By Monty Pelerin, on November 29th, 2009
… your $200,000 ten years ago has been halved in terms of purchasing power. However, in terms of planning purposes, your anticipated retirement amount has been reduced by 75%. Given these outcomes, who will be able to retire? And for those already retired, how many will “unretire?”
For Buy and Hold investors, better have a look at the following post. There are lessons to be learned, even if your broker would prefer you not know them. When viewing the charts below, remember that Japan has completed two lost decades with no end yet in sight. We are just finishing our first decade, but the results have been devastating for investors, retirees and those planning for retirement.
To put things into perspective, suppose you were nearing retirement in 2000 and had $200,000 invested in the stock market. Your anticipated retirement date was 2010 and you expected your investment to compound forward at 8% per year. Doing the math, you expected to have $426,000 at retirement. Instead you would have ended up with $138,000. To make matters worse, inflation over this period meant that your purchasing power in 2000 dollars was even less.
The government-issued CPI index shows purchasing power decreased by about 22% over this period. Thus, your starting $200,000 in purchasing now compares with about $108,00. (The CPI index is felt by many to understate actual inflation. John Williams at Shadowstats.com argues your purchasing power decreased quite a bit more.)
Using the government’s CPI numbers, your $200,000
Continue reading Retirement, For Whom?
By Monty Pelerin, on September 8th, 2009 Corporate Insider Selling continues at a record pace. What do they know about their own companies that you don’t? Now news is that Warren Buffet is lightening up on his stock holdings.
Share/Save
By Monty Pelerin, on September 7th, 2009 Below is an excerpt from David Rosenberg’s piece at https://ems.gluskinsheff.net/Articles/Breakfast_with_Dave_082809.pdf
“Indeed, let’s compare the economic background last October compared to today:•The unemployment rate was 6.6% then, today it is 9.4%•The level of employment (nonfarm payrolls) was 136.35 million; today it is nearly 4.0% smaller at 131.5 million•The level of nominal GDP was $14.347 trillion; today it is $14.143 trillion•The level of real GDP was $13.149 trillion; today it is $12.892 trillion•The 4-quarter trailing operating EPS was $49.50; today it is $39.90.•The 4-quarter trailing reported EPS was $14.90; today it is $7.90.•The dividend yield was 2.9%; today it is 2.3%•The P/E ratio (operating earnings) was 19.6x; today it is 25.2x•The “real” yield (5-year TIP), which is a bond proxy for “real” growth expectations was 3.0% back in October; today it is 1.7%•Industrial production was 106.2 (index); today it is 10% smaller, at 96.0•Industry wide capacity utilization rates were 75.4% then; they are 68.5% today•Manufacturing inventory-to-shipments ratio was 1.33 back then; now it is at 1.42•Housing starts were 763k (annualized) units; today even with the recovery they are 581k (24% smaller)•Commercial construction was $729 billion then, it is $712 billion today•Oil prices were $71/bbl then, about where they are today•The “real” yield on the Baa corporate yield was 5.2%; today it is 8.6%•Bank credit was $9.5 trillion back in October; it is $9.2 trillion today•The federal deficit was running at a $550 billion 12-month run-rate; today it is $1.3 trillion•Corporate spreads were 450bps back then; they are 300bps today (this,
Continue reading Stocks Divorced From Real World
|
Friedrich von Hayek
Friedrich von Hayek founded the Mont Pelerin Society.
“Monty Pelerin” is a pseudonym chosen by this blogger to convey general agreement with the philosophy, goals and spirit of the Mont Pelerin Society. No other connection exists between the blogger and the Society.
|
