Geeks talking about money

Our lunchtime conversation often revolves around money because money is important part of life and one of the reasons why we work so hard.  It’s one of the factors that society uses to judge men and how successful they are.

In today’s stocks market and realestate market in the bay area, where would you invest your money?

Yahoo! is investing it it’s own stock by buying back $3 billion worth of stock in the next 5 years.

I’m heavily invested in Yahoo! via options as well as the overall US stock market via my 401K.  I’m also
invested in the Bay Area realestate market.  I believe this stock market has legs for another 2-5 years.  The realestate market in the bay area has a few years to go

  1. there are lots of rich people here who would prop up the bay area realestate market
  2. there are people who didn’t buy when they should have and have the money to get into the market when it sinks 20%
  3. The interest rate is still very very low
  4. the economy should get better
  5. there are very few places in the world that has better weather than the Bay Area
  6. california survivored the 2000 crash and we are stronger than before without the stupid Dot Coms

So, the question for you is that if you have equity in your currect house, would you take a loan out and buy a 2nd property as an investment or would you just sit on the equity because you think the housing market would collapse?  If you sit on the equity, the question is.. why?  Let’s say your house was bought for $400,000 and your house is worth $800,000 now, that $400,000 equity is sitting there doing absolutely nothing.. isn’t it a waste?

With the current interest rate of around 6.5%, after tax deductions the real rate is around 4%.  Minus inflation (2-3 %), money seem very very cheap.  You don’t want to gamble, but with some bond investment plus some stocks, it shouldn’t be hard to get more than 4% for your money.

If you don’t own a house, where are you putting all your cash?  Stocks?  Money Market?