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Re: Where to put cash if you don't trust the market....
Old 12-18-2006, 03:21 PM   #21
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Re: Where to put cash if you don't trust the market....

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Originally Posted by Nords
If inflation spikes like it did in the 1970s then I won't be buying CDs or TIPS or bonds. I'll be sniffing around for those single-digit P/Es and 40-cent dollar bills.
That is, with whatever you have left to buy them with.
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Re: Where to put cash if you don't trust the market....
Old 12-18-2006, 03:32 PM   #22
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Re: Where to put cash if you don't trust the market....

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Originally Posted by brewer12345
OK, instead take a look at BEGBX. It is a non-USD bond fund.
Thanks! Will do.
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Re: Where to put cash if you don't trust the market....
Old 12-18-2006, 03:49 PM   #23
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Re: Where to put cash if you don't trust the market....

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Originally Posted by brewer12345
That is, with whatever you have left to buy them with.
Yeah, with the cash allocation that will have magically blossomed from 5% of our portfolio to 10% just due to shrinkage!
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Re: Where to put cash if you don't trust the market....
Old 12-18-2006, 05:42 PM   #24
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Re: Where to put cash if you don't trust the market....

Quote:
Originally Posted by brewer12345
OK, instead take a look at BEGBX. It is a non-USD bond fund.
Forgive me, I've gotten a little lost in this thread - are you saying
"instead of LSGLX" ? I thought LSGLX was non-USD too.

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Re: Where to put cash if you don't trust the market....
Old 12-18-2006, 06:51 PM   #25
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Re: Where to put cash if you don't trust the market....

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Originally Posted by JohnEyles
Forgive me, I've gotten a little lost in this thread - are you saying
"instead of LSGLX" ? I thought LSGLX was non-USD too.

LSGLX is probably OK, but I like BEGBX and have looked at it carefully enough to be comfy with it.
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Re: Where to put cash if you don't trust the market....
Old 12-18-2006, 07:28 PM   #26
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Re: Where to put cash if you don't trust the market....

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Originally Posted by bennevis
That's exactly what I did in 2000 and missed 95% of the crash !
.
If we enter an inflationary cycle, the Fed. will be letting us know by raising rates.
I am struck by the "if we enter into an inflationary cycle..."

How could we not? We did great after WW1, largely because we got rich on that war, rather than impoverished as in all subsequent wars. Look at what happened after Viet Nam. Expect a repeat, if not a harsher ride.

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Re: Where to put cash if you don't trust the market....
Old 12-19-2006, 08:32 AM   #27
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Re: Where to put cash if you don't trust the market....

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Originally Posted by HaHa
I am struck by the "if we enter into an inflationary cycle..."

How could we not? We did great after WW1, largely because we got rich on that war, rather than impoverished as in all subsequent wars. Look at what happened after Viet Nam. Expect a repeat, if not a harsher ride.

Ha
We could, but we won't,,,why? ... because the Fed is much better at controlling inflation today, but not so after WWI. And that's thanks to people like Milton Friedman and, lately, Alan Greenspan. Monetary/Fiscal policy is much better today than in 1929. So, yes, inflation could be a problem, but certainly not a "harsher" one.

Nords says correctly "Besides with everything that's coupled to the ECI or the CPI these days, if inflation spikes the Fed is going to have a real powerful motivation to jump all over it. With all the analysis tools and data-collection systems I'm cautiously optimistic that between the Fed and Congress there'll be a bunch of people keeping inflation within tighter control than we've ever seen before."

All you doom seekers out there, what are you doing about it ?
And do you not believe in FireCalc ? And why not?


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Re: Where to put cash if you don't trust the market....
Old 12-19-2006, 08:52 AM   #28
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Re: Where to put cash if you don't trust the market....

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Originally Posted by bennevis
We could, but we won't,,,why? ... because the Fed is much better at controlling inflation today, but not so after WWI. And that's thanks to people like Milton Friedman and, lately, Alan Greenspan. Monetary/Fiscal policy is much better today than in 1929. So, yes, inflation could be a problem, but certainly not a "harsher" one.

Nords says correctly "Besides with everything that's coupled to the ECI or the CPI these days, if inflation spikes the Fed is going to have a real powerful motivation to jump all over it. With all the analysis tools and data-collection systems I'm cautiously optimistic that between the Fed and Congress there'll be a bunch of people keeping inflation within tighter control than we've ever seen before."

All you doom seekers out there, what are you doing about it ?
And do you not believe in FireCalc ? And why not?
.
Methinks you ascribe too much power and competence to the Fed.
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Re: Where to put cash if you don't trust the market....
Old 12-19-2006, 10:18 AM   #29
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Re: Where to put cash if you don't trust the market....

