dabble with free enterprise. Therefore, ANYTHING could happen in the market. All we have to go on are past examples and probabilties.

Second, I would like to clarify that buying some gold is a good idea, the more diversification the better. It is far better to be part wrong than all wrong. I currently own an agressively managed fund of a fund. The managers have seen this "Meltdown" coming for quite a while and have purchased a good deal of gold (and gold mine stocks) with the fund money. They are quite a bit smarter than I am, and the fund has held up reasonably well given the circumstances. The best part was, I didn't have to think about it and worry if a economic holocaust was coming, they worried for me.

I apologize for the bad grammar/spelling, I am very tired.

[Sakaki Onsei]

Another piece of advice: Ignore Jim Cramer.

[Bobtheduck]

[quote="ClosetOtaku (post: 1263088)"]I would caution against a "hold" strategy for stocks. Your mutual funds have gone a long way to making fund managers rich, but a lot of people who have been saving for years are now being burned big-time. If I had to shift investments, I would look towards precious metals and commodities -- things that hold value despite the fact that the economy is collapsing about them. Stocks have gone from an "investment" vehicle to a "speculation" vehicle]

But you do know the crux of this whole thing is that if everyone pulls their stocks, the companies that those stocks are for... fail, and people lose jobs, and the economy enters a depression rather than a recession? So you know that selling off to save yourself, in conjunction with everyone else doing it, is what's going to cause another depression?

The wisdom you speak of is only short term, and not viable when it's everyone panicking to back out... The panic and shortsightedness is what caused black tuesday, which i believe we're coming to again (the anniversary AND another literal black tuesday.)

When it comes down to it, all the more complicated talk about the markets and the reasons for all of it is people missing the forest for the trees.

[ClosetOtaku]

But you do know the crux of this whole thing is that if everyone pulls their stocks, the companies that those stocks are for... fail, and people lose jobs, and the economy enters a depression rather than a recession? So you know that selling off to save yourself, in conjunction with everyone else doing it, is what's going to cause another depression?

The wisdom you speak of is only short term, and not viable when it's everyone panicking to back out... The panic and shortsightedness is what caused black tuesday, which i believe we're coming to again (the anniversary AND another literal black tuesday.)

When it comes down to it, all the more complicated talk about the markets and the reasons for all of it is people missing the forest for the trees.

First, If you think the behavior of the stock market, or even the current crisis, can be significantly influenced by the individual investor, you are incorrect.

Take a look at the derivatives market. Take a look at Credit Default Swaps. All the leveraging (and now de-leveraging) that is going on -- to the tune of around $50 trillion (that's trillion -- with a T -- around five times the annual GDP of the United States) is the result of massive speculation and debt accumulation on the part of huge investment banks and financial institutions. Nothing -- I repeat nothing -- the individual investor does is going to make a dent in this problem.

Second, stocks and real estate are tremendously overvalued. I WANT stock prices and real estate prices to tumble. There's not much I can do to accomplish that (because I no longer own stock), but if other investors 'panic' (e.g. decide -- correctly -- that they need to get out while their portfolios still have some value), all the better. The system NEEDS to adjust if there is going to be any chance of recovery. All the Government has done and continues to do is prop up a set of valuations that is needlessly inflated, at significant cost to the taxpayer, just to maintain the illusion of prosperity.

I will not 'take one for the team' and get back into stocks just to 'prop up' a broken system -- and just so others can continue prolonging the fantasy of endless growth.

There is no 'forest for the trees'. There is no forest anymore. It is burning before your eyes. There is nothing I and my dixie cup of water can do to stop it. You are welcome to try to put it out with your dixie cup, but be careful not to get scorched in the process.

