Roadrunner: Your following quote from this thread is very interesting and also very perceptive. Thanks for sharing your insight!!
<< Unfortunately the number of real 64's and 65's continue to shrink (as coins are upgraded) while the quantity of crappy coins rises. Without new investor demand, the supply of crappy coins keeps their prices down.
Price guides do not reflect the value of the real coins. In 19th century silver type the ratio of crappy coins to real ones that are available in the market is any where from 4 to 1 to as high as 9 to 1.
The majority of them have been taken off the market. The last time they were seen was in 2002-2003. When will they be back........ hmmmmm? >>
Stuart
Collect 18th & 19th Century US Type Coins, Silver Dollars, $20 Gold Double Eagles and World Crowns & Talers with High Eye Appeal
"Luck is what happens when Preparation meets Opportunity"
What is fun money today MAY NOT be 5 years from today.
If I understand your comment correctly, then you and I have a different definition of fun money.
If you go to the movies, you never get that money back. If you go on vacation, you never get that money back. That is my definition of fun money. I would NEVER borrow to go to the movies or to go on vacation. If you don't have the disposable income to purchase non-necessities then IMO you shouldn't be buying them. Get your financial house in order first and the rest will follow.
<< <i>Investment monies, whether spent on real estate, stocks, or whatever, should NEVER be more than one can afford to loose. It should be money not needed for the necessities of life. >>
Hi quarterguy. Thank you for the response. I hear what you are saying. Unfortunately, this is not the reality. Many people have purchased real estate that is well beyond their means and have done so with heavy mortgages. Many more have so-called "cashed out" with equity loans as well (based upon over zealous property value assumptions) which only serves to increase the debt to equity ratio of the property.
Surely, purchasing a home with a mortgage is by definition spending money that one does not have: conduct you referred to as a "ponzi scheme" in your earlier post.
Significantly, what you earlier referred to as governments "ponzi scheme" is the very backbone of what "backs" MANY mortgages and which has kept the housing markets moving! Are you aware of this? Are you opposed to the government backing certain mortgages and ensuring liquidity for them? (Fannie Mae, Ginnie Mae, etc). If the govt. stopped doing this, what do you think would happen to people's ability to obtain a mortgage? Wouldn't access to mortgages tend to deflate the value of real estate prices? Your real estate thesis depends heavily upon the governments continued support of mortgages.
Those who have purchased with heavy mortgages - and more so those who have purchased a "portfolio" of properties with heavy debt - are most vulnerable to a real estate price decline. Bankers know this of course, and this is the MAIN reason why they pushed for (and received) the new bankruptcy laws that go into effect in October (next month). Once that law passes, people with mortgages, especially mulitple or heavy mortgages, are exceedingly vulnerable. They can no longer "walk away" if the market slips or some life event occurs to the borrower (i.e. job loss, divorce, illness, etc). There is NO escaping debt any longer quarterguy. Unlike past real estate busts, the bankers will not be taking back properties without the borrower paying the FULL fare, even if it takes them forever to do so, even until they die or until it is paid off in full, in perpetutity.
<< <i>Everyone needs a place to live and I don't think anyone can agree that renting is better than owning. >>
It certainly is NOT desirable to own an over mortgaged property(s) in a declining real estate market. That is a recipe for disaster and/or potential bankruptcy.
<< <i>With the interest rates as low as they have been in past years, some have bought more house than they needed but that is not necessarily a bad thing. As long as the borrower is protected with a fixed rate mortgage, he could buy a pricier home for the same monthly payments. >>
A fixed rate mortgage does not make a borrower immune to a falling real estate price. All that it does is "fixes" the interest rate of the debt service, nothing else. Rapidly rising property taxes (over 100% in some areas) are immediately added to the monthly payment for mortgaged properties whether that mortgage is fixed rate or not. As a result, fixed rate mortgages do NOT make the cost of the monthly payment fixed.
<< <i>With appreciation over the years, the net gain to the owner should be more with the higher priced home. This is a good thing for the average person. >>
Of course, if prices increase it is better for the borrower. At issue is what happens if prices do NOT increase. That was the original point of coinlietuenant's comment that you took issue with. Your response in this thread requires an ever increasing real estate value. It also presupposes that a heavily mortgaged indebted person is immune to some life altering situation such as loss of job, divorce, health crisis, etc. It also does not take into account the new bankruptcy laws which are sweeping and affect every person with debt.
Last thought; the Immancipation Proclamation signed by Abraham Lincoln (Jan. 1, 1863) supposedly did away with slavery. The new bankruptcy laws of October 2005 make hayseed of old Abe's proclamation. If it can make hayseed of the Declaration of Proclamation, what can it make of the massive mortgage and other debt that lines the landscape of our great Nation? I hope you are correct about rising real estate prices Quarterguy. I can't imagine the economic pain if it were otherwise. Thank you again for your response. matteproof
<<"If you go to the movies, you never get that money back. If you go on vacation, you never get that money back. That is my definition of fun money. I would NEVER borrow to go to the movies or to go on vacation. If you don't have the disposable income to purchase non-necessities then IMO you shouldn't be buying them.">>
We are on the same page here. Its just that if I choose to spend $50 on a coin instead of dinner I do care that I can get most or all of the $50 back [if market conditions warrant it] if I go to sell the coin at some future date. I do not buy coins with non-discretionary funds or loans [except fairly short term 30 days or less].
Everyone needs a place to live and I don't think anyone can agree that renting is better than owning....
That's been true for the past 2 decades due to the amount of paper pumped into the economy (money supply increased by 4X). But will it be true for the next 10 years? The house I currently live in was offered for sale around 1989-1991. The owners were a bit off in their timing as the recession hit. We rented the place in 1991. Over the next 5 years the house dropped in value. We bought it in 1996 for 60% of what they wanted in 1991. You cannot say that buying that house in 1991 was the smarter move. What little would have been saved in taxes and earned equity was a fraction of what the house lost in real value.
There are times to rent and times to buy. The home is no longer anything special as it was in the 50's and 60's and 70's. It's now a financial asset that can go up or down with the market. And people should sell or buy as the market dictates. Of course if you are a house collector who doesn't care what your home is worth then this discussion is of no concern to you.
The rules have changed. Of course the rules are also dictated by where you live and the demand to live in that particular area. And with new bankruptcy laws in effect you have even more to consider in your home ownership.
The NYT real estate section had an article today suggesting renting was a lot better than buying in NY and CA, but buying was still better in the midwest. They are going by the property value/rent ratio which is at record highs on the coasts. The only way buying is better in NYC is if the market continues to appreciate at record levels for the next few years. In other words, probably not the best time to buy a Manhattan apartment.
<< <i>What is fun money today MAY NOT be 5 years from today.
If I understand your comment correctly, then you and I have a different definition of fun money.
If you go to the movies, you never get that money back. If you go on vacation, you never get that money back. That is my definition of fun money. I would NEVER borrow to go to the movies or to go on vacation. If you don't have the disposable income to purchase non-necessities then IMO you shouldn't be buying them. Get your financial house in order first and the rest will follow.
I am struck by the serious degree of negativity on this thread. Unless this group is more savy than most other categories of investors the market may have some more to go. I am however struck by the soundness of the advise to buy scarcity and quality. It takes a lot of buyers available to maintain the price of something that has a really big float (ie common coin) but only a few buyers needed to sell a one of a kind.
<< <i>I am struck by the serious degree of negativity on this thread. Unless this group is more savy than most other categories of investors the market may have some more to go >>
With this much negativity it doesn't sound like a top to me, sounds like it is time to buy.
<< <i>I am however struck by the soundness of the advise to buy scarcity and quality. It takes a lot of buyers available to maintain the price of something that has a really big float (ie common coin) but only a few buyers needed to sell a one of a kind. >>
With this much negativity it doesn't sound like a top to me, sounds like it is time to buy.
That's what it sounds like to me. There are a certain few who almost look to be talking the market down, one of whom has predicted ten of the last two coin downturns!
I bid stupid money (2x+ Trends) for something in the Heritage sale I wanted and DID NOT get it. Quite honestly I was amazed, usually such bids are succesful. The market is definitely strong for the "right" coins.
<< <i>As a Real Estate Broker and investor I can tell you that in my part of the country (South Florida) you have to be a fool not to be using other people's money to own real estate and harvest the 40%+ appreciation per year.
What a crock of B/S that is.
For many years r.e. in S Fla was a dismal performer. You don't really want to challenge me on that statement do you?
It took off in the last 4 years and is now way out of whack with reality.
I like the new "sell the sizzle" words though. "Harvest" the returns? Hahahaha.
It's a good time to be "harvesting" some profits in the coin business.
<< <i>With this much negativity it doesn't sound like a top to me, sounds like it is time to buy.
That's what it sounds like to me. There are a certain few who almost look to be talking the market down, one of whom has predicted ten of the last two coin downturns! >>
Quis custodiet ipsos custodes?
Apropos of the coin posse/aka caca: "The longer he spoke of his honor, the tighter I held to my purse."
This thread is getting so large, with so many different comments I think you are confusing what others have said with what I said, or maybe I am the one cinfused?
<<I hear what you are saying. Unfortunately, this is not the reality. Many people have purchased real estate that is well beyond their means and have done so with heavy mortgages. Many more have so-called "cashed out" with equity loans as well (based upon over zealous property value assumptions) which only serves to increase the debt to equity ratio of the property.>>
I agree that some people have large mortgages and even 2nd mortgages, with little or no equity in their properties. I would not agree that it is because of "over zealous property value assumptions". First mortgage lenders have appraisals done on RE before lending their money. And I can tell you for a fact that apprasied value is rarely as high as market value.
It is obvious that it is much easier today to borrow money on a home, even to the point of having no equity in it, than it has been is the past. This is due to the fact that there is soooooo much money out there to lend!!
When you speak of "reality" you must realize that whatever is "perceived" IS reality.
<<Surely, purchasing a home with a mortgage is by definition spending money that one does not have: conduct you referred to as a "ponzi scheme" in your earlier post.>>
I never referred to purchasing a home with borrowed money as a ponzi scheme.
<<Significantly, what you earlier referred to as governments "ponzi scheme" is the very backbone of what "backs" MANY mortgages and which has kept the housing markets moving! Are you aware of this? Are you opposed to the government backing certain mortgages and ensuring liquidity for them? (Fannie Mae, Ginnie Mae, etc). If the govt. stopped doing this, what do you think would happen to people's ability to obtain a mortgage? Wouldn't access to mortgages tend to deflate the value of real estate prices? Your real estate thesis depends heavily upon the governments continued support of mortgages.>>
I never said the govenment's ponzi scheme had anything to do with backing home loans. What I was referring to was the fact that the government continues to spend more money each year that it actually has. Backing RE loans is not part of this. In fact Fannie Mae, Ginnie Mae, etc. makes money each year, it does not spend it. And if a borrower whats to borrow more than 80% of the value of the home, he must purchase mortgage insurance, which is another on-going money maker. This is a banking regulation.