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Originally Posted by brewer12345
Methinks you ascribe too much power and competence to the Fed.
As compared to the Fed in 1929, 1966, or 1973? I think the tools are much more powerful today.
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Re: Where to put cash if you don't trust the market....
Old 12-19-2006, 10:30 AM   #30
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Re: Where to put cash if you don't trust the market....

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Originally Posted by Nords
As compared to the Fed in 1929, 1966, or 1973? I think the tools are much more powerful today.
Hmmm, except that the world was different back then. The global economiy was more compartmentalized, which means that cetral banks could act more as they wished without causing immediate counterbalancing reactions all over the world. The US Fed also sisn't have to hammer of mammoth foreign holdings of US gummint debt to watch out for. This problem is compounded by teh constant need we have for more funding every day.
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Re: Where to put cash if you don't trust the market....
Old 12-19-2006, 11:27 AM   #31
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Re: Where to put cash if you don't trust the market....

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Originally Posted by brewer12345
Hmmm, except that the world was different back then. The global economiy was more compartmentalized, which means that cetral banks could act more as they wished without causing immediate counterbalancing reactions all over the world. The US Fed also sisn't have to hammer of mammoth foreign holdings of US gummint debt to watch out for. This problem is compounded by teh constant need we have for more funding every day.
Well, that's all a good point... whether the Fed can keep ahead of the rest of the world. And we still haven't addressed the "competence" issues!
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Re: Where to put cash if you don't trust the market....
Old 12-19-2006, 11:31 AM   #32
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Re: Where to put cash if you don't trust the market....

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Well, that's all a good point... whether the Fed can keep ahead of the rest of the world. And we still haven't addressed the "competence" issues!
There is no question that the current Fed is a lot more sophisticated tahn it was in the 70s and the 30s. But there has been a lot of turnover and the current crew don't have Greenspan's street cred yet. I would imagine that they will make mistakes along the way, just like everyone else.
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Re: Where to put cash if you don't trust the market....
Old 12-19-2006, 11:34 AM   #33
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Re: Where to put cash if you don't trust the market....

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Originally Posted by brewer12345
But there has been a lot of turnover and the current crew don't have Greenspan's street cred yet. I would imagine that they will make mistakes along the way, just like everyone else.
How long did Bernanke work under Greenspan? I always thought ol' Al handpicked that turnover... it was quite the case of impeccable timing to watch Bernanke raise his profile through a few carefully-chosen public appearances, then leave the Fed for another prestigious job, and then 18 months later suddenly pop up to be available to give Greenspan a well-deserved sendoff. Much easier than trying to step up from the vice-president's job, where he'd be blamed for all the mistakes of the outgoing administration while trying to explain how he'd do things better.
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Re: Where to put cash if you don't trust the market....
Old 12-19-2006, 01:08 PM   #34
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Re: Where to put cash if you don't trust the market....

Back to the OP, if I may...

Quote:
Originally Posted by HBH
I retired about 5 years ago at 54.

My portfolio is about 42% fixed, 35% equity funds, and 23% cash in CDís. In 2 years, Iíll be taking my SS income.

The fixed portion provides about 120% of my living expenses. ... return 5% and non-publicly traded reits, which return about 7.5%.

....

The 2 financial planners Iíve talked to over the last 5 years think my general investment strategy is poor, primarily because it doesnít maximize my estate at the end, but thatís not my goal.

HBH
Maybe I'm not thinking this thru correctly, but, consider this - His fixed income (@ 42% of his portfolio), kicks off more than enough to cover current living expenses (120%), and he is not concerned about leaving an estate to heirs, and he will start collecting SS in a few years. So, what if he doubled his allocation to fixed - wouldn't he be making enough to cover inflation in this case (240% of needs, and more after SS)?

I think we would need more specific numbers to know for sure. Those could be plugged into FireCalc, but my gut says that the next egg must be pretty large compared to expenses, so maybe conservative is a reasonable choice?

I always look at a really large nest egg two ways -

one) it is so large that you can afford to have some at risk, and

two) it is so large, a conservative approach kicks off all the income I need, why put any at risk?

I don't think either approach is wrong or right, just personal preference.

-ERD50

PS/edit: IMO, the financial planners think his general investment strategy is poor, primarily because it doesnít maximize THE PLANNER'S estate at the end, -
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Re: Where to put cash if you don't trust the market....
Old 12-19-2006, 01:09 PM   #35
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Re: Where to put cash if you don't trust the market....

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Originally Posted by Nords
As compared to the Fed in 1929, 1966, or 1973? I think the tools are much more powerful today.
To keep the over indebted economy from falling through the floor, Fed will need to attempt to try to blow some more bubbles. Especially if the housing downturn picks up speed as it has been appearing to do.

