tag:blogger.com,1999:blog-6758770623162438423.post2391804677829314927..comments2023-09-28T04:27:48.195-07:00Comments on Goatmug Blog - Financial Perspectives from the Mountain Top: PUBLIC ENEMY #1 - DEFLATIONGoatmughttp://www.blogger.com/profile/06717166521459240516noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-6758770623162438423.post-10672810931542984942009-10-25T19:33:47.298-07:002009-10-25T19:33:47.298-07:00Hi DJ,
If we really are in a deflationary period,...Hi DJ,<br /><br />If we really are in a deflationary period, unless you are opening a bankruptcy consulting firm the easy answer is probably to delay the purchase of the business because it may be worth less in the future (of course it depends on many other metrics like what type of business it is, does it rely on extending credit to clients/customers, etc.). <br />On the flip side of this, deflation is bad for employees because there is more than a slight chance that you'll get fired and lose your source of income. <br />As an owner of a small business, I know that I have 100% job security as long as people keep the products I've sold and are happy with my services. This is why in a truly deflationary environment you hear that you'll want to have ZERO debt because your income is always potentially at risk and you may not be able to service that debt if your fired.<br /><br />As far as the house, that is more cut and dry. In theory (it's always theory because if you have kids and stuff you need a real home), you will delay the purchase of the home because next year's price will be cheaper and there will be more foreclosed assets on the cheap. I think this will be the case as FHA loans will be harder to get starting in December of the year and there is still a flood of pent up foreclosures and defaults coming no matter what Congress, the Fed, and Treasury does.<br /><br />One final note, don't assume that just because the DOW does or doesn't reach a certain level we have entered or exited deflation. Japan has a significant history of HUGE ramps and dumps and still were locked in that spiral. <br /><br />Last, we can speculate about investments and the perfect timing, but you still have to live your life and if that means buying a house - buy wisely. If that means taking your own fate into your own hands and opening a business, try to find ways to do it organically start your own without the big purchase of an existing business. The internet is a great thing and I find free advice on how to do just about everything cheaper or in a smarter way.<br /><br />Thanks for commenting.<br /><br />GoatmugGoatmughttp://www.goatmug.blogspot.comnoreply@blogger.comtag:blogger.com,1999:blog-6758770623162438423.post-16896091654870610572009-10-25T18:04:09.542-07:002009-10-25T18:04:09.542-07:00Very good post. thank you for sharing your thought...Very good post. thank you for sharing your thoughts. I have been debating a question on deflation and your post comes in right time. Let me ask you. Is it wise to open a new business in deflation period (with 50% or 100% cash) or is it wise to save that cash and invest when DOW reaches 4k-5K?<br /><br />Another question: Is it wise to buy a house in this environment or deflation period will deteriorate house prices further?Deejhttps://www.blogger.com/profile/06902731469072674786noreply@blogger.com