One of the things I hate about a secular bull market — especially towards its rampaging tail end — is how everyone and everything gets silly. Money and champagne flows, conspicuous consumption is on full display. I recall people — literally — dancing on bars during the late 90s in NYC.

To be sure, Fed Chair Alan Greenspan was not going to be the spoilsport and take away the punchbowl. Every one was having a good old time.

Except the people who knew. Those worrywarts who looked at price, at valuations, who are familiar with market history and understood mean reversion. These folks were aware of what was going to come next.

I hated the Manhattan party atmosphere in 1999; it was obvious how (but not precisely when)  it was going to end: Badly. The prices paid for baubles, the reckless, conspicuous consumption, and ostentatious displays of wealth — paying more than full retail — it was all a symptom of way too much money sloshing around.

Mal-investments were everywhere, and prices became stupid — for cars, for apartments, and of course, for equities.

That is, to say the least, no longer the case (equities excepted).

Prices have plummeted, consumers are de-leveraging, and cash is king, For those of you consumers who are value sensitive — and still have jobs — this current environment is far more attractive a period of time to acquire goods and services than the mayhem at bull market tops. Everything is priced to sell.

I started thinking about this issue in mid 2008 when a wealthy client had said the following to me: “Barry, I appreciate you steering us away from trouble during this mess, but your commentary is so relentlessly negative, its a bummer to read. What can you tell me that is not utterly depressing?”

Now, this gentlemen measures his wealth in GDP of small countries, and while we have many similar interests — cars, watches, boats, travel, music, etc. — his “collections” are insane, museum quality work. (I have an old SL, he has a airplane hanger full of fully restored 196os Ferraris; I have a few nice antique watches, he has million dollar time pieces).  So my advice –  I mentioned this on Tech Ticker — was as follows: “Make a wish list of what you have wanted to own, but were unwilling to pay top dollar for. Could be real estate, art work, collectible autos, jewels, sports franchises. Bid 50% of the peak market price. Then sit back to see what happens.”

He thanked me for that, and acquired a number of items at a hefty discount to market value.

Which leads me to this question for us mortals: Are any of you readers going on a “spending spree” of sorts? What are you purchasing? What assets have dropped enough in price that they have tempted you to step up to the plate and buy?

Since the crisis began, I have advised clients to consider buying:

-Homes, Vacation Properties
-Renovations, Construction, Extensions
-Vacations, Travel
-Collectible Automobiles
-Investments, Stocks, funds
-Boats, Planes, recreational vehicles
-Art & Sculptures?
-Audio, Video, Electronics, Computers.
-Watches, Jewelry (especially those of Precious Metals)

Fortunately, I avoided temptation and did not make many dumb purchases at the top. That made me more comfortable buying distressed assets after the prices collapsed. And, putting my money where my mouth is, I have made many purchases this down cycle (no Gulfstream, but much of the rest of the list).

So my question is simply this: What are you buying?

~~~

For those of you who want to be anonymous, send me an email at thebigpicture at optonline dot net, and I will assemble a list of the most interesting purchases for a future post . . .

Category: Consumer Spending, Cycles, Psychology, Retail

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

94 Responses to “Counter-Cyclical Spending (during recessions)”

  1. I want to emphasize that I am in no way comparable to any of these bajillionaires. I live in middle class neighborhood, drive a late model Japanese car, and spend money modestly. I am not by any stretch of the imagination “Wall Street wealthy.”

  2. totekramer says:

    I always find that the purchase of a box of Cuban cigars satisfies my desire to “spend some dough” for a reasonably small outlay.

  3. JohnDoe says:

    Golf clubs

  4. tagyoureit says:

    I’m replacing my natural gas fired steam furnace (couple thousand, plus plumbing), doing some landscaping ($3-400 maybe) and sending my kid to summer day camp 3 days a week (about $1000). Planning to spend about $1000 on several day trips in lieu of vacation.

    To offset the cost, I’m cancelling the cable TV ($80/month), right after the final round of Supercross.

    But, my dream purchase is a two-stroke motocross bike 2001 CR 250 R and a private practice track.

    Brrr Rrrrrt! ;)

  5. Chief Tomahawk says:

    Just an observation: the “all-inclusive” packages to Mexico on Expedia are at bargain prices WITH extras thrown in (that was when I looked 2 months ago.) Now with the latest cartel drug violence, if you’re ‘feeling lucky’, I would imagine the prices have only fallen further.

  6. GB says:

    Wolfinger’s comment is stellar.

    We have found lots of deals online since we bought a fixer upper last year. You wouldn’t believe what you can get for half off that people are selling. Appliances, tubs, faucets… It’s a bit sad though but they are glad to have the cash when we hand it over.

  7. b_thunder says:

    “What can you tell me that is not depressing?” – I’d tell him to start watching “Mad Money”

  8. torrie-amos says:

    nothing, nothing at all

  9. beaufou says:

    If you have a wine cellar, it’s a good time to get real quality at reasonable prices.

  10. Joe Retail says:

    Not necessarily doing more travel than usual, but we’re sure enjoying the prices we’re getting.

    On the other hand we did a large amount of necessary home renovations and, thanks to stimulus money, not only are there no bargains but it takes forever to get a contractor in our area.

  11. YY says:

    As usual BR, you maybe a bit early, I suspect we will still see a double dip that will make these deals get better (especially vacation homes). But the prices are not bad on somethings indeed.

    1. Of the above we vacationed in the Maldives after eying it for a long time. On the other hand, all vacation spots that Europeans and Asians frequent have seen relatively minor price pressures. So Mexico can’t be compared to a vacation in Eastern or Southern Africa Safari.

    2. Wines are mostly great deals (especially California wines, again the Europeans are showing less price pressure), I am considering expanding my collection from 300-350 bottles to 1000+.

  12. Joe Retail says:

    Oh, and I should be as lucky as beaufou. Wine is sold by a government owned monopoly here, so bargains are rare.

  13. b_thunder says:

    I’d definitely buy some RE, but with oversupply of epic proportions I’m unwilling to buy unless and until RE prices hit the “bottom.” With $8K bribe, Treasury gimmicks and The FED buying $1.5T+ of paper, i am convinced RE prices have not passed the trough.

