Morning Commentary
At the same time that the Gallup Poll came out, Bankrate.com released its poll on American's attitudes about investing. Apparently 76% of Americans say they're not inclined to invest in the stock market. This is an amazing statistic. Sure we know there is the recession, there was that big crash and there are non-stop stories about the evils of Wall Street. I get where many believe the end of the world is near come election day in November. I get all of that stuff, but I don't get what the game plan is for those that know they're not prepared yet refuse to invest.
People are putting money into bonds! That's what governments and Central Banks buy for safety, not to take a trip around the world while sporting that new gold watch. Heck, this game plan means pawning that watch the day after your retirement party. It doesn't have to be this way. In fact, this is plain lunacy. According to Investment Company Institute, last year saw $134.8 billion come out of domestic mutual funds. Thus far this year $16.7 billion has come out as there have been ten straight months of net outflows. I'm trying so hard to get people to wake up. Last week we had a bunch of winners, some huge, but many subscribers had already closed out those ideas.
The reasoning for closing positions before the alerts ranged from:
Some other idea was down big
The economic data wasn't looking good
There was a small profit and that's better than nothing
It was taking too long
I get it. We are all human and thus emotional. I've been doing this for a long time and even take action based on assuaging those emotions, but we can't be self destructive. The market rally, while still squarely focused on money printing (manipulation), has a fundamental component that has passed from the emerging market story to a domestic story.
Longer term, it will be an emerging market story again. I sit here and just know that so many of those that tell my representatives they want to wait or have no faith in the president will jump on the bandwagon at Dow 15,000. I have no faith in the president, but I have a ton of faith in American businesses.
I have a ton of faith in the American public. And I know the rest of the world is hooked on this thing we no longer hold in high regard–capitalism. I should say the rest of the world outside of Europe where the drumbeats are getting louder for Socialism. If Hollande wins on Sunday, it could spark a wave of Socialist fever across the continent. It's almost laughable that some are calling austerity a failure after weeks or a couple months, and want to stick to the wild spending that has wrecked their economies. I suspect right-thinking leaders of Greece, Spain, and Italy will throttle back on their ambitions of fiscal responsibility.
Perhaps the greater test of resolve to correct massive overspending will be the referendum in Ireland on May 30. The nation agreed to a bunch of measures in order to get 87.0 billion in bailouts from an assortment of lenders back in November 2010. Back then, deficit to GDP was racing at 32% and now it's all the way down to 10%. The stated goal of getting the deficit to under 3% of GDP by 2014 is in place but now it's in jeopardy. This new referendum vote came out of left field and appears to be gaining traction. Apparently, 80% polled to continue with new discipline but that number is now down to 47%, with 35% saying no and 18% undecided.
When this debacle began in Europe, I predicted Ireland would come out of it first because they are still eager and still understand the benefits and true freedom of economic independence. Of course many don't think being led around by the nose is independence, but it is the price one pays for economic sins that result in the need for bailout. I'm rooting for Ireland which is indeed enduring tough parameters to meet its goals.
Welfare and other benefits cut
Wages for middle class cut 15%
Sales tax 23%
New household tax €100
New water usage tax
Car fee of $205 to $3,045
I think the exodus of young people will begin to reverse, and Ireland will prove to the world and, more importantly, its European neighbors that austerity works.
Some form of austerity has to stay in place if for no other reason than all the frivolous money was spent a long time ago. The crazy thing is this wave toward spending even more money and punishing the rich and not-so-rich will have a billion dollars behind it in America. Does anyone find that weird? A true anti-wealth campaign should be mostly word of mouth and limited to a couple hundred million. Of course, that old saying "it takes money to make money," applies even to the haters that want to limit generational wealth and besmirch all self-made success stories.
Demonization of Great Parents and Grandparents Continues
I've written about how the "silver spoon" comment by Obama disrespected the hard work of families to make life easier for their offspring. That line of attack continues and it's really irritating. Somehow, parents that leave their kids something is bad and those that squandered opportunity are heroic. Soon, we may be told that "Papa was a Rolling Stone" but the Temptations is an anthem for parents smart and considerate enough not to do a damn thing for their children. Hollywood is already working hard to make slackers and jerks heroes while promoting teenage pregnancy. Destroying values is the last nail in this dependency culture we are all being herded into.
