I can't pay a bank money to store my stuff...especially when in a time of crisis access might not be possible. I'll risk it with my own little safe. I don't think junk silver is bringing 20x face just yet, but with the way the market has inflated, it's not impossible. Your wife seems to have no end of means, must be a good investor herself, or she married well or something :shades:
I just continue to put money into various retirement funds with each paycheck, and check it every now and then to make sure it is providing a return. I have a long ways to go yet, and life is too short to obsess over it daily.
Actually she is a true fiscal conservative. One of the few I know. She never bought anything except real estate on time. And always quality when she did buy. She married an iron worker that was trying to start a business. She was the brains and he provided the brawn. It was a good combo and they did ok. He was generous with their money to a fault, or they may have had a lot more. He gave at least 4 pastors a new car that I know of. And that is not a write-off on your taxes. He loved Porsche and Mercedes and owned several of each during his lifetime. My favorite was the 1960s Shelby GT350 with 4 speed he bought from Hertz rent a car. His boys wrecked them as soon as given a chance. Kids and fast cars are trouble.
So she ended up with a little when he died. With my pension and her investments most of which I have made for her, we get by quite nicely. Still hard to get her to spend much. She would have upgraded her 1990 Lexus if they had not gone so ugly. We got the Sequoia and it is in the garage for long trips. I run it every 3-4 weeks to charge the battery. It looks brand new after 3 years with 21k miles on the odo.
Her deceased husband bought most of the gold and silver over many years and stashed it in several banks. I think we have it all in one now. I worry about keeping too many valuables at home. We live in a high fire area. And most gun safes are only good for half an hour. Ours is one hour rated. I still have the contents insured. Mostly papers and computer backup with all out pictures.
As far as new investments. We have sold our HI farm and old house here. And have not figured out what to invest the cash in. I know it is losing value sitting in the bank. But at our age we are not going to take big risks. My IRA is sitting at the highest level since I retired in 2006. Most of the gain is Ford stock. I guess I should be looking at Fords.
They are winning big customers left and right. Personally, the more I work with it, the more I like it. If I were the CIO of a large company looking for BI software, QV would be it.
OK, OK. I'm convinced!
Didn't think I'd change my mind, but I am buying QLIK again... 1,000 shares, no matter what my broker says... lol.
Must have been a hell of a business, maybe not ironworking :shades: I don't know if giving pastors new cars and letting kids drive hot rods is very conservative, though
Money might lose value more slowly in the bank than in real estate, especially anything bought in the past 5 years. There's a vehicle where I see no upside for a long time.
I did not say her husband was conservative. Anyone that bought as many cars as he did was not fiscally conservative. He also traveled a lot with missionaries and preachers. She got to stay home and keep the business going. There was many good years in the reinforcing steel business. They did very well on a few real estate deals. I would say that was better than the steel business over all.
There are places today you can buy real estate and make a buck or two. Fannie Mae properties are the key.
The key is finding the bottom, and buying in the right location. I can't say I think we've hit bottom yet, too many distressed properties still need to work through the system.
I have looked at property around Sequim. I don't think Seattle area is even close to bottom. I don't see much downward movement at all. Your economy must be thriving. Here is the key. Replacement cost. When your insurance company figures it will cost $200k to replace a home you are only paying $150k for. You are close to the bottom. I have looked at places around me that are selling for less than the bare lots in the area, before the crash. They will not head back up until FM gets rid of the bulk of their properties. And they have a boatload. Those are the best bets right now.
Sequim...less rain, but no amenities and a pretty bleak employment picture...no thanks. I'm too young to think about a retirement community.
Around here the problem is commuting times and less available land compared to many other metro areas. A 20 mile commute doesn't sound bad, but in the winter it can easily be 2 hours each way (as people in the NW can't handle rain, sun, or snow, and the transit network isn't too hot). It'll be a few years before the junk gets worked through the system to make prices hit a natural bottom, where they really should kind of stay so long as lending standards remain logical. Smaller condos amuse me most...many selling at half of their peak price, or less. And these aren't exactly dumps either. Developers and lenders got greedy and worked together to build and convert too much. I hope at least a few lost everything.
I just bought an additional 250 shares of QLIK at about $21.30. Good luck to all of us!!!
Charlie,
You warned us long ago that you had the uncanny ability to jinx the market, and perhaps I should have taken you more seriously.
You are definitely starting to spook me. When we posted about Citi being lifeless, I sold it after holding it for soooo long, and then it immediately went up significantly. Then, you mentioned QLIK, and I bought 1,000 shares and sure enough now it's down nearly 8% so far today.
You are definitely starting to spook me. When we posted about Citi being lifeless, I sold it after holding it for soooo long, and then it immediately went up significantly. Then, you mentioned QLIK, and I bought 1,000 shares and sure enough now it's down nearly 8% so far today.
Yes Sir! I Mr. Spook here . BTW, as I told you a day or two ago, I did not sell my 1000 shares of Citi. My broker talked me out of it. Then I pulled the trigger on the 250 shares of QLIK this morning. Now I have about 1250 shares of the "GS stock". Don't worry, be happy!
Great article here and one I completely agree with. I think we have room for the market to go up but it will be because of higher incremental margins thanks to technology efficiency and productive workers that want to keep their jobs much more so than growth. The slow growth scenario is here for a long time to come. But the margins wrung out of that low growth will be greater and greater than ever so there's some room to grow on valuations.
This is an interesting perspective, and it makes sense....On the other hand if 90% are working, and 10% not, I think most of the ninety percent are spending and borrowing to a degree, and not way off their norm...The ten percent are being helped by the rest of us, and therefore they are spending what they have , and hunkered down....Employment would certainly make a big difference, and to me it is amazing that things are going as smoothly as they are.....I personally will be cautious for a long time as the manipulation is always just around the corner...:) Tony
Good stuff, yeah, hard to really find any fault there.
"Consumer spending went away because it had been built on a mistake."
Indeed...and that can be said for the past decade, if not 20 or 30 years. This is a new reality, and will hopefully be more sustainable than the last. Extreme booms and busts simply aren't healthy. However, a part of any significant growth will be via consumer spending, it is better than people spend a little than nothing at all. I'll admit I've spend more this year than I usually did in the boom days...I suddenly had a case of "you can't take it with you" -itis...but that should pass soon.