    I did go on three separate 2-week long vacations out of the country vacations last year, but i don’t see same kind of deals now.

    stocks – sold out when Dow hit 9000 last year. figured market is too “exuberant.” should have watched “Mad Money”…..

  14. TakBak04 says:

    Barry,

    Confused about your list of what you are advising your clients to buy. In your introduction you talk about the “party atmosphere” of the late ’90′s. Then you say: That is no longer the case (equities excepted.) Then on your list of what to buy now you have listed: “Investments, Stocks, funds.” If “equities are in a party mood” then why would “Investments, Stock Funds, etc.” not be over valued at this time. Are you serious that you are telling folks to “load the truck” in those at this present time?

    ~~~

    BR: I don’t believe equities are remotely cheap now. But don’t fall into the trap of thinking that stocks at all time must reflect a fair value. I showed a chart last week that showed stocks more or less over valued for most of the past 30 years.

    And as I have noted since last year, the current rally is an unwind of the failed armageddon trade of 2008/09.

  15. pmorrisonfl says:

    We’re house shopping in South Florida. Not sure the bottom is in, at least judging by asking prices vs. historical metrics, but friends have found solid deals on fixer-uppers, and some sellers seem to see the light.

    Not entirely sure it’s ‘time’, so not entirely committed to buying this year, but we’re shopping seriously for the first time in years.

    We did pick up a big screen LCD at the end of last year, at about 66% of what we would have paid for the same thing a year or two earlier.

  16. catman says:

    I gorged on closed end funds at 20-30% discounts. My friend Gary just bought a condo in Texas. Apparently wealthy Mexicans travel north in the summer and he can rent it out. He’ll be at his lake cabin in the northwoods by then.

  17. flipspiceland says:

    A loose 3.25 carat diamond for an engagement ring, $10K plus. Or else I’ll have to take a hike.

    A faulty Toyota at a fantastic price, if I can find one. No luck yet. Apparently the owners aren’t all that fed up to just dump them.

    Mead Johnson common, Bristol Myers calls, Bull call spread on AAPL.

    Printer drum, books, itunes, Tumi luggage, plane tickets, hotel room,

    Oh, and a bullshit filter to screen out the lies from Israel, geithner,orszag, bernanke, summers, paulson,
    greenspan,rubin, friedman, fuld, frank, thain, dodd, mozillo,o’neal, gensler, cassano, blankfein, yellin, shapiro, clinton, cox, kashkari, et al.

  18. tawm says:

    As a wage slave at a large tech corporation, I am relieved to have survived the most recent layoffs, but displeased that my salary is not keeping up with cost of living. I am still renting in the NY suburbs, but wary of buying a home because of the looming state tax needs. Like Wolfinger, we are just spending on our daily needs, and keeping our existing long-term holds in blue chip equities (about 80% of our savings) and some gold, unwilling to rollover muni debt at these ridiculous levels, and unsure what to do about the future prospect of our US $ value plummeting. Sure we could invest in more tangible assets that you’ve listed, but as a middle class wage slave not in Finance, I am not confident of being able to pay the holding costs….

  19. bonghiteric says:

    Small plots of timberland (for daughter)

    Seiko Ananta

    Trying to convince wife on the E63 AMG over the S550.

  20. mlimberg says:

    I was very lucky, I was transferred out of the Country in 1998. Came back to the USA in 2002. Had to settle in California, looked at the price of houses and moved to Georgia. Not much better here in Georgia, so I’ve been living in an apartment for the paste 9 years.

    Now I’m looking to buy a house in Arizona for less than half of what I sold my last house for in 1999. Twice the house, half the price? It’s a great Country isn’t it?

  21. We’ve bid on 4 rental properties in our town at 65-70% of assessment (our town did a reassessment on 7/2007 which was pretty much the top of the upstate NY market). We were outbid on 1 house and the other three are still sitting. I’ll wait them out and cut my offer by another 5% next time.

    Talked last night about doing the bare minimum around the house for the next couple of years.

    Specialized Hotrocks – one 20″ and one 24″ – for the kids will be our biggest splurge in a long time.

  22. TakBak04 says:

    Home improvement is on our list since the market is slow in our neighborhood. We’ve paid off our mortgage so we feel it’s a good time to update some things in kitchen and bath. So, far we aren’t seeing fire sales on home improvements but our area isn’t as hard hit as some of the country, yet since we were late to the housing bubble. (Lowe’s and Home Depot should do well in sales in the coming year)

    Vacation property in the Southeast is looking better for a buy. Particularly SC and Georgia Coast. Prices had not crashed like FLA/CA but there are now beginning to be some bargains, and we notice many foreclosures seem to be coming on the market. Since our home is paid off we are free and clear to purchase something in one of those areas. I doubt there will be any appreciation for vacation homes in the next decade or more given my dark view of the economic future of the country, but the price of ownership is getting much more in sync with what one can rent the property out for part of the year to defray the property owner costs in some of these communities. That would make buying vacation property a plus for us. As long as we break close to even with some part time vacation rental to cover the cost of high coastal flood and wind insurance, maintenance and property management fees, etc. it would make sense for us to do it.

    I haven’t sold off my gold at the jewelry parties so I’m okay there. :D But, where do people find to go today wearing lots of gold or jewels? Maybe in the New York area at the Charity parties that Wall St. attends so regularly, folks are still “showing their stuff,” but I don’t see a younger generation trying to live the frenzied lifestyle of the late 90′s and recent housing bubble and banking good times. The affluent older Boomers aren’t holding lavish social functions and entertaining the way they used to in my area of the Southeast. I don’t see fancy times ahead when the average American is savings poor, job compromised and worn out. Where are the jobs going to come from that can support a lavish lifestyle or even the comfortable middle-class one that we were used to?

    Hopefully the antique and collectible market will come back. It usually does, but most of the younger affluent I know are buying from IKEA or “Rooms to Go” which is furniture that isn’t quality but looks “urban professional,” and they all want the same furniture…nothing unique or antique. They don’t want their grannies real “silver” (too much polishing) so they buy Chinese tableware from whatever the hot store is and toss out their grannies “Limoges” and other fine porcelain for what really has little value.

    Boats, Plans and RV’s are a steal though. And probably value will come back much sooner than for the rest. Plus the personal enjoyment, instant gratification factor.

