Showing posts with label 401k. Show all posts
Showing posts with label 401k. Show all posts

Thursday, January 9, 2020

Making Money Investing Should Not Be This Easy (or maybe it should be)

Since the Great Financial Crisis (GFC) of 2007-09, the performance of the major indices have been nothing short of miraculous.

At the nadir of the crisis, the bottom, on March 9, 2009, the Dow Jones Industrial Average stood at 6,547.05. It closed Wednesday at 28,745.09, an tidy increase of 439%. Nearly 11 years later, that's an average annual return of 39.9%, or, for the rounders amongst us, 40 percent per year, on average.

Imagine, a $100,000 investment right at the bottom of the market would be worth $439,000, and that's just on 30 stocks that comprise the Industrials, without adding in dividends, which could have been reinvested and made even more money. It's absolutely ludicrous that such an easy investment strategy - buying and holding an index fund, for instance - could generate such awe-inspiring returns. That gain of $339,000, or, $30,818, non-compounded, is more than most Americans make in a year. Incredible.

What this shows is that anyone who had a retirement fund and didn't touch it during the crash of 2008, is probably pretty smug and comfortable right about now. Such people would be mostly Baby Boomers, people born between 1946 and 1965, who were, in 2008, as old as 62 or as young as 43 and are now between the ages of 54 and 73.

Many from this age group have already retired. Some are headed that way, and, if the market holds up, many will take early retirement at age 62, if not sooner (59 1/2 for those with IRAs or 401k plans). This is an enormous portion of the population, about 23% of all the people (legally) living in America.

Now, not every Baby Boomer had 100,000 in their investment account in 2008. Some had more, some had less, some had none, but, without a doubt, there are some very fat and sassy old folks out there, hoarding their gains, figuring out how long their money will last if they start withdrawing a little here, a little there, mostly more or less on a plan to live until they are 85 or 90, because that's the general life expectancy these days.

All of these people will also collect Social Security, adding anywhere from $400 (slackers) to $2,788 a month to their income. There's a lot of money out there, much of it still being invested.

While this all sounds like economic Nirvana, there is one no-so-small caveat. In a word, it's inflation. In more words, it's the cost of living. Everything is more expensive today than when the Baby Boomers began investing, so it's eroding their profits, though they're still pretty well off, because, as young people will learn and older folks already know, costs of living (outside of severe medical expenses) are lower when you're older. You eat less, go out less, need less of everyday items because you already own them. You drive less, and, probably, you save more.

Even discounting the effects of inflation (a new car in 1970 could be purchased for less than $2000; today's it's generally more then $20,000, often much more), these Baby Boomer retirees are going to be pretty well off, even if Social Security runs out of money and is forced to reduce benefits.

As much as people today bemoan the great inequality of incomes and wealth, this one group, Baby Boomers, were born into and continue to live in a pretty sweet spot, when the economy was good, if not great, and life in the United States of America was one of general peace and tranquility. America is still a very solid country in the grand scheme of things, and maybe the complainers and nay-sayers could do themselves and everybody else a favor by working just a little bit harder, saving just a little bit more, complaining just a little bit less.

Nobody can predict the future, but who knew, 11 years ago, that American stocks would provide so well?

Millennial food for thought.

At the Close, Wednesday, January 8, 2020:
Dow Jones Industrial Average: 28,745.09, +161.41 (+0.56%)
NASDAQ: 9,129.24, +60.66 (+0.67%)
S&P 500: 3,253.05, +15.87 (+0.49%)
NYSE Composite: 13,934.44, +36.00 (+0.26%)

Wednesday, January 9, 2019

Stocks Keep Rising, But Major Speed Bumps Are Dead Ahead

Bored yet?

Since bottoming out the day before Christmas (December 24), the major US indices have gained in eight of the last ten sessions, including today's smallish gains.

While going eight for ten to the upside certainly sounds impressive, there is a small problem. The NASDAQ. S&P 500, Dow Industrials, and NYSE Composite are all trading below their 50-and-200-day moving averages. What's more troubling is that those averages are inverted, with the 50 below the 200, as all of the charts show the so-called "death cross" occurring variously between late November and mid-December.

