"I say it's 59 1/2."
Thank-you, this proves my point.
"I say it's 59 1/2."
Thank-you, this proves my point.
The run-up over the last three days is due in large part to the perceived higher probability of a rate cut in December and increased expectations for a greater magnitude of rate cuts going forward. You are not likely to see the market rally on a rate cut next month because it is now vitually assured (as far as the market is concerned). Look at the fed funds futres contracts - the market has priced in a 25 pt cut as a certainty and a slight chance of a 50 pt cut. Going further down the road, the market has priced in another rate cut in Jan and two more rate cuts during the first half of the year, bringing the fed funds rate to 3.50% by the end of june. The market is now priced for a much more friendly interest rate environment going forward. You are not likely to see rallies on the actual rate cuts.
Flagpole Willy wrote:
What was a 9.1% YTD return for me earlier in the week has increased to 11.9%. The Fed has hinted at lowering rates too in December, so the market should receive a bounce from that.
bro fro wrote:
i dunno much about economics, but what does this all mean when stock market does well but the value of the dollar continues to go down?
A couple of things can happen from a declining dollar. On the outside, a declining dollar signals our overall financial strength compared to other economies. Right now, we look pretty crappy. Notice that it is very expensive for us to travel to UK, countries that support the Euro, etc. But this also affects our global trade. Because of our weak dollar, countries are buying from us and increasing our net exports. This should help strengthen our dollar but hasn't yet.
A falling dollar also affects foreign investments. This ranges from Europeans buying vacation homes in the US, foreign companies placing stores and operations, etc. But because of the recent credit crunch, those investments have slowed down or gone negative. I believe that this is the biggest contributing factor to the declining dollar.
There are other micro issues that surround this topic like China's pegging and housing, but this is the overall gist of it.
This is one of the reasons why we now have the wave of Fed interest rate cuts. As loans become affordable again, we are hoping to see foreign investments return. This should, after a couple of cycles, help to strengthen our dollar. Hopefully those investments will also buy up the surplus of houses so we aren't facing the 1 in every 40 homes being foreclosed.
Gasbag wrote:
"I say it's 59 1/2."
Thank-you, this proves my point.
Proves what point? Yes mot people don't retire by age 60 these days, but that's because they are spend-a-holics. Invest even just $5,000 a year from age 23 until age 60 and you'll have $1.4 million dollars. That's just $416 a month, or just 10% on a $50,000 a year salary. I understand that initially a 23 year old might not be making $50,000, but eventually they will be, and if they want, they can provide even more money then.
It's not that hard and not that radical to retire at age 60 with some decent money.
Take 5% a year from that 1.4 million and that's $70,000 per year. Add that to any Social Security you might have, and it's not bad. And remember, I based this on only $5000 invested per year. Most people, especially once they turn 30 can do lots more than that. The real power though of course it to do it early. Want more money, then make more and invest more.
Flagpole Willy wrote:
Also, why should a dropping house price make people spend less money?
Because the value of their net assets were overvalued and have corrected. Accordingly, they have adjusted their spending. Over the last year we have seen homeowners have a DECLINING value in their house and an INCREASE in their mortgage payments. IF they can sell their house, they wouldn't even be close to paying the mortgage off.
Flagpole Willy wrote:
Regarding credit tightening, I say GOOD. People with no means and poor payback history should not be given loans. The banks and the people who took those loans out should be suffering. I hope they've all learned their lessons.
I hope they learn their lesson too. But the truth is that there are way too many people in this problem and all of us will bailing them out, even the banks.
Flagpole Willy wrote:
If people would quit treating their homes like a bank, they would be better off.
You are right, they would be better off but your stocks wouldn't do as well because consumer spending would be less.
Flagpole Willy wrote:
Invest even just $5,000 a year from age 23 until age 60 and you'll have $1.4 million dollars. That's just $416 a month, or just 10% on a $50,000 a year salary.
Please provide your calculations
Pierce & Pierce wrote:
Flagpole Willy wrote:Invest even just $5,000 a year from age 23 until age 60 and you'll have $1.4 million dollars. That's just $416 a month, or just 10% on a $50,000 a year salary.
Please provide your calculations
Flag is being conservative here. $5K a year for 37 years averaging 12% is over $3 million. I own a fund that has averaged almost 13% for 57 or so years. $1.4 million is not that big a deal. That's a nine percent return.
http://www.moneychimp.com/calculator/compound_interest_calculator.htm"Yes mot people don't retire by age 60 these days, but that's because they are spend-a-holics."
