Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
recession or inflation,gearing portfolio
Old 06-03-2006, 07:29 AM   #1
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2005
Posts: 5,414
recession or inflation,gearing portfolio

looks like in my opinion we are reaching a point of stag-flation ..kind of balancing between recession and inflation..stag-flation is usually temporary leading to another economic climate ...soooo the question is which way are you all gearing your portfolios?....i think the fed is more inclined to raise their comfort zone for inflation to 3-5% rather than throw us into recession by tightning rates...although im very well diversified im holding back buying any bonds beyond buying my fidelity ultra short term bond*, floating rate high income,,new market income and capital and income..all hi-yield and short term......
__________________

__________________
mathjak107 is online now   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!

Re: recession or inflation,gearing portfolio
Old 06-03-2006, 09:06 AM   #2
Moderator Emeritus
Nords's Avatar
 
Join Date: Dec 2002
Location: Oahu
Posts: 26,620
Re: recession or inflation,gearing portfolio

Quote:
Originally Posted by mathjak107
looks like in my opinion we are reaching a point of stag-flation ..kind of balancing between recession and inflation..stag-flation is usually temporary leading to another economic climate
Geez, mathjak, were you investing during the 1970s?

I was only in my teens then but I remember "stagflation" a heckuva lot differently than you present it!
__________________

__________________
*
*

The book written on E-R.org, "The Military Guide to Financial Independence and Retirement", on sale now! For more info see "About Me" in my profile.
I don't spend much time here anymore, so please send me a PM. Thanks.
Nords is offline   Reply With Quote
Re: recession or inflation,gearing portfolio
Old 06-03-2006, 09:46 AM   #3
Recycles dryer sheets
dusk_to_dawn's Avatar
 
Join Date: Dec 2005
Posts: 163
Re: recession or inflation,gearing portfolio

Quote:
Originally Posted by mathjak107
...soooo the question is which way are you all gearing your portfolios?....
Do you remember the old Ron Popeil rotisserie oven commercials? That's how I gear my portfolio....."Set it and forget it!" I allocate among large, mid, small, reit, bonds, int'l and rebalance when necessary. I can never guess which way the market is headed, so I just stay put.
__________________
The way I see it, you got two choices. You either gotta get busy livin'...or get busy dyin'.
dusk_to_dawn is offline   Reply With Quote
Re: recession or inflation,gearing portfolio
Old 06-03-2006, 09:48 AM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Gone4Good's Avatar
 
Join Date: Sep 2005
Posts: 5,381
Re: recession or inflation,gearing portfolio

Quote:
Originally Posted by Nords
Geez, mathjak, were you investing during the 1970s?*

I was only in my teens then but I remember "stagflation" a heckuva lot differently than you present it!
I agree. *We're a far cry from "stagflation". *Real stagflation during the late 70's and early 80's gave rise to a new economic measure called the Misery Index, which is simply the current inflation rate added to the unemployment rate. *The current Misery Index stands at 8.25% vs. a 22% peak in 1980. *For some additional perspective, the Misery Index has averaged 9.5% since 1948 (the median over the same time frame is 8.5%). *So I'd say we're pretty much where we're supposed to be in terms of inflation and unemployment (i.e. stagflation).

To the original question . . . I have no idea whether we are heading for recession or expansion, inflation or deflation, so I try not to fiddle with my portfolio based on whatever the flavor of the month panic/mania happens to be.
__________________
Retired early, traveling perpetually.
Gone4Good is offline   Reply With Quote
Re: recession or inflation,gearing portfolio
Old 06-03-2006, 10:02 AM   #5
Thinks s/he gets paid by the post
Helen's Avatar
 
Join Date: Oct 2004
Location: Portland
Posts: 1,355
Re: recession or inflation,gearing portfolio

