Dow at 2-year high

Flagpole, much as Sarah Palin, has some basic truisms correct, then goes overboard with them, against reason, with insufficient information, and a notable lack of curiosity to learn new things.

He'll keep money in the market when it is falling, after having failed to capture his gains when it is high. He's like a guy who doesn't think it's necessary to come in from the rain, reasoning that he will be dry again a day or two after the rain stops, just by standing there, no matter what.

It's not an investment strategy. It's putting yourself at the mercy of the worst the market is capable of, while forfeiting its upside. By taking the downs and the ups, he gets the ups, on a net basis, only once, at most, depending on when he retires/cashes out. It's also possible that he'll be fully invested through the mother of all crashes and have nothing of consequence to cash out someday.

Past performance is not necessarily indicative of future performance, and just because he's "ridden out" every storm so far doesn't make it wise for him to continue to do so, or for others to imitate.

Buy low, make money. Get out with profits. Wait till low again. Buy then, etc. Greed eventually catches up with people who can only add, and not subtract.

Fire and Ice wrote:

flagpole:

you are not seriously under the belief that you will receive any $ from social security are you??

if the program exists then, there will be a grade tax and you will be taxed at 100% of your benefits so you will get nothing from social security

The Democrats love social security and will do everything they can to keep it solvent and working. The GOP hates social security, but they also hate taxes. No way are they going to raise taxes on the elderly.

So, yeah, I think that social security will be around and there is zero chance that it will be taxed at 100%.

it means that if Flagpole is receiving income other than from social security then at some level he will be taxed on his social security earnings till the net is zero,

basically rich people, which flagpole declares he will be, will not be eligible for soc sec even if they are elderly

elderly poor etc. will still be

i could be wrong though, they may institute a Logan's Run system instead

Unhappy News wrote:

Flagpole, much as Sarah Palin, has some basic truisms correct, then goes overboard with them, against reason, with insufficient information, and a notable lack of curiosity to learn new things.

Ha! I like that, but not for the reasons most on letsrun would. No offense intended to Flagpole, who I doubt is a Palin fan. But this is perfect. Flagpole and Palin both have a few simple, common-sense "truisms," as you call them, which a bunch of folks on this message board look down their nose at. Both also seem to be happy, well-adjusted people who have had a great deal of success in spite of not being nearly as "sophisticated" as the haters. I wish I had Flagpole's retirement portfolio. I wish I had Palin's TV show, 2 best-sellers, millions of dollars, and political influence (all self-made, without marrying an influential husband like Hillary did). I think what I like best about both of them is that they cause all the "right" people's heads to explode with indignation.

Fire and Ice wrote:

dude even if I spend more time trying to explain to you, you don't necessarily have to agree with it

its pretty much basic macro economics, but her you go:

http://en.wikipedia.org/wiki/Keynesian_economics

either you are a keynesian or you are not, and even if you are you can disagree about the state of the economy, where it should go, and the policy decisions to try to get there

also, somebody is buying a lot of cotton and driving prices up, if it is not you or flagpole then the Duke brothers must know something

_________________________________________

I think this means that you have absolutely no idea why a high cotton price means my 15% gains in the stock market are devalued.

If you can't explain something simply, it usually isn't true

DontFeedTheTroll wrote:

They are caused by spending more than we collect in taxes. Your opinion that we are spending too much is just an opinion (just as my opinion that we do not tax enough is just an opinion).

Since 1950 federal revenues have bounced between 13% and 20% of GDP. Income taxes revenues have bounced between 6% and 10% of GDP. Messing with tax rates can have severe affects on individual taxpayers but has little affect on how much revenue the government collects.

Since 1950 government spending has risen from 24% of GDP to it's present rate of 45%.

The difference between revenues and spending is what causes the deficit. No matter what the government does, it's not going to get more than 20% of GDP in revenues. However, it does have the power to cut spending to a level that doesn't create huge deficits.

If you can't increase revenues, the only way to decrease the deficit is to cut spending. These aren't opinions, they're facts. The problem isn't not enough taxes, it's too much spending.

_______________________

I agree with you mostly - but the one way government can keep spending more is if they put together a tax package that grows the pie. That way they can still get their 20% of gdp, but that means more and more dollars.

And that is what the fed and congress and white house are doing - trying to grow the pie. Mostly.

agip wrote:

Fire and Ice wrote:

dude even if I spend more time trying to explain to you, you don't necessarily have to agree with it

its pretty much basic macro economics, but her you go:

http://en.wikipedia.org/wiki/Keynesian_economics

either you are a keynesian or you are not, and even if you are you can disagree about the state of the economy, where it should go, and the policy decisions to try to get there

also, somebody is buying a lot of cotton and driving prices up, if it is not you or flagpole then the Duke brothers must know something

_________________________________________

I think this means that you have absolutely no idea why a high cotton price means my 15% gains in the stock market are devalued.

