Investing questions

[BleedBlueGold]

Bleed, you have your head on straight. But as Whiskey pointed out, not all debt is created equal. Nothing wrong with having some leverage. Just use your debt on stuff that will appreciate, or on what ultimately makes you happy.

This is all the validation I needed to moved forward with purchasing a new boat.

I'm not a finance guy, so take what I say with a grain of salt. I wouldn't safely assume a 6% growth rate for the next two years, and I also wouldn't assume 1.5% in a savings account. I think we're going to see some hellacious volatility in the next two quarters, because this COVID situation isn't done yet. I also think we're going into correction number two, and the bottom is really going to drop out when businesses can't get back online through the fall.

Maybe split your money: half into a few extra mortgage payments, while accruing the other half in whatever cash account you use. I follow the Buffett methodology, and his money is on the sidelines. I'm doing the same. My major 401k is also pure S&P 500 index, at this point.

As RDU pointed out, my time frame isn't very long (5-8 years) and if we do see another correction/crash, how much further does it push out the time line? But here's my answer to that: Again, as RDU pointed out, I'm not in a position of "must sell" so if I decided to continue invest and hold on to that 2.75% mortgage loan, am I losing anything besides not accomplishing my goal? One would argue, the goal wasn't the correct goal in the first place, hence my "re-evaluation" comment after a few years.

I like Buffet and I like Jack Bogle, both of whom suggest the index fund approach for someone like me. I usually keep all of my investing in the realm of 80:20 - 100:0 stock index to bond index respectively.

Good chat. Thanks again, everyone.

 

[SonofOahu]

This is all the validation I needed to moved forward with purchasing a new boat.

<iframe src="https://giphy.com/embed/NQT4BXwNSkoes" width="480" height="300" frameBorder="0" class="giphy-embed" allowFullScreen></iframe><p><a href="https://giphy.com/gifs/notorious-big-NQT4BXwNSkoes">via GIPHY</a></p>

Do it!

 

[Wild Bill]

I'm in the process of getting my student loans refi'd and here are my options:

Fixed rates:
3.70% 5 year (60 month)
3.96% 8 year (96 month)
4.18% 12 year (144 month)
4.39% 15 year (180 month)

Variable rates:
2.33% (cap 9.00%) 5 year (60 month)
2.67% (cap 10.00%) 12 year (144 month)
2.82% (cap 9.00%) 8 year (96 month)
3.44% (cap 10.00%) 15 year (180 month)

Posting for a few reasons:
1. Rates are really low so some of you may be able to take advantage and reduce payments or overall payoff.

2. Does anyone have any idea why the 12 year variable is lower than the 8 year variable?

3. Any opinions on the variable vs fixed? I'm leaning towards the variable based on the obvious immediate rate savings and I'm thinking the rates stay lower than 4% for a few years. Any thoughts or opinions would be appreciated.

 

[tussin]

Any opinions on the variable vs fixed? I'm leaning towards the variable based on the obvious immediate rate savings and I'm thinking the rates stay lower than 4% for a few years. Any thoughts or opinions would be appreciated.

Do you plan to repay ahead of schedule? If you plan to hunker down and pay everything off in 3 years then the variable rates could be a good option -- otherwise I'd avoid them and take the sure thing in the fixed.

Are these federal loans? If so, I'd hold off on the refi until the interest-free forbearance period ends. You never know, it could get extended again and I suspect rates won't drastically rise higher in the coming months.

 

[Wild Bill]

Do you plan to repay ahead of schedule? If you plan to hunker down and pay everything off in 3 years then the variable rates could be a good option -- otherwise I'd avoid them and take the sure thing in the fixed.

Are these federal loans? If so, I'd hold off on the refi until the interest-free forbearance period ends. You never know, it could get extended again and I suspect rates won't drastically rise higher in the coming months.

I could pay them back ahead of schedule but would prefer a situation where the rate stays lower than 4% and stretch the repayment out for six or seven years.

No, these are private loans. My fed loans are fixed at 5% and I want to refi them but I'd lose a ton of options, namely the income sensitive repayment option. Without going into great detail, if I go off on my own and open up shop, I'll be able to report little to no income for years and avoid repayment. At this point, it's worth paying a higher rate to keep my options open.

I just don't see the rates getting much higher over the next few years. It's obviously a gamble but could be a net benefit of over $6,000 if it works out.

 

[PraetorianND]

I could pay them back ahead of schedule but would prefer a situation where the rate stays lower than 4% and stretch the repayment out for six or seven years.

No, these are private loans. My fed loans are fixed at 5% and I want to refi them but I'd lose a ton of options, namely the income sensitive repayment option. Without going into great detail, if I go off on my own and open up shop, I'll be able to report little to no income for years and avoid repayment. At this point, it's worth paying a higher rate to keep my options open.

I just don't see the rates getting much higher over the next few years. It's obviously a gamble but could be a net benefit of over $6,000 if it works out.

