OT: is this a good time to go to cash in your investment accounts?

[eddief]

Is it possible to have a conversation about what going on in the country right now without getting nasty? I am 66 and have not felt so uncomfortable since the Viet Nam war. The vibe is weirder than I have ever felt it to be. I hope everything settles down, but need those dollars for the long haul. Is anyone else feeling the heat?

I am completely ok if this gets closed if it is too risky for our community.

[mhespenheide]

I hope we can talk about this rationally and with some conviviality. The thought has passed through my head many times in the last few days. I have almost no idea how to diversify internationally beyond directing some mutual funds into "emerging markets".

How do I hedge against a downturn in [1] the market and [2] the US dollar?

43 and finally just getting out of debt (except for the remaining mortgage) and starting to invest seriously. Not much income, but not many costs either.

[zmudshark]

Is it possible to have a conversation about what going on in the country right now without getting nasty? I am 66 and have not felt so uncomfortable since the Viet Nam war. The vibe is weirder than I have ever felt it to be. I hope everything settles down, but need those dollars for the long haul. Is anyone else feeling the heat?

I am completely ok if this gets closed if it is too risky for our community.I'm in basically the same position, age-wise.

If things go that far South, I'm not sure I want to live to be 67.

I think the financial powers to be wont let that happen. If the nukes start flying, I'm getting as close as I can to a big one.

YMMV :beer:

[Llewellyn]

My gut feeling from a distance is that the Trump presidency probably won't be quite as catastrophic as some are suggesting, and I think financial markets will adjust. That said, you say you are 66 so you are probably looking for some certainty in your return from your investments at this stage of your life. Without being indelicate, you are at an age where you may not have the luxury of waiting for a lot of years for markets to bounce back if they do take a significant dive. So it may be prudent to put some of your money into less market sensitive areas - fixed interest etc. Just my 2 cents of course.

[SoCalSteve]

Is it possible to have a conversation about what going on in the country right now without getting nasty? I am 66 and have not felt so uncomfortable since the Viet Nam war. The vibe is weirder than I have ever felt it to be. I hope everything settles down, but need those dollars for the long haul. Is anyone else feeling the heat?

I am completely ok if this gets closed if it is too risky for our community.

I know exactly how you feel. And, I too am worried about my financial picture. My money is invested in muni bond funds ( for dividend income ). They are in the toilet now.

So, what do you do? I don't have THE answer. But, I do have an answer. Look at the stock and bond market for the last 10,20,30 or more years. If you are in it for the long haul like I am, you do nothing.

Don't look at it, don't think about it, just live your life the best way you can.

This too shall pass.

Of course, this is just one mans opinion ( which means nothing on the internet ) please follow your own heart and mind and do what you feel is best for you and your situation.

[FlashUNC]

Markets don't like uncertainty. Right now there's a lot of uncertainty.

[Louis]

One thing to keep in mind is that eight years ago many, many folks were seriously worried that Obama was going to take away all their guns and turn the country over to Osama bin Laden. Well, that didn't quite come to pass.

I'm hoping that all my current fears (shutting down of the EPA, selling off of vast swaths of Federal govt land to the highest bidder, David Duke on the Supreme Court etc. etc.) are equally over-blown. (OK, that last one was a joke, but the others are unfortunately quite possible)

[eddief]

but that is across world markets with lots of stock-related securities or ETfs. I think the whole world is watching and no one is saying anything good. At least those I tend to listen to are not saying anything good.

[makoti]

I am going to be following this thread. I am, at 58, getting close to retiring. I'd go tomorrow if I could. I desperately need to reallocate my portfolio (using the term loosely) & the obvious thing to do is move gobs of money into bonds, but with interest rates as low as they are & the uncertainty, I'm afraid I'll just be buying something that's about to tank when rates rise. I know the bond market shed some trillion dollars in value last week. At least I missed that, but I need to move towards safety. But into what?

