The sky is falling, the sky is falling

[greg]

Well,we found him guilty on both counts. Wild deliberations all day. We all made a juror cry at 4:20PM. Guilt determined at 4:25. I accused a different woman of attempting to use the "pickled defense." (This is the same as the 'twinkee defense," but Minnesota style. The 'poor' defendant was under the influence.) She felt sorry for him because of prior alcohol related decisions. I straightened her out fast. Highly amusing. I recommend jury duty to all. Back for seconds at the jury trough tomorrow. Still busy; no time to have serious fun here.

MikeW--I will respond.

REW: I hope you are still pondering; I am. I'm also thinking about throwing down the gauntlet to expose the steely hard fist of truth.

[REWahoo]

Quote:

Originally Posted by Apocalypse . . .um . . .SOON Well,we found him guilty on both counts.

"Bring in the guilty SOB, give him a fair trial and hang his *ss." Is this a great country or what?

Quote:

Originally Posted by Apocalypse . . .um . . .SOON REW: I hope you are still pondering; I am. I'm also thinking about throwing down the gauntlet to expose the steely hard fist of truth.

"pondering"?

ponder (syn.): appraise, brood, cerebrate, cogitate, consider, contemplate, daydream, debate, deliberate, dwell, evaluate, examine, excogitate, figure, meditate, mind, moon, mull, mull over, muse, noodle around, perpend, pipe dream, puzzle over, reason, reflect, revolve, roll, ruminate, speculate, study, think out, think over, turn over, weigh, wool gather

No way. I'm retired and that ponder stuff sounds a lot like w*rk to me... :P

REW

[Donner]

Greg—
* * * *
* * * * I hereby pass the baton of chief gloom ‘n doomer in residence on the ER board to you.* Permanently.* I ain’t taking it back.* *Just a caution—you are skating on very thin ice, my friend!* *Good luck.

* * * * You are singing my song.* It does matter what you pay for things.* *The equity, bond* and real estate markets in their current condition of* over-valuation, or super valuation,* have left the arena of* sound investment and are now operating on a different wavelength altogether.* *

* * * * *A good many* very good, sound and intelligent people are puzzled over what is going on in the markets today.* That, in and of itself, ought to give any “investor” pause in the present environment.* That includes yours truly.

* * * * *Liquidity is pouring into these markets and floating the prices of assets all across the board – all over the world.* What’s happening?* *Don’t know for sure but I suspect it has to do with a massive,* perhaps a better word is biblical, shifting of wealth that is going on between the poor, working and middle classes across the globe to a much smaller “investor” class worldwide.* The rich are getting massively richer and the poor* and middle classes are getting richer only at a lot slower pace.* This effect is being masked* in the public’s perception because the poor and middle classes are getting richer from a nominal perspective.* Never had it so good so to speak – what are you complaining about?

* * * * * At the bottom of it is Alan Greenspan’s favorite solution to all of our economic problems – productivity.* Productivity is the amount of output per worker per hour.* And it is going up all around the world.* You CAN produce more with less.* And if you are a really smart businessman, you can cut your prices,* beat the competition, increase your market share,* thumb your nose at your workforce (cut their wages, health care and pensions – Jack Welch calls that Winning) and pocket all that lucre that falls to the bottom line.*
* * * * * *
* * * * * *Used to be that capitalist managers* would have to share the spoils of productivity with labor through higher wages and benefits and with the investors through higher dividends or interest payments.* That game has changed thanks to globalization.* The pathway for the flow of* resources through the capitalist system has changed in a very fundamental way.* The management class, the investor class of the new era,* now* pockets the profits -- the prize for productivity.* *And corporate managers, big and small, don’t want to share the wealth.* Look at Microsoft.* No way Bill Gates is going to share that $32 billion pile of loot he amassed with his labor or his stockholders without being absolutely embarrassed into it by public outrage.* Same goes for the owner of the mom and pop retail outfit at your local strip mall.* Capitalism ain’t what it used to be!
* * * *
* * * * *The forces of globalization are concentrating savings and wealth, funneling it, into pools of excessive, massive liquidity which is being force fed into existing liquid secondary markets for financial instruments in an increasingly global, single, unified financial market.* *And it is a very efficient market* with tens of thousands of very bright money managers all over the world devising efficient portfolio strategies for their manager class/investor class clients.* And those guys in New York, London, Hong Kong, Geneva* and elsewhere are chasing after yield in a short term competitive scramble for returns THIS QUARTER which is rubbing out the benefits of the old Modern Portfolio Theory nostrum – diversify, diversify, diversify.* There is no diversity anywhere in the financial world anymore. It is one world now, baby!* Bond? Stock? Mortgage?* Domestic? International?* Large cap? Small cap? Growth? Value? Makes no difference.* Asset allocation?* Who is kidding who?* Is their yield there that will give me a leg up on Fidelity this quarter?*