The 10% only measures folks still looking. I would bet you it is moe like 82-18 or 83-17 in workers to non workers and a good deal of the 82-83% are probbaly still scared to spend freely and will remain so for a long time to come. I also think this powerful recession reset menatality of spending, especially in the heartland and in any folks that were high leveraged.
The spending philosophy that I "can spend all I want now because I believe my net worth will be much greater in the future" is dumber than dumb in my opinion. I have always been of the mentality that If I cannot afford it (NOW) , then I will not buy it now. This is the way I was taught by my parents and I am better off now because of this upbringing. There were a lot of things that I wanted when I was a young lad, but I could not afford them. No big deal. It seems that folks in this country have no self control.
You know what? I bet that this article will turn out to be wrong. Why? Because deep inside this mentality of spending even though it cannot be afforded will return much sooner than anyone thinks. Therefore, as soon as the average "Joe Blow" thinks that things are getting a little better, they will start spending more. That will in turn accelerate the economic recovery. Thus, in my opinion, a year or so from now we will be looking back and saying "recession, what recession".
Those of you that predicted the Dow would hit 11,000 before year's end are already in the clear. Job well done!
As I check back on my posts, however, it seems I went further out on a limb and predicted it would hit 11,250-11,500 before the end of the year. So, there is no pat on the back for me... not yet! But I am very optimistic and hopeful that we will see it happen.
BTW, with regards to unemployment, it's my theory that there will always be a certain percentage of unemployment no matter what. I have been trying to come up with what that number might be, and as a rough number I tend to think it would be about 3% - 4%.
If there is any truth to this idea, then that would mean to me that the significant unemployment number would be the difference between that absolute base level percentage and the current percentage. In other words if unemployment is 9%, and we theorize that 3% will never be employed no matter what, then 6% is the significant percentage of unemployment. That's certainly bad for those in the 6% group, but perhaps it's not as big a catastrophe in the bigger scheme of things
Also, just want to mention that I thought the article Len posted was very interesting... but I will be very surprised if future data shows us that the American consumer ended up actually tucking away significant amounts into savings accounts. I just don't see that kind of behavior ever happening in a huge way. Americans are no longer savers, it just "ain't gonna happen."
There's no doubt, however, that the massive reduction of home equity (and the beat-up real estate market in general) has certainly helped to put a big wrench in the gears of the consumer and the economy.
Because deep inside this mentality of spending even though it cannot be afforded will return much sooner than anyone thinks.
D'ont see it happening that easily Charlie. That was all based on keeping up with the Joneses, your home going up in valuation and having freedom to borrow against that future home valuation. Basically your home was a currency for the last 2 decades. A lot of folks found out the Joneses didn't have what they thought they had. I know folks that leased GS and E class cars but they couldn't afford to buy a Corolla. They did it through their equity line support but these days getting that support is going to be hard. Housing will have to come back significantly and widespread and banks will remain cautious for a long time to come rather than return to easy credit lending. I see higher spending levels coming back when unemployment starts dropping consistently as that'll comfort those who already have a job to feel more secure and start spending again. Too many folks now are living paycheck to paycheck with nothing to fall back on. While that may have been the case before, they had equity lines to fall back on and a feeling their 401K's and home valuations would keep rising. That wealth effect is gone and folks now know how easily the 401K monies can fall again.
I don't really trust todays jobs report. Earlier this week ADP reported a 59K drop in employees on corporate payrolls. ADP has a big share of the market, certainly one that can be safely modelled out. That's a world of difference from what was reported today. Two weeks ago there were reports that consumners moved out of stocks and heavily into treasuries with pension and 401K monies. Again that shows me the concern folks have about their money. If they are being that cautious with retirement money than they have to be even more cautious with household money. Thirdly retailers are barely hiring more positions for the Holiday season so they are not expecting much change in traffic or buying despite the overall feeling of consumers being healthier financially this year. Had we had a modest recession I'd be inclined to be a lot more agreeable. But this one was deep and like the recovery after 1987 we will probably bounce along for years until the wounds becomes better healed. Remember also that 1987 was more of an over-valuation issue of stocks as opposed to this deep and widespread economic correction. We also did not have any major stoppage of home construction back then. This one was much more systemic in nature and housing is pretty much idle as a correcting force..
Again - I think the market will find a trading range of say 10,600 to 11,200 or so than evenually raise it to 11,000-1,750 in 2011. I still like 11,200 or so for a high this year with a fall back toward that 10,600-10,800 level in December as mutuals and hedge funds lock in gains for the year. The market most certainly is not headed straight up.
Let me close by saying that I hope you are right and I'm wrong. I was quite agreesive when the market was at 6700 and made major bets at that time. The easy money has been made though. I have a very hard time seeing 20% upside from these levels over 2 years while I had an easy time seeing 50-70% giams in a very short time back then.
Depends on the economy of the moment Tag. I'd say 2-3% in a healthy economy and 6-8% in an unhealthy one. Basically I think we are dealing today with 18% unemployment of which 6-8% has no chance of coming back. I might even argue 8-10% has no chance of coming back and that the unemployment rate does not truly decline until the baby boomers retire and the workforce decreases in size.
Basically I think we are dealing today with 18% unemployment of which 6-8% has no chance of coming back.
I think that is closer to reality. I know unemployed people doing yard work and handyman work here for $10 per hour. Signs on every telephone pole with a local phone number looking for any kind of work. Two years ago you were lucky to find anyone that would do those jobs for $12 per hour plus a hot lunch. Jobs done mostly by illegals here in San Diego. The illegals have thinned out at Home Depot and the usual spots I see them.
The problem with waiting for the baby boomers to retire, is the fear of giving up a job in this unhealthy economy. I have a friend I worked with 37 years. He keeps working under worse and worse conditions. I know he has more than enough to retire. Just afraid to give up his job until his house is paid off. I am glad I am retired and out of the workforce. If my IRA goes away I was not planning on using it anyway. As of today it is higher than it was at the peak in 2007.
U.S. Won’t Recover Lost Jobs Until March 2020 At Current Pace By Ed Carson Fri., Oct. 08, 2010 12:18 PM ET
The U.S. economy lost 95,000 jobs in September, far worse than expectations for no change in employment. More Census-related temp jobs ended, as expected, but state and local governments slashed staff far more than predicted.
