Dogecoin, Housing Bubbles, & More: Cut Through The Noise

Dogecoin Housing Bubbles & More: Cut Through The Noise

What is Dogecoin and what’s with the euphoria? Is there a “Housing Bubble” & More! 

In this episode of Cut Through The Noise, Anthony Saffer, CFP®,CKA® and Alex Okugawa, CFP®, CEPA®, CKA® tackle the hottest topics in financial markets, financial planning, and life, including:

What is Dogecoin and is it worth buying? 

► What’s going on with the huge increase in commodity prices?

► With stocks at an all-time high, is it better to sit on cash and wait for a downturn to invest?  

► How can I buy a house in San Diego? Is the market going to crash?

Watch Here:

Audio Version Here:

Show Notes:

Full transcript:

SPEAKERS

Anthony Saffer VP / Financial Advisor CFP®, CKA®,

Alex Okugawa  / Financial Advisor CFP®, CKA®, CEPA® 

Alex Okugawa 0:00
Hi there, and welcome to our segment cut through the noise where we answer your questions that we’ve been hearing throughout the month. Today we’re talking about Dogecoin, stocks at all time highs, the San Diego housing market, and commodity prices. Stay tuned.

What is dogecoin?

 

 

 

 

 

 

 

 

 

Anthony Saffer 0:26
All right, Alex has jumped right in with the tough one. What is Dogecoin? And is it worth buying?

Anthony Saffer 0:31
Yeah, it’s definitely taken off on social media and become a bit of a hot topic for people to talk about. So a quick history on that. For those who don’t know, I mean, really Dogecoin started off. I think it was created a few years ago by a guy out in San Francisco. And basically, it was created as a joke, created as a joke.

Anthony Saffer 0:51
Let’s invest in it!

Alex Okugawa 0:52
Yeah, a Doge is a meme. It’s of a Shiba Inu dog. And I think we’ll post a picture of that so people can see what we’re talking about. But again, this whole meme, cryptocurrency was created basically as a joke, and it’s taken off, you’ll have people like Elon Musk, tweet about it, like “Buy Dogecoin” or talk about it, and everyone just piles in. So a lot of people like should I be buying it? Is it worth buying it?

I mean, there’s a lot of people who are just becoming rich, because the coin was so cheap, you could buy like $100 worth and get a bunch of coins. And then as the price takes off, now all sudden, you’re really racking up the growth.

So when people talk about this, I think it goes all the way back to listen, let’s not get fancy here. Let’s go back to standard investment principles, like do the goods, do the right stuff, put 95% of your money in just the solid boring stuff that you might think is boring, then go ahead and have fun with the other 5%.

I mean, it’s totally fine. If you want to carve out, hey, I want to buy Dogecoin I want to buy all these speculative assets, totally fine. But just understand what your investment philosophy isn’t principles going into it? Yeah, you can lose all this money very, very quickly.

Anthony Saffer 0:52
Yeah. And you wrote a good post on How to invest in speculative stocks. We’ll post that as well.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Alex Okugawa 2:07
Absolutely. So speaking of stocks, with stocks at an all-time high, is it better to sit on cash, or wait for a downturn to invest, kind of timing the market?

Anthony Saffer 2:16
Yeah, I mean, stocks are at an all-time high. And that doesn’t necessarily mean just because they’re at an all-time high, or the next cycle is downward.

I mean, it could continue to go up. And so really not knowing the short term, you need to look number one at your timeframe. If this is money that you have to invest, but you’re going to need it soon.

Stocks probably aren’t the best best place for it. If there’s a significant timeframe over the long term, like you said before, is maybe try not to get fancy with it.

Yeah, even consider what we call dollar-cost averaging, which is put some in maybe, you know, wait on a little bit more a month later and just have a very systematic process to get in the market. But if the timeframe is long, then it may not matter at all.

Alex Okugawa 2:57
Sure, but and so I think the question, though, is alright, dollar-cost averaging works really well.

