Let's take a moment to reflect on the events of 4 years ago. Since that day, everything has changed:
<ul>
<li> projected federal tax revenues down $1.35 trillion dollars from then until 2010
<li> a federal budget deficit of $158 billion in 2002
<li> a federal budget deficit of $378 billion in 2003
<li> the Dow Jones closed industrial average closed at 11,090 and has since to return
<li> the government has tried to operate at it's lowest percentage of GDP (16%) since 1959
</ul>
<!--break-->
As a transformative force in society, the Bush tax cuts of 2001 will have more impact on the future of American society than the attacks later that year. (Only just a little hyperbole.)
(<a href="http://www.theatlantic.com/doc/200507/fallows">source</a> -- pay for it)
<li>a federal budget deficit of $412 billion in 2004
<li>a (projected) federal budget deficit of $350 billion in 2005
</ul>
Thanks to increased revenues, the budget deficit this year _may_ decrease, the first time in four years. No thanks to controlling spending.
even though I am participating in them,
these "the sky are falling" posts are starting to make my eyes glaze over.
_______________________________
I'm not sure I get it.
_______________________________
<i>Disclaimer: This post not about Gabe Kapler.</i>
Im sure all the Chicken Littles will explain it away.
but Im pretty confident that investing my $$$ in the Stock market over a period of 20+ years will yield much better results than stuffing it in a mattress or worse yet, waiting for the uber progressive movement of wonderful government to come and save me / help me in my retirement...
*My emerging markets stock had a 44% rate of return from 12/31/2004 to 12/31/2005* - what a shitty economy, eh?
<img width=600 src="http://static.flickr.com/39/84938682_947a437f90_o.jpg">
<i>Ed.: shrunk pic.</i>
Do you really think you get a "worse" return on investment through government bonds than just "stuffing it in a mattress"?
And then if I explain this to you, I am a "chicken little"?
Your ignorance in econimcs is astounding.
I don't see how someone in their late 20's or early 30s. with so much time to invest, would put a lot of money into bonds, without risk there is no reward.
If you are retiring in the next 5 years swinging for the fence doesn't make a lot of sense.
[earnestly, w/ no intentional sarcasm or condescension]What would you, db, recommend for a good text on economics so I can see your point of view more?[/earnestly, w/ no intentional sarcasm or condescension]
20+ years in the stock market _may_ give you better performance than stuffing your savings in a mattress. "Past performance is no indication of future returns", isn't that what they say? Regardless, you are putting words in my mouth. As I doubt I have ever claimed that relying on the government is an individual's surest way to a comfortable retirement.
It's the biggest falsehood of the "Save Social Security" spectacle: IT"S NOT A RETIREMENT ACCOUNT! If you find that you'll be depending solely on Social Security to fund your retirement, then you will be living in poverty. Sounds fantastic, doesn't it? No wonder the Republicans want to dismantle it. The clamor for poverty must be tempting for Joe Six-Pack...
Does your 44% return in the past year make up for the <a href="http://quicktake.morningstar.com/Fund/TotalReturns.asp?Country=USA&Symbol=FEMKX&fdtab=returns">abyssmal returns of '97-'00</a>? FEMKX has actually outperformed in the period that I've been lamenting! Alas, one mutual fund does not an economy make. In fact, FEMKX has 10-yr annualized return of 2.74% Sounds like mattress stuffing, or at least, government bonds. ;)
It is true that if you've _started_ investing in this particuar fund in '03, then you are doing pretty well. Woe to the money that went into this well prior to that.
All Im saying is that living in America isnt always the gloom/doom picture that is presented here and many other places. Many many bad / wrong things in our country, but they beat the heck out of any alternatives I can think of, and call me a Pollyanna if you must, the world could stand for some optimism as opposed to more cynicism.