<<Those who have purchased with heavy mortgages - and more so those who have purchased a "portfolio" of properties with heavy debt - are most vulnerable to a real estate price decline. Bankers know this of course, and this is the MAIN reason why they pushed for (and received) the new bankruptcy laws that go into effect in October (next month). >>
I don't think so. It was the losses stemming from credit cards not RE loans that the banks were concerned with. The thought of a RE bubble burst surely was in their minds but it is the losses from credit cards that they wanted to eliminate. It took them 8 long years of greasing sleezy politcians to finally get it done.
<<Once that law passes, people with mortgages, especially mulitple or heavy mortgages, are exceedingly vulnerable. They can no longer "walk away" if the market slips or some life event occurs to the borrower (i.e. job loss, divorce, illness, etc). There is NO escaping debt any longer quarterguy. Unlike past real estate busts, the bankers will not be taking back properties without the borrower paying the FULL fare, even if it takes them forever to do so, even until they die or until it is paid off in full, in perpetutity. >>
I have mixed feelings about bankruptcy. My first thought is that it shouldn't be allowed. A debt is a debt and it should be repaid. On the other hand it doesn't seem fair to punish someone forever that made an honest mistake or was a victim of circumstances. Investors should be treated differently than individuals buying a home to live in. I am sick and tired of seeing the govenment bailing out businesses that fail. Look at all the money they poured into the airlines after 9-11 and they are still asking for more as they go into bankruptcy.
<<It certainly is NOT desirable to own an over mortgaged property(s) in a declining real estate market. That is a recipe for disaster and/or potential bankruptcy. >>
Agreed....but are not IN a declining RE market.
<<A fixed rate mortgage does not make a borrower immune to a falling real estate price. All that it does is "fixes" the interest rate of the debt service, nothing else. Rapidly rising property taxes (over 100% in some areas) are immediately added to the monthly payment for mortgaged properties whether that mortgage is fixed rate or not. As a result, fixed rate mortgages do NOT make the cost of the monthly payment fixed. >>
I never said a borrower is immune to a falling RE market, nor have I spoken at all to a falling RE market. Why should I, it isn't falling. I have been speaking to the current and recent past market.
The fixed rate mortgage fixes the payment of the loan. Property taxes are a different matter. Property taxes mainly increase as the value of the property increases. Property taxes increase as a pertentage of the property value increase, 2% where I live. That means the remainder 98% is the owners equity.
I have a friend I put into a modest 2nd home here 2 years ago. He paid $170,000. After the first year he property taxes went up $1700 and the value of the home increased $60,000. The 2nd year his taxes went up $2000 and the value of the home went up $90,000. Over this 2 year period his property taxes went up $3700 and his equity increased $150,000. This seems like a pretty good deal to me, spending $3700 to get equity of $150,000 in two years. If he couldn't afford to pay the taxes with money on hand, which he can, he could easily borrow $3700 against his extra equity of $150,000. Oddly enough, everytime I see this guy he does nothing but complain about his RE tax bill!
<<Last thought; the Immancipation Proclamation signed by Abraham Lincoln (Jan. 1, 1863) supposedly did away with slavery. The new bankruptcy laws of October 2005 make hayseed of old Abe's proclamation. If it can make hayseed of the Declaration of Proclamation, what can it make of the massive mortgage and other debt that lines the landscape of our great Nation? I hope you are correct about rising real estate prices Quarterguy. I can't imagine the economic pain if it were otherwise. Thank you again for your response. >>
I agree that a major adjustment down in property values would be crushing to many industries, the country, and the economy has a whole. But as I said before it isn't happening now. All Real Estate is "local". There will always be corrections in local markets. Some areas will decline as others appreciate.
My point has been that people that sit on the sidelines and nay-say will never gain anything. Their fear of failure has them paralized. While they think about doomsday and all the possible negatives, others are making money doing what they fear and think can not be done.
All investments have some level of risk. It is up to each of us to determine our own risk/reward level. One size does not fit all.
I have no problem with anything said here by others. I see it as nothing more than good conversation, an exchange of thoughts and ideas.
Got to go now ....... I have another house to buy.
Hi quarterguy. Thank you again for the follow up. I appreciate your taking the time. Just a few comments to yours.
<< <i>I agree that some people have large mortgages and even 2nd mortgages, with little or no equity in their properties. I would not agree that it is because of "over zealous property value assumptions". First mortgage lenders have appraisals done on RE before lending their money. And I can tell you for a fact that apprasied value is rarely as high as market value. >>
Property value assumptions are performed by third parties called "real estate appraisers." They are paid a fee for this service. Sometimes the bank sends the appraiser but it is the borrower who pays for the service. Who does the appraiser work for? The bank or the borrower? In either case, the valuations are often generous - sometimes grossly so - in order to "push" (their term not mine) the deal (refi) through. "Cash Outs" are entirely built upon "increased equity" assumptions of a given property based upon a perceived market value. It is not uncommon for a property to have a very high debt to equity ratio and many nowadays even have a negative debt to equity ratio (very often the result of aggressive property valuations in refinance deals). Even a slightly declining real estate market would quickly erode such valuations dramatically - and with it equity. In fact many mortgages today from their inception are designed to meet this premise of "equitylessness" (so-called negative amortization mortgages, interest only mortgages, etc).
<< <i>It is obvious that it is much easier today to borrow money on a home, even to the point of having no equity in it, than it has been is the past. This is due to the fact that there is soooooo much money out there to lend!! >>
If the banks lend cash it is the borrower who is taking it in as DEBT. The easy money policy of the FEDS these past years was supposedly designed to encourage corporations to expand their businesses and create new jobs. It didn't happen! So the bankers turned the money spigot loose on individuals. Borrowers have taken upon themselves MORE debt than they should have been allowed. If the bank is pushing "easy money" (and I agree with you on this) it is the borrower (homeowner) who is responsible for it, not the bank. Under the new bankruptcy laws, it is the borrower who will pay the price in full.
<< <i>When you speak of "reality" you must realize that whatever is "perceived" IS reality. >>
I feel that reality is precise and is connected with a state of fact or some observable and repeatable truth. And, it is fact that our beloved nation, and the individuals within the nation, have FAR too much debt and too little equity (and savings). In our day, this is largely due to excessive debt, particularly mortgage debt. Our national savings rate is hovering in the "negative" territory.
<< <i>I never referred to purchasing a home with borrowed money as a ponzi scheme. >>
You said; "the biggest ponzi skeem of all is the one that is perpetuated by our elected leaders in Washington.....they just keep spending money they do not have to assure their re-elections and make themselves feel good about helping people. (bold is mine) You defined "spending money they do not have" as being a ponzi scheme. A mortgage, by definition, is "spending money that someone does not have."
<< <i>I never said the govenment's ponzi scheme had anything to do with backing home loans... >>
By backing and ensuring mortgages as the money of last resort, the governement is essentially "co-signing" the mortgage for the bank. This is the main reason that banks are so willing to write mortgages. Without that government assurance, there would be FAR FAR fewer mortgages which would, of course, depress real estate prices.
<< <i>..What I was referring to was the fact that the government continues to spend more money each year that it actually has. >>
My point was that this is exactly what over mortgaged people do. They spend MORE than they actually have. That is why they took the mortgage or "cash out" to begin with and that is why they are so deeply in debt. If it's a ponzi scheme for the government, then it must also be a ponzi scheme for an indiviudal.
<< <i>Backing RE loans is not part of this. In fact Fannie Mae, Ginnie Mae, etc. makes money each year, it does not spend it. And if a borrower whats to borrow more than 80% of the value of the home, he must purchase mortgage insurance, which is another on-going money maker. This is a banking regulation. >>
The government's backing of Fannie Mae, Ginne Mae (and the other sister Maes) makes them very much a part of the mortgage industry and the Fannie & Ginne Mae are very much like quasi-governmental agencies. In fact, their bonds, Ginne Mae certificates, Mortgage Backed Securites, CMO's, etc are all packaged by Wall Street as "governement guaranteed." If these mortgages fail (GOD forbid) this fact will become all too clear. That is exactly what occurred during the S&L scandal of the early 1990's. All of that foreclosed real estate was ultimately paid for by the governement (vis-a-vis the taxpayers of course). Those foreclosed properties were auctioned off by the govt for pennies on the dollar. The next time the real estate markets busts, it will be the individual debtor who pays as a result of the new bankruptcy laws.
<< <i>I don't think so. It was the losses stemming from credit cards not RE loans that the banks were concerned with. >>
Fraudulent dead beat credit card abusers amount to a pittance of finanical losses surrounding bankruptcy filings. The vast majority of bankruptcies result from "medical illness" expenses, bad business/too much real estate and other debt, and single motherhood. Credit card fraud is compartively minor. The bankers certainly tried to make it appear that it was credit card fraud that prompted their lust for reform, but the studies showed otherwise and even the bankers themselves no longer make this claim (but only now that the laws have already been passed). The new bankruptcy laws would have never passed if the banking lobby had told the truth, that the majority of bankruptcy's result from "medical illness" debts. The public outcry would have been too great and the bankers would have lost. There marketing deception surrounding "credit card fraud" was a brilliant but devious public relations victory for the banking industry. By the way, you might be interested to know that the bankers fought VERY hard to NOT allow an exception in the new bankruptcy laws that would have excluded "medical bankrupts." Tragically, the bankers won. The brazen hypocrisy of the banking industry is great, because while bankruptcies nearly doubled, credit card industry profits more than tripled in the same period (from $12.9 billion in 1995 to $31.6 billion in 2004). According to a report (I think it was a Harvard study) estimates are that the new bankruptcy laws will net the credit card industry an additional $5 billion on top of that! So, as you can see, it is NOT credit card debts that the banking industry fears (their profits have tripled). Rather it is some OTHER debt that they fear which prompted their passion for the bankruptcy law changes. What other form of debt could it be? Possibly overextended homeowner Mortgage debt? So, for all of the whining from the banking lobby, they have successfully figured out a way to have the government become their collection agency with the new bankruptcy laws.
<< <i>I have mixed feelings about bankruptcy. My first thought is that it shouldn't be allowed. A debt is a debt and it should be repaid. On the other hand it doesn't seem fair to punish someone forever that made an honest mistake or was a victim of circumstances.... >>
I hear you quarterguy. Yet, if we deny a man the opportunity of a "fresh start" he is bound to become disheartened and give up hope. It is poor legislation as a matter of public policy. Also, most bankruptcies are medical expense bankrupts and they obviously had no choice in their unfortunate outcome. It is cruel and misguided to force such ones into a lifetime of economic slavery, which the new bankruptcy laws flaunt. There are many potential "unintended consequences" that are nearly certain to arise as a result of the new and awful bankrupcty laws. The authors of the new bankruptcy laws have perfomed a horrible injustice to America. To my way of thinking, the new bankruptcy laws are a heartless, unAmerican, assault upon a class of people whose circumstances were CREATED by the industry that now seeks to enslave them.
