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screwrealestate_IHB

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<p>Hey all, so here is a question I am looking for advice on since I am finding myself in "Paralysis by Analysis". I have about 3Gs in an old IRA that I have in cash and want to invest in something. I applied for options for my rollover IRA and thought I had it, but just learned today that I only have covered call writing, not call/put options (was trying to buy puts on KBH and HOV). I have been doing very well this year so far with my investments, with NTDOY.PK (in at 44 and 60), PBW alternative energy (in at 17) and JAOSX (Janus Overseas). I bought some SKF (proshares ultrashort financial) for 81 a week or so ago and it looks like its about to go back into the money. I want to but cannot directly short any lenders or builders but still want to be short on housing and building. </p>

<p>My options are buy more SKF, buy SRS (proshares ultrashort real estate) or some commodities (GLD or mixed fund).





I can see that the SRS was way higher a bit back but is more tied to commercial, which has a lag behind and wont get as bad as residential most likely. GLD and commodities have had quite a run lately and while I am sure will go higher, may depend on a rate cut for the next leg up. </p>

<p>Any ideas/suggestions/personal preference???</p>

<p>Thanks and go buy a Wii!!!</p>

<p>PS. I am my own guy and will buy if its right, not something I will buy because of a hot tip so no worries about bad feelings...</p>
 
SRE,



If I read it correctly, the bottom line is you want to play with the $3000 you have in your old IRA. Personally, I don't think that is big enough a balance to trade the way you were describing. Remember, you can't take tax deductions for any IRA loses until a later date. For any IRA, you should take a long term approach, and "diversification" is the key. For 3000, I will just put that in one (max 2) mutual funds and be done with it. If you want to be aggressive, I will suggest you allocate 60% in large caps, and 40% in international funds. Just make sure you invest in a fund that is at lease a four star by morningstar.
 
just be sure the funds have low expense ratios like 0.2% like the Vanguard funds or most of the exchange traded index funds (ETFs). don't buy mutual funds with expense ratios around 1% or 1.5%. With $3,000 the costlier fund in terms of expense ratio won't affect you too much in dollar terms but as you invest more and say it grows to $300,000 after many years, the higher expense ratio of say 1.5% is like an annual property tax or mello roos tax on your equity fund. Why pay high "property taxes" around 1.5% when you can pick an equity fund that has low "property taxes" around 0.2%. And statistically 80% of all actively managed funds that charge the high expense ratios lag their index, so they have higher "property taxes" and their value goes up less than the low cost ETF funds with the lower "property taxes".
 
<em>>>Well go buy some more games then!!!! </em>





I would have bought more in Japan while I was there, but the games are region coded. A pox on that!





I passed by the home office in Kyoto. Does that count?
 
good point, fumbling. The only exception might be some of the internationa fund and emerging market funds. Those funds in general carry relatively higher expense ratios, but the potential / historical return has been really high. For example, the T. Rowe Price Emerging Market fund I have has an YTD return of 45%, its expense ratio is close to 1.3%. American Fund EuroPacific fund YTD retunr is 20%, its expense ratio is 1.5%.
 
<p>I appreciate the advice on mutual funds, but actually already have about 1/2 of my total money in Domestic and Overseas stock funds with Janus Overseas (30+% YTD) and Janus Contrarian (25%YTD) in a Roth and my work IRA in Vanguard. I had all of my other IRA from an old job in Fidelity funds (Contrafund and Diversified International) but sold them to buy Nintendo and PBW, which have both way outperformed those mutual funds (35% YTD). This was more to be aggressive and see if anyone had any strong preferences (thanks awgee..) between Commodities or the Proshares Ulstrashort Real estate. Since I have little free cash to spend on Puts on real estate, will SRS reflect the impending doom as well or are there other ways to get it?</p>

<p>Thanks!</p>
 
<p>I have a lot of money sitting there doing NOTHING. I need to start investing wisely, but don't know who to ask for help. Do you recommend any competent financial advisors? I don't feel like the Wells Fargo guys have much more insight than I do anyway, so I don't trust them yet. Any financial advisor you recommend?</p>

<p>Thanks</p>
 
I agree, and have had a heavy cash position for a good while. The frustration comes from the fact that cash is guaranteed to give whatever negative return inflation dictates.
 
Roo,



Where you invest your cash depends completely on your intended use and time of the cash.



If your intention is to use this cash as downpayment for house in the next several years, then your only choice is keep them in a "cash position". Cash position can be taken by keep the cash in a CD or keep them in a high yield money market fund (around 5% for a taxable money fund, around 3.5% for a fed & state AMT free money fund).



If you don't need this cash for at least 5 to 10 years ( i.e. kids college / retirement), then you need to invest most of the cash into the market with proper diversification. That is where you need might need some help.



Lastly, if you are 10 to 30 years away from retirement, keep your retirement savings ( either before tax or after tax) in cash is not a wise decision.
 
<p>Thanks guys,</p>

<p>I have a pretty good background in finance. I understand I need the money in the short-term (0-3 years) therefore I am staying away from the stock market and mutual funds. My 401(k) is invested in foreign markets to the extend possible and is only in highly stocks since I'm young. However, I'd like to have a real plan. Therefore, are you using any financial advisor that you feel good about? </p>
 
Roo,



There are two types of FAs : the ones who actually give you advise and manage your money for a fee based on your portfolio size and the ones you pay by the hour to just get advise. The later type is more like a financial planner who does more than just allocate your money.



Unless you have several million and too busy to manage yourself, I think it is better to pay someone by the hour for advise, then execute the advise yourself. Personally, I don't use any finanical advisor to manage my money at this point since I don't see the point of paying .75% of overall porfolio size as a fee to them. It sounds you are young, and I image your situation probably is not that complicated - Money market for house downpayment, emergency fund, after tax and before tax retirement fund, 529 if you have kids, disability insurance, and life insurance probably are the buckets you need to focus on.
 
Mr. Buffett said he isn't yet interested in buying into depressed home builders, hit by this year's credit-market turmoil. He said he would buy only "if they are selling below what I think they're worth," adding, "they're not there yet. I'm waiting until they're underpriced."
 
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