[joosttx]

[QUOTE=mhespenheide;2078066]I hope we can talk about this rationally and with some conviviality. The thought has passed through my head many times in the last few days. I have almost no idea how to diversify internationally beyond directing some mutual funds into "emerging markets".

How do I hedge against a downturn in [1] the market and [2] the US dollar?



The markets are at very high multiples and inflation is/has been happening. I would cash some out. However, I see value in some RIETs . the sector has been beaten up but the solid ones will come back 2 months after they raise interest rates. They generate a nice income too.

They key is find international decoupled, interest rate decoupled, income producing securities.

[adub]

Markets don't like uncertainty. Right now there's a lot of uncertainty.

And the Dow and S&P 500 are at their all time high as investors chase the last vestige of returns.

My take is the market has (somewhat) spoken and approve of the Trump Presidency. The market rallied rather than tanking as the 95/100 pundits predicted.

For the past couple of decades we have had unprecedented growth, with exception of 2009-2011. We are now living the repercussions of the life-support that government gave the banks and the markets to save their bacon from collapsing because of the mortgage crisis (that they caused)

Because of the mass influx of basically free capital (near zero interest rates) we have a glut of everything in the world, I believe we will could see no real growth for a decade or two because of these actions. The globes corporations hoard all their cash as it makes more sense to borrow rather than deploy their own capital.

Low interest rates devalue real cash, just ask anyone who is a saver, they are being severely punished. Government debt/obligations also play a big roll in this mess, but that is another discussion. Shame on our Governments.

I'm not part of the catastrophic collapse camp, but the party is over for a while. Hunker down and ride it out as it could be a while of flat/no real growth.

[Louis]

the obvious thing to do is move gobs of money into bonds,

http://nyti.ms/2ezFV3F

Ahead of Trump Presidency, Global Investors Sell Bonds and Grab Stocks

Global investors have rendered their verdict on Donald J. Trump as president: Sell government bonds and pile into stocks that will benefit the most from a resurgent United States economy.

From Indonesia to the United States, government bonds are undergoing a sharp sell-off as investors — large sovereign wealth funds and hedge funds, as well as the accounts of American retirees — restructure investment portfolios to try to capture the fruits of what they expect will be a free-spending Trump presidency.

Across the board, the yields of these bonds, which move up as their prices decline, are pushing higher. The yield on the 10-year United States Treasury note — a benchmark for mortgages and other lending rates — has risen to 2.2 percent from 1.5 percent in less than two months. For such a widely held and traded security, that is an unusually abrupt move.

Other safe-haven bonds have had similar reactions. The yield on Germany’s 10-year notes has gone to positive. In just a week, it has gone to 0.35 percent from negative 0.15 percent.

[MattTuck]

Liquidate your holdings and invest in gold, campy and wine.

The headwinds facing the economy are SIGNIFICANT.

[shovelhd]

At 59 my portfolio has been conservative but early next year we are going to move more towards growth. There's upside.

[Louis]

http://kswp.org/wp/wp-content/uploads/2013/05/the-end-is-near1.jpg

[Tony T]

Markets don't like uncertainty. Right now there's a lot of uncertainty.

The markets are saying otherwise. DOW, S&P and NASDAQ are at, or near all time highs.

edit: I see that adub said this already

[Tony T]

http://kswp.org/wp/wp-content/uploads/2013/05/the-end-is-near1.jpg



https://encrypted-tbn2.gstatic.com/images?q=tbn:ANd9GcQn1Lkgx1Yu5x2wfW1QF6VqSL_uq10fK wX3ST3YonIW08zerjgy

[Louis]

In more ways than one...

https://encrypted-tbn2.gstatic.com/images?q=tbn:ANd9GcQn1Lkgx1Yu5x2wfW1QF6VqSL_uq10fK wX3ST3YonIW08zerjgy

[astrov]

[QUOTE=mhespenheide;2078066]I hope we can talk about this rationally and with some conviviality. The thought has passed through my head many times in the last few days. I have almost no idea how to diversify internationally beyond directing some mutual funds into "emerging markets".

How do I hedge against a downturn in [1] the market and [2] the US dollar?



