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Boomers And The Stock Market

Boomers are trying to repair their recession-ravaged nest eggs fast before they retire.  The stock market is looking hot – we’ll look at Boomers running scared toward retirement.

Trader Peter Tuchman, center, works on the floor of the New York Stock Exchange Wednesday, April 30, 2014. The future of many Baby Boomer pension funds is called to question as the stock market continues to hit unprecedented highs. (AP)

Trader Peter Tuchman, center, works on the floor of the New York Stock Exchange Wednesday, April 30, 2014. The future of many Baby Boomer pension funds is called to question as the stock market continues to hit unprecedented highs. (AP)

New record highs in the stock market yesterday.  The Dow and S&P both.  After huge gains in 2013, Wall Street is again pushing way up high.  Bulls, of course, say it has room to run.  Bears are saying run for the hills.  For America’s 70 million Baby Boomers, it’s hard to know what to do.  Retirement time is in their faces now.  For most, their savings were never great, and the Great Recession made them worse.  They need a good return to recover.  Wall Street gave that last year, but Wall Street can bite.  This hour On Point:  Nobel prize-winning economist Robert Shiller and more on Wall Street and the American retirement crisis.

– Tom Ashbrook

Guests

Ashlea Ebeling, associate editor at Forbes. (@ashleaebeling)

Robert Shiller, professor of economics at Yale University. Winner of the 2013 Nobel Prize in economic sciences. Author of “Finance and the Good Society” and “Reforming US Financial Markets: Reflections Before and Beyond Dodd-Frank.” (@RobertJShiller)

Michael Finke, professor and director of the Center for Retirement Planning and Living at Texas Tech University. (@FinkeonFinance)

From Tom’s Reading List

The Wall Street Journal: Will Higher Interest Rates Sink Your Bond Portfolio? — “How much could interest rates rise? How much would your individual portfolio suffer? To answer the first question, we can look to nominal economic growth, which reflects both inflation and real (after-inflation) GDP growth. Bond yields and nominal economic growth tend to track each other fairly closely.”

New York Times: Time to Worry About Stock Market Bubbles — “It’s possible that a world of rising inequality and low interest rates is here to stay – and that stocks have reached a permanently high plateau. In that case, whatever our other economic worries, the stock market’s valuation doesn’t need to be high among them.”

Salon: 401(k)s are retirement robbery: How the Koch brothers, Wall Street and politicians conspire to drain Social Security – “Social Security taxes are already so high, relative to benefits, that Social Security has quite simply become a bad deal for younger workers, providing a low, below- market rate of return. This poor rate of return means that many young workers‘ retirement benefits are far lower than if they had been able to invest those funds privately. However, a system of individual accounts, based on private capital investment, would provide most workers with significantly higher returns. Those higher returns would translate into higher retirement benefits, leading to a more secure retirement for millions of seniors.”

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  • Yar

    How many multi-billion dollar acquisitions can you name just from the last few months? What’s really going on? There is a move afoot by businesses to get rid of cash, which is a pretty reliable indicator of upcoming hyper-inflation. Essentially all of it is “backed by” (on the back of) our retirement system. Who do you think is going to get the short end of the stick when things go south? The old, the poor, and the sick. We could have a major crop failure this year. Eventually it is going to catch up with the false horizon we built with fake money.

    • StilllHere

      Most acquisitions have been for stock, not cash. Hyper-inflation will have to come from elsewhere.

      • Yar

        So Apple’s 7 to 1 stock split and buy back program is not about cash?

        • Don_B1

          The stock split mainly just makes it easier to purchase Apple stock in 100-share blocks, the traditional way stocks are bought.

          The buy-back program basically puts company profits in the hands of shareholders (and particularly company management with large stock option purchases) as capital gains which is taxed at a much lower rate.

  • B.P.B

    If Boomers are vulnerable, it’s only because their fellow Boomers (those in power & control) are now calling the shots on the nation’s destiny – and the world’s, too. I refer readers to my recent book, BUSTED BOOM: THE BUMMER OF BEING A BOOMER, for a wider discussion. – Brian Paul Bach
    http://my.bookbaby.com/book/busted-boom#

    • Steve__T

      Congrats on getting published.

  • JHWillson

    Corporations shedding “legacy” costs. Government orchestrated bankruptcies. Fully funded pension funds taken by government fiat. What are 20,000 retirees to do? Our 5 year lawsuit continues in Michigan Federal District Court. Does Ashbrook and On Point have the guts to take on the White House, U.S. Treasury Department and Pension Benefit Guaranty Corporation? The background and updates of our struggle can be found here: https://www.delphisalariedretirees.org/delphi/

  • X Y & Z

    The bubble in the stock market is largely due to the Federal Reserve spending approximately $80 billion a month to buy up the toxic assets of the big banks, who in turn have taken that money from the Federal Reserve and invested it in the stock market.