    Definitely not buying any mutual funds or stock funds. Individual dividend funds are a yes for us, though. We are managing our own. We have done well enough that we don’t want the risk of other people messing with it. Our “Cash” that we’ve kept out of the market will probably go into vacation property for instant enjoyment rather than sitting in the CD’s and MM funds since “BB” is going to keep the rates low for a while longer.

  23. dead hobo says:

    Just normal replacement stuff plus a few bucks for hobby related stuff. The hobby stuff is mostly from eBay at standard low eBay prices. The low price is part of the hunt and this is really a nickel and dime hobby – maybe a couple hundred dollars a year and lots of fun. I might do a little home remodeling in 2011. I like to cook and take pride in making meals that taste amazing but cost about $1 or $2 per plate, except for pizza, which costs about $4 to make each if I load them up. You have to know how to shop to do this.

    Consumption won’t recover from me and I never buy anything that requires payments.

  24. ruetheday says:

    Wheat in 6 gallon plastic buckets along with other non-perishable food, a grain mill, portable camping stove, generator, fuel, firearms, and ammo.

    I’m only half joking. We haven’t seen the end of this economic event anymore than we saw the end of the Great Depression in late 1932 or Japan saw the end of their economic problems in 2000. Stay tuned, there’s more to come.

    While people should certainly take advantage of the situation where bargains present themselves, it’s hardly prudent to go on a spending spree at this stage in the game.

    I did recently pick up a new piece of Swiss Army (Victorinox) luggage that normally retails for $279 for just under $100.

  25. WFTA says:

    Five more years of retirement, 2015-2020.

    If I thought the bottom was in on RE and could make it pencil out, I might pull the trigger on the retirement condo. So please give me a tickle when the real estate nadir for western North Carolina is reached.

  26. brianm says:

    Prices are down? I’m not so sure .. I’ve been locked out of the NYC real estate market for a decade due to the fraudulent credit bubble and “party atmosphere” I look out my window here in midtown and see a bunch of unfinished buildings still going up. Discounted rentals are everywhere ..

    And yet… The prices have barely budged. Even in places like Astoria Queens, prices are still outrageously high compared to a few years ago. I just don’t understand how we’ve managed to keep things so elevated.

    I’ve been going to Europe a lot in the last 2 years. Yeah, hotels etc are cheaper. But the US $ has been so decimated that even cities like Prague seem very pricey to an American (and they’re not even using the Euro yet)

    I can’t comprehend how after “the worst global financial crisis since the Great Depression”, everything is “all fixed now” (ie. markets rally 70 – 80% in less than a year) Seriously? US banks and financial institutions are solvent now? People are running out and taking out million dollar mortgages again ? There’s a jobs boom somewhere ?

    I swear our financial markets are a game of 3 card Monte .. And I thought we’d run those guys out of NYC :)

  27. destor23 says:

    Have taken some vacations and drink nicer but not too extravagant wines. Still in New York where there’s a lot of money even in down times, a lot remains out of reach for a working guy.

  28. dussasr says:

    Finally caved and bought a 52″ flat screen and a Blu-ray for Christmas. Since then the TV dropped by $500 and the Blu-ray player in half. Aren’t electronics great?

    Also looking at foreclosed apartment complexes in Indianapolis. They are selling for $10k to $25k per unit and the economy isn’t too bad here. The replacement cost would be $60k per unit. Anyone want to go in with me on one? SteveDussault at yahoo dot com.

  29. Mannwich says:

    I’m not a “things” person, but we like to spend our money on vacations.

  30. wunsacon says:

    I’d like to buy a house and a new car. But, they’re still priced about 20% higher than I want to pay without feeling financially reckless. So, I wait.

  31. rich says:

    upgraded to filet mignon from basic cuts and wild salmon from farm raised on cheaper prices. Bought an excellent condition used BMW SUV from a R/E guy that really needed to offload it. Doing a large landscaping job with some friends who really need the work but not pushing them on price. Upgraded the entire kitchen cabinets to custom solid wood cherry on cheaper lumber and labor and availability of excellent craftsmen. Bought an older Gibson guitar which has come down in price. I have always viewed myself as countercyclical. it just took a long time for this one to arrive due to the elongating policies (bubble making?) of the past Fed Chairman and the political leaders of the millenium decade.

  32. dead hobo says:

    BR asked:

    So my question is simply this: What are you buying?

    reply:
    ————-
    I hate to sound like a hippy, but buying things just because you can is only fun when you just come into money and never had the opportunity to do it before. If you’re lucky, maybe you go from renting to buying and snag a great deal on a new home and furnish it well for not a lot of money. I’m not talking about that. If I went from affluent to megaball winner, I might blow a few bucks on a house that was too big and buy a new car. But after that, I probably wouldn’t live much differently. I like my life and accumulations of stuff often just becomes useless clutter. I don’t need clutter to feel good about myself. I don’t need to piss on others to feel good, although I had fun yesterday with cognos. Nothing wrong with that.

  33. Alex says:

    Furniture and travel are the biggest items so far. I bought some really nice oak Craftsman pieces for a huge price. We also bought some very nice luxury items for the house, but those deals seem to have subsided. The only extravagance of mine so far has been one smokin’ deal on a swiss watch.

    Sometime In 2006 / 2007, “Smartmoney” magazine wrote a piece (under financial advice for God’s sake) on how to buy a luxury watch. Accordingly, a few years later, the price of certain brands is occasionally reasonable. Frankly, I think those prices may come down even further.

    I would think that a nice Toyota would probably be a good purchase right now.

  34. Durrman says:

    I have been taking advantage of the change in exchange rate between Canadian and US dollars, and I just spent around 8k CDN on parts for my 2003 Mustang, (The book value of the car is probably mid-high teens) and I’m planning another 4k (CDN). The same stuff 5 years ago would have cost about 40% more (in Canadian dollars).

  35. Chz says:

    In the last six months the biggest purchases we’ve made – an IPod touch for wife, a Nano for me. We are not consumer driven and extremely frugal. For the near term future I am looking at land in central South Dakota, a development that sells lots from 5 to 20 acres with water, elect, etc (they haven’t been moving and I think I can get a significant discount). I’m considering having corrective laser eye surgery and looking at a Remington 700 XCR in .300 to add to my arsenal.