[Technomancer]

[quote="ClosetOtaku (post: 1263088)"]Allow me to first reference a post I made back in March that explained why we were about to get into the mess that we are currently in. That post is [url=http://www.christiananime.net/showpost.php?p=1211066&postcount=9]here[/urlThis period of deflation will not last long. The Federal Reserve is printing money like mad]

I suppose geography matters a fair bit in our assesments. We're getting a nasty bit of the backwash from all of this up here, but we haven't had any of the bank or debt problems like you've had. Of course, because of speculation on a recession, commodities have been hit pretty hard price-wise.

http://ca.news.yahoo.com/s/reuters/0810 ... dest_banks

[ClosetOtaku]

I suppose geography matters a fair bit in our assesments. We're getting a nasty bit of the backwash from all of this up here, but we haven't had any of the bank or debt problems like you've had. Of course, because of speculation on a recession, commodities have been hit pretty hard price-wise.

While the crisis is certainly worldwide, the really big loser will be the U.S. Dollar initially.

There are really only two major questions left to be answered in this crisis:

First, will the world abandon the "Dollar Standard" in favor of another fiat (paper) currency such as the Euro or the Yen (both of which have also seen significant increases in their respective supplies), or will the world move to some sort of commodity-based standard for exchange (say, a precious-metal or oil-backed currency)?

Second, will the U.S. witness a deflationary period first, or will we go directly to a hyperinflationary spiral? Let's hope for some deflation, some coming to the senses of the markets, some stability before the Dollar crumbles.

[Technomancer]

While the crisis is certainly worldwide, the really big loser will be the U.S. Dollar initially.

There are really only two major questions left to be answered in this crisis:

First, will the world abandon the "Dollar Standard" in favor of another fiat (paper) currency such as the Euro or the Yen (both of which have also seen significant increases in their respective supplies)

Most likely not the Yen, since the Japanese economy doesn't enjoy enough dominance even locally. Between their own economic problems and the relative growth of other local economies, I simply don't see it happening. In the long term though, the yuan could become much more dominant. As far as the Euro goes, it is a potential rival. I'm not sure that it is likely to replace the dollar though so much grab more of a share of transactions, especially on the European periphery. The size of the American economy (barring total catastrophe) would seem to preclude outright replacement though as a domiant currency.

, or will the world move to some sort of commodity-based standard for exchange (say, a precious-metal or oil-backed currency)?

As with any commodity-based currency, the loss of monetary control would be a major barrier for any government to adopt. Past experience with the gold standard would seem to make this a higly undesirable outcome.

Second, will the U.S. witness a deflationary period first, or will we go directly to a hyperinflationary spiral? Let's hope for some deflation, some coming to the senses of the markets, some stability before the Dollar crumbles.

Sort of I think. A fall in some prices that are tied to commodities could be good, as could a market "correction" that brings stock values more in line with earnings. But deflation can be every bit as ugly as inflation.

[Bobtheduck]

There's an old saying: Deflation brings depression.

"Individual investors" make up ALL the investors, unless you're referring to companies that own stocks, yet those are also owned by "individuals" and, to a lesser degree, are subject to the same issues of panic. A mass panic would pull the rug out from under all the companies that rely on stocks. It's not that I'm asking the "individual" to not pull his or her stocks out, I'm saying that NO ONE should because once everyone does, it destroys the companies that rely on them...

While I don't agree with your stance, ClosetOtaku, I'm certain your well thought out and yet I still feel incorrect (that's as far as I'll take that) view is held by many. It's held by many involved in this panic pulling out their stocks and pulling the rug out from under their own feet. I'm not going to argue the point anymore. I'm just going to ride it. That's all.

[ClosetOtaku]

While I don't agree with your stance, ClosetOtaku, I'm certain your well thought out and yet I still feel incorrect (that's as far as I'll take that) view is held by many. It's held by many involved in this panic pulling out their stocks and pulling the rug out from under their own feet.

I don't consider myself in the group of 'panic' investors who are currently pulling out of their portfolios. I sympathize with their position, but as I previously said, I got out of that game a decade ago. I have no reason to panic, and in fact rejoice that the market is undergoing this correction.

What I would say in response to your position is: beware of paper. The paper dollar, paper stocks, contract paper that tells you what collateral you have for the money you just loaned someone else. Investors everywhere are now realizing that most of this paper can turn worthless, literally, overnight. Stocks and bonds aren't what they used to be 30 years ago, or even 10 years ago. The game doesn't favor the little guy.