    Major investors such as Jim Rogers and Marc Faber have been warning that the US stock market is over valued and due for a correction.

    • Human2013

      I call that welfare by another name!

    • John Cedar

      Are you talking about the securities they purchased from Fannie Mae & Freddie Mac? Or the toxic ones the banks held that were originated using the standards and oversight of Fannie Mae, Freddie Mac and the rest of our government?

      • X Y & Z

        All of the above.

        • John Cedar

          If tried and tested loan origination standards had been kept in place, there would be no toxic assets to buy. Even if the new reckless origination standards were enforced, there would not be any toxic assets to buy.

        • jefe68

          Oh do you mean the Gramm–Leach–Bliley Act of 1999?

          As in: Sen. Phil Gramm (R, Texas), Rep. Jim Leach (R, Iowa), and Rep. Thomas J. Bliley, Jr. (R, Virginia),

          • X Y & Z

            Instead of signing it, Clinton could have vetoed it.

          • jefe68

            I’m not defending Clinton. I have nothing but contempt for Rubin, who is one of the worst political hacks out there. I was pointing out that you conveniently left out the authors of the bill. Wonder why?

          • X Y & Z

            You’re right. The repeal of the Glass-Steagall Act could have never passed without GOP support.

        • Don_B1

          Certainly President Clinton opened the door by signing the Gramm-Leach-Bliley Act, relieving the big banks from having to separate their “banking” functions and their “investment” functions and then the Commodities Futures Modernization Act of 2000, which removed the right to regulate derivatives (CDOs, CDSs, and other speculative financial instruments).

          But the Democratic Congress had given the Federal Reserve the power to regulate the “shadow banking” system in the early 1990s. Then, despite calls from Rep Barney Frank, (Ann Rand) libertarian Federal Reserve Chairman Alan Greenspan refused to use that power, which would have cut the legs out from under the housing/mortgage bubble, which financed the Big Banks on their path to the 2008 financial crisis.

          Mr. Greenspan (in)famously stated that the Market would always take care of misuse of money, even outright fraud, without any need for government oversight.

          President Bush also appointed a lot of minimal-regulation types to various government regulation agencies, such as Rep. Cox to the S.E.C., where the devastation that was building up with the overleveraging by the Big Banks and others was not even understood.

          • X Y & Z

            Excellent post Don _B1. The creation of the super secretive Federal Reserve in 1913 was a violation of the US Constitution and it should be abolished.

          • Don_B1

            Thank you for the praise, but I cannot back your call for the abolishment of the Federal Reserve. It works to achieve some much needed functions, as stated in its organization:

            “The Congress established the statutory objectives for monetary policy–maximum employment, stable prices, and moderate long-term interest rates–in the Federal Reserve Act.

            The Federal Open Market Committee (FOMC) is firmly committed to fulfilling this statutory mandate. In pursuing these objectives, the FOMC seeks to explain its monetary policy decisions to the public as clearly as possible. Clarity in policy communications facilitates well-informed decision making by households and businesses, reduces economic and financial uncertainty, increases the effectiveness of monetary policy, and enhances transparency and accountability, which are essential in a democratic society.”

            http://www.federalreserve.gov/faqs/money_12848.htm

            Many/most financial writers reduce these objectives to two:

            1) The Federal Reserve has an objective to maintain a full employment workforce (though that is hard to measure) to the extent possible.

            2) The Federal Reserve has an objective to maintain stable prices and moderate long-term interest rates (the latter tend to go with stable prices).

            The FOMC does, in normal times, achieve both goals by setting the federal funds, or discount, rate to push the general interest rates up, which slows business investment (and economic activity) and economic growth, or down, which encourages business investment and thus stimulates economic growth. Economic growth encourages hiring more employees (among other things) and thus lower unemployment rates, while too much growth, too rapidly, results in price inflation.

            These functions are not performed well by the collective economy, requiring a central actor to perform, generally called a central bank.

            A certain amount of secrecy is required to keep certain economic actors from overreacting to actions that the Federal Reserve takes, as demonstrated last year, when Chairman Ben Bernanke attempted to explain the Fed’s policy on “Quantitative Easing,” which led lenders to think that the Fed would raise interest rates soon, and thus there was a huge sell-off of bonds with low coupon rates, upsetting the financial markets and interest in rates in general.

          • hennorama

            Don_B1 — there was also the issue of reduced enforcement of existing regulations, and cutting funding for it.

            (As we see with the IRS of late.)

      • Don_B1

        The Big Banks began buying “toxic” mortgages all on their own, soliciting more and more such mortgages from the shadow banks like Countrywide which they “diced and sliced” into tranches of increasing risk to sell to the rich who had money to invest but wanted big returns.

