: Your thoughts on the Stock Markets current situation??



Msilva954
07-28-04, 02:57 PM
Just wanna know what you guys think about the Stock Market at this time?? Ive been tryin to get my mother to sell it all and put a down payment on a Condo........but everyday it goes lower and lower and she doesnt know whether to sell today or wait a little (about a month) and try an get some back.

daacon
07-28-04, 03:50 PM
That is a loaded question for sure. Sure sell it all <hahaha>. First off I would review her portfolio and determine if all or any are for long term goals. If so leave alone. If there are some short term investments , still dicey , but you can weigh the approxiamte apprecaition of your asset (Condo) against the likleyhood of Stock Market increase. I think a good rule of thumb (very general) is , if you are not involved in high risk stocks , one "should" be able to double their money every 7 years with a conservative portfolio.

So if you have 10k invested - 7 years from now that could be 20k (or could be nothing as well !!!). Will the Condo appreacite 10k in the next 7 years (have to check the area )

A risk either way .....there is no right answer, only opinions and what people base their decisions on. Good Luck.

Msilva954
07-28-04, 05:16 PM
I say this because for over 3 yrs we have seen neither gain or loss (now we are losing)....and truthfully it is a waste of time.....here in Florida for the past 3 yrs we have experienced a LARGE real estate boom.....and we purchased a home right as it happened......now we have about $200,000 in equity alone in this house......

So that is where the Condo comes in.....here in south Florida...Miami really, there is no more land and what land is available homes go for really high prices for what you get.

And Condos are now taking there places......in 2 yrs over 4 thousand condo units have been sold......all in 20-70 story buildings. While we are about 40 thousand too late....I figure why not jump in now, put the 20% down...(Liquidate the stock) and when the building is done in late 2005 rent it out for 6 months then I will take over while I go to UM for college......5 yrs later....they can sell or keep it as they please.

Right now 2 units are avail in a 896 building on Riverwalk Miami...(Very hot Spot) an we are looking at buying a contract from a woman in Columbia.(Damn Foreign investors) for about $10,000-20,000 less then she was asking for......that is equity right there in the form of that amount as the other condos 1/1 are now starting at $270,000.

So what do you guys think???

daacon
07-28-04, 05:33 PM
The last 5 years overall have "sucked" for most all investments. Yours sounds like a resonable opertunity. What type of interest rate will the mortgage be at ? (that is tax deductable in the US is it not ?. lucky dogs !). Will the payments be an issue unitl the complex is completed ? (ie: what happens if you suddenly have income issues in the household or unexpected expenses never want to spread yourslef so thin that you have to default ). What happens if the building is delayed (constrcution can have soooooo many issues) are your prepared to continue payments until completed ? Are there are any "Tennant Rules" you need to be aware of (Adult only, no pets, etc..). Is there a waiting list for tennants already ? Can you sublet to anyone or does a "Condo Board" (if there is one) have a say? Are there any additional 'Condo Fees' to be aware of and if so what does this get you ?

Renters can truly be a hit and miss thing. If you have good tennants , then life is a breeze, however you can have nightmare tennants where property destruction is your responsibility. Big decesion for sure , just offering some things to consider.

Msilva954
07-28-04, 06:01 PM
Actually we put 10% down then the other 45 days later.........then in 2005 late it will be completed.....no monthly payments until late 05' or 06'.....we would have one tennet until I move in for college....and all the renters down there are either business men from NY....or the Brickell miami area.

I too expect construction delays.....but Im told that this builder is always within 30 days of their estimation..........a neat fact about this is that the builders are the same guys that did that IBM complex purchase in Palm Beach county.

The building includes Valet parking too, resort pools....restaurants etc.....and the miami metro rail and people mover go straight to the College....which would mean no more useless mileage on the caddy.

daacon
07-28-04, 09:45 PM
Well it sounds like a good investment. No way to tell for sure. Not sure what kinds of protfolio your mom has but check into any penalties for withdrawl

I have no stocks (too chicken to play the market) ,but if and when I do, I will treat that money as gone (ie: willing to loose it). I have mutual funds for long term (not that they are doing great the last few years!)