  36. fubsy_cooter says:

    Hey Barry,

    Great topic!! I recently bought a 1967 Fender Super Reverb amplifier, one of the timeless and truely organic guitar amplifiers out there. I also bought a custom built Telecaster by Bill Nash, that is a relic of the 1963 Fender Tele, meaning that Bill builds them new, then beats the crap out of em, and they come out looking, feeling and playing as beautifully, if not better than an actual 1963 tele at 25% of the price. Also bought a 1962 American Made Jazzmaster Reissue. Sweet axe. One day I’ll pick up an orignal. I’m also building a pedal board of boutique analog guitar effects that are allowing me to create walls of sound, and some of the crispiest riffs ever. I’m living a mid life adventure that is truely sweet. Of course, the one piece that I’m coveting, and watching for the deal of the century is a 1971 LesPaul Custom, Black Beauty. The same guitar I bought at 19 years old, and stupidly sold against the warning of my wife, “You’re gonna regret this someday”, so I could pay off a credit card. They are selling between 4k to 6.5k appx, depending on condition. Just watching and waiting, and believing that this is a buyers market.

    My project: writing a rock opera about the global political climate ant the essense of human nature that lead us to the predicament we’re in. I’m looking for a lyricist with a more positive bent on humans ability to persevere, and create beauty out of mayhem.

    Here’s a verse and Chorus from Sleepwalk. I think you might relate to the chorus.

    Squint and shift your ticking heart
    Your body is a meteor of love
    Floating on a sea of submission
    Out and about in tiny briefs
    Hinges squeeking on membrane wings
    The fire and the dog are in your skin

    Fleeting stars will scathe you
    Who was saved in his heyday
    Sleepwalk in an endless hall
    One foot forward…in deep space.

    Thanks for the oppty to rave and share. Having tons of fun!!

    Mitch

  37. pmorrisonfl says:

    @fubsy_cooter
    rock on!
    Two tiny regrets in my life: In the early 80′s I picked up a Les Paul and a Fender Strat for $350 and $250, respectively, on the ‘buddy needs cash quick’ plan. I sold them both in the early 90′s when it was clear I wouldn’t be a rock star and felt like clearing the clutter. I don’t remember manufacturing dates, but I have the feeling it’d have been cheaper to keep them every time I look at prices on these things.

    I guess there’s an art to recognizing what is timeless and valuable… and to having the space in your life to keep such things.

  38. jrm says:

    i indugle a swiss watch :o

  39. ashpelham2 says:

    We have spent some money on small things, such as some parts for my bike (stuff that wears out every year). Bought some paint and a pressure washer to use around the house. Might go see a concert or two once the weather turns nicer and outdoor shows become more common.

    I have to buy my wife a new setting for her ring because I lost my wedding ring, bought new matching ones, and the ring now doesn’t exactly match.

    Nothing big ticket though. We are just now beginning to stockpile some cash again after last summer’s job losses.

  40. dessert girl says:

    Lots of goodies here in AZ. My husband got a new Porsche for a great value. I got an 5 ct antique diamond that someone needed to sell. We also just purchased a home that was a short sale. Previously valued at 2.5 mil, we got it for 1.35!! We are also having work done on the new house. Contractors are giving us great prices and are more responsive than ever!

  41. torrie-amos says:

    rockers,

    I donated a 1962 re-issue les paul gold top i picked up in 91 too a friend, after had two neck surgeries, it sat for 10 years, still got a tele and a hot rodded 1973 marshall 100 water w/peavy 4×10 cabinet, oh just can’t let em go, lo

  42. beaufou says:

    Got a Musicman Luke for Christmas and a zoom G9 (half price).
    Goes well with 5150 I already had.
    I grew up in the 80s as you can see.

    One thing I won’t be buying, I accepted invitations to stay with relatives and friends on vacation for the first time.
    It was either that or cutting it short…now that would be silly.

  43. bobabouey says:

    Swedish Snus, cheaper than other tobacco products, can be used at work, no spitting, many varieties to try, and apparantly doesn’t cause cancer!

  44. couragesd says:

    I still think that large ticket items such as homes are over valued, especially in California. Wages and number of jobs do not match the cost of living. I think that people and banks are holding their breath waiting for things to get better so the prices are still inflated on items such as homes and condos. Rumor is that people buying these places are buying with cash, i.e. investors. Considering the cost of living and wages out here I think that prices need to come down at least another 20%, and that is going to be once the interest rates go up again and your everyday person is going to still have to compete against the investors. However, I think that the investors are going to get a wake-up call when they purchase items that they can’t re-sell for a significant profit and in the case of properties, wages will still not be enough to support the rents that these new landlords will hope to gain. It should be an interesting power dynamic. I expect rental rights to be one of the top political topics in local economies in the next couple of years.

    Considering that home prices are ridiculous, my wife and I have “splurged” on electronics such as Iphone, Wii. but won’t buy a new TV or an ipad…That I going to far. We also spend money on yoga classes (yes…so very california). We are also stockpiling cash. And Barry, by the way…because I read your blog, I avoided disaster, found the near bottom and made 35% last year on my very meager 401. Of course this year things are priced high and the question is where is there to go?

    Back to the point. My wife and I are pre-approved for a mortgage, but keep it nearby and casually house hunt in the case that something turns up.

    On a side note. I was extremely frustrated and still am on all the efforts to keep homeowners in homes that can’t and never could afford and still can’t afford. Prices are still being unreasonably propped up. People are being rewarded for their poor choices when they bought their 500 sq. ft. studio apartment for $800,000 and are agast when they cant get $600,000 for it. Meanwhile my wife and I recognize that the prices are ridiculous and didn’t buy. Yes, let the housing steam out slowly until banks can re-capitalize and the US economy can restructure, but I think that it is giving the average person a false sense of reality.

    k. I got a lot more on this but I will let it go.

  45. WFTA says:

    http://benedetto-guitars.com/bb-bravoelite-ob.php

    If I’m only going to wish, I might as well wish first class.

  46. doug says:

    We are expanding the boat dock. Very easy to get permitted and mutlitple, low bids. Contractors of all sorts are quick to respond and bid.

  47. Thor says:

    Travel travel travel. You can get some pretty amazing deals these days.