<< <i>I never said a borrower is immune to a falling RE market, nor have I spoken at all to a falling RE market. Why should I, it isn't falling. I have been speaking to the current and recent past market. >>
Fair enough. Still, coinlieutenants original post that prompted our comments on this thread referred to the "forward looking" real estate market.
<< <i>I have a friend I put into a modest 2nd home here 2 years ago. He paid $170,000. After the first year he property taxes went up $1700 and the value of the home increased $60,000. The 2nd year his taxes went up $2000 and the value of the home went up $90,000. Over this 2 year period his property taxes went up $3700 and his equity increased $150,000. This seems like a pretty good deal to me, spending $3700 to get equity of $150,000 in two years. If he couldn't afford to pay the taxes with money on hand, which he can, he could easily borrow $3700 against his extra equity of $150,000. Oddly enough, everytime I see this guy he does nothing but complain about his RE tax bill! >>
I know of folks who purchased a million dollar home with a heavy "fixed rate" mortgage, whose property taxes were 15k per year at purchase and are now pushing 30k per year (with built in automatic rises in place for the future). That property tax double occurred in a very short period of time - I'd say about five years or so. That rising property tax is built into their monthly mortgage payment, which is growing rapidly all of the time, even though it is a fixed rate mortgage! These folks are complaining because they are feeling the extra cost. Their wages (though high) have not risen and in fact have declined to some degree. Each one lives in constant fear of losing their job. If they are forced to sell at some point - which is a possibility - it will only work out well for them if they sell while the prices are up. But even then, they would still have to purchase another home at the current market, which tends to mitigate selling the present one. However, if the prices start to drop before they sell, they run the real risk of finding themselves in an ever increasing costly monthly nightmare with the prospects of selling the property into a weak and declining market (assuming there is one). Here's a frightening thought. If (GOD forbid) real estate prices decline, do you think those property taxes will decline with it? No way! When all is said and done, if the cost of carrying a home cannot be offset entirely by the income from renting it out (after factoring in things like insurance, legal fees, deadbeat tenants, maintenance, etc) then what does that tell you about the value of the property?
<< <i>I agree that a major adjustment down in property values would be crushing to many industries, the country, and the economy has a whole. But as I said before it isn't happening now. All Real Estate is "local". There will always be corrections in local markets. Some areas will decline as others appreciate. >>
Yes, I hear you. Thank GOD the real estate market has been very strong. As a result, the pain of many people's misuse of mortgage debt has not been so readily felt yet. Yet, my sense (and it is only a sense based on observation) is that the real estate market is already softer right now than it was, say, one year ago. I fear that it could become noticeably weaker in the future and I can't help but wonder WHY the new bankruptcy laws were pushed so hard just at this particular time (the law only passed a short while ago). What were the bankers fearing that caused such a mad push for the reform at this particular time?
<< <i>My point has been that people that sit on the sidelines and nay-say will never gain anything. Their fear of failure has them paralized. While they think about doomsday and all the possible negatives, others are making money doing what they fear and think can not be done. >>
Yes, I agree with you to a very large degree. It is true that in order to hit a home run, one must be willing to step up to the plate and swing at the pitch. However, only a poor hitter swings at a pitch that is "way outside" the plate. The best hitters weigh the odds, the alternatives, and the many potential outcomes of that pitch. At least then, if they strike out, they can walk to the dugout and say; "at least I swung at a perfect pitch and not at some wide outside the plate one." Prudence is an asset.
<< <i>All investments have some level of risk. It is up to each of us to determine our own risk/reward level. One size does not fit all. >>
Very true. Yet for many a house is not an investment, it's a home.
<< <i>I have no problem with anything said here by others. I see it as nothing more than good conversation, an exchange of thoughts and ideas. >>
Amen quarterguy. I agree entirely. I consider myself very fortunate to exchange thoughts and ideas with the savvy folks on this board including you quarterguy.
<< <i>Got to go now ....... I have another house to buy. >>
Good luck with the house hunting quarterguy. But remember to watch out for those mortgages. I have it on very powerful authority that; "the borrower is slave to the lender" (Proverbs 22:7).
Your points were all well taken. Your Proverbs quote pretty much says it all!! But I will continue to buy and sell real estate as long as it is a winner for me and the risk/reward is acceptable, IMO..... >>
Thanks quarterguy. I much appreciate your excellent thoughts. matteproof
Folks, don't forget the absolutely absurd margins that the average collector pays for this so-called "investment." You buy at auction; you pay the 15% buyer's premium. You sell at auction; maybe you get 105% of hammer (remember, you are an "average" collector). Of course, it could be worse: you could buy retail from a "reputable dealer" and sell later at wholesale to some other "reputable dealer" and get hit for far more than 10%, overall.
Name another investment where you are 10% in the hole the minute you buy. The coin marketplace is incredibly inefficient.
OK folks, I didnt think that this thread would get such a passionate following.
Just a few more thoughts.
A home is to live in
Coins are basically to have fun with
Stocks are intended to give you ulcers
Gold coins are used to fill up safe deposit boxes.
Money in the bank allows you to sleep at night
40lK and pensions and Social security allow you to sleep when you get to be my age.
Loaded guns are to keep people from screwing with you in your own home, usually late at night.
Most all the people on this Forum are nimble, smart, prudent and quite able to go with whatever the flow is. I wish all Americans had the smarts shown by the folks on this Forum.
With these thoughts, I wish you all a fond goodnight.
I read and read and read and believe it or not, this thread took me high ,low, down, up and through about every emotion a person can deal with. There is a wealth of knowledge here and the participation is truly as passionate as you will find , even in the church pulpit on Sundays. It is great to be a part of this and it is nice to see the views and the insight of others in this thread. You summed it up very well , and Korona is right, too.........if one goes into this market from the retail end, he gets hammered and his thought of coins as an investment will wither away soon. I have seen the market explode over the past thirty years and it continues to grow to this day. High End coins are bought by the upper echelon folks and sold in High End auctions several times per year, Low end coins are "traded and dealt" by us common folks usually building sets or collections, it is a hobby and a love, NOT just a MARKET. This market will not have the bottom drop out. We didn't see coin collectors buying bread in 1929 with St Gaudens pieces any more than you see collectors dumping their coins off now in fear that there will be a collapse. This is a strong market that adds new collectors every single day.
Ever watch them sell NGC coins on television ? We all know we can do better buying on ebay and get the same coins for half the cost in a PCGS holder. And yet, they continue to sell millions of dollars worth each month....and these are State Quarters, common proof sets, common date Morgans, etc.
Of course we cannot group our market with the housing market or the transportation industry for that matter. Coins hold value and the value usually goes up.
For dealers, the economy has a profound effect on them, just as gas prices affect all of us, they too fall victim to budgetary constraints of buyers. But most collectors of coins also know that if the price of gas hits 4 dollars, they are still going to buy whatever coin they want, just as soon as it comes available or they have the 'extra' money to do so.
I am sure David Hall would agree with your statement that coins are to have fun with, too. if ya know what I mean .
(i)"Hi quarterguy. But this is exactly what INDIVIDUALS have done with rampant borrowings and heavy mortgages. You blame our elected officials for conduct that you seem to praise in individuals. If you think that I'm wrong, please tell me why."
I have never "praised" anyone for living beyond their means or risking their position on uncertainies. I didn't mean to give that impression.
Investment monies, whether spent on real estate, stocks, or whatever, should NEVER be more than one can afford to loose. It should be money not needed for the necessities of life.
Everyone needs a place to live and I don't think anyone can agree that renting is better than owning. With the interest rates as low as they have been in past years, some have bought more house than they needed but that is not necessarily a bad thing. As long as the borrower is protected with a fixed rate mortgage, he could buy a pricier home for the same monthly payments. With appreciation over the years, the net gain to the owner should be more with the higher priced home. This is a good thing for the average person.
coynclecter
Sorry to hear of your loss in CA. I understand your feelings about living in hurricane land. At times it does get frustrating thinking about it. But I do not agree what another said here about no boomer in his right mind moving to the south Florida. As a Real Estate Broker I have baises las we all do, but it is a fact that boomers ARE moving here and will continue to do so in the future.
Even as expensive as properties are here, some people moving in from the North East think our prices are low.
I don't see South Florida as any more dangerous living than being in the Midwest dodging tornados or living on the left coast fearing earthquakes. ....and the winters are heaven!!..... where might you live? >>
<< <i>Folks, don't forget the absolutely absurd margins that the average collector pays for this so-called "investment." You buy at auction; you pay the 15% buyer's premium. You sell at auction; maybe you get 105% of hammer (remember, you are an "average" collector). Of course, it could be worse: you could buy retail from a "reputable dealer" and sell later at wholesale to some other "reputable dealer" and get hit for far more than 10%, overall.
Name another investment where you are 10% in the hole the minute you buy. The coin marketplace is incredibly inefficient. >>
In the area of collectibles, coins probably have the least buy/sell spread. That being said, you're being pretty optimistic that an average collector would get 105% of hammer. Coins should not be viewed as investments. Of course, no one is hoping to lose money on them, but if you look at coins with a critical eye they are a lousy investment vehicle.
What I like about coins is you can enjoy a great hobby and you have a decent chance of getting most of your money back out of it if you want. Can't say that about too many hobbies.
New collectors, please educate yourself before spending money on coins; there are people who believe that using numismatic knowledge to rip the naïve is what this hobby is all about.
<<"Folks, don't forget the absolutely absurd margins that the average collector pays for this so-called "investment." You buy at auction; you pay the 15% buyer's premium. You sell at auction; maybe you get 105% of hammer (remember, you are an "average" collector). Of course, it could be worse: you could buy retail from a "reputable dealer" and sell later at wholesale to some other "reputable dealer" and get hit for far more than 10%, overall.
Name another investment where you are 10% in the hole the minute you buy. The coin marketplace is incredibly inefficient.">>
Thats not necessarily true at all. Dealers buy coins at auction all the time, mark them up and still sell them. It all depends on what you buy and when you sell. I have seen times on eBay when everyone seemed to want a particular kind of coin and the next week no one wanted them. If I buy a house here for $200K and 2 days later decide/need to sell thru a realtor at 7% commish then I need $214K to break even. If I bought a house that was on the market for half a day I stand a good chance to break even; if it was on the market for 3 months then I'm probly screwed. And so it is with coins.
"As a Real Estate Broker and investor I can tell you that in my part of the country (South Florida) you have to be a fool not to be using other people's money to own real estate and harvest the 40%+ appreciation per year."
I am glad that I resisted temptation to sell everything and put it into Florida real estate in late 2005.
One thing is for sure, you can see now who KNEW what they were talking about. At least we know about the real-estate and gas markets, still waiting for the coin market. Let’s see, if this past historic thread is any gauge, the debate was that coins will go up for ever verses they will crash. I vote crash.
WS
Proud recipient of the coveted PCGS Forum "You Suck" Award Thursday July 19, 2007 11:33 PM and December 30th, 2011 at 8:50 PM.
<< <i>One thing is for sure, you can see now who KNEW what they were talking about. At least we know about the real-estate and gas markets, still waiting for the coin market. Let’s see, if this past historic thread is any gauge, the debate was that coins will go up for ever verses they will crash. I vote crash.
