Terrified. Begging for help - Income/Investing

[47]

Someone mentioned what if some pundit said sell everything in 2007..

The best thing that happened to me.. actually I should put that in the active voice -- the best that I did in the past decade was to quit watching CNBC. Actually I completely cut my cable and made do with OTA channels for sports and Netflix/hulu/online etc. for everything else. It's been such a blessing to my health and most importantly to my portfolio.

I went through the entire 2008 melt-down as if nothing happened. You can call it inertia, lack of options, ostrich attitude, wishful thinking, or even stupidity.

I'd quit full-time in 2004. I'd indexed everything, I was comfortable with my AA, and some income trickling in along with portfolio generated investment income that I could easily hold on for a couple of years by hunkering down. It's not like I wasn't aware of what was going on. I was following the market on a daily basis -- sometimes even two or three times a day -- But never with a lump in my throat but in a strangely emotionally detached way.

I never sold ANYTHING. NOTHING during the melt-down.

If I'd panicked, I would have been cooked for life.

Now, I cannot bear to watch CNBC even for a minute with that scrolling tickers crisscrossing the screen, with your own Rorschach test of pundits.

I am never going back.

 

[AllDone]

Someone mentioned what if some pundit said sell everything in 2007..

The best thing that happened to me.. actually I should put that in the active voice -- the best that I did in the past decade was to quit watching CNBC.

+1

We went looking for a financial advisor when DH turned 50 and I was 49 which coincidentally coincided with the financial meltdown. All the advice we could find seemed to be based on the ravings of TV and radio talking heads, so we wound up doing nothing which in retrospect was just right. I was appalled though. I'm a doctor and even though there are some entertainers with whom I otherwise agree politically but who oppose vaccination, I would never in a million years base my professional recommendations on their lunatic rants. I expected FAs to display a similar level or professionalism -- with my money, dammit!

That being said and to tie it back to the OP, I wish that I had had The Boggleheads Guide to Investing when I was younger. The OP might want to read this and share it with his DW. I've already told my sister-in-law that I'm putting the graduation checks for each of her kids inside a copy

 

[Sparkie67]

May be right to worry, but care to provide a reference for that 95% reduction?

I'm admittedly not much good at reading tons of data, but wading through the US Treasury website had this graph which shows the decline.

From other areas at the website, in the 12 months to July 2013, the private sector bought US$12.5B, down from US$357.6B the year before. Central banks bought US$62.3B, down from US$202.9B the year before. (Thats 87% reduction not 95% - my apologies)

I wouldn't consider myself a tin-hatter, but I do think the petrodollar will cease to be, and with it goes America's ability to print up large sums of money which can be taken up by foreigners, as a requirement to do trade. With no overseas buyers, the cash stays at home, and with it comes inflation and higher interest rates.

As someone who lives outside the US, let me tell you that the perception of America (not necessarily its people!) is one of economic incompetence, bullying, and on its way out. Time will tell I guess. I hope its not the case, but funding structural spending with printed money will end in disaster.

 

[pb4uski]

I'm admittedly not much good at reading tons of data, but wading through the US Treasury website had this graph which shows the decline.

From other areas at the website, in the 12 months to July 2013, the private sector bought US$12.5B, down from US$357.6B the year before. Central banks bought US$62.3B, down from US$202.9B the year before. (Thats 87% reduction not 95% - my apologies)

I wouldn't consider myself a tin-hatter, but I do think the petrodollar will cease to be, and with it goes America's ability to print up large sums of money which can be taken up by foreigners, as a requirement to do trade. With no overseas buyers, the cash stays at home, and with it comes inflation and higher interest rates.

As someone who lives outside the US, let me tell you that the perception of America (not necessarily its people!) is one of economic incompetence, bullying, and on its way out. Time will tell I guess. I hope its not the case, but funding structural spending with printed money will end in disaster.

