Pointedstick wrote:
Chuck Norris doesn't explain things. He scares them into explaining themselves.
Chuck Norris doesn't scare things. He scares them into scaring themselves.
I don't rebalance my own Permanent Portfolio. It rebalances itself, but it gives me a dozen roundhouse kicks to the head to make me think I did the rebalancing.
I thought I understood english
but its difficult to understand some of your sentences/jokes
I will divide my PP from other portfolios to avoid see it so often, this may be happening with more of you
Xan wrote:
A scenario where stocks are way up and the PP is treading water is probably one of the worst scenarios for this kind of angst.
Yes.
The question is whether stocks are currently in the midst of a cyclical bull market against the backdrop of an ongoing secular bear market, OR are we in the early stages of a new secular bull market for stocks?
When I look at the long term effects of deleveraging, the overall demographic profile in our country and the political incompetence of our leaders, I tend to think that the secular bear market for stocks has a bit farther to go, but I could be wrong.
I could be wrong, but I think we are at the beginning stages of a transitional period in human history that will see changes for society as momentus as the industrial revolution was. I think that over the next 20 years we are going to be fundamentally rethinking the economic systems and concepts of capital and labor that have brought us to this point. How to begin to think about investing during this transition is beyond me and so I have just turned things over to the PP.
All of humanity's problems stem from man's inability to sit quietly in a room alone. - Blaise Pascal
For those worried about missing out on the beginning of a bull market in stocks, please make the case for where the consumer spending that drives corporate earnings is going to come from?
As Jack VanDerhei, research director of the nonprofit, nonpartisan Employee Benefit Research Institute, puts it, “very large numbers of people are at risk of running out of money in retirement.”? In a recent study, the institute found that roughly 44 percent of households in the baby boom and Gen X generations — those born from 1948 to 1975 — were likely to run short of cash in their retirement years.
Last edited by doodle on Mon Jun 17, 2013 10:38 pm, edited 1 time in total.
All of humanity's problems stem from man's inability to sit quietly in a room alone. - Blaise Pascal
doodle wrote:
For those worried about missing out on the beginning of a bull market in stocks, please make the case for where the consumer spending that drives corporate earnings is going to come from?
I'm not sure, but the housing market is already starting to heat up again--at least in Southern California. Prices have climbed 25% compared to a year ago. Where is that spending coming from?
In other words, increases in consumer income may be a sufficient condition for causing certain asset prices to rise, but evidently it is not a necessary one. Asset prices can also rise when banks start lending more freely, and/or when investors sitting on big piles of cash finally decide to start using some of that cash to buy stuff.
Pointedstick wrote:
It's the same old story: credit-driven asset bubbles that make people feel wealthier than they really are. Recent history shows us how this ends.
Yes, so whenever someone asks, "Where will the money come from?", I think the most likely answer is: the credit market. Stagnant consumer incomes aren't necessarily a constraint on asset prices if the banks decide to start loosening their lending standards to make money (or to create the illusion of making money). Such bubbles don't last forever, but years can go by before reality finally reasserts itself.
Pointedstick wrote:
It's the same old story: credit-driven asset bubbles that make people feel wealthier than they really are. Recent history shows us how this ends.
Yes, so whenever someone asks, "Where will the money come from?", I think the most likely answer is: the credit market. Stagnant consumer incomes aren't necessarily a constraint on asset prices if the banks decide to start loosening their lending standards to make money (or to create the illusion of making money). Such bubbles don't last forever, but years can go by before reality finally reasserts itself.
I think the desire for more credit on the part of consumers is maxed out. We saw YOY credit growth for 30 years and now the generation who brought us those heady times is looking at retirement with a nest egg of 50 grand. The younger millenial generation is witnessing their parent plight and is jaded towards banks and financial institutions in general and has a more frugal mentality. Besides, the job market is so weak for them that they wouldnt qualify for large credit advances anyways.
Either the government comes in big time with infrastructure spending or we will just wither here for many years to come. Not that that is a bad thing. It is a great opportunity for people to focus on other things than cranking out useless gadgets. At the end of the day, I think these are the things we should be talking about: http://www.deepleafproductions.com/wils ... -RICH.html
All of humanity's problems stem from man's inability to sit quietly in a room alone. - Blaise Pascal
doodle wrote:
I think the desire for more credit on the part of consumers is maxed out. We saw YOY credit growth for 30 years and now the generation who brought us those heady times is looking at retirement with a nest egg of 50 grand. The younger millenial generation is witnessing their parent plight and is jaded towards banks and financial institutions in general and has a more frugal mentality. Besides, the job market is so weak for them that they wouldnt qualify for large credit advances anyways.
