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%)

Stubborn Dow Remains Range-Bound; NASDAQ Dips

Since March 9, the Dow has traded in a fairly tight range - considering the time elapsed (nearly six months) - of just more than 1400 points, or less than six percent of total market value.

Recently, it has been trading near the upper end of this range, but has repeatedly failed to surpass the previous interim high and is still another 1400-1500 points away from January's all-time high of 26,616.71.

The range, 23,924.98 - 25,335.74, has been wide enough to offer hope to both bulls and bears, though neither a breakout nor a breakdown has occurred, with much of the betting money on the latter. Current and prior sentiment sees a second half slowdown, with the Trump tax cuts already measured in, inflation becoming more of an issue, and the tariff tug-fo-war on the world stage only in the early stages.

Thus, seasoned investors are wary of sudden impulse moves such as today's and also have an eye toward the political spectrum, midterm elections and what now appears to be a runaway federal budget-busting deficit for the current fiscal year. These are the factors contributing to the skeptical view, while the more subdued bull case rests largely on the employment picture. Americans are well-employed at present, even though labor force participation remains near record lows.

Inside the demographics of the United States, there exists a virtuous cycle, in which retiring baby boomers give up jobs to millennials and Generation Xers, while spending their retirement incomes without a care. There's plenty of money to go around, though, with a country as large and diverse as the US, it's difficult to pigeonhole any particular stocks that should benefit the greatest.

Consumer staples are and have been the safest bets along with energy, tech, and basic materials, but the gains have been paltry outside the smoking tech sector. A diversified portfolio is probably the best insurance against a market rout, but being in the right stocks can prove tricky, if not altogether impossible to attain anything better than the average index fund.

On the day, the Dow and NASDAQ diverged, a sign that everything is not in sync, and that issues remain unresolved, though that is a normal case and not anything about which to be overly pessimistic.

With crosswinds at the crossroads of prosperity and desperation, there's more than ample rationale for either argument.

This remains a sit-tight-and-hold-cash condition.

Dow Jones Industrial Average July Scorecard:

Date	Close	Gain/Loss	Cum. G/L
7/2/18	24,307.18	+35.77	+35.77
7/3/18	24,174.82	-132.36	-96.59
7/5/18	24,345.44	+181.92	+85.33
7/6/18	24,456.48	+99.74	+185.07
7/9/18	24,776.59	+320.11	+505.18
7/10/18	24,919.66	+143.07	+648.25
7/11/18	24,700.45	-219.21	+429.04
7/12/18	24,924.89	+224.44	+653.48
7/13/18	25,019.41	+94.52	+748.00
7/16/18	25,064.36	+44.95	+792.95
7/17/18	25,119.89	+55.53	+848.48
7/18/18	25,199.29	+79.40	+927.88
7/19/18	25,064.50	-134.79	+793.09
7/20/18	25,058.12	-6.38	+786.71
7/23/18	25,044.29	-13.83	+772.88
7/24/18	25,241.94	+197.65	+970.53

At the Close, Tuesday, July 24, 2018:
Dow Jones Industrial Average: 25,241.94, +197.65 (+0.79%)
NASDAQ: 7,840.77, -1.10 (-0.01%)
S&P 500: 2,820.40, +13.42 (+0.48%)
NYSE Composite: 12,847.49, +53.44 (+0.42%)

Millenials May Be The Last Free Americans

On this day, a conversation was had with a couple of millennials, roughly in their mid-20s, working (or acting like they were working) in a smoke shop.

The conversation - following them chiding a senior citizen for talking about rolling your own and growing your own tobacco while he was buying rolling papers - was inferior, not even worth mentioning, which is why it is being mentioned.

At issue is the future, and the current youth... or, at least a sizable portion of them, want to vote for Bernie Sanders, who promises a $15/hour minimum wage, free college for everybody, and a host of other liberal-ideological non sequiturs that would essentially turn a once-prosperous free-market country (USA) into another stinking hell-hole like much of Europe, or the Middle East, or perhaps, Japan.

The problem lies not with the millennials. They don't know any better. Most of them haven't been around for more than 25 years, meaning that scads of them were in high school during 9-11, and those images are burnt into their psyches, as too the neo-liberal education they've been given, in which they know little about history, economics, language, culture or just about anything that would promote a thriving, free nation.

No, to blame are largely baby boomers, who foisted upon their youth such undistinguished values as participation trophies, non-judgemental attitudes, video games, addiction to cell phones, social media and other claptrap that promotes laziness, sloth, stupidity, class hatred, and decline.

Between the educational system run from afar in Washington, D.C., the Federal Reserve (also a D.C. inhabitant), and a mainstream media intent on propaganda du jour rather than objective journalism, the millennials may just be the last generation of Americans who can claim any level of freedom.

Americans are being taxed, silenced, tabooed, and numbed into a state of slavish devotion to media and government.

As a nation, America is pretty much doomed unless radical changes in the culture are made, and soon. Traditional values would be a welcome relief, but, whenever they are proposed, millennials scoff and pay, and continue down the path to self-destruction.

Thank you, Janet:
S&P 500: 2,068.46, +13.45 (0.65%)
Dow: 17,748.61, +115.50 (0.66%)
NASDAQ: 4,881.76, +35.14 (0.73%)

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