AuthorTopic: Hyperinflation or Deflation?  (Read 147190 times)

Offline John of Wallan

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Re: Hyperinflation or Deflation?
« Reply #660 on: October 12, 2019, 03:17:38 AM »
Yes its coming if not here already:
https://www.news.com.au/finance/economy/interest-rates/no-room-to-move-graph-exposes-economys-risky-gamble/news-story/a45c1a8d8c3f5780e2ddab47ea122a94
Record low interest rates everywhere.
Europe is in recession, Oz is about to go into recession, Asia is slowing and US is probably already in recession.

Get out of debt and reduce spending now everyone. There's a bad moon on the rise.
https://www.youtube.com/watch?v=zUQiUFZ5RDw

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Offline Surly1

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Re: Hyperinflation or Deflation?
« Reply #661 on: October 12, 2019, 03:25:33 AM »
Yes its coming if not here already:
https://www.news.com.au/finance/economy/interest-rates/no-room-to-move-graph-exposes-economys-risky-gamble/news-story/a45c1a8d8c3f5780e2ddab47ea122a94
Record low interest rates everywhere.
Europe is in recession, Oz is about to go into recession, Asia is slowing and US is probably already in recession.

Get out of debt and reduce spending now everyone. There's a bad moon on the rise.
https://www.youtube.com/watch?v=zUQiUFZ5RDw

JOW

Always the world's best advice, JOW.
"Do not be daunted by the enormity of the world's grief. Do justly now, love mercy now, walk humbly now. You are not obligated to complete the work, but neither are you free to abandon it."

Offline RE

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Re: Hyperinflation or Deflation?
« Reply #662 on: October 12, 2019, 03:28:35 AM »
There's a bad moon on the rise.

<a href="http://www.youtube.com/v/w6iRNVwslM4" target="_blank" class="new_win">http://www.youtube.com/v/w6iRNVwslM4</a>

RE
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Offline Surly1

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Re: 📉 Is A Recession Inevitable?
« Reply #663 on: October 12, 2019, 03:36:06 AM »
Yes.

RE

<a href="http://www.youtube.com/v/BOW0AIT_3FY" target="_blank" class="new_win">http://www.youtube.com/v/BOW0AIT_3FY</a>

I agree with JOW that it's already here. Despite the denials of Trumputinbots and other members of #TeamTreason.
"Do not be daunted by the enormity of the world's grief. Do justly now, love mercy now, walk humbly now. You are not obligated to complete the work, but neither are you free to abandon it."

Offline RE

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Re: 📉 Is A Recession Inevitable?
« Reply #664 on: October 12, 2019, 03:42:44 AM »

I agree with JOW that it's already here. Despite the denials of Trumputinbots and other members of #TeamTreason.

Honestly, I don't think we have been out of recession since at least 2009.  The numbers get massaged with QE and interest rate changes, but the store closures and increasing homelessness has been on a steady rise through the whole time period.  Now they're just running out of ways to paper it over.

RE
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📉 The Recession Train Has Left the Station
« Reply #665 on: October 14, 2019, 04:23:29 PM »
https://www.bloomberg.com/opinion/articles/2019-10-14/a-china-trade-war-recession-is-already-on-the-way

The Recession Train Has Left the Station

A minor trade-war truce, if it even exists, won’t save the economy.
By Mark Gongloff
October 14, 2019, 12:28 PM AKDT


Get ready for a wild ride.
Photographer: Jason Kirk/Hulton Archive/Getty Images

Mark Gongloff is an editor with Bloomberg Opinion. He previously was a managing editor of Fortune.com, ran the Huffington Post's business and technology coverage, and was a columnist, reporter and editor for the Wall Street Journal.
Read more opinion
Follow @markgongloff on Twitter
COMMENTS
LISTEN TO ARTICLE
6:46

Today’s Agenda

    A trade truce, if it even exists, won’t save the economy.
    Europe must fix its euro problem.
    Trump’s approval ratings are low but unmoved.
    America does sanctions often, but not necessarily well.
    Pragmatic poverty fighters won the Nobel Prize for Economics.

The San Diego County Fair Comes to Southern California
Almost as much fun as an inverted yield curve.
Photographer: Sandy Huffaker/Getty Images North America
A Trade Truce Will Probably Not Save Us

For the past 18 months, the global economy has been on a miserable roller-coaster ride, the Fiery Fist O’ Trade War Pain. In the past few days alone, we’ve gone from soaring highs to gut-wrenching drops. At the end of the line, recession awaits.