Flagpole, I admire your propensity to save, you will have a fine retirement, but you have little or no self-awareness. Your personal preferences are not the norm. You have a somewhat higher risk tolerance than most people, this is good, it should allow you to benefit from equity investment. Choice in retirement age is probably the single most powerful variable in determining optimal lifetime expenditure (after income?), your personal preference is NOT consistent with the norm. People around you with the same set of facts and reasoning ability RARELY make the decision to employ their human capital and allocate investment resources the way you do.
Flagpole Willy wrote:
Regarding credit tightening, I say GOOD. People with no means and poor payback history should not be given loans. The banks and the people who took those loans out should be suffering. I hope they've all learned their lessons.
Also, why should a dropping house price make people spend less money? The only ones who spend less due to a drop in housing prices are builders, or people who bought a lot of real estate hoping to sell them and make money, OR (and these are the losers among them) people who use the home equity to buy things. If people would quit treating their homes like a bank, they would be better off. Bottom line is if you got a $150,000 mortgage in 2000 and pay $1200 a month on it in a fixed rate loan, and by 2004 your house was worth $210,000 but is now back down to being worth $175,000, then your montly payment for that house didn't change at all. I don't feel bad for people who bought houses they couldn't afford in hopes that they could sell them in a couple years for a big profit. That's a big gamble they took. Shouldn't buy a house if a swing in the market could make you broke.
I agree that credit tightening is GOOD. People need to take responsibility for their actions.
I disagree about housing. Refinancing has spurned big spending and the economy. Right or wrong, people until recently, have borrowed against their houses to buy cars, vacation homes, college funds etc. The irresponsible spenders created growth. remove them and that growth slows.
I sold some stuff a couple of weeks ago and I remain glad I did. Profit-taking, pure and simple.
Go back and take a look at the Dow Jones for the last year, 2 years, 5 years, and 10 years. We're due for more than a minor correction. We had a serious downturn back around the turn of the millennium--hell, I just looked at the graph, and there was a drop of 2-3000 points over a period of 9-12 months. I'm not jumpy, but neither am I greedy. I think there's more bad news ahead, sooner rather than later.
So yes, I'm feeling better. Sleeping much better at night. Because I sold 40% of the two mutual funds that had done spectacularly well for me.
In the six months between March 2002 and October 2002, the market (DJIA) dropped 2500+ points.
Pierce & Pierce wrote:
Flagpole Willy wrote:Invest even just $5,000 a year from age 23 until age 60 and you'll have $1.4 million dollars. That's just $416 a month, or just 10% on a $50,000 a year salary.
Please provide your calculations
Ok.
Age, Contribution per year, Average Rate of Return, Amount
23, 5000, 9% (1.09), 5450
24, 5000, 9% (1.09), 11390.5
25, 5000, 9% (1.09), 17865.645
26, 5000, 9% (1.09), 24923.55305
27, 5000, 9% (1.09), 32616.67282
28, 5000, 9% (1.09), 41002.17338
29, 5000, 9% (1.09), 50142.36898
30, 5000, 9% (1.09), 60105.18219
31, 5000, 9% (1.09), 70964.64859
32, 5000, 9% (1.09), 82801.46696
33, 5000, 9% (1.09), 95703.59899
34, 5000, 9% (1.09), 109766.9229
35, 5000, 9% (1.09), 125095.946
36, 5000, 9% (1.09), 141804.5811
37, 5000, 9% (1.09), 160016.9934
38, 5000, 9% (1.09), 179868.5228
39, 5000, 9% (1.09), 201506.6898
40, 5000, 9% (1.09), 225092.2919
41, 5000, 9% (1.09), 250800.5982
42, 5000, 9% (1.09), 278822.652
43, 5000, 9% (1.09), 309366.6907
44, 5000, 9% (1.09), 342659.6929
45, 5000, 9% (1.09), 378949.0653
46, 5000, 9% (1.09), 418504.4811
47, 5000, 9% (1.09), 461619.8844
48, 5000, 9% (1.09), 508615.674
49, 5000, 9% (1.09), 559841.0847
50, 5000, 9% (1.09), 615676.7823
51, 5000, 9% (1.09), 676537.6927
52, 5000, 9% (1.09), 742876.0851
53, 5000, 9% (1.09), 815184.9327
54, 5000, 9% (1.09), 894001.5767
55, 5000, 9% (1.09), 979911.7186
56, 5000, 9% (1.09), 1073553.773
57, 5000, 9% (1.09), 1175623.613
58, 5000, 9% (1.09), 1286879.738
59, 5000, 9% (1.09), 1408148.914
60, No contribution. You are left with $1,408,148.91.
