Inflation and Idiots

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Sep 25, 2009 8:52 pm

Yes, I am. So you mean to tell me stocks arent going to provide any returns moving forward, but other products like bonds, cds, insurance will ?

Sep 25, 2009 8:53 pm
2wheeledbeemer:
Gaddock:

I use stamps. Put a .03 and a current first class in front of them and ask what does this mean?

 

Then tell them about the guy that was styling in 1975 with his early retirement $20k a year pension. He was the envy of all his friends and family. Then say loudly with conviction pound your fist once on the table and stand up squarely facing them... 

 

NOW HE CHOOSES BETWEEN FOOD AND MEDICINE!

 

Stare them right in the eye and say nothing, don't even blink and wait until they look away (when  they do you have set the hook, now reel them in)

 

A DOLLAR IN THE MID SEVENTIES WOULD TAKE $3.28 TODAY TO HAVE THE SAME BUYING POWER.

 

Here you use the words we & us while putting the back of one hand into the other with intonation on the words we & us...

 

WE WILL NOT LET THIS HAPPEN TO US!!

 

Now lower your voice to below normal just a little bit as if there has been a great weight taken off your chest and sit as you're saying it.

 

We need to start asap Mr. prospect, like maybe today, no - YESTERDAY!

 

You in? (nodding your head up and down a tiny bit while saying it.)

 

Look them in the eye and then look off into the sunset for a few seconds and look back like you would as if you just took a drag off a cigg after having great sex.

 

SHUT UP AND DONT SAY A WORD. Anything less than a yes or no you simply repeat the question and do the same.

 

All the world is a stage. The above truly works well he he he.



First place is a Cadillac ElDorado. Second place is a set of steak knives. Third place is..you're fired.

 
Reality is BIG MONEY!! YEEEEEEEEEHA for all involved.
Sep 26, 2009 9:08 am

I love stocks. I've made lots of dough investing in stocks using strategies of every ilk. Everything from day trading to dividend roll to bull spreads to position building to long term hold. I've been around a long time and I have the balls and where-with-all to try a lot of things. Still, the days where i could pull out a stamp from 1952 and pound the table that equities are the SUREST way to guard against inflation are gone.

 
The evil that unregulated capitalism has become has wrecked the wealth building gravy train that equities once were. Meanwhile advisors rely on statistics that were built in a different era to continue to build a case that equities are the answer. That's not to say, don't buy stocks, and that's not to say that there aren't some exceptional geniuses among us that can still get positive returns without burning down the house every six or seven years. But for us average geniuses, we scratch our heads and wonder why top quality companies like GE are trading at 1/3 of where they were just seven or eight years ago?
 
What happened to the market in 2001-2003 was an explainable event. What happened to the market in 2008 was a criminal event. And, until the government moves to put back the regulatory safguards that they removed over the past decade I can't look any retirement prospect in the eye and say "Stocks are the answer!"
 
 
Sep 26, 2009 11:01 am
BondGuy:

I love stocks. I've made lots of dough investing in stocks using strategies of every ilk. Everything from day trading to dividend roll to bull spreads to position building to long term hold. I've been around a long time and I have the balls and where-with-all to try a lot of things. Still, the days where i could pull out a stamp from 1952 and pound the table that equities are the SUREST way to guard against inflation are gone.

 
The evil that unregulated capitalism has become has wrecked the wealth building gravy train that equities once were. Meanwhile advisors rely on statistics that were built in a different era to continue to build a case that equities are the answer. That's not to say, don't buy stocks, and that's not to say that there aren't some exceptional geniuses among us that can still get positive returns without burning down the house every six or seven years. But for us average geniuses, we scratch our heads and wonder why top quality companies like GE are trading at 1/3 of where they were just seven or eight years ago?
 
What happened to the market in 2001-2003 was an explainable event. What happened to the market in 2008 was a criminal event. And, until the government moves to put back the regulatory safguards that they removed over the past decade I can't look any retirement prospect in the eye and say "Stocks are the answer!"
 
 



I see alot of words but not answers. 

Sep 26, 2009 11:05 am

I do believe the decades of 15% annual returns are gone. 8% annual returns over 10 year periods in stocks is still very much achievable and I believe has to be part of an effective retirement portfolio. If bonds are in the 4% range and with an obvious risk premium to stocks, 8% is a mathematical probability. 20 years ago you could only make money is US markets, now it is global. JUMP ON !!!

Sep 26, 2009 11:25 am
Ron 14:

I do believe the decades of 15% annual returns are gone. 8% annual returns over 10 year periods in stocks is still very much achievable and I believe has to be part of an effective retirement portfolio. If bonds are in the 4% range and with an obvious risk premium to stocks, 8% is a mathematical probability. 20 years ago you could only make money is US markets, now it is global. JUMP ON !!!





