Morgan Stanley issues: "Full US Recession alert" - Page 4

WickedLou9 · 01-08-2008, 01:10 PM

Originally Posted by bheld

I'd love to get rid of the CGT too and tax it all as income. Either way, the issue isn't going to make or break the economy.

Short term capital gains are already taxed at your normal income rates. Long term rates are lower. This actually makes some sense because it encourages people to leave thier money in the market longer.

Ardentfrost · 01-08-2008, 03:00 PM

Originally Posted by IminWonderland

If Orange County was one of the areas that really bubbled, when do you think the bottom will happen?

We are counting on getting in when it's bottom, I was thinking more towards the end of the year....any thoughts?

Analysts I've read seem to say that how bad the bubble was has caused different areas to burst at different times, but that as the national economy comes out of it, it will produce a slow recover across the board.

So, in that respect, this year should be a decent year to buy for anyone as long as you're not selling as well. If you need to sell, wait until after recovery if you can.

I like the site Trulia - Real Estate, Homes For Sale, Sold Properties, Real Estate Maps if for no other reason than to price out neighborhoods. It tells you trends in each neighborhood and how the house prices compare to the last time the house was sold even. Very informative site, and has been paramount in my decision to buy a house (particularly the timing of that event, because I pushed it back 6 months based on the data I got from there).

Just realize there is no "best" time, but the timing right now is decent. A year or two down the road you'll look back and say something like "oh man, the market bottomed out at this specific time" but it's unreasonable to try to get that exact time right now

I also suggest using the deflating market to talk your seller down, but I'm sure you know that.

Thorgrim · 01-09-2008, 11:17 AM

Goldman Sachs said it expects the U.S. economy to drop into recession this year and that the Federal Reserve will have to cut interest rates to 2.5 percent by the third quarter as a result.

"Over the past few months, we have become increasingly concerned that the US housing and credit market downturn would trigger not just a growth slowdown and substantial Fed easing -- our long-standing view -- but also an outright recession," Goldman Sachs said in a note to clients Wednesday. "The latest data suggest that recession has now arrived, or will very shortly."

The recent rise in unemployment is particularly worrisome, Goldman indicated.

"The recession is likely to last 2-3 quarters and should be relatively mild by historical standards, with a cumulative decline in real GDP of only about 0.5 percent (not annualized)," Goldman noted.

Goldman Sachs sees recession in 2008 - Financials * US * News * Story - MSNBC.com

DosEquis · 01-09-2008, 12:42 PM

Originally Posted by Ardentfrost

Especially since there's a possibility of a big jump in CGT. People can pull out now and get hit by a 15% tax, or possibly get hit by a 25% tax later. If they wait, they need a better-than-10% jump in their stock worth, and with speculation being that people will pull out, the chance to get the 10% jump before wanting to pull out after-the-fact is low.

So, that has real potential to cause problems.

Sounds like a great time to buy to me. Let them bail and have stocks and other things undervalued. Then BUY.

Ardentfrost · 01-09-2008, 12:47 PM

Originally Posted by DosEquis

Sounds like a great time to buy to me. Let them bail and have stocks and other things undervalued. Then BUY.

Once the "time to buy" happens, it'll already be too late

DosEquis · 01-09-2008, 04:17 PM

Originally Posted by Ardentfrost

Once the "time to buy" happens, it'll already be too late

How so? I have money, i want to invest, I wait for all the rich guys to bail to avoid taxes... the market goes down from them selling... i buy in when its under valued... it goes back up eventually.

The really wealthy guys have deep enough pockets that a significant decline in the market is not going to hurt them that much. Further, its only a loss if they sell it then. Most will just diversify to more stable things, then buy back in the other things when its low. It will recover and they will make even more money after it does. Will they have a higher tax rate? Maybe but they won't turn it down. History will show you that people will invest regardless of the capital gains tax.

Ardentfrost · 01-09-2008, 04:59 PM

Originally Posted by DosEquis

How so? I have money, i want to invest, I wait for all the rich guys to bail to avoid taxes... the market goes down from them selling... i buy in when its under valued... it goes back up eventually.

The really wealthy guys have deep enough pockets that a significant decline in the market is not going to hurt them that much. Further, its only a loss if they sell it then. Most will just diversify to more stable things, then buy back in the other things when its low. It will recover and they will make even more money after it does. Will they have a higher tax rate? Maybe but they won't turn it down. History will show you that people will invest regardless of the capital gains tax.

No, I mean the economic impact of it dropping like that. Think back to the .com boom and bust. There were startups that had solid ideas that ended up getting caught up in that mess, never to return. The mass pull out would cause less money for companies to expand or invest into new areas.

It might be a good time for a middle American to buy a few stocks, but if a substantial portion of "rich guys" pull their money out, if holding companies have to pull out because their investors are playing the arbitrage game, we're talking major effects on jobs and the already recessing economy.

I'm saying that the possible resulting exodus of the market, even if short-lived, could exacerbate the recession we're having by spreading into other economic factors.