The evidence that you provided doesn't really relate to the point you were asserting. The point you had made was that foreigners were no longer buying US government debt.

...America has traditionally funded its overspending by selling bonds to foreigners. Over the past 12 months this has all but dried up (95% reduction), so the Fed is 'printing' up the money to buy them. ....

Someone challenged you to back that up and you provide the pdf chart. Trouble is the chart represents "U.S. Treasury and
Government agency bonds and notes, and U.S. corporate bonds and stocks" (emphasis added). So the pdf may or may support the assertion you made not depending on how much of the $408b of net sales in 2013 is government and how much is corporate (which isn't indicated in the document).

Your "printing money" comment is also misinformed - see this article explaining why. Why Quantitative Easing Isn't Printing Money

Also, in your previous post you indicated:

.....The bonds will be sold, and the only buyer is the US government....

As you may know it doesn't really work that way, once the securities are issued the US government has no obligation to buy them no matter how much demand there is to sell them - they can opt to buy them but they are not obligated to.

 

[47]

I just have one observation to the US doomsdayers.

Normally these are the same folks who believe in the omniscient power of the market which absolutely prices everything to perfection.

That being the case, how US is still able to borrow at 2.5% (Fed is not the only entity making the market) needs to be explained.

They can't cry wolf day in and day out for years together and still expect to be taken seriously, when in fact the opposite of what they claim, which is exploding interest rates, is the reality (Krugman's point)

U.S. may not be in perfect shape, but it is nowhere near the edge of apocalypse they make it out to be.

If it is really tinfoil time, the chaos will be so rampant, if you ever end up preserving anything you will be as safe as someone wearing a milkbone undies in a dog eat dog world.

 

[Keim]

I have yet to hear of someone decrying the state of the US suggesting a safer place to invest. The US isn't perfect. It doesn't need to be. It just needs to remain better than the rest.

 

[Sparkie67]

The evidence that you provided doesn't really relate to the point you were asserting. The point you had made was that foreigners were no longer buying US Government debt.......

.......Also, in your previous post you indicated:
As you may know it doesn't really work that way, once the securities are issued the US government has no obligation to buy them no matter how much demand there is to sell them - they can opt to buy them but they are not obligated to.

The Treasury website (section E1) lists the US net position for foreigner purchase and sales of US govt debt. Calender year 2012 = $416,444 M. YTD 2013 (to August) = $ - 22,644 M. Ie, the Govt bought more than it sold.

If the govt doesn't buy them, there will be a potential flood of bonds etc to the market, lowering prices and increasing interest rates. The govt will buy them IMO to avoid this, even if it doesn't 'have' to.

Anyhow, I'm not here to argue, especially at the expense of the OP getting his concerns answered. No one can predict the future. We all take the info we have, and act accordingly as we see fit. If we agreed, there'd be no market!

 

[pb4uski]

You're right Sparkie - that flood of -$22 billion of bonds is bound to trash prices and interest rates! I'm just trying to figure out whether you really believe the drivel you wrote in the last post or are just pulling my leg.

 

[Sparkie67]

You're right Sparkie - that flood of -$22 billion of bonds is bound to trash prices and interest rates! I'm just trying to figure out whether you really believe the drivel you wrote in the last post or are just pulling my leg.

My. Bit over the top. 'If you dont agree with me, then i'll attack you'. America personified!

The point being, foreigners are reducing the amount they are prepared to bail the US out. Leaving the US to monetize its debt to fund the budget deficit. If you think that's the mark of a successful economy, then good for you. I'll leave it there.

 

[Meadbh]

You're right Sparkie - that flood of -$22 billion of bonds is bound to trash prices and interest rates! I'm just trying to figure out whether you really believe the drivel you wrote in the last post or are just pulling my leg.

pb4uski, if you are referring to the post immediately above yours, I'm going to need some help to understand why you describe it as "drivel".

 

[Gumby]

America personified!