Well, you are forgetting volatility, and that is what will make clients nervous. You have volatility on no-margin equity competing with leveraged commodities - that is not a good sign. I don't have a crystal ball, but I would venture to guess that our situation is very similar, if not worse, than Japan. The debt on our balance sheets here will take a long time to manage.



I would say that equities sectors on the international front are viable, so I will agree with you there. I just think it is almost over here for the time being. Investing internationally is not trip in the park either since the equity swings, as I mentioned above, can give you ulcers.

Sep 26, 2009 11:32 am

No, I am not forgetting volatility, that is exactly where the RISK PREMIUM is. People, like yourself, have given up on stocks because of the last 10 years. The only people getting ulcers from holding stocks are the ones with no faith in the future. As Nick Murray would say, "Optimism is the only realism."

Sep 26, 2009 11:36 am

People, like yourself, have given up on stocks because of the last 10 years. The only people getting ulcers from holding stocks are the ones with no faith in the future.


I haven't given up on equities, I just trade it smarter than people like yourself - but that is for my own account. You are forgetting that you have to deal with OTHER people's expectations and risk tolerance. Unless you are a CTA, and have the client base that understands volatility, good luck to you.



As Nick Murray would say, "Optimism is the only realism."


That is a gambler's mentality. I think we are in the business of capital preservation first, then results second.

Sep 26, 2009 11:48 am

How many investors have you met that were 100% exposed to Japanese equities over the last 19 years ? Zero. And that would have them getting in after their index went from 200, which was where the Dow was at the same time, to over 40,000. Give me a break.

Sep 26, 2009 11:51 am
Ron 14:

How many investors have you met that were 100% exposed to Japanese equities over the last 19 years ? Zero. And that would have them getting in after their index went from 200, which was where the Dow was at the same time, to over 40,000. Give me a break.





Just from your statement, you like to deal in absolute terms. Good luck to you.

Sep 26, 2009 11:51 am

Buying diversified equity holdings, asset allocation, and rebalancing is the gambler's mentality, but trading in and out is logical ? Ok. Sounds good Jim Cramer,  See you at S&P 2000.

Sep 26, 2009 11:55 am
Ron 14:

Buying diversified equity holdings, asset allocation, and rebalancing is the gambler's mentality, but trading in and out is logical ? Ok. Sounds good Jim Cramer, See you at S&P 2000.





Well, that is for my personal account and not for client's. BTW, I would have them in bonds for the majority and not equities going forward. With the market tanking 50% and then rising 30% I would say it is a gambler's market now. You also misread my response to your optimism quote - it was only until afterwards did you define that term.



As for your James Cramer crack (who I don't care for, but you seem to have labeled me), that is why there are rich and poor folks in this business. Many of the successful hedge fund managers are really traders - the term buy and hold doesn't exist for them. Their results are quite dramatic and superior compared to straight equity holdings. That is why they are able to command 2%-3% management fees and 20% incentive since they deliver results. This market going forward may be a hedge fund manager's dream - I wish I was as confident and absolute as you are.

Sep 26, 2009 7:09 pm

Bonds going forward with interest rates at all time lows? Sounds like a wonderfully disasterous philosophy. You go ahead and put people in bonds. I will continue to buy the great companies of the world at unbelievable prices. I will also let those companies pay me a dividend that is about 80% of what your glorious bonds are paying with no upward gain in principal.

Sep 26, 2009 7:25 pm
Ron 14:

Bonds going forward with interest rates at all time lows? Sounds like a wonderfully disasterous philosophy. You go ahead and put people in bonds. I will continue to buy the great companies of the world at unbelievable prices. I will also let those companies pay me a dividend that is about 80% of what your glorious bonds are paying with no upward gain in principal.





Who said that rates will go up anytime soon? You think the balance sheet of consumers and corporate in the US are any stronger than Japan was in 1990? Look at the BOJ's discount rate for the last 15 years - it is about where we are now. And...there is no credit (at ZERO rates) to get us out of this hole. Neither Keynesian or Supply-side will help at this point.



Sounds like a wonderfully disastrous philosophy of putting your clients in equities that will do nothing for the next 10 years. I will continue to make money for my clients year after year in bonds, with no dividend loss and lower share prices due to lower corporate revenues.



There is always 2 sides to a trade buddy. Good luck to you.

Sep 26, 2009 10:09 pm

I will, thanks. And most of them aren't 70 years old, so if it takes 20 years for the S&P, or whatever gauge of the broad equity market you want to use, to reach 2000, so be it. Did you sell your home and start renting ? You should because with your outlook real estate won't have increased in value either.