* * * * * As far as I am concerned the collective “markets” we are talking about are no longer about financial matters at all.* The dollars and cents per share no longer represent financial values but instead constitute a way to measure world “confidence”.* Trying to analyze the data and the markets from financial perspective is frustrating and essentially pointless. A more productive approach, at least in the short term,* would be to try to analyze how the world is “feeling” today.* *How confident is the world* feeling about the future today?* Feeling real good?* Feeling rich?* Feeling content?* Stomachs full? Feeling safe? Feeling secure? Feeling happy? If enough people “feel” that way then, by golly, the markets are going up today.*

* * * * * *Simply put, we are evolving into a new world order where concentrated wealth deriving from the benefits of globalization driven productivity is finding a place to reside in financial instruments in a one-world 24/7 financial marketplace that never
sleeps.* The funneling process has bid up prices to levels not connected to financial reality from any historical perspective.* But, the markets are not about financial reality anymore. We are in completely new territory.* This wealth plays by different rules.* It is “hot” liquid non-denominational international wealth.* It can be here today and gone tomorrow.* Financial markets are a temporary storehouse for “hot” international wealth.* The individual investor, the little guy, the retiree,* the slow-footed, buy and hold DCA’er, is counted upon to provide the liquidity, to “hold the bag” when it’s time to run.* And he does.* *It’s all about collective world “confidence”.

* * * * * *So,* Greg, you pose the question:* Is the sky falling?* *Better yet –when will the sky fall?* *The answer is : it will fall when the world loses “confidence”.* When will that failure of confidence occur?* Your guess is as good as mine.* But I would suggest the cause of the loss in confidence will be some geo-political setback rather than any “financial” event. No, don’t look to financial metrics : GDP growth rates, inflation unemployment, earnings growth, dividend growth, capitalization rates etc to determine the future course of the “financial markets”.* Look to the headlines on the front pages not the business pages.* * And I would say one of those failure of confidence events in the not too distant future is a lead pipe cinch.*

* * * * * *As always, the question for ERs and wannabes and investors in general is:* how much “confidence”, how much “animal spirit” are you willing to pay for today?* We may not like it but that is now the name of the game.* Personally,* I don’t feel comfortable at all valuing “confidence”.* Is it worth 20 times S&P earnings? 50 times?* 100 times? And, I don’t much cotton to the idea of hitching my retirement portfolio and my retirement lifestyle to the whims of how the international “hot” money set “feels” today.* I will be back in the equities markets when they re-enter earth’s atmosphere and begin to respond to the laws of finance once again.* May be a long wait.* But I really don’t thinks so.

* * * * * * Good luck in your new role of Chicken Little on the Board, Greg.* I empathize.* But be aware that you are singing a song nobody here wants to hear.* Keep your eye on the exit.* You will probably need it before long.

Donner

* * * *

[REWahoo]

Quote:

Originally Posted by Donner Good luck in your new role of Chicken Little on the Board, Greg. I empathize. But be aware that you are singing a song nobody here wants to hear. Keep your eye on the exit. You will probably need it before long.

Donner, don't concern yourself too much about Greg, you appear to have plenty on your plate to worry about as it is. Besides, Greg's already retained counsel....

REW

[MRGALT2U]

Quote:

Originally Posted by Apocalypse . . .um . . .SOON Well,we found him guilty on both counts.* Wild deliberations all day.* We all made a juror cry at 4:20PM.* Guilt determined at 4:25.* I accused a different woman of attempting to use the "pickled defense."* (This is the same as the 'twinkee defense," but Minnesota style.* The 'poor' defendant was under the influence.)* She felt sorry for him because of prior alcohol related decisions.* I straightened her out fast.* Highly amusing.* I recommend jury duty to all.* Back for seconds at the jury trough tomorrow.* Still busy; no time to have serious fun here. MikeW--I will respond. REW:* I hope you are still pondering; I am.* I'm also thinking about throwing down the gauntlet to expose the steely hard fist of truth.* *

I've never been on jury duty. No one in their right mind would allow me to be seated unless to take advantage of my almost complete lack of respect
for authority. Why, I can't even watch 'COPS' any more because I
sympathize so strongly with the "perps"

JG

[Michael Moore]

I liked the comment "My goal is to have enough and reduce my odds of running out too soon."* Luckily, the CSRS pension should pretty much handle that for us.* If it doesn't, things will probably be in such bad shape that large segments of the population will be worrying about finding food, not where to invest.