This is troubling to chartists because the rallies have produced some ill-placed optimism in the minds of some investors, mostly affecting those passive types with 401k, retirement, IRA and other "hands off" accounts.

So, while everybody is cheering the fantastic performance of stocks in the new year, there are major speed bumps dead ahead. Turning around inverted moving averages is the kind of heavy lifting for which the PPT was created and how the Fed came up with various forms of money creation, such as QE, QE2, Operation Twist, and other variants of magical fiat money.

Earnings season is about to kick into high gear next week, and expectations are not all that rosy, though, if one tracks home builders, like Lennar (LEN), which missed expectations but still managed a gain today of nearly eight percent. Of course, the stock is just off its 52-week low, so there's an outside chance that everybody, all at once decided it was too cheap to pass up.

So, the question is whether the PPT or the Fed or the Bank of Japan or the ECB, or all of them are of like mind and will buy with open arms every stock that looks like a sure loser over the next four to five weeks.

There's an old adage in the investing world, that posits, "don't fight the Fed." This time it appears to be for real and the Fed, from the speeches and off-the-cuff quotes by some of the regional presidents, is in a fighting mood.

Dow Jones Industrial Average January Scorecard:

Date Close Gain/Loss Cum. G/L
1/2/19 23,346.24 +18.78 +18.78
1/3/19 22,686.22 -660.02 -641.24
1/4/19 23,433.16 +746.94 +105.70
1/7/19 23,531.35 +98.19 +203.89
1/8/19 23,787.45 +256.10 +459.99
1/9/19 23,879.12 +91.67 +551.66

At the Close, Wednesday, January 9, 2018:
Dow Jones Industrial Average: 23,879.12, +91.67 (+0.39%)
NASDAQ: 6,957.08, +60.08 (+0.87%)
S&P 500: 2,584.96, +10.55 (+0.41%)
NYSE Composite: 11,778.42, +62.19 (+0.53%)

Sunday, May 13, 2018

Week In Review: Roadblocks or Flagmen? Dow Rocks Higher 7th Straight Session

Finishing out the week with a lackluster session that had the Dw up nearly another 100 points, the rally that began on May 26 - and which Money Daily then predicted would run 1000 points - is, as of Friday, good for a cool 747 points, rising, with a few bumps and grinds along the way, from 24,083.83 (April 25 close), to the current closing price of 24,831.17.

Unlike the NASDAQ (which finished lower on Friday), the S&P (which has seen two down days in the past seven), and the NYSE Composite (up six straight days) the Dow has risen each of the past seven sessions, although two of those sessions - the first and the fourth, which respectively saw gains of just five, and two points - have not been considered very inspirational nor insightful.

Still, stocks continue to ramp higher. They'll keep doing this until the herd of traders, lemming-like, will turn away for a few days or decide that they'd rather hold onto art or comic books or Beanie Babies or baseball cards, vintage cars, or oil futures while their favored pieces of dingy, junky corporate paper wither away over a longer period of time and get revalued at more appropriate prices.

That's the way Wall Street has always worked, and, despite all the howling from pundits, idiots and idiosyncratic voices one may value or disavow, it is the way it will always work.

Until it changes, the world is stuck with Wall Street and its various iterations in London, Berlin, Tokyo, Hong Kong, Shanghai and the various bourses of the civilized world, trading in debt and equity instruments of which the average investor knows little, expects much, and is happy to pump money into over vast swatches of time.

This kind of activity, viewed from an outside perspective, might seem odd. People make money from their various endeavors, only to pay bills, build up debt (mortgages, college funds, credit cards), and give the rest to some known or unknown entity to purchase partial shares of megalithic international corporations, giving said corporations vast amounts of money and power to invest, divest, spend, grow, or waste.

How much money is eventually a waste by corporations never enters the equation, though it's likely to be an enormous sum of money, which is probably why it's never mentioned.

For certain, some corporations do some good, but others are merely there for the taking, the tops of them skimmed by the ubermeisters of the investing world, the whales, the one-percenters, the government and probably some reckless speculators. The rest is left to the proletariat, the pensioners, the poor people.