WS >>
I think that argument is disingenuous. Everyone knows the coin market will crash. That's easy. There were several who predicted that the market crash was imminent or even at hand three years ago, and they were clearly incorrect. I think that it is foolhardy to make confident predictions on when a bull market (of any kind) will end. It's important to recognize that there are cycles and when the market looks really, really good or really, really bad, remind yourself of the nature of cycles.
<< <i>Everyone knows the coin market will crash. That's easy. There were several who predicted that the market crash was imminent or even at hand three years ago, and they were clearly incorrect. I think that it is foolhardy to make confident predictions on when a bull market (of any kind) will end. >>
Dictionary definition of the word crash: to collapse or fail suddenly, as a financial enterprise: The stock market crashed.
Yes the bull market curently affecting some coins will someday end. Although the media may disagree, not all bull markets end in a crash, so it doesn't necessarily follow that we will see coin prices collapsing (or failing) when this bull market ends.
Advanced collector of BREWERIANA. Early beer advertising (beer cans, tap knobs, foam scrapers, trays, tin signs, lithos, paper, etc)....My first love...U.S. COINS!
Bear's posts are by far some of the best on these boards. He makes salient arguments without all the emotion that often muddies logic.
My only real concern with the coin market is amount of leverage in the system. If buyers and/or dealers have been borrowing money to buy coins, watch out below. Otherwise, I believe the coin market will slow and slump but not collapse.
I also agree with stman's original comments - very insightful.
This thread is getting so large, with so many different comments I think you are confusing what others have said with what I said, or maybe I am the one cinfused?
<<I hear what you are saying. Unfortunately, this is not the reality. Many people have purchased real estate that is well beyond their means and have done so with heavy mortgages. Many more have so-called "cashed out" with equity loans as well (based upon over zealous property value assumptions) which only serves to increase the debt to equity ratio of the property.>>
I agree that some people have large mortgages and even 2nd mortgages, with little or no equity in their properties. I would not agree that it is because of "over zealous property value assumptions". First mortgage lenders have appraisals done on RE before lending their money. And I can tell you for a fact that apprasied value is rarely as high as market value.
It is obvious that it is much easier today to borrow money on a home, even to the point of having no equity in it, than it has been is the past. This is due to the fact that there is soooooo much money out there to lend!!
When you speak of "reality" you must realize that whatever is "perceived" IS reality.
<<Surely, purchasing a home with a mortgage is by definition spending money that one does not have: conduct you referred to as a "ponzi scheme" in your earlier post.>>
I never referred to purchasing a home with borrowed money as a ponzi scheme.
<<Significantly, what you earlier referred to as governments "ponzi scheme" is the very backbone of what "backs" MANY mortgages and which has kept the housing markets moving! Are you aware of this? Are you opposed to the government backing certain mortgages and ensuring liquidity for them? (Fannie Mae, Ginnie Mae, etc). If the govt. stopped doing this, what do you think would happen to people's ability to obtain a mortgage? Wouldn't access to mortgages tend to deflate the value of real estate prices? Your real estate thesis depends heavily upon the governments continued support of mortgages.>>
I never said the govenment's ponzi scheme had anything to do with backing home loans. What I was referring to was the fact that the government continues to spend more money each year that it actually has. Backing RE loans is not part of this. In fact Fannie Mae, Ginnie Mae, etc. makes money each year, it does not spend it. And if a borrower whats to borrow more than 80% of the value of the home, he must purchase mortgage insurance, which is another on-going money maker. This is a banking regulation.
<<Those who have purchased with heavy mortgages - and more so those who have purchased a "portfolio" of properties with heavy debt - are most vulnerable to a real estate price decline. Bankers know this of course, and this is the MAIN reason why they pushed for (and received) the new bankruptcy laws that go into effect in October (next month). >>
I don't think so. It was the losses stemming from credit cards not RE loans that the banks were concerned with. The thought of a RE bubble burst surely was in their minds but it is the losses from credit cards that they wanted to eliminate. It took them 8 long years of greasing sleezy politcians to finally get it done.
<<Once that law passes, people with mortgages, especially mulitple or heavy mortgages, are exceedingly vulnerable. They can no longer "walk away" if the market slips or some life event occurs to the borrower (i.e. job loss, divorce, illness, etc). There is NO escaping debt any longer quarterguy. Unlike past real estate busts, the bankers will not be taking back properties without the borrower paying the FULL fare, even if it takes them forever to do so, even until they die or until it is paid off in full, in perpetutity. >>
I have mixed feelings about bankruptcy. My first thought is that it shouldn't be allowed. A debt is a debt and it should be repaid. On the other hand it doesn't seem fair to punish someone forever that made an honest mistake or was a victim of circumstances. Investors should be treated differently than individuals buying a home to live in. I am sick and tired of seeing the govenment bailing out businesses that fail. Look at all the money they poured into the airlines after 9-11 and they are still asking for more as they go into bankruptcy.
<<It certainly is NOT desirable to own an over mortgaged property(s) in a declining real estate market. That is a recipe for disaster and/or potential bankruptcy. >>
Agreed....but are not IN a declining RE market.
<<A fixed rate mortgage does not make a borrower immune to a falling real estate price. All that it does is "fixes" the interest rate of the debt service, nothing else. Rapidly rising property taxes (over 100% in some areas) are immediately added to the monthly payment for mortgaged properties whether that mortgage is fixed rate or not. As a result, fixed rate mortgages do NOT make the cost of the monthly payment fixed. >>
I never said a borrower is immune to a falling RE market, nor have I spoken at all to a falling RE market. Why should I, it isn't falling. I have been speaking to the current and recent past market.
The fixed rate mortgage fixes the payment of the loan. Property taxes are a different matter. Property taxes mainly increase as the value of the property increases. Property taxes increase as a pertentage of the property value increase, 2% where I live. That means the remainder 98% is the owners equity.
I have a friend I put into a modest 2nd home here 2 years ago. He paid $170,000. After the first year he property taxes went up $1700 and the value of the home increased $60,000. The 2nd year his taxes went up $2000 and the value of the home went up $90,000. Over this 2 year period his property taxes went up $3700 and his equity increased $150,000. This seems like a pretty good deal to me, spending $3700 to get equity of $150,000 in two years. If he couldn't afford to pay the taxes with money on hand, which he can, he could easily borrow $3700 against his extra equity of $150,000. Oddly enough, everytime I see this guy he does nothing but complain about his RE tax bill!
<<Last thought; the Immancipation Proclamation signed by Abraham Lincoln (Jan. 1, 1863) supposedly did away with slavery. The new bankruptcy laws of October 2005 make hayseed of old Abe's proclamation. If it can make hayseed of the Declaration of Proclamation, what can it make of the massive mortgage and other debt that lines the landscape of our great Nation? I hope you are correct about rising real estate prices Quarterguy. I can't imagine the economic pain if it were otherwise. Thank you again for your response. >>
I agree that a major adjustment down in property values would be crushing to many industries, the country, and the economy has a whole. But as I said before it isn't happening now. All Real Estate is "local". There will always be corrections in local markets. Some areas will decline as others appreciate.
My point has been that people that sit on the sidelines and nay-say will never gain anything. Their fear of failure has them paralized. While they think about doomsday and all the possible negatives, others are making money doing what they fear and think can not be done.
All investments have some level of risk. It is up to each of us to determine our own risk/reward level. One size does not fit all.
I have no problem with anything said here by others. I see it as nothing more than good conversation, an exchange of thoughts and ideas.
Got to go now ....... I have another house to buy.
<< <i>Bear's posts are by far some of the best on these boards. He makes salient arguments without all the emotion that often muddies logic.
My only real concern with the coin market is amount of leverage in the system. If buyers and/or dealers have been borrowing money to buy coins, watch out below. Otherwise, I believe the coin market will slow and slump but not collapse.
I also agree with stman's original comments - very insightful. >>
Some dealers may be at risk who buy cons for inventory on leverage but I find it difficult to believe that great coins being put away by collectors are being bought with leverage. I also believe the coin market may slow but not collapse when it comes to the great coins. I actually think the 'dealer' is becoming less of a factor in terms of prices. I think collectors have more influence on prices than dealers.
What I find interesting is that when the term " coin market" is used on this board it means the US coin market. Wake up!
The reality is there are growing coin markets all over the world.
Witness the recent Millenia sale that took place this past Monday.
A quote from CRO's road report May 26th: "And as a result, the market for world coins is apparently stronger than it has ever been. Ever."
I manage money. I earn money. I save money . I give away money. I collect money. I don’t love money . I do love the Lord God.
Just my two cents (get it? ) but, for those who are betting the coin market will crash in short time... wouldn’t the price of silver and gold have to drop for that to happen?
Perhaps the newest stuff might take a hit but, I just posted 32 ounces of silver made up of 42 Morgan and Peace Dollars with lots of honest ware (not good enough to sell separately but not totally junk either) and it shot to $500 in 48 hours and there are 17 people watching the auction. My last weeks sales of older books with silver went for just under $1700. Even my SBA book with the 1979 Type II went for over $100.
I did have some trouble selling my smaller modern sets, modern proofs, and First Day of Issue Stamps separately so, I put all of that into one large 1000 coin auction, tossed in some silver and it shot to $420 with 19 people watching; it doesn't end until Sunday.
I’m honestly not seeing a slow down at all.
I remember baseball cards in the mid 90s, that market did crash but, that was cardboard and kids got priced out of the market... if silver keeps going up, it really seems like coins will hold their value for at least sometime to come.
Also with the new state quarters and new dollars, more and more kids are collecting, which only helps the hobby. Kids can go to the bank and get the new dollar for a dollar, not $5 or $10 for the new rookie card (which is a LOT of money to a kid) or $40 to $100 for the star's rookie card (which is impossible for a kid), like things got in the late 90s with baseball cards.
I've always said, getting kids to collect is KEY to the future of the hobby.
Maybe prices and values won’t sky rocket but, I don’t see a crash in the coin market anytime soon and especially if silver hits $25 or even $30 by years end.
Wow, I was reading this thread and didn't realize until I got to my first post that it was 2005!
Price guides do not reflect the value of the real coins. In 19th century silver type the ratio of crappy coins to real ones that are available in the market is any where from 4 to 1 to as high as 9 to 1.
The majority of them have been taken off the market. The last time they were seen was in 2002-2003. When will they be back........ hmmmmm?
In any case those words were true in 2005 and those truly gem type coins are only now filtering slowly back into the market (usually at auction) as prices have risen. It will take much higher prices to pry a lot more loose. And the 9 to 1 or 4 to 1 ratios are still mainly true imo. For every good or great coin, there are 8 pretenders.
As already stated, don't look for the end to this bifurcated coin bull market until gold and silver have peaked. And that's years off imo. But the bifurcation will only continue to widen.