We moved the rest of our TSP accounts into the G fund a couple of weeks ago so we're now 100% in it.* I see the numbers on the S and C and they look mighty enticing (at this moment in time), and I'm sure that if things don't go pear shaped over the next 5-10 years I'll be kicking myself about all the wonderful profits that were missed.* On the other hand, I didn't enjoy watching the way the C fund brought my total TSP balance down a few years back when I was sure it was just a temporary correction.* ** I can't add any more to the TSP, so I want to at minimum ensure that it doesn't lose money.* I guess you could say I'm inelastic downwards.*

My expectation is that the movers and shakers in the world will continue to watch out for their interests, and not mine.* If their omlette requires that X million of small investors' nest eggs get broken, I don't see that as being much of a factor in their decisions (not to say that some might not* have a qualm or two, but I don't see that as being more than a minority position).

After I get my annual leave cash out I"ll be going down and opening some CDs for my modest chunk o' cash on hand.* My hope is that I'll still save a bit out of the pension amount, and the money in the CDs and the TSP will just chug along, staying safe yet fairly liquid, and will be there to subsidize a small splurge or ease a small crisis here or there along the way and help make later years a bit more comfortable.

FIRE at (almost) 52 exceeds my expectations, so slow and steady gains with zero risk sounds like gravy to me.

In re juries: I was the foreman on a 5 week Municipal Superior Court case - workplace assault and employer discrimination charges.* My lessons learned are that doing most anything you can to stay out of court is worthwhile, as it is damned difficult to tell what the "truth" is, and there sure doesn't seem to be anything like a witness who saw anything at all with accuracy.* Listening to 8 different versions of an event from 8 different people, all of which differ mild->radically from one or more of the other versions, is pretty sobering.

Or it makes you want to unsober yourself when you think of it.*

cheers,
Michael

[Dreamer]

Hey good to have you back Donner. *I always like reading your perspective. *Keep posting!

Dreamer

[unclemick]

While I'm sure Dow 5000 might cause 'pucker' in certain areas of my anatomy - I think I'll let De Gaul and the Norwegian widow ride a little longer.

Ran Firecalc before this post - we should be spending about three times current budget - perhaps a tad overkill on Ben Graham's margin of safety.

In the 'comfort zone' at 12 years into ER - ratcheting up is scary - almost as much as 'the pucker factor' being unemployed in 1993 with 300k combined financial(not counting RE) assets. Luckily - I learned to lighten up in the stretch and became a ER.

Amusingly - the little 2000-2002 market flutter - caused my(not her's) portfolio to swing more than I started with in 1993.

Norwegian widow wise - I noticed the dividends were still there.

[greg]

Quote:

Originally Posted by unclemick2 While I'm sure Dow 5000 might cause 'pucker' in certain areas of my anatomy - I think I'll let De Gaul and the Norwegian widow ride a little longer. Amusingly - the little 2000-2002 market flutter - caused my(not her's) portfolio to swing more than I started with in 1993. Norwegian widow wise - I noticed the dividends were still there.

You're lucky, wise and conservative. I can only have fantasies. I bought a significant number of solid dividend payers in the deeps of 2002, only to sell them in late 2003 out of fear of recession, part 2. When you can get those PEs of 10 on sturdy companies--they should be keepers. Next time for sure! I still try to learn from my mistakes. Shorter term AAA bonds (average 4 duration) will be converted inside the smartypants. The longer duration AAA 8s are specs in the hormone part. Go team.

I have no idea if anyone understands us.

[greg]

Quote:

Originally Posted by REWahoo! Besides, Greg's alredy retained counsel.... REW

My counsel advised me not to mention any misspellings, so I won't.

--Greg

[Danny]

Quote:

Originally Posted by Apocalypse . . .um . . .SOON Y Shorter term AAA bonds (average 4 duration) will be converted inside the smartypants. The longer duration AAA 8s are specs in the hormone part. Go team. I have no idea if anyone understands us.

Let me give you an idea of how much I don't understand. Have you started wearing smartypants? What exactly are you into? I am all for longer duration and hormones however..whatever it takes..I support your right to bare arms and whatever.

[REWahoo]

Quote:

Originally Posted by Apocalypse . . .um . . .SOON My counsel advised me not to mention any misspellings, so I won't. --Greg

Good advise advice. T-Al could be the litigious tipe type.

REW

[greg]

Quote:

Originally Posted by mikew Greg I like the smarty pants part but I don’t know about the hormonal part (which I think is different from some hobby stocks). Mike

The hormone part is where you learn without doing too much damage. It's kinda like examining your wife carefully, watching and learning as much as you can about all the particular components and processes. And then, afterwards applying all the lessons learned to all the other women in the world. It keeps all the learning destruction contained in your own immediate environment without destroying the rest of the female universe--until later. It's where you practice;so it's more than just a hobby. Learn at the micro level, and then move that knowledge out into the macrol world.