  48. MayorQuimby says:

    What am I buying? Nothing. And lots of it.

  49. Mannwich says:

    I’m with you, Thor (see above). I’d also like some new golf clubs but my golf game doesn’t justify buying even discounted clubs.

  50. brianm says:

    Totally agree with you couragesd . . we live in a corrupt society where all assets are manipulated to the upside so that voters will feel “richer.” And go out and spend spend spend !

    But why exactly are high home prices a good thing ? If the price of your flatscreen tv was going up, would you say, “great! That must mean it’s a *better* tv because it costs more now! ” ?

    If you grew up in the 1960s, you could choose to live (more or less) where you wanted in the U.S. Not anymore. The Coasts and major cities may be off limits to the average working schmuck thanks to government home price subsidies and manipulation. Once again why is that a good thing ??

  51. Bokolis says:

    Thanks to an out-of-work contractor looking to stay busy, not buying, renting…as in, renting while I renovate me own. Renting in Manhattan still costs more than my mortgage+taxes+etcetcetc, but I’m getting a lot more apartment, location and can terminate pretty much when I want.

    Refuse to fly because of the massive hassle, mostly driving around…mentally prepared to stomach $6 gas.

    Owned some assets that spiked as the market was tanking. Took out a chunk of that equity and buried it into some monoliths trading at keychain prices…grandkids (when I have them) will have some powder with which to take on the world.

    Can vouch for the lack of downward price pressure on European wines…and macs, for that matter.

    Football (soccer) gear costs run as normal, probably in line with the technology.

    Grew up using a coat hanger as an antenna, so I’m not into toys and frills. If the secular bull holds off until after my post mid-life crisis kicks in, the hog won’t cost as much.

  52. Bala says:

    Mac Pros are dropping in price quickly (craigslist, ebay, etc).
    I switched all of my trading computers from PC to Mac. I couldn’t be more impressed.

  53. Stav says:

    Bought GE bonds in Oct 08. Bought Stocks from Nov’08 through March ’09. Mostly quiet since until early this year when we bought high end audio equipment at a significant discount and planned one month SE Asia trip, where we are getting our Four Seasons, Orient Express, Raffles and Ritz Carlton rooms at about $150-$250 a night! Singapore, Penang, Bangkok, Phuket, Siem Riep, Chiang Mai and some place in Laos I can’t name or spell ;) Anyways first time to the region for us, so I don’t know if it has always been this cheap, but astounded. Even Singapore Airlines Economy RT for under $1,500.

    Have looked at RE in Berkshires, but finding no bargains.

  54. TDL says:

    Like another commenter said, “buying nothing and whole lot of it.” Then again I have been unemployed since June, from the sounds of the comments so far, I’m the only one.

    Regards,
    TDL

  55. Stav says:

    Oh forgot, put in new kitchen in Fall ’09. Nice to have the contractors come in every day and not take every other day off to handle some other project.

  56. Event_horizon says:

    New Surfboard… that’s all I need for contentment

  57. The Curmudgeon says:

    A lot of books, the old-fashioned kind, with pages that turn and everything. I have very eclectic tastes, or, if you prefer, an ADHD-addled attention span, so my recent purchases range from Walter Kaufman’s “Critique of Religion and Philosophy” to John J Palmer’s “How to Brew”. I’m formulating a plan whereby I am more or less completely non-cash in about five years. I bought some farm land a couple of years back, and once I clear the kids out of the house, that’s where I’m heading.

    Couldn’t care less about the latest consumer electronic gadgetry (sorry, Mr. Jobs), but am working up plans for an energy-efficient, more or less self-sustaining farm house, that will take advantage of some of the latest improvements in energy conservation and production.

  58. 4horsemen says:

    Took a vacation in Mexico January 2009 and again this month. Didnt seem like an overwhelming deal though, and didnt change from last year.

    Bought a (used) car November 2008, but more because I needed it.

    Honestly, nothing stands out as being jaw dropping. Bought a 72″ TV at a decent price, but I dont think that had anything to do with the economy – more to do with new technology in the pipe.

    On that note, Panasonic quickly sold out of its $3300 3D TVs in the US. Call me crazy, but $3300 aint a cheap avg price for a TV for the avg American these says, and 3D TVs have to be about as discretionary as it gets for this economy. So…who the hell is buying these and how? Has the US consumer returned so quickly to his old ways?

  59. spooz says:

    Hobby farm
    farm machinery and supplies
    greenhouse
    solar panels
    deck & porch
    cars
    power tools
    computers
    liquor

  60. gordo365 says:

    Curmedgeon – I like the books idea. I just bought a 1st printing excellent condition edition Alan Moorhead’s White Nile – published in the 60s for $2. Shipping was more than the book.

    I think in a generation or two – used bookstores will be gone and most people will throw out their parents libraries. So in 40 years – what will a collection of 1st printing books by a mid century author be worth?

    Gordo

  61. Rupert says:

    I got the missus a nice laptop recently. Also got a very good deal on a low-end Spector bass. All it needed was a good setup and a new set of pickups to make it a very playable budget bass ( SD Basslines).

    I keep my eye on the vintage guitar gear market, which includes some highly collectible and frequently pricey items. So far, I’ve only seen a slight dip in the prices of the more sought-after pieces. Blackface Fender Vibrolux Reverbs (Non-RI) were going for $1800-$2000 a couple of years ago. You can find them for $1700 now but nothing like 50% off peak. Even modest priced pieces like old Ampeg tube amps are only 5-10% off recent highs. If they ever get to half-off their highs, I’d be sorely temped to pick a few. Until then, I’ll continue rolling my own: http://my.att.net/p/s/community.dll?ep=16&groupid=112535&ck=

  62. Mike in Nola says:

    Members of the middle class have not changed their attitude about houses despite the ongoing collapse in prices: “it’s always a good time to buy a house.”

    Houston didn’t get the crash in either housing or jobs til last year. Last year it lost 100,000 jobs and that’s still going on as the oil and chemical industries contract and homebuilders struggle and CRM gets worse. Home sales fell another 5% in Feb. and there are for rent and for sale signs all over. One builder isn’t wasting any time: a newly finished house has a sign saying for sale or rent.

    Yet, when my wife tells people at work that we are renting an not buying, they tell her she’s crazy, as they all sit there with depreciating houses.

