Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 05-25-2008, 10:13 PM   #21
Full time employment: Posting here.
 
Join Date: Jan 2008
Posts: 798
Quote:
Originally Posted by clifp View Post
You mean like Annuties? Oh wait if inflation is too low then annuities are even worse deal. I am so confused.:confused:
I don't know why this comes up. Annuities are investments like other investments such as stocks and bonds. All investment vehicles are being impacted by the under-reported CPI in my opinion, annuities are not worse off or better off. Annuities are what they are, currently yielding slightly more than some fixed income assets. All fixed income assets get hurt by inflation, with a COLA'd annuity there may actually be some protection. There is no inflation protection on a standard bond investment. (But it really doesn't matter to me if you do not like annuities, I find them to be a pretty interesting non-volatility investment).

PLUS, even though I believe CPI is much higher than reported right now, I am not predicting high inflation far into the future. It could be peaking right now at around 7% (as in the rest of the world) or more, not the 4% CPI-U the BLS is telling us, that's my view.
Using Gross's calculations on the impact of that, many assets could be overpriced; stock PE's in the 20's, the long bond at 4.6%. Both look highly valued historically.

I am waiting for actual inflation to fall from about 7% to 3%. At that point the BLS will be forced to show we are in deflation; the CPI figures will surely go negative, heck the BLS said inflation was zero a few months ago . I predict they will readjust their methods to show there really isn't deflation. Maybe they already have that covered, they will start assuming we are eating steak instead of hamburger again . A panicking Uncle Ben will be flying the helicopter, the plunge protection team at work. It might not be that far off if the housing market doesn't stabilize.
__________________

__________________
RockOn is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 05-25-2008, 11:32 PM   #22
Recycles dryer sheets
barbarus's Avatar
 
Join Date: Aug 2007
Posts: 433
Quote:
Originally Posted by RockOn View Post
A panicking Uncle Ben will be flying the helicopter, the plunge protection team at work. It might not be that far off if the housing market doesn't stabilize.
House-price deflation is going to accelerate for some time. The only way to stop it would be substantial wage-inflation to make the oversupply of houses affordable to the many. Impossible.

When the Bernanke helicopters release their fiscal payload general-price inflation will also accelerate.

Stagnant inflation.
__________________

__________________
Consult with only myself as your adviser or representative. My thoughts should be construed as investment advice of the highest caliber. Past performance is but a pale shadow and guarantee of even greater results in the future.
barbarus is offline   Reply With Quote
Old 05-26-2008, 08:24 AM   #23
Thinks s/he gets paid by the post
 
Join Date: Apr 2006
Posts: 1,487
Quote:
It could be peaking right now at around 7% (as in the rest of the world) or more
a quick check will show that inflation in the "developed world" is not at the level claimed: Output, prices and jobs | Economist.com
__________________
d is offline   Reply With Quote
Old 05-26-2008, 08:30 PM   #24
Full time employment: Posting here.
 
Join Date: Jan 2008
Posts: 798
Quote:
Originally Posted by d View Post
a quick check will show that inflation in the "developed world" is not at the level claimed: Output, prices and jobs | Economist.com
Sorry, but I'll go with Ed Hyman's world inflation numbers. Last I checked, he knows a thing or two about matters like this.
__________________
RockOn is offline   Reply With Quote
Old 05-26-2008, 09:36 PM   #25
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
cute fuzzy bunny's Avatar
 
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,697
At least someone knows what they're talking about...
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
cute fuzzy bunny is offline   Reply With Quote
Old 05-26-2008, 09:56 PM   #26
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Lsbcal's Avatar
 
Join Date: May 2006
Location: west coast, hi there!
Posts: 5,695
Well the Gross article makes me feel that my equities allocation of 34% to foreign is not too high. I do not feel that the Bill Gross article is self-serving.
__________________
Lsbcal is offline   Reply With Quote
Old 05-27-2008, 02:32 PM   #27
Full time employment: Posting here.
 