The markets are at very high multiples and inflation is/has been happening. I would cash some out. However, I see value in some RIETs . the sector has been beaten up but the solid ones will come back 2 months after they raise interest rates. They generate a nice income too.

They key is find international decoupled, interest rate decoupled, income producing securities.

I have about a grand invested in a healthcare REIT (senior care). It has been getting hammered over the last few weeks, along with similar stocks. (down 12% in the last month)

Can someone explain why that is? Because interest rates *might* rise?

[Ken Robb]

[QUOTE=joosttx;2078087]

I have about a grand invested in a healthcare REIT (senior care). It has been getting hammered over the last few weeks, along with similar stocks. (down 12% in the last month)

Can someone explain why that is? Because interest rates *might* rise?
My guess is that this segment will do well over the next 10+ years but maybe there is bad news affecting your unnamed REIT? Or it's just a temporsry glitch and it will all come out ok in the long run.

[verticaldoug]

[QUOTE=joosttx;2078087]

I have about a grand invested in a healthcare REIT (senior care). It has been getting hammered over the last few weeks, along with similar stocks. (down 12% in the last month)

Can someone explain why that is? Because interest rates *might* rise?

The hot money that ran into the sector for a interest rate proxy is just leaving. The highs were post brexit in late August/Sept at the tail end of the low rates forever frenzy.

If 10 yr is paying you 1.5%, maybe 5% looks good, if 10 yr pays 3%, 5% looks a lot less attractive. And if Gundlach is right and rates go to 6%, well SOL.

The other part of the equation is Senior Care Reits are under wage pressure for skilled nursing, etc without the ability to increase rents. Bear case adds occupancy declines which would limit pricing power even more.

The converse to this trade is banking. Even though rates will move higher, the cash the bank pays you on account will remain stuck near zero for the foreseeable future. All the excess will just be growth in net interest margin falling directly to the banks bottom line.

It's like oil and gas at the pump. When oil price rises, the gas price goes immediately higher, when oil comes down, the gas price gets sticky at the higher price. Banks are just like gasoline stations. We are going to get the sticky pump.

[dumbod]

I understand your concerns (my wife and I are in exactly the same place) but you need to take a breath. As good or bad as you think the next four years are going to be, unless you're planning to die soon, you're in it for the long haul.

It's pretty well established that (1) long-term investors need to be in equity, (2) that equity markets will fluctuate and (3) nobody times the market consistently. Also, depending on where your savings are, selling an investment may have tax consequences, even if all you want to do is flip the proceeds into another investment account.

My first advice is not to take investment advice from a bike forum but my wife and I are sitting tight albeit a little nervously. YMMV

[Ralph]

It's probably safe to assume that over time treasury yields will go up...sending the price of hi quality fixed income investments down. After all....interest rates have mostly trended down since the last peak in fall of 1981. But even this won't happen in a straight line. There will be recessions in future where fed will lower rates for a while...even if long term trend of interest rates is up. Hi yield (junk) bonds do better than hi quality usually in this kind of environment.

We will probably have more inflation in future....more deficit spending by Fed. The new administration seems to be signaling to bond markets to expect more borrowing in future. Stocks tend to keep up with inflation if earnings also go up with inflation....over longer periods. Maybe good time to be a home owner.

I'm retired from the financial services industry....and one thing I know. The so called experts never call it right. So don't panic....stick with an investment plan for your situation. Don't listen too much to day to day financial "news". Things have a tendency to work out over time.

[veloduffer]

[QUOTE=joosttx;2078087]



I have about a grand invested in a healthcare REIT (senior care). It has been getting hammered over the last few weeks, along with similar stocks. (down 12% in the last month)



Can someone explain why that is? Because interest rates *might* rise?


In part interest rates but the healthcare sector is volatile as Trump and Ryan have talked about repealing Affordable Healthcare Act (Obamacare) and changing Medicare without revealing any specifics.

Any changes will have some unintended consequences, as they are complicated programs. Plus there is a cost to implement major changes (systems, forms, information/media to consumers and providers).



