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Old 09-10-2008, 10:43 PM   #61
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Originally Posted by rickier55 View Post
I've been retired a little over 3 years now. DW right at 3 years. I have a Cola'd pension that covers 90% of my annual expenses. So I've been drawing on my portfolio a little less than 3% .

The market fall has bothered me some - but not really to the point of worry. I have a pretty heavily weighted equity asset allocation (around 80/20). Porfolito down around 11% YTD - The market down is not pleasant - but when I start to worry too much about it, I go through some mental math to show myself that if it dropped 50% and then stayed level for 10 years I'd still be ok - Well before then DW pension and SS will kick in.

Though I still wince when I see the market drops like Tuesdays.

Rick
Rick,
You have nothing to worry about (at least financially).
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Old 09-10-2008, 10:57 PM   #62
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Doing great, the worse it gets, the better I do as I invested for deflation.

Don't ask me to tell you next time, I did already.


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Originally Posted by vickko View Post
...my FIRE depends on the TSE and it fell another 500 points today.

I now need to die 3 years earlier :-(

Best to hunker down, enjoy my classes, and hobbies, until brighter skies. I can't add to the camera collection, but I can shot more of my stockpile of film.

How are you weathering this?

Vick
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Old 09-10-2008, 11:00 PM   #63
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So Dan, how does one invest for deflation and what are you in thats done so well?
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Old 09-11-2008, 01:40 AM   #64
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To prepare for deflation,
one needs cash and no debt....
the opposite financial position
of the average American.
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Old 09-11-2008, 08:45 AM   #65
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I've been retired a little over 3 years now. DW right at 3 years. I have a Cola'd pension that covers 90% of my annual expenses. So I've been drawing on my portfolio a little less than 3% .
That's good.........HOW would you be investing WITHOUT the pension??
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Old 09-11-2008, 08:46 AM   #66
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To prepare for deflation,
one needs cash and no debt....
the opposite financial position
of the average American.
I think deflation may be on the horizon, but there's plenty of INFLATION out there still. Cash can help deflation, but the periods of deflation in US history are a much shorter story..........
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Old 09-11-2008, 08:54 AM   #67
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The last time we had significant measurable deflation was in the early 1930's, and that was most likely caused largely by retirement of a lot of paper civil war currency. The start of the depression and 25% unemployment were also strong factors.

Considering we're barely skimming a recession, unemployment is less than 1/4 of that scenario, and we dont have any funny old currency to retire...I wouldnt count on something we havent seen in 75 years turning back up anytime soon.

The only other plausible cause of strong deflation would be the implicit failure of a lot of US businesses, with persistent bailouts and government 'handouts' to those companies to prop them up over a period of years and decades, coupled with the average american ceasing their current levels of spending and turning towards a saver mentality.

While we're bailing out some companies, I sort of doubt we'll still be pumping money into dozens of very large and hundreds of large companies over the next ten years. As far as the consumerism changes...eh...good luck with that.
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Old 09-11-2008, 09:23 AM   #68
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Some have predicted a scenario like Japan in the '90s -- stagnant growth, no movement in equity or real estate.

We haven't had an official down quarter but the last adjustment to GDP at 3.3% was comprised mostly of exports. Now, the dollar is worth a bit more than it has been worth most of the past year and it's strengthening because a lot of other countries are facing weaker growth prospects than us. So exports may not continue at previous levels.
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Old 09-11-2008, 10:02 AM   #69
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I'd like to see the rationale that 'some' put forward. I see almost no plausible chance that we'd see anything here that would correlate with Japan. Other than the fact that we're both countries and both have economies.
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Old 09-11-2008, 10:12 AM   #70
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I think deflation may be on the horizon, but there's plenty of INFLATION out there still. Cash can help deflation, but the periods of deflation in US history are a much shorter story..........
Good points.
My thoughts are that we are in for a period of slower world wide growth*.
Much of the past growth - after 2000 - was fueled by the expansion of the money supply by the Fed to avoid the past financial problems - Stock Market bursting; 9/11 and the current financial problems. Also the war spending has fed world growth.

War spending will be slowing down greatly. US consumers will be spending less due to higher energy costs and conscientiously trying to reduce their debt.

Currently the US is slowing down and the world will follow. Other central banks will lower rates to stimulate their economies.

This slower growth phase may last about 1.5 - 2 years as excesses in housing, retail space and manufacturing are eliminated.

After that growth should resume.

Ultimately, the growth in world wide population and government efforts to keep larger populations of people happy will help to avoid deflation. Now there will be deflation in certain sectors - labor costs among them.

*I do think the US stock market will bottom towards the end of next year and the world will follow after that.
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Old 09-11-2008, 10:20 AM   #71
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I think deflation may be on the horizon, but there's plenty of INFLATION out there still. Cash can help deflation, but the periods of deflation in US history are a much shorter story..........
Greenspan, and now Bernanke, recognize the dangers of deflation for an economy, so I'm sure they'd be willing to pump money into the system to prevent it. See this speech by Bernanke himself, in which he references Milton Friedman's last ditch "strategy" to avoid deflation, dropping money from a helicopter.

Reduction in asset prices isn't deflation, and is something that always has a reasonable chance of occurring. I'm confident we won't see deflation in the US in my lifetime.
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Old 09-11-2008, 11:10 AM   #72
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Greenspan, and now Bernanke, recognize the dangers of deflation for an economy, so I'm sure they'd be willing to pump money into the system to prevent it. See this speech by Bernanke himself, in which he references Milton Friedman's last ditch "strategy" to avoid deflation, dropping money from a helicopter.