Do you think it fair to characterize an entire country based on one post of one person on ER Org? Most would not.

Let's all try to keep things civil.

 

[HFWR]

Haven't had time to peruse the referenced website, but I'm unaware of any dramatic drop in interest of US bond offerings.

 

[pb4uski]

pb4uski, if you are referring to the post immediately above yours, I'm going to need some help to understand why you describe it as "drivel".

My point was that net sales YTD for 2013 of $22b is a proverbial drop in the bucket in relation to trading in US government securities and is hardly evidence that global investors are fleeing from buying debt issued by the US government as Sparkie was suggesting. I guess we'll see who is right during the next financial hiccup when there is a flight to quality.

 

[MichaelB]

People often forget the primary reason foreign central banks hold US$ debt obligations is their countries run trade surplus with the US. The foreign Central Bank is reluctant to exchange those US$ back into their own currency, so they hold it in US$. This is especially true for Asian exporters and OPEC members. In other words, their holdings of US debt is an expression of their internal monetary policy. The true test of foreign gov't "view of the relative safety of US debt" is not the % of US debt held by foreigners, it is what % of total reserves of the foreign country is held in US$ vs other currencies.

 

[HFWR]

My. Bit over the top. 'If you dont agree with me, then i'll attack you'. America personified!

The point being, foreigners are reducing the amount they are prepared to bail the US out. Leaving the US to monetize its debt to fund the budget deficit. If you think that's the mark of a successful economy, then good for you. I'll leave it there.

A lot of moving parts in your statements, but let's look a bit more closely:

GDP - USA, number 1 by 2x
UN funding - USA, number 1 by 2x
Foreign aid - USA, number 1, by almost 3x

No wonder the rest of the world "hates" us...

[/thread hijack]

 

[Meadbh]

Paging Porky.......

 

[Bestwifeever]

Do you think it fair to characterize an entire country based on one post of one person on ER Org? Most would not.

Let's all try to keep things civil.

This. Thank you, Gumby.

 

[HFWR]

Back on topic...

OP, please have a doctor or doctors give you a real diagnosis. Bully for you for taking steps to become healthier. Don't presume you have a fatal illness!

In terms of planning for a future after you're gone, I'd work on building a couch-potato type portfolio, designed to minimize the amount of management necessary, and designed to help your DW sleep at night.

There are lots of possibilities vis a vis what will happen to the US and world economy. It's not a foregone conclusion that it'll be peaches and cream, but also not a foregone conclusion that we'll go to heck in a handbasket...

 

[DevonMiles19]

Ok I cant resist

I'm not saying America is perfect or always right. We aren't. And we need to do somethings better and with a better tone.

BUT, it's others using a statement by one person to say "America Personified". That's sort of generalizing, or even prejudice. But here's a humble proposal to all the world's nations and peoples who have been:

*Boycott American foreign aid dollars. Send the money back. Don't take money from such a bad country.

*Cancel all American military aid. Europe? You handle your own defense...see if you have money leftover for high speed rail then. Ditto Japan, South Korea. And no assumed security guarantee for Canada (a great country). That means Europe takes over the Balkans, and the next time a Bosnia happens, no evil America.

*Boycott American Prescription Drugs. Don't take them anymore.

*Refuse to use American inventions:

*Cars, airplanes, TV's...you can't use em anymore on principle. CELL phones, SMART phones....no more using those.

*Oh, NO more internet. The evil American gov't devised it and American private sector proliferated it. No more Facebook, Twitter. The Arabs don't give free oil, why should America give free internet? Boycott the internet....or at very least, tax the world's citizens for the privilege.

*No more investing in American securities.

*Herald a multi-polar world. The nice Russians, Chinese and North Koreans will be mightier military powers, and no Evil America as a check and balance.


1st off, I appreciate EVERYONE'S heartfelt advice on this thread, doesn't matter your national and political stripe. Hopefully we can all be a human community despite differences.