On Friday, President Donald Trump said he’d struck a trade truce with China, and stocks soared. This morning, China said it needed more talks to reach a truce, and markets tumbled. Having fun yet? No. (For more of this sort of “entertainment,” see the Brexit Tilt n’ Spew, which took another bad turn today.)

And honestly, even a truce of the sort Trump claimed on Friday won’t help the economic outlook much, writes Tim Duy. The global economy seems headed for a recession, which the U.S. will struggle to avoid. So the Federal Reserve will probably cut rates again this month. It has already started buying bonds to fix technical problems in the overnight repo market. (It doesn’t want to call this quantitative easing, notes Mohamed El-Erian, but for all practical purposes, that’s what it is.)

Thanks to trade hopes and those Fed bond purchases, the “yield curve” — the gap between long- and short-term interest rates — has turned right-side up, after weeks of being queasily “inverted,” with short rates higher than long ones. An inverted yield curve is a recession warning, but its un-inversion doesn't necessarily sound the all-clear, writes John Authers. Yield-curve recession signals have long lead times.

With unemployment low and consumer spending holding up OK, many people think a recession is not inevitable. Gary Shilling is not one of those people; he writes a factory-sector contraction is enough to bring on a recession, and consumer sentiment is weakening anyway.

And there’s no indication China and the U.S. are anywhere near a comprehensive trade deal, writes David Fickling. If anything, the sides seem to be growing further apart. Expect more gut-wrenching dips.
European Vexation

Back in July 2015, Greek 10-year debt yielded an astonishing 18%. Today, that yield is barely more than 1%. Greece was even able to borrow money at negative yields recently, like it’s Germany or something. Greece and Italy, not long ago the sick men of Europe, are now hale and hearty, writes Ferdinando Giugliano. But both countries still have plenty of debt and questions to answer.

The new sick man of Europe, for now, might be Germany, although it’s suffering from a different illness — not a busted budget but an economy with dismal growth prospects, writes John Authers. It won’t break out of its rut until it invents revolutionary new products. Flying Volkswagens, say.

Europe’s biggest problem, though, is an incomplete currency union. Disjointed responses have made crises worse, notes Bloomberg’s editorial board; a unified approach might have kept Greece from the brink of disaster, for example. Now’s a great time, while things are relatively calm, to fix this. Otherwise the next crisis could bring an even scarier populist backlash.
Trump Has Quiet Impeachment Day, Approval Numbers

It was a relatively quiet day on the impeachment front, which may seem like good news for Trump, but could be even better news for Democrats trying to keep their story simple. The indictments of Rudy Giuliani associates last week added new wrinkles to the story, but Noah Feldman writes they shouldn’t distract Democrats from their main message — that Trump himself, in front of the world, abused his office for personal gain.

The Ukraine scandal that has Trump in jeopardy has been going on for three weeks, during which time poll numbers in favor of impeachment have jumped. But Trump’s own approval ratings, while still very low, have been oddly static, writes Jonathan Bernstein, who has some theories on why that might be.
Another Day, Another Round of Sanctions

Less than a week after giving Turkey a green light to invade Kurdish territory in Syria, Trump is slapping sanctions on Turkey for its invasion of Kurdish territory in Syria. Trump has been a big fan of sanctions, which isn’t necessarily a bad thing, writes Bobby Ghosh. But overusing them can sap them of effectiveness. It’s important to make sure they’re doing what they’re supposed to do — which starts with articulating their goals, Bloomberg’s editorial board writes.
Poverty-Fighters Win the Nobel Prize

The Nobel Prize for Economics this year went to Abhijit Banerjee and Esther Duflo of MIT and Michael Kremer of Harvard. The three use experiments to study poverty-fighting tactics. Some call their methods overly scientific, but being depoliticized is a feature, not a bug, writes Mihir Sharma. Their prize is a victory for humble, problem-solving economics, writes Noah Smith, in contrast to quests for universal truths.

One problem Kremer has studied is refugee policy, notes Stephen Carter; he endorsed having wealthy nations pay poorer ones for hosting refugees. And the world always needs more cash for refugees; there are now 17 million, the most since World War II, writes Irene Yuan Sun. Finance can play a role in helping them, with savings accounts, microlending and more.