As far as Quarterguy goes, it sounds like he has gone the way of Dollardude...out to pasture with the rest of the real estate and forever crowd. As long as the FED and its Wall Street Buddies are around to cycle the markets hard and create never-ending bubbles, there will be no such thing as a true investment anymore....just various forms of speculations. Get used to it, it's all we have to separate us from our fiat.
Comments
<< Unfortunately the number of real 64's and 65's continue to shrink (as coins are upgraded) while the quantity of crappy coins rises.
Without new investor demand, the supply of crappy coins keeps their prices down.
Price guides do not reflect the value of the real coins. In 19th century silver type the ratio of crappy coins to real ones that are available in the market is any where from 4 to 1 to as high as 9 to 1.
The majority of them have been taken off the market. The last time they were seen was in 2002-2003. When will they be back........ hmmmmm? >>
Stuart
Collect 18th & 19th Century US Type Coins, Silver Dollars, $20 Gold Double Eagles and World Crowns & Talers with High Eye Appeal
"Luck is what happens when Preparation meets Opportunity"
If I understand your comment correctly, then you and I have a different definition of fun money.
If you go to the movies, you never get that money back. If you go on vacation, you never get that money back. That is my definition of fun money. I would NEVER borrow to go to the movies or to go on vacation. If you don't have the disposable income to purchase non-necessities then IMO you shouldn't be buying them. Get your financial house in order first and the rest will follow.
Joe.
<< <i>Investment monies, whether spent on real estate, stocks, or whatever, should NEVER be more than one can afford to loose. It should be money not needed for the necessities of life. >>
Hi quarterguy. Thank you for the response. I hear what you are saying. Unfortunately, this is not the reality. Many people have purchased real estate that is well beyond their means and have done so with heavy mortgages. Many more have so-called "cashed out" with equity loans as well (based upon over zealous property value assumptions) which only serves to increase the debt to equity ratio of the property.
Surely, purchasing a home with a mortgage is by definition spending money that one does not have: conduct you referred to as a "ponzi scheme" in your earlier post.
Significantly, what you earlier referred to as governments "ponzi scheme" is the very backbone of what "backs" MANY mortgages and which has kept the housing markets moving! Are you aware of this? Are you opposed to the government backing certain mortgages and ensuring liquidity for them? (Fannie Mae, Ginnie Mae, etc). If the govt. stopped doing this, what do you think would happen to people's ability to obtain a mortgage? Wouldn't access to mortgages tend to deflate the value of real estate prices? Your real estate thesis depends heavily upon the governments continued support of mortgages.
Those who have purchased with heavy mortgages - and more so those who have purchased a "portfolio" of properties with heavy debt - are most vulnerable to a real estate price decline. Bankers know this of course, and this is the MAIN reason why they pushed for (and received) the new bankruptcy laws that go into effect in October (next month). Once that law passes, people with mortgages, especially mulitple or heavy mortgages, are exceedingly vulnerable. They can no longer "walk away" if the market slips or some life event occurs to the borrower (i.e. job loss, divorce, illness, etc). There is NO escaping debt any longer quarterguy. Unlike past real estate busts, the bankers will not be taking back properties without the borrower paying the FULL fare, even if it takes them forever to do so, even until they die or until it is paid off in full, in perpetutity.
<< <i>Everyone needs a place to live and I don't think anyone can agree that renting is better than owning. >>
It certainly is NOT desirable to own an over mortgaged property(s) in a declining real estate market. That is a recipe for disaster and/or potential bankruptcy.
<< <i>With the interest rates as low as they have been in past years, some have bought more house than they needed but that is not necessarily a bad thing. As long as the borrower is protected with a fixed rate mortgage, he could buy a pricier home for the same monthly payments. >>
A fixed rate mortgage does not make a borrower immune to a falling real estate price. All that it does is "fixes" the interest rate of the debt service, nothing else. Rapidly rising property taxes (over 100% in some areas) are immediately added to the monthly payment for mortgaged properties whether that mortgage is fixed rate or not. As a result, fixed rate mortgages do NOT make the cost of the monthly payment fixed.
<< <i>With appreciation over the years, the net gain to the owner should be more with the higher priced home. This is a good thing for the average person. >>
Of course, if prices increase it is better for the borrower. At issue is what happens if prices do NOT increase. That was the original point of coinlietuenant's comment that you took issue with. Your response in this thread requires an ever increasing real estate value. It also presupposes that a heavily mortgaged indebted person is immune to some life altering situation such as loss of job, divorce, health crisis, etc. It also does not take into account the new bankruptcy laws which are sweeping and affect every person with debt.
Last thought; the Immancipation Proclamation signed by Abraham Lincoln (Jan. 1, 1863) supposedly did away with slavery. The new bankruptcy laws of October 2005 make hayseed of old Abe's proclamation. If it can make hayseed of the Declaration of Proclamation, what can it make of the massive mortgage and other debt that lines the landscape of our great Nation? I hope you are correct about rising real estate prices Quarterguy. I can't imagine the economic pain if it were otherwise. Thank you again for your response.
We are on the same page here. Its just that if I choose to spend $50 on a coin instead of dinner I do care that I can get most or all of the $50 back [if market conditions warrant it] if I go to sell the coin at some future date. I do not buy coins with non-discretionary funds or loans [except fairly short term 30 days or less].
That's been true for the past 2 decades due to the amount of paper pumped into the economy (money supply increased by 4X). But will it be true for the next 10 years? The house I currently live in was offered for sale around 1989-1991. The owners were a bit off in their timing as the recession hit. We rented the place in 1991. Over the next 5 years the house dropped in value. We bought it in 1996 for 60% of what they wanted in 1991. You cannot say that buying that house in 1991 was the smarter move. What little would have been saved in taxes and earned equity was a fraction of what the house lost in real value.
There are times to rent and times to buy. The home is no longer anything special as it was in the 50's and 60's and 70's. It's now a financial asset that can go up or down with the market. And people should sell or buy as the market dictates. Of course if you are a house collector who doesn't care what your home is worth then this discussion is of no concern to you.
The rules have changed. Of course the rules are also dictated by where you live and the demand to live in that particular area. And with new bankruptcy laws in effect you have even more to consider in your home ownership.
roadrunner
<< <i>What is fun money today MAY NOT be 5 years from today.
If I understand your comment correctly, then you and I have a different definition of fun money.
If you go to the movies, you never get that money back. If you go on vacation, you never get that money back. That is my definition of fun money. I would NEVER borrow to go to the movies or to go on vacation. If you don't have the disposable income to purchase non-necessities then IMO you shouldn't be buying them. Get your financial house in order first and the rest will follow.
Joe. >>
Coins that are quality for the grade will be in demand... especially rare coins. Common coins will for the most part always be common.
In seeking the high grade, tend to stay away from common coins. Even in MS 67, an 1880-s Morgan is common even though it is quite attractive.
Experience the World through Numismatics...it's more than you can imagine.
<< <i>I am struck by the serious degree of negativity on this thread. Unless this group is more savy than most other categories of investors the market may have some more to go >>
With this much negativity it doesn't sound like a top to me, sounds like it is time to buy.
<< <i>I am however struck by the soundness of the advise to buy scarcity and quality. It takes a lot of buyers available to maintain the price of something that has a really big float (ie common coin) but only a few buyers needed to sell a one of a kind. >>
That's what it sounds like to me. There are a certain few who almost look to be talking the market down, one of whom has predicted ten of the last two coin downturns!
<< <i>
<< <i>As a Real Estate Broker and investor I can tell you that in my part of the country
(South Florida) you have to be a fool not to be using other people's money to own
real estate and harvest the 40%+ appreciation per year.
What a crock of B/S that is.
For many years r.e. in S Fla was a dismal performer. You don't really want to challenge me on that statement do you?
It took off in the last 4 years and is now way out of whack with reality.
I like the new "sell the sizzle" words though. "Harvest" the returns? Hahahaha.
It's a good time to be "harvesting" some profits in the coin business.
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
I am about to close on a Hawaii condominium in Lahaina, Maui!!
Paying in full with no mortgage.................................................
Thank goodness it is only a 2 week xmas-time ----truly an oceanfront small 1 bedroom timeshare in Western Maui!
<< <i>With this much negativity it doesn't sound like a top to me, sounds like it is time to buy.
That's what it sounds like to me. There are a certain few who almost look to be talking the market down, one of whom has predicted ten of the last two coin downturns!
Apropos of the coin posse/aka caca: "The longer he spoke of his honor, the tighter I held to my purse."
This thread is getting so large, with so many different comments I think you are confusing what others have said with what I said, or maybe I am the one cinfused?
<<I hear what you are saying. Unfortunately, this is not the reality. Many people have purchased real estate that is well beyond their means and have done so with heavy mortgages. Many more have so-called "cashed out" with equity loans as well (based upon over zealous property value assumptions) which only serves to increase the debt to equity ratio of the property.>>
I agree that some people have large mortgages and even 2nd mortgages, with little or no equity in their properties. I would not agree that it is because of "over zealous property value assumptions". First mortgage lenders have appraisals done on RE before lending their money. And I can tell you for a fact that apprasied value is rarely as high as market value.
It is obvious that it is much easier today to borrow money on a home, even to the point of having no equity in it, than it has been is the past. This is due to the fact that there is soooooo much money out there to lend!!
When you speak of "reality" you must realize that whatever is "perceived" IS reality.
<<Surely, purchasing a home with a mortgage is by definition spending money that one does not have: conduct you referred to as a "ponzi scheme" in your earlier post.>>
I never referred to purchasing a home with borrowed money as a ponzi scheme.
<<Significantly, what you earlier referred to as governments "ponzi scheme" is the very backbone of what "backs" MANY mortgages and which has kept the housing markets moving! Are you aware of this? Are you opposed to the government backing certain mortgages and ensuring liquidity for them? (Fannie Mae, Ginnie Mae, etc). If the govt. stopped doing this, what do you think would happen to people's ability to obtain a mortgage? Wouldn't access to mortgages tend to deflate the value of real estate prices? Your real estate thesis depends heavily upon the governments continued support of mortgages.>>
I never said the govenment's ponzi scheme had anything to do with backing home loans. What I was referring to was the fact that the government continues to spend more money each year that it actually has. Backing RE loans is not part of this. In fact Fannie Mae, Ginnie Mae, etc. makes money each year, it does not spend it. And if a borrower whats to borrow more than 80% of the value of the home, he must purchase mortgage insurance, which is another on-going money maker. This is a banking regulation.
<<Those who have purchased with heavy mortgages - and more so those who have purchased a "portfolio" of properties with heavy debt - are most vulnerable to a real estate price decline. Bankers know this of course, and this is the MAIN reason why they pushed for (and received) the new bankruptcy laws that go into effect in October (next month). >>
I don't think so. It was the losses stemming from credit cards not RE loans that the banks were concerned with. The thought of a RE bubble burst surely was in their minds but it is the losses from credit cards that they wanted to eliminate. It took them 8 long years of greasing sleezy politcians to finally get it done.
