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I really appreciate your point of view and the book recommendation. The coffeehouse investor idea is waking me up to the fact that I should care less and make appropriate adjustments.
That one is Joshua's recommendation. A wonderful resource and good balance of passive and active investment styles.
If you were me, and had an IRA from Edward Jones and a 403 from TIACREF, where would you be allocating your funds. I understand if you don't have time to answer, but a general opinion that could lessen the blow to my portfolio would be appreciated.
Their Funds are located here: Invalid Link Removed
I'm thinking of changing to a 50/50 investment in International Equity and International Equity Index, both seem to be returning above the market and doing great each year, and obviously will go nowhere but up with this market.
I'm not very familiar with those, and can't responsibly or legally get into what someone else should do. I can say that I think the idea to focus outside the US markets and dollar is long overdue but not too late.
US markets have done the worst of the top-26 world markets the past few years. That trend will continue.
If it's retirement money, IMO it's crucial to be very diversified - ideally not even in stock markets, just split among various major currencies and gold.
Suggestions for investments and trends to consider abound in this thread, and I'll let the record speak for itself.
Anyone else get the willies when they stopped reporting the M3 index? I had a feeling that would be the clippers on the golden fleece...now the average Joe has to try to calculate how much fiat cash is actually in circulation, which is kind of like trying to determine the population of the US based on counting the number of cars passing 6th St. and Elm in Anytown, USA between the hours of 6am and 10am...not enough information. What the US government is doing is lying, cheating, and stealing like a common criminal. There is absolutely NOTHING backing the US dollar except debt- piles and piles of stinky, filthy debt. Now China is selling off the dollar, depreciating it even more. I look for the dollar to be worthless soon, perhaps in the next few weeks, if China dumps (which I noticed they are starting to do). Thanks, Fed.
That, and the fact that they restructured the bankruptcy laws so that only corporations may benefit from them. The average consumer MUST PAY BACK everything, and this was done before, and knowing FULL WELL, that the mortgage industry would be collapsing...what do you get? A financial crisis of unprecedented proportions. This makes the S&L crisis look like pocket change. We are NOT, IMO, heading for a recession in the US. What we ARE heading for, as far as I can figure, is a depression that will make the 30's look like the golden age. The real gauge of inflation to me, and many others as stated above, is what's left after the bills are paid. For far too many, it's a negative number. For me, it will soon become a problem if things continue along the current path. They don't report anything resembling real inflation numbers, they're invariably twisted and manipulated by the empty suits, and have no bearing on the reality of people in the US actually becoming homeless, losing jobs because they can no longer afford to go to work and still pay the rent, or food, or medicine for the baby...it's really getting far worse than the media will ever let on. And it will get worse, I believe. It's only a basketball-sized snowball right now, but it's rolling downhill and through many feet of snow!
Don't forget that gov't debt is now 9 Trillion. It won't be as simple as an immediate collapse though. Arguably we're overdue for a positive bounce.
We may eventually see an outright crash, Zimbabwe-style, but more likely it'll be the usual continual slide over decades with enough asset bubbles to trick people into thinking they're hitting the jackpot. Today's dollar is worth 5c (five cents) compared to a dollar about 90 years ago.
A crashing dollar wouldn't be such a problem if we still had a manufacturing economy because then exports would rise, but our big industries are in big trouble if they still exist at all. Like the gov't, General Motors couldn't come close to paying its debts if its creditors called 'em in today. But as with the gov't, the creditors know that so they won't. Instead they just won't keep lending, just as the Chinese won't be floating so much of our debt. The end result may be the same, but it'll take longer and those not paying attention won't see it happening.
Your points are very topical, as while I read your post I had these two articles from today's news open on my screen to read :
"Bankruptcy Law Backfires"
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"Sarkozy Says Dollar Drop Risks Triggering Trade War"
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"French President Nicolas Sarkozy told a joint session of the U.S. Congress the Bush administration must stem the dollar's plunge or risk triggering a trade war.