So far in 2010, the U.S. has added just 613,000 jobs — for a monthly average of 68,111.
Employment bottomed in December 2009 at 129.588 million — two years after peaking at 137.951 million. At this year’s pace, the U.S. won’t recoup all those 8.36 million lost jobs* until March 2020 — 147 months after the December 2007 high.
I've concluded the biggest problem we have with government interference is that it gets so overly done with so many agendas that it then gets in the way of everything. The government did its job in eliminating a catastrophe. It should be done. I liken it to turning the heat on after a cold night with a 70 degree day to follow. All you need to do is get the chill out of the house and let the sun take over. You d'ont need to heat the house to the point of turning the AC on. But government wants it to get that hot to prove it was effective and get its party re-elected. What we need now is business to use the seed government planted and get the economy going on its own. But instead the government (and this would be an issue for either party who was in control) has it's re-election agenda going now. Just note the comment in the story that "the most important thing is to get Democrats re-elected". The problem of course is economic healing from such a major fracture needs more time to heal than any party's elected candidates term. So by going overboard the government will get folks employed with temporary projects after all the stimulus it has already thrown out and then look to tax increases on the very folks that need to do the re-hiring the economy needs for the real LT econmic growth. That forestalls a recovery and can render the seed planted as useless. A double dip and/or deflation would of course be a prove out of that. A smart government that had real LT aspirations of growth would now get out of the way and provide stimulus with a cross the board tax cut (it can be extremely small - it just needs to lay a solid foundation that there's no increase coming for anyone). I would much rather see that than the Fed going out of its way to buy LT treasuries or Obama going the route of un-needed projects as a way to heal the wound we have. But knowing that our government is more concerned with re-election and a hopeless prove-out in the short term I hedged everything a lot on Friday and traded 40% out of stocks and into treasuries. This will all become effective on Monday. I did this not because I think it's the smart fundamental thing to do but because that's where everything seems to be going based on all the Goverment talk. Without a tax cut or holding firm with what we have, Bernanke's hands are pretty much tied and his only out is to do the unusual - buy LT treasuries and hope that it lays a foundation for consumer home buying and business development. If I see some firm talk about upholding the Bush tax cuts then I'll re-trade right back out. But personally I think we have very little upside in stocks under the currenrt admins thinking and non-action on taxes. I'll also jump back in and play the sideways game if I see us head back down to mid-upper 10K's.
Still holding onto the Big C though and AAPL as my hand selected stocks. I'm in C for the long run.
The jobs that were based on a false housing and property development situation (I have a friend who works in land use planning - got laid off 9 months ago and is still out of work) and consumer overspending will never come back. I suspect that's a bit of those numbers. If we can get some politicos who will cut a little public sector fat, the jobless numbers won't improve either. It's going to be awhile. And to think, Europeans were once laughed at for high unemployment.
the biggest problem we have with government interference is that it gets so overly done with so many agendas that it then gets in the way of everything.
Try this out for size...
Seems our Transportation Secretary Ray La Hood wants to "interfere" with ANY phone in our vehicles, even with hands-free Bluetooth! Heck, perhaps it will be illegal to talk to our passengers as well.
Talk about freakin interference, and government getting into every single thing we do! It's insane. LaHood has gone too far. He's an idiot.
This... from Bloomberg... U.S. Transportation Secretary Ray LaHood says he believes motorists are distracted by any use of mobile phones while driving, including hands-free calls, as his department begins research that may lead him to push for a ban.
LaHood, whose campaign against texting and making calls while driving has led to restrictions in 30 states, says his concerns extend to vehicle information and entertainment systems such as Ford Motor Co.’s Sync and General Motors Co.’s OnStar.
“I don’t want people talking on phones, having them up to their ear or texting while they’re driving,” LaHood said in an interview this week. “We need a lot better research on other distractions,” including Bluetooth-enabled hands-free calls and the in-car systems, he said.
Even without a ban, which would have to be implemented by individual states, LaHood’s escalating campaign may limit the growth of vehicle features such as Sync, being added by automakers to attract younger buyers. His push also may reduce calls made from vehicles and the revenue of mobile-phone companies such as Verizon Wireless and AT&T Inc.
LaHood, 64, said even hands-free phone conversations are a “cognitive distraction.” Calling for a ban on hands-free communications is a possible outcome of research under way at the Transportation Department’s National Highway Traffic Safety Administration into all driver distractions, Olivia Alair, a department spokeswoman, said.
Tag - it just makes you sick. Seems like this guy will prevent you from sipping water while driving. Next up - get rid of the cupholders. Off topic - I saw the Secretariat movie today and it was terrific. Diane Lane, as always was great and John Malkovich probably gets an oscar nomination. Lane may too. Well acted and very well done. It was very much about Penny Chennery Tweedy as well and she was the underdog that Disney needed to make the story a success. Certainly the horse could not be the underdog as he was favored in almost every race he ever ran, and an overwhelming favorite, usually 1-5 or 1-10 once his ability and fame as a 2 year old got out.
On a seperate note... my daughter is a high school senior and is gearing up for college. I want to warn any and all readers that have kids about to approach this time in life. It is hell. The college application process is a dysfunctional process. The nightmarish overload of confusing forms and procedures is enough to make one wonder how some of these places of "higher" learning could have devised such patheticically ridiculous application procedures.
Then there are the abundance of absurd questions about practically every single person the applicant has ever met, and every place the applicant has ever gone, and how these people and places have impacted their life. Lists of every community service experience that ever happened. Tons of forms, questions, essays, lists, deadlines, and information. And then there are the emails, the downloads and uploads of still more forms to an from the college servers.
Why not just send the the applicant's transcripts and answer a couple of key questions along with a check? No wonder the costs of college are so high... it's to support an overbloated beauracracy and administration at the school's offices that have made the application process one of the most convoluted things I've ever seen. Until you experience it, you can't evern imagine it. :confuse:
It wan't like this when I was a kid, that's for sure.
Agreed. I think socialism was invented by a bunch of busybodies who could not keep their noses out of other people's business.
On the college business, thank goodness that is all behind me. My brother recently went thru all that with his grandson (who he raised). It was a small out of state Catholic University, and sort of expensive, etc. The only place his grandson wanted to attend. Like you said, the details could go on and on. After all that the kid was there for two weeks, quit, came home and enrolled in a nearby state univ. because he was "homesick".