Dropping money [or credit] from helicopters creates another
Weimar Germany.... a bankrupt country that ends with huge
deflation and the rise of Hitler.
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Old 09-11-2008, 11:18 AM   #73
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Greenspan, and now Bernanke, recognize the dangers of deflation for an economy, so I'm sure they'd be willing to pump money into the system to prevent it. See this speech by Bernanke himself, in which he references Milton Friedman's last ditch "strategy" to avoid deflation, dropping money from a helicopter.

Reduction in asset prices isn't deflation, and is something that always has a reasonable chance of occurring. I'm confident we won't see deflation in the US in my lifetime.

I think on Friday you are going to see that inflation is up year over year but they will nock it down by using core inflation figures. Watch and wait for tomorrows Fed report.

Inflation from this past oil run up will be passed to the consumer moving forward. Check flight prices, transportation costs, food etc.

Oil will cycle up again towards Christmas.
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Old 09-11-2008, 12:32 PM   #74
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I'd like to see the rationale that 'some' put forward. I see almost no plausible chance that we'd see anything here that would correlate with Japan. Other than the fact that we're both countries and both have economies.
I think Japan saw its real estate bubble pop. Remember at the end of the '80s, Japanese banks were big and real estate there had run up.

So the supposition was that it would take a long time to recover from the real estate deflation.

Plus what dex set forth can figure into it as well. Consumers are tapped out and they may not have the access to credit that we had much of this decade -- a lot of home equity loans fueling spending.

It also doesn't help that wages have stagnated.


Oh and the oil price recovering around Xmas, a conspiracy theorist might say after the election prices will go right back up.
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Old 09-11-2008, 12:44 PM   #75
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I think Japan saw its real estate bubble pop. Remember at the end of the '80s, Japanese banks were big and real estate there had run up.

So the supposition was that it would take a long time to recover from the real estate deflation.

Plus what dex set forth can figure into it as well. Consumers are tapped out and they may not have the access to credit that we had much of this decade -- a lot of home equity loans fueling spending.

It also doesn't help that wages have stagnated.


Oh and the oil price recovering around Xmas, a conspiracy theorist might
say after the election prices will go right back up.
Japanese real estate in the 80's was well overpriced but the real bandits were the banks, not only did they hold mortgages but they went out and bought the buildings as well. The environment is different from what is going on in the US. The market is still up from 5 years ago except certain areas, itís just that new entrants got caught and the banks made some bad loans. This will restrict growth moving forward but the market will stabilize eventually. You wonít see another spike in real estate for quite a few years.

As for oil, commodities tend to take an escalator up and an elevator down. There is still demand for oil. China and India are still growing and creating demand. Oil will rebound. All the easy finds are gone so the cost of extraction increases and I can make a pretty sure statement that OPEC won't be giving it away.
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Old 09-11-2008, 01:02 PM   #76
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odd how the price still drops even with ike headed to houston & opec threatening a slowdown. likely i'll never understand this stuff. meanwhile, i heard they have 800 billion barrels available to sell at profit between $60-$100/barrel here Welcome to the Mahogany Research Project - United States.

not that i'm pro-drilling, mind you. i think the combustion engine is stupid and since we can send particles off to collide at near light speed with http://en.wikipedia.org/wiki/Large_Hadron_Collider and since biologists are on the verge of creating manmade life http://science.slashdot.org/article....11216&from=rss, it just seems a bit primitive to rely still on oil.
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Old 09-11-2008, 01:18 PM   #77
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Dropping money [or credit] from helicopters creates another Weimar Germany.... a bankrupt country that ends with huge deflation and the rise of Hitler.
Stop with your fear tactics. I think the cause and effect are a little more complicated than that.

Deflation is terrible for economic development and growth (Bernanked talked about it in the article I linked), and there are a number of policies that can be used to combat it. Dropping money from the skies is only 1 way.
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Old 09-11-2008, 01:32 PM   #78
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Stop with your fear tactics.
Put her on ignore and you won't have to be bothered with her nonsense any more. Now if people would just stop quoting this sort of stuff...
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Old 09-11-2008, 02:25 PM   #79
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Put her on ignore and you won't have to be bothered with her nonsense any more. Now if people would just stop quoting this sort of stuff...

" put her on ignore "

" her nonsense "

" stop quoting this sort of stuff "


Yes, you might succeed in censoring discussion of deflation...
but you won't succeed in preventing deflation... or suffering
the consequences of not preparing for it.


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Old 09-11-2008, 02:36 PM   #80
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odd how the price still drops even with ike headed to houston & opec threatening a slowdown. likely i'll never understand this stuff. meanwhile, i heard they have 800 billion barrels available to sell at profit between $60-$100/barrel here Welcome to the Mahogany Research Project - United States.

not that i'm pro-drilling, mind you. i think the combustion engine is stupid and since we can send particles off to collide at near light speed with Large Hadron Collider - Wikipedia, the free encyclopedia and since biologists are on the verge of creating manmade life Slashdot | Biologist (Almost) Creates Artificial Life, it just seems a bit primitive to rely still on oil.
Oil and other commodities were in a bubble that is now deflating.

You are right, oil is a primitive fuel... 35 years ago, during the last
oil crisis, NASA was on the moon... 35 years ago if NASA had begun
to develop and perfect space/moon solar energy beamed down to
earth to generate clean, unlimited electricity... and if 35 years ago,
American auto makers had begun to develop and perfect electric cars...
then today the world would be coming to America hat in hand for the
blessing of the amazing new technology... instead of America groveling
to the third world for their primitive oil.


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