Back to economic texts:
I have been attempting to pore through FA Hayek's <i><b>The Road To Serfdom</i></b> as well as reading books by Peter Lynch and looking into the history of folks like Alexander Hamilton. To keep things constructive here, what are other quality resources are out there that you guys like? What am I missing?
yours in (hopefully declining) economic ignorance,
NP
What's wrong with wanting the US to be better? Sorry for my patriotism.
What's wrong with wanting the US to be better? Sorry for my patriotism."
Which I certainly appreciate, I should have made it a point to also regard the good news you pointed out here in this thread. My apologies.
I guess my head was stuck in the thread we were all going back and forth with a few weeks/months back in where it was said in no uncertain terms that our economy sucked.
If you're reading Hayek and Hamilton, then you're way ahead of me as it relates to various macro- theories. Galbraith, though, temper 'em with Galbraith.
I agree, after thinking about the post more carefully, that posting Lev Co Sto or S&P Index would have proved my point abit better. (Went for the eye popping number - sorry)
It's also notable that Emer. mkts is like 10% of my portfolio - I might have made people look at one tree instead of the forest - My point is that our economy <b>does not</b> suck right now. consumer confidence from a standpoint of December spending, DJIA, S & P, et. al are all up.
I understand inflation and other things you guys mention that also have to be considered when measuring how the US is doing overall.
I had so many years of being afraid to even open my 401K statements, and now, I m seeing positive rates of returns globally through all of my funds (90 % of which are strictly US by the way)and by paying attention to this information, I am hoping to learn more so I wont have to depend financially on others later in my life and to be able to help the little Ween listener go to a good college. I feel more positive about these goals of mine today than I did a few years ago. Is that so wrong?
I beg you yet again, please stop arguing facts.
T-Bonds are at about <a href="http://www.savingsbonds.gov/indiv/research/indepth/tbonds/res_tbond_rates.htm">4% right now.</a>
Under the mattress = 0%
You said "worse yet, waiting for the uber progressive movement of wonderful government to come and save me / help me in my retirement."
Factually wrong, and one does not need a text book to know this.
Nothing personal.
There's nothing wrong about being pleased with performance. I am happy the markets are moving generally upwards. I too have about 10% in mutual funds focused on international stocks. Based on my pessimism I should probably re-allocate. Indeed, it seems that I'm doing OK if I want to hedge my bets against inflation (7% in bonds). Then again, my new philosophy is "hold 'em". Which I picked up after getting burned by switching from State Street, to M.I.G., to Fidelity, to American Funds over the course of 1999 and 2000 (more due to employment status rather than investment strategy).
I was seeing better returns, overall, in 2003, for example:
<a href="http://quicktake.morningstar.com/Fund/Snapshot.asp?Country=USA&Symbol=RAFAX">RAFAX</a>, <a href="http://quicktake.morningstar.com/Fund/Snapshot.asp?Country=USA&Symbol=RLBAX">RLBAX</a>, <a href="http://quicktake.morningstar.com/Fund/Snapshot.asp?Country=USA&Symbol=AEPGX">AEPG</a>, <a href="http://quicktake.morningstar.com/Fund/Snapshot.asp?Country=USA&Symbol=SMCWX">SMCWX</a>
If only I'd had as much money in 2003 as I have in 2006, then everything would be swell!
----
Holiday spending was fairly flat relative to last year, so I thought. The S&P is only up 1% for 2005. DJIA is up 5%, good news, but still off 700 points from an all-time high in Jan. 2000. Granted, that was the peak of an unsustainable bubble.
The economy does not suck. Could it be better? Definitely. Are their indications that current monetary policy could make the economy really sucky? I think so.
Here's my point: The economy will continue to work for me (I can't argue I'm _worse_ off than I was 5 years ago), however, not everyone can afford to put money in the financial markets. Moreover, the economy is changing such that more and more people will be unable to do so (namely, rising interest rates, creeping inflation and stagnant wages). There I go again, worrying about others.
I have about 10% in bonds, but many I know have over 40% and did much better than I since summer '01.
The only conciliation is that 'black Fridays' typically don't bleed into the next week.