Tag - my son is in second year at Rutgers now so I know exactly what you mean. But I took an easy way out. I got help from a former guidance counselor who once worked in that position at Rowan University and then Rutgers. He handled everything for me. It cost me a little more than a grand but it made life very easy plus he had all the know how of what to write in the essay, what universities would be sure shots, borderline or no-go and what they'd be looking for in any interviews that might come up if anything went that far. He was dead right across the board too. All I ended up doing was paying the fees of each application on-line.
D'ont see it happening that easily Charlie. That was all based on keeping up with the Joneses, your home going up in valuation and having freedom to borrow against that future home valuation. Basically your home was a currency for the last 2 decades.
Len, I really do see it happening. The average American "Joe Blow" does not have enough discipline to NOT spend when given only a small excuse. In my opinion, this is an ingrained characteristic.
Again - I think the market will find a trading range of say 10,600 to 11,200 or so than evenually raise it to 11,000-1,750 in 2011. I still like 11,200 or so for a high this year with a fall back toward that 10,600-10,800 level in December as mutuals and hedge funds lock in gains for the year. The market most certainly is not headed straight up.
I have little argument with your prediction. I am probably a little more optimistic than you are about the levels to be reached by the Dow, but not much more. I never said the market was going straight up. Slow growth is fine with me for a while (6 months to a year). As long as I/we pick the right stocks, it will still be a pleasant period.
Len, I really do see it happening. The average American "Joe Blow" does not have enough discipline to NOT spend when given only a small excuse. In my opinion, this is an ingrained characteristic.
Where's the money coming from to do this? In the past it was borrowed. That's pretty much a closed avenue now. My issue is not the mentality - I agree on that - it's the ability.
Where's the money coming from to do this? In the past it was borrowed. That's pretty much a closed avenue now.
It will be all from perception. As the economic situation improves just a little over the next 6-12 months, those that are not living on paycheck to paycheck (lower middle class and above) will be nudged to spend more. Even though unemployment will remain high, we need to remember that there is more than 80% of the population that does have a job. It will be a lot of these people who will start to spend more as soon as the economic news, at least in their minds, improves. That will get the ball rolling and recovery will speed up. That is the way I see things unfolding over the next year and beyond.
Charlie, from my perspective that has already happened and is still happening. IMO - that is the small growth we've had that's led to the profit enhancement and better valuations accruing from higher incremental margins. The real unemployment rate (not the 9.6% BS rate) is still worsening as more folks enter the workforce than retirees + new hires. I just see the growth as very slow for years to come and we are still too fragile and it w'ont take much to push us in a bad direction. Again I'd love to be on the same page as you on this so I'm not frying to be a Debbie Downer here. What I see is that corps may seek another level of technology that helps them keep labor costs low. They need to maintain growth in margins going and they'll turn to technology getting the job done.
Where's the money coming from to do this? In the past it was borrowed. That's pretty much a closed avenue now. My issue is not the mentality - I agree on that - it's the ability.
Len, To a certain degree, you and Charlie are both right on this. The home equity credit lines are undoubtedly drastically compromised, but those nasty credit cards haven't exactly disappeared, and they are still a major source of consumer spending.
As I've posted previously, the idea of consumers saving just "ain't gonna happen" in any significant way. When it comes down to it, they'll spend most of their income. And there are a lot of reasons for this, just one of which is the assault of concentrated massive and sophisticated persuasive advertising and marketing that pretty much makes manipulation of the consumer as easy as shooting fish in a barrel. It is an American way of life that is not about to change.
So, the spending (not saving) pattern will be what primarily continues, but only to the degree that it is possible, and certainly that degree has been diminished.
Charlie, from my perspective that has already happened and is still happening. IMO - that is the small growth we've had that's led to the profit enhancement and better valuations accruing from higher incremental margins.
Yes, you are absolutely correct. It has happened and still continues to happen. The key, in my opinion, is the phrase "still continues to happen". In the minds of most Americans, there is still some danger. The increase in spending by the average "Joe Blow" will be gradual, but I think 6 months to a year from now, it will be substantial enough to really make a difference and the economic recovery will then accelerate. Unless, something horrible happens either domestically or internationally in the next several months to change this perception, I believe my scenario will come to pass. Hey, I am an optimist (except in the summer of 2008) by nature, so I could be full of you know what .
Well guys we'll see how it plays out. I still see it as slow and I think Americans will be slow to return to free spending. The key IMO will be a rise in housing prices and a steady decline in unemployment.
Meanwhile Obama is going to take this deficit to the moon and long-term that is crippling. I just saw his address re infrastructure improvement. He hasn't figured out how it will get paid based on his comment that it will get paid for as we go along. That's a great plan! I was hoping I'd hear him say it would be paid under the prior stimulus plan. I read last week that there is still more than 25% of the old $800bln stimulus money unspent (so over $200bln is available), yet he now wants to add more deficit spending rather than use money already available. If I had excess budget funds available to me in my old jobs and presented new spending on top of that excess I'd have been quickly shown the exit door. This guy thinks government spending is the only way to go. Unfortunately all these jobs are temporary. Obama doesn't seem to get the fact that he needs to get the economic circulation flowing well again and temporary jobs have no chance of doing that.
Re paycheck money - there are a couple of concerns re the Bush tax cuts and the beginning of the year payrolls. First of all if the tax cuts aren't extended soon then the IRS will be required to print new withholding forms that go back to the old tax rates during the Clinton admin. Employees will have to choose their withholding status off those forms and if they choose to do nothing payroll companies like ADP will have to set-up the old tax rates to apply their current withholding status against those tax rates regardless. So net payroll money for almost every employee goes down early in the year unless decisions on the Bush rates are made real soon. Add to that a new year of social security tax kicks in and anyone over $105K sees a big drop in their take home pay. It is little things like this that can add to decreased spending in the new year. And an economy this fragile can't handle things like this so easily. Even if the Bush tax cuts are later upheld, the damage gets done - at least for awhile at the beginning of the year. In such a case that more highly taxed money becomes a forced savings. Most folks d'ont adjust their withholding status to correct things like this so they see w'ont see the tax windfall money until March 2012 at the earliest when 2011 tax refunds start coming to them. Re Wall street, any cutback in consumer spendings in Q1 gets realized in stock prices until Q1 earnings reports are history. Anyway the whole point of this is that even a late decision to maintain our current tax rates can have a ripple in the economy. The earlier this is put to bed the better off for everyone.
