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Old 06-26-2008, 10:14 AM   #21
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Unanticipated (key word) inflation is, indeed, a greater risk for the retired than it is for the general population. Even the U.S. Bureau of Labor Statistics believes this to be true. For the last 20 years, they have compiled a unique inflation index -- the CPI-E(lderly) -- which is distinct in composition from the more commonly used CPI-W (or CPI-U). In fact, this retiree inflation index has outpaced the regular broad-based CPI by .5% to 1% per year during those twenty years. (The difference is attributable by, for example, retirees typically consuming more health care services than food.)

I know, the CPI itself is controversial but I seem to remember a line from the Hobbit that went something like "always include the Dragon in your plans, if you live near one."
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Old 06-26-2008, 10:19 AM   #22
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Quote:
Originally Posted by Helena View Post
Today the American worker must compete with third world labor...
Not quite as true as it once might have been was:

ABC News: Oil Price Fallout: Jobs Coming Home?
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Old 06-26-2008, 10:25 AM   #23
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Rich, the difference was you were working. A big difference. Even though there is a lag between wages and inflation, wages do rise, eventually catch up, overshoot a bit. Especially for professional worker-bees.

Totally different situation for pensioneers, FIRE'd, retired, etc. More so when the portfolio tends to fall just when it needs to rise.
Absolutely, and well said. It underscores the importance of having enough fixed equities and/or cash to hold out a while if necessary.
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Old 06-26-2008, 10:27 AM   #24
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Quote:
Originally Posted by Art G View Post

Oil is cheap … at least in comparison with some other "liquids".


The last time oil went through the roof, NASA was on the moon.
Now, 40 years later, here we are at the mercy of oil again and
NASA has sent another robotic mission to Mars... NASA's first
landing on Mars [Viking 1] was in 1976 !

So, why do I relate NASA with oil ? Because I believe the answer
to the energy problem is space solar generated electricity.

In the 1990s a congressional committee asked NASA to develop
space solar energy.

NASA had years of positive study... asked for government funding
of a space solar energy program and NASA had received government
approval and funding of a space solar energy program... then suddenly,
the whole project was mysterious cancelled without explanation...
August before 9-11.

NASA Spaces on Energy Solution


My brother is one of NASA's last remaining Apollo era scientists,
so I asked him about space solar and he replied that initially it
would be quite expensive... but the $$$ spent on the war in Iraq
would be a start.


~
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Old 06-26-2008, 10:41 AM   #25
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Not quite as true as it once might have been was:

ABC News: Oil Price Fallout: Jobs Coming Home?

Why outsource to the third world,
when much of the third world has
immigrated here !
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Old 06-26-2008, 10:49 AM   #26
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Why outsource to the third world,
when much of the third world has
immigrated here !

And I sincerely apologize for that.

My family came here, mostly from "undeveloped" areas, during the years 1640 (France) and 1655 (Scotland) without consulting me. Nevertheless, I will continue to ask you Native Americans to forgive us.
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Old 06-26-2008, 10:57 AM   #27
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Whistling past the cemetery won't change the facts.
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Old 06-26-2008, 10:59 AM   #28
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Since I didn't understand the idiom, maybe others would be interested as well:

Whistling past the graveyard
  • If someone is whistling past the graveyard, they are trying to remain cheerful in difficult circumstances. ('Whistling past the cemetery' is also used.)
Speaking as another unfortunate immigrant from the 1600s....
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Old 06-26-2008, 11:04 AM   #29
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Memo to self: Drink less Whiskey and Beer. Drink more Orange Juice and Milk. Easy on the Hot Sauce and Perfume.
What? Less whiskey, less beer, more oj, more milk. Seems to you you got your priorities upside down. It ain't the price per gallon, it's the enjoyment per ounce that counts.

Michael
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Old 06-26-2008, 11:10 AM   #30
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My dad's dad's dad came here in 1916 according to Ellis Island. However, Kaiser's army doesn't show him discharged until 1919. Dessertion or bad record keeping?

We've fought for the last 60 years to export capitalism and democracy to the world, why are we upset now that we won? (at least on the capitalism front). If it's not what we wanted, then it might be possible to change it, but what a tough slope to crawl back up.
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Old 06-26-2008, 11:54 AM   #31
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Quote:
Originally Posted by Helena View Post
My brother is one of NASA's last remaining Apollo era scientists, so I asked him about space solar and he replied that initially it would be quite expensive... but the $$$ spent on the war in Iraq
would be a start.
The problem is that we have mentally spent this money a dozen times, or so it seems.