Quote:
Originally Posted by mathjak107
i think the fed is more inclined to raise their comfort zone for inflation to 3-5% rather than throw us into recession by tightning rates...
I disagree. Once inflation gets loose, it's hard to rein it back in. It's something the Fed wants to avoid. I believe they (the Fed) feel it's easier for the US to pull out of a recession than it is to curtail runaway inflation, the Fed has more tools to combat recessions.
__________________
Helen is offline   Reply With Quote
Re: recession or inflation,gearing portfolio
Old 06-03-2006, 10:14 AM   #6
Thinks s/he gets paid by the post
Leonidas's Avatar
 
Join Date: May 2006
Location: Where the stars at night are big and bright
Posts: 2,847
Re: recession or inflation,gearing portfolio

Quote:
Originally Posted by 3 Yrs to Go
I agree. We're a far cry from "stagflation". Real stagflation during the late 70's and early 80's gave rise to a new economic measure called the Misery Index, which is simply the current inflation rate added to the unemployment rate.
Oh, the horrible memories this all brings back. Gerald Ford and his WIN buttons (Whip Inflation Now)! And Jimmuh Cahtah, with that stupid sweater, telling us to lower the temperature on our thermostats. Mortgage rates at 22%!

I'll admit that a couple of years ago I was briefly worred that we might be heading toward stagflation, but while I'm not ruling out the possibility that it could happen I think we are still very far from that. Productivity growth is slowing but not going negative, competition is still strong, unemployment is low, inflation is a concern but not a problem. The fuel shortage and price jump from the oil embargo in the 70's was the spark that set it all to really burning, the current rise in oil prices is but a pimple (in terms of real inflation) compared to what that was.

The Fed has a much tighter line to walk now than in the past decade or two, but while I'm eyeing inflation closely I don't think we are even close to putting "stag" on the front end of "flation".
__________________
There is no pleasure in having nothing to do; the fun is having lots to do and not doing it. - Andrew Jackson
Leonidas is offline   Reply With Quote
Re: recession or inflation,gearing portfolio
Old 06-03-2006, 10:31 AM   #7
Thinks s/he gets paid by the post
 
Join Date: Apr 2006
Posts: 1,487
Re: recession or inflation,gearing portfolio

in all likelihood the Fed would target inflation rather than unemployment ... the lesson learned from the last time, was a painful one.* best guess it that they will target a max core CPI (ex food and energy) to be 2-2.5%

BTW, while the 70's were indeed painful, it was in retrospect a great time to be accumulating equities.
__________________
d is offline   Reply With Quote
Re: recession or inflation,gearing portfolio
Old 06-03-2006, 10:32 AM   #8
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2003
Location: Kansas City
Posts: 7,409
Re: recession or inflation,gearing portfolio

Hmmm

The long shadow of military action overseas(spending), lack of fiscal disipline by Congress, high oil prices - it's different this time - Right?

You betcha - this time I'm older and don't intend to do stupid stuff like I did back then - buy gold, silver, international stocks, timberland and real estate. Luckily - largely un-noticed by me - auto deduct(DCA) into S&P 500 via 401k basically funded my ER - after a loooong flat period.

This time -ala Bogle: 'Hurry up, just stand there!'

110- my age handgrenade wise. Led sled dog is VG Target Retirement 2015 - aka MPT lite. With a few putz dividend stocks on the side.

De Gaul and the Norwegian widow ride on!

heh heh heh heh - can't find the Bogle quote handy but the 70's were one of the best decades for earnings growth along with low P/E in the post 1946 period.

Oh crap - I forgot - did own some - psst! Wellesley in the 80's, early 90's - which was ok.
__________________
unclemick is offline   Reply With Quote
Re: recession or inflation,gearing portfolio
Old 06-03-2006, 10:45 AM   #9
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2005
Posts: 5,414
Re: recession or inflation,gearing portfolio

well looks to me like the starting stages of stag flation...i think stag flation is when the economy slows and prices are rising..i think unemployment has to creep higher for the true meaning but after yesterdays jobs report who knows......im just a little gun shy about commiting to bonds yet
__________________
mathjak107 is online now   Reply With Quote
Re: recession or inflation,gearing portfolio
Old 06-03-2006, 12:30 PM   #10
Thinks s/he gets paid by the post
 