Funny. But seriously it seems the strategy is let's just hold the fort and after that we can do whatever we want and that does make me sick. I haven't seen a LT economic strategy out of this admin yet and that is of course because it doesn't have one other then spend, hold office and then raise taxes as we spend a lot more. Some Dems thinking about introducing a bill to raise the estate tax to a whopping 65% told me how desperate things are getting. I had thought we were past all that but then I just saw Secretariat and how Penny Chennery had to sell breeding rights to the horse to pay the estate tax bill and ironically that's why we never had the chance to see the greatest horse ever in his maturity stage as a 4 year old. It's funny - but there are some folks I know locally that swore they'd never vote Rep but are planning to vote the republican ticket without even looking at the names and one reason is a fear that dems will raise the estate tax through the roof forcing the sale of their businesses early rather than have the fire sale you'll see if you see the Secretariat movie.
Maybe you might be interested in knowing that just last Thursday, a Senate Health, Education, Labor and Pensions Committee held a hearing on retirement savings and security. WebGuy forwarded me lots of emails of people asking me to prove it. So here you go. You can watch the committee meeting right here ... and then you can be more entertained by turning to watch the paint dry on your walls. Or you can read this summary of the meeting from Connie Hair at Human events. The point of the meeting was to figure out ways in which private 401(k) plans could be more "fairly" distributed as taxpayer-funded pensions. Senator Tom Harkin, Chairman of the Committee, hand-picked the witnesses for the meeting. Who did he chose? People advocating "Guaranteed Retirement Accounts." Sound familiar? It should. I've been telling you about this plan for at least two years. It is a plan created by Theresa Guilarducci and it would seize private retirement accounts, set up an additional 5% mandatory payroll tax, and then use the money from the tax and seizure to distribute it "fairly" to Americans.
I've been telling you about this plan for at least two years. It is a plan created by Theresa Guilarducci and it would seize private retirement accounts, set up an additional 5% mandatory payroll tax, and then use the money from the tax and seizure to distribute it "fairly" to Americans.
Yeah, I've been reading a bit about that. The ideal that they could possibly seize my account is scary. My wife and I have saved since we first started working, meaning we have quite a bit more in our accounts than most our age. If they are going to confiscate it for the "common good" BS, I'll cash out and buy a large cruiser.
Still more here on how shallow a recovery we are dealing with. I just d'ont see spending coming back to pre recession levels for many more years and unemployment will get worse.
A lot of the pre-recession days were built on a house of cards, or more honestly, a lie. A lot of traits of those days simply will not come back. Shallow recovery or new normal....could be either.
Topped $300. At least one of my predictions this year came through (I think I posted it earlier this year) as I thought it would run to $300. Now do I have the guts to sell. I bought this at prices ranging from $84-101, sold at $128 by a limit order triggered by a stock market fall while I was on vacation, rebought all that I sold and then some at $158-164, What are you guys holding Apple doing? Greed is good, except when it's not good.
AAPL has so many awesome things going for it, that I am not going to sell any of my shares until it reaches at least $325. I really do think it will go to $350 in the next 3-6 months.
I recently doubled up on AAPL, and I am glad I did. I see the stock going much higher than you and Charlie. I see it at a minimum of $400, so I am going to hold for now, and likely buy more in November, and then again in December.
I recently doubled up on AAPL, and I am glad I did. I see the stock going much higher than you and Charlie. I see it at a minimum of $400, so I am going to hold for now, and likely buy more in November, and then again in December.
I hope I did not give the impression that I am selling all my shares at $325. I will sell a few at that level. You could very well be right about your $400 prediction. It would not at all surprise me. This stock is literally going to go to the moon. BTW, this weekend I am going to purchase my first Apple product...an IPad. I will either pick it up at Best Buy or the Apple Store here in Des Moines. I would buy it through Amazon (own a lot of shares of AMZN) since I buy almost everything there these days. But you know the story with IPad and Amazon.
It's not that I d'ont believe. Heck I've done extremely well with 250% gains here in 2-2.5 years. But the fear is that at some point companies like Apple d'ont fall because they lose greatness, they simply get too high a capitalization value(almost like gas jumping out of the tank before settling down) and then investors worry that one bad earnings vs inflated expectaions takes out too much stock value or they feel that the growth can't be maintained. On fundamentals I'd never sell this stock at this point. I'll hold till $325 though and come back to this decision then. Remember guys I got burned here at $128 because I wasn't paying attention while on vacation. The stock had reached near $140 and I put a stop loss in. Maybe now I'm doing the opposite and paying too much attention.
BTW the idiots on Fast Money recommended selling this at $120 two years ago because they thought it had run out of growth.
IMO, the biggest wrench in Apple's gears will be the tragic death of Steve Jobs. However, I am positively confident that Apple will overcome that inevitible event.
Comments
I just continue to put money into various retirement funds with each paycheck, and check it every now and then to make sure it is providing a return. I have a long ways to go yet, and life is too short to obsess over it daily.
Actually she is a true fiscal conservative. One of the few I know. She never bought anything except real estate on time. And always quality when she did buy. She married an iron worker that was trying to start a business. She was the brains and he provided the brawn. It was a good combo and they did ok. He was generous with their money to a fault, or they may have had a lot more. He gave at least 4 pastors a new car that I know of. And that is not a write-off on your taxes. He loved Porsche and Mercedes and owned several of each during his lifetime. My favorite was the 1960s Shelby GT350 with 4 speed he bought from Hertz rent a car. His boys wrecked them as soon as given a chance. Kids and fast cars are trouble.
So she ended up with a little when he died. With my pension and her investments most of which I have made for her, we get by quite nicely. Still hard to get her to spend much. She would have upgraded her 1990 Lexus if they had not gone so ugly. We got the Sequoia and it is in the garage for long trips. I run it every 3-4 weeks to charge the battery. It looks brand new after 3 years with 21k miles on the odo.