        It was only when the GSEs saw their share of the mortgage refinancing business dropping that they agreed to accept more subprime loans than they had been, well after the Big Investment Banks had lowered the standards all by themselves.

  • StilllHere

    Social security is an income redistribution program in drag. It’s another way for people to avoid taking responsibility for themselves. Moreover, as we all know, the disability portion of it has become a cesspool of fraud and abuse.

    • TFRX

      No SocSec, no middle class.

      I almost prefer it when righties pretend to want to “fix” it rather than lie about it as you do.

      • StilllHere

        We had a middle class before SS, we’ll after one after. The first fix is to call it what it is, another tax for lackabouts.

        • TFRX

          Lackabouts?

          Hahahaha.

          Why don’t you just call it “welfare” and be done with it?

        • jmpo’lock

          The middle class grew to its largest extant after the New Deal was created.

          The middle class is now shrinking due to the deregulation, and systematic dismantling social programs and underfunding the public sphere.

          Add in the relentless demoralization and community distrust inflicted by the Right, and you have the perfect virus to destroy civil society.

        • AnneDH

          If you become disabled, re-visit this comment.

          • Don_B1

            He already is disabled in some way to not know that the middle class was the most numerous and strongest AFTER SS came into effect and also when the income tax system was the most progressive with steeply growing marginal tax rates with each step up in income.

    • X Y & Z

      If the Democratic party was really the party of “Choice”, then they would let people opt out of social security, and make school vouchers available for every school child. But the reality is that Democrats are only for “Choice” as long as your choice coincides with their “Choice”. That’s not very democratic.

      • Kyle

        Who are you quoting when you say “Choice”? I don’t think Social Security has much more of a future, but clearly “opt out” is the same as repealing the law, because the way it works, current workers pay for current retirees, and wealthy individuals would all choose to opt out, causing not enough money to be in the pool to pay for the retirees. Did you think Social Security was a personal retirement fund run by the gov’t? Its not.

        • X Y & Z

          SS is going bankrupt. Young people should be given the choice to opt out of it.

          SS is also a losing investment, as the dollar continues to weaken (thanks to the Federal Reserve), the return on all money taken by SS from workers paychecks, will decrease.

          • Kyle

            You either end it or keep it. Opt out is just ending it by rewarding those who opt out first.

          • X Y & Z

            Social Security will end on its own when it runs out of money, which is theft against young Americans in their 20′s and 30′s who are forced to pay into the SS Ponzi scheme.

          • Kyle

            Like I said, I agree that in its current incarnation, Social Security is not going to last. Where I disagree is your approach to “opt out” of social security, which would destroy it, but in an extremely uneven manner. If you want to end social security, it should be done slowly, so that those of us who are young won’t get it, but we also won’t pay as much over our careers, and those who are close to retirement, will still get it, but not as much. I think we should fix it, by raising retirement age fairly significantly, and paying out less to those who are higher income.

          • Don_B1

            There is absolutely no need for SS to “run out of money.” The reason that the current contributions to SS have fallen slightly below what the actuaries expected when the F.I.C.A. rates were established for the 1983 is that the wages of the 99% have not been increasing as they expected, because the super wealthy have been able to extract bigger and bigger shares of the increases in profits made in this country.

            Thus it is wealth and income inequality that is hurting SS funding, for which there is a remedy that will mostly fix it: the elimination of the cap on wages subject to F.I.C.A. taxes, along with eliminating the different treatment of wages and capital gains which would slow the sleight-of-hand shifting of wage income to capital gain income by the wealthy.

    • jimino

      Yes, the several trillion dollars paid into the system to fully fund current and future obligations to the hard-working Americans who paid it into the system has been raided and used for tax cuts for and other sops to the wealthy. So on this extremely rare occasion, you are correct; just for the wrong reason.

      • StilllHere

        You just don’t understand how this “trust fund” works.

        • jimino

          I just told you how it works.

          Assets grew from about $47 billion at the end of December 1986 to about
          $2,762 billion ($2.8 trillion) by the end of March 2014. Where’s my money?

    • hennorama

      Stilllhere — “as we all know” — yeah, right.

  • Human2013

    It pains me that my retirement is tied to the stock market. I’ve tentatively set my retirement for 2040, but I have a funny feeling something is going to go terribly wrong in the markets with all the wizardry, fairy tales and fortune telling.

    • Don_B1

      If the attempts to water down Dodd-Frank are not stopped in their tracks real soon, and probably a few more banking regulations passed. you are likely to be right, except that without such action there will almost certainly be another, even deeper Great Recession and financial crash that will stop further attempts at deregulation for at least another 50 to 70 years.

      It will take an alert and knowledgable public, sadly not much in evidence today, to prevent what you fear.