A good question to ask a professional financial advisor is whether it would be wise to sell off a large portion of one's money in stocks and pay off all of one's debt, including the voracious eater of happiness, the 30-year mortgage. The stock answer is "no," followed by "no," and "oh, no."

Paying off one's mortgage would put banks out of business (it wouldn't really), and without banks, well, we wouldn't have, um, well... you see where this is going.

A long, long time ago, men and women owned land, raised their own crops, husbanded their own animals, taught their own children and bore whatever good or evil the earth, sun, and nature would bestow upon them. That was before the rise of the predator class of bankers, insurers, financiers, and governments. Now we outsource everything, starting with our own existence, the food we eat, to our children, which we send to schools where they are taught shoddily the ways of good citizenship and nothing about good survival and the difference between existence and prolonged suicide.

Your 401k or pension plan may give you comfort, but only indirectly. It's a promise to pay, over time. And promises are often broken. Just look at the divorce rate in developed countries or listen to a politician over a period longer than two years and you might detect that promises and words do not necessitate a brighter future.

Being bound to the whims and fantasies of corporate CEOs, government officials and generally, people whose wealth and power far exceeds your own may be some consolation that you have done well, but, in the end, all you really have is yourself and the land on which you stand, and some of you don't even own that.

Some things to think about, brought to you by music from the 60s.

Bear in mind: 26,616.71.

Dow Jones Industrial Average May Scorecard:

Date Close Gain/Loss Cum. G/L
5/1/18 24,099.05 -64.10 -64.10
5/2/18 23,924.98 -174.07 -238.17
5/3/18 23,930.15 +5.17 -233.00
5/4/18 24,262.51 +332.36 +99.36
5/7/18 24,357.32 +94.81 +194.17
5/8/18 24,360.21 +2.89 +197.06
5/9/18 24,542.54 +182.33 +379.39
5/10/18 24,739.53 +196.99 +576.38
5/11/18 24,831.17 +91.64 +668.02

At the Close, Friday, May 11, 2018:
Dow Jones Industrial Average: 24,831.17, +91.64 (+0.37%)
NASDAQ: 7,402.88, -2.0913 (-0.03%)
S&P 500: 2,727.72, +4.65 (+0.17%)
NYSE Composite: 12,761.82, +30.18 (+0.24%)

For the Week:
Dow: +568.66 (+2.34%)
NASDAQ: +193.27 (+2.68%)
S&P 500: +64.30 (+2.41%)
NYSE Composite: +268.47 (+2.15%)

Friday, May 4, 2018

When The Bottom Falls Out The Media Might Tell You

Most people who are invested in stocks via an employer-supplied pension plan of 401k don't watch the stock market very closely. Many of them don't even know the stocks in which their fund has invested their money.

Thus, most of these people - which is a rather large segment of the market as a whole, and a very important one - will never know that the Dow Industrials were down nearly 400 points on Thursday, or that the NASDAQ and S&P had similar, scary declines.

Rather, some of these people will note that the Dow gained five points and the other indices were down very little at the end of the day. They will get this information from the nightly network news, which is such an overrated form of communication, largely composed of liars telling lies, that it ought to be banned.

When the bottom finally does fall out of the market, as it nearly did in February, these same idiot non-savants on the television will bleat out doom and gloom and warn that all is not well because our precious corporations are today not worth what we thought they were yesterday, or the day before that.

These people, these casual observers of market mechanics, have only themselves to blame for not taking better care of their money. What kind of country is this that fosters the belief that men in suits from downtown Manhattan are better stewards of our wealth than the people who made the money in the first place?

There's an answer to that somewhat rhetorical question, and it is simply this: a gullible, trusting country, full of good-hearted people who routinely get taken to the cleaners by investment advisors, bankers, and their loving government. And then the press lies to them about it.

It's too bad, because there was once a time these advisors, bankers, and people from government could be trusted to do the right thing. There was a time when the press was free and honest.

Those days are long gone.

Look out below.