Martha: Just kidding, but also 'thank you." You're good for the emotions and the mind.

--DH

[Nords]

Quote:

Originally Posted by Apocalypse . . .um . . .SOON I have no idea if anyone understands us.

My fear is that I do!

Quote:

Originally Posted by Apocalypse . . .um . . .SOON It's kinda like examining your wife carefully, watching and learning as much as you can about all the particular components and processes.* And then, afterwards applying all the lessons learned to all the other women in the world.* It keeps all the learning destruction contained in your own immediate environment without destroying the rest of the female universe--until later.* It's where you practice;so it's more than just a hobby.* Learn at the micro level, and then move that knowledge out into the macro world.

My spouse is all for the "learning as much as you can" part, but she objects to the "applying to the rest of the world" part. I tell her it's just a hobby...

[greg]

Quote:

Originally Posted by Nords My fear is that I do! My spouse is all for the "learning as much as you can" part, but she objects to the "applying to the rest of the world" part. I tell her it's just a hobby...

You may have missed the 'lessons" part. I keep my lessons in my head. Your DW may have a different understanding of "lessons" and is worried about where your particular "lesson" may wander about in the rest of the world. If so, you need to explain to her carefully where your "lesson" boundaries are. I suggest the following: While out to dinner with you DW, when the young, blonde waitress bends over in front of you to fill the glass of water, and rubs against you, you should turn to her (the DW) and say with arched eyebrows "I think she needs a lesson." This way you can test your DW's understanding of the term "lesson." And have a good 'heart to heart' about what's important and what isn't. It's an educational thing. Education is good, isn't it. If she tells you to keep your 'lesson' in your pants, then you know there's a definition problem. Problem solved? Maybe, maybe not. But the DW will like it because you're communicating with her. Problem solved.

PS Try do these sorts of 'communication' things while her favorite HGTV shows are on. You win twice. 8)

--Greg

[greg]

Donner--

Thank you. I accept the baton. I hope to wield it with the best parts of my mind and my heart.

A comment or two on your comments: It's tough to gain perspective when you're sitting on top of an opaque bubble. Right now, after a number of months denying that there is a housing bubble, the market has shifted its perspective to the idea that "well, maybe the bubble will just deflate a little like in Australia." They are at least now admitting that there is a bubble. This helps. But it isn't the entire truth, obviously. Knowledge of both the bear and bull side is good; it is a good starting point for deciding what your actions should be. Denying the existence of one reality (even if, perhaps, small) means you get what you deserve. (The ignorant, as always, will say they didn't see it coming.) Knowledge and information are can be elevators of the human mind and purifiers of the human heart. Use them as such.

I read an article a few months back that said the current AAA bonds have drifted down to BBB status over the past twenty years. Think about this: We, as citizens, have imposed upon Americans not even born yet the obligation to pay off our current obligations, debts (SS), and bad spending habits. How likely is it for this obligation to be fulfilled? Especially if all our actions now don't create a much richer and stable world for them? Answer honestly, taking into consideration all the things happening now--and their possible outcomes. They might actually be junk bonds. Enough said.

I hope for your support in this endeavor,

--Apocolypse . . . um . . . Soon

[Nords]

Quote:

Originally Posted by Apocalypse . . .um . . .SOON PS Try do these sorts of 'communication' things while her favorite HGTV shows are on.* You win twice. 8) --Greg

Machiavellian! I like it!!

[wabmester]

OK, here's a question for you bubble heads. * Do you prefer to avoid a bubble entirely or participate in the bubble and sell near the top?

If I understand Donner's rants correctly, he believes the stock market is overvalued because the P/E is higher than the historical average. * Using that metric as a rationale for exiting the market, he would have been out of stocks since the mid-1980's.

So, how do you guys decide when to exit your position in a frothy asset?

[greg]

Quote:

Originally Posted by Nords Machiavellian! I like it!!

The other choice is denial: Just say "I did NOT have a lesson with that blonde waitress, Monica Lewinsky." Then go down to the strip club and wait for her to figure it out.

--Greg

[Nords]

Quote:

Originally Posted by wabmester OK, here's a question for you bubble heads. * Do you prefer to avoid a bubble entirely or participate in the bubble and sell near the top? So, how do you guys decide when to exit your position in a frothy asset?

Hey, that's what active managers, Warren Buffett, & stop-loss sell orders are for.

But we replenished the spending-money cash last month just in case 2006 is a bad year to be replenishing anything...