      The Tea Party rose out of the ashes of the financial crash and Great Recession, but with approaches to “fixing” the problem that were incredibly ignorant, based on a “simple solution to a complex problem” that is almost always wrong, and, in this case, has slowed the recovery by years. The next time, that simple solution will almost certainly cause another
      Great Depression, only even worse.

      I am sorry for my pessimism, but the way supposed leaders are not willing to stand up to the ignorant beliefs of so many citizens says that they will act similarly when the next financial shock comes along.

  • Michiganjf

    We can all forget a comfortable retirement based on investments so long as the rich keep gaming the system, both “legally” and illegally, through questionable hedge funds, pay-to-play day trading cheats, funneling retirement gains into their pockets through excessive fees, etc…

    Meanwhile, Republicans will keep claiming Americans should count on “savings” alone for retirement, so long as their wealthy overlords keep making bank on the backs of the rest of us, stealing the majority of what little gain we can manage to stow away for ourselves.

    Need proof?

    Read Republican comments as they’re posted today!

    • Matt MC

      True for the time being, but it seems a bit apocalyptic to me. We’ve faced periods of corruption as bad or worse than what we face now: robber barons, monopolies, child labor, 70 hour work weeks, no worker protections, and even a stock market that had taken an even more extreme hit. I think it is good to point out the corruption, but we need to start talking about how to fix the system as well.

    • Jeff

      Yet it’s the Republicans that are trying to do something to save social security while the Democrats are demanding the status quo…which leads to a draining of all SS funding.

      • TFRX

        Once more, without feeling: If you’ve got some GOPers who’re saying they want to “save” SocSec, and they’re not proposing anything they haven’t for the last ~20 years, then what you’ve got are GOP members who want to destroy SocSec.

        • Jeff

          Facts, that’s what’s missing from your argument.

          • Don_B1

            And from yours, also.

  • Human2013

    Did On Point get rid of the down votes? We’re going to need them in this discussion

    • Yar

      I would like a flag to indicate duplicate IP addresses, when more than one screen name is used.

  • John Cedar

    NYS pension fund reached a record high of $176 billion*.
    Greedy evil pension funds making money off our backs.

    http://www.osc.state.ny.us/press/releases/may14/051214.htm

    *Too bad they don’t mention the record obligations due to our corrupt unions and patronage double dipping appointments, with no reasonable defined benefits formula.

  • Shag_Wevera

    The biggest flaw in the greatest generation is that after the war they made the baby boom generation. The generation that saved the world spawned the generation that will eventually ruin America.

    • John Cedar

      If you are going to fault the Greatest Generation for creating the lousy Baby Boomers, then we should credit the G.I. generation for creating the Greatest Generation.

    • Coastghost

      –in which case Brokaw was in grave error: the Greatest Generation thus would have been the WWI generation: it gave birth to the victors of WWII, and the slide into luxury began post-1945.
      “Now we are paying for a lengthy peace. More deadly than armies luxury has fallen upon us, avenging the world we conquered. Every crime and act of lust has become familiar since the demise of Roman poverty.” (Juvenal, Satire VI, Rudd tr.)

  • John Cedar

    Not to say that Salon ever had any credibility at all, but it is comical to hear them refer to SS as a “trust fund”.

    • jimino

      Your ignorance of how Social Security is designed is staggering. There most definitely is a “fund”. It amounts to close to $3 trillion. It’s the “trust” that is missing.

      • Steve__T

        Yes the trust that congress will keep their hands off it. But they don’t. they want to spend it on their own pet projects, that have nothing to do with retirement, savings or provisions to keep it solvent.
        Just want to spend it and put back promissory notes, what I call I.O.U’s that have no savings or interest.

      • John Cedar

        Not sure if it is more staggering that you don’t understand the workings of open-form compound words, or that you don’t know what a “fund” is.

        • jimino

          Just like all that cash you have in the bank is really there, right? In the actual bills you took in your grubby little hands to deposit. Hope you saved the serial numbers so you can be sure to get “your” money back.

          • John Cedar

            So far, every time I go to take that cash out my banks, they oblige.

            OTOH…the beneficiaries of the SS “trust fund” haven’t even tried to take the cash out of the SS trust fund yet, but the trustee is already stammering and asking to raise the retirement age, raise the contribution cap and a few decades ago, they started taxing it as income.

            IOU…what I say I owe you, and in the mean time I spent the money. is not a trust fund.

          • jimino

            I don’t know where you get your misinformation. If you want to know the truth, you could try the actual Social Security Trustees reports:

            http://www.ssa.gov/oact/STATS/table4a3.html

            http://www.ssa.gov/oact/progdata/assets.html

  • Charles

    I hate to sound callous, but don’t expect a lot of sympathy from a “millennial”, as the show has referred to my generation.