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[ebaker205]

There are a lot of amateur investors working at large corporate funds. These folks tend to operate of off knee-jerk reactions and gossip dispensed from one of many news agencies commissioning from viewer count.
Are the markets currently overvalued?—probably in some areas. However, given your age, you are likely to invest more in something a little more stable, ie bond, CDs, annuities.

There should be a lot of opportunity in these areas in the near future. America has a lot of money. Americans have a lot of money, but right now it is not invested correctly. A lot is abroad because money cannot be made easily by the federally set low interest rates. Hopefully this will change soon so American can start the gears turning again.

A lot of folks will warn against timing the market. Whatever you decide, best of luck to you.

There is a great website: https://www.bogleheads.org/ if value investing is of any interest to anyone.

(steps of soapbox)

[TimD]

Couple of quick points:

Investors seek to maximize returns. When interest rates are near zero, bond returns are low, making equities relatively more attractive (all other things being equal). When foreign economies are stagnant, US-based investments become relatively more attractive. The resulting market demand is one reason US equity prices are relatively high.

Changes to Medicare, if the public doesn't protest too much, might be of a few forms, including replacement of direct payments with vouchers and an increase in the eligibility age. Replacement of direct payments will, of course, allow profit back into the system, raising costs to the consumer.

[eddief]

I held tight during the real estate recession and was rewarded back up to the top of the market where it sits now. While we maybe in for a completely different kind of shock now, I am thinking knee jerk to cash may not be the way to go.

[54ny77]

Many members in this forum are smarter in financial markets than 99.2% of so-called financial advisors.

Hey Smith Barney I'm talking to you: F YOU!!!!!


My first advice is not to take investment advice from a bike forum but my wife and I are sitting tight albeit a little nervously. YMMV

[93legendti]

I held tight during the real estate recession and was rewarded back up to the top of the market where it sits now. While we maybe in for a completely different kind of shock now, I am thinking knee jerk to cash may not be the way to go.

I think you are correct. Money decisions should be based upon fundamentals not emotions.

If you need some money it's once thing. If you want to take some profits, ok. If you want to increase your cash position (not a bad idea at 66), ok.
Sell off over 50%? Could be expensive.

[Tickdoc]

Stay the course. The wheels on the bus go round and round, and the markets follow suit.

The potential volatility is scary, but I feel more hopeful than I have since '07-'08.

Sounds like I'm in the minority here, but I personally have not recovered financially since then and feel like we are still in a major recession. I hear the financial pulse reports i.e. Jobs, ratings, etc. but my indicators are more simple and it ain't like it used to be in any way shape or form.

[biker72]

Interest rates and bond prices have an inverse relationship; so when one goes up, the other goes down. With the Fed talking about raising interest rates look for bond value to fall.

I have no idea what the Trump presidency will bring. I have recently sold a couple of stocks I've had for years at their all time high. Other than that I'm sticking with index mutual funds and ETF's. (No bonds.)

[soulspinner]

At 59 my portfolio has been conservative but early next year we are going to move more towards growth. There's upside.

60 here and I agree. Nothing this administration does is going to hurt wall street long run. Too much $ at stake......have done very well since 2008 with the pittance we have. I smell opportunutiy and I am no Trump supporter. ;)

[jlwdm]

You need an advisor you are comfortable with and a plan that fits your needs.

Just understand half the experts are usually wrong. Many big hedge funds have been struggling. Most people have been predicting interest rates to go up for years. Many experts have been concerned about the high levels of the stock market for a few years - but our markets have been the safe place to invest for years and are getting a lot of money from around the world.

Interest rates are going to go up at some point and the stock market will have pullbacks or reversals. Some changes are due with everything going on in the world - lots of weaker economies. It is not all going to happen just based on the presidential election. You should have been ready for change no matter who won the election. Don't make excuses for any losses you have - it is your plan and it needs to be flexible. Figure out why you are having losses. Some of them might be good hedges. It depends on your plan.

