Quantitative easing has created serious inflation threats. The only way out is to increase tax receipts and reduce government spending, neither of which is in the Fed’s purview. Otherwise, serious inflation lies ahead, regardless of Fed actions.
Prices can continue to rise, until they don’t. Have we reached the point where they don’t?
The PPA has made a mistake in designating an MA as a QDIA. Perhaps the drafters of the PPA were thinking about accounts that are actually managed, but those participants do not default, so that flavor of MA is not a QDIA, and is typically reserved for executives of the sponsoring firm.
The future is impossible to predict, but looking at the patterns around price/earnings ratios can provide some insight about what one might expect.
Many boomers are business owners who are selling their businesses. This article provides guidance for these retiring business owners, their heirs and their advisors. This article also discusses opportunities for investors to capitalize on this once-in-a-lifetime mass exodus of baby boomer business owners.
Finally, an innovation has arrived in 401(k) investing. PTDAs are new. They combine multiple target date glidepaths with managed accounts, potentially using the best of both. Because they are new, it will be easy to think of them all as being the same, but that is far from the truth.
In response to the 2008 stock market and real estate crash, the Federal Reserve stimulated the economy by reducing interest rates to (almost) zero under its zero interest-rate policy (ZIRP). It “printed money” that amazingly did not bring serious inflation, yet.
The Roaring 2020s have been very good so far, but not exceptional when examined in isolation. That said, when viewed in the context of the past 16 years, this record-breaking bull market is spectacular.
Wall Street is forecasting an 8% return in 2025. That’s below the 10.4% average nominal return over the past 99 years, but it is a forecast of even higher highs. Do you believe it? Will “The Bull” keep running this new year, or is it getting tired?
It’s that time of year again, when pundits are forecasting next year’s stock market performance. I believe investors are being gaslighted more than usual this year because the basic underlying assumptions are optimistic and unlikely.
Wall Street expects the stock market to earn a return in 2025 that is similar to the average return over the past 100 years. Do you agree?
The odds are good that Santa won’t disappoint in 2024. Here’s the history of the past 99 Decembers, compared to the other months.
Short-term rates are going down because the Treasury is issuing related debt at lower rates. Meanwhile, long-term rates are going up because the Fed is not intervening.. The Fed is trapped in a vicious cycle. Can you see a way out?
Most of the time the yield on long-term bonds exceeds that on short-term bonds, in order to compensate for the greater risk attached to long-term debt. But until recently the yield curve was inverted, with short-term rates exceeding long-term rates. This happens when investors expect interest rates to decline in the future.
Protect yourself with Treasury Inflation Protected Securities (TIPS), precious metals, certain real estate like farmland, and other real assets.
GAO reports are intended to improve industry practices. GAO failed in its target date fund report but succeeded in its conflicts of interest report.
The ERISA Advisory Council is conducting hearings on Qualified Default Investment Alternatives (QDIAs), seeking recommendations for improvements. The big challenge is making better decisions for people who do not want to engage.
78 million baby boomers are about one-third of the voter-eligible population and 77 percent of them vote, so there are 60 million baby boomer votes. That 60 million is 38 percent of the 158 million votes cast in the 2020 presidential election. The baby boomer voters’ bloc is a big deal.
The “country” in this article is the wild and woolly market of small retirement savings plans (SRSPs) that have less than 100 participants. The “old men” are baby boomers who cannot afford to lose their lifetime savings. And the villain is the next stock market crash.
Baby Boomers likely won’t have time to recover from the next crash. Their loss is also their heirs’ loss. There’s $70 trillion in play. Baby boomers shouldn’t be greater fools.
Baby boomers need to be concerned about worst cases because the rest of their lives could be ruined by the next crash, and with $70 trillion at risk the stakes are high for them and their heirs. So rather than averages, let’s look at worst cases. That’s what baby boomers need to protect against.
Large-cap U.S. stocks, as measured by the S&P 500, have dominated in both absolute and risk-adjusted terms. They are soaring. It’s the Roaring ’20s again!