Perhaps you inadvertently skipped over my previous post in which I offered a direct, empirical counterexample to that claim:
If nobody is qualifying for large credit advances and the deflationary demographic trends you describe are currently in effect, then what is driving up the cost of those homes right now?
doodle wrote:
I think the desire for more credit on the part of consumers is maxed out. We saw YOY credit growth for 30 years and now the generation who brought us those heady times is looking at retirement with a nest egg of 50 grand. The younger millenial generation is witnessing their parent plight and is jaded towards banks and financial institutions in general and has a more frugal mentality. Besides, the job market is so weak for them that they wouldnt qualify for large credit advances anyways.
Perhaps you inadvertently skipped over my previous post in which I offered a direct, empirical counterexample to that claim:
If nobody is qualifying for large credit advances and the deflationary demographic trends you describe are currently in effect, then what is driving up the cost of those homes right now?
I would say top 10% wealthy investors looking for a place to put their cash. They are probably either flipping them to other investors or renting them out. The average American is broke....not buying million dollar one bedroom apartments in Malibu.
All of humanity's problems stem from man's inability to sit quietly in a room alone. - Blaise Pascal
doodle wrote:
I would say top 10% wealthy investors looking for a place to put their cash. They are probably either flipping them to other investors or renting them out. The average American is broke....not buying million dollar one bedroom apartments in Malibu.
Lending and credit permit broke people buy million dollar one bedroom apartments in Malibu, though. I mean, that's what caused the last housing meltdown, right?
In the end, goosing asset prices through credit expansion seems like a terrible way to grow the economy. In theory it can make people feel wealthier and make them spend and create jobs… but if it's not a sustainable expansion in spending, it's just sowing the seeds of an even more wrenching pullback later, IMHO.
Human behavior is economic behavior. The particulars may vary, but competition for limited resources remains a constant.
- CEO Nwabudike Morgan
The 25% increase explained in the article is not in million-dollar apartments in Malibu; it's in the median home price. That's the price at which a full 50% of the homes are more expensive, and 50% are less expensive.
When a relatively small fraction of the population decides to bid up some high-end homes, you don't get a large movement in the median home price. The mean, perhaps, but definitely not the median. When the median price moves like this, it's evidence of a broader trend involving the area's overall population.
Last edited by Tortoise on Tue Jun 18, 2013 12:41 pm, edited 1 time in total.
Tortoise wrote:
The 25% increase explained in the article is not in million-dollar apartments in Malibu; it's in the median home price. That's the price at which a full 50% of the homes are more expensive, and 50% are less expensive.
When a relatively small fraction of the population decides to bid up some high-end homes, you don't get a large movement in the median home price. The mean, perhaps, but definitely not the median. When the median price moves like this, it's evidence of a broader trend involving the area's overall population.
Where do you think the money is coming from? Look at the wealth distribution in the United States. Only the top 5% of Americans can probably afford to purchase a house in Southern California to begin with. From my perspective I see a baby boomer generation with no savings followed by rather asset less and underemployed Gen X and Millennials...
We were coming off an extreme crash and very low prices relative to peak. Maybe things are just normalizing and moving towards stabilization. If housing returns to the heady days of 2005 or 2006 Id be very shocked.
All of humanity's problems stem from man's inability to sit quietly in a room alone. - Blaise Pascal
doodle wrote:
Where do you think the money is coming from? Look at the wealth distribution in the United States. Only the top 5% of Americans can probably afford to purchase a house in Southern California to begin with. From my perspective I see a baby boomer generation with no savings followed by rather asset less and underemployed Gen X and Millennials...
Isn't the money just coming from the bank, when they make a new loan? You can buy any size house the bank will let you buy. Doesn't matter if you're a boomer hoping to retire on 100k or a millenial buried in student loans. If you can find a bank dumb enough to give you a mortgage, the house is yours!
Right?
Human behavior is economic behavior. The particulars may vary, but competition for limited resources remains a constant.