Why 9% annual average return? Because that's a CONSERVATIVE number you should be able to meet if you are investing properly. Mutual funds over their history have done close to 12%. Conservative financial advisors say to use 9%. Want to be even more conservative, then use 8%. At 8% by age 60 you'll have $1,096,579.73. And again, this is ONLY with putting in $5,000 a year. You get 9% and decide to work until 65 instead of 60, and you'll have $2,199,228.33.
So, lets say you do $5,000 a year beginning at age 23 and you do that until you are 33 and then at that time due to salary increases and a student loan that is gone, you decide you can now invest $10,000 a year. At age 60 you'll have $1,967,989.99. You can see that doubling your investing has an impact, but it's not HUGE considering you doubled it for the last 17 years. The power is in doing it initially. Now, just for fun lets see what happens if you do $10,000 a year from 23 to 33 and then go down to $5,000 per year from 33 to 60 -- $2,256,456.74. Proving that it is WAY better to dump a ton of money in early if you can than wait until you feel like you can. This is why it is soooooo stupid for a new college graduate to go buy a $20,000 car when he really should find a nice used car for $5,000 and drive that for a long time, save the money and move up in car later, all the while investing as much as possible.
People have heard there's power in compounding, but they don't really get it unless they've done the math.
In my last example to end up with $2,256,456.74, the investor put in just $235,000 over his lifetime. Stout.
"Regarding credit tightening, I say GOOD. People with no means and poor payback history should not be given loans. The banks and the people who took those loans out should be suffering. I hope they've all learned their lessons.
Also, why should a dropping house price make people spend less money? The only ones who spend less due to a drop in housing prices are builders, or people who bought a lot of real estate hoping to sell them and make money, OR (and these are the losers among them) people who use the home equity to buy things. If people would quit treating their homes like a bank, they would be better off." --FPW
God, I SO agree with this. Just read an article in the WSJ couple days ago about a couple who may lose their house because their HELOC rate is going up and ARM is readjusting. Can't refinance because between the HELOC and the ARM they owe more than it's worth. She was a medical billing supervisor and I believe he was a postal delivery worker. Solid stable jobs....but they took out the HELOC to pay the $30K she owed on her LEXUS. A LEXUS? Damn. I don't drive a Lexus --my car cost under $14K. But I ain't in danger of losing my house either. What the hell were they doing? No way should they be bailed out for their stupidity.
Flagpole you are so annoying. You are such a cog for taking stupid people's money.
You leave out inflation.
You leave out rising costs of goods.
This whole thread is like an advertisement to you.
You leave out banking, liquidity crisis, dollar crisis, possible bank runs, bank failures, money market failures, mortgage foreclosures, debt market shut down, negative U.S asset accumulation by foreigners, huge foreign debts, social security, rising taxes, rising tuition costs, possible high unemployment.
You leave all of this out flagpole and paint a cheery, happy picture to all of these young guys on Letsrun who don't know anybetter. You should go to hell and Wejo should ban you. you are destroying the lives of all of these young runners. Is that what you want?
They're gonna have enough to go through. Jesus, do you have a conscience? You must be stupid, no way someone could be that cruel, no way. Stealing money from 40 year old idiots is one thing. But from 19 year old kids? Go to hell.
I hope more people listen to KudzuRunner for a few more weeks. I want to buy more into the market at discount prices in the coming weeks.
However, unless he is now retired or he made a move to simply rebalance his portfolio, I am not sure what made him make a move. A gut feeling? Looking at charts of past history? Some fundamental analysis ratio that I am not aware?
As noted on another thread, the three variables to long term investors are time, risk, and costs. Buying and selling often end up increasing your costs. Unless you are really good at timing the market, you would be better in the long run with staying with what you got unless some fundamentals really changed the picture. Look at Warren Buffett does. He buys and holds and rides out the ups and downs. He looks for companies that make a profit and that he understands.