Join Date: Jan 2008
Posts: 798
Quote:
Originally Posted by cute fuzzy bunny View Post
At least someone knows what they're talking about...
so bitter
__________________
RockOn is offline   Reply With Quote
Old 05-27-2008, 02:51 PM   #28
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Quote:
Originally Posted by lsbcal View Post
I do not feel that the Bill Gross article is self-serving.
Haaaaaahahahahaha!!!

Pull the other one, its got bells on.
__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Old 05-27-2008, 02:57 PM   #29
Thinks s/he gets paid by the post
 
Join Date: Apr 2006
Posts: 1,487
Quote:
Originally Posted by RockOn View Post
Sorry ...
it is indeed.
__________________
d is offline   Reply With Quote
Old 05-27-2008, 07:01 PM   #30
Thinks s/he gets paid by the post
 
Join Date: Apr 2006
Posts: 1,487
Quote:
Originally Posted by lsbcal View Post
... I do not feel that the Bill Gross article is self-serving.
in his own words: "there is a need for new global investment solutions, a role that PIMCO is more than willing (and able) to provide."
__________________
d is offline   Reply With Quote
Old 05-27-2008, 08:19 PM   #31
Full time employment: Posting here.
 
Join Date: Jan 2008
Posts: 798
Quote:
Originally Posted by d View Post
in his own words: "there is a need for new global investment solutions, a role that PIMCO is more than willing (and able) to provide."
Bill Gross makes his money on bond funds. Do we need a few facts on that? Believing the CPI is really higher makes bonds overvalued, maybe more than a little.

Sure he has global investment funds, etc., but he doesn't want his bond fund investors selling their bond funds and going there. I think he is watching out for his clients. He obviously doesn't need the money.

Seeing self-interest in this article . I did expect it though.
__________________
RockOn is offline   Reply With Quote
Old 05-27-2008, 08:22 PM   #32
Thinks s/he gets paid by the post
 
Join Date: Dec 2007
Posts: 4,764
Quote:
Originally Posted by RockOn View Post
Bill Gross makes his money on bond funds. Do we need a few facts on that? Believing the CPI is really higher makes bonds overvalued, maybe more than a little.

Sure he has global investment funds, etc., but he doesn't want his bond fund investors selling their bond funds and going there. I think he is watching out for his clients. He obviously doesn't need the money.

Seeing self-interest in this article .
What do you figure the "real" cpi at? 8 or 9?
__________________
Notmuchlonger is offline   Reply With Quote
Old 05-27-2008, 08:35 PM   #33
Full time employment: Posting here.
 
Join Date: Jan 2008
Posts: 798
Quote:
Originally Posted by Notmuchlonger View Post
What do you figure the "real" cpi at? 8 or 9?
I've been saying around 7%. Obviously not 3.5% or 4%.

I think I'll go with John Williams numbers since they have been out for a pretty long time now and nobody is disputing him except a few on ER Forum. When I hear he doesn't disclose how he calculates it, I don't buy it. He says exactly what he is doing, anybody who cared enough could replicate the models that were good enough for many years (before the fudging began) and check the numbers.

If we used the current CPI model in the 70's, hyper-inflation could have taken hold in the early 80's. Paul Volker would not have shut off the juice when it was necessary. Maybe history is repeating but this time the juice will not be cut off because we have financial engineered away the recognition of inflation. Inflation is a problem that might not disappear just because we wish it to be gone. I'm not predicting that, but it is possible.
__________________
RockOn is offline   Reply With Quote
Old 05-27-2008, 09:40 PM   #34
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Lsbcal's Avatar
 
Join Date: May 2006
Location: west coast, hi there!
Posts: 5,695
Quote:
Originally Posted by d View Post
in his own words: "there is a need for new global investment solutions, a role that PIMCO is more than willing (and able) to provide."
I didn't even remember reading that but was responding to the overall substance of his article. You are right that he said that. Now I don't have any reason to stick up for Bill Gross, he doesn't need it after all since he's a very rich guy. But I do admire him for some insightful articles. He probably bothers some people because of clearly political statements from time to time. I'm not sure about the CPI being under estimated or not but Treasuries and TIPS seem to be too low.