Her deceased husband bought most of the gold and silver over many years and stashed it in several banks. I think we have it all in one now. I worry about keeping too many valuables at home. We live in a high fire area. And most gun safes are only good for half an hour. Ours is one hour rated. I still have the contents insured. Mostly papers and computer backup with all out pictures.
As far as new investments. We have sold our HI farm and old house here. And have not figured out what to invest the cash in. I know it is losing value sitting in the bank. But at our age we are not going to take big risks. My IRA is sitting at the highest level since I retired in 2006. Most of the gain is Ford stock. I guess I should be looking at Fords.
OK, OK. I'm convinced!
Didn't think I'd change my mind, but I am buying QLIK again... 1,000 shares, no matter what my broker says... lol.
TM
Money might lose value more slowly in the bank than in real estate, especially anything bought in the past 5 years. There's a vehicle where I see no upside for a long time.
There are places today you can buy real estate and make a buck or two.
Fannie Mae properties are the key.
Around here the problem is commuting times and less available land compared to many other metro areas. A 20 mile commute doesn't sound bad, but in the winter it can easily be 2 hours each way (as people in the NW can't handle rain, sun, or snow, and the transit network isn't too hot). It'll be a few years before the junk gets worked through the system to make prices hit a natural bottom, where they really should kind of stay so long as lending standards remain logical. Smaller condos amuse me most...many selling at half of their peak price, or less. And these aren't exactly dumps either. Developers and lenders got greedy and worked together to build and convert too much. I hope at least a few lost everything.
Charlie,
You warned us long ago that you had the uncanny ability to jinx the market, and perhaps I should have taken you more seriously.
You are definitely starting to spook me. When we posted about Citi being lifeless, I sold it after holding it for soooo long, and then it immediately went up significantly. Then, you mentioned QLIK, and I bought 1,000 shares and sure enough now it's down nearly 8% so far today.
TM
Yes Sir! I Mr. Spook here
http://finance.yahoo.com/news/Why-Consumer-Spending-Went-cnbc-3850027279.html?x=- - - - 0&sec=topStories&pos=4&asset=8b96cb58630ab0375ceddeeb84677fa4&ccode=
"Consumer spending went away because it had been built on a mistake."
Indeed...and that can be said for the past decade, if not 20 or 30 years. This is a new reality, and will hopefully be more sustainable than the last. Extreme booms and busts simply aren't healthy. However, a part of any significant growth will be via consumer spending, it is better than people spend a little than nothing at all. I'll admit I've spend more this year than I usually did in the boom days...I suddenly had a case of "you can't take it with you" -itis...but that should pass soon.
The 10% only measures folks still looking. I would bet you it is moe like 82-18 or 83-17 in workers to non workers and a good deal of the 82-83% are probbaly still scared to spend freely and will remain so for a long time to come. I also think this powerful recession reset menatality of spending, especially in the heartland and in any folks that were high leveraged.
The spending philosophy that I "can spend all I want now because I believe my net worth will be much greater in the future" is dumber than dumb in my opinion. I have always been of the mentality that If I cannot afford it (NOW) , then I will not buy it now. This is the way I was taught by my parents and I am better off now because of this upbringing. There were a lot of things that I wanted when I was a young lad, but I could not afford them. No big deal. It seems that folks in this country have no self control.
You know what? I bet that this article will turn out to be wrong. Why? Because deep inside this mentality of spending even though it cannot be afforded will return much sooner than anyone thinks. Therefore, as soon as the average "Joe Blow" thinks that things are getting a little better, they will start spending more. That will in turn accelerate the economic recovery. Thus, in my opinion, a year or so from now we will be looking back and saying "recession, what recession".
As I check back on my posts, however, it seems I went further out on a limb and predicted it would hit 11,250-11,500 before the end of the year. So, there is no pat on the back for me... not yet! But I am very optimistic and hopeful that we will see it happen.
BTW, with regards to unemployment, it's my theory that there will always be a certain percentage of unemployment no matter what. I have been trying to come up with what that number might be, and as a rough number I tend to think it would be about 3% - 4%.
If there is any truth to this idea, then that would mean to me that the significant unemployment number would be the difference between that absolute base level percentage and the current percentage. In other words if unemployment is 9%, and we theorize that 3% will never be employed no matter what, then 6% is the significant percentage of unemployment. That's certainly bad for those in the 6% group, but perhaps it's not as big a catastrophe in the bigger scheme of things
Also, just want to mention that I thought the article Len posted was very interesting... but I will be very surprised if future data shows us that the American consumer ended up actually tucking away significant amounts into savings accounts. I just don't see that kind of behavior ever happening in a huge way. Americans are no longer savers, it just "ain't gonna happen."
There's no doubt, however, that the massive reduction of home equity (and the beat-up real estate market in general) has certainly helped to put a big wrench in the gears of the consumer and the economy.
TM
D'ont see it happening that easily Charlie. That was all based on keeping up with the Joneses, your home going up in valuation and having freedom to borrow against that future home valuation. Basically your home was a currency for the last 2 decades. A lot of folks found out the Joneses didn't have what they thought they had. I know folks that leased GS and E class cars but they couldn't afford to buy a Corolla. They did it through their equity line support but these days getting that support is going to be hard. Housing will have to come back significantly and widespread and banks will remain cautious for a long time to come rather than return to easy credit lending. I see higher spending levels coming back when unemployment starts dropping consistently as that'll comfort those who already have a job to feel more secure and start spending again. Too many folks now are living paycheck to paycheck with nothing to fall back on. While that may have been the case before, they had equity lines to fall back on and a feeling their 401K's and home valuations would keep rising. That wealth effect is gone and folks now know how easily the 401K monies can fall again.
I don't really trust todays jobs report. Earlier this week ADP reported a 59K drop in employees on corporate payrolls. ADP has a big share of the market, certainly one that can be safely modelled out. That's a world of difference from what was reported today. Two weeks ago there were reports that consumners moved out of stocks and heavily into treasuries with pension and 401K monies. Again that shows me the concern folks have about their money. If they are being that cautious with retirement money than they have to be even more cautious with household money. Thirdly retailers are barely hiring more positions for the Holiday season so they are not expecting much change in traffic or buying despite the overall feeling of consumers being healthier financially this year. Had we had a modest recession I'd be inclined to be a lot more agreeable. But this one was deep and like the recovery after 1987 we will probably bounce along for years until the wounds becomes better healed. Remember also that 1987 was more of an over-valuation issue of stocks as opposed to this deep and widespread economic correction. We also did not have any major stoppage of home construction back then. This one was much more systemic in nature and housing is pretty much idle as a correcting force..
