DVC and The Great Recession of 2007-2014

[Lumpy1106]

The financial crisis in 2007 was a result of corruption in the financial markets. Find a copy of "The Big Short" - truly an excellent movie that is nearly entirely non-fiction. Before that it was the ENRON scandal (see or read, "Smartest Men in the Room" for the backstory on that one) and 9/11 (yes, those occurred at the same time). Before that there was the tech bubble that burst, a result of rampant speculation based on nothing of any real value with a few exceptions. Really curious why so many people are predicting doom-and-gloom now. Is there some big scandal coming our way I am oblivious to? Maybe the fallout from Brexit? "The stock market is too high" may be true, but stock market corrections tend to be a lot more gradual.

 

[AvidDisReader]

It is more simple--Presidential Election. It brings out the worst in all those running for office.

 

[crisi]

The financial crisis in 2007 was a result of corruption in the financial markets. Find a copy of "The Big Short" - truly an excellent movie that is nearly entirely non-fiction. Before that it was the ENRON scandal (see or read, "Smartest Men in the Room" for the backstory on that one) and 9/11 (yes, those occurred at the same time). Before that there was the tech bubble that burst, a result of rampant speculation based on nothing of any real value with a few exceptions. Really curious why so many people are predicting doom-and-gloom now. Is there some big scandal coming our way I am oblivious to? Maybe the fallout from Brexit? "The stock market is too high" may be true, but stock market corrections tend to be a lot more gradual.

Stock market declines tend to be gradual? Corrections, yes, but there have been several stock market crashes - not all of them predicated on scandal. 1987, 1973, 1962, 1968, 1947.....all meet the definintion of crash. Yes, some of them are "gradual" in that - as opposed to the market losing 87% of its value over one day in 1929, some of these took several months from peak to bottom. Which, btw, is what happened in 2008 and 2000 (the 2000 bust happened over two years!)

 

[Maistre Gracey]

The question was placed in the right place here, though. (Perhaps would be better in the 'purchasing' strand)
It's asking that if this is in fact that start of a recession, not saying that it for sure is one, what should we as owners/ potential buyers expect to see happen? I personally am curious as well, and moves like flipping a Riviera contract from buying in at $180 to selling at $100, and Poly points listed for under $130 show that potential changes may already be beginning.

My comment about a different message board was not directed at you or your post. I simply meant that I was afraid my response may come across as political, which we all know is a no-no here.

 

[Maistre Gracey]

Eventually, they will be correct. These predictions have been around for some time.


If unemployment hits middle and upper income earners and/or lots of people cut back on expensive vacations, we will see an increase in DVC (and other timeshare) contracts for sale and downward pressure on prices. I would expect to see a lot more contracts from the younger resorts available because those were more likely to have been financed.

Indeed it will be correct at some point.
The word “looming”, at least to me, implies it is imminent.

 

[Lumpy1106]

Stock market declines tend to be gradual? Corrections, yes, but there have been several stock market crashes - not all of them predicated on scandal. 1987, 1973, 1962, 1968, 1947.....all meet the definintion of crash. Yes, some of them are "gradual" in that - as opposed to the market losing 87% of its value over one day in 1929, some of these took several months from peak to bottom. Which, btw, is what happened in 2008 and 2000 (the 2000 bust happened over two years!)

I dunno, maybe I'm just overly-optimistic, but if the market didn't crash in 2007 (actually started in 2005), I don't see it happening now. Remember the 2005-2008 housing market collapse put several cities and, in fact, whole countries into bankruptcy. We came through that OK - I just don't see anything of that magnitude looming.

 

[Lumpy1106]

It is more simple--Presidential Election. It brings out the worst in all those running for office.

No argument there

 

[supersnoop]

Eventually, they will be correct. These predictions have been around for some time.

Economists have predicted 24 of the past 5 recessions.

 

[_auroraborealis_]

It is realistic to say that no economic boom is eternal, and expecting growth to be continuous and forever is against all laws of history, economics and good sense. There will be a downturn. When and how bad are open questions.

 

[Madame]

The financial crisis in 2007 was a result of corruption in the financial markets. Find a copy of "The Big Short" - truly an excellent movie that is nearly entirely non-fiction. Before that it was the ENRON scandal (see or read, "Smartest Men in the Room" for the backstory on that one) and 9/11 (yes, those occurred at the same time). Before that there was the tech bubble that burst, a result of rampant speculation based on nothing of any real value with a few exceptions. Really curious why so many people are predicting doom-and-gloom now. Is there some big scandal coming our way I am oblivious to? Maybe the fallout from Brexit? "The stock market is too high" may be true, but stock market corrections tend to be a lot more gradual.

Stock buybacks...