On the money making front Gross has done well for investors in HABDX (Harbor Bond, ER=.56%) with 1 year return of 11.7% -- wish I'd owned it. HABDX ranks in the top 2% for intermediate term bond funds. Just might buy some HABDX with the sales from my TIPS.
__________________
Lsbcal is offline   Reply With Quote
Old 05-28-2008, 10:58 AM   #35
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
FinanceDude's Avatar
 
Join Date: Aug 2006
Posts: 12,484
Bill Gross has been bearish since I was 10...........
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)


This Thread is USELESS without pics.........:)
FinanceDude is offline   Reply With Quote
Old 05-28-2008, 11:06 AM   #36
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Lsbcal's Avatar
 
Join Date: May 2006
Location: west coast, hi there!
Posts: 5,695
Quote:
Originally Posted by FinanceDude View Post
Bill Gross has been bearish since I was 10...........
Well he is a bond guy and bonds do best when things are miserable.
__________________
Lsbcal is offline   Reply With Quote
Old 05-28-2008, 11:10 AM   #37
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,386
Quote:
Originally Posted by lsbcal View Post
Well he is a bond guy and bonds do best when things are miserable.
The biggest all time bond bull market in the US was during the 80s and 90s. Hardly depression stuff.

Ha
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is offline   Reply With Quote
Old 05-28-2008, 12:14 PM   #38
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Lsbcal's Avatar
 
Join Date: May 2006
Location: west coast, hi there!
Posts: 5,695
Quote:
Originally Posted by haha View Post
The biggest all time bond bull market in the US was during the 80s and 90s. Hardly depression stuff.
Ha, you are right that bonds can do well especially in a declining real rate environment like the 80s and 90s. I was thinking of bonds generally doing well in recessions when equities do poorly. Was 100% equities until about 5 years ago.
__________________
Lsbcal is offline   Reply With Quote
Old 05-28-2008, 01:02 PM   #39
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,386
Quote:
Originally Posted by lsbcal View Post
Ha, you are right that bonds can do well especially in a declining real rate environment like the 80s and 90s. I was thinking of bonds generally doing well in recessions when equities do poorly. Was 100% equities until about 5 years ago.
For sure this is sometimes true. But the 70s are an instructive counter-example. Bonds hated inflation, and so did stocks. At least the stock averages did in the 70s.

The only effective investments in those years were commodities and short term fixed rate paper.

Ha
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is offline   Reply With Quote
Old 05-28-2008, 01:15 PM   #40
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Lsbcal's Avatar
 
Join Date: May 2006
Location: west coast, hi there!
Posts: 5,695
Quote:
Originally Posted by haha View Post
For sure this is sometimes true. But the 70s are an instructive counter-example. Bonds hated inflation, and so did stocks. At least the stock averages did in the 70s.

The only effective investments in those years were commodities and short term fixed rate paper.
...and Silicon Valley real estate where the leverage acted like jet fuel.
__________________

__________________
Lsbcal is offline   Reply With Quote
Reply

Tags
cooking


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Uncle Warren's Tin Hat: A Fairy Tail barbarus FIRE and Money 7 02-29-2008 06:59 PM
Yet another Tin Foil Hat Message barbarus FIRE and Money 17 02-04-2008 12:08 AM
Tin Foil Hat Time... mountaintosea FIRE and Money 6 01-22-2008 11:30 PM
Soup Lines Ahead? Bill Gross Speaks haha FIRE and Money 45 09-05-2006 07:19 PM
Bill Gross calls CPI fraudulent haha FIRE and Money 1 10-13-2004 01:12 PM

 

 
All times are GMT -6. The time now is 10:22 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.