Today, this is a tiny fraction of what Goldman Sachs, JPMorgan and the likes do. Their business is more like a casino: betting and speculation. Layers and layers of financial products like russian dolls; when will people realize that for every dollar they invest the actual product is a tiny fraction and the rest are commissions and promises of a bogus return in the future?
The money they make comes from: a) the extra margin we all pay on almost everything, from utilities to commodities (raw materials, food, etc.), since they have already bought them and sold them with profit with their derivatives and b) the money we are all going to lose when the market collapses; either directly or indirectly – through our taxes to bail out banks and insurance companies, while their management walks away with billions in bonuses.
Decades ago, the financial industry used to amount to 5-10% of the GDP; recently, it was around 40%. What does this tells us? Simply this: we’re buying very, very watered-down whisky. The whole world is suffering and working like crazy while these vampires are still living on their ivory towers and sucking our blood. We could layoff 99% of these guys and the world would still move on happily. Can we say the same about any other profession?>>
Depending on your time frame and your investment strategy, many of your positions should have been stopped out. I am posting the model portfolio for purposes of illustration (some should have already been stopped out.) We are not currently proposing any new buys. Also depending on your strategy, perhaps half of the winning positions should have been sold after a 15-20% gain.
The “Cash for Clunkers” U.S. Government program cost taxpayers $24,000 per vehicle sold per Edmunds.com data. Can you imagine the government waste waiting for us with the upcoming “health care overhaul.” For more Halloween Fun, visit: http://www.cagw.org
My purpose for this blog is not to go into any details about the fundamentals (financials) of the companies that are placed in the model portfolio. In fact, I don’t even tell you what they do. This information is easily obtained, and my intention is to accomplish my purpose for this blog with as little writing as possible.
CAAS (chart above) at the price indicated on the chart of 10.76 and CVGW at 20.87. YONG from last weekend very strong player. Some may want to buy half a position and wait for a pullback in the two new ones. CREE at 39.00 looks attractive, but not as fast a stock, so we’re just throwing it out there. Other signals are on stocks already in the model portfolio! They include QSII (already up 9%), ISRG & VPRT (those last 2 are at about breakeven). GMCR is +17.56%. IBM mentioned last weekend as a potential mover (mostly for daytraders, but investors are welcome), with a piercing line candle as a signal (gap down with a sharp reversal, see last post) is up very nicely from 119 to 125.93 (almost 7 points).
Response to Time Magazine article Cover Story Saturday, Nov 7 2009
News & Comments maximize401k 3:35 PM
I recently posted an excerpt from the Time magazine article cover story suggesting that American’s main retirement vehicle should be “retired.” Here is a good response to that article.
Tips to Make Your 401(k) Work For You
It’s surprising there aren’t many calls in the press to ditch the automobile. After all, think of all the dumb things people do with them. They drive much too quickly and sometimes after drinking lots of alcohol. They even drive while sending text messages, putting on makeup, and reading the newspaper. The consequences can be dire: More than 40,000 Americans die in auto-related deaths each year, with nearly 3 million suffering injuries of some kind. Of course, it would be impractical and silly to outlaw the automobile. They are too intertwined in our lives and are beneficial in many ways. And it would be unfair to blame the automobile for its misuse.
Yet that’s exactly what’s happened in the case of another vehicle, in this case, the main retirement savings vehicle for most Americans: the 401(k). A recent Time cover story called for the retirement of the 401(k) itself, using the often-catastrophic losses investors suffered in the 2008 crash as the argument against them. But just as cars don’t cause accidents, there’s nothing inherent in a 401(k) that dooms you to a substandard retirement.
The Time article was trying to make a broader point that the do-it-yourself nature of the 401(k) makes retirement savers much more vulnerable to unpredictable fluctuations in the market, especially versus the company-provided pensions of yore. Although pensions aren’t perfectly secure either, it’s true that even investors with thoughtfully conceived 401(k) portfolios suffered heavy beatings in 2008. Those nearing or in retirement were dealt an especially tough blow as they faced living off a much-smaller nest egg and because, unlike younger investors, they don’t have as much time to recoup their losses. (If you find yourself in this unfortunate spot, click here for some advice on how to cope.)
Regardless of its shortcomings, though, the 401(k) is probably here to stay. And contrary to the impression provided by the Time article, using one successfully isn’t a lost cause. Here are a few tips on how you can make your retirement plan work for you.
Save More
The Time article does make one claim few can dispute: Americans don’t save enough for retirement. And, of course, it doesn’t help that over the past decade, stocks have gone nowhere, just like most investors’ 401(k) balances. Fortunately, there are some good reasons to believe that the next decade for stocks may be better than the last (long periods of subpar returns historically have been followed by long periods of above-average ones), which will give 401(k) accounts a boost. But you can’t rely on the market to do all your heavy lifting. If stocks and bonds don’t provide the return you need, you’ll have to fill in the gap by saving more.
Of course, saving more can be easier said than done, especially now, with so many households strained by high debt, stagnant incomes, and unemployment. If it’s not possible to change your savings patterns dramatically right away, start small. You can pledge to increase your savings rate by a percentage point (or more) every year, for instance. If your 401(k) plan has an option that automatically increases your savings rate on an annual basis, take it. The easier you make it to stay disciplined, the more likely you’ll achieve your goals.
Originally posted at: www.learningmarkets.com
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