``The dollar cannot remain `someone else's problem,''' Sarkozy said today on Capitol Hill. ``If we are not careful, monetary disarray could morph into economic war. We would all be its victims.''
If you watched the video link in my earlier post, you'll have seen Bernanke answer some very pertinent questions with a cheap dodge about people who earn US dollars spending in US dollars so there's no problem. That's right up there with Cheney's cheap infamous lie that "deficits don't matter".
The truth is that the staples such as oil (gas) and wheat (food) are priced on international markets and the relative strength of foreign economies and currencies results in higher prices in US dollars for those staples, which Americans must pay to survive and of course the gov't does not include in their fraudulent inflation figures which allows their growth figures to be equally fraudulent.
Toys are imported, as are the big TVs, schlockbuster DVDs, most of our bass gear, etc. etc. etc. etc. etc. The weak dollar means the prices will rise and/or corporate profits will shrink. And our grandchildren's grandchildren's grandchildren will still be paying for the debts "we" are racking up at the national level today. They'll wonder aloud, and probably not in English, how we could be so stupid and irresponsible.
Those reading this who don't like it, I encourage not to blame the messenger. History repeats, and the trends are self-evident. I didn't make the universe that way, but I do profit from it and anyone willing to make an effort can do the same.
It just takes more reading and thinking instead of repeat watchings of Star Wars pt. 5, part of a "Director's Cut" box set bought to replace the regular box set, especially enjoyable on the biggest of 4 TVs in the house, all of which, including the house, were completely bought on credit naturally. I'm not saying that's you, I'm saying that's sadly more the norm (credit card debt now totals a record $915 billion in the U.S.) than people thinking about what's going on.
Speaking of what's going on, here's the good news -
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And today's "The Daily Reckoning" (the bad ... I mean "accurate" news) is as always a must-read and very relevant to recent points made here.
An excerpt :
"The trouble with the financial world is that nothing stands still. We read in today’s paper that houses in the United Kingdom are down – for the second month in a row. During the housing bubble, British housing rose even more than in the United States; it probably has a lot further to go down.
But...what’s this...measured in gold, housing in the U.K. has been going down for the last three years!
Let’s see, if you measured U.S. housing in gold, the average house probably cost about 650 ounces in ‘97. Now, the same house costs only about 500 ounces.
And measured in euros, the average U.S. house cost about 250,000 in ‘98. Now, even after doubling in dollar terms, it costs only about 275,000 euros. After the costs of maintenance and taxes, the homeowner has lost ground .
But what do you care what your house is worth in euros or gold?
“Wall Street and dollar take another beating,” is the headline in the Times of London this morning.
Colleague Steve Sjuggerud forwarded a chart showing that real estate declines and bear markets on Wall Street always come together. “It’s only a matter of time...” says Steve.
Hold that thought, dear reader. And don’t worry. In today’s Daily Reckoning, we will clarify things. After a very long time when things seemed so very sure, when everyone knew the U.S. of A. had the world’s most dynamic, most profitable, and most secure economy ... when property prices were clearly going up ... when there was definitely a bull market in stocks...
...suddenly, the question marks are back:
- what is the meaning of the credit crunch ...?
- is Bernanke fighting inflation...or fighting deflation...?
- are stocks going up? How about the dollar? Is gold hitting another peak ?
- and what is ANYTHING worth...when EVERYTHING floats on a bubbly sea of shifting exchange rates?
Relax. Most of these questions are unanswerable, so don’t trouble yourself with them. Instead, let us look at a few things that don’t float. Let’s go back to the eternal verities...the North Star for investors.
There are a few things you can count on. Stocks always go down. Paper money always loses its value. Government always lies.
First, let’s look again at the dollar.
A couple of years ago, we dared to guess that the greenback would hit $1.50 to the euro. At the time, everyone thought the dollar would go down. Even Warren Buffett, who doesn’t like speculation of any sort, was betting against the dollar.
It seemed too easy. Too obvious. Markets don’t usually work that way. People rarely get what they expect, because what they expect is already reflected in current prices. Instead, markets usually surprise us.
How would the dollar surprise us , we wondered?