There are so many things people propose to fund by stopping the Iraq quagmire. Fine and good, but there are two problems:

(1) We can't fund all these different things with the same proposed source of revenue.

(2) Even if the Iraq operation ended today, there would still be a budget deficit, and thus we still couldn't afford it.
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Old 06-26-2008, 12:05 PM   #32
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Quote:
Originally Posted by ziggy29 View Post
The problem is that we have mentally spent this money a dozen times, or so it seems.

There are so many things people propose to fund by stopping the Iraq quagmire. Fine and good, but there are two problems:

(1) We can't fund all these different things with the same proposed source of revenue.

(2) Even if the Iraq operation ended today, there would still be a budget deficit, and thus we still couldn't afford it.
Don't worry, there's always tax increases to rid ourselves of any pesky problems in the USA............
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Old 06-26-2008, 02:02 PM   #33
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Quote:
Originally Posted by Helena View Post
The last time oil went through the roof, NASA was on the moon.
Now, 40 years later, here we are at the mercy of oil again and
NASA has sent another robotic mission to Mars... NASA's first
landing on Mars [Viking 1] was in 1976 !

So, why do I relate NASA with oil ? Because I believe the answer
to the energy problem is space solar generated electricity.

In the 1990s a congressional committee asked NASA to develop
space solar energy.

NASA had years of positive study... asked for government funding
of a space solar energy program and NASA had received government
approval and funding of a space solar energy program... then suddenly,
the whole project was mysterious cancelled without explanation...
August before 9-11.

NASA Spaces on Energy Solution


My brother is one of NASA's last remaining Apollo era scientists,
so I asked him about space solar and he replied that initially it
would be quite expensive... but the $$$ spent on the war in Iraq
would be a start.


~

these days we have venture capitalists that are funding companies to solve future energy problems. NASA is not the only game in town.

i personally trust the VC's more than NASA in this case.
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Old 06-26-2008, 02:23 PM   #34
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One good thing about inflation: my mortgage payment will start to look cheaper and cheaper!
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Old 06-26-2008, 02:25 PM   #35
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One good thing about inflation: my mortgage payment will start to look cheaper and cheaper!
Inflation is great for debtors as long as your income more or less keeps up (or even close to it). It stinks for savers and lenders, though.
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Old 06-26-2008, 04:08 PM   #36
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Inflation is great for debtors as long as your income more or less keeps up (or even close to it). It stinks for savers and lenders, though.

Don't count on inflation to last...
After Weimar Germany's hyperinflation...
came deflation, depression, then Hitler.
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Old 06-26-2008, 04:47 PM   #37
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Absolutely, and well said. It underscores the importance of having enough fixed equities and/or cash to hold out a while if necessary.
Rich....please help me understand. How is holding cash a hedge against inflation? Historically, that has not usually been the case.
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Old 06-26-2008, 05:26 PM   #38
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Rich....please help me understand. How is holding cash a hedge against inflation? Historically, that has not usually been the case.
Would spending "cash in reserve" be better than cashing in stocks? Hmmmm. (He didn't say he would hold it.)
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Inflation Make Stocks Safer Than Bonds?
Old 06-26-2008, 05:43 PM   #39
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Inflation Make Stocks Safer Than Bonds?

Back in the mid 70s, Dr. Henry Singleton who created Teledyne and who was a very successful investor opined that equities were far safer than bonds during inflationary times.

In my map, modern governments make inflation endemic. None of us will live long enough to see deflation, barring nuclear war. So worrying about or hoping to profit from deflation is a waste. Occasionally something happens like the entry of a billion new workers who produce much more than they consume. This may slow inflation down, but never stop it.

In my view there should be zero allocation to nominal bonds, except for short term money parking needs. Large allocations should be to stocks or TIPS or commodities, depending on their perceived relative valuation. Money in cash is much better than bonds, as normally at least interest rates will tend to track inflation. You will lose with this investment. but less than with long term bonds. And you have liquidity.

Many times it might be best to have close to 100% stock allocation-but there is one large caveat. A way to tame volatility must be found. A big COLA'd pension is best.

Next best for me is a growing dividend stream.

Those who rely on total return asset allocations will almost have to keep a larger fixed income allocation. They can exercise skill with maturity choices and similar.

Ha
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Old 06-26-2008, 06:10 PM   #40
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" i personally trust the VC's more than NASA in this case"

al_bundy


Yeah, right. The VC's did such a great job in developing the internet. Oh, I forgot, they didn't develop the internet, it was a government program that developed it.

Well what about the Golden Gate Bridge? Sorry, another government program. Hover Dam? Sorry. Try again.

Well, what did the develop? Pets.com!

b.
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