Join Date: Apr 2006
Posts: 1,487
Re: recession or inflation,gearing portfolio

Quote:
looks to me like the starting stages of stag flation
by all counts inflationary expectations are modest and, while moderating, the economy is also in good shape --unemployment at 4.6%. (though things could change, we seem to have managed to absorb $70+/barrel oil without major disruption.) so .... what's the cause for concern?
__________________
d is offline   Reply With Quote
Re: recession or inflation,gearing portfolio
Old 06-03-2006, 01:20 PM   #11
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Brat's Avatar
 
Join Date: Feb 2004
Location: Portland, Oregon
Posts: 5,914
Re: recession or inflation,gearing portfolio

I think the inflation will be the result of higher oil prices working through the economy, not demand. I don't think the Fed would be wise to push interest rates up... the market will do that.

Were I they I would keep a light finger on the economy.
__________________
Duck bjorn.
Brat is offline   Reply With Quote
Re: recession or inflation,gearing portfolio
Old 06-03-2006, 01:51 PM   #12
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2005
Posts: 5,414
Re: recession or inflation,gearing portfolio

lets face it if everything was fine the federal reserve wouldnt have looked at each other at the last meeting and as described basically said HUH??

each report seemed to point first one way (inflation) and then onother (slow down to possible recessionary).......theres very little consistant clues for even the professionals of the professionals to grasp and come to a conclusion....
* at this stage its very easy for them to tighten to much and throw us over the edge....my personal feeling is they would prefer to raise their inflation targets from 2 to 3% to 3-5%...not a big problem but i think they would prefer that to overtightning and throwing us into a recession.
__________________
mathjak107 is online now   Reply With Quote
Re: recession or inflation,gearing portfolio
Old 06-03-2006, 01:52 PM   #13
Moderator Emeritus
Nords's Avatar
 
Join Date: Dec 2002
Location: Oahu
Posts: 26,620
Re: recession or inflation,gearing portfolio

Quote:
Originally Posted by mathjak107
lets face it if everything was fine the federal reserve wouldnt have looked at each other at the last meeting and as described basically said HUH??
No, that was caused by the reports of TH's car purchases this year (so far)...
__________________
*
*

The book written on E-R.org, "The Military Guide to Financial Independence and Retirement", on sale now! For more info see "About Me" in my profile.
I don't spend much time here anymore, so please send me a PM. Thanks.
Nords is offline   Reply With Quote
Re: recession or inflation,gearing portfolio
Old 06-03-2006, 02:28 PM   #14
Full time employment: Posting here.
 
Join Date: Feb 2006
Posts: 569
Re: recession or inflation,gearing portfolio

Differance between a Long Term Government Bond and a certain poseur/poster?

The Bond will eventually mature.

Post election, rates will go up in U.S, Greenback is continuing to decline, foreigners will not want to hold a declining currency, rates must go up to defend it, R.E will start to deflate.

Mortgage Rates will be 10% within 2 years.
__________________
Maximillion is offline   Reply With Quote
Re: recession or inflation,gearing portfolio
Old 06-03-2006, 02:39 PM   #15
Thinks s/he gets paid by the post
Tadpole's Avatar
 
Join Date: Jul 2004
Posts: 1,174
Re: recession or inflation,gearing portfolio

Quote:
Originally Posted by mathjak107
lets face it if everything was fine the federal reserve wouldnt have looked at each other at the last meeting and as described basically said HUH??

each report seemed to point first one way (inflation) and then onother (slow down to possible recessionary).......theres very little consistant clues for even the professionals of the professionals to grasp and come to a conclusion....
* at this stage its very easy for them to tighten to much and throw us over the edge....my personal feeling is they would prefer to raise their inflation targets from 2 to 3% to 3-5%...not a big problem but i think they would prefer that to overtightning and throwing us into a recession.
Sounds like Mauldin's latest newsletter. Slowdown - yes; inflation -yes; fed increase - yes.
__________________
Tadpole is offline   Reply With Quote
Re: recession or inflation,gearing portfolio
Old 06-03-2006, 03:21 PM   #16
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
audreyh1's Avatar
 
