Quote:
Originally Posted by Vegas69
Is there really any doubt a correction is coming on the horizon? When you team what Greg said with the debt cycle, it seems likely in the near future. Think about what happened 7-10 years ago. Many wiped out there excessive debts through foreclosure, short sales, and bankruptcy. When the economy came roaring back, they now had a large percentage of income that could be displaced with debt. The fact is that roughly 85% of cars are financed. The US economy is very reliant on consumers taking on debt to make purchases of houses, cars, boats, furniture, etc.. When Americans start getting toward the end of their available monthly income due to excessive debt load, spending slows down. Team that with higher interest rates and.... I know I've seen people spending similar to 12-15 years ago.
I recently read in the Wall Street Journal that the stock market had it's second best run under Obama vs. any other president in history. That's 8 years of serious gains. Housing has been appreciating for 5-6 years in most markets.
Are we there yet? Who knows, but we are much closer than yesterday. If I was closing in on retirement, I'd be making some conservative moves with my money, that I know. Unless I lived off my dividends like Greg! 97% can't do that.
One thing is certain, cash will be king in the next low cycle. I hope to be ready.
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I see a period of "between" --- where we are spending *thus - buying* FIRST..... as there's a rush to get things done BEFORE the rates go very much higher (we have time here)..... Then - as TODD rightly points out - the glass begins to fill with debt and spending slows accordingly. We're not talking about next week guys!!! But WE MUST BE OUT FRONT (that means to be thinking in ADVANCE) of this...... at some point. Not yet - but at some point you need to understand these relationships.