My mother is 95 and these low interest rate years have been tougher on her as she is preserving capital at her age. She is fine financially at this point but has not accumulated as much income as she had planned.

Be prepared and have a plan at all times. No matter what you do you will not always be right.

Jeff

[veloduffer]

There are a lot of amateur investors working at large corporate funds. These folks tend to operate of off knee-jerk reactions and gossip dispensed from one of many news agencies commissioning from viewer count.
Are the markets currently overvalued?—probably in some areas. However, given your age, you are likely to invest more in something a little more stable, ie bond, CDs, annuities.

There should be a lot of opportunity in these areas in the near future. America has a lot of money. Americans have a lot of money, but right now it is not invested correctly. A lot is abroad because money cannot be made easily by the federally set low interest rates. Hopefully this will change soon so American can start the gears turning again.

A lot of folks will warn against timing the market. Whatever you decide, best of luck to you.

There is a great website: https://www.bogleheads.org/ if value investing is of any interest to anyone.

(steps of soapbox)



The US isn't the only country with low interest rates. The European Central Bank has loosened monetary policy, Japan has negative rates, and China's rates are the lowest in a decade.

Saying America has a lot of money is a gross generalization. Corporations and the wealthy have a lot of money but the middle class and below don't, as folks are getting squeezed by rising healthcare costs, local taxes, and stagnant wages. Retirees feel the pinch by lack of cost of living adjustments due to low interest rates & inflation.

Many folks work more than one job to make ends meet, particularly those lacking a college degree.

Furthermore, young workers are saddled by student debt (72% of 4yr college grads have some form of student loans). Student debt is $1.3 Trillion, which exceeds the level is credit card debt and auto loans in the US. Plus this debt is at above market rates of 8-9%.

This will be a large drag on the US economy as it delays spending., household formation and retirement savings.

The reason Trump was elected was due to voter angst about these issues.


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[eddief]

My Schwab guy mentioned this approach to me the other day. It invests in only large US companies known to pay good dividends. The idea being even if their stocks go down, the companies still pay mostly their usual dividends. So you keep generating dividend income and get the principal appreciation when the stocks go up and hopefully over the long haul you get both dividends and appreciation. Seems level-headed and not too risky.

No super innovative, but maybe makes sense at my age.

[redir]

Invest in concrete and build that wall!!!

Weapons are always a safe bet too :eek:

On a lighter note... Canibus?

[MattTuck]

My Schwab guy mentioned this approach to me the other day. It invests in only large US companies known to pay good dividends. The idea being even if their stocks go down, the companies still pay mostly their usual dividends. So you keep generating dividend income and get the principal appreciation when the stocks go up and hopefully over the long haul you get both dividends and appreciation. Seems level-headed and not too risky.

No super innovative, but maybe makes sense at my age.

Eddie, not sure of your experience with finance, so if this is obvious, please ignore.

When you have a stock that pays dividends, there are two numbers you need to think about. The first, the price, is the price at which you buy the stock, we'll call this P. The second is the amount of the dividend, which we can call D.

The dividend yield of the stock can be calculated as D / P.

Let's put some actual numbers behind it now, let's say the stock is $100, and the annual dividend is $2. From our handy formula (D / P), we can calculate that the dividend yield is 2%.

You can use that as a benchmark against other investments that yield, such as bonds, or loans to your family, etc.

Now, since both the D and the P are not fixed, we know that dividend yield can change over time. If the company decides it wants to distribute more of its profits to investors in the form of dividends, it could increase its dividend payout (let's say to $4). If the price of the stock remains the same, this would now mean that it is yielding 4%.

On the other hand, let's say that market expectations decline, and there is a large sell off in the market. Perhaps the stock price goes down to $50. If the fundamentals of the business are intact and management maintains their $2 dividend, we can see that this is another way to get a dividend yield of 4%.

Another thing to think about is if the stock price goes up (let's say market expectations improve), and the stock is now $120, but it is still paying the same dividend amount ($2). The yield is going to be 1.6%.