- CEO Nwabudike Morgan
doodle wrote:
Where do you think the money is coming from? Look at the wealth distribution in the United States. Only the top 5% of Americans can probably afford to purchase a house in Southern California to begin with. From my perspective I see a baby boomer generation with no savings followed by rather asset less and underemployed Gen X and Millennials...
Isn't the money just coming from the bank, when they make a new loan? You can buy any size house the bank will let you buy. Doesn't matter if you're a boomer hoping to retire on 100k or a millenial buried in student loans. If you can find a bank dumb enough to give you a mortgage, the house is yours!
Right?
Its yours until you cant afford to make the payments. At that point, the bank owns it again.
Can anyone tell me where the money is going to come from (other than massive gov. deficit spending) to maintain aggregate demand and hold up asset prices?
Credit is tapped out, three generations of Americans are broke, and employment opportunities are being automated away to machines.
I think the new movie Elysium with Matt Damon is one possible future scenario.
All of humanity's problems stem from man's inability to sit quietly in a room alone. - Blaise Pascal
doodle wrote:
Its yours until you cant afford to make the payments. At that point, the bank owns it again.
Can anyone tell me where the money is going to come from (other than massive gov. deficit spending) to maintain aggregate demand and hold up asset prices?
Exactly. Asset prices can't fundamentally outstrip the underlying productive capacity of the economy for too long without some sort of manipulation that will inevitably end and pop the bubble.
I don't know what's going to happen either. Cash may well be the best asset for a while. As for how society is going to change… well, all we know is that it will, as it always does.
Human behavior is economic behavior. The particulars may vary, but competition for limited resources remains a constant.
- CEO Nwabudike Morgan
doodle wrote:
Its yours until you cant afford to make the payments. At that point, the bank owns it again.
Can anyone tell me where the money is going to come from (other than massive gov. deficit spending) to maintain aggregate demand and hold up asset prices?
Exactly. Asset prices can't fundamentally outstrip the underlying productive capacity of the economy for too long without some sort of manipulation that will inevitably end and pop the bubble.
I don't know what's going to happen either. Cash may well be the best asset for a while. As for how society is going to change… well, all we know is that it will, as it always does.
The productive capacity of the economy is being dictated by monetary economics. In other words, the proverbial cart is being placed in front of the horse.
At present we are under producing and consuming relative to our potential capacity because the money is not distributing itself through the economy. It is all bunched up in the hands of a small group of people and locked away useless investments like gold bars, Picasso paintings, or overpriced property.
This economy is a living breathing creature and money is its lifeblood. Presently there seems to be a clot in the creatures neck that is preventing the blood from flowing back out of the head into the rest of the body. Or to put it another way, as the saying goes "Money is like manure; it's not worth a thing unless it's spread around encouraging young things to grow."
We will not see strong economic growth and jobs recovery until we figure out how to get money back into average American workers hands. Until that time, businesses will see slow revenue growth and there will be little incentive to hire.
All of humanity's problems stem from man's inability to sit quietly in a room alone. - Blaise Pascal
Another wonderful day for the PP. The planets would have to align perfectly for this portfolio to have a positive day. I have come to expect these losses in the portfolio, with the only question being how much am I down today. I wish I never would have found this approach to investing. I've heard it all before so save your breath.
1. Its like a rudder on a ship...
2. If you cant stand a 4% loss...
3. Everything else is down...
4. What is the alternative...
Blah, blah, blah...the facts are the facts.
"The first principle is that you must not fool yourself and you are the easiest person to fool" --Feynman.
Wasn't EVERYTHING down today? (Apart from cash, of course.) All by about the same amount? I must confess I don't see how what the Fed did would cause everything to drop, but who knows in such a complex system.
buddtholomew wrote:
Another wonderful day for the PP. The planets would have to align perfectly for this portfolio to have a positive day. I have come to expect these losses in the portfolio, with the only question being how much am I down today. I wish I never would have found this approach to investing. I've heard it all before so save your breath.
1. Its like a rudder on a ship...
2. If you cant stand a 4% loss...
3. Everything else is down...
4. What is the alternative...
Blah, blah, blah...the facts are the facts.
I really feel like the stock market has peaked. I don't see any positive news going forward that will push it higher. So although your traditional portfolio might have outperformed the PP for the last year my guess is that it will see a pull back sometime over the summer.
All of humanity's problems stem from man's inability to sit quietly in a room alone. - Blaise Pascal