Further Nobel Reading: The critique of  Peter Handke’s Nobel for Literature misunderstands him. — Leonid Bershidsky
Telltale Charts

If you need visual aids for Tuesday’s Democratic debate, here’s a chart from Max Nisen and Elaine He showing where all the Democrats stand on Medicare for All:
relates to The Recession Train Has Left the Station

The second U.S. shale boom is ending, writes Julian Lee. A third is coming, though it will be less spectacular than the others.
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Offline RE

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📉 Is a Recession Coming? 3 Signs of a Stock Market Crash in 2019/2020
« Reply #666 on: October 18, 2019, 02:46:01 AM »
<a href="http://www.youtube.com/v/fTREL-7eRG4" target="_blank" class="new_win">http://www.youtube.com/v/fTREL-7eRG4</a>
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Offline RE

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📉 Now that I'm finally ready to start investing, everyone says a recession...
« Reply #667 on: December 28, 2019, 03:09:13 AM »
Invest in PREPS!

RE

https://www.businessinsider.com/should-i-invest-money-if-recession-is-coming-advice

Now that I'm finally ready to start investing, everyone says a recession is coming — so I asked a financial planner what to do
Elizabeth Aldrich


    People keep talking about an impending recession, and it's making me nervous to invest my savings after paying off debt and saving up an emergency fund. I don't want to risk losing it all.
    I asked a financial planner what to do, and she said investing now is always better than investing later. "Where people make mistakes is by delaying their entry into the market," the planner told me. That's exactly what I've been doing, out of fear.
    So, I made a plan that splits up my investments between index funds at Vanguard and an investing app.
    To get advice on your own saving and investing strategy, find the right financial planner for you with SmartAsset's free tool »

My Dad's been stressing the importance of investing early to me since I was in high school, but I never listened. Then I realized that I could be worth three times as much as I am now if I had.

Once I realized that investing is the key to generating wealth, I decided to buckle down and start investing as soon as possible. I had to pay off debt first and build up an emergency fund. Now that I've done both, and I've saved up some money to get started, I'm finally ready to invest.

Of course, now that I'm ready to dive into the market, my newsfeed is buzzing with talk of how the market is ready to crash. No one can predict the next recession; even I know that. But still, all this talk of an upcoming recession has me worried about investing at the wrong time.

Scared that an impending market crash would decimate the savings I worked so hard to build if I chose to invest it, but also aware of the fact that I'll never be able to build up an adequate retirement fund by letting my money sit around in a savings account, I decided to ask an expert.
Should I invest my money when everyone says a recession is coming?

I now have $40,000 saved up, all sitting in various savings accounts. I've got $5,000 sitting in a savings account that doesn't earn interest as a cushion for my checking account, another $5,000 sitting in an Ally high-yield savings account as money to use for any self-investment opportunities that come up, and the final $30,000 in a separate high-yield savings account as a very generous emergency fund.

I could probably stand to invest at least half of that money, if not more. I'm not a homeowner, nor do I have kids, so I can't think of many emergencies that would cost me more than a few thousand dollars. As a freelancer, my income is unstable but also diversified, so I'm not too worried about it dropping all the way to zero.

I am worried about my investments dropping all the way to zero, though.

So, I asked Kaya Ladejobi, a Certified Financial Planner (CFP) and founder of financial advisory firm Earn Into Wealth, what I should do.

As a young person in a good financial position to start investing, Ladejobi told me that the next recession shouldn't concern me. "As a matter of fact, a decline in the stock market should spell a buying opportunity for you," she explained. It runs counter to most people's intuition, but when the market dips or crashes, you should invest even more money. This is because you're essentially buying up shares at a discount, and while you might take hits in the short run, your investments will shoot back up eventually.

"I recommend that people with a long-term horizon should stick it through and continue to implement their saving and investment strategy," Ladejobi explained. "With dollar-cost averaging, sometimes you buy high and sometimes you buy low. If you keep it up over your career, things eventually average out."

Historically speaking, returns on the stock market average out to 10% — 7% when adjusted for inflation. Compare this to a typical savings account, which often earns 0.01% to 0.03%, or even high-yield savings accounts, which currently earn around 2% at best, and it's easy to see why investing for the long-run is a no-brainer.