  63. Mike in Nola says:

    Members of the middle class have not changed their attitude about houses despite the ongoing collapse in prices: “it’s always a good time to buy a house.”

    Houston didn’t get the crash in either housing or jobs til last year. Last year it lost 100,000 jobs and that’s still going on as the oil and chemical industries contract and homebuilders struggle and CRM gets worse. Home sales fell another 5% in Feb. and there are for rent and for sale signs all over. One builder isn’t wasting any time: a newly finished house has a sign saying for sale or rent.

    Yet, when my wife tells people at work that we are renting an not buying, they tell her she’s crazy, as they all sit there with depreciating houses.

  64. Mike in Nola says:

    don’t know how that double post happened. Only hit submit once.

  65. Web advertising is getting cheap. Lots of good space that can be had at a bargain if you look for it

  66. trail says:

    I’m frugal to the point of being almost miserly, but I do like durable, well-crafted things that I can get for a bargain – like pocket knives.

  67. dh, above, was getting to it..

    HDT, before, hit on it..

    “Thoreau also went to Walden with the firm belief that man was too encumbered with material things – too much possessed by his belongings. He believed that a man is rich only “in proportion to the number of things he can afford to let alone.” One passage from Walden tells of an auction, held to dispose of a deacon neighbor’s possessions. Thoreau scorned the affair, referring to the accumulations as “trumpetery” that had lain for “half a century in his garret and other dust holes”:

    [And now] … instead of a bonfire, or purifying destruction of them, there was an auction, of increasing of them. The neighbors eagerly collected to view them, bought them all, and carefully transported them to their garrets and dust holes, to lie there till their estates are settled, when they will start again. When a man dies he kicks the dust.

    All aspects of life for Thoreau focused on simplicity. He ate simple meals, his diet consisting mostly of rye, Indian meal, potatoes, rice, a little pork, salt and molasses. He drank water. On such foods he was able to live for as little as a dollar a month. “The cost of a thing,” he reasoned, “is the amount of what I will call life which is required to be exchanged for it, immediately or in the long run.”…”
    http://onlineessays.com/essays/summary/summ67.php
    “The cost of a thing,” he reasoned, “is the amount of what I will call life which is required to be exchanged for it, immediately or in the long run.”…”
    ~~
    past that, it’s, always, best to remember Rodney Dangerfield’s character, from “Caddyshack”, on the c-phone to his broker: “They’re Buying? Then, Sell! Sell!, They’re Selling? Then Buy! Buy!”..

    or, differently, if People are unique, and ‘Everybody’s doing it’, then, most must not know what they’re doing..Fade the assemblage.

  68. Sam says:

    Barry, this is indeed the silliest thing I have ever heard from you

    Buying “stuff” because it is perceptively inexpensive compared to….. what, yesterday’s prices?

    And you’re sure prices of stuff won’t go lower?

    How low is low?

    How about this

    Buy what you need – ONLY

    What are you talking about? storing wealth by way of watches, RVs and second homes. Deflation is upon us folks with no sign of inflation except the very obvious bubble in precious metals. Ask yourself this question; what capacity do any of us have to cope with rising inflation or rising asset values beyond equities. The consumer? business? government? Nope, Nope and absolutely Nope. Follow the train of delevering which flies directly the face of Barry’s advice.

    Deflation means buy interest bearing securities, buy the US dollar, sell assets – I know I know that’s not what Jim Cramer says. Drink that Koolaid if you’d like but please don’t bother us with tears when it just doesn’t quite work out as planned.

  69. I am not sure you got my point. I am not discussing yesterday’s price.

    There are certain items that have a specific value, and these items have a specific cost. Very often, the cost exceeds the perceived value. There are times when the opposite occurs, and the value exceeds the cost.

    I am suggesting that the latter is what is occurring these days with some items.

    This isn’t an endorsement of rampant consumerism or wild excess consumption — its a reflection that patient buyers can often obtain what they want at attractive prices if they are willing to spend counter-cyclically.

  70. Thatguy says:

    Looking at a Can Am Spyder (three wheeled motorcycle, not too far from a road going snowmobile) for the wife so she can use HOV on the way to her work in the city. We got eachother smartphones for XMas and are window shopping (tax subsidies). Other than that, I can’t really think of much more crap that I want or need……… other than the usual video game purchases.

  71. LookoutRanch says:

    I have a good tenant who’s a carpenter and was having trouble making his rent few a few months last year so I hired him on favorable terms to do quite a bit of much needed work around my place. A new deck, etc. A couple of years ago you couldn’t get a carpenter for small projects, and if you could you didn’t want him. So, yes, I’ve had a lot of work done around the place by an excellent carpenter for very reasonable rates, and he has been able to keep a roof over his family’s head.

    Interestingly, he’s been busy enough since last summer to pay the rent without working for me.

  72. tude says:

    “There are certain items that have a specific value, and these items have a specific cost. Very often, the cost exceeds the perceived value. There are times when the opposite occurs, and the value exceeds the cost.” – BR

    That may be true, but I am certainly NOT seeing this in many parts of California, where property prices are still nearly double what they were 10 years ago!

    On the other hand, I have had to take a nearly 20% pay cut in the last 2 years, while prices on necessary goods and services (food, fuel, transport, phone, health) are 20% higher…

  73. flipspiceland says:

    @Bala

    If you would, what are the advantages to the change out to MACs?
    thx

  74. USofMH says:

    Hey Barry –
    Love the site, and great topic. I’ve benefited from cheaper purchases mostly around the edges. My teevee completely broke, and when I went to Best Buy to replace, they had a sale on a decent flatscreen with a PS3 – that would not have happened pre-meltdown. Also, retail has been so sad generally, that when I visit a store like Banana Republic – I’m usually only one of a handful of people there. I got easily 35% of full retail of items they had just received. For the most part, and like many others, I’ve been working on my own develeraging – paying off the car, the HELOC, and switching to cash instead of swiping credit cards for most purchases.

  75. riverrat says:

    We’re taking the plunge on a house. Despite the fact that I’m not optimistic about the US economy as a whole, things are not too bad where we live- a small western US college town, somewhat “Norman Rockwell-esque”, with strict building codes, a mainly white-collar work-force (university, gubment and high-tech) and a perpetually limited supply of homes for sale in our price range and the school district we want. Home prices leveled off over the past couple of years, and maybe dropped a little but not a whole lot.

