Posted by Frugal on 27th June 2013
Many things have changed a lot since just three or four months ago. I’m going to keep it brief here.
1. Stock market is a hold or even a short term sell. Should add more on pullback.
2. Real estate is a hold, changed from a buy. Only add if ROI is bigger than the mortgage rate. The buy vs rent decision is very hard at this point, because most people won’t sell in less than 5 years. The short-term bottom is definitely behind us, but I’m not too sure about longer term.
3. Gold is a trading buy. Scale in gradually if you want to buy. The short-term bottom should be just around the corner, but even if you miss the bottom by one day, it could cost you a lot. You should probably trade it out once it bounce.
4. Bond is a sell. I haven’t held bonds for years (and I was wrong). The interest rates kept going lower and lower. Now with QE tapering coming(?), bonds have sold off and mortgage rates have risen to put a stop on the housing market. It’s hard to imagine that US interest rate would go back to the recent low from last year, but I was wrong on this for quite some time. If US becomes like Japan, then it’s definitely possible that interest rates will go lower. The best way for regular folks to play this is to lock the mortgage rate for longer term, and keep doing zero-point zero-fee refinancing whenever the rate drops. I’ve locked two of my loans close to the lowest points (just about 1/8 from the lowest). That’s the best way to participate.
5. Bitcoin? Bitcoin is a scam, just like any other un-backed currencies. But it doesn’t matter however whether it’s backed or not backed by some assets. The only thing that matters is whether people are willing to continue to value Bitcoin, and my answer is a YES. Unless government totally shuts it down, I think Bitcoin is going stay around. By the way, not all virtual currencies are like Bitcoin. For example, OpenCoin is a scam among scams, despite having Google & Marc Andreesen behind it. I think OpenCoin will go down to the drain, simply because it’s just NOT an open standard. You just can’t have the cake, and eat it too, giving yourself billions of monopoly money, and expect others to exchange real money with you.
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