I love my high-yield savings account for stashing funds I might need to access in an emergency, as it currently earns a 1.80% APY. But even then, I know that by letting all of my savings sit in that account, I'm missing out. "Where people make mistakes is by delaying their entry into the market," Ladejobi told me. That's exactly what I've been doing, out of fear.

Blair duQuesnay, another financial planner and investment adviser at Ritholtz Wealth Management, agreed. "The right time to invest is always today, no matter what the market is doing or has done recently," she said.

DuQuesnay said that investing today is even more important for someone like me with 20 or 30 more years to go until retirement. "The power of compounding returns only shows up after significant time invested in the market," she continued, "and you can't start participating until you invest."
How I decided to invest my savings

It's clear to me that I need to start investing, regardless of my worries about the economy. All I need now is a plan.

After some research, I've decided to leave my $5,000 checking account cushion and $5,000 self-investment fund in place and split up my $30,000 emergency fund. I'll invest $10,000 for the long-run (retirement), which will leave me with a $20,000 emergency fund. I'll then invest half of my emergency fund ($10,000) in an account that's easily accessible.

For my long-term investments, I've decided to go with the famous three-fund portfolio, a version of the "lazy portfolio" strategy designed for people who want their investments to perform well in most markets while not requiring active management. I'll invest with Vanguard, splitting the $10,000 up between the following three index funds:

    Vanguard Total Stock Market Index Fund (VTSAX)
    Vanguard Total International Stock Index Fund (VTIAX)
    Vanguard Total Bond Market Fund (VBTLX)

My investments will lean heavily toward stocks, since retirement is still pretty far off for me.

As for the $10,000 of my emergency savings fund that I want to invest, that will be invested with an online investing app, with half of it allocated toward bonds to lower risk. I already have a high-yield savings account there, so I'll be able to invest that money easily, and with its checking account, I can withdraw those investments quickly if I ever need extra cash.

Overall, I feel great about my decision to finally start investing. As Ladejobi says, "Investing is a muscle that you have to build, and I don't recommend that young people sit on the sidelines for the perfect time. Just get in and start investing bit by bit."
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Online K-Dog

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Re: Hyperinflation or Deflation?
« Reply #668 on: December 28, 2019, 12:14:34 PM »
When I was thrown into the Viking grave two months ago (my last employer died) I was able to grab and invest my 401K at 2.7%.  Technically it is in a three year annuity.  RE knowing me personally will be able to figure out exactly what happened to me.  Four slaves had their throat cut to be thrown in the buried boat and I was one of them,  That is the metaphorical way to put it.  The Myans used to bury slave grave offerings alive with the poison of a nightshade plant to induce willingness to go along with the ritual.  We use legal documents.  We imagine burial of slaves along with noble deaths as expressions of grief, but having been through it myself, I know it was all about survivor politics.  No religious belief really behind any of it.  I'm feeling a novel.  Buried slaves were a part of raping and pillaging an estate by heirs in a way which made the most economic sense.  Greed sanctioned by religious ceremony.  An irresistible combination.  Expenses were trimmed.

RE, the get out of my face mailbox money was a few thousand more than your guess it would be last June, but you were in the ball park.  I had to sign a 20 page document to get it and I am not supposed to talk about any lizard people details or I have to give it all back.  I wisely did not insult myself by reading the 20 pages.  I don't really know or care what the details are and I know I am better off not knowing them. 

If I have to give it back that is what I have to do.  I am Ok with doing that.  So do you know anyone in Hollywood?  Seriously sordid details are worth well more than what I would have to give back and I'd be happier with that as an ending now.  I was told by HR that we don't care what you tell your friends but don't talk about this to anyone else.  It would be an interesting screenplay.  Name recognition along with my story would ensure a box office hit, as RE can attest.  A finders fee would be a reasonable expense.

But enough with the personal shit.  We are going to crash and the woman in the article above is going to have her investments lose a decade of value before more funny money gets printed to stick another finger in our leaking economic dike.  A hard crash would wipe me out too; but if a new bailout buys a few more years I won't lose a dime and I still get significant return.

Which inflation wipes out but it is better than gambling it away on Wall Street.  IMHO we have a huge bubble ready to pop.