<<Once that law passes, people with mortgages, especially mulitple or heavy mortgages, are exceedingly vulnerable. They can no longer "walk away" if the market slips or some life event occurs to the borrower (i.e. job loss, divorce, illness, etc). There is NO escaping debt any longer quarterguy. Unlike past real estate busts, the bankers will not be taking back properties without the borrower paying the FULL fare, even if it takes them forever to do so, even until they die or until it is paid off in full, in perpetutity. >>
I have mixed feelings about bankruptcy. My first thought is that it shouldn't be allowed. A debt is a debt and it should be repaid. On the other hand it doesn't seem fair to punish someone forever that made an honest mistake or was a victim of circumstances. Investors should be treated differently than individuals buying a home to live in. I am sick and tired of seeing the govenment bailing out businesses that fail. Look at all the money they poured into the airlines after 9-11 and they are still asking for more as they go into bankruptcy.
<<It certainly is NOT desirable to own an over mortgaged property(s) in a declining real estate market. That is a recipe for disaster and/or potential bankruptcy. >>
Agreed....but are not IN a declining RE market.
<<A fixed rate mortgage does not make a borrower immune to a falling real estate price. All that it does is "fixes" the interest rate of the debt service, nothing else. Rapidly rising property taxes (over 100% in some areas) are immediately added to the monthly payment for mortgaged properties whether that mortgage is fixed rate or not. As a result, fixed rate mortgages do NOT make the cost of the monthly payment fixed. >>
I never said a borrower is immune to a falling RE market, nor have I spoken at all to a falling RE market. Why should I, it isn't falling. I have been speaking to the current and recent past market.
The fixed rate mortgage fixes the payment of the loan. Property taxes are a different matter. Property taxes mainly increase as the value of the property increases. Property taxes increase as a pertentage of the property value increase, 2% where I live. That means the remainder 98% is the owners equity.
I have a friend I put into a modest 2nd home here 2 years ago. He paid $170,000. After the first year he property taxes went up $1700 and the value of the home increased $60,000. The 2nd year his taxes went up $2000 and the value of the home went up $90,000. Over this 2 year period his property taxes went up $3700 and his equity increased $150,000. This seems like a pretty good deal to me, spending $3700 to get equity of $150,000 in two years. If he couldn't afford to pay the taxes with money on hand, which he can, he could easily borrow $3700 against his extra equity of $150,000. Oddly enough, everytime I see this guy he does nothing but complain about his RE tax bill!
<<Last thought; the Immancipation Proclamation signed by Abraham Lincoln (Jan. 1, 1863) supposedly did away with slavery. The new bankruptcy laws of October 2005 make hayseed of old Abe's proclamation. If it can make hayseed of the Declaration of Proclamation, what can it make of the massive mortgage and other debt that lines the landscape of our great Nation? I hope you are correct about rising real estate prices Quarterguy. I can't imagine the economic pain if it were otherwise. Thank you again for your response. >>
I agree that a major adjustment down in property values would be crushing to many industries, the country, and the economy has a whole. But as I said before it isn't happening now. All Real Estate is "local". There will always be corrections in local markets. Some areas will decline as others appreciate.
My point has been that people that sit on the sidelines and nay-say will never gain anything. Their fear of failure has them paralized. While they think about doomsday and all the possible negatives, others are making money doing what they fear and think can not be done.
All investments have some level of risk. It is up to each of us to determine our own risk/reward level. One size does not fit all.
I have no problem with anything said here by others. I see it as nothing more than good conversation, an exchange of thoughts and ideas.
Got to go now ....... I have another house to buy.
Michael
<< <i>I agree that some people have large mortgages and even 2nd mortgages, with little or no equity in their properties. I would not agree that it is because of "over zealous property value assumptions". First mortgage lenders have appraisals done on RE before lending their money. And I can tell you for a fact that apprasied value is rarely as high as market value. >>
Property value assumptions are performed by third parties called "real estate appraisers." They are paid a fee for this service. Sometimes the bank sends the appraiser but it is the borrower who pays for the service. Who does the appraiser work for? The bank or the borrower? In either case, the valuations are often generous - sometimes grossly so - in order to "push" (their term not mine) the deal (refi) through. "Cash Outs" are entirely built upon "increased equity" assumptions of a given property based upon a perceived market value. It is not uncommon for a property to have a very high debt to equity ratio and many nowadays even have a negative debt to equity ratio (very often the result of aggressive property valuations in refinance deals). Even a slightly declining real estate market would quickly erode such valuations dramatically - and with it equity. In fact many mortgages today from their inception are designed to meet this premise of "equitylessness" (so-called negative amortization mortgages, interest only mortgages, etc).
<< <i>It is obvious that it is much easier today to borrow money on a home, even to the point of having no equity in it, than it has been is the past. This is due to the fact that there is soooooo much money out there to lend!! >>
If the banks lend cash it is the borrower who is taking it in as DEBT. The easy money policy of the FEDS these past years was supposedly designed to encourage corporations to expand their businesses and create new jobs. It didn't happen! So the bankers turned the money spigot loose on individuals. Borrowers have taken upon themselves MORE debt than they should have been allowed. If the bank is pushing "easy money" (and I agree with you on this) it is the borrower (homeowner) who is responsible for it, not the bank. Under the new bankruptcy laws, it is the borrower who will pay the price in full.
<< <i>When you speak of "reality" you must realize that whatever is "perceived" IS reality. >>
I feel that reality is precise and is connected with a state of fact or some observable and repeatable truth. And, it is fact that our beloved nation, and the individuals within the nation, have FAR too much debt and too little equity (and savings). In our day, this is largely due to excessive debt, particularly mortgage debt. Our national savings rate is hovering in the "negative" territory.
<< <i>I never referred to purchasing a home with borrowed money as a ponzi scheme. >>
You said; "the biggest ponzi skeem of all is the one that is perpetuated by our elected leaders in Washington.....they just keep spending money they do not have to assure their re-elections and make themselves feel good about helping people. (bold is mine) You defined "spending money they do not have" as being a ponzi scheme. A mortgage, by definition, is "spending money that someone does not have."
<< <i>I never said the govenment's ponzi scheme had anything to do with backing home loans... >>
By backing and ensuring mortgages as the money of last resort, the governement is essentially "co-signing" the mortgage for the bank. This is the main reason that banks are so willing to write mortgages. Without that government assurance, there would be FAR FAR fewer mortgages which would, of course, depress real estate prices.
<< <i>..What I was referring to was the fact that the government continues to spend more money each year that it actually has. >>
My point was that this is exactly what over mortgaged people do. They spend MORE than they actually have. That is why they took the mortgage or "cash out" to begin with and that is why they are so deeply in debt. If it's a ponzi scheme for the government, then it must also be a ponzi scheme for an indiviudal.
<< <i>Backing RE loans is not part of this. In fact Fannie Mae, Ginnie Mae, etc. makes money each year, it does not spend it. And if a borrower whats to borrow more than 80% of the value of the home, he must purchase mortgage insurance, which is another on-going money maker. This is a banking regulation. >>
The government's backing of Fannie Mae, Ginne Mae (and the other sister Maes) makes them very much a part of the mortgage industry and the Fannie & Ginne Mae are very much like quasi-governmental agencies. In fact, their bonds, Ginne Mae certificates, Mortgage Backed Securites, CMO's, etc are all packaged by Wall Street as "governement guaranteed." If these mortgages fail (GOD forbid) this fact will become all too clear. That is exactly what occurred during the S&L scandal of the early 1990's. All of that foreclosed real estate was ultimately paid for by the governement (vis-a-vis the taxpayers of course). Those foreclosed properties were auctioned off by the govt for pennies on the dollar. The next time the real estate markets busts, it will be the individual debtor who pays as a result of the new bankruptcy laws.
<< <i>I don't think so. It was the losses stemming from credit cards not RE loans that the banks were concerned with. >>
Fraudulent dead beat credit card abusers amount to a pittance of finanical losses surrounding bankruptcy filings. The vast majority of bankruptcies result from "medical illness" expenses, bad business/too much real estate and other debt, and single motherhood. Credit card fraud is compartively minor. The bankers certainly tried to make it appear that it was credit card fraud that prompted their lust for reform, but the studies showed otherwise and even the bankers themselves no longer make this claim (but only now that the laws have already been passed). The new bankruptcy laws would have never passed if the banking lobby had told the truth, that the majority of bankruptcy's result from "medical illness" debts. The public outcry would have been too great and the bankers would have lost. There marketing deception surrounding "credit card fraud" was a brilliant but devious public relations victory for the banking industry. By the way, you might be interested to know that the bankers fought VERY hard to NOT allow an exception in the new bankruptcy laws that would have excluded "medical bankrupts." Tragically, the bankers won. The brazen hypocrisy of the banking industry is great, because while bankruptcies nearly doubled, credit card industry profits more than tripled in the same period (from $12.9 billion in 1995 to $31.6 billion in 2004). According to a report (I think it was a Harvard study) estimates are that the new bankruptcy laws will net the credit card industry an additional $5 billion on top of that! So, as you can see, it is NOT credit card debts that the banking industry fears (their profits have tripled). Rather it is some OTHER debt that they fear which prompted their passion for the bankruptcy law changes. What other form of debt could it be? Possibly overextended homeowner Mortgage debt? So, for all of the whining from the banking lobby, they have successfully figured out a way to have the government become their collection agency with the new bankruptcy laws.
<< <i>I have mixed feelings about bankruptcy. My first thought is that it shouldn't be allowed. A debt is a debt and it should be repaid. On the other hand it doesn't seem fair to punish someone forever that made an honest mistake or was a victim of circumstances.... >>
I hear you quarterguy. Yet, if we deny a man the opportunity of a "fresh start" he is bound to become disheartened and give up hope. It is poor legislation as a matter of public policy. Also, most bankruptcies are medical expense bankrupts and they obviously had no choice in their unfortunate outcome. It is cruel and misguided to force such ones into a lifetime of economic slavery, which the new bankruptcy laws flaunt. There are many potential "unintended consequences" that are nearly certain to arise as a result of the new and awful bankrupcty laws. The authors of the new bankruptcy laws have perfomed a horrible injustice to America. To my way of thinking, the new bankruptcy laws are a heartless, unAmerican, assault upon a class of people whose circumstances were CREATED by the industry that now seeks to enslave them.
<< <i>I never said a borrower is immune to a falling RE market, nor have I spoken at all to a falling RE market. Why should I, it isn't falling. I have been speaking to the current and recent past market. >>
Fair enough. Still, coinlieutenants original post that prompted our comments on this thread referred to the "forward looking" real estate market.