[minakichan]

Someday I will go in and read this thread. Today is not that day...

Another piece of advice: Ignore Jim Cramer.

OH NOOOOO everything I know about everything is now invalid! I KNOW NOTHING!

[Mithrandir]

Quite a lively little thread we have going on here. It's nice to see these kinds of discussions going on.

I think CO has a pretty good grasp of a lot of what's going on here, but given the P/E ration of many stocks that are currently in the toilet, I'm afraid I have to disagree that this isn't the right time to get back in to the market. (If you are positive you want to stay in PMs, be sure you've done the research on that market, too. Also, take a look at the insane exponential growth curve of the price of gold over the last 20 years. I've heard the argument that: "at least the other markets have been correcting themselves.")

If you're really concerned about it the value of the stocks being overinflated beyond any value, find stocks that pay decent dividends, and/or look toward a longer investment horizon. I'm invested for a 30 year period, so I can afford a portfolio that has some pretty risky pieces along with some pretty solid ones. Real Estate is not ONLY about increase in value. Even if the price of my house drops IN HALF in the next 17 years, I'll still OWN it. And I'll have paid about what I'd be paying in RENT, so it's not like I could have "just invested" that money somewhere else.

More to the point, it's actually a pretty good time to buy a house - if you know what to look for. As the baby boomers begin to retire, they're going to start downsizing. This is NOT a good time to buy a large house. Instead, if you buy a condo, or a town house in a good neighborhood, your increase in value over the next 7-10 years is likely to pay off in spades as the glut of SFR's hits the market.

The bottom line is, you have to take SOME risks in life. If you simply buy gold coins and horde them under your bed, someone could pretty easily steal them, and you're out your entire life savings. And even if they're not stole, let's say you're right: the markets collapse, house prices go to pot, and the bottom completely falls out of the economy. I'm pretty sure you'll have bigger concerns than your gold supply. Like, can you eat that gold? Because there probably won't be any other food around very long either.

YMMV, I guess. If people are interested, I could probably be persuaded to go into a bit more of the "fun" history behind our current issues, or maybe to start an actual "Help with your Finances" thread.

Bottom Line, take a class on finance/investing. Remember, investing is about GROWING your money - but that implies you have a pile to start out with. If you are currently living on credit (or paycheck to paycheck), you need to get some other things straightened out too (notice I didn't say "first.") Imagine your financial world as running bathtub. Water going in is income, water going out the drain is expense. Your goal is to fill the tub. You can either get more money going in, or stop/slow the water going out. Think of all the ways money goes out, and try to stop as many as you can. Probably your biggest expenses are going to be (for a while anyway): College, Car, Rent/Mortgage, Taxes. If you take a class, you will likely learn good ways to do this.

The above is why the following tend to be sound advice:
* Buy a good used car instead of a new one, and keep it for at least 10 years (if you need the peace of mind from a new car - own it for 15 years to make up the difference; this is what I do).
* Buy a house (it can help cut your taxes AND build wealth).
* If you get a college degree, know if you will make more money with it than without it.
* If you go to college, start out with an AA from a community college - you can cut your expenses up to half.
* Invest for retirement (a very long way away) in ways that minimize your tax burden.
* Find ways to minimize your "ongoing" expenses. Can you cut your cell phone contract down, or pay less by switching to cheaper insurance? Can you pay off your credit cards so you're not moving around your balance? If you had a more fuel efficient car, how much could you save on gas (petrol for you Brits)? If you cooked from scratch, could you save money ($10 can make enough spaghetti to feed 10 people if done right)?
* If you can't afford the time or money to take said class, and you still want to invest, pick a fund that manages toward a DATE (for example, something that points toward 2050 as a target "retirement" date) and start an IRA (or Roth IRA, if you think you'll make more money in retirement than you are making now).

Well, that's my contribution (for now, anyway). HIH.

[Gabriel 9.0]

I agree with Mith, besides all of this will cool down eventually. I recall that the the recession in the 70's was far worse, even Donald Trump was forced to file for bankruptcy.

Besides God is in control.