If you can't explain something simply, it usually isn't true

_________________

I think I do, and you don't.

If you can't understand something, then to you it is'nt true. All I can say is you are missing out pal. But you keep trolling along if it makes you happy to argue against the winds.

Fire and Ice wrote:

prices are rising my friend ... the problem is coming

http://graphics.thomsonreuters.com/F/08/CRB_YTD.gif

what are you talking about? look at the numbers. there is virtually no inflation. when demand starts growing significantly and employment grows rapidly, then we should see some inflation. until then, stop invoking the apocalypse.

fisky wrote:

Social Security is won't disappear. While its financial problems are severe, there a number of steps that could be taken to keep it solvent. These steps could include 1) reducing the formula for the percent of SS early retirees get. Currently a 62-year-old can draw 75% of full SS benefits. Reducing that to 60% would result in a tremendous savings because over half of boomers are signing up for SS at age 62. I did a spreadsheet projection of this a while back and the savings were impressive. 2) Phase full SS eligibility (currently age 66) out to age 70 over the next 15 years or so. 3) Remove the cap on SS withholding or raise it to $1 million. 4) Raise the taxes on SS benefits for high income retirees.

I believe you are correct. As I plan to take SS benefits at 62, I know that it is likely I will not get what the current projects are...this is why I have other investments.

Fire and Ice wrote:

agip wrote:

_________________________________________

I think this means that you have absolutely no idea why a high cotton price means my 15% gains in the stock market are devalued.

If you can't explain something simply, it usually isn't true

_________________

I think I do, and you don't.

If you can't understand something, then to you it is'nt true. All I can say is you are missing out pal. But you keep trolling along if it makes you happy to argue against the winds.

____________________________

tell me this - if raw cotton prices falls 10% does that mean my stock market returns are magnified? I suspect you would say no.

point is, you are just spouting stuff that you hear on cnbc and infomercials without any real understanding, no?

What you are suggesting is a strategy only for traders (people who buy individual stocks). There is a time to do that, and that time is when you are COMPLETELY debt free including a house while still putting 15% minimum into retirement accounts made up of good growth stock mutual funds (and some bonds as you get closer to retirement).

You are incorrect that I would always keep money in the market...within 5 years of retirement, if we had another 2008 happen or even the hint that something like that could happen, I would make drastic changes. As I was just 42 in 2008, it was no big deal to watch it go up and then back down and then up again; I just bought a TON when it was low, including two extra unscheduled purchases. LOTS of people got out WAY before they should and got back in WAY after they should. Almost NO ONE gets in at the bottom and out at the top or even close to that, and if that's your strategy, you need to do that consistently on the ups and the downs to make that work...studies show that investors can NOT do that. Studies show that if you invest more like most WOMEN do (buy and hold, and buy and buy and buy and hold) that you come out WAAAAAAY better. I'm playing the percentages brother, and so far, it has worked out great for me.

Including all the bad years since 1989, I've now made right on 11% annually since then. By investing half my income for the first 7 years (beginning at age 23), and up to 20+% since, this has made a nice pile. The 11% annually includes dividends but does NOT include my contributions. Of course the past isn't indicative of the future, but until a drastic change comes to the way the stock market works, there's every reason to believe that it will be close to the norm. At this point, I don't even need it to go up at all. With 16 more years to work, a flat market with my contributions and dividends will give me more than enough. It WON'T be a flat market though, and if it's even close to what it's done in the past, I'm retiring at age 55 instead of 60.

People here told me in 2008 that it would take 20 years for the Dow to get back to 10,000. Nope. They told me to expect small gains in the next couple years that would barely meet inflation. Nope. (I made 34.7% in 2009 and...I'm looking this up right now...18.4% so far in 2010 (hmm...went down even with yesterday's up day...I'll have to see why).

You say to wait until the stock market is low again. Care to tell me what level that would be? What typically happens is people have a number in mind that never comes, because they are driven by greed. Also what happens is that the vast majority of people who are waiting for the magical low level spend all the money they would have invested, so after waiting for 3 years for a LOW level, they are then only able to invest minimally. This is a recipe for disaster. Meanwhile, I've invested the whole time, not only getting the benefit of forced savings, but also the dividends that are reinvested AND shares at a decent price, as EVENTUALLY the market will go north of where I bought.

THE easiest way to wealth and financial freedom short of an unexpected windfall is to do the following:

1) Emergency fund of 3-6 months of expenses.

2) NO debt other than a mortgage which is no more than 25% of your take home pay.

3) Invest 15% or more into retirement accounts...401k first up to match, then Roth IRA and then back to 401k.