Either it would not fall, or it would fall much more than people expected. We guessed it was the latter. And so, it is turning out to be. Oil is already getting friendly with $100. Gold is getting very close to meeting up with its highest level ever – $850. And the euro is trading over $1.47.
Can you count on the dollar losing more value? Yes, you can. The dollar is the I.O.U. of the USA, a nation more deeply in debt than any has ever been. It’s a cinch to go down. Central banks around the world are turning to other currencies to stock their vaults. Celebrity models are demanding payment in euros. Investors are getting interested in gold.
But exactly how, when, and against what will the dollar decline? Oh dear reader, you’re asking too much.
But here’s another verity:
America’s middle class is getting squeezed.
“Homeowners Feeling Pinch of Lost Equity,” says the New York Times .
Diesel fuel and heating fuel are both selling for more than $3 a gallon.
And the Boston Herald reports that appraisers are now killing housing sales. They give their opinions just as they did before. But now, their appraisals are not high enough to get mortgage financing.
And now Ben Bernanke is warning of inflation. Hmmm... He told Congress yesterday that higher energy and higher import prices “put renewed upward pressure on inflation.”
What he meant to say was that he and his colleagues were destroying the value of the dollar, and people were beginning to notice.
Then, he went on with the remarkable line:
“We are going to make sure that the inflationary impact that may come from a weakening dollar is not passed into broader prices.”
How is he going to do that? If the dollar goes down, it will take more dollars to buy things. That’s what inflation is. Can you have inflation without rising prices; can you have a falling dollar in which the dollar doesn’t fall?
Mr. Bernanke did not venture into the metaphysics of it. Instead, he left the false impression that he and his sidekicks at the Fed were going to catch the buck in mid-air. Ha! They’re not going to catch it at all. They’re going to let it fall. We remember Paul Volcker; and Ben Bernanke is no Paul Volcker.
And so, dear reader, the story is getting more and more interesting.
The financial industry is sitting on something between $100 billion and $500 billion of as-yet-undisclosed losses. The Financial Times says the “crisis will get worse before it gets better.”
About 2 million American homeowners are set to lose their homes.
The dollar has already lost 10% of its value against other major currencies so far this year.
Americans’ most important asset – residential property – is going down at nearly 5% per year. Since property prices are in dollars, in world terms, the householder is losing about 15% per year. And yes, dear reader, housing will keep going down. There’s another thing you can count on. The typical family doesn’t earn enough money to buy the typical house. Either family incomes must rise, or housing prices will fall. Which will it be?
Which is more likely? Here, we’ll take a wild guess – uh...housing prices will fall.
And now, dear reader, here comes the other shoe – the drop in stock prices. Yesterday, the Dow was off a few points. It was down 360 points the day before. If this presages a general collapse in share prices, it means that ALL major forms of wealth and savings are in decline for Americans. Housing, stocks, even money in the bank.
The only things that are not going down are the cost of living...and gold.
Ben Bernanke implied that the Fed would not be lowering rates again...not any time soon. He’s not going to allow the cost of living to get out of control, he says. But if stocks slide, what else can he do?
One way or t’other, stocks are going down. Because real estate is going down. And because profits are going down. Profit margins are high now, for reasons we’ve explained in these Daily Reckonings. But profits never stay this high for long. They always regress to the mean. Besides, the growth in profits has come from financial activities, not manufacturing. Finance is peaking out. Wall Street itself is selling off. Goldman, Merrill, Morgan Stanley... these dogs have had their day. Now, they’re on their way down, and so are business profits, generally...and so are stocks.
Want some other sure things?
The middle class is sinking. Houses are going down. Stocks are going down. Isn’t that enough?
Okay, how about this: inflation, worldwide, is picking up . There are many more people with much more money in their pockets than there were a few years ago. Wages are rising in the East. Prices for basic materials and food are soaring. Soon, the asset inflation we’ve seen over the past few years will give way to consumer price inflation. Not just in the United States, but worldwide. "
Crocs stock down 35%. Today alone ! 
