SailNet Community banner

1 - 20 of 110 Posts

·
Master Mariner
Joined
·
8,235 Posts
Discussion Starter #1
As a charter boat that derives most of our clientele from Europe, I spend a lot more time than I would like to watching BBC economics because they seem to be the most straightforward. Our investment company is also forecasting a recession.
All indications are we are headed for a world wide recession brought about by letting a failed businessman make financial decisions which are affecting not only his country but world trade. Our bookings are down (and we are not one of the expensive boats) more than 50% and I can see no bright light anywhere on the horizon.
My question is; how are you all faring in this and do you foresee hard times or boon? Living overseas, I can still get many things that have tariffs in the US, at pre-tariff prices or below, like solar panels, but you all in the US can't. Are you pulling back on expenditures like solar panels (30% tariff) or are you doing well enough to absorb these tariffs? Those on a fixed income like SS, which congress is trying to defund, how does your future look to you?
Please, no wild crazy rants, just an honest analysis of what you see ahead for you and your future boating, be it on your own boat or chartering.
 

·
Old soul
Joined
·
4,498 Posts
Hmmm, eat more beans?

I really don’t have any concerns. The joys of having little to lose means I don’t really care much about these economic machinations. I suppose at some point it could affect my lifestyle, but I already live below the poverty line, and yet I live the life of (O)Reilly :).

P.S. I’m Canadian, not American. So my SS (CPP in Canada) is not at risk, and I can still get solar panels at pre-tariff prices.
 

·
Registered
Joined
·
2,504 Posts
Economy seems to be still cooking in my area. I see "Now Hiring" signs in the area. I'm retired but, my portfolio seems to be pretty stable and my savings are still going in a positive direction even though I'm no longer working. Have not noticed any tremendous price increases. Even with the drone attack on Saudi Oil fields gas prices did not go up as far as I noticed. Probably because the U.S. is more energy independent these days. I'm not noticing any tariff effects on any thing I've bought recently either. Trumps get tough policy on China trade seems to be working. Apple even announced their new updated Mac Pro will be built in the U.S.

Europe may be different. Since a lot of things are being run by the bureaucrats in Brussels these days. Plus the influx of migrants may be taxing their social programs. Migrants get a pretty sweet deal there. Apartments etc... Plus their tax policies are not conducive for people to invest their money so they may have less disposable income than those of us in the U.S.
 

·
Learning the HARD way...
Joined
·
7,152 Posts
Perhaps you remember this thread; https://www.sailnet.com/forums/off-topic/35937-market-crash-we-there-yet.html

The thread was started on August 9, 2007.

The following timeline from Wikipedia shows what happened in the "Financial Crisis of 2007-2008;"
Following is a timeline of major events during the financial crisis:[10][11][12]


  • April 2007: New Century, an American REIT specialising in sub-prime mortgages, filed for Chapter 11 bankruptcy protection. This propagated the sub-prime crisis, through securitization, to banks around the world.[13]
  • August 9, 2007: BNP Paribas blocked withdrawals from three of its hedge funds,[14] since there was no liquidity, making valuation of the funds impossible – a clear sign that banks were refusing to do business with each other.[13]
  • August 2007: The Federal Open Market Committee began reducing the federal funds rate from its peak of 5.25% in response to worries about liquidity and confidence.
  • October 9, 2007: The Dow Jones Industrial Average hit its peak closing price of 14,164.53.[15] Existing home sales also peaked this month and began to decline.
  • December 12, 2007: The Federal Reserve instituted the Term Auction Facility to supply short-term credit to banks with sub-prime mortgages.
  • February 13, 2008: The Economic Stimulus Act of 2008 was enacted, which included a tax rebate.
  • March 17, 2008: The Federal Reserve guaranteed Bear Stearns' bad loans to facilitate its acquisition by JPMorgan Chase.
  • July 11, 2008: IndyMac failed.
  • July 30, 2008: The Housing and Economic Recovery Act of 2008 was enacted.
  • September 7, 2008: Fannie Mae and Freddie Mac were taken over by the federal government.
  • September 15, 2008: Lehman Brothers went bankrupt after the Federal Reserve declined to guarantee its loans, causing the Dow Jones to drop 504 points, its worst decline in seven years. The same day, Bank of America purchased Merrill Lynch.
  • September 16, 2008: The Federal Reserve took over American International Group. The Reserve Primary Fund "broke the buck" as a result of massive withdrawals from money market accounts.
  • September 21, 2008: Goldman Sachs and Morgan Stanley converted themselves from investment banks to bank holding companies to increase their protection by the Federal Reserve.
  • September 26, 2008: Washington Mutual went bankrupt after a bank run.
  • September 29, 2008: The House of Representatives rejected the Emergency Economic Stabilization Act of 2008 instituting the $700 billion Troubled Asset Relief Program. In response the Dow Jones dropped 770 points, its largest single-day decline.
  • October 3, 2008: Congress passed the Emergency Economic Stabilization Act of 2008.
  • November 25, 2008: The Term Asset-Backed Securities Loan Facility was announced.
  • December 16, 2008: The federal funds rate was lowered to zero percent.
  • January 2009: Two of the three Big Three automobile manufacturers received a bailout from the TARP program.
  • February 13, 2009: Congress approved the American Recovery and Reinvestment Act of 2009, a $787 billion economic stimulus package.
  • March 6, 2009: The Dow Jones hit its lowest level of 6,443.27.
I believe that the strong stockmarket over the last ten years has been a result of the Recovery and Reinvestment Act of 2009. Sadly, I also believe that the increased deficit spending, and the concentration of wealth over the last 3 years have set us up for another financial melt down.
 