4) Do the above things and now either pay the house off quickly or open a non-retirement mutual fund or funds and put extra money there.

5) At this step, you can set up college funding accounts for your kids if you like. This is OPTIONAL.

6) At this step, if you've paid off your house so that you have ZERO debt, AND you continue to fund retirement accounts to the tune of 15% of your income, you CAN buy individual stocks with these rules...a) never own fewer than five; b) never have more than 20% in any one sector; c) spend an hour per week per stock on research on whether to buy more, sell, or hold that stock.

When you retire, you should have NO debt at all. If you've invested as I said above, and you started by age 30, you'll have several million dollars. If you had to start after age 30, then you need to either invest a greater percentage of your income, work a little longer, or do with less money when you retire (and that's fine...even today, if you are 65 and get Social Security, you don't NEED to also have a million dollars in investments to supplement...my parents have a great time traveling the country in their huge 5th wheel camper, are debt free and not stressed about money at all, and they do it all on Social Security, a small pension and less than half of a million dollars in investments.

Unhappy News wrote:

...Buy low, make money. Get out with profits. Wait till low again. Buy then, etc. Greed eventually catches up with people who can only add, and not subtract.

This ^ is SO true. I just don't get why Flagpole and others don't seem to get it.

Buy low. After a big market rise, sell. If you don't get that big market rise then don't buy in the first place!

Making money is SO easy.

Care to tell me when the next LOW market is? Some analysts say it is NOW...even though the Dow has gone from 6400 to 11,400 since March 2009.

Not Flagpole wrote:

Unhappy News wrote:

...Buy low, make money. Get out with profits. Wait till low again. Buy then, etc. Greed eventually catches up with people who can only add, and not subtract.

This ^ is SO true. I just don't get why Flagpole and others don't seem to get it.

Buy low. After a big market rise, sell. If you don't get that big market rise then don't buy in the first place!

Making money is SO easy.

Thanks for the links.

"The problem isn't not enough taxes, it's too much spending."

I agree.

Do you think we can increase tax revenue in order to pay the debt? Either way, spending must be cut. I just think revenue needs to be increased in order to pay for past spending.

I guess the one thing we can agree on is that the "compromise" currently in Congress is bullshit. Lower revenue AND higher spending is the one option that is DEFINITELY wrong.

agip wrote:

tell me this - if raw cotton prices falls 10% does that mean my stock market returns are magnified? I suspect you would say no.

point is, you are just spouting stuff that you hear on cnbc and infomercials without any real understanding, no?

not sure why you fixate on cotton but here goes:

my point to your question:

raw materials index is different than consumer price index

if rmi goes up and cpi does not then either business efficiency has improved or profits (which are your tax base) go down

an early indicator of inflation is when manufacturers pay more for raw materials (that is happening now), on the good side increase in raw material prices is usually an indicator tht an economy is growing so that is a good sign

the response you want to your question:

yes if cotton prices fall 10% than any gains you have in the stock market are magnified to the extent you use your gains to buy cotton, or cotton based products

I am guessing you do not buy a lot of cotton because it does not wick well.

So again I ask you a question:

who is buying up all the cotton???

flag,

i am thinking of buying cotton futures, what do you think?

http://www.agrimoney.com/news/supply-squeeze-to-keep-cotton-price-high---fitch--2613.html

agip,

get in on this now before it is too late

http://www.danielstrading.com/resources/news/Futures-Market-News/Cotton-surges-by-maximum-for-second-straight-day_800290898/

Methuselah wrote:

Thanks for the links.

"The problem isn't not enough taxes, it's too much spending."

I agree.

Do you think we can increase tax revenue in order to pay the debt? Either way, spending must be cut. I just think revenue needs to be increased in order to pay for past spending.

I guess the one thing we can agree on is that the "compromise" currently in Congress is bullshit. Lower revenue AND higher spending is the one option that is DEFINITELY wrong.

I agree with you, with just one minor quibble. The current "compromise" doesn't return LOWER revenue (if you accept the fiction that the payroll tax is dedicated to OASDI), it keeps tax rates as they currently are. It never ceases to amaze me that the way that DC does math always assumes spending will stay the same or rise, but not that tax policy will be continued. If I did my family budget that way (assuming my employer will give an across-the-board 5% raise in spite of the current economy, while also simultaneously assuming that there's no way I can spend next year the same as I did this year), I'd have a mess, too.

That said, the payroll tax cut is pretty wrongheaded. And once the current economic unpleasantness is past, it's quite likely that we should raise taxes. (I'd be in favor of a pretty major overhaul, using the deficit commission's work as a good starting point.) But if we would simply FREEZE (not even cut) spending, we could make huge dents in the deficit.