If you have the liquidity to pay them off in the event rates spike, then it isn't a terrible option.

 

[BobbyMac]

I could pay them back ahead of schedule but would prefer a situation where the rate stays lower than 4% and stretch the repayment out for six or seven years.

No, these are private loans. My fed loans are fixed at 5% and I want to refi them but I'd lose a ton of options, namely the income sensitive repayment option. Without going into great detail, if I go off on my own and open up shop, I'll be able to report little to no income for years and avoid repayment. At this point, it's worth paying a higher rate to keep my options open.

I just don't see the rates getting much higher over the next few years. It's obviously a gamble but could be a net benefit of over $6,000 if it works out.

I'm not saying this as a conservative snark but I'll bet the play is to pay the minimum because that stuff is going to be wiped out as soon as the Dems get enough power to do so. Hell, a Rep might have to promise it to win in 4 years.

 

[Wild Bill]

If you have the liquidity to pay them off in the event rates spike, then it isn't a terrible option.

Yeah, that's my take too. I went in thinking I would just snag the 8 year fixed that just below 4% and save myself a few bucks overall but that 5 year variable or the 12 year variable that I'd pay off in half the time is tempting.

I'm not saying this as a conservative snark but I'll bet the play is to pay the minimum because that stuff is going to be wiped out as soon as the Dems get enough power to do so. Hell, a Rep might have to promise it to win in 4 years.

You may be right about the fed backed loans but I have my doubts. There's a better chance of winning the lottery than our gov't wiping out private loans, imo. Both sides are in bed with banking and I just don't see it happening.

 

[PraetorianND]

Yeah, that's my take too. I went in thinking I would just snag the 8 year fixed that just below 4% and save myself a few bucks overall but that 5 year variable or the 12 year variable that I'd pay off in half the time is tempting.



You may be right about the fed backed loans but I have my doubts. There's a better chance of winning the lottery than our gov't wiping out private loans, imo. Both sides are in bed with banking and I just don't see it happening.

Just remember that liquidity can get pinched if things go bad in conjunction with a big rate hike. I'm not necessarily saying you should sit on cash or anything, but make sure your liquidity plans don't end up falling apart if there is a big economic shift.

 

[tussin]

I'm not saying this as a conservative snark but I'll bet the play is to pay the minimum because that stuff is going to be wiped out as soon as the Dems get enough power to do so. Hell, a Rep might have to promise it to win in 4 years.

I really, really don't see this happening. Mass forgiveness would never pass in a bill and any executive action would face a tough road in the courts.

 

[RDU Irish]

The higher cap is probably the difference in the 12 year being lower rate than the 8 year variable. If you aren't paying off over the next 5-7 years I would go for the fixed. 4.4% still isn't horrendous for 15 years.

 

[Wild Bill]

The higher cap is probably the difference in the 12 year being lower rate than the 8 year variable. If you aren't paying off over the next 5-7 years I would go for the fixed. 4.4% still isn't horrendous for 15 years.

Right now, I have a fixed rate of 4.09 that will be paid off in 9.5 years at the current pace. I could easily get them paid within 8 years at the 2.67 rate with roughly the same monthy payment (granted it'll vary with the rate changes). I have about 18 months left on my wife's car that is .9%. Once that's paid, I could, if needed, commit those funds to this student loan and I'd have the balance paid in five years or so.

There's obviously no right or wrong answer here - I just really doubt we'll see a much of an increase in rates over the next few years, which will give me a chance to chop away at the principal enough to make a relatively pain free lump sum payment if the rates get too high on the back end of the loan. Overall, we'd have to see a relatively large increase within the next five years for me to "lose" on the overall interest paid from this variable option as compared to my current fixed rate.

 

[Wild Bill]

The market is having a day today.

 

[Luckylucci]

That it is. Been a wild ride.

 

[NDBoiler]

Sell now Koon! Sell now!

 

[Irishize]

I really, really don't see this happening. Mass forgiveness would never pass in a bill and any executive action would face a tough road in the courts.

Not for the middle class anyway.

 

[Irishize]

The market is having a day today.

They look at the future so you’re seeing airlines stocks jumping as much as 40% on the trend that they’ll be operating at a much higher level in July.

Anyone falling Nikola stock? They took the first name of Nikola Tesla (since his last name was taken already by Musk). They have designed hybrid/hydrogen fueled OTR trucks.

I’ve heard it referred to a cult stock b/c they don’t have one single vehicle on the road yet. They have stated they won’t start production until they have actual purchases. Anheuser Busch has contracted to buy a fleet of them but now they have to wait for production.

 

[tussin]

Who has been following this GameStop story? One of the most insane things I've ever experienced or witnessed.

I hold a position and have literally no idea how to manage the exit.

 

[IrishLax]

Who has been following this GameStop story? One of the most insane things I've ever seen or witnessed.