BUT, here's the thing to remember, changes in yield caused by changes in the price of the stock only affect the people who buy in the future. When you buy a dividend yielding stock, that denominator is locked in. So if you buy when the stock is high, and it declines, your denominator of calculating 'yield' is locked in. This is sort of the equivalent of paying a premium for a good or service, vs. getting it on sale. Just think about how much money you are willing to pay for $1 of dividend.

Here is a graph showing dividend yields of the S&P500 over time.
http://avondaleam.com/wp-content/uploads/2015/02/SP-500-Dividend-Yield-vs.-10-Year-Treasury-Yield.jpg

[veloduffer]

My Schwab guy mentioned this approach to me the other day. It invests in only large US companies known to pay good dividends. The idea being even if their stocks go down, the companies still pay mostly their usual dividends. So you keep generating dividend income and get the principal appreciation when the stocks go up and hopefully over the long haul you get both dividends and appreciation. Seems level-headed and not too risky.

No super innovative, but maybe makes sense at my age.



Dividend stocks have been hit lately, as these were overbought, mainly as a substitute for bonds. Since corporate bonds are not retail, muni bonds could be more attractive and not subject to price volatility if held to maturity.


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[eddief]

http://www.simplysafedividends.com/living-off-dividends-retirement/

[astrov]

[QUOTE=astrov;2078112]
My guess is that this segment will do well over the next 10+ years but maybe there is bad news affecting your unnamed REIT? Or it's just a temporsry glitch and it will all come out ok in the long run.

A whole class of similar stocks (healthcare REITs) are all being affected negatively. Ticker symbols:

HCP
DOC
UHI
VTR
HCN
LTC

[Ken Robb]

My Schwab guy mentioned this approach to me the other day. It invests in only large US companies known to pay good dividends. The idea being even if their stocks go down, the companies still pay mostly their usual dividends. So you keep generating dividend income and get the principal appreciation when the stocks go up and hopefully over the long haul you get both dividends and appreciation. Seems level-headed and not too risky.

No super innovative, but maybe makes sense at my age.
Thomas Partners is owned by Chas. Schwab. They watched what Thomas was doing and it seemed simple. When they tried to copy the Thomas system they didn't match his performance so they bought Thomas Partners and Kept Mr. Thomas to run it.

I put the minimum amount into this fund a couple of years ago and later increased that substantially because I liked the way it is run and the results. When I looked at the stocks they held quite a few of them were the same as stocks I have held for years so that was a good clue that our basic philosophies of investing were similar. I had just enough education in finance and accounting to know that I didn't know enough about sophisticated accounting practices but I know that cash flow, cash reserves and dividends are hard to fake. :-)

[FlashUNC]

My Schwab guy mentioned this approach to me the other day. It invests in only large US companies known to pay good dividends. The idea being even if their stocks go down, the companies still pay mostly their usual dividends. So you keep generating dividend income and get the principal appreciation when the stocks go up and hopefully over the long haul you get both dividends and appreciation. Seems level-headed and not too risky.

No super innovative, but maybe makes sense at my age.

Problem will be when those dividends get slashed. Citigroup is still light years away from the dividends it was paying out pre-crisis.

[eddief]

involves a butt load of research and, granted they can't be perfect, but I don't have the time, interest, or knowledge to do it on my own. I'd hope they'd avoid most of the stinkers.

Problem will be when those dividends get slashed. Citigroup is still light years away from the dividends it was paying out pre-crisis.

[Mikej]

I left mine alone, anytime I start messing with it I lose out. I did buy a fat bike to keep my mind off of the markets, however...

[1centaur]

Big picture, we are looking at a slow growth world, which will affect markets everywhere. In the US, boomers are retiring, young people have loans and poor job skills, there has been a bump of people living on disability, and manufacturing jobs have been sent overseas. We may get some of those back and may keep a few that would have gone if Trump achieves something, but the robots are coming anyway so... Trump is in a position to do what Dems have wanted to do: build stuff. Reps worried about deficits may limit that growth driver, but with monetary policy having failed to revive more than Wall Street the US is collectively looking to worry about deficits some day but not now. That's the source of the market's reaction post election (along with looser regulations, which will un-gum some growth regardless of any negative effects that may flow therefrom).