The job search is underway.  Supposedly the economy is at full employment but that is a lie.  Sugar coated by Trumptopia.  The average time you stay out of work if you are out of a job now has not changed in a year and it still exceeds 20 weeks.  Our ministry of truth has been working hard to paint a mirage in the American desert.  Everybody (non-Diner) thinks the country is doing fine.
« Last Edit: December 28, 2019, 12:49:12 PM by K-Dog »
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Online K-Dog

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Re: 📉 Is a Recession Coming? 3 Signs of a Stock Market Crash in 2019/2020
« Reply #669 on: December 28, 2019, 12:25:18 PM »
<a href="http://www.youtube.com/v/fTREL-7eRG4" target="_blank" class="new_win">http://www.youtube.com/v/fTREL-7eRG4</a>

The inversion in bond yields might be no more reliable than a dousing rod.  14 recessions in 90 years says we could have another.

Such info does not mean anything without a lot more detail and those were the only interesting facts presented.  The rest was political BS.  Trade war this and that.
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Offline RE

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Re: Hyperinflation or Deflation?
« Reply #670 on: December 28, 2019, 01:38:26 PM »
When I was thrown into the Viking grave two months ago (my last employer died) I was able to grab and invest my 401K at 2.7%.  Technically it is in a three year annuity.  RE knowing me personally will be able to figure out exactly what happened to me.  Four slaves had their throat cut to be thrown in the buried boat and I was one of them,  That is the metaphorical way to put it.  The Myans used to bury slave grave offerings alive with the poison of a nightshade plant to induce willingness to go along with the ritual.  We use legal documents.  We imagine burial of slaves along with noble deaths as expressions of grief, but having been through it myself, I know it was all about survivor politics.  No religious belief really behind any of it.  I'm feeling a novel.  Buried slaves were a part of raping and pillaging an estate by heirs in a way which made the most economic sense.  Greed sanctioned by religious ceremony.  An irresistible combination.  Expenses were trimmed.

RE, the get out of my face mailbox money was a few thousand more than your guess it would be last June, but you were in the ball park.  I had to sign a 20 page document to get it and I am not supposed to talk about any lizard people details or I have to give it all back.  I wisely did not insult myself by reading the 20 pages.  I don't really know or care what the details are and I know I am better off not knowing them. 

If I have to give it back that is what I have to do.  I am Ok with doing that.  So do you know anyone in Hollywood?  Seriously sordid details are worth well more than what I would have to give back and I'd be happier with that as an ending now.  I was told by HR that we don't care what you tell your friends but don't talk about this to anyone else.  It would be an interesting screenplay.  Name recognition along with my story would ensure a box office hit, as RE can attest.  A finders fee would be a reasonable expense.

But enough with the personal shit.  We are going to crash and the woman in the article above is going to have her investments lose a decade of value before more funny money gets printed to stick another finger in our leaking economic dike.  A hard crash would wipe me out too; but if a new bailout buys a few more years I won't lose a dime and I still get significant return.

Which inflation wipes out but it is better than gambling it away on Wall Street.  IMHO we have a huge bubble ready to pop.

The job search is underway.  Supposedly the economy is at full employment but that is a lie.  Sugar coated by Trumptopia.  The average time you stay out of work if you are out of a job now has not changed in a year and it still exceeds 20 weeks.  Our ministry of truth has been working hard to paint a mirage in the American desert.  Everybody (non-Diner) thinks the country is doing fine.

So you have joined me collecting your Mailbox Money?  :icon_sunny:

Why even BOTHER looking for a new job?  You did GOOD!  You got a great job when you were on the verge of falling off the cliff, and it lasted to Retirement age!

Kick back and RELAX!

RE
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Offline moniker

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Re: Hyperinflation or Deflation?
« Reply #671 on: December 28, 2019, 02:13:14 PM »
The Myans used to bury slave grave offerings alive with the poison of a nightshade plant to induce willingness to go along with the ritual.  We use legal documents.
I just signed an employee agreement with a large tech company for a non-technical job saying if I even think about writing 2 or more lines of code they get to license it. Maybe they will make me wear one of Elon's neurolinks!  :laugh:
« Last Edit: December 28, 2019, 02:21:44 PM by moniker »