    Pension funds? I will never see one of them. Social Security? I will never see a dime from the money I pay every week.

    Point being, you think that Boomers are getting a raw deal? Wait.

    • jefe68

      Actually you don’t know that. SS does have enough to pay out for the next 20 plus years without any problems.
      Raising the cap on it would change that and it would be there when you retire.

      • Kyle

        when SS was set up, there was something like 150 workers per covered beneficiary. By 1960 it was 5. For a long time after that it was 3.3 to 3.4. Now its under 3. It is pretty unlikely that by the time I retire (another millenial) that we will have enough workers to pay for social security. I work at a company which now has a layoff at least once every 5 years, but is still paying pension to their boomer retirees. The boomer generation is the reason that the country is in debt, they are the reason our companies and local governments offered pensions when there was no chance that we could afford them in the long term.

        • jefe68

          Sorry your company is not doing well enough. But here’s a little info, those boomer paid into the pension fund.

          The rest of your comment is nothing short of a right wing screed based on misinformation. Also, stop whining and try to join the human race. It’s not only about you.

    • TFRX

      You really think SocSec is going broke?

      Well, someone can put up the “Mission Accomplished” banner.

      • Jeff

        It runs out of funds in 2034, well before I retire.

        • TFRX

          You really think SocSec is going broke?

          “Mission Accomplished!”

  • Jeff

    Boomers had the best years for the stock market…literally every boomer could be a millionaire if they simply put a few thousand dollars a year into the stock market over the past 3 or 4 decades. Meanwhile the millennials have watched the stock market bounce up and down…over the past decade the market has been basically breaking even. I’m sorry but the idea that boomers need to repair their next egg is false, the stock market has recovered the housing market has shot up leaps and bounds over the past 30 years (it’s once again the millennials who purchased within the last 6-8 years who got completely screwed)…there’s nothing to repair, the boomers have had amazing years to be in the labor market, to invest in the stock market and housing. I just hope the boomers realize how good they’ve had it and that the following generations would hope to have it half as good as they had it for the last 30-40 years.

    Backing up my claim about being a millionaire…9.8% average stock market returns over 40 years, saving $300/month ($3,600/year) equals $1.657 million.

    http://www.daveramsey.com/article/investing-calculator/lifeandmoney_investing/#/entry_form

    • jefe68

      In index funds.

    • Yar

      What percentage of workers has 300 dollars per month to put in the market. What should we do with those that couldn’t or didn’t save?

      • Jeff

        I put in more than $300 per month into a retirement account. I’m a younger worker, a millennial…$300 of tax free investment isn’t all that much to save per month for retirement.

        • stephenreal

          depends what you do and where you live

        • Yar

          Thank you, I will spend it for you.

        • Jo Bleaux

          It’s not that much now. It was a fortune back when boomers were entering the workforce.

    • hennorama

      Jeff — indeed if “stock market returns” were smoothly reliable and steady, the projections work out.

      But that’s definitely not how markets operate in the real world.

      • Jeff

        It is how they work “over time”, don’t pull your money out of the market during every scare…slowly transition it over time as you get closer to retirement.

        • hennorama

          Jeff — thank you for your response.

          You might wish to look into value averaging as opposed to your current strategy of dollar-cost averaging.

          Buying is easy; selling, not so much.

    • Shea

      You are describing a very small percent of boomers. About 50% or more of those boomers have been divorced or had 4+ children versus younger generations and had little money to save. Many lost good jobs with the downfall and outsourcing of manufacturing in this country, and work minimum wage jobs. What they did save was often lost in the stock market or earned little from CD’s and savings account that paid .34%. Many of those boomers who bought a home 30-40 years ago, have taken out large mortgages on their homes (I am a real estate broker) and the taxes have reached extreme levels and they can no longer afford to pay them. I believe you are describing less than 20% of the boomer generation, if that.

      • Jeff

        Just admit most did not save because they weren’t responsible, stop making excuses. Also, stop draining social programs so that nothing will be left for those kids and grand kids that are so important.

        • Pam G.

          I have sold homes to those boomers, some were responsible, some not. Many divorced, many lost good jobs, most not using social services…too proud to do so. You have a very negative image of those older than yourself, so I am assuming you have the same negative image of your parents?

    • Jo Bleaux

      Where would a boomer get 300/mo. over the first 3/4 of that time period? Back in 1980, minimum wage was $3.10/hour, so at that rate someone would gross just $480/month. In 1970, someone working full-time at minimum wage pulled in about $260/month. In 1960, about $170/month.

      Of course many people made more, but over the course of a career, that would be the starting point. In fact, in those days, minimum wage was worth much more in real dollars, and many entry-level jobs only paid a little bit more than minimum.

      When you’re making a point, maybe try looking up actual figures instead of running a few quick calculations based on your personal experience.