Compared to the US, Europe is in worse shape (bad demographics, an unwieldy union without good monetary tools, sclerotic regulatory tendencies) and Japan is in much worse shape (horrendous demographics and deficits). China has massively increased debt and is running out of productive uses as the monied classes try very hard to get their capital off shore to avoid what they fear may come.

Trump's plans that could raise rates may raise the dollar and that will hurt emerging markets.

So good luck avoiding what will be a reality for many years to come.

Earning 4-5% every year in a world like this would be attractive. Governments are loathe to let rates go up too much because their deficits are so high the interest burden to the government becomes a runaway train (Japan is leading that parade).

Expect price volatility. So you won't make money buying low and selling high, probably. Maybe instead earn dividends and interest and don't watch the volatility, or buy stock in companies with managements that add value consistently in how they spend their capital (look for mutual funds that seek such if you don't buy individual stocks). Not being scared when markets shudder may be the most important skill you can develop. Some day all developed economies may default their debt, but as Mel Gibson said in Braveheart, not this day!

[54ny77]

Awesome commentary as always from this forum member.

Big picture, we are looking at a slow growth world, which will affect markets everywhere. In the US, boomers are retiring, young people have loans and poor job skills, there has been a bump of people living on disability, and manufacturing jobs have been sent overseas. We may get some of those back and may keep a few that would have gone if Trump achieves something, but the robots are coming anyway so... Trump is in a position to do what Dems have wanted to do: build stuff. Reps worried about deficits may limit that growth driver, but with monetary policy having failed to revive more than Wall Street the US is collectively looking to worry about deficits some day but not now. That's the source of the market's reaction post election (along with looser regulations, which will un-gum some growth regardless of any negative effects that may flow therefrom).

Compared to the US, Europe is in worse shape (bad demographics, an unwieldy union without good monetary tools, sclerotic regulatory tendencies) and Japan is in much worse shape (horrendous demographics and deficits). China has massively increased debt and is running out of productive uses as the monied classes try very hard to get their capital off shore to avoid what they fear may come.

Trump's plans that could raise rates may raise the dollar and that will hurt emerging markets.

So good luck avoiding what will be a reality for many years to come.

Earning 4-5% every year in a world like this would be attractive. Governments are loathe to let rates go up too much because their deficits are so high the interest burden to the government becomes a runaway train (Japan is leading that parade).

Expect price volatility. So you won't make money buying low and selling high, probably. Maybe instead earn dividends and interest and don't watch the volatility, or buy stock in companies with managements that add value consistently in how they spend their capital (look for mutual funds that seek such if you don't buy individual stocks). Not being scared when markets shudder may be the most important skill you can develop. Some day all developed economies may default their debt, but as Mel Gibson said in Braveheart, not this day!

[SoCalSteve]

Big picture, we are looking at a slow growth world, which will affect markets everywhere. In the US, boomers are retiring, young people have loans and poor job skills, there has been a bump of people living on disability, and manufacturing jobs have been sent overseas. We may get some of those back and may keep a few that would have gone if Trump achieves something, but the robots are coming anyway so... Trump is in a position to do what Dems have wanted to do: build stuff. Reps worried about deficits may limit that growth driver, but with monetary policy having failed to revive more than Wall Street the US is collectively looking to worry about deficits some day but not now. That's the source of the market's reaction post election (along with looser regulations, which will un-gum some growth regardless of any negative effects that may flow therefrom).

Compared to the US, Europe is in worse shape (bad demographics, an unwieldy union without good monetary tools, sclerotic regulatory tendencies) and Japan is in much worse shape (horrendous demographics and deficits). China has massively increased debt and is running out of productive uses as the monied classes try very hard to get their capital off shore to avoid what they fear may come.

Trump's plans that could raise rates may raise the dollar and that will hurt emerging markets.