Again - I think the market will find a trading range of say 10,600 to 11,200 or so than evenually raise it to 11,000-1,750 in 2011. I still like 11,200 or so for a high this year with a fall back toward that 10,600-10,800 level in December as mutuals and hedge funds lock in gains for the year. The market most certainly is not headed straight up.
Let me close by saying that I hope you are right and I'm wrong. I was quite agreesive when the market was at 6700 and made major bets at that time. The easy money has been made though. I have a very hard time seeing 20% upside from these levels over 2 years while I had an easy time seeing 50-70% giams in a very short time back then.
I think that is closer to reality. I know unemployed people doing yard work and handyman work here for $10 per hour. Signs on every telephone pole with a local phone number looking for any kind of work. Two years ago you were lucky to find anyone that would do those jobs for $12 per hour plus a hot lunch. Jobs done mostly by illegals here in San Diego. The illegals have thinned out at Home Depot and the usual spots I see them.
The problem with waiting for the baby boomers to retire, is the fear of giving up a job in this unhealthy economy. I have a friend I worked with 37 years. He keeps working under worse and worse conditions. I know he has more than enough to retire. Just afraid to give up his job until his house is paid off. I am glad I am retired and out of the workforce. If my IRA goes away I was not planning on using it anyway. As of today it is higher than it was at the peak in 2007.
By Ed Carson
Fri., Oct. 08, 2010 12:18 PM ET
The U.S. economy lost 95,000 jobs in September, far worse than expectations for no change in employment. More Census-related temp jobs ended, as expected, but state and local governments slashed staff far more than predicted.
So far in 2010, the U.S. has added just 613,000 jobs — for a monthly average of 68,111.
Employment bottomed in December 2009 at 129.588 million — two years after peaking at 137.951 million. At this year’s pace, the U.S. won’t recoup all those 8.36 million lost jobs* until March 2020 — 147 months after the December 2007 high.
http://blogs.investors.com/capitalhill/index.php/home/35-politicsinvesting/2128-- us-wont-recover-lost-jobs-until-march-2020-at-current-pace
http://www.nytimes.com/2010/10/09/business/economy/09jobs.html?_r=1&ref=todayspa- - - - - - - - - - - per
I've concluded the biggest problem we have with government interference is that it gets so overly done with so many agendas that it then gets in the way of everything. The government did its job in eliminating a catastrophe. It should be done. I liken it to turning the heat on after a cold night with a 70 degree day to follow. All you need to do is get the chill out of the house and let the sun take over. You d'ont need to heat the house to the point of turning the AC on. But government wants it to get that hot to prove it was effective and get its party re-elected. What we need now is business to use the seed government planted and get the economy going on its own. But instead the government (and this would be an issue for either party who was in control) has it's re-election agenda going now. Just note the comment in the story that "the most important thing is to get Democrats re-elected". The problem of course is economic healing from such a major fracture needs more time to heal than any party's elected candidates term. So by going overboard the government will get folks employed with temporary projects after all the stimulus it has already thrown out and then look to tax increases on the very folks that need to do the re-hiring the economy needs for the real LT econmic growth. That forestalls a recovery and can render the seed planted as useless. A double dip and/or deflation would of course be a prove out of that. A smart government that had real LT aspirations of growth would now get out of the way and provide stimulus with a cross the board tax cut (it can be extremely small - it just needs to lay a solid foundation that there's no increase coming for anyone). I would much rather see that than the Fed going out of its way to buy LT treasuries or Obama going the route of un-needed projects as a way to heal the wound we have. But knowing that our government is more concerned with re-election and a hopeless prove-out in the short term I hedged everything a lot on Friday and traded 40% out of stocks and into treasuries. This will all become effective on Monday. I did this not because I think it's the smart fundamental thing to do but because that's where everything seems to be going based on all the Goverment talk. Without a tax cut or holding firm with what we have, Bernanke's hands are pretty much tied and his only out is to do the unusual - buy LT treasuries and hope that it lays a foundation for consumer home buying and business development. If I see some firm talk about upholding the Bush tax cuts then I'll re-trade right back out. But personally I think we have very little upside in stocks under the currenrt admins thinking and non-action on taxes. I'll also jump back in and play the sideways game if I see us head back down to mid-upper 10K's.
Still holding onto the Big C though and AAPL as my hand selected stocks. I'm in C for the long run.
Try this out for size...
Seems our Transportation Secretary Ray La Hood wants to "interfere" with ANY phone in our vehicles, even with hands-free Bluetooth! Heck, perhaps it will be illegal to talk to our passengers as well.
Talk about freakin interference, and government getting into every single thing we do! It's insane. LaHood has gone too far. He's an idiot.
This... from Bloomberg...
U.S. Transportation Secretary Ray LaHood says he believes motorists are distracted by any use of mobile phones while driving, including hands-free calls, as his department begins research that may lead him to push for a ban.
LaHood, whose campaign against texting and making calls while driving has led to restrictions in 30 states, says his concerns extend to vehicle information and entertainment systems such as Ford Motor Co.’s Sync and General Motors Co.’s OnStar.
“I don’t want people talking on phones, having them up to their ear or texting while they’re driving,” LaHood said in an interview this week. “We need a lot better research on other distractions,” including Bluetooth-enabled hands-free calls and the in-car systems, he said.
Even without a ban, which would have to be implemented by individual states, LaHood’s escalating campaign may limit the growth of vehicle features such as Sync, being added by automakers to attract younger buyers. His push also may reduce calls made from vehicles and the revenue of mobile-phone companies such as Verizon Wireless and AT&T Inc.
LaHood, 64, said even hands-free phone conversations are a “cognitive distraction.” Calling for a ban on hands-free communications is a possible outcome of research under way at the Transportation Department’s National Highway Traffic Safety Administration into all driver distractions, Olivia Alair, a department spokeswoman, said.
link title
This socialism stuff sucks. :mad:
TM
On a seperate note... my daughter is a high school senior and is gearing up for college. I want to warn any and all readers that have kids about to approach this time in life. It is hell. The college application process is a dysfunctional process. The nightmarish overload of confusing forms and procedures is enough to make one wonder how some of these places of "higher" learning could have devised such patheticically ridiculous application procedures.
