A new Martenson Report is ready for enrolled members. In this report, we stroll through the recent data and I make the case that there’s no need to wait for any clearer signs that “things have changed” than the ones we already have. If you are waiting for TSHTF (explained in the article) then you can stop waiting.
In times like these, I take a few steps back and try to look at the whole picture. The details are numerous; they are often contradictory and confusing. For clarity’s sake, it can be helpful to keep the macro view in focus, instead of the details. Here are the big-picture items that I keep firmly in mind each day:
This is a crisis of too much debt, not too little spending.
This is a global crisis. Clues for directionality are best found by viewing the entire world situation. That data still points downwards.
The energy situation is getting worse, not better, due to a lack of critical and focused investment and the passage of wasted time.
It's not possible for an insolvent nation to borrow money from an insolvent financial system to bail out insolvent financial, real estate, and insurance companies.
hpernar hope you are doing well in the market I know I am happy I am in with 1/2 of my $$$. I feel this market should be 4000 on the dow at the moment & have little doubt it will be 4500 in a bad recession & 1000 to 800 in a depression over time. So I feel this rally is a cheep thrill at best.
Wish I would have found the CM site sooner before I gave up so much earlier. This site has made me much more aware of the value of capital preservation. Depressions are for zeroing us all out which is what I feel Chris is trying to help us all see & trying to prevent. Now I have the other half of my $$$ in cash & PM. I always have a quick finger on my mouse with day trading & hope I can get lucky & not lose too much more.
I am betting we have been through 2/3rd of this rally & have 1/3rd left with all the money they have thrown at the mess. WHO REALLY KNOWS?
Chris
Thank you as always, extremely well researched and timely (scary too but better to know). With appreciation for your efforts and Rebecca’s and the rest of the Brigade’s-
One of CM’s main points is this a global crisis. Does this mean most worldwide economies will decline with the US and there is no safe haven? Does this differ from folks like Peter Schiff whom I hear talk about the decline of the US dollar and economy but that economies in foreign countries like China will hold stronger - as the US moves toward more socialistic, managed economics and China moves toward freer capitalism? Or do you have to figure in a global wide impact with peak oil?
Tom
Why was my comment and question (posted last night on this thread) taken off? Whats going on? A simple comment "I finally subscribed, glad I did" and asking why CM rents instead of owning? Wow, was that to personal? Why would a post like that be taken off? Lost.
Thanks Strabes, I still don’t know how to work this site. The answer to the rent vs own question was good but my thought is at what point is it worth it to own once you’ve built your self sustaining infrastructure (garden, root cellar, etc.) and then have to do it all over again when you have to move out of your rental? I know the answer centers around your personal circumstances, I get that but what is helpful is the thinking around the timing of the rent vs own scenario. With all thats going on in the sustaining home and community ideas the question of when to finally own is ( in response to out national state of affairs not personal affairs) a good one. Anyone?
owning is fine as long as you comfortably maintain a 1) balance sheet cushion and 2) a cashflow cushion and aren’t at risk of getting underwater. for example, signing up for a mortgage that simply fits your current income isn’t a sufficient cushion since people will be losing jobs or getting pay cuts as this depression picks up steam. basically you just need to do a "stress test" on your own balance sheet and cashflow to determine if the overhead of owning (which is really just renting from a bank until you payoff the mortgage) is better than the flexibility/liquidity of renting from a landlord.
Our situation is a bit unique and the future will dictate if we are in a good position or not. We bought several homes during the heydays but instead of renting them full time we bought prime real estate next to a major national park and we rent them to vacationers (a banner year now but a very slow start and everyone asking for discounts) with a formula of one week rental equals monthly expenses. Now that we know about the crash course, peak everything, it looks like one of the properties will be perfect for self sustaining life style. We are not even close to owning outright and we’re not rich by any means so the point in mentioning this is that not every rental is full time rental and the vacation rental can also be a good sell even in a bad economy. Our international travel has tanked but next state and local is booming. There are still Americans with money and they will visit the national parks even in bad economic times, it’s a scale down vacation for them. These are interesting times.
yes that’s entirely different. rather than stress testing your personal balance sheet / cashflow statement as you would for a live-in primary home, you just need to stress test your business plan given you’re running profitable rentals…that is an asset, not a liability, so the decision completely changes. just make sure you stress test your business plan for near-zero revenue…that’s the possibility in the next phase of the collapse, or TSHTF. :)
Rocketgirl1,
Why do I rent? I began renting because I could not find any houses or land that I considered even remotely within a reasonable price (at the time) and I judged that my holdings in gold would outpace local real estate by a wide margin.