    We wonder if this town is just behind the curve, and house prices will drop more in the future. But we plan to stay at least ten more years, and believe we have the job security and situation that this is realistic. For the time being, the market for $300k 1800-2000sf houses in our area and in good condition remains strong- we often see other buyers circling in their Outbacks and Volvos when a nice place at a reasonable price hits the market. We’re sick of having 2/3 of our stuff in storage, and the rental house market is not really that great- due to building codes and limited buildable land in our preferred part of town, the builders here didn’t really overshoot the way they did in a lot of places. We found a place we can definitely make nicer over time. Whether or not that “adds value”, remains to be seen. I hope it is worth at least what we paid plus inflation if and when the times comes that we want to sell it, but we’re buying it as a place to live and raise our child not an investment. And I can finally get back to gardening and running most errands by bicycle. So here we go…

    We didn’t alter our spending habits much as a result of the recession, since we’re pretty frugal to anyway. I’m the kind of guy who refuses to pay retail if at all possible, even in the best of times. We’re buying slightly cheaper wine and not eating out as much. I did splurge on a nice Denon 3930ci DVD/CD/SACD player (for 75% off list) since I am not an early adopter of blu-ray that made it “obsolete”, and I’m casually shopping for a nice tube DAC to listen to my FLAC music files. The other item on my wish list is a trailer for my river raft…

  76. andrew755 says:

    What Recession? Have you seen home prices in Canada…. we really didn’t get hit much at all and not only that but the Canadian $$$ has been on a rampage.

  77. JohnQ2 says:

    Just did an extension on my house and plan on redoing a 25 year old kitchen in my modest cape home. I am quite capable of doing these things myself, I am very capable despite having a CPA and a M.S. in Tax. However, the number that the subs were coming with were not worth me taking time off and the hassle of doing the work myself. For example, I put in 45 pieces of 12 foot sheetrock (5/8th thick– heavy duty). In the roaring housing market, workers were getting $20 board to hang and another $20 to tape and spackle. (I live in Long Island, NY on the south shore….) This winter bids came in at $10 for the exact same specs (three coats). I watched and checked the workers to be sure they were doing what we agreed to. They all said they were just trying to keep their crews working during the down market. At this rate I am doing a massive renovation of my kitchen.
    After all that I can’t afford much else.

    High net worth clients are going to town on high end appliances and media centers, while maintaining low profile cars that are well equipped. (Honda and Lexus). Mercedes are noveau riche and are looked down upon as overly ostentatious…. Curious thought train.

  78. M says:

    Hi, Barry. Wanted to chime in, but anonymously as I’ve caught flack in the past from those who assume automatically that just because this is ongoing, ANY buying of real estate is a fool’s choice. They dismiss you as a know-nothing out of hand.

    But, I bought myself a house. Not just any old house…after searching like it was my second job for 2 years and being on top of the market here in Southern Cali on a daily basis, I located exactly what I wanted, where I wanted and in exactly as distressed a position as I hoped to make a fantastic deal. In an area where homes just don’t go up for sale because the region didn’t jump into the silliness of 2003-2007, I found a great half-acre property and developed a friendly relationship with the owner, as we shared similar backgrounds. It hadn’t sold in 30 days as the interior of the house was being used as furniture storage, and thus appeared cluttered and imposing to the average buyer. It had fallen out of escrow once, as a buyer had their blind offer accepted and then pulled it when they realized it wasn’t a turn-key.

    She pulled her property from the market – not because I asked – and sold it to me for over 130k less than the nearest low-ball comparables (the appraiser had to go 5 miles away to find comps for sale). My mortgage payment is less than 1/3 the rent for a similar house, and such that I will have it paid off in under 10 years even though I took a conventional, 30 year loan. Low enough that even if both my husband and I lost our jobs, a single part-time job working for peanuts will still pay the mortgage (and so would unemployment, with money to spare), the property tax and insurance. I’d call that a wise investment, even though housing is NOT an investment 90% of the time, and it would not have been possible without the economic downturn.

    The deals are out there, if you take it seriously, devote time to the hunt and don’t ‘fall in love’ with anything. It’s a great time to pick up many things, if you saved money and are willing to do the work to craft a true deal.

  79. Prof says:

    OK Barry here’s a list of wild recent spending:

    finally, a frost free refrigerator, energy star
    mint copy (recent reprinting) of The Water Babies by Kingsley with
    illustrations by Wilcox Smith
    Fantastic meal at Eno Terra in Kingston, NJ
    hundreds of dollars of books for grandchildren
    Catered pre-easter/passover meal for grandchildren and greatnephews
    and niece (and their parents)
    New copy of Bertrand Russell’s History of Western Philosophy
    Toshiba netbook

    (academics, as you are well aware no doubt) live very
    frugally…and are very! grateful for your blog to understand the
    financial world)

    Best wishes and thanks for all the fish,

  80. BJ says:

    Large ranch properties have continued to appreciate at a bubble rate with the shift into hard assets. Many folks believe the money will become worthless. However, the price of up and coming bucking bulls has dropped, due the general erosion in investor balance sheets. Bucking bulls offer tax advantages and, if the bull is successful, produces a steady term stream of earnings from semen sales. Bull breeders have so perfected the genetics that the odds of purchasing a yearling bull that becomes a high earning performer have been lowered dramatically over the past ten years.

    High quality rare books have been solid for a long time and have held up well in this downturn.

    Stock certificates from notorious belly-ups: Credit Mobilier, Penn Central, Enron, Overstock.com …

  81. J says:

    I sold my house in 2002, and paid cash for a small condo. I have a 10 year old Miata which should last another 10 years. I don’t buy new clothes, except when old ones are threadbare. I want to build big accounts, but own NOTHING.

    I used to love travel abroad (my daughter lives in London) but now prefer to go only where I can drive, and stay in a motel. Prices at the gas pump and the motel don’t have 500,000 different tariffs which change every day. Buying and flying an air ticket is a complicated and frustrating hassle.

    Consumerism SUX. I don’t want to own ANYTHING. A good laugh is the best thing there is, and that costs nothing. Appreciate life’s small pleasures!