If you’re coming into the market with cash, right? You have cash on the sidelines, I’m going to come into the market, that might be a good time-to-dollar cost average, at least from a psychology standpoint.

But for people that are already invested in a high market, they might be saying, you know, is now the time to take off risk and completely backed off from my plan.

Anthony Saffer 3:20
Yeah. And I, I normally suggest like, don’t get extreme with that. Because you can really outsmart yourself if you feel like pulling back a little bit of risk or rebalancing back to your plan. So you’re not overly risky. That can make a lot of sense, but trying to time the market and get out and get back in is really hard.

Alex Okugawa 3:36
Absolutely.

Housing Bubbles

 

 

 

 

 

 

 

 

 

 

 

 

 

Anthony Saffer 3:36
So Alright, next question for you. Alex, how can I buy a house in San Diego? Is the market going to crash?

Alex Okugawa 3:43
Yeah, that’s a really good question. Obviously, housing prices are going up a lot in certain areas.

I mean, San Diego has always been a hot market. It’s always been pricey, and it’s getting pricier by the day. So I think it comes back to understanding the things that you can control and understanding what you can’t control, right?

Like my blog is called Controlling Controllables. Because it’s all about only focusing on the things that you can control and letting go of the things that you can’t, you have no control over this housing market.

What you do have control over is your own personal finances, your approach, and your strategy. So you can’t control those prices. But you can control just knowing your numbers cold, you know, how much home can I reasonably afford?

And what is most appropriate for my financial situation? You know, what area are we going to live in?

And how long are we going to be there for right, you don’t want to be forced into a situation where like, you know, I’m just gonna buy this house and we might only be here for you know, a year or two and then we can quickly grow out of that.

That puts you in a really tight position or if you buy a house and you’re planning on only being there for a short period of time, the market could correct right at the time that you need to sell and that’s just a bad place to be and so as much as you can, I know everyone’s situation is totally different.

But if you can put yourself in a position of strength, have your finances lined up and make sure you’re not forced into a situation get into some giant bidding war that you end up regretting later. I think that’s really the key when things get crazy.

Anthony Saffer 5:12
Yeah. And you mentioned the setup and being prepared and having a good real estate agent helps because they can help you with, okay, this type of offer may be best, because it is a very competitive environment out there, and especially here in Southern California, but really across the nation.

I’ve talked to two real estate agents in the last week and they say, Yeah, you do have to be ready, have everything buttoned up and be ready to go.

Commodities & More

 

 

 

 

 

 

 

 

 

 

 

Alex Okugawa 5:35
Absolutely. Well, speaking of housing, and building houses. So what’s going on with the huge increase in commodity prices?

I think we’re seeing lumber, like there’s a lot of jokes going around, like, you know, I have all this lumber in my backyard.

I didn’t know I was a billionaire, because the price of wood it’s just going up exponentially.

Anthony Saffer 5:52
Yeah, it’s, I think, tripled from what I’ve seen, we’ll try to put a chart up there.

Commodity returns as of April 2021
Commodity Research Index 5yr return

 

 

 

 

 

 

 

 

 

 

 

 

But things like sugar and corn and these types of things have increased greatly. So it seems to line up with the increased expectations of inflation. So you know, prices are going to get higher, just based on the expectations of inflation going up or money being pumped into the economy doesn’t necessarily mean that inflation is going to take off. We’ve talked about that before. But sometimes even the perceived expectation of inflation can

Alex Okugawa 6:19
Could also be that pent-up demand story that we’ve been hearing.

Anthony Saffer 6:24
Yeah, more people are doing construction projects. They are at home. There’s more building going on. So that’s a you know, an outcome.

Alex Okugawa 6:31
Absolutely. Well, this was our segment cut through the noise. We hope you enjoyed it. If you have questions that you would like us to answer, you can submit them to us. Email us at admin@onedegreeadvisors.com

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More Reading: What is Value Investing? With Wes Gray Ph.D – Alpha Architect

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