Interest rates. WTF? Why are we getting almost free money?

[BigRedChief]

I put a contract on a house yesterday. Locked in a rate and loan. Got 3.625 and they gave me $8,800 towards closing costs. Which is obviously more than it costs.

We were able to lower the purchase price because we didn't have any closing costs.

Last time we bought a house we got 5.25% which at the time our loan guy said was the lowest rate since WWII.

So my question for the board is why is the public getting home loans that are maybe 1%-2% above inflation? Where's the money being made or lost?

[petegz28]

Originally Posted by La literatura

Well, I think it lays out a good model for me. I'm taking a Wealth Management class, and we just read Random Walk and Bogleheads. They lay out a convincing argument.

Most active managers don't beat the average large index fund. Imagine how I would do as a person with an entirely different job.

That's right, most managers don't beat their averages on a regular basis. Which is why it is important you keep abreast of what is going on. I don't chase returns which is why I didn't lose my ass like most did in the last crash. For long term investing I focus on asset allocation. If my stock portfolio only goes up 10% while everyone else's goes up 20% I don't give a shit because when things come down, and they will come down, I don't lose 40% like they do, I lose 5%.

[petegz28]

Originally Posted by La literatura

Well, I think it lays out a good model for me. I'm taking a Wealth Management class, and we just read Random Walk and Bogleheads. They lay out a convincing argument.

Most active managers don't beat the average large index fund. Imagine how I would do as a person with an entirely different job.

Well I don't know what they are teaching you in that class, I could guess but nonetheless remember 1 rule you rarely hear any of these talking heads and so-called "experts" say......it's not how much money you make, it's how much you keep.

[La literatura]

Originally Posted by petegz28

That's right, most managers don't beat their averages on a regular basis. Which is why it is important you keep abreast of what is going on.

Face it, man. I'm not going to read enough stuff to be the next Warren Buffet/Peter Lynch.

[La literatura]

Originally Posted by petegz28

Well I don't know what they are teaching you in that class, I could guess but nonetheless remember 1 rule you rarely hear any of these talking heads and so-called "experts" say......it's not how much money you make, it's how much you keep.

Yeah, saving is big. But then you invest that savings to make your savings worth more.

[petegz28]

Originally Posted by La literatura

Face it, man. I'm not going to read enough stuff to be the next Warren Buffet/Peter Lynch.

Make time. It's your money and you will work your ass off for it and really you might find it fun. No is asking you to be Lynch or Buffet. Just pay attention to things. Read the Wall St. Journal or Investors Daily, read some books on the topic.

Or you can work your ass off for your money, then not give a shit about it and hope you have some left when you need it. It's up to you.

[petegz28]

Originally Posted by La literatura

Yeah, saving is big. But then you invest that savings to make your savings worth more.

See, that would be poor financial managment, or didn't the cover that yet?

There is a significant difference between "savings" and "investments". And you should not take one and make it another.

[La literatura]

Originally Posted by petegz28

Make time. It's your money and you will work your ass off for it and really you might find it fun. No is asking you to be Lynch or Buffet. Just pay attention to things. Read the Wall St. Journal or Investors Daily, read some books on the topic.

Or you can work your ass off for your money, then not give a shit about it and hope you have some left when you need it. It's up to you.

Nope. I'm not going to buy a cows and chickens and make my own fresh breakfast either. I'm just going to buy milk and eggs from the grocery store. Even if it would be fun to own and milk a cow.

I am reading books on the topic. Their advice is to do exactly what I'm saying.

[petegz28]

Originally Posted by La literatura

Nope. I'm not going to buy a cows and chickens and make my own fresh breakfast either. I'm just going to buy milk and eggs from the grocery store. Even if it would be fun to own and milk a cow.

I am reading books on the topic. Their advice is to do exactly what I'm saying.

You might as well call your local bookie while you're at it

[La literatura]

Originally Posted by petegz28

See, that would be poor financial managment, or didn't the cover that yet?

There is a significant difference between "savings" and "investments". And you should not take one and make it another.

What do you think a 'savings' should be? CDs? Do you put a monthly amount in your savings?

[KC native]

Originally Posted by petegz28

time and tide. first thing is to undrstand the differnce between "trading" and "investing". with modern day technology, daytradind is not just for the pro's anymore. in fact the currency markets, which I have never traded, draw large populations of non-pro traders due to the small margin req's and 24 hour trading

you have to understand I look at a mortgage through a different pair of glasses than I do a mutual fund

FX markets are for big boys. Small movements lead to extremely large gains or losses due to the inherent leverage. It's dominated by banks and big institutional people.

Day Trading or swing trading is for people who are DEDICATED to it. That dedication means a consistent evaluation of your methods, disciplined buy and sell strategy, and constant education. The only people who make money doing this type of trading are the ones who are willing to do all of this.

[KC native]

Originally Posted by La literatura

I am interested, but I don't want to do it myself. My plan is to just have a Roth IRA and another cheap Vanguard portfolio and a very passive philosophy.

I'm not going to daytrade. I like watching CNBC so I can watch CEOs get in fights and call each other liars.

I definitely don't want to read a chart. I just want to read my year's return numbers, talk to my manager about rebalancing, and annoy him about why I don't see anything above the number 7.

Bloomberg TV is much better.

[petegz28]

Originally Posted by KC native

Bloomberg TV is much better.

I agree with this. I do watch Bloomberg. I do not watch CNBC or Fox Business.

[La literatura]

Originally Posted by KC native

Bloomberg TV is much better.

I can believe it. CNBC is basically Jim Cramer and Fidelity's green carpet ads. Bloomberg TV isn't on my cable package though.

[petegz28]

Originally Posted by KC native

FX markets are for big boys. Small movements lead to extremely large gains or losses due to the inherent leverage. It's dominated by banks and big institutional people.

Day Trading or swing trading is for people who are DEDICATED to it. That dedication means a consistent evaluation of your methods, disciplined buy and sell strategy, and constant education. The only people who make money doing this type of trading are the ones who are willing to do all of this.

Are you just elaborating or what? I know all this. And all the financial markets are dominated by the big boys, the FX is no exception.

[petegz28]

Originally Posted by La literatura

I can believe it. CNBC is basically Jim Cramer and Fidelity's green carpet ads. Bloomberg TV isn't on my cable package though.

I've never researched it but I have heard people joke that if you shorted everything Cramer said to buy you would make a small fortune.

You can get Bloomberg TV on the net. There's an App for it as well and it's free.