Dow Jones Industrial Average May Scorecard:

Date Close Gain/Loss Cum. G/L
5/1/18 24,099.05 -64.10 -64.10
5/2/18 23,924.98 -174.07 -238.17
5/3/18 23,930.15 +5.17 -233.00

At the Close, Thursday, May 3, 2018:
Dow Jones Industrial Average: 23,930.15, +5.17 (+0.02%)
NASDAQ: 7,088.15, -12.75 (-0.18%)
S&P 500: 2,629.73, -5.94 (-0.23%)
NYSE Composite: 12,392.50, -25.56 (-0.21%)

Wednesday, May 24, 2017

Central Banks Have Schemed Markets To Unforeseen Heights

If you're 16, eight years seems like a long time.

It's different if you're in your 50s or 60s, because you've lived longer, so eight years might be just 1/7th of your lifetime, or 1/8th, or more. When you're 16, eight years is half of your current lifetime.

Eight years (and two+ months) is also the length of the current stock market rally, and whether that seems like a long time or not, it's significant, being that this bull market has run longer and higher than even the most optimistic people might have predicted.

Who knew, when the Dow was in the dumpster, closing at 6,547.05 on March 9, 2009, that the index would continue to rise, without so much as a 15% correction, uninterrupted, to its current level of 20,937.91, more than tripling in value since the Great Financial Crisis?

Even the engineers and planners behind the massive, central bank asset buying spree had no idea where this was heading, though they were fairly certain that their actions would take stocks much higher. And, it is also likely that the new genii at the Fed has no clue either. Global markets have indeed been in uncharted territory since at least March, 2009, but it's getting to the point - just like the current and ongoing spate of fake news - that nobody even cares anymore.

One might look at his or her quarterly or monthly pension portfolio or 401k and see that the money keeps rolling in and not give a second thought as to why. Life is good, one would assume, and retirement will be even better!

It's this kind of naive thinking that has led many a bull market or bullish stock picker to ruin, but, it does really seem different this time, because it truly is. Never before have the central banks from nearly every developed country coordinated in such a manner to produce such an ungodly financial bubble.

Bubbles eventually burst. Big ones make loud noises.

At the Close, 5/23/17:
Dow: 20,937.91, +43.08 (0.21%)
NASDAQ: 6,138.71, +5.09 (0.08%)
S&P 500: 2,398.42, +4.40 (0.18%)
NYSE Composite: 11,604.62, +19.41 (0.17%)

Thursday, May 26, 2016

Flat Is Good Says Yahoo! Finance, Which Should Know

"Why a flat day is good for the markets"
screams the headline on Yahoo! Finance at the close of trading on Thursday.

Of course closing flat is good. Up is good, down is good, flat is good. Darn, the markets are even good when they're closed.

It's all about the narrative, with the financial media desperately trying to keep convincing an ever-shrinking number of "home-gamers" (trtaders with their own individual accounts), 401k holders, and other interested parties that the economy - and the stock market in particular - have never been better, or at least to convince themselves that they are convincing somebody.

It's a complete crock.

The global economy is, and has been, on its knees since the fall of 2008. Everything after that is a facade, made possible by trillions of dollars spent by the Federal Reserve and matching amounts of yen, yuan, euros and rupees by corresponding central banks, stock buybacks, income sheet fraud, mark-to-fantasy accounting, high valuations and the lack of any real price discovery mechanism.

It's a sham.

Central bankers are idiots who have walled themselves off from the general population and can't seem to find their way out of the boxed-in condition they've created for themselves.

So, we have Trump and Sanders (forget Clinton, she's a has-been, and a poor candidate who cannot win in a general election) vying to be the most powerful man in the world (don't tell Mario Draghi or Janet Yellen, though), an economy that can't produce nominal growth of more then two percent, stupid wars, uncontrollable mass migration, and a host of other problems.

But, a flat day is all good, all the time. Glad Yahoo Got the memo. They've been flat (or down) for a long time. Love ya some Marissa Mayer (Yahoo CEO). She's cute. She's smart. She's blonde. She's... no, don't go there.