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Re: Hyperinflation or Deflation?
« Reply #672 on: December 28, 2019, 03:13:39 PM »
When I was thrown into the Viking grave two months ago (my last employer died) I was able to grab and invest my 401K at 2.7%.  Technically it is in a three year annuity.  RE knowing me personally will be able to figure out exactly what happened to me.  Four slaves had their throat cut to be thrown in the buried boat and I was one of them,  That is the metaphorical way to put it.  The Myans used to bury slave grave offerings alive with the poison of a nightshade plant to induce willingness to go along with the ritual.  We use legal documents.  We imagine burial of slaves along with noble deaths as expressions of grief, but having been through it myself, I know it was all about survivor politics.  No religious belief really behind any of it.  I'm feeling a novel.  Buried slaves were a part of raping and pillaging an estate by heirs in a way which made the most economic sense.  Greed sanctioned by religious ceremony.  An irresistible combination.  Expenses were trimmed.

RE, the get out of my face mailbox money was a few thousand more than your guess it would be last June, but you were in the ball park.  I had to sign a 20 page document to get it and I am not supposed to talk about any lizard people details or I have to give it all back.  I wisely did not insult myself by reading the 20 pages.  I don't really know or care what the details are and I know I am better off not knowing them. 

If I have to give it back that is what I have to do.  I am Ok with doing that.  So do you know anyone in Hollywood?  Seriously sordid details are worth well more than what I would have to give back and I'd be happier with that as an ending now.  I was told by HR that we don't care what you tell your friends but don't talk about this to anyone else.  It would be an interesting screenplay.  Name recognition along with my story would ensure a box office hit, as RE can attest.  A finders fee would be a reasonable expense.

But enough with the personal shit.  We are going to crash and the woman in the article above is going to have her investments lose a decade of value before more funny money gets printed to stick another finger in our leaking economic dike.  A hard crash would wipe me out too; but if a new bailout buys a few more years I won't lose a dime and I still get significant return.

Which inflation wipes out but it is better than gambling it away on Wall Street.  IMHO we have a huge bubble ready to pop.

The job search is underway.  Supposedly the economy is at full employment but that is a lie.  Sugar coated by Trumptopia.  The average time you stay out of work if you are out of a job now has not changed in a year and it still exceeds 20 weeks.  Our ministry of truth has been working hard to paint a mirage in the American desert.  Everybody (non-Diner) thinks the country is doing fine.

Well played.

The  best financial asset I have is a job nobody can fire me from....every year that gets more obvious.

I won't tell you what to do, because you're a smart dog and your plan is fine. And when you're out-of-work you shouldn't take risks.

But I would mention that crytpo banks are paying 8% on deposits of stable coins.  And I own a crypto bank coin (Nexo) that's been paying out a 12% dividend. I regard it as far safer than some shitty corporate bond.

Younger people need to figure out how to think outside the box.  Returns from most plain vanilla traditional investments are guaranteed to underperform as growth declines. 
What makes the desert beautiful is that somewhere it hides a well.

Offline Eddie

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Invest in PREPS!

RE

https://www.businessinsider.com/should-i-invest-money-if-recession-is-coming-advice

Now that I'm finally ready to start investing, everyone says a recession is coming — so I asked a financial planner what to do
Elizabeth Aldrich


    People keep talking about an impending recession, and it's making me nervous to invest my savings after paying off debt and saving up an emergency fund. I don't want to risk losing it all.
    I asked a financial planner what to do, and she said investing now is always better than investing later. "Where people make mistakes is by delaying their entry into the market," the planner told me. That's exactly what I've been doing, out of fear.
    So, I made a plan that splits up my investments between index funds at Vanguard and an investing app.
    To get advice on your own saving and investing strategy, find the right financial planner for you with SmartAsset's free tool »

My Dad's been stressing the importance of investing early to me since I was in high school, but I never listened. Then I realized that I could be worth three times as much as I am now if I had.

Once I realized that investing is the key to generating wealth, I decided to buckle down and start investing as soon as possible. I had to pay off debt first and build up an emergency fund. Now that I've done both, and I've saved up some money to get started, I'm finally ready to invest.

Of course, now that I'm ready to dive into the market, my newsfeed is buzzing with talk of how the market is ready to crash. No one can predict the next recession; even I know that. But still, all this talk of an upcoming recession has me worried about investing at the wrong time.

