Gyroscopic Investing

Here is a new program that my employer just opened up TODAY.  It will be interesting to see how it is received.
It is a corporate finance adaptation of the "person to person" or "direct lending" concept.

https://uhaulinvestorsclub.com/

I don't understand.

What is it?

i don't see anything here that sounds encouraging to me

from their web site..

We believe in transparency, so here are a few things you should know before you start investing.
U-Haul Investors Club is not for short-term investors

U-Haul Investors Club members cannot easily sell or trade their U-Notes, and are required to hold the U-Note until maturity unless earlier redeemed by us in our sole discretion. Maturities range between 2 to 30 years, please review the terms in our prospectus and prospectus supplements carefully and invest accordingly.
The U-Note is not FDIC insured

While the money you deposit into your U-Haul Investors Club account is not insured by anyone, your investment is secured by the asset.
There are risks involved

As with all forms of investments, risk can only be reduced, not eliminated. View our prospectus and prospectus supplements for details on the risks of investing with U-Haul Investors Club.
No pre-payment penalty

We reserve the right to pay back any U-Note at any time, with no pre-payment penalties. However, we are under no obligation to do so.
No corporate guarantee

U-Notes are secured only by its specific collateral (the asset). AMERCO®, U-Haul International, Inc. and their respective affiliates do not guarantee your investment. There is no other guarantee or insurance for your investment. View our prospectus and prospectus supplements and all terms and conditions for details on the risks of investing with U-Haul Investors Club.
No secondary market

Each U-Note investment must be held until its respective maturity date. There is no secondary market for U-Notes, and you will not be able to sell the U-Note back to the company. If you want to sell your U-Note you will need to find a buyer yourself and pay a transfer and re-title fee. The current fee is $25 per transfer (Fee subject to change without prior notice).

So it's just corporate bonds with some poor terms.

What rate do they pay?  I assume they tell you that.

MediumTex wrote: So it's just corporate bonds with some poor terms.

What rate do they pay?  I assume they tell you that.

It doesn't look like corporate bonds, but rather a source of loans to franchisees which they can use for specific capital expenditures.  There's a list of current "investment opportunities" at https://uhaulinvestorsclub.com/InvestmentOpportunities

That sounds awful to me.

What rate is it supposed to pay?  If it was less than 20% I would say run.

One other nice thing about the PP.  It really makes you realize what BS most other investments are outside of it.  I now take the attitude "This has to offer me an unusually great return for me to invest in this instead of the PP."

At one point I even considered e-lending, where you borrow people money for pretty decent interest rates via the internet.

What in God's name was I thinking...

Great point, Moda. 

I was making some ill-advised investments myself.  I was trying to use the 200 day moving average to "position trade" and also even using options and trading on margin.

The thing is, I think you have to have gone through this kind of stuff to realize how sound the PP philosophy is.  If someone hasn't experimented a bit, they might not understand why the PP is what it is.

Try explaining PP to someone with limited investing experience and they will probably look at you like you're nuts.  Most of them view a portfolio with 10 or 15 pseudo-randomly selected stocks or high exepnse mutual funds as a better options. 

Appreciating the PP requires some experience, and also some understanding general macroeconomic theories that most people just don't have.

Adam

Adam1226 wrote: Great point, Moda. 

I was making some ill-advised investments myself.  I was trying to use the 200 day moving average to "position trade" and also even using options and trading on margin.

The thing is, I think you have to have gone through this kind of stuff to realize how sound the PP philosophy is.  If someone hasn't experimented a bit, they might not understand why the PP is what it is.

Try explaining PP to someone with limited investing experience and they will probably look at you like you're nuts.  Most of them view a portfolio with 10 or 15 pseudo-randomly selected stocks or high exepnse mutual funds as a better options. 

Appreciating the PP requires some experience, and also some understanding general macroeconomic theories that most people just don't have.

Adam

it makes me feel lucky, as a new investor i went from gold to bogleheads to pp in a short period of time, i think having the internet and some good searching skills has saved me a lot of trouble and expense...