She's an idiot, a poser, a fraud. Just take a look at Yahoo's performance since she became CEO. Courtiers to the company are looking at a take-under sometime late this year or early next. The $35-ish share price is a bit rich for their tastes. Something more like $18-24 may be more like it.

Flat Is In... Again!
S&P 500: 2,090.10, -0.44 (0.02%)
Dow: 17,828.29, -23.22 (0.13%)
NASDAQ: 4,901.77, +6.88 (0.14%)

Crude Oil 49.33 -0.46% Gold 1,220.00 -0.31% EUR/USD 1.1193 +0.31% 10-Yr Bond 1.82 -2.51% Corn 407.75 +0.74% Copper 2.10 -0.05% Silver 16.34 +0.52% Natural Gas 2.15 -1.51% Russell 2000 1,140.39 -0.06% VIX 13.67 -1.65% BATS 1000 20,677.17 0.00% GBP/USD 1.4665 -0.25% USD/JPY 109.7650 -0.39%

Thursday, February 18, 2016

Chinks In The Global Ponzi Armor

What the central banks have constructed today as a "global economy" would make Bernie Madoff blush for all its arrogance and chutzpah.

The Fed buys Treasury bills, notes and bonds from the US government, the French government, Japan, Germany, UK, Australia, China, and the central banks of those countries do likewise. In essence, they are all borrowing from each other, and all of them, in the aggregate - and often enough singularly - are insolvent. It's the world's largest kiting scheme, being played on a global scale with money created out of thin air, backed by debt, most of which will never be repaid.

This kind of scam is typically known as a pyramid scheme, an airplane game, or, a Ponzi scheme, in which the creators and early adopters receive the bulk of the benefit, and those last in are left whining about promises made and unkept, with a loss of their investment and great remorse.

When one views the global economic structure from outside, it's clear that the creators of the Ponzi are the central banks, the early adopters are governments, and the vast majority of losers are savers, investors, retirees and, eventually, the young and future generations, who will inherit literally, a world of hurt, where the assets have been stripped away, wealth belongs to an upper, upper echelon of self-annoited masters, and social mobility is largely a myth.

Already, in the United States - the wealthiest nation in the world - there is evidence that the next generation to retire beyond he baby boomers, will be less well off than the previous one. Baby boomers have been retiring steadily, but their wealth has been neutered by the Zero Interest Rate Policy (ZIRP) of the Fed (soon to become NIRP), the COLAs (Cost of Living Adjustment) has been likewise zeroed out due to recalibration of how inflation is measured by the government, and taxes will take care of the rest. And that's just the Social Security end of it.

The Federal government has already put in place methods and scenarios in which they can confiscate the holdings of retirees, in 401k confiscations, wealth extraction taxes and "national emergency" legislation. In fact, senior debt holders (derivatives) would already have priority over depositors in an orderly liquidation of a major bank.

There's only one way to win at this game, and that's to not play. If possible, one would work outside the system, avoiding all taxation and contributions to unemployment insurance, social (in)security, worker's compensation theft, and the latest money extraction scheme, the ACA, otherwise known as Obamacare. Savings would likewise have to be outside the system, acquiring and holding everything from undeveloped land to precious metals, gems, to canned food, tools and machinery of trades.

It's a tough game to play, though, as the global Ponzi scheme continues to unravel in front of our very eyes, one which must be given consideration, even as a partial remedy to outright wealth confiscation through inflation, taxation or fiat.

Today's notch in the Ponzi wood:
S&P 500: 1,917.83, -8.99 (0.47%)
Dow: 16,413.43, -40.40 (0.25%)
NASDAQ: 4,487.54, -46.53 (1.03%)

Crude Oil 32.73 -0.76% Gold 1,231.30 +1.64% EUR/USD 1.1112 -0.12% 10-Yr Bond 1.76 -3.30% Corn 366.25 -0.27% Copper 2.07 -0.22% Silver 15.42 +0.28% Natural Gas 1.85 -4.63% Russell 2000 1,004.71 -0.64% VIX 21.64 -3.00% BATS 1000 20,682.61 -0.29% GBP/USD 1.4338 +0.34% USD/JPY 113.2550 -0.74%