·
Registered
Joined
·
3,727 Posts
\Apple even announced their new updated Mac Pro will be built in the U.S.
The MacPro has always been made in the US, and Apple was continuing to manufacture the new one here until the tariffs hit. Apple was planning to move production to China because the tariffs on necessary imported parts weren't economically feasible. To keep them in the US, Trump granted Apple an exemption on tariffs for anything they needed from China.

I wouldn't call this type of trade policy "working". I'd even suggest this example shows just the opposite. As does the farmer welfare program, and the many, many similar exemptions that have been made to keep US manufacturing businesses afloat and remaining in the US during this beautiful, easily winnable, well-thought out and planned trade war.

Mark
 

·
al brazzi
Joined
·
2,076 Posts
I'm not "gloom and doom" I'm pragmatic. We are headed for a correction, sure thing. We have in the USA adopted a dangerous type of Patriotism and cult that has allowed borrowing from as many creative sources as possible. Be it environment, deficit, you name it, all just borrowing. Corrections are healthy for everyone except the guy trying to reelect so if it can be postponed then it's good for some but its coming, part of my inevitability theory. I think what you're seeing is people with money getting in front of it.
 

·
Registered
Joined
·
7,069 Posts
Think the big issues predate the egocentric in chief but have been rapidly accelerated by him.
National debt was rising but now due to his tax give back to the 0.01%ers rate of rise has accelerated. Even Milton Friedman said some degree of debt is good policy but at trillion and rising it will exceed gnp. Risk of a deflationary cycle like what japan experienced lurks.
Earnings to price ratios are not in synch with historical norms. The expected 30% correction devalues nearly all forms of retirement plans regardless if administrated by the individual or employer. That results in people delaying retirement and increasing employee pool. The strength of the economy has been consumer confidence. That will disappear triggering yet a further bear market.
One can hope the recession as forecasted by the inversion of bond rates will hit soon. Ideally before November 2020. That would allow the republicans to return to their anti national debt roots and democrats to stop pandering to the extreme left.
Last time we had a severe long duration down turn many US sailboat manufacturers closed. Pearson, Cape Dory, and the like in my state. Others down sized their operation making only high margin large boats or power vessels (Hinckley etc.). Now although there’s nearly no US manufacturers ( sorry Steve yes I know PSC is still there in NC) one can still expect further contraction of the industry.
Upside is service work in yachting centers (Newport, mt. Desert, southern bays of Grenada, Antigua etc.) may get cheaper. But used boats ( in the 40-60’ range) will lose value, many service yards and marinas will close. NAs will be less likely to be able to get true new designs into production as remaining manufacturers won’t take those risks but rather stay with what’s sold in the past. Yachting (both power and sail) is a choice not a necessity. All aspects with be hit hard and soon.
Personally preposition ourselves. Didn’t maximize our roi with the rise but feel you can’t time the market. Still feel confident we won’t outlive our money. At some point will transition to a used Norhavn (43 or 47] or Kady Krogen (48). So what we lose on the Outbound will be balanced out by a cheaper next boat. Expect near lateral movement between boats to persist but total boat sales to decline.
 

·
Registered
Joined
·
21,643 Posts
Here’s an overarching point. The US Federal Reserve has some of the most accomplished PhD economists in the world. Regardless of your opinion of the value or role of a central bank, this point is fact. Lots of smart dudes/dudettes behind the scenes.

The Fed produces a predictive indicator of whether the US economy is in recession at any given point in time. The actual measurement of a recession is in hindsight, as they add up GDP, so they attempt to predict it in the moment. In no recession over the past 50 years has that indicator ever been greater than 50%, when we ultimately realized we were actually in a recession. IOW they never found it more likely than not we were in a recession, when we actually were. BTW, that indicator is above it’s historic average heading into all past recessions, right now.