I hold a position and have literally no idea how to manage the exit.

It is totally bonkers.

 

[GATTACA!]

Who has been following this GameStop story? One of the most insane things I've ever experienced or witnessed.

I hold a position and have literally no idea how to manage the exit.

Love it. Seems like it's going to go up bigly before this is all over too.

$BB and $AMC are next.

 

[hungryhippo]

Love it. Seems like it's going to go up bigly before this is all over too.

$BB and $AMC are next.

Yeah, I caught wind of it on r/wallstreetbets late last week. Hold no position in it. There's something about it that feels so fundamentally pump-and-dump that it scares me.

That said, they've been talking up BB for some time. It's on the rise, wouldn't be surprised to see it skyrocket soon.

 

[tussin]

Yeah, I caught wind of it on r/wallstreetbets late last week. Hold no position in it. There's something about it that feels so fundamentally pump-and-dump that it scares me.

That said, they've been talking up BB for some time. It's on the rise, wouldn't be surprised to see it skyrocket soon.

This really isn't pump and dump and it kind of irks me to hear all of the Wall Street shills on CNBC complain about "market manipulation" by a idiots in a subreddit. This is what happens when investors overextend and short 200%(!!!) of the available shares on a stock.

A combination of 1) hyper-aggressive positions by hedge funds; 2) Ryan Cohen investment in Gamespot; 3) industry headwinds; and 4) momentum investing by both retail and institutions on the other side of the trade has left the shorts in an unwinnable position. At this point the trade has moved away from any type of fundamental analysis, but I still love it and think that the shorts deserve to bleed out for taking such an aggressive and foolish position.

I don't think this event is replicable in any of the other shorted stocks (AMC or BBBY) because the short interest isn't as high and the business fundamentals aren't there. AMC may genuinely go out of business.

 

[Wild Bill]

https://twitter.com/ShaanVP/status/1353951035224694785?s=19

This thread explains it a bit.

 

[GATTACA!]

This really isn't pump and dump and it kind of irks me to hear all of the Wall Street shills on CNBC complain about "market manipulation" by a idiots in a subreddit. This is what happens when investors overextend and short 200%(!!!) of the available shares on a stock.

A combination of 1) hyper-aggressive positions by hedge funds; 2) Ryan Cohen investment in Gamespot; 3) industry headwinds; and 4) momentum investing by both retail and institutions on the other side of the trade has left the shorts in an unwinnable position. At this point the trade has moved away from any type of fundamental analysis, but I still love it and think that the shorts deserve to bleed out for taking such an aggressive and foolish position.

I don't think this event is replicable in any of the other shorted stocks (AMC or BBBY) because the short interest isn't as high and the business fundamentals aren't there. AMC may genuinely go out of business.

I don't think any of the others will replicate the GME craze to this extent, but BB and AMC are going to pop for sure. AMC was already up to 60% today. I got in after hours while it was still at $6.

AMC already said they had enough cash to last the rest of the year with no major changes in attendance. Add in the vaccine and they're due for a rebound. It doesn't even really matter though because this is all based on hype because there's no universe where GME deserves to be at $240 per share. Maybe it was a bit undervalued, but that's a dying company. Movies will come back once covid passes, GameStop was in trouble regardless.

BB is an outlier because it seems there are actual reasons to be optimistic about the company. They just signed a deal with Amazon.

 

[GATTACA!]

https://twitter.com/ShaanVP/status/1353951035224694785?s=19

This thread explains it a bit.

Since this was tweeted DFV went from 13 million to 25ish.

 

[Wild Bill]

Since this was tweeted DFV went from 13 million to 25ish.

Hero

Will be smiling all day if Melvin goes under this week as is being reported. This is what these people do to other businesses - they've earned it

-Hey how'd you lose your billions?

-long story involving millions of internet trolls and Gamestop.

So great.

 

[BobbyMac]

I bought a little yesterday and I'm going to sell tomorrow. Does it hit $400?

I'm not sticking around. Gonna have my finger on the trigger.

 

[Wild Bill]

I bought a little yesterday and I'm going to sell tomorrow. Does it hit $400?

I'm not sticking around. Gonna have my finger on the trigger.

Seemingly it collapses moments after Melvin. I don't think it'll take 400 to get that done. Like my old man said, pull sooner rather than later.

 

[GATTACA!]

I think this probably rides out until eow at least. That's when all the calls come up.

And really what's holding it back at this point? The price isn't based in reality in terms of GME as a business, and who would be stupid enough to seriously short it? Everyone just saw a bunch of reddit trolls shut down a 12 billion dollar firm, you really want to test your luck?

 

[tussin]

Seemingly it collapses moments after Melvin. I don't think it'll take 400 to get that done. Like my old man said, pull sooner rather than later.

Wrong -- Melvin is sending lackey analysts on CNBC to stir up FUD. The squeeze ain't squoze yet. The show goes on. Let them bleed.