Today's Market
by Dr Invest
Some of you have wondered if I had stopped writing. No! There just hasn't been much to report. Politicians locked over whether to spend or scrimp, locked over whether to print money or save money, finally, in fear of losing their jobs made a last minute decision that at best was poor and at worse will deepen the recession in the coming months.
See, it seems that I am repeating myself here. The market is no worse off, nor better off. As often quoted "It was the best of times, it was the worse of times." The only thing really going for the market is $40 billion monthly to stimulate the economy. Without the stimulus, we would be in the red in a heartbeat experiencing something even greater than the GREAT DEPRESSION.
I hate stocks right now, but I bought WMT and RTH at the first part of November. They have been up...close to 3% and down close to 4%. I told my wife, "If the politicians don't settle the fiscal cliff, we are surely going to see WMT and RTH hit their stop-sell with a 5% loss."
You know the rest of the story, both WMT and RTH gained 1% today and my elation was met with the fact that within three short weeks, the haggling over the DEBT LIMIT will be a new source to deflate any new found gains.
One economist said, "The politicians will put together a "last minute deal", stimulating the market long enough to please investors... then fall off the cliff." I think this to be a likely scenario. I will hope for the best over the next two weeks and tightly close my TRAILING-STOP so the stocks sell.
I don't have much faith in either the Federal Reserve, nor our government. Spending will continue at full steam and Bernanke will provide the wood that fuels the economic engine. At some point, there will be no rich to tax; the government, as has happened in so many other countries with a fiat currency, will have to TAX THE MIDDLE CLASS.
If you look closely, you will already see that the middle class is being taxed, but I'm talking about 60% of your income returning to the government. You already work 5 months out of a year to pay for all taxes (property, city, state, federal, social security). But I am saying that with in five years, you will work 8 months to pay taxes and the government will give you what is left over. Now TAX FREEDOM DAY is estimated differently by different economists and it depends in which state you live.
Now Mitt Romney got in trouble for saying what was true. At that time 47% of the U.S. population was receiving some kind of benefit from the Federal Government. Just being logical here, why would you vote for someone who would cut off your government benefits. If I were King, and I said "no more government support for art... like a crucifix in a jar of urine... or a cow and calf cut in half, in a big Plexiglas vat of formaldehyde... there would be some artists who would truly hate me. Or if a cinematographer wanted his vision painted on the big screen, of three sisters engaged upon a sexual exploration from their innocent upbringing...blah, blah, blah, and I cut Federal funding for his offbeat movie, again, I would be hated. I understand these examples sound ridiculous but each of these examples are TRUE. The list goes on and on. http://endoftheamericandream.com/archives/30-stupid-things-the-governemnt-is-spending-money-on
I only wish government wasn't wasting your tax dollars, but all of this is pushing us further and further into debt. We had the change for REAL CHANGE, but the vote was for more socialism.
Let me turn you on to Chris Martenson. He explains some of the problems of growth, but also in relation to debt. https://www.youtube.com/watch?v=bRc-YfcXVYo Exponential growth is explained, so that at the end of a growth cycle or debt cycle, the growth or debt can exceed you ability to comprehend it and happen within a blindingly short period of time.
This is exactly what happens to an individual. They fail to understand the power of compound interest. When you pay more than double the original price of your home in interest, you are losing real money. Assuming you buy a $200,000 home, you are giving $231,000 to the lender. This initially seems to your advantage because you didn't have the $200,000 to pay for the home in the first place...so you are using someone else's money.
But when you have the $200,000 to pay for a home, you are saving $231,000 in losses over a 30 year period. This is $231,000 that can go to work for you. So money, when used properly over 30 years, seems to grow slowly at first, but at the end of the thirty-year period the growth is exponential.
That $231,000 lost to interest, would have grown in 30 years, at 6% interest, to $1,210,435. Your actual loss is $1,210,435 of investment power.
For the individual, a series of loans and credit purchases can erode their wealth and set them up with so much debt, that one set of tires or an unexpected illness can bring down their whole financial house.