<< <i>I have a friend I put into a modest 2nd home here 2 years ago. He paid $170,000. After the first year he property taxes went up $1700 and the value of the home increased $60,000. The 2nd year his taxes went up $2000 and the value of the home went up $90,000. Over this 2 year period his property taxes went up $3700 and his equity increased $150,000. This seems like a pretty good deal to me, spending $3700 to get equity of $150,000 in two years. If he couldn't afford to pay the taxes with money on hand, which he can, he could easily borrow $3700 against his extra equity of $150,000. Oddly enough, everytime I see this guy he does nothing but complain about his RE tax bill! >>
I know of folks who purchased a million dollar home with a heavy "fixed rate" mortgage, whose property taxes were 15k per year at purchase and are now pushing 30k per year (with built in automatic rises in place for the future). That property tax double occurred in a very short period of time - I'd say about five years or so. That rising property tax is built into their monthly mortgage payment, which is growing rapidly all of the time, even though it is a fixed rate mortgage! These folks are complaining because they are feeling the extra cost. Their wages (though high) have not risen and in fact have declined to some degree. Each one lives in constant fear of losing their job. If they are forced to sell at some point - which is a possibility - it will only work out well for them if they sell while the prices are up. But even then, they would still have to purchase another home at the current market, which tends to mitigate selling the present one. However, if the prices start to drop before they sell, they run the real risk of finding themselves in an ever increasing costly monthly nightmare with the prospects of selling the property into a weak and declining market (assuming there is one). Here's a frightening thought. If (GOD forbid) real estate prices decline, do you think those property taxes will decline with it? No way! When all is said and done, if the cost of carrying a home cannot be offset entirely by the income from renting it out (after factoring in things like insurance, legal fees, deadbeat tenants, maintenance, etc) then what does that tell you about the value of the property?
<< <i>I agree that a major adjustment down in property values would be crushing to many industries, the country, and the economy has a whole. But as I said before it isn't happening now. All Real Estate is "local". There will always be corrections in local markets. Some areas will decline as others appreciate. >>
Yes, I hear you. Thank GOD the real estate market has been very strong. As a result, the pain of many people's misuse of mortgage debt has not been so readily felt yet. Yet, my sense (and it is only a sense based on observation) is that the real estate market is already softer right now than it was, say, one year ago. I fear that it could become noticeably weaker in the future and I can't help but wonder WHY the new bankruptcy laws were pushed so hard just at this particular time (the law only passed a short while ago). What were the bankers fearing that caused such a mad push for the reform at this particular time?
<< <i>My point has been that people that sit on the sidelines and nay-say will never gain anything. Their fear of failure has them paralized. While they think about doomsday and all the possible negatives, others are making money doing what they fear and think can not be done. >>
Yes, I agree with you to a very large degree. It is true that in order to hit a home run, one must be willing to step up to the plate and swing at the pitch. However, only a poor hitter swings at a pitch that is "way outside" the plate. The best hitters weigh the odds, the alternatives, and the many potential outcomes of that pitch. At least then, if they strike out, they can walk to the dugout and say; "at least I swung at a perfect pitch and not at some wide outside the plate one." Prudence is an asset.
<< <i>All investments have some level of risk. It is up to each of us to determine our own risk/reward level. One size does not fit all. >>
Very true. Yet for many a house is not an investment, it's a home.
<< <i>I have no problem with anything said here by others. I see it as nothing more than good conversation, an exchange of thoughts and ideas. >>
Amen quarterguy. I agree entirely. I consider myself very fortunate to exchange thoughts and ideas with the savvy folks on this board including you quarterguy.
<< <i>Got to go now ....... I have another house to buy. >>
Good luck with the house hunting quarterguy. But remember to watch out for those mortgages. I have it on very powerful authority that; "the borrower is slave to the lender" (Proverbs 22:7).
Thanks matteproof
Your points were all well taken.
Your Proverbs quote pretty much says it all!!
But I will continue to buy and sell real estate as long as it is a winner for me
and the risk/reward is acceptable, IMO.
And I will be "tip toeing" through the mine fields as I do it.
qg
<< <i>Thanks matteproof
Your points were all well taken. Your Proverbs quote pretty much says it all!! But I will continue to buy and sell real estate as long as it is a winner for me and the risk/reward is acceptable, IMO..... >>
Thanks quarterguy. I much appreciate your excellent thoughts.
Name another investment where you are 10% in the hole the minute you buy. The coin marketplace is incredibly inefficient.
Just a few more thoughts.
A home is to live in
Coins are basically to have fun with
Stocks are intended to give you ulcers
Gold coins are used to fill up safe deposit boxes.
Money in the bank allows you to sleep at night
40lK and pensions and Social security allow you
to sleep when you get to be my age.
Loaded guns are to keep people from screwing with you
in your own home, usually late at night.
Most all the people on this Forum are nimble, smart, prudent
and quite able to go with whatever the flow is. I wish all Americans
had the smarts shown by the folks on this Forum.
With these thoughts, I wish you all a fond goodnight.
Camelot
I read and read and read and believe it or not, this thread took me high ,low, down, up and through about every emotion a person can deal with. There is a wealth of knowledge here and the participation is truly as passionate as you will find , even in the church pulpit on Sundays. It is great to be a part of this and it is nice to see the views and the insight of others in this thread. You summed it up very well , and Korona is right, too.........if one goes into this market from the retail end, he gets hammered and his thought of coins as an investment will wither away soon. I have seen the market explode over the past thirty years and it continues to grow to this day. High End coins are bought by the upper echelon folks and sold in High End auctions several times per year, Low end coins are "traded and dealt" by us common folks usually building sets or collections, it is a hobby and a love, NOT just a MARKET. This market will not have the bottom drop out. We didn't see coin collectors buying bread in 1929 with St Gaudens pieces any more than you see collectors dumping their coins off now in fear that there will be a collapse. This is a strong market that adds new collectors every single day.
Ever watch them sell NGC coins on television ? We all know we can do better buying on ebay and get the same coins for half the cost in a PCGS holder. And yet, they continue to sell millions of dollars worth each month....and these are State Quarters, common proof sets, common date Morgans, etc.
Of course we cannot group our market with the housing market or the transportation industry for that matter. Coins hold value and the value usually goes up.
For dealers, the economy has a profound effect on them, just as gas prices affect all of us, they too fall victim to budgetary constraints of buyers. But most collectors of coins also know that if the price of gas hits 4 dollars, they are still going to buy whatever coin they want, just as soon as it comes available or they have the 'extra' money to do so.
I am sure David Hall would agree with your statement that coins are to have fun with, too.
Joe
``https://ebay.us/m/KxolR5
<< <i>matteproof
(i)"Hi quarterguy. But this is exactly what INDIVIDUALS have done with rampant borrowings and heavy mortgages. You blame our elected officials for conduct that you seem to praise in individuals. If you think that I'm wrong, please tell me why."
I have never "praised" anyone for living beyond their means or risking their position on uncertainies. I didn't mean to give that impression.
Investment monies, whether spent on real estate, stocks, or whatever, should NEVER be more than one can afford to loose. It should be money not needed for the necessities of life.
Everyone needs a place to live and I don't think anyone can agree that renting is better than owning. With the interest rates as low as they have been in past years, some have bought more house than they needed but that is not necessarily a bad thing. As long as the borrower is protected with a fixed rate mortgage, he could buy a pricier home for the same monthly payments. With appreciation over the years, the net gain to the owner should be more with the higher priced home. This is a good thing for the average person.
coynclecter
Sorry to hear of your loss in CA.
I understand your feelings about living in hurricane land. At times it does get frustrating thinking about it. But I do not agree what another said here about no boomer in his right mind moving to the south Florida. As a Real Estate Broker I have baises las we all do, but it is a fact that boomers ARE moving here and will continue to do so in the future.
Even as expensive as properties are here, some people moving in from the North East think our prices are low.
I don't see South Florida as any more dangerous living than being in the Midwest dodging tornados or living on the left coast fearing earthquakes. ....and the winters are heaven!!..... where might you live? >>
any day over living in Florida and having to deal with hurricanes.
Cold weather? HA!!!! I laugh at the wimps who can't deal
with that.
<< <i>Folks, don't forget the absolutely absurd margins that the average collector pays for this so-called "investment." You buy at auction; you pay the 15% buyer's premium. You sell at auction; maybe you get 105% of hammer (remember, you are an "average" collector). Of course, it could be worse: you could buy retail from a "reputable dealer" and sell later at wholesale to some other "reputable dealer" and get hit for far more than 10%, overall.
Name another investment where you are 10% in the hole the minute you buy. The coin marketplace is incredibly inefficient. >>
In the area of collectibles, coins probably have the least buy/sell spread. That being said, you're being pretty optimistic that an average collector would get 105% of hammer. Coins should not be viewed as investments. Of course, no one is hoping to lose money on them, but if you look at coins with a critical eye they are a lousy investment vehicle.
What I like about coins is you can enjoy a great hobby and you have a decent chance of getting most of your money back out of it if you want. Can't say that about too many hobbies.
New collectors, please educate yourself before spending money on coins; there are people who believe that using numismatic knowledge to rip the naïve is what this hobby is all about.
Michigan
No wimp here.......
I lived in northwestern Illinois for over 40 years......I know what winter is
The below zero temps just got to my bones. Pain is not a something I am comfortable with.
Stay in the north country if wish........for me, South Florida has been a god-send.
Name another investment where you are 10% in the hole the minute you buy. The coin marketplace is incredibly inefficient.">>
Thats not necessarily true at all. Dealers buy coins at auction all the time, mark them up and still sell them. It all depends on what you buy and when you sell. I have seen times on eBay when everyone seemed to want a particular kind of coin and the next week no one wanted them.
If I buy a house here for $200K and 2 days later decide/need to sell thru a realtor at 7% commish then I need $214K to break even. If I bought a house that was on the market for half a day I stand a good chance to break even; if it was on the market for 3 months then I'm probly screwed. And so it is with coins.
<< <i>These are fun historic threads. At least some of the opinions are consistent! >>
"As a Real Estate Broker and investor I can tell you that in my part of the country
(South Florida) you have to be a fool not to be using other people's money to own
real estate and harvest the 40%+ appreciation per year."
I am glad that I resisted temptation to sell everything and put it into Florida real estate in late 2005.
WS
<< <i>One thing is for sure, you can see now who KNEW what they were talking about. At least we know about the real-estate and gas markets, still waiting for the coin market. Let’s see, if this past historic thread is any gauge, the debate was that coins will go up for ever verses they will crash. I vote crash.
WS >>
I think that argument is disingenuous. Everyone knows the coin market will crash. That's easy. There were several who predicted that the market crash was imminent or even at hand three years ago, and they were clearly incorrect. I think that it is foolhardy to make confident predictions on when a bull market (of any kind) will end. It's important to recognize that there are cycles and when the market looks really, really good or really, really bad, remind yourself of the nature of cycles.
realists, from the dreamers and wishful dreamers,
Camelot
<< <i>Nothing like historic threads to separate the
realists, from the dreamers and wishful dreamers,
Bear,
I searched a lot of threads on the topic of the "coin market" before I decided to reprise this one. Your sound advice has been consistent throughout.
RYK
Of course, consistant, could mean consistantly stupid.
Camelot
<< <i>Everyone knows the coin market will crash. That's easy. There were several who predicted that the market crash was imminent or even at hand three years ago, and they were clearly incorrect. I think that it is foolhardy to make confident predictions on when a bull market (of any kind) will end. >>
Dictionary definition of the word crash: to collapse or fail suddenly, as a financial enterprise: The stock market crashed.
