Running_Man
Thinks s/he gets paid by the post
- Joined
- Sep 25, 2006
- Messages
- 2,844
Perhaps it is the gloomy predictions by Dex -- he does present compelling arguments -- that has made me more sensitive to this issue than I should be but...
Doomsayers Beware, a Bright Future Beckons
I am curious of the thoughts of others on the subject.
The view of the optimists is just fine so long as you were not a Russian citizen in the early 1900's or a Jew in Germany in the late 30's or fully invested in stocks as you were retiring in 1930. The idea that the world is just one big continual unstoppable uptrend and that naysayers have been proven wrong time and again is absurd
The ability to analyze a situation whether an American Indian in 1800 or living in Russia in the early 1900's or a Jew in the 1930's in Germany or a resident of Hiroshima in 1945 or an investor in the late 1920's or a real estate investor in 2005 and the implication of what the consequences of those actions could be and take precautions is obviously superior to the what me worry approach when the low percentage result occurs. However precious few ever take those steps when confronted and if they do take steps are typically ridiculed for their hesitance at avoiding a low probability high risk event.
People who are optimistic are revered and put up as examples of how to be willing to take risks, but for every Warren Buffet and Bill Gates there are many more who become bankrupt and lose all their money. But for any opportunity taken there is a percentage of likelihood in the opposite occuring, for many the best percentage play they can conceive is asset allocation, and as that has not yet failed it is not an idea yet ridiculed, yet if a low probability event comes along and destroys asset allocation models, the ridicule will certainly arise.
People living in Germany today, considered the most stable of all European countries have in the last 100 years 2 instances of their currency being worthless and so there is considerable pressures in that country for social responsibility.
Everything comes to a cash flow problem in retirement, the uncertainy of need for future cash flows to fund a retirement balanced against the level of risk needed to be taken to assure a level of returns to fund that need. Where this cash is going to come from in an era when the US Government went for 9 percent of GDP in 1910 to 45 percent in 2010 leading to a long term uptrend bias that is displayed in Firecalc as a basis for the next 40 years. Now that 1/3 of that spending is not funded I see little chance of a continuance of the same trend over the next 100 years as that would requre spending of 75% of GDP and a positive outcome for the economy. This same issue has halted growth in Japan for 20 years.
As for the gold thread I always find it amusing that threads that are deemed "not worthy of discussion" generate the highest number of views and posts.