 

[GoingSince1990]

I wish I'd loaded up on DVC points back then. But then again I wish I'd bought Bitcoin in 2010. The great thing about DVC points is that even if you need to hunker down economically, you should still be able to rent out your points to cover the maintenance fees and make some extra income, as opposed to having to panic and sell them at probably the worst possible time.

 

[Matty B13]

Indeed it will be correct at some point.
The word “looming”, at least to me, implies it is imminent.

They have been saying this about Tom Brady's decline as well........... we know how that has turned out....... GO PATS!!!!

 

[Dean Marino]

Deleted.

 

[emchen]

In the last recession, DVC reached a point where they were exercising ROFR very, very infrequently. They had a shortage of buyers, and enough inventory not to have to ROFR older resorts. They also had new resorts coming online, so they had plenty to sell and an incentive to not add to the inventory of older resort points. Disney was hurting on cash rooms. I recall getting 35% off Poly one year, 25% off AND free dining at Poly another year, and whole long houses that were empty. I'd imagine that DVC also had room inventory that couldn't be rented, which could cause a shortage of cash to buy up those cheap ROFR contracts. In short, DVC hunkered down and rode it out.

Thank you for sharing! Can't imagine those types of discounts...

FWIW, we made an unplanned, greatly unexpected purchase in Sept 2007 because the "offer was too good to refuse." On the very last day of our UY we stumbled into the Grand Cal preview center at Disneyland and were toured by a new-to-us west coast guide. She charmed us and surprised us. The incentives, that day, were stunning:

1. Current Year points (obviously)
2. Bonus Points (an additional full set of points)
3. New points the following day (triggered by the UY)
4. Discounted rate (rebate), I think
5. Two AP vouchers, no expiration to activate (which are currently valued as Platinum at WDW)

We were so surprised by the incentives that we purchased our largest single contract that day ... on a whim. Didn't see it coming.

Otherwise, our story is: bought, held. No other changes.

Love this anecdote. Salivating at free AP vouchers and other amazing incentives. Like a dream come true!

In 2007, my wife and I were in a recession proof position. Professionally, I was just starting out on my own after a long "apprenticeship". We were living in Davis, CA with our two toddler girls (1 and 2 1/2). If only I could tell my 2007 (or 2008) self to visit Disneyland and stop by the DVC booth! What coulda been...Lol!

We bought in 2011 so not even the worst of it for about 50% of what current resale prices is. We wish we had bought more points then. We are thinking about buying another contract but since we don't really "need" it we are going to wait and see if prices drop some.

Nice!

"snip..."
My theory is that Disney's economic models will spot trouble before most Disboarders. As demand collapses, Disney will again drop 99% of their ROFR activity to avoid being stuck with too many contracts. Most of us will be too concerned with job uncertainty to pick up more DVC, even if it's a great deal. We'll see.

Will be keeping an eye on that...DVC ROFR as "canary in the coal mine"...nice theory!

 

[emchen]

Really curious why so many people are predicting doom-and-gloom now. Is there some big scandal coming our way I am oblivious to? Maybe the fallout from Brexit? "The stock market is too high" may be true, but stock market corrections tend to be a lot more gradual.

Brexit, "Trariffs", and inverted yield curves. XP

I dunno, maybe I'm just overly-optimistic, but if the market didn't crash in 2007 (actually started in 2005), I don't see it happening now. Remember the 2005-2008 housing market collapse put several cities and, in fact, whole countries into bankruptcy. We came through that OK - I just don't see anything of that magnitude looming.

From Oxford Dictionary Online:
Recession = a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.

Market crashes aren't part of the definition, although they do, some times, go together...=-)

 

[Deb & Bill]

I wish I'd loaded up on DVC points back then. But then again I wish I'd bought Bitcoin in 2010. The great thing about DVC points is that even if you need to hunker down economically, you should still be able to rent out your points to cover the maintenance fees and make some extra income, as opposed to having to panic and sell them at probably the worst possible time.

Not when Disney is offering great deals on hotel rooms. Unless you plan to rent for the cost of dues only.

 

[linda9681]

one of my patients is a government economist who travels the world researching other economies and then gov agencies here and trending. He slipped up during our exam chat and said we are already sliding into a recession, and it is happening to many countries. He told me to have a stable job and cash on hand... I trust him since he has been at that job for 15 years.

 

[emchen]

one of my patients is a government economist who travels the world researching other economies and then gov agencies here and trending. He slipped up during our exam chat and said we are already sliding into a recession, and it is happening to many countries. He told me to have a stable job and cash on hand... I trust him since he has been at that job for 15 years.

Ummm...are u a psychiatrist or psychologist? Hahaha!

 

[linda9681]

Ummm...are u a psychiatrist or psychologist? Hahaha!

Haha! Sometimes I feel like both, but I am an ENT provider

 

[emchen]

Haha! Sometimes I feel like both, but I am an ENT provider

Looked in the ears? Clear, no wax? Just making sure he is a reliable witness! ;-)