Yes the bull market curently affecting some coins will someday end. Although the media may disagree, not all bull markets end in a crash, so it doesn't necessarily follow that we will see coin prices collapsing (or failing) when this bull market ends.
Who is John Galt?
<< <i>These are fun historic threads. At least some of the opinions are consistent! >>
If one keeps saying the same things over and over and over again, eventually that person will be right. If for just a short time
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
short term correction the dollar will slide, near future.
buy junk silver.
I have found power in the mysteries of thought.
It is always a question of knowing and seeing, and not that of believing.
Our virtues, and our failings are inseparable, like force, and matter. When they separate, man is no more.
.
I have found power in the mysteries of thought.
It is always a question of knowing and seeing, and not that of believing.
Our virtues, and our failings are inseparable, like force, and matter. When they separate, man is no more.
.
My only real concern with the coin market is amount of leverage in the system. If buyers and/or dealers have been borrowing money to buy coins, watch out below. Otherwise, I believe the coin market will slow and slump but not collapse.
I also agree with stman's original comments - very insightful.
<< <i>matteproof
This thread is getting so large, with so many different comments I think you are confusing what others have said with what I said, or maybe I am the one cinfused?
<<I hear what you are saying. Unfortunately, this is not the reality. Many people have purchased real estate that is well beyond their means and have done so with heavy mortgages. Many more have so-called "cashed out" with equity loans as well (based upon over zealous property value assumptions) which only serves to increase the debt to equity ratio of the property.>>
I agree that some people have large mortgages and even 2nd mortgages, with little or no equity in their properties. I would not agree that it is because of "over zealous property value assumptions". First mortgage lenders have appraisals done on RE before lending their money. And I can tell you for a fact that apprasied value is rarely as high as market value.
It is obvious that it is much easier today to borrow money on a home, even to the point of having no equity in it, than it has been is the past. This is due to the fact that there is soooooo much money out there to lend!!
When you speak of "reality" you must realize that whatever is "perceived" IS reality.
<<Surely, purchasing a home with a mortgage is by definition spending money that one does not have: conduct you referred to as a "ponzi scheme" in your earlier post.>>
I never referred to purchasing a home with borrowed money as a ponzi scheme.
<<Significantly, what you earlier referred to as governments "ponzi scheme" is the very backbone of what "backs" MANY mortgages and which has kept the housing markets moving! Are you aware of this? Are you opposed to the government backing certain mortgages and ensuring liquidity for them? (Fannie Mae, Ginnie Mae, etc). If the govt. stopped doing this, what do you think would happen to people's ability to obtain a mortgage? Wouldn't access to mortgages tend to deflate the value of real estate prices? Your real estate thesis depends heavily upon the governments continued support of mortgages.>>
I never said the govenment's ponzi scheme had anything to do with backing home loans. What I was referring to was the fact that the government continues to spend more money each year that it actually has. Backing RE loans is not part of this. In fact Fannie Mae, Ginnie Mae, etc. makes money each year, it does not spend it. And if a borrower whats to borrow more than 80% of the value of the home, he must purchase mortgage insurance, which is another on-going money maker. This is a banking regulation.
<<Those who have purchased with heavy mortgages - and more so those who have purchased a "portfolio" of properties with heavy debt - are most vulnerable to a real estate price decline. Bankers know this of course, and this is the MAIN reason why they pushed for (and received) the new bankruptcy laws that go into effect in October (next month). >>
I don't think so. It was the losses stemming from credit cards not RE loans that the banks were concerned with. The thought of a RE bubble burst surely was in their minds but it is the losses from credit cards that they wanted to eliminate. It took them 8 long years of greasing sleezy politcians to finally get it done.
<<Once that law passes, people with mortgages, especially mulitple or heavy mortgages, are exceedingly vulnerable. They can no longer "walk away" if the market slips or some life event occurs to the borrower (i.e. job loss, divorce, illness, etc). There is NO escaping debt any longer quarterguy. Unlike past real estate busts, the bankers will not be taking back properties without the borrower paying the FULL fare, even if it takes them forever to do so, even until they die or until it is paid off in full, in perpetutity. >>
I have mixed feelings about bankruptcy. My first thought is that it shouldn't be allowed. A debt is a debt and it should be repaid. On the other hand it doesn't seem fair to punish someone forever that made an honest mistake or was a victim of circumstances. Investors should be treated differently than individuals buying a home to live in. I am sick and tired of seeing the govenment bailing out businesses that fail. Look at all the money they poured into the airlines after 9-11 and they are still asking for more as they go into bankruptcy.
<<It certainly is NOT desirable to own an over mortgaged property(s) in a declining real estate market. That is a recipe for disaster and/or potential bankruptcy. >>
Agreed....but are not IN a declining RE market.
<<A fixed rate mortgage does not make a borrower immune to a falling real estate price. All that it does is "fixes" the interest rate of the debt service, nothing else. Rapidly rising property taxes (over 100% in some areas) are immediately added to the monthly payment for mortgaged properties whether that mortgage is fixed rate or not. As a result, fixed rate mortgages do NOT make the cost of the monthly payment fixed. >>
I never said a borrower is immune to a falling RE market, nor have I spoken at all to a falling RE market. Why should I, it isn't falling. I have been speaking to the current and recent past market.
The fixed rate mortgage fixes the payment of the loan. Property taxes are a different matter. Property taxes mainly increase as the value of the property increases. Property taxes increase as a pertentage of the property value increase, 2% where I live. That means the remainder 98% is the owners equity.
I have a friend I put into a modest 2nd home here 2 years ago. He paid $170,000. After the first year he property taxes went up $1700 and the value of the home increased $60,000. The 2nd year his taxes went up $2000 and the value of the home went up $90,000. Over this 2 year period his property taxes went up $3700 and his equity increased $150,000. This seems like a pretty good deal to me, spending $3700 to get equity of $150,000 in two years. If he couldn't afford to pay the taxes with money on hand, which he can, he could easily borrow $3700 against his extra equity of $150,000. Oddly enough, everytime I see this guy he does nothing but complain about his RE tax bill!
<<Last thought; the Immancipation Proclamation signed by Abraham Lincoln (Jan. 1, 1863) supposedly did away with slavery. The new bankruptcy laws of October 2005 make hayseed of old Abe's proclamation. If it can make hayseed of the Declaration of Proclamation, what can it make of the massive mortgage and other debt that lines the landscape of our great Nation? I hope you are correct about rising real estate prices Quarterguy. I can't imagine the economic pain if it were otherwise. Thank you again for your response. >>
I agree that a major adjustment down in property values would be crushing to many industries, the country, and the economy has a whole. But as I said before it isn't happening now. All Real Estate is "local". There will always be corrections in local markets. Some areas will decline as others appreciate.
My point has been that people that sit on the sidelines and nay-say will never gain anything. Their fear of failure has them paralized. While they think about doomsday and all the possible negatives, others are making money doing what they fear and think can not be done.
All investments have some level of risk. It is up to each of us to determine our own risk/reward level. One size does not fit all.
I have no problem with anything said here by others. I see it as nothing more than good conversation, an exchange of thoughts and ideas.
Got to go now ....... I have another house to buy.
Michael >>
Check out my current listings: https://ebay.com/sch/khunt/m.html?_ipg=200&_sop=12&_rdc=1
<< <i>Bear's posts are by far some of the best on these boards. He makes salient arguments without all the emotion that often muddies logic.
My only real concern with the coin market is amount of leverage in the system. If buyers and/or dealers have been borrowing money to buy coins, watch out below. Otherwise, I believe the coin market will slow and slump but not collapse.
I also agree with stman's original comments - very insightful. >>
Some dealers may be at risk who buy cons for inventory on leverage but I find it difficult to believe that great coins being put away by collectors are being bought with leverage. I also believe the coin market may slow but not collapse when it comes to the great coins. I actually think the 'dealer' is becoming less of a factor in terms of prices. I think collectors have more influence on prices than dealers.
What I find interesting is that when the term " coin market" is used on this board it means the US coin market. Wake up!
The reality is there are growing coin markets all over the world.
Witness the recent Millenia sale that took place this past Monday.
A quote from CRO's road report May 26th: "And as a result, the market for world coins is apparently stronger than it has ever been. Ever."
I give away money. I collect money.
I don’t love money . I do love the Lord God.
Just my two cents (get it?
Perhaps the newest stuff might take a hit but, I just posted 32 ounces of silver made up of 42 Morgan and Peace Dollars with lots of honest ware (not good enough to sell separately but not totally junk either) and it shot to $500 in 48 hours and there are 17 people watching the auction. My last weeks sales of older books with silver went for just under $1700. Even my SBA book with the 1979 Type II went for over $100.
I did have some trouble selling my smaller modern sets, modern proofs, and First Day of Issue Stamps separately so, I put all of that into one large 1000 coin auction, tossed in some silver and it shot to $420 with 19 people watching; it doesn't end until Sunday.
I’m honestly not seeing a slow down at all.
I remember baseball cards in the mid 90s, that market did crash but, that was cardboard and kids got priced out of the market... if silver keeps going up, it really seems like coins will hold their value for at least sometime to come.
Also with the new state quarters and new dollars, more and more kids are collecting, which only helps the hobby. Kids can go to the bank and get the new dollar for a dollar, not $5 or $10 for the new rookie card (which is a LOT of money to a kid) or $40 to $100 for the star's rookie card (which is impossible for a kid), like things got in the late 90s with baseball cards.
I've always said, getting kids to collect is KEY to the future of the hobby.
Maybe prices and values won’t sky rocket but, I don’t see a crash in the coin market anytime soon and especially if silver hits $25 or even $30 by years end.
Okay… flame on!
<< <i>Market crashes are easy to predict. I have predicted 10 of the last 2 crashes. >>
I love that quote.
Check out my current listings: https://ebay.com/sch/khunt/m.html?_ipg=200&_sop=12&_rdc=1
Barring a recession I'd push it back to early or mid-2009.
Price guides do not reflect the value of the real coins. In 19th century silver type the ratio of crappy coins to real ones that are available in the market is any where from 4 to 1 to as high as 9 to 1.
The majority of them have been taken off the market. The last time they were seen was in 2002-2003. When will they be back........ hmmmmm?
In any case those words were true in 2005 and those truly gem type coins are only now filtering slowly back into the market (usually at auction) as prices have risen. It will take much higher prices to pry a lot more loose. And the 9 to 1 or 4 to 1 ratios are still mainly true imo.
For every good or great coin, there are 8 pretenders.
As already stated, don't look for the end to this bifurcated coin bull market until gold and silver have peaked. And that's years off imo.
But the bifurcation will only continue to widen.
As far as Quarterguy goes, it sounds like he has gone the way of Dollardude...out to pasture with the rest of the real estate and forever crowd. As long as the FED and its Wall Street Buddies are around to cycle the markets hard and create never-ending bubbles, there will be no such thing as a true investment anymore....just various forms of speculations. Get used to it, it's all we have to separate us from our fiat.
roadrunner