But while America isn't perfect, i'd offer profanity that says America is better than most, and has done more good for more people than most nations have. On our worst day, people of all colors and money strata long to emigrate here. "Ugly Americans" may not speak the native language when touring other countries....but the same Ugly Americans make accomodations for people who legally and ILLEGALLY, live in America for decades and don't speak English.

As the son of immigrants all I can say is that I am thankful for the United States and I feel it's become to en vogue to trash the place. There's good things in Canada, France, UK, Israel, India, Belgium and many places that America can learn from.

But, many , especially IN America should take a step back and wonder if we trash this place a bit too much and too casually.

Rant over.

 

[DevonMiles19]

Still a skeptic

My point was that net sales YTD for 2013 of $22b is a proverbial drop in the bucket in relation to trading in US government securities and is hardly evidence that global investors are fleeing from buying debt issued by the US government as Sparkie was suggesting. I guess we'll see who is right during the next financial hiccup when there is a flight to quality.

The logic is 100% correct. For now America is THEE place for capital, and will continue to be.

But, is it possible that between America, UK, Japan, China, and the traditional global powerbrokers and money-people.....they might engineer a collapse of the system, and start a new system?

A systemic collapse + a big bloody World War would be perfect catalysts and if we look beyond the headline, there's plenty of evidence that both catalysts are almost being egged on by the global Ruling Class.

That being said, all I ask is that Vanguard and Fidelity pay my family 3% returns for the next 50 years okay?

 

[Sparkie67]

Do you think it fair to characterize an entire country based on one post of one person on ER Org? Most would not.

Let's all try to keep things civil.

No worries. As I said earlier in the thread, America, (not its people) is seen overseas as a bully. Not because of what pb4uski says, but because of the way it acts in the global community. So i was characterising America based on what it does and how it is perceived. Just so happens in this case, that pb4uski acted IMO in the same way.

OP. All I'm getting at, is there are potential signs that all is not well economically in the US, IMO. If you sold out at market lows, maybe consider the possibility that you may be buying back in at market highs.

Most on this forum are probably 60 years old or so. They've lived through 40 years of debt fuelled growth, and know nothing else other than rising markets that sometimes correct but bounce back. Those days, IMO, are coming to an end.

 

[haha]

Your comments might be more useful if you tell us where you are from, if you are a permanent resident in the US now, if you are a student and plan to go back, or perhaps you are a worker who finds better opportunities in the US?

Ha

 

[REWahoo]

Ha, click the user name, then "about me"...

 

[HFWR]

No worries. As I said earlier in the thread, America, (not its people) is seen overseas as a bully. Not because of what pb4uski says, but because of the way it acts in the global community. So i was characterising America based on what it does and how it is perceived. Just so happens in this case, that pb4uski acted IMO in the same way. OP. All I'm getting at, is there are potential signs that all is not well economically in the US, IMO. If you sold out at market lows, maybe consider the possibility that you may be buying back in at market highs. Most on this forum are probably 60 years old or so. They've lived through 40 years of debt fuelled growth, and know nothing else other than rising markets that sometimes correct but bounce back. Those days, IMO, are coming to an end.

The USA is often perceived as you say, though not always rightly. I did post some counterfactuals; care to comment? Also, it's worth noting that we're the largest economy, and the largest consumer, with the largest military; thus if we crap out, it will hurt all over. Best wish us luck!

Many of us, to varying degrees, are aware of and concerned about the issues you raise, but I personally think there's much potential still left, both here and around the world, for economic growth and rising standards of living. We may ver well screw the pooch, but it's not written in stone by any means. You pays your money, you takes your chances...

As an aside, the British and the Aussies are often the only "friends" we have when it comes to stepping up and donating our blood and treasure. I for one am grateful for that. We have too many fair-weather friends who stand back and throw stones...

 

[Alan]

Thanks everyone...

Porky Pig Cartoon Ending "That's All Folks!" - YouTube