Anyway talk to some locals, even other owners, find out as much about the fine print as you can , all the due dillengence up front (what extra fees are there ? Condo Fees ? Taxes ? What would uitlites cost in the area ? , etc ) ... it will save unexpected headaches later.

Good luck........................dy

RERM
07-28-04, 10:18 PM
First, let me preface this by saying, this is what I do for a living. This year the market has followed the historical trend for all presidential election years. In fact, the courve is almost perfect. Generally the trend is for an early downturn, a sideways summer and a Nov - Dec rally. Now, doubling your money every 7 years is actually a fairly aggressive goal, (not conservative at all) you would need a return of 10-12% per year for that.

First I would evaluate your mothers short and long term needs, then I would look at her current portfolio and see how it stacks up to her needs (current income, growth, growth and income...). Selling at the bottom is never a good idea, unless she desperately needs the money, NOW, I wouldn't sell.

Look at her allocation, Bonds v. Stocks, sounds to me like she's too much into equities (stocks). Remember, though, in a rising interest rate environment you don't want to buy more bonds (their value is inverse to interest rate movements).

Msilva954
07-28-04, 11:18 PM
Thats her problem.....me being 16, I know more about the market then she does and she relies on a advisor to put her money in every thing.....when I checked last time it was a half/half equities/mutual funds.........

She (in my opinion) doesnt make much money at all from all the years she has put into her job......and will always rely on my fathers income.....but this money that she does have is money from previous law suits..........thus...is why she is playing with it a little......

Her goals would be strickly LONG TERM.....which is why I say real estate.....down here when buying real estate your buying not only long term but also short term too....as I said we have about $180,000 equity in a little over one year of buying a new constructed 6 bedroom home.........in the past year condo prices have gone up $40,000-75,000.......one hell of alot of money......and they are continuing to rise....

I fiqure if she got into it now she would make at least $20,000-50,000 before we even close in late 2005 early 2006.....thats not including the 3-5 yrs I rent it from them and the follow years of who knows what..........but I do agree with you at not selling it all at lowest cost.....Ive been painstakingly watching the market this last week as it rises and lowers.........seems like she gains and lowers $500 every day....haha.

Daacon.......from your previous posts.......you have to own the property for 2 yrs before your gain is not taxed......which is great.....other fees.....such as cable...garbage...amenities....etc etc are all in the maintanece fee......a WHOPPING $288 a month........(who ever said Miami living was cheap). But free Valet in a covered parking garage is worth that.....haha.

daacon
07-31-04, 10:49 AM
Now, doubling your money every 7 years is actually a fairly aggressive goal, (not conservative at all) you would need a return of 10-12% per year for that.

So you do not think on a long term investment an averyage of 10 - 12% percent return in "retirement" protfolio (Mutual Funds - let's says 20+ years) is likley ? I always thought so ...what would be your "average expectations" for investments like this ?

Damn - if not then I have two choices - work longer or die younger.(the third choice of spending less .....hahaha couldn't do it)

Msilva954
07-31-04, 02:01 PM
There is 4th also.......................................win the lotto.:)

Elvis
07-31-04, 06:37 PM
I've actually had several good quarters in the past two years. The market will have a mini-rally around Labor Day. Not sure whether it will hold on thru the election or not.

RERM
07-31-04, 07:50 PM
So you do not think on a long term investment an averyage of 10 - 12% percent return in "retirement" protfolio (Mutual Funds - let's says 20+ years) is likley ? I always thought so ...what would be your "average expectations" for investments like this ?

Damn - if not then I have two choices - work longer or die younger.(the third choice of spending less .....hahaha couldn't do it)you


I agree with you about 10-12% returns on a properly diversified portfolio geared towards long term growth. I thought his mother was allready retired, usually someone in retirement, should be looking at a portfolio of about 70% bonds and 25-30% stocks. With that kind of allocation returns should be more in the 6-8% range. Remember, when in retirement, you look more for income than long term growth.

Msilva954
08-01-04, 10:26 AM
No, she isnt retired.....about 5-7 yrs till then......and she will be relying on my fathers income anyways........so she is looking for an investment now.....to pay off in 5-7 yrs......which Is why I think real estate is the best bet.