Good morning. Here’s my early morning reading:

• Technical and Fundamental Arguments Against the Secular Bull Thesis (Reformed Broker), see also S&P 500 Falls Most Since November Amid Valuation Concern (Bloomberg)
• What You Know About Retirement Investing Is Wrong (WSJ)
• No, it’s not another housing bubble (Columbia Journalism Review)

 

Continues here

Category: Financial Press

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

13 Responses to “10 Tuesday AM Reads”

  1. rd says:

    The coincident timing of both the Secular Bull-Bear and What You Know about Retirement Investing is Wrong is interesting. I have been mulling over both of these issues as our retirement is about 7-10 years away.

    The U-shaped approach to equity allocation would lend itself very well to a class of Target Date funds that have a glide path down to age 65 and then slowly back up over the next 20 years. That would be an interesting way for the mutual fund companies to keep a number of their customers in a single fire-and-forget fund for their entire lives.

    We may be done with the secular bear in 2009 but I still remain quitre unconvinced until I can see the economy and the stock market able to survive on their own two feet with 2%-3% inflation, 2%-3% Fed Funds and 4%-6% 10-yr T-bond. At that point, some semblance of normalcy wll have been restored. Until then, it is hard to believe that the patient can survive without a breathing machine. Usually these things take 16-20 years to work themselves out simply because the actors in the markets and govenrment need to get washed and rinsed out a couple of times before things actually complete a cycle of change.

    I think that cycle of change was arrested in 2009 by the unprecedented actions by the world’s central banks – as a result, it is taking time instead of shock value to finish up the change cycle. 1982 was a valuation and inflation-adjusted low, but not a nominal low. My gut feeling is that the next low will be similar. 1932 was a shock low in North America and there would probably have been a much better recovery later in that decade if the European economic and financial problems stemming from WW I didn’t still need to be resolved.

  2. hue says:

    A Tale of Twinned Cities: One Party Rule (NYTimes)

    The Beatles were the Mitt Romney of the 1960s, and other policy lessons from the Fab Four (WaPo)

    America is separating into peasants and scholar-gentry (Noahpinion) Noah Smith: You Are Already in the Afterlife (Confessions of a Supply-Side Liberal)

    • rd says:

      Listening to the rhetoric, I sometimes wonder if we are living in a re-run of Downton Abbey where the primary issue that the aristocrats have is how to protect their assets from the government so that they can pass them down to their heirs.

  3. WickedGreen says:

    “China’s water shortage is so bad it could turn out the lights”

    What good is light if what you drink kills you?

    “Freedom” fellators and “Industry” pimps on Wall Street talk a lot about excessive regulation and dirty enviro hippies.

    How are you valuing growth and economic prospects in West Virginia these days?

  4. rd says:

    Apparently reality TV shows are the solution to poverty. MTV reality shows tracking pregnant teens and their struggles bringing up their infants are statistically correlated to signfiicant reductions in teen pregnancies where people watched those shows. Since single mothers make up a high percentage of the poor, these reductions would come right off the top of the poverty rate.

    http://blogs.marketwatch.com/themargin/2014/01/13/mtvs-16-and-pregnant-helped-reduce-teenage-birthrate-study-says/

    Maybe we could show reality TV shows tracking Wall Street felons in jail to reduce fraud in the finance sector, but it would probably be tough actually locating convicted felons.

  5. ch says:

    rd-

    I think you should consider the possibility that you are “fighting the last war” in regards to retirement allocations. In other words, while you are looking in the rear view mirror for the next 2008 or 1982 or even 1933, out the windshield, the view may be a bit different:

    -the average American monthly healthcare premium is rising 40-100% in 2014.

    -the US owes its Baby Boom generation an estimated $120T in Medicare/Medicaid & Social Security v. US GDP of $17T…those obligations cannot be paid back in real terms, suggesting 2014′s healthcare premium increases relative to stock price increases are just a warm up.

    In 2013, stocks rose 30%; healthcare rose 40-100%.

    I think the risk for retirees is less one of nominally falling stock prices but rather watching over the next 5 yrs as the avg retiree’s healthcare expenditures continue to rapidly outpace the gains from stocks & certainly from bonds & go from say $500/mth to $3,000/mth…

    PS: Per the above, no one ever includes US entitlements in the US debt picture, yet my parents’ interest income checks from Treasury bonds & Medicare reimbursement checks all come from the same place…

  6. faulkner says:

    Big Ag’s big lie: Factory farms, your health and the new politics of antibiotics
    Science only gets clearer: Factory farms are accelerating an antibiotics nightmare.
    http://www.salon.com/2014/01/12/big_ags_big_lie_factory_farms_your_health_and_the_new_politics_of_antibiotics/
    Some scientists estimate it may only be a decade before many modern medical procedures become impossible due to risk of infecton. Meanwhile deaths from staph infections, strep throat, and pneumonia would become common (again). This would change retirement and heelthcare for the aged completely.

  7. LeftCoastIndependent says:

    I don’t know where the Columbian Journalism Review is getting there numbers from, but Bay Area housing is now 20% higher than ever before. I read the NY metro area is the same. Maybe Hickville, USA still has low priced real estate, but the dreaded QE inflation has arrived to the QE beneficiaries.

    • Anonymous Jones says:

      I live on the Left Coast, and I’m an Independent, yet I still want to caution you about correlation and causation!

      Money moving into one asset class in one jurisdiction is probably a lot more complicated than just QE, but I could be wrong…

      I mean, there’s the growing appeal of metro areas, there’s the widening inequality that is concentrating wealth in the hands of the financiers in Silicon Valley and Wall Street, there’s the diminishing availability of land in a state that was basically uninhabited 150 years ago. I could go on, of course.

      • LeftCoastIndependent says:

        Hmmmm, got a point there Jones. But why is the FED so cautious about tapering ? Because they know higher % rates will result which will slow down the economy and decrease home prices. Ask yourself this, if the FED ended QE entirely today, do you think the real estate rebound would continue ? I doubt it. QE has by design created easy money in the equity markets, the tech sector being one of the biggest beneficiaries, and bingo, Silicon Valley/Bay Area real estate gets inflated. Now granted, the FED is shooting for 2% inflation, so maybe the hotspots are making up for the dead spots in minimum wage rural America.

  8. willid3 says:

    death of the PC (and Mac) will lead to the death of the web as we know it?
    http://www.wired.com/business/2014/01/death-pc-also-mean-end-web/

  9. RW says:

    When Summers focuses strictly on his discipline there is no one better. Right or wrong or someplace in between his hypothesis is generating the kind of substantive dialogue, debate and research that has a chance of actually solving problems rather than whitewashing them.

    Larry Summers on why the economy is broken — and how to fix it

    In November, former Treasury secretary Larry Summers took the podium at the International Monetary Fund’s annual conference and delivered a speech that shook the economics world. The weak recovery, he hypothesized, isn’t just the hangover from the financial crisis. It’s evidence of a sickness that predated the crisis. Looking back over the last decade, he argued that the economy, even in the seemingly good times, has been incapable of creating enough demand absent bubbles or extraordinary stimulus. And that problem is getting worse by the day.

    In this interview, Summers lays out his concerns in more detail — and suggests three paths we might take to restoring economic balance. …