This does not mean they are incompetent, despite what some would like to claim for political reasons. This means no one knows. There are too many variables. It’s chaos theory.

They are also among the few organizations that can actual set an interest rate. Still, they rarely do what they predict they will do and they have the power to do whatever they choose. Think about it. No one knows.

People guess the economy. Some guess right. Most guesses are politically biased.

I think the US is on a trajectory to win the global economic game. Europe is in a tail spin, especially those with negative interest rates. Both the US and China are being hurt by the trade war, but I think China is being hurt marginally more. That’s a game of chicken and it’s to be seen who blinks first. I don’t like the bluster, but China’s thievery and cheating had to be called out.

The problem is, this is not like a game of monopoly. Once you’ve won on the global stage, the game is not over. If you have all the money and properties, the other players will come after you. If they’re starving, they’ll come at you lethally, they have nothing to lose. That’s what I see is out of balance right now and creating the potential for calamity.
 

·
Registered
Joined
·
7,069 Posts
Try to read Barrons, wsj and other sources but what has intrigued me was an article published about a decade ago (think it in the nyt) that stated the following.(paraphrased in the extreme).
All countries have haves and have nots but also have ins and outs. When the ins feel sufficiently threatened by the outs conflict results. When the ins are also the only haves they do everything possible to make as many have nots believe they are also ins and haves even when they aren’t haves.
In every country with oil riches this plays out using religion (think Wahhabism or Iran) or communism ( think Venezuela) or fascism. No country where oil riches are the major source of export income has been able to maintain a representative democracy.
However, a similar distortion has occurred in the western democracies. As the transition to a knowledge based economy occurred and capital was centralized in a few hands labor was devalued. To meet the need for unskilled labor countries imported it. Be it Turks to Germany, Algerians to France decades before the current crop of middle eastern wars or Mexican agricultural workers well before the collapse of Central American countries. A large segment of the middle class disappeared as well with automation, robotics, global outsourcing, information technology and the absence of need of many mid level managers. The result for America is for the first time most parents do not expect their children to be as financially secure as they were. Similar sentiments are seen elsewhere in mature economies. Increasing numbers of folks , although currently with excellent employment, don’t feel their financial future to be secure.
Major entertainment investments are looked at with a jaundiced eye. Cars are now just transportation, buying into air craft is viewed as exorbitant, as are mid to large boats or even horses.
I know four 30 somethings quite well. They’re my kids and spouses. We are close. Each has an excellent job and have gone up several grades in their career paths. None have ever been fired or downsized. None have ever had an employer close their doors. Still, in spite of being successful their attitude toward large capital expenditures for any possession is radically different than my own. This is even true for houses. Think when the business cycle rotates into recession significant societal shifts will occur as well. Although ridership is up way fewer HD motorcycles (in fact any brand but acute for HD) are being sold, fewer horses, fewer small airplanes and fewer boats. Folks increasingly fly to their destination and rent a bike or charter a boat or join a airplane co-op or horse riding academy. A membership can be canceled. You can defer renting a bike, boat or airplane.
During the Great Depression the movie theaters, bars and restaurants were full. People needed that night out on the town. When it lifted people bought with a dream in mind that included possessions . Houses, boats and cars. However, when the next recession hits then lifts don’t think you’ll see similar behavior. Rather it’s already shifting with owning viewed as giving less joy and the experience being the be all and end all. Pride of ownership is disappearing.
Not optimistic about the sailing life existing. People will daysail and race in clubs. People will cruise on charters. But boat ownership ( beyond small craft) will be a rare occurrence.
 

·
Administrator
Joined
·
7,167 Posts
Well, that was fun :)

I just deleted a couple of posts and the responses.

Ummmmmm the idea with this forum is we can discuss contentious issues. Its not to make contentious remarks about other forum users :)

Sorry I missed these posts earlier. I was drunk.



Merci!


Mark
 

·
Administrator
Joined
·
7,167 Posts
My question is; how are you all faring in this and do you foresee hard times or boon?
Its a boon for either view imho.
I dont have time right now to explain as I have to head out... but the USA Markets open in 20 minutes and should open about .30% higher... and yesterday they went up a similar amount.

Theres a method, that I will explain, where its good no matter what you foresee.... boom or bust.



Mark
 

·
Old soul
Joined
·
4,498 Posts
Its a boon for either view imho.
I dont have time right now to explain as I have to head out... but the USA Markets open in 20 minutes and should open about .30% higher... and yesterday they went up a similar amount.

Theres a method, that I will explain, where its good no matter what you foresee.... boom or bust.
Damn. You were right! The Dow did open .34% up … and then fell throughout the day, going down another 1.28%. Is that good? Bad?

I really have no idea what any of that actually means in the real world. But it’s kinda fun to watch, and wonder what was said by El Presidenté whenever the slope turns sharply down. Usually a tweet, or something.