I love peeps wrote:
Flagpole you are so annoying. You are such a cog for taking stupid people's money.
You leave out inflation.
You leave out rising costs of goods.
This whole thread is like an advertisement to you.
You leave out banking, liquidity crisis, dollar crisis, possible bank runs, bank failures, money market failures, mortgage foreclosures, debt market shut down, negative U.S asset accumulation by foreigners, huge foreign debts, social security, rising taxes, rising tuition costs, possible high unemployment.
You leave all of this out flagpole and paint a cheery, happy picture to all of these young guys on Letsrun who don't know anybetter. You should go to hell and Wejo should ban you. you are destroying the lives of all of these young runners. Is that what you want?
They're gonna have enough to go through. Jesus, do you have a conscience? You must be stupid, no way someone could be that cruel, no way. Stealing money from 40 year old idiots is one thing. But from 19 year old kids? Go to hell.
You are FLAT wrong brother. Mutual funds have averaged just under 12% DESPITE all the bad market conditions you mentioned. Also, so what about inflation? When there's inflation there's also increased salaries. In the case I supplied above, $5,000 a year was put in, or 10% of a $50,000 a year salary. If you go by percentages, you're likely going to be even better as you are likely to get raises in there. You say inflation is not considered. I say BS. $5,000 will be tougher a year at age 23 than it will be at 43, and in one of my scenarios, I said that due to SALARY INCREASES and loss of debt (student loans) that you could put in more. I'm EXACTLY thinking of inflation.
AND, if you say inflation and taxes eat so much of your money up that you ought to just spend it all now, then go right ahead. The dude who put in $5,000 a year will end up with more than 1.4 million dollars, and you'll end up with nothing. Which would you rather have? Remember that the 1.4 million is a conservative estimate as they will likely get raises in there, and perhaps at some point be able to invest even more.
Helloratious wrote:
"Regarding credit tightening, I say GOOD. People with no means and poor payback history should not be given loans. The banks and the people who took those loans out should be suffering. I hope they've all learned their lessons.
Also, why should a dropping house price make people spend less money? The only ones who spend less due to a drop in housing prices are builders, or people who bought a lot of real estate hoping to sell them and make money, OR (and these are the losers among them) people who use the home equity to buy things. If people would quit treating their homes like a bank, they would be better off." --FPW
God, I SO agree with this. Just read an article in the WSJ couple days ago about a couple who may lose their house because their HELOC rate is going up and ARM is readjusting. Can't refinance because between the HELOC and the ARM they owe more than it's worth. She was a medical billing supervisor and I believe he was a postal delivery worker. Solid stable jobs....but they took out the HELOC to pay the $30K she owed on her LEXUS. A LEXUS? Damn. I don't drive a Lexus --my car cost under $14K. But I ain't in danger of losing my house either. What the hell were they doing? No way should they be bailed out for their stupidity.
I agree that they shouldn't be bailed out for their stupidity. More people than should drive a Lexus or a BMW or some other status car. Dude across the street had a Jaguar and a satellite dish (and he made less than me for sure), but he just had to sell his house on a short sale because he was behind in his house payments; he bought it for $163,500 in 2002 and sold it 5 years later for MUCH less than that. My guess is he either had a 5-year ARM that he couldn't handle or a subprime loan. But HEY, he was driving his Jaguar! Nice guy, but didn't know how to handle money at all.
FINL baby, FINL. I bought 7,000 shares 4 days ago at $2.93, sold today at $3.61, a 23% return return in just a few days and a nice $4,760 profit. Good lord I love it when the market drops..
dont care wrote:
delete this thread
Really, all the fuss about the day to day goings on in the SM. None of you will ever live to spend the majority of the money anyway. Go for a nice run along the trails, shuffling through the leaves long since fallen from the trees and admire the woodland creatures gazing upon you in your quest for your next great endeavor or pr.
In other words: Get a f***ing life!
Yep wrote:
dont care wrote:delete this thread
Really, all the fuss about the day to day goings on in the SM. None of you will ever live to spend the majority of the money anyway. Go for a nice run along the trails, shuffling through the leaves long since fallen from the trees and admire the woodland creatures gazing upon you in your quest for your next great endeavor or pr.
In other words: Get a f***ing life!
Who isn't going to live long enough to spend their money?