Scared that an impending market crash would decimate the savings I worked so hard to build if I chose to invest it, but also aware of the fact that I'll never be able to build up an adequate retirement fund by letting my money sit around in a savings account, I decided to ask an expert.
Should I invest my money when everyone says a recession is coming?

I now have $40,000 saved up, all sitting in various savings accounts. I've got $5,000 sitting in a savings account that doesn't earn interest as a cushion for my checking account, another $5,000 sitting in an Ally high-yield savings account as money to use for any self-investment opportunities that come up, and the final $30,000 in a separate high-yield savings account as a very generous emergency fund.

I could probably stand to invest at least half of that money, if not more. I'm not a homeowner, nor do I have kids, so I can't think of many emergencies that would cost me more than a few thousand dollars. As a freelancer, my income is unstable but also diversified, so I'm not too worried about it dropping all the way to zero.

I am worried about my investments dropping all the way to zero, though.

So, I asked Kaya Ladejobi, a Certified Financial Planner (CFP) and founder of financial advisory firm Earn Into Wealth, what I should do.

As a young person in a good financial position to start investing, Ladejobi told me that the next recession shouldn't concern me. "As a matter of fact, a decline in the stock market should spell a buying opportunity for you," she explained. It runs counter to most people's intuition, but when the market dips or crashes, you should invest even more money. This is because you're essentially buying up shares at a discount, and while you might take hits in the short run, your investments will shoot back up eventually.

"I recommend that people with a long-term horizon should stick it through and continue to implement their saving and investment strategy," Ladejobi explained. "With dollar-cost averaging, sometimes you buy high and sometimes you buy low. If you keep it up over your career, things eventually average out."

Historically speaking, returns on the stock market average out to 10% — 7% when adjusted for inflation. Compare this to a typical savings account, which often earns 0.01% to 0.03%, or even high-yield savings accounts, which currently earn around 2% at best, and it's easy to see why investing for the long-run is a no-brainer.

I love my high-yield savings account for stashing funds I might need to access in an emergency, as it currently earns a 1.80% APY. But even then, I know that by letting all of my savings sit in that account, I'm missing out. "Where people make mistakes is by delaying their entry into the market," Ladejobi told me. That's exactly what I've been doing, out of fear.

Blair duQuesnay, another financial planner and investment adviser at Ritholtz Wealth Management, agreed. "The right time to invest is always today, no matter what the market is doing or has done recently," she said.

DuQuesnay said that investing today is even more important for someone like me with 20 or 30 more years to go until retirement. "The power of compounding returns only shows up after significant time invested in the market," she continued, "and you can't start participating until you invest."
How I decided to invest my savings

It's clear to me that I need to start investing, regardless of my worries about the economy. All I need now is a plan.

After some research, I've decided to leave my $5,000 checking account cushion and $5,000 self-investment fund in place and split up my $30,000 emergency fund. I'll invest $10,000 for the long-run (retirement), which will leave me with a $20,000 emergency fund. I'll then invest half of my emergency fund ($10,000) in an account that's easily accessible.

For my long-term investments, I've decided to go with the famous three-fund portfolio, a version of the "lazy portfolio" strategy designed for people who want their investments to perform well in most markets while not requiring active management. I'll invest with Vanguard, splitting the $10,000 up between the following three index funds:

    Vanguard Total Stock Market Index Fund (VTSAX)
    Vanguard Total International Stock Index Fund (VTIAX)
    Vanguard Total Bond Market Fund (VBTLX)

My investments will lean heavily toward stocks, since retirement is still pretty far off for me.

As for the $10,000 of my emergency savings fund that I want to invest, that will be invested with an online investing app, with half of it allocated toward bonds to lower risk. I already have a high-yield savings account there, so I'll be able to invest that money easily, and with its checking account, I can withdraw those investments quickly if I ever need extra cash.

Overall, I feel great about my decision to finally start investing. As Ladejobi says, "Investing is a muscle that you have to build, and I don't recommend that young people sit on the sidelines for the perfect time. Just get in and start investing bit by bit."

Terrible article, other than a blueprint for what not to do.

She doesn't say anything about what she needs her emergency fund for....how much are her bills? She never says. She says she's not a homeowner. Does she pay rent? How much? Is she single? Sounds like it. An emergency fund is great, but it needs to be based on math. How much money does she have going out the door every month?

Forget her cash savings. How much can she afford to invest every week or month, going forward?  That's what matters.