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 16,536
Re: recession or inflation,gearing portfolio

The Fed might raise a little more - who knows?!?!, but according to ECRI, inflation pressures have peaked and are starting to back off. And the economy will slow down later this year. A slowing economy will reduce inflationary pressures. http://www.thestreet.com/_tscs/marke.../10289029.html I've followed ECRI for many years - they are very good at predicting macro conditions 6 months out (but only 6 months out - no further).

It's hard to know if the Fed will "push" the economy into recession, but there is a ways to go yet. The Fed can cause a slow-down without causing a recession. In either case - recession or slow-down - bonds are usually a good investment.

I brought my bond allocation up to full investment (rebalanced) in mid-April 2006 when the 10-year first crossed 5%. I had let my bond allocation dwindle over the past couple of years as interest rates moved up. So far I am feeling pretty good about this move. I only hold short-term bond funds by the way - these are a better diversifier against equities than long-term bonds.

Audrey
__________________
Well, I thought I was retired. But it seems that now I'm working as a travel agent instead!
audreyh1 is offline   Reply With Quote
Re: recession or inflation,gearing portfolio
Old 06-03-2006, 03:22 PM   #17
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Re: recession or inflation,gearing portfolio

Quote:
Originally Posted by mathjak107
well looks to me like the starting stages of stag flation...i think stag flation is when the economy slows and prices are rising..i think unemployment has to creep higher for the true meaning but after yesterdays jobs report who knows......im just a little gun shy about commiting to bonds yet
Eh, then buy TIPS and make sure you have some commodities exposure, simple as that.
__________________
"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
Re: recession or inflation,gearing portfolio
Old 06-03-2006, 03:42 PM   #18
Thinks s/he gets paid by the post
 
Join Date: Apr 2006
Posts: 1,487
Re: recession or inflation,gearing portfolio

Quote:
TIPS and ... commodities
TIPS would handle the inflation ... but don't believe commodities would help in stagflation.* commodities are led by econ growth, so if that slows commodities would likely fall.
__________________
d is offline   Reply With Quote
Re: recession or inflation,gearing portfolio
Old 06-03-2006, 04:48 PM   #19
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2005
Posts: 5,414
Re: recession or inflation,gearing portfolio

commodities may get a little kick while stocks may drop a bit if we head to the 3-5% range..remember the markets always react like we are going to the moon ....just speculation ,who knows.....
i think im just gearing my fixed income portion a little towards the higher inflation option...over all i still stay put in my equities....im a terrible market timer
__________________
mathjak107 is online now   Reply With Quote
Re: recession or inflation,gearing portfolio
Old 06-03-2006, 06:57 PM   #20
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Re: recession or inflation,gearing portfolio

Quote:
Originally Posted by d
TIPS would handle the inflation ... but don't believe commodities would help in stagflation.* commodities are led by econ growth, so if that slows commodities would likely fall.
Go look at the history. IIRC, commodities did quite well in the bad old days of the 1970s.
__________________

__________________
"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
Reply


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
SWR - Amortize your portfolio RgrGd FIRE and Money 5 03-28-2007 11:29 AM
High Dividend Portfolio vs Portfolio Diversified Across Asset Classes ScaredtoQuit FIRE and Money 36 01-12-2007 01:24 PM
Another perspective on a high-equity portfolio Nords FIRE and Money 98 02-13-2006 12:37 PM
Conservative distribution phase portfolio peteyperson FIRE and Money 13 03-22-2005 07:48 AM
Volatility in your Portfolio ESRBob FIRE and Money 5 03-03-2005 10:09 AM

 

 
All times are GMT -6. The time now is 05:26 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.