    Fuck the producers of everything but good food, beer, and cheap wine!

    My greatest satisfaction is staying in GREAT health, running 4 miles every other day, and eating well. I hope to life to over age 100 in good health. But once in the hands of the medical/industrial complex, I hope to summon the courage to pop a black pill and be gone!

    I’ll say to the assembled blogger-media “hey, media/medical/food/insurance/and military industrial complexes, I get the last laugh, and FUCK you all, I’m OUTTA here!”

  82. CH says:

    2 week vacation to Thailand last year.
    Paid 1250 for round trip airfare and got a free upgrade to business class (round trip) from a friend who had expiring miles.

    BTW massages and girlfriends are 40% off too.

  83. Y says:

    My wife and I took a deserving and wonderful vacation to Italy for two weeks, two months after the financial disgust. And, we have since bought a new 2008 Porsche Boxster (fully loaded dealer priced $51,000, but paid $37,050). We have also added a little piece real estate land in Missouri for a bargain. Thank you for an interesting question and have a nice day.

  84. SW says:

    i bought a 1979 24 channel quad eight pacifica mixing board from a gent in new zealand.
    less than a 100 left in the world.
    used by pink floyd, steely dan.

    there was a huge bubble in vintage music gear, and since most folks in the music business can’t finance their way out of a paper bag it’s a buyer’s market.

    thanks,

  85. DN says:

    The list for last twelve months:

    1) Piaggio MP3 400 – the most fun ride for under $10K – new runs $9K, bought 2009 model with less than 1000 miles for $6K off craigslist

    http://www.piaggiousa.com/scooters.php#/overview/Piaggio MP3 400

    2) Club Med Ixtapa – One week during spring break – $5K for family of 3

    3) Diamond Earrings + Pendant – 1+1+1.6 carats for $21K

    4) BMW 335xi – European delivery with pickup and drive vacation in Munich, Germany for $44K

    Best buy in the last decade – Vacation home in Sonoma, CA, bought in 2001 for under $1M – current Zillow valuation $1.8M

    ~~~

    BR: I had a 330i 6 speed years ago — fun car.
    The 335 looks great —

    Here’s a little secret — the dealer can install a factory approved Dinan chip that will add 100 HP to the 335 (via Turbo boost)
    NO warranty void because its dealer/factory approved!

    About $1000 — $10 per HP is dirt cheap!

  86. gman says:

    I bought a gut rehabed graystone in 08 from a distressed contractor. I got it then for what I thought was a steal…i would be lucky to get my money back out today.
    But hey, the point of this thread and “armageddon averted” is to live a little…so im finally having the balance of the small city lot landscaped professionly, wrought iron fence installed, and the interior decorated….after having moved in almost 2 years ago! All this is being done for a much better value than was posseble when the place was purchased.

    PS longtime lurker…first time poster

  87. fubsy_cooter says:

    THis thread is probably old hat by now, but one thing I forgot that I have been and will continue to buy is pre 1964 silver coins. I want to have something with buying power if the dollar collapses. I’ll probably also buy a couple hand guns, ammo, and canned foods.

    Aside from the guitar gear binge, I have been extremely frugal ove the past 18 months, and am priding myself on buying local good, nothing from Wal Mart, COstco, Target etc…putting my money in the local credit union, giving nothing to the large money center bastard banks, and eating locally grown food as much as is possible.

    I sincerely believe that the way we spend is one way the people still have to retain enormous powers in our society. If you disagree with something, vote against it with your dollars.

    Mitch

  88. Boots or Hearts says:

    GE at 7$ and AXP at just under 10 intraday last year. Restoration Hardware leather couch at 50% of retail value.

    The big bargains are not there as they were a year ago from where I sit. I am waiting for all the bears to be converted into pisanis or Froehlichs. I have not watched cnbc in ages, but do recall the extreme ends of the spectrum.

    I know folks in Arizona who are flipping homes in the 80-100k range with apparent ease since last year. One person in particular recently bought eight homes in that range, put between 5 and 10 thousand into each and all sold within three months at a 20-30% profit. All eight new owners will probably be 15% underwater in 2012 of course. The 8k credit has been a big shot in the arm for those in a position to profit from it I suppose.

    In general, sooner or later the music will stop, but the atmosphere is celebratory compared to a year ago from the perch I stare out from.

    On the other hand, a colleague recently lost an employee and had hired a replacement. This person did not show up for work after spending a few days in informal training. She called up an hour after missing her start time and bluntly said that she realized her unemplyment benefits were extended so she did not need to take the job. He called me expressing dismay at her “honesty.”

    I digress…

  89. CentralIowaFarmer says:

    I picked up my Case IH STX 4260 sprayer yesterday. It is a 2003 w/ 3060 hours on it. So, somewhat used. Only $118,000. It has Envizio Pro and AccuBoom. Was listed for $125,000. @#$#@ Bargain! Traded our 1995 Patriot XL sprayer.

    Besides better technology, our sprayer boom width went from 80′ to 90′, and Horsepower goes from 120 HP to 265 HP. Size of tank improved from 750 gallons to 1200 gallons, plus 3″ intake compared to 2″ intake for liquids, i.e. can fill tank in same amount of time. AND, the cab has better visibility, buddy seat, radio works, less noise; I’d consider it a luxury.

    You can go to fastline.com or tractorhouse.com if you are interested in similar sprayers – new sprayers go for $250K plus.

  90. Darkness says:

    Just last week decided to start loading up the wine cellar. Sonoma and Oregon wineries are having serious fire sales.

  91. kcowan says:

    Bought a condo in Mexico and equipped it with 4 flat panel HDTVs. Went from cable to satellite and bought receivers (4 plus PVR). Bought 2x$100k in Convertible Debentures. Sold BMW cabriolet and bought a 2005 Ford Escape. Sold Corriente Resources for $8.53. Bought a media center PC (Vista) off craigslist.

  92. nmgridl says:

    Making sure use the energy tax credits to their fullest. New windows in 2009. The state got a federal grant for fuel efficient furnaces – $1200 to me. Thus new boiler in 2010.

    Oooh – stocking up on wine seems like a good idea.

  93. [...] we have previously exhorted, the consumer is “not quite dead, yet.” Indeed, the data suggests that after falling into a [...]