The number one way self-supporting single women lose their money is by finding some boyfriend to support...or by getting married and then losing it in a divorce.

I bet the CFA failed to mention that. Nobody ever confronts reality when it comes to investing.

Maybe owning a house might not be a bad investment. It depends completely on where she lives. I bet the CFA didn't even talk about that. They don't know anything about anything except how tax-deferred financial instruments work, and the so-called benefits of buy-and-hold investing.

CFA's are still telling people to expect 10% stock market returns over the long term, as this article confirms. Apparently they don't study demographics in CFA school. The likelihood of that happening over the next 20-30 years is exactly zero.

But we see her doing what has always been suggested by practically every silly money magazine you could read for the last 20 years.. Buy some mutual funds and split your portfolio between a stock market index fund, an international stock fund (shudder) and a mixed bond fund (that's probably split between government bonds that pay next to nothing, and corporate bonds, which are EXTREMELY high risk at the moment.

This is a recipe for never getting ahead. Deflation will kill her if it hits, and if we get high inflation, she is unlikely to keep up with it.

Forgive me if I am underwhelmed by this pathetic loser of a strategy; No wonder older women end up subsisting on minimal social security.

And "everyone says" we're headed into a recession. Nothing like basing your investment strategy on "what people are saying."

People like this woman should have a special name.

Call them  "Financial Prey". 

She is grossly ignorant, walking around ready to write somebody a check for a substantial portion of her net worth, based on what? Not much.
What makes the desert beautiful is that somewhere it hides a well.

Online K-Dog

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Re: Hyperinflation or Deflation?
« Reply #674 on: December 28, 2019, 10:33:15 PM »
When I was thrown into the Viking grave two months ago (my last employer died) I was able to grab and invest my 401K at 2.7%.  Technically it is in a three year annuity.  RE knowing me personally will be able to figure out exactly what happened to me.  Four slaves had their throat cut to be thrown in the buried boat and I was one of them,  That is the metaphorical way to put it.  The Myans used to bury slave grave offerings alive with the poison of a nightshade plant to induce willingness to go along with the ritual.  We use legal documents.  We imagine burial of slaves along with noble deaths as expressions of grief, but having been through it myself, I know it was all about survivor politics.  No religious belief really behind any of it.  I'm feeling a novel.  Buried slaves were a part of raping and pillaging an estate by heirs in a way which made the most economic sense.  Greed sanctioned by religious ceremony.  An irresistible combination.  Expenses were trimmed.

RE, the get out of my face mailbox money was a few thousand more than your guess it would be last June, but you were in the ball park.  I had to sign a 20 page document to get it and I am not supposed to talk about any lizard people details or I have to give it all back.  I wisely did not insult myself by reading the 20 pages.  I don't really know or care what the details are and I know I am better off not knowing them. 

If I have to give it back that is what I have to do.  I am Ok with doing that.  So do you know anyone in Hollywood?  Seriously sordid details are worth well more than what I would have to give back and I'd be happier with that as an ending now.  I was told by HR that we don't care what you tell your friends but don't talk about this to anyone else.  It would be an interesting screenplay.  Name recognition along with my story would ensure a box office hit, as RE can attest.  A finders fee would be a reasonable expense.

But enough with the personal shit.  We are going to crash and the woman in the article above is going to have her investments lose a decade of value before more funny money gets printed to stick another finger in our leaking economic dike.  A hard crash would wipe me out too; but if a new bailout buys a few more years I won't lose a dime and I still get significant return.

Which inflation wipes out but it is better than gambling it away on Wall Street.  IMHO we have a huge bubble ready to pop.

The job search is underway.  Supposedly the economy is at full employment but that is a lie.  Sugar coated by Trumptopia.  The average time you stay out of work if you are out of a job now has not changed in a year and it still exceeds 20 weeks.  Our ministry of truth has been working hard to paint a mirage in the American desert.  Everybody (non-Diner) thinks the country is doing fine.

So you have joined me collecting your Mailbox Money?  :icon_sunny:

Why even BOTHER looking for a new job?  You did GOOD!  You got a great job when you were on the verge of falling off the cliff, and it lasted to Retirement age!

Kick back and RELAX!

RE

I need to kick the savings up some.  I've done well but I might live a while.
« Last Edit: December 28, 2019, 10:35:24 PM by K-Dog »
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