Adam1226 wrote: Try explaining PP to someone with limited investing experience and they will probably look at you like you're nuts.  Most of them view a portfolio with 10 or 15 pseudo-randomly selected stocks or high exepnse mutual funds as a better options. 

Appreciating the PP requires some experience, and also some understanding general macroeconomic theories that most people just don't have.

Adam

It's like the whole world (including what most people would think of as very sophisticated investors) have somehow mistaken the Wall Street casino for a legitimate money-making opportunity.  When you try to point out the obviously ridiculous nature of this arrangement, you find out just how deeply hypnotized people are by the conventional wisdom.

Those silly green ribbon pathway to retirement commercials are a great example of people simply doing whatever the TV tells them to do.  It's amazing that people would treat their hard earned money so carelessly.

Adam,

It took me a LONG time to convince my dad to get invested in it.  He had the attitude "Stocks return the best... I simply have to stomach the losses to reap the rewards."

Once I showed him how the PP performed about the same as stocks the last 40 years (CAGR wise), how stocks were flat during 2 periods making up half of the last 50 years ('66-'82 and 2000-'09), and how inserting opposing assets into an all-stock portfolio can actually INCREASE your rate of return, while smoothing volatility as well, he picked up on it.

I also showed him the specific calendar years where stocks went down 10% or more and how gold and/or LT treasuries have a history of doing an amazing job of bouncing up during those periods.  He also loved Craig's bond graph showing 2008's activities and how everything but treasuries performed somewhere between awful and lackluster.

Those are the things that really spoke to him.  Sometimes, we've looked at so many of the intricacies of the PP it makes it difficult for us to convince friends/family with some of the most simple facts.  I think a few of those points above may help your discussions.... who knows though... it really does have a "too-good-to-be-true" feel to it at first.

Your dad sounds more open-minded than most. 

I find that you get about two sentences to explain almost anything to most people.  Once you're at the point where you're pulling out charts and comparing returns, most people have written you off (or maybe I just lack charisma). 

Adam

Adam1226 wrote: Your dad sounds more open-minded than most. 

I find that you get about two sentences to explain almost anything to most people.  Once you're at the point where you're pulling out charts and comparing returns, most people have written you off (or maybe I just lack charisma). 

Adam

Normally, once people hear the PP has 25% in gold they shut down (though less so now than in the past).

If the gold part doesn't shut them down, when they hear about the 25% in LT treasurys, they normally say something like "I wouldn't want to own long term treasurys right now because rates are about to go up."

KevD wrote:

MediumTex wrote: If the gold part doesn't shut them down, when they hear about the 25% in LT treasurys, they normally say something like "I wouldn't want to own long term treasurys right now because rates are about to go up."

Lately, they'd be right!

...but they've been saying it for about 15 years and they've been mostly wrong.

I rememebr on one of HB's radio shows a woman called in and was all worried about buying LT treasurys because they were only yielding 6% and that just seemed absurdly low.

Desert wrote: Nobody I know defends an investment in LT. 

I defend them.  I think they are a screaming buy right now.

Rising interest rates will wreck the U.S. economy, which would have a tendency to push rates lower.

Don't let this cyclical bull market for stocks fool you.  Cyclical bull markets are always intense in the midst of longer term secular bears.  When the stock market starts rolling over (as it always does in a secular bear market), interest rates will fall again as money moves from risk assets into bonds.

Japan's fiscal situation is about twice as bad as ours and their 30 year bonds are yielding a little over 2%.  Look at the bond market in the UK and Germany.  Are their finances so much better than the U.S.'s?  Someone's bond market is out of whack--I think it is the U.S.'s, and I think rates are going to fall.

That's my take.  I could, of course, be wrong.

Desert,

JAPAN...

That's all I have to hear to understand deflation over an extended period.  It's hard to avoid as the billions of dollars printed tend to get put towards paying down debt and improving private-sector balance sheets as asset prices fall. 

It always helps, for me, to thing of the actual path of new dollars into the economy.  As MT has said, it takes a back-and-forth of higher wages and higher CPI to create sustained inflation.  One really has to imagine a scenario of rapidly rising wages to imagine a scenario of sustained inflation.