The next inflation wave will challenge the economy and the Fed. It will not be transitory. A pivot back toward a zero interest rate policy (ZIRP) will intensify the problem.
The GAO report was three years in the making. At $4 trillion and growing, target date funds are very important. The GAO report has the potential to improve the industry.
The Federal Reserve is expected to lower interest rates, but the economy and stock market don't need stimulation.
Inflation is not over. The next wave will be torturous and will last a long time.
The TDF industry is dominated by a few firms that form an oligopoly that is hard to disrupt. It’s no surprise that non-oligarchs are spearheading the movement to personalization.
Interest on our federal debt is 2% and heading towards 5%, which will crowd out other expenditures and escalate deficit spending.
Many boomers are invested in target-date funds that are not safe and do not provide the protection they desire.
Target-date funds, which make up over half of total 401(k) assets, are not following investment theory, exposing investors to excessive risk.
Early signs of economic unraveling are appearing. The federal corporation that insures bank deposits is woefully underfunded. The Fed is under pressure to pivot away from its inflation fight.
President Biden has proposed a $6.9 trillion budget that calls for reducing deficits and raising taxes on wealthy people and large corporations. There is a lot of spending in this budget that fuels inflation.
Reducing the U.S. deficit is praiseworthy. How was that accomplished in 2022?
This past year was disappointing for stock and bond investors. The real 25% loss in stocks was in the bottom decile and the real 20.3% bond loss is the worst in the past 97 years. Greater losses lie ahead.
This year could be the beginning of the bursting of a superbubble that inflated over the previous 13 years.
A new wave of lawsuits alleges that Blackrock’s target date funds (TDFs) have underperformed. These lawsuits open the door to a related and scandalous breach of fiduciary duty – excessive risk.
A few billion dollars cannot move a multi-trillion inflation needle. Two types of inflation are in play: one is transitory, but the other is not. The Fed cannot control inflation, but we want to believe it can.
We meet the official definition of a market correction and the unofficial definition of a recession, and we’re close to the definition of high inflation. Market corrections can and have caused recessions. Be prepared for all three problems coexisting for many years.
Last month I advised abandoning stocks and bonds in favor of inflation-protected alternatives. That hasn’t worked out. I have not changed my mind. Interest rates will increase and cause losses in stock and bond markets.
Depending on risk and diversification, 401(k) plans have lost between 4% and 20% so far this year. Unlike most other periods when stocks lost money, bonds have not defended well this time.
Two forecasting methods predict a 54% stock market loss in 2022. Someday the stock market bubble will burst. But the data says we have not seen the worst of equity market declines.
In 2003, at age 19, Elizabeth Holmes founded Theranos, and it became a $10 billion company by 2014. But it was a fraud. Aspects of target date funds mirror the Holmes story.
Those who are familiar with my articles know that I see market crashes in stocks and bonds occurring in this decade, combined with serious inflation. Readers ask how I recommend protecting. This is it.
The U.S. debt cannot be paid, even in inflated dollars. Serious inflation is inevitable that will crash stock and bond markets, in addition to devaluing the dollar.
The 60/40 stock/bond allocation is ubiquitous, but that’s stupid because it’s just not right for everyone, especially baby boomers.
The Rest of the Story was a radio show that aired from 1942-2008. Host Paul Harvey revealed little known facts that were previously not reported. The rest of the Federal Reserve story is that it is just pretending to be in control, and the rest of the Russian invasion story is about China and the U.S. dollar.
Interest rate manipulation has been achieved through massive money printing that is causing inflation. To control inflation, bond manipulation must stop. When the manipulation ends, bond prices will plummet, and stock prices will follow.
Last year was a good year for stocks, but not bonds. The post-2008 recovery has been spectacular, one of the best 13-year U.S. stock markets. I provide details for the entire 96 years as well as five-year and 10-year sub-periods
In this article, I examine the history of 13-year returns on stocks and bonds to put the most recent 13-year period into perspective. It has indeed been extraordinary.
Our economic experience could be driven by a con game – a hustle.