So far so good.
However, I have been actively seeking the right piece of land - house is optional - for quite some time and would have bought if the right piece had opened up as far back as a year and a half.
We are actively seeking right now and more and more is opening up all the time as sellers s.l.o.w.l.y. come to grips with reality. It’s still frustrating for me to see overpriced houses pop up on the market every week, but for the local realtors it’s been deadly and they are beyond frustrated at this point.
To me, the math is simple. Either people can afford to buy a house or they cannot. Now that lenders have been demanding 20% down plus a 30% cap on the mortgage:income ratio, this has put a severe cap on house prices locally. At least, a severe cap on the ones that are selling I should say. Things are moving quite nicely in the $150k - $180k range (which aligns with local incomes), but nothing has sold in my area over $400k in over a year. Yet people still slap their silly ranches on the market for prices well over that mark, let them languish, pull them off and relist them in hopes that nobody notices that its the same house for some insane "drop" of perhaps $5k, try different brokers, and generally do everything they can to avoid noticing that the problem is that their listing price is out of alignment with current market realities.
So we are "in the market" but not at fantasy or delusion levels. I am pathologically averse to losing money in markets or overpaying for assets and I am quite tuned into the local market so I’ll know a good deal when I see one and we will move rapidly when the situation warrants.
Best,
Chris
PS - We very, very rarely delete posts around here and always notify the poster when we do.
Thanks for your time and insights Chris, Strabes, Ron (hope I didn’t miss anyone) especially the detailed thinking behind your decision Chris. This is such an important question for everyone. Another thought I have about our properties is in the SHTF sooner rather then later scenario and how a cozy cabin in the mountains will be a great temporary get away for a family so we may be prepping one of them with food, etc. just in case. It’s good to wait when you know values will continue to fall but what makes me nervous is waiting too long and then there’s a scramble for the, get out of the city , properties and a landlord who can get twice what their getting now and suddenly renters are part of the panic herd they were trying to avoid to begin with. I’ve learned that any decision I’ve made out of fear came back to bite me in the end (pun intended) and level headed non emotional decisions have worked for the better but now it’s so tempting to act on fear or maybe it’s just fear of being with the madding crowd and how I don’t want to be in any line (gov. etc.) What is rationally going to happen, answer your fears with rational action and a little planning can go a long way.
In our business I can see that there are people with money and in a collapsed economy there will still be people with money who want and need to feel safe.(just to avoid possible criticism, we do a great deal of charitable giving and will continue to even in the toughest of times) I hope we can help with that. Good luck to all of you and may timing be on your side. As a Christian I’d also like to say God luck to you as well (smile).
Chris, I reread your post and I my thoughts are from my own vantage point and I’m think you might be interested in this current situation here in upscale, second home market. We did consider putting one of our vacation homes on the market (increase cash reserves) and the agent/ broker was willing to list at our desired price (positive cash flow business, turn key) but with 80-90% foreclosures and short sales currently listed the chances of selling at profitable level are about the same as a banana flavored Popsicle on the asphalt in Vegas in July lasting more then a nano second. Why put us all through that and besides the agent let us know that people of means are smart enough not to buy at yesterdays (two years ago) prices even if it is a good business. Soooo, as a business it’s a who moved my cheese scenario. I understand where the "silly ranches" on the market are coming from and I believe it’s a matter of survival not just of the fittest but the timeliest as well. If people of "means" stop visiting the national parks then we too will be in trouble.
Thanks again for your time.
One more thing, we advertise on a international website and last week they asked if we would give an interview with CNBC. Apparently they are interested in us as an example of our type of business and market conditions. I don’t know if they will think this will apply but CM and The Crash Course has changed us as a business and on a personal level as well and I will try my best to get a plug in there for you. It’s the least I can do. Thanks CM and all the behind the scenes warriors!
While the stock market is up sharply since early March, the economy as well as corporate earnings continue to suffer. Today’s chart helps provide some perspective as to the magnitude of the current economic decline. Today’s chart illustrates that 12-month, as-reported S&P 500 earnings have declined over 90% over the past 20 months (with over 90% of S&P 500 companies having reported for Q1 2009), making this by far the largest decline on record (the data goes back to 1936). In fact, real earnings have dropped to a record low and if current estimates hold, Q3 2009 will see the first 12-month period during which S&P 500 earnings are negative.