History suggests that it is hard to re-blow the same bubble over and over. Too many people have already been burned by the collapse of the most recent go-round.

The only reason that the massive bubble blowing of the early 21st century didn't cause intense consumer price inflation is a) outsourcing with the consequent recycling of cash back to US securities; and b)the housing boom which due to peculiarities of CPI arithmetic took the pressure off the very large CPI component called rent and owner's equivalent rent.

We could get lucky again next time around, but IMO it is about time to expect the Piper to submit his bill. We cannot possibly start paying down our external debt without depreciating our currency.

Ha
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Re: Where to put cash if you don't trust the market....
Old 12-19-2006, 01:35 PM   #36
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Re: Where to put cash if you don't trust the market....

10-year Treasuries are yielding 4.6%. 10-year TIPS are yielding 2.3%. The bond market is implicitly forecasting a 10-year inflation rate of about 2.3%. The same spread for 30-year securities is about 2.5%. Are you guys (Brewer and Ha) saying that the bond market has got it totally wrong?
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Re: Where to put cash if you don't trust the market....
Old 12-19-2006, 01:39 PM   #37
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Re: Where to put cash if you don't trust the market....

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10-year Treasuries are yielding 4.6%. 10-year TIPS are yielding 2.3%. The bond market is implicitly forecasting a 10-year inflation rate of about 2.3%. The same spread for 30-year securities is about 2.5%. Are you guys (Brewer and Ha) saying that the bond market has got it totally wrong?
I'm saying that I don't know and wish to be protected f the bond market is deluding itself or missing something.
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Re: Where to put cash if you don't trust the market....
Old 12-19-2006, 01:46 PM   #38
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Re: Where to put cash if you don't trust the market....

The key factor is market confidence. Most people are backing away from purchasing real estate. People are still buying equities. Maybe the real estate speculators that got out are fueling the stock markets. When investors lose confidence, we are in for a correction. Nothing the Fed can do will stop that.

If they crank down interest rates, international markets will leave the USD again. But I seriously do not expect the real estate sector to recover. Usually there is a lag effect just like there was on the way up. The Fed had to overcorrect to stem the tide of rising real estate prices.

How many people are jumping into the markets compared to just a year ago?

Has anybody here got their money in 30 year bonds at 2.5%?
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Re: Where to put cash if you don't trust the market....
Old 12-19-2006, 02:14 PM   #39
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Re: Where to put cash if you don't trust the market....

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10-year Treasuries are yielding 4.6%. 10-year TIPS are yielding 2.3%. The bond market is implicitly forecasting a 10-year inflation rate of about 2.3%. The same spread for 30-year securities is about 2.5%. Are you guys (Brewer and Ha) saying that the bond market has got it totally wrong?
First, since I am willing to throw out deflation as a serious possibility over any prolonged period, if TIPS and fixed rates long term bonds are at parity, I'll take TIPS. I feel like giving away the downside of inflation is not a big loss. But I get to cover the upside essentially for free.

Mostly this is just my prejudice. I think governemnts are liars and thieves and the good luck that has suppressed inflation of tradable goods is getting long in the tooth. Note that only inflation of tradable goods has been suppressed-inflation of everything else proceeds at high rates.

While I was still in my 20s I had the immense good fortune to be exposed to Dr. S.I. Hayakawa at SF State. What a genius. He was not an economist. He called himself a general semanticist. A main point he made was that there is a primary reality, which he called "The Territory". One cannot know this reality in any complete way, but only try to approach it carefully and respectfully and from different points of view. Overlaid on this primary flux were secondary and tertiary and even higher levels of abstraction which he called "The Maps". A key point was that one should never forget that the map is not the territory. At best it is a partial representation of the territory which will always be misleading in some ways and at some times.

I try to pay little or no attention to abstractions about how things are supposed to work, because just when you think you have it down pat-BAM! Socked in the kisser!

Ha
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Re: Where to put cash if you don't trust the market....
Old 12-19-2006, 02:55 PM   #40
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Re: Where to put cash if you don't trust the market....

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Originally Posted by HaHa


While I was still in my 20s I had the immense good fortune to be exposed to Dr. S.I. Hayakawa at SF State. What a genius. He was not an economist. He called himself a general semanticist. A main point he made was that there is a primary reality, which he called "The Territory". One cannot know this reality in any complete way, but only try to approach it carefully and respectfully and from different points of view. Overlaid on this primary flux were secondary and tertiary and even higher levels of abstraction which he called "The Maps". A key point was that one should never forget that the map is not the territory. At best it is a partial representation of the territory which will always be misleading in some ways and at some times.
Actually, this idea about map vs. territory was formulated (famously) by Alfred Korzybski.

Winnie
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