Actually, Trump has done the impossible; he’s turned me into a market watcher. I’ve got minimal skin in the game, but it’s really fun to match the sudden turns to whatever he’s tweeting about.
 

·
Registered
Joined
·
21,643 Posts
Well, that was fun :)

I just deleted a couple of posts and the responses.

Ummmmmm the idea with this forum is we can discuss contentious issues. Its not to make contentious remarks about other forum users :)

Sorry I missed these posts earlier. I was drunk.



Merci!


Mark
Was this new forum your idea? Think 48 hrs later you’re deleting posts. Wait till 48 days.
 

·
Senior Member
Joined
·
11,803 Posts
Predicting the economy is as accurate as predicting the path of a hurricane.
Anyone who claims to have a clear vision is a snake oil salesman.

I have to agree with Don here
 

·
Administrator
Joined
·
7,167 Posts
Was this new forum your idea? Think 48 hrs later you’re deleting posts. Wait till 48 days.

Well, I disagree. Once everyone gets the parameters it will be fine. Its not Sailing Anachy. Have a hot debate but dont call out another person. Attack the subject, not the messenger :)

If It doesnt work we will go back to the former method.
 

·
Administrator
Joined
·
7,167 Posts
Damn. You were right! The Dow did open .34% up … and then fell throughout the day, going down another 1.28%. Is that good? Bad?

Wow, yeah, extreme market volatility. Day Traders love it but retired people hate it.
@capta thinks we might be heading for doom, and certainly he's backed up by the media. My thoughts are we are in the most wonderful moment to do what we think is right and still be correct and successful financially.

USA, UK, Aus inflation is almost Zero... but we can still get 2% in term deposits.

A few months ago a friend who is 70 told me he has put a lot in Term Deposits at 2% and I said YOURE CRAZY your'e not going to make any money. He said: "Maybe, but Im not going to lose any money!"

So, here be the point: If you think the world is headed for a recession get your money into the best Term Deposit. If you think were going well then have it in stocks in the markets you think best.

OK, so 2% looks garbage? No its not! This week the Dow is down about 2% so suddenly that +2% is looking great against -2%.
What if the Dow goes down by 10% between now and November 2020? thats a 12% difference and certainly nothing to be sneezed at.

My personal plan is keeping in the market (I don't trade) until a certain President starts packing his bags, then, instantly I will have my money in Term Deposits until I see the way forward.

Another persons plan maybe to do the exact opposite, have it in Term Deposits and flick to the Market when the bag packing happens.

I also have Stop Loss on 10% - which at my age and Risk Profile is fine for me.

So, no matter who one supports, what media they read, or what Risk Profile they have, I think we can all do fine in this very interesting market.

Mark
 

·
Registered
Joined
·
7,069 Posts
When I retired had my financial advisor shift parameters. Became more risk aversive. Set the financial modeling and computer trading to allow 6% ROI and maximum of 10% short term downturn. This required some alternative investments, shift from the classic 60/40 ratio and a larger cash balance to be able to take advantage of good opportunities when they arose. We positioned ourselves to be secure regardless of market fluctuations. All this occurred 7 years ago. So now we can just ride it out.
Investment mistakes can be absorbed when you are still working. But it takes planning, protection of capital, ability to accept a lower ROI when the income spigot is turned off. The boat was modeled as a total loss. It’s scheduled to be taken off the books at age 77. Outflow scheduled as 10% of initial cost per year until liquidation with recovery of 30% or less of initial cost. Outflow is ALL associated costs. We’re ahead of budget currently on the boat but expect to be on budget in 2 years as expect a major refit will be required ( new standing rigging, engine over haul etc.). We’ve already prepositioned for when we both swallow the anchor. The house operating expenses are real estate taxes, remote monitoring and insurance. It’s operating at a zero carbon footprint and even cash flow in from the solar. It’s coverings and external structures are durable plastic or treated wood or manufactured/ natural stone. So repair/renewal costs negligible. Spent the summer away from the boat to finish the house. Everything done with cash and no liens.
Given global financial insecurity would suggest to my younger sailing brethren to think about these truths.
At some point you will stop working.
At some point you will stop sailing.
You can’t time markets.
You can’t control nor predict future events.
The world is bigger than your home country which you can use to your advantage to diversify away some risk.
People need food, water, shelter which you can use to decrease risk to a modest extent.
Unless you have extensive computer back up and megabucks day trading is for fools.
Don’t invest in what you don’t understand but realize you don’t know what you don’t know so get a financial advisor. Ideally outside a financial house so you don’t become invested preferentially in that houses offerings.
Plan now for retirement. I started in my late 20s.
 
1 - 20 of 110 Posts
Top