Tuesday, May 17, 2016

No Pension Recovery, More Loss for 30 Years

When a financial advisor uses terms correctly, give him a listen:
“Either deflation is going to accelerate, which is most likely, or they [central banks] will turn to real inflation, real printing, rather than just credit inflation. Either way it’s disastrous.”
Good, he has money and credit right.  But disastrous for whom?  Just about everyone, since just about everyone in in this pickle:
 “The whole idea you buy stocks and hold them for 30 years was never correct. … The typical investor should be out of stocks and out of bonds and wait for a crisis, and buy during a crisis.”
But our entire patterns, practices and laws are based on this being true.  For anyone who has been deferring income into pension plans, guess what, the longer you wait, the less you get.  Since how and when you withdraw is set by law, you are a sitting duck.   With inflation your money will buy less as it comes out, with deflation it will bu more, but Uncle Sam will them tax is more heavily on the way out, even if it is tax exempt.

People who think medicare or social security will do, well, it is worse off than the pensions.  This from Mish:
My favored scenario is a series of five to fifteen percent declines over a number of years, with smaller and less frequent rallies, where every rally is a trap.
Such a slow bleed would be far more painful to pension plans counting on eight percent annualized returns.
Crash?  It probably already happened.  The damage is done during the boom.  What have we seen?  The slow bleed. The elders are the first to be harmed, and they are not in a position to complain.  This will get around to everyone, no matter what happen on Wall Street or in Washington.  Neither has anything to offer Main Street.  A real estate crash is inevitable at some point, since it is wildly overpriced.  The bottom of the market is not low prices, but no customers.

Don't get in the fight over dwindling assets.  Start creating your own by starting up your own business.

Feel free to forward this by email to three of your friends.


Anonymous said...

Always great advice John. The old saying, "A bird in the hand is better than two in the bush" applies here. Can we really trust the people managing our pensions? The State of California ran into some mismanagement issues with the Calpers pension some time ago. I believe that starting a business is definitely the way to secure one's future.