The irony of "Hippopotomonstrosesquippedaliophobia" being the fear of long words is almost comical. The irony of planning for a longer life without investing for a longer life is anything but comical.
Comments |
As for me, I took early retirement @62, I have social security, a pension an annunity plus dividends every month. Added up, TWICE what I need to cover ALL my fixed expenses. And greater than the 70% retirement income threshold. If someone doesn't have more finanical instruments than Social Security, they are screwed. dennis logan on 4/30/2012 10:15:18 AM |
I have no need for anything beyond social security and medicare. The government exists to take care of me. I know they will always be there for me. And just in case anything should go wrong (I can't imagine what could possibly go wrong with a gov't that can print its own money), I live in California, which will surely step in to provide for me. HAHAHAHAHAHAHAH...WAAAAAHHHHH! Tim Irving on 4/30/2012 10:22:00 AM |
Charles, I'm 67 and still working. I don't know how much longer I'll be working. I keep cruntching the numbers and I ask myself, why take any risk in the market ? In 2000 I remember a guy I worked with work who was back working as a contractor bragging he now had $ 2,000,000 in stocks and I said Don't you think you should put half in a safe place; His answer was no. And then the tech bubble hit, He lost half ! I've talked to people I work with and they have diversified their funds for 25 years per their advisor and claim they are just about even over that 25 year period ; when I hear this I ask myself why take the risk ? Chuck Charles Reed on 4/30/2012 10:25:46 AM |
I keep my capital in a money market fund at this time. It has been there for several years. I don't put my capital in MMF to make money, I put it there to minimize the potential of a loss. I'm actually thinking of buying guns and ammunition for appreciation. blr on 4/30/2012 10:36:50 AM |
bundle money for Obama, start a green energy compny, take federal money, pay some back to Obama campaign, then file bankruptcy, take the money and run. The repeat. ernie moyer on 4/30/2012 11:13:23 AM |
Excellent article. More sceptical people need to read this thoughtful article especially before they vote in the next election. We are on the brink of major politicle changes in america that will effect the econmic health and stability of this country for years to come. Think hard and long before you cast your vote. DR. David Horowitz on 4/30/2012 11:20:12 AM |
For leary skeptics who would rather not risk assets in US stocks at this time, there are other types of investments such as real estate, commodities, foreign investments,etc., which can also be lucrative. Grace on 4/30/2012 12:23:40 PM |
I think some folks are running from the stock market, at least temporarily for 2 big reasons. The biggest reason is the election year and with all it's uncertainty. If Mr. Obama gets re-elected then our country will go deeper in debt, blah, blah, blah, you know what will happen as it has been discussed at length and the wheels may fall off the stock market....again, temporarily I hope. Secondly, they figure instead of hiding their money under the mattress, they'll buy bonds which they believe to be safer and they can earn some interest on their money. There are some good financial options available and guaranteed but you’ll only get about a 4 or 5% return which some days isn’t all that bad.. Jim on 4/30/2012 2:18:12 PM |
Hope like hell we get a better President and Congress, or start making MoonShine. Walter Galbraith on 4/30/2012 2:24:37 PM |
trying really hard to come up with a plan to generate passive income via RE - enough to cover our 10K monthly expenses- we are targeting to accomplishing doing so within the next 5 to 7 years- Elaine on 4/30/2012 3:02:33 PM |
there will be serious money to be made in the market if romney is elected and serious money to be lost if obama is elected meyerhof on 5/1/2012 12:40:32 AM |
My husband and I have just had a wonderful, long and sometimes continuous conversation over this very issue of retirement. He is 67 and I am 65. We are both still working and he is unwilling to "lower" our life style and therefore our expenses. We are 80% in cash and have been for 10! years. So, the impasse has been breached and he has agreed that "we" will find someone or two that he can trust to help us invest. I hear your message Charles "you can't keep doing the same thing over and over and ......etc. = insanity. helen helen on 5/1/2012 11:30:05 AM |
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