So good luck avoiding what will be a reality for many years to come.

Earning 4-5% every year in a world like this would be attractive. Governments are loathe to let rates go up too much because their deficits are so high the interest burden to the government becomes a runaway train (Japan is leading that parade).

Expect price volatility. So you won't make money buying low and selling high, probably. Maybe instead earn dividends and interest and don't watch the volatility, or buy stock in companies with managements that add value consistently in how they spend their capital (look for mutual funds that seek such if you don't buy individual stocks). Not being scared when markets shudder may be the most important skill you can develop. Some day all developed economies may default their debt, but as Mel Gibson said in Braveheart, not this day!

If you don't take anything else from this thread, this is the best take away. Seriously. It's hard to do, believe me, really hard.

[HenryA]

At 66 and probably in good shape from all that bike riding, I'd think you should go have some fun and let the economic forecasting alone. Keep your solid investments and even if everything goes to hell again, just hang there and wait for the next up-swing.

On the other hand, should you think you will drop dead in the next few years, sell it all and have a big time while you're here.

:beer:

[wallymann]

You need an advisor you are comfortable with and a plan that fits your needs.

Just understand half the experts are usually wrong....


2 good pieces of advice!

the value of a financial planner is helping develop a financial strategy that supports your financial/life goals *and* can help you avoid making stupid financial decisions.

IMO it is foolish to think a financial planner will somehow be able to consistently beat the market. we've had a great guy for ~15 years and only the last couple of years, after griping that "our returns are no better than SP500", have i realized the real value he's brought to us -- sound financial planning advice.

The reason Trump was elected was due to voter angst about these issues.


and ignorance. dont forget about the ignorance.

[Seramount]

financial experts make guesses just like those that forecast election results...

sometimes they're right, sometimes not.

my adviser has recommended not dumping my positions...could be a mistake, we'll see.

[ripvanrando]

Zero Interest Rate Policy or worse Negative Interest Rate Policy has been nothing more than the financial repression of savers. Brutal. I guess I should have been driving Ferraris and Lambos my whole life.

There was only one direction for interest rates from here and of course, bond prices have always had to fall. Bond and stock prices have historically been negatively correlated; however, they have been positively correlated for the past 6 or so years. The markets were either broken or for the tin foiled hat crowd, they were maliciously manipulated for political gain on the back of the prudent. Irrespective of one's political views, the Bond Market's voice matters most and it is speaking loud and clear.

At what interest rate does debt become irredeemable? Default certain? Not today but someday. The US Gov debt not including unfunded liabilities rose from $8T to $20T over the past 8 years. Trump clearly can't and won't cut the budget deficit. He is pro growth and will spend like all Politicians. More spending and higher debt service only adds to the burden. The question is whether we stagnate or whether GDP actually grows beyond a 2% population growth baseline. If we see 4% growth over his Presidency, he will have pulled a rabbit out of his hat. I think he might achieve 3% and we plod along.

I would be happy/delighted with a real 3% return after inflation and fees. Not so easy to achieve going forward. I suspect the 10 year will inch towards 2.5% and stall there before settling back closer to 2.0%. But who knows. Repatriated tax holiday capital (corporate profits parked overseas) will come back and be used for stock buybacks and dividends rather than building middle class jobs here (factories). Probably a good time to own a civil engineering firm or construction business or coal mines.

I was all cash going into the election.

[joosttx]

[QUOTE=Ken Robb;2078121]

A whole class of similar stocks (healthcare REITs) are all being affected negatively. Ticker symbols:

HCP
DOC
UHI
VTR
HCN
LTC

VTR is a good one to buy now. Thats all the free advice I will give :)

[Tony T]

Maybe by 2018? :)
https://images-na.ssl-images-amazon.com/images/I/51Cdo6BMwkL.jpg (https://www.amazon.com/Dow-2008-Different-This-Time/dp/1893958701/ref=sr_1_1?s=books&ie=UTF8&qid=1480093427&sr=1-1&keywords=dow+20000)