Where to put cash if you don't trust the market....

[haha]

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.

Ha

 

[renferme]

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?


.

 

[brewer12345]

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.

 

[Nords]

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.

 

[brewer12345]

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.

 

[Nords]

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!

 

[brewer12345]

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.

 

[Nords]

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.

 

[ERD50]

Back to the OP, if I may...

I retired about 5 years ago at 54.

My portfolio is about 42% fixed, 35% equity funds, and 23% cash in CD’s. In 2 years, I’ll 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 I’ve talked to over the last 5 years think my general investment strategy is poor, primarily because it doesn’t maximize my estate at the end, but that’s 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 doesn’t maximize THE PLANNER'S estate at the end, -

 

[haha]

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

 

[FIRE'd@51]

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?

 

[brewer12345]

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.

 

[kcowan]

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%?

 

[haha]

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

 

[winnie]

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

 

[yakers]

Actually, this idea about map vs. territory was formulated (famously) by Alfred Korzybski.

Winnie

Good call, I just happen to have a copy of Science And Sanity on the shelf next to my desk.

 

[haha]

Actually, this idea about map vs. territory was formulated (famously) by Alfred Korzybski.

Winnie

I guess I didn't say that Hayakawa invented the idea, only that he was to me an accessible and able promulgator of these ideas. I waded through Korzybski's book also, but compared to Hayakawa he is a turgid and needlessly wordy author. Also, Hayakawa was right there in San Francisco, refusing to submit to the hysteria that bowled over many a college administrator in those tumultuous years. So I could see and hear him as well as read his books.

As I see it, the bedrock message of general semantics in the map/territory contrast. General semantics is not owned by any one person, any more than semiotics or utilitarianism or Epicureanism is.

Remember-one territory, many maps.

Ha

 

[winnie]

I guess I didn't say that Hayakawa invented the idea, only that he was to me an accessible and able promulgator of these ideas.

Remember-one territory, many maps.

Ha

I guess I agree, and don't mean to hijack the thread. But, I can't resist adding in Baudrillard's postmodern updating of these ideas -- much scarier and vertigo-inducing. He argued that, in todays technology-saturated environment, the comfortable line between map and territory no longer holds, as it did for Korzybinski in the 30s and Hayakawa in the 50s/60s:


"Today abstraction is no longer that of the map, the double, the mirror, or the concept. Simulation is no longer that of a territory, a referential being or substance. It is the generation by models of a real without origin or reality: A hyperreal. The territory no longer precedes the map, nor does it survive it. It is nevertheless the map that precedes the territory - precession of simulacra - that engenders the territory. (Baudrillard, 1994, p. 1)

Computer software is one of his examples of the disappearance of the real (territory) in the face of the imaginary (map). And, I guess one could argue that valuations on Wall Street -- to the extent that they are completely uncoupled from reality sometimes (think Enron) is another example of the "hyper-real" -- the disappearance of the real in the face of the imaginary.

ok. I'll shut up now.
winnie

 

[REWahoo]

ok. I'll shut up now.
winnie

Oh pooh, winnie. You don't have to do that.

 

[unclemick]

Hmmm

I vaguely remember - 'the word is not the thing' from communications 101 in the early 60's at the old U of W. Good old S.I.H. can't remember his book?

heh heh heh - go Huskies maybe next year.

 

[donheff]

"Today abstraction is no longer that of the map, the double, the mirror, or the concept. Simulation is no longer that of a territory, a referential being or substance. It is the generation by models of a real without origin or reality: A hyperreal. The territory no longer precedes the map, nor does it survive it. It is nevertheless the map that precedes the territory - precession of simulacra - that engenders the territory. (Baudrillard, 1994, p. 1)

Computer software is one of his examples of the disappearance of the real (territory) in the face of the imaginary (map). And, I guess one could argue that valuations on Wall Street -- to the extent that they are completely uncoupled from reality sometimes (think Enron) is another example of the "hyper-real" -- the disappearance of the real in the face of the imaginary.

ok. I'll shut up now.
winnie

As we would have said, back in the day, "wow, that's some heavy Sh**." So is he really saying that there is no real or just that we are now creating our reality?

 

[winnie]

As we would have said, back in the day, "wow, that's some heavy Sh**." So is he really saying that there is no real or just that we are now creating our reality?

There is a real. BUT, mostly, it is no longer accessible to us, so it may as well not exist. So, we create our reality....our illusions are more powerful than the material. Illusions drive profit. People really got rich from the Enron sleight of hand. People really became impoverished from it. The illusion drove the reality, and not vice versa. But, at times, the Real can reassert itself (the unwinding of the Enron scandal). And I'll bet its reasserting itself all over Mr. Skilling right about now. For Baudrillard, though, the reassertion of the Real is the exception rather than the norm in our media-ted society.

Winnie