Sep 27, 2009 8:27 am
Ron 14:

I do believe the decades of 15% annual returns are gone. 8% annual returns over 10 year periods in stocks is still very much achievable and I believe has to be part of an effective retirement portfolio. If bonds are in the 4% range and with an obvious risk premium to stocks, 8% is a mathematical probability. 20 years ago you could only make money is US markets, now it is global. JUMP ON !!!

 
How so? I'm quadrupling that now.
 
I guess it's all how you play the game.
Sep 27, 2009 8:51 am
BondGuy:

I love stocks. I've made lots of dough investing in stocks using strategies of every ilk. Everything from day trading to dividend roll to bull spreads to position building to long term hold. I've been around a long time and I have the balls and where-with-all to try a lot of things. Still, the days where i could pull out a stamp from 1952 and pound the table that equities are the SUREST way to guard against inflation are gone.



The evil that unregulated capitalism has become has wrecked the wealth building gravy train that equities once were. Meanwhile advisors rely on statistics that were built in a different era to continue to build a case that equities are the answer. That's not to say, don't buy stocks, and that's not to say that there aren't some exceptional geniuses among us that can still get positive returns without burning down the house every six or seven years. But for us average geniuses, we scratch our heads and wonder why top quality companies like GE are trading at 1/3 of where they were just seven or eight years ago?



What happened to the market in 2001-2003 was an explainable event. What happened to the market in 2008 was a criminal event. And, until the government moves to put back the regulatory safguards that they removed over the past decade I can't look any retirement prospect in the eye and say "Stocks are the answer!"







I have a theory as to why GE is trading so low. After the 2000-2002 recession, there was a "flight to quality" of which people thought GE was one. Analysts assumed the valuations were fair, but in reality, all valuations needed to be looked at under a microscope. To be fair, I don't think GE is valued accurately now, but you could make a case that it should only be slightly more pricey than it is now.

Sep 27, 2009 10:08 am
voltmoie:
BondGuy:

I love stocks. I've made lots of dough investing in stocks using strategies of every ilk. Everything from day trading to dividend roll to bull spreads to position building to long term hold. I've been around a long time and I have the balls and where-with-all to try a lot of things. Still, the days where i could pull out a stamp from 1952 and pound the table that equities are the SUREST way to guard against inflation are gone.

 
The evil that unregulated capitalism has become has wrecked the wealth building gravy train that equities once were. Meanwhile advisors rely on statistics that were built in a different era to continue to build a case that equities are the answer. That's not to say, don't buy stocks, and that's not to say that there aren't some exceptional geniuses among us that can still get positive returns without burning down the house every six or seven years. But for us average geniuses, we scratch our heads and wonder why top quality companies like GE are trading at 1/3 of where they were just seven or eight years ago?
 
What happened to the market in 2001-2003 was an explainable event. What happened to the market in 2008 was a criminal event. And, until the government moves to put back the regulatory safguards that they removed over the past decade I can't look any retirement prospect in the eye and say "Stocks are the answer!"
 
 



I see alot of words but not answers. 

 
You're right! I don't have the answer and i admit that i don't have the answer. That seperates me from about 99.999% of the advisors out there who claim they do have the answer. Advisors whose battle cry is "We will go to the edges of this flat world to get you the returns you need!"
Sep 27, 2009 10:13 am

Morean, Obviously GE was over valued. As was most of the market. But a 2/3 drop? And then there is this: it is only with the 20-20 benefit of hindsight that WS recognizes its valuation miscue. Where does that leave us today?

Sep 27, 2009 12:05 pm
Ron 14:

I will, thanks. And most of them aren't 70 years old, so if it takes 20 years for the S&P, or whatever gauge of the broad equity market you want to use, to reach 2000, so be it. Did you sell your home and start renting ? You should because with your outlook real estate won't have increased in value either.





The powers of equity from a home are gone. Many small business relied on HELOC and 2nd mortgages to start and increase their business...those days are gone. I am a small business owner, with a 7 figure revenue base.I would not have achieved that without tapping into my home equity.



No credit = no growth (like is use to be)



The US is in a much different place. Economies are dynamic and change regardless of what some robots like Barton Biggs or Abbie Cohen say on weekly basis. When Long Term Credit was the canary in the cave of the hazards of leverage, so is Japan on the excess of credit growth. The US didn't take the lessons of both, and now we are in that boat.



FA's have to step up to the plate and become more global or learn to trade in these markets (like Gaddock) - if their clients expect returns above bonds. I can tell you from first hand experience is that if you have one bad month, you would rather have your mother-in-law scream in your ear 24/7 then hearing from a pissed off client.That is why I would rather concentrate on raising money and put them in bonds - less headaches.