Then there are the abundance of absurd questions about practically every single person the applicant has ever met, and every place the applicant has ever gone, and how these people and places have impacted their life. Lists of every community service experience that ever happened. Tons of forms, questions, essays, lists, deadlines, and information. And then there are the emails, the downloads and uploads of still more forms to an from the college servers.
Why not just send the the applicant's transcripts and answer a couple of key questions along with a check? No wonder the costs of college are so high... it's to support an overbloated beauracracy and administration at the school's offices that have made the application process one of the most convoluted things I've ever seen. Until you experience it, you can't evern imagine it. :confuse:
It wan't like this when I was a kid, that's for sure.
TM
Agreed. I think socialism was invented by a bunch of busybodies who could not keep their noses out of other people's business.
On the college business, thank goodness that is all behind me. My brother recently went thru all that with his grandson (who he raised). It was a small out of state Catholic University, and sort of expensive, etc. The only place his grandson wanted to attend. Like you said, the details could go on and on. After all that the kid was there for two weeks, quit, came home and enrolled in a nearby state univ. because he was "homesick".
2013 LX 570 2016 LS 460
Len, I really do see it happening. The average American "Joe Blow" does not have enough discipline to NOT spend when given only a small excuse. In my opinion, this is an ingrained characteristic.
Again - I think the market will find a trading range of say 10,600 to 11,200 or so than evenually raise it to 11,000-1,750 in 2011. I still like 11,200 or so for a high this year with a fall back toward that 10,600-10,800 level in December as mutuals and hedge funds lock in gains for the year. The market most certainly is not headed straight up.
I have little argument with your prediction. I am probably a little more optimistic than you are about the levels to be reached by the Dow, but not much more. I never said the market was going straight up. Slow growth is fine with me for a while (6 months to a year). As long as I/we pick the right stocks, it will still be a pleasant period.
Where's the money coming from to do this? In the past it was borrowed. That's pretty much a closed avenue now. My issue is not the mentality - I agree on that - it's the ability.
It will be all from perception. As the economic situation improves just a little over the next 6-12 months, those that are not living on paycheck to paycheck (lower middle class and above) will be nudged to spend more. Even though unemployment will remain high, we need to remember that there is more than 80% of the population that does have a job. It will be a lot of these people who will start to spend more as soon as the economic news, at least in their minds, improves. That will get the ball rolling and recovery will speed up. That is the way I see things unfolding over the next year and beyond.
Len,
To a certain degree, you and Charlie are both right on this. The home equity credit lines are undoubtedly drastically compromised, but those nasty credit cards haven't exactly disappeared, and they are still a major source of consumer spending.
As I've posted previously, the idea of consumers saving just "ain't gonna happen" in any significant way. When it comes down to it, they'll spend most of their income. And there are a lot of reasons for this, just one of which is the assault of concentrated massive and sophisticated persuasive advertising and marketing that pretty much makes manipulation of the consumer as easy as shooting fish in a barrel. It is an American way of life that is not about to change.
So, the spending (not saving) pattern will be what primarily continues, but only to the degree that it is possible, and certainly that degree has been diminished.
TM
Yes, you are absolutely correct. It has happened and still continues to happen. The key, in my opinion, is the phrase "still continues to happen". In the minds of most Americans, there is still some danger. The increase in spending by the average "Joe Blow" will be gradual, but I think 6 months to a year from now, it will be substantial enough to really make a difference and the economic recovery will then accelerate. Unless, something horrible happens either domestically or internationally in the next several months to change this perception, I believe my scenario will come to pass. Hey, I am an optimist (except in the summer of 2008) by nature, so I could be full of you know what
Meanwhile Obama is going to take this deficit to the moon and long-term that is crippling. I just saw his address re infrastructure improvement. He hasn't figured out how it will get paid based on his comment that it will get paid for as we go along. That's a great plan! I was hoping I'd hear him say it would be paid under the prior stimulus plan. I read last week that there is still more than 25% of the old $800bln stimulus money unspent (so over $200bln is available), yet he now wants to add more deficit spending rather than use money already available. If I had excess budget funds available to me in my old jobs and presented new spending on top of that excess I'd have been quickly shown the exit door. This guy thinks government spending is the only way to go. Unfortunately all these jobs are temporary. Obama doesn't seem to get the fact that he needs to get the economic circulation flowing well again and temporary jobs have no chance of doing that.
http://boortz.com/nealz_nuze/2010/10/retirement-security.html
Watch hearing here
http://cspan.org/Watch/Media/2010/10/07/HP/A/39041/Senate+HELP+Cmte+Hearing+on+R- - etirement+Security.aspx
It's amazing they could return to DC during their campaign break to try to modify your 401ks and put money into union retirement funds in each budget.
2014 Malibu 2LT, 2015 Cruze 2LT,
Yeah, I've been reading a bit about that. The ideal that they could possibly seize my account is scary. My wife and I have saved since we first started working, meaning we have quite a bit more in our accounts than most our age. If they are going to confiscate it for the "common good" BS, I'll cash out and buy a large cruiser.
http://www.nytimes.com/2010/10/13/business/economy/13econ.html?ref=todayspaper
AAPL has so many awesome things going for it, that I am not going to sell any of my shares until it reaches at least $325. I really do think it will go to $350 in the next 3-6 months.
I recently doubled up on AAPL, and I am glad I did. I see the stock going much higher than you and Charlie. I see it at a minimum of $400, so I am going to hold for now, and likely buy more in November, and then again in December.
TM
I hope I did not give the impression that I am selling all my shares at $325. I will sell a few at that level. You could very well be right about your $400 prediction. It would not at all surprise me. This stock is literally going to go to the moon. BTW, this weekend I am going to purchase my first Apple product...an IPad. I will either pick it up at Best Buy or the Apple Store here in Des Moines. I would buy it through Amazon (own a lot of shares of AMZN) since I buy almost everything there these days. But you know the story with IPad and Amazon.
BTW the idiots on Fast Money recommended selling this at $120 two years ago because they thought it had run out of growth.
TM