(note: the above information is for entertainment purposes only and not to be used as investment advice.)
by Dr Invest
Some of you have wondered if I had stopped writing. No! There just hasn't been much to report. Politicians locked over whether to spend or scrimp, locked over whether to print money or save money, finally, in fear of losing their jobs made a last minute decision that at best was poor and at worse will deepen the recession in the coming months.
See, it seems that I am repeating myself here. The market is no worse off, nor better off. As often quoted "It was the best of times, it was the worse of times." The only thing really going for the market is $40 billion monthly to stimulate the economy. Without the stimulus, we would be in the red in a heartbeat experiencing something even greater than the GREAT DEPRESSION.
I hate stocks right now, but I bought WMT and RTH at the first part of November. They have been up...close to 3% and down close to 4%. I told my wife, "If the politicians don't settle the fiscal cliff, we are surely going to see WMT and RTH hit their stop-sell with a 5% loss."
You know the rest of the story, both WMT and RTH gained 1% today and my elation was met with the fact that within three short weeks, the haggling over the DEBT LIMIT will be a new source to deflate any new found gains.
One economist said, "The politicians will put together a "last minute deal", stimulating the market long enough to please investors... then fall off the cliff." I think this to be a likely scenario. I will hope for the best over the next two weeks and tightly close my TRAILING-STOP so the stocks sell.
I don't have much faith in either the Federal Reserve, nor our government. Spending will continue at full steam and Bernanke will provide the wood that fuels the economic engine. At some point, there will be no rich to tax; the government, as has happened in so many other countries with a fiat currency, will have to TAX THE MIDDLE CLASS.
If you look closely, you will already see that the middle class is being taxed, but I'm talking about 60% of your income returning to the government. You already work 5 months out of a year to pay for all taxes (property, city, state, federal, social security). But I am saying that with in five years, you will work 8 months to pay taxes and the government will give you what is left over. Now TAX FREEDOM DAY is estimated differently by different economists and it depends in which state you live.
Now Mitt Romney got in trouble for saying what was true. At that time 47% of the U.S. population was receiving some kind of benefit from the Federal Government. Just being logical here, why would you vote for someone who would cut off your government benefits. If I were King, and I said "no more government support for art... like a crucifix in a jar of urine... or a cow and calf cut in half, in a big Plexiglas vat of formaldehyde... there would be some artists who would truly hate me. Or if a cinematographer wanted his vision painted on the big screen, of three sisters engaged upon a sexual exploration from their innocent upbringing...blah, blah, blah, and I cut Federal funding for his offbeat movie, again, I would be hated. I understand these examples sound ridiculous but each of these examples are TRUE. The list goes on and on. http://endoftheamericandream.com/archives/30-stupid-things-the-governemnt-is-spending-money-on
I only wish government wasn't wasting your tax dollars, but all of this is pushing us further and further into debt. We had the change for REAL CHANGE, but the vote was for more socialism.
Let me turn you on to Chris Martenson. He explains some of the problems of growth, but also in relation to debt. https://www.youtube.com/watch?v=bRc-YfcXVYo Exponential growth is explained, so that at the end of a growth cycle or debt cycle, the growth or debt can exceed you ability to comprehend it and happen within a blindingly short period of time.
This is exactly what happens to an individual. They fail to understand the power of compound interest. When you pay more than double the original price of your home in interest, you are losing real money. Assuming you buy a $200,000 home, you are giving $231,000 to the lender. This initially seems to your advantage because you didn't have the $200,000 to pay for the home in the first place...so you are using someone else's money.
But when you have the $200,000 to pay for a home, you are saving $231,000 in losses over a 30 year period. This is $231,000 that can go to work for you. So money, when used properly over 30 years, seems to grow slowly at first, but at the end of the thirty-year period the growth is exponential.
That $231,000 lost to interest, would have grown in 30 years, at 6% interest, to $1,210,435. Your actual loss is $1,210,435 of investment power.
For the individual, a series of loans and credit purchases can erode their wealth and set them up with so much debt, that one set of tires or an unexpected illness can bring down their whole financial house.
(note: the above information is for entertainment purposes only and not to be used as investment advice.)
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