      • Jeff

        People generally don’t start saving until they’re at a good job and out of college…let’s assume that’s around age 25 years old. The average salary back in in 1980 was $12,500/year…assuming the person had a good job (post college) they’re probably making about double that at $25,000/year. That would amount to less than 15% of income if you saved $300/month…that’s not unreasonable. I also picked $300/month because it’s a middle value…I save much more than $300/month but I knew that would be too high over that period of time, so I settled with a value lower than today’s average savings.

        • Jo Bleaux

          Yes, but it doesn’t average out evenly, because the benefit of compounded returns is on the much lower amounts.

          I’m not about to argue with the value of starting to save early, a concept I’ve really been emphasizing to my nieces and nephews.

          But, your arguments lose their credibility with your overuse of assumptions.

          • Jeff

            Well I’m sorry I didn’t get it 100% exactly perfect…the financial calculator I used didn’t offer up a changing addition to your contributions, I figure a rough estimate is good enough for conversational purposes. Even if I reduce the final amount by 25% the end number is still over $1 million…still proving my point. Over analyziation of specific numbers ends up showing that a person doesn’t really have anything to say and that a person is simply nitpicking over something relatively minor to deflect and change the overall conversation. My point was that the older generations had it so easy in the labor market, with investments, with housing…you made excuses for people who threw their money away then continued to nitpick…okay, my main point remains; if you did the basic right things you’d be a millionaire today.

  • stephenreal

    What’s the average boomer has saved? Something like $30,000 dollars?

  • stephenreal

    The high end stock traders/marketeers need to put more into the kitty for retirement of the regular folks. Cheap bastards

  • stephenreal

    market literacy is very hard to learn
    unless it was your major in college.

    • Jeff

      Not sure if that’s true, my major was electrical engineering and I seem to have no issues investing.

      • stephenreal

        you job pays well. no doubt.

        • Jeff

          It pays alright, not great but remember I picked a major that’s much more difficult than the typical college major…shouldn’t I be rewarded for the hard work I put in during those college years?

          • stephenreal

            yes. you did well for yourself.
            now what about everybody else?

          • Jeff

            I would suggest they pick something to work hard at as well.

          • stephenreal

            Your ego will never allow you to see from their shoes will it?

          • Jeff

            I’m confused, what are you suggesting that we should take from some people and give it to others? The social security system does that already to an extent…another welfare program? What are your solutions?

          • stephenreal

            taxing the f out fund mangers
            just like Eisenhower did

          • Jeff

            What about oil companies? Rich Republicans? How about rich people in general? Why not doctors who invent vaccines…they make good money. Tech companies, they have a ton of money let’s raise their taxes too! Basically you’re demanding class warfare and higher taxes…another brilliant idea from the left.

          • Don_B1

            I would suggest that those making larger amounts of money pay more for the services they receive.

            Some things that applies to:

            1) Schools. It is in the interest of everyone that all workers receive the best education they can use. But poor areas have many social factors working against the children who live there, from single parents who work at minimum wage jobs which don’t pay enough to put food on the table, or get healthcare for the chronic medical problems, like asthma, which are endemic in poor areas because of pollution (mercury, arsenic from power plants, in the past lead from car exhaust, etc.). The learning disadvantages of the students typically drives away the best teachers, so the students are less likely to have that exceptional teacher/mentor that puts so many of the children of the wealthy, who already get much more support at home, on the path to a successful life. And vouchers, along with the more subtle charter schools, basically syphon public money toward schools that benefit mostly those students with wealthy parents, are unlikely to make good use of taxpayer money. While selective bussing programs like Boston’s METCO, do give students from poor inner city areas the chance to go to a better school in the suburbs, they put much of the onus and requirement for extra work on the student, not the system.

            2) Rentier income. Those with great amounts of wealth can use that money to corner ways to magnify the growth in their income that are not available to those with less wealth. Jared Bernstein, on his blog, On the Economy, recently posted a list of such ways that the wealthy use to corner ever larger shares of the growing profits in the economy:

            Someone asked for the list I ticked off of examples of “rents” or rent-like distortions that drive inequality higher:

            –As per Bertrand et al, oil industry CEOs paid for luck as their comp moves up with world oil prices;
            –Tippy-top exec comp that moves up and down with the stock market;
            –Discontinuity as the top 0.1% of comp increases sharply relative to the average;
            –Top inequality driven not by educational wage premiums but by relative gains of the wealthiest;
            –Financial “innovators” overpaid relative to risks they created;
            –”Regulatory capture” as financial sector pay rose as deregulation faded;
            –Low accountability of comp in finance (JP Morgan gets fined; Jamie Dimon gets raise);
            –Persistent race and gender earnings differentials;
            –Tax loopholes, like carried interest and international tax avoidance;
            –Piketty effects: accumulated wealth builds while labor income falls;
            –HFT, as noted above;
            –Rents in US health care, like big pharma.

            And that’s surely a partial list. What else, OTEers??

            [See:

            http://jaredbernsteinblog.com/talking-inequality-with-greg-mankiw-and-charlie-wheelan-at-dartmouth/

            ]

      • Kyle

        Same, just takes some effort.

    • Yar

      Live below your means.

      • stephenreal

        and…?

        • Yar

          Build community.

          • stephenreal

            with asset allocation

  • http://hlb-engineering.us/ HLB

    Where’s that Global Heating stock or hedge fund that’s going to outlast Mother Nature? And what are you going to do with the “returns” when Wall Street is under water?

    I would buy Mother Nature’s war bonds if she’d “float” them.

  • TFRX

    Meta here: A word on how “DJIA” or “StockMarket” = “Economy” in much of our media, Tom?

    • stephenreal

      tell it to Bear Stearns

  • http://neilblanchard.blogspot.com/ Neil Blanchard

    Many stocks are not reality based; but rather with speed trading they have become a gambling game.

    • http://hlb-engineering.us/ HLB

      Flash Boys: a good read. Hoober Doober

  • http://hlb-engineering.us/ HLB

    “Retirement accounts managed by professionals.” Would those be the same “professionals” who lost all those trillions of dollars in 2006-2009?

  • Coastghost

    What is the status of “inheritance” in the present environment? Has wealth transference become so negligible a factor?

    • Don_B1

      Inheritance of family wealth is a rapidly growing factor in the increase in wealth/income inequality in the U.S., as shown in Thomas Piketty’s data.

  • http://hlb-engineering.us/ HLB

    I’m in the market: lettuce, kitty litter, Fritos, Arugula, Diet DP, tater tots.

  • creaker

    “Recovery” doesn’t work well when you don’t have a lot of money to pump into investments when the market is low – which is the case of many working folks when the economy has gone south.

  • http://hlb-engineering.us/ HLB

    The stock market has picked itself off the mat and is lurching onto its feet. Ready, willing, and awaiting another pummeling by the champ, Bruiser Reality.

    Ding. Ding. Round Two.

  • JP_Finn

    It seems pretty clear that the soon-to-retire folks in our society need to adjust their expectations for a cushy retirement, if they haven’t already. Any rush to invest in the stock market so late in the game would probably just be another example of the prisoner’s dilemma: everyone hopes they can ride a wave back to their former net savings’ worth, which will just flood the market with investment money, create another bubble (i.e., cause shares to be overvalued, rather than under/fairly valued), and then, >pop!<

    I don't relish in the diminished level of luxury boomer retirees can expect, but we can't deny that this is a problem their generation created for themselves by being (willingly) bamboozled by the swindlers who sold them on the miracles of market deregulation. Unfortunately–if for no other reason than filial piety–their children (i.e., my generation) are going to have to serve as the ultimate safety net for boomers in retirement… and somehow figure out how to still afford to retire ourselves on top of that (I'm not holding my breath).

    • Euphoriologist

      I agree.

  • Yar

    One issue of the bubble baby boomers has is they create a need to pull real value out of the market to meet their retirement needs. Pull 10 percent of the value out of the market and it Drops by half. The market is not designed to give back value, it is intended to trade value with others entering the market. It won’t work for the demographic bubble.

  • Kyle

    I, for one, have recently reduced my investment risk, despite being a millenial who is told to skew “risky, long term”. I think that is BS. The market will crash again, soon, because no aspect of our economy is as strong as the stock market, and whatever this bubble is will burst. When that happens, then you should invest, not now.

    • injun2

      As an old codger who has been doing this a long time, I have to commend your strategy! Worked for me in the crashes of 2000 and 2007. High dividend yeilding blue chips and REITs in the intervals

  • Coastghost

    Does Prof. Shiller see a vast difference between real estate (commercial or residential properties) and otherwise undeveloped farmland in terms of investment potential?

  • WorriedfortheCountry

    Memo to Robert Schiller:

    Climate models are based on “fake” physics and are thus VERY MUCH like economic models.

    See confessions of a reformed climate modeller here:
    http://www.youtube.com/watch?v=hvhipLNeda4

  • twenty_niner

    Usually shows like this indicate a market top. Unless it goes up more.

    • Kyle

      well that certainly covers the possibilities :)

  • Livin_Large

    I bought an annuity (from a very highly rated mutual company) that is accumulating at the HIGHER of 7% a year (net of fees) OR the return from a managed portfolio (minus fees).

    In 10 years, I will be able to withdraw 4.5% a year for the rest of my life no matter how long I live, and the annuity has a death benefit in case I die early. I can sleep at night.

    • hennorama

      Livin_Large — assuming the insurer is still around, of course.

      What level of expense have you assumed for these guarantees?

      • Livin_Large

        Yes, the insurer needs to be carefully chosen and I did. The guaranteed accumulation is net of fees. The fees to provide the guarantees are withdrawn from the non-guaranteed managed portfolio results.

        • hennorama

          Livin_Large — as long as you realize the cost of your security (i.e. “I can sleep at night”), no worries.

          It might be interesting to track how your funds would perform outside the annuity, were they in similar investments.

          • Livin_Large

            Yes, but in the final analysis there are so many assumptions built into such a model that it’s pie-in-the-sky. And you know, I don’t really care all that much. I just want to enjoy life and this is a vehicle that makes that possible.

          • hennorama

            Livin_Large — thank you for your response.

            No worries.

            The point is that the large expenses of annuities vs. their rather modest guarantees are not for everyone.

          • Livin_Large

            I neglected to say that the 7% for 10 years
            is further guaranteed to be 200% of the initial premium at the beginning of year 11. For the entire life of the contract, income cannot go down regardless of market performance but it resets at a higher level as the Fund reaches a new high.

            So you think this is a modest guarantee for a passive activity? I am amused.

          • hennorama

            Livin_Large — thank you for your response.

            Your confidence in your decision is clear. Best wishes.

          • jmpo’lock

            Not to mention 7% is pretty huge today, where most money markets and savings accounts are under 1% returns
            My brother punked me for buying into a return on premium life insurance plan which pre- Great recession offered 5% return on investment (capital over premium cost)
            It looks pretty good now!

      • John Cedar

        Just make sure it has AAA ratings like AIG’s collateralized default swaps did.

        • hennorama

          John Cedar — TYFYR.

          Right as rain.

  • http://hlb-engineering.us/ HLB

    West Virginia beach front property. Bitcoins. Life rafts. Protein shakes that mix with seawater. Air conditioners powered by radioactive waste. Mu shu Asian Carp heads. Hillary Clinton.
    The future is HERE!

    • hennorama

      HLB — you left out water and desalination providers.

      • http://hlb-engineering.us/ HLB

        Perhaps they can power one another. Hoober Doober

  • creaker

    Always the same message – stay on the treadmill, run faster, stay on it longer. In the past Heaven was used to entice the peasants to peacefully work themselves to death for their masters – these days it’s retirement.

    • http://hlb-engineering.us/ HLB

      Rats who work hard get the pellets. HD

  • Livin_Large

    One of the biggest threats to retirement is financing the cost of long-term care, which can cost over $100,000 a year. Most Americans are hoping to become poor enough to go on Medicaid, which is a big target for politicians and at best a very meager existence.

  • stephenreal

    Assets drive America. You are either in or you’re out.

    • injun2

      It’s always been the reward goes to those who are willing to take risk. Seems some people want it both ways…..a high return with no risk. Unfortunately, politicians like to promise people what they want.

  • Yar

    For intelligent investing you should choose when to be born!

    • injun2

      Yep – those born before the 1940′s should have been screwed but they thrived. My parents had the Great Depression, the Dustbowl (were in Oklahoma), WWII, and the Cold War. No running water, electricity, or any kind of social safety net to help either. Plus, being an Indian back then was wasn’t exactly pleasant either (I have an old sign “No admittance to Indians after Sunset, Durant OK 1929″

    • hennorama

      Yar — and to whom.

  • Jeff

    One of the best options is to open up a Roth IRA and fill it to the maximum every year you can. No earnings are taxed in a Roth IRA.

    • stephenreal

      true

    • http://hlb-engineering.us/ HLB

      Not yet. HD

    • John Cedar

      A better option is to earn so much money, that you do not qualify to open one.

  • http://hlb-engineering.us/ HLB

    More federal regulations and aggressive prosecutions of financial riggers & other malefactors? {we could hardly have less of these}

  • http://hlb-engineering.us/ HLB

    We could all join the 2 + 20 racket. Dibs on: Anybody’s Hedge Fund.* {we’ll all get rich taking in each other’s bitcoins}

    * And bar and grill. Free money management advice for ladies, Wednesday’s.

  • Yar

    It takes a heap of hype to keep the machine going!

  • Coastghost

    Otherwise, we get treated to overplay of the “zero-sum” argument . . . .

  • Randy Kritkausky

    Our generation faces a double challenge. We seek to invest for retirement, but we also want to contribute to “sustainability” of our communities. Many retirement investment options offer little or no palatable options. Paying someone on Wall Street to put money in companies that injure the planet is not our dream of retirement. Socially Responsible investing still goes through the volatile market. Some of us are sitting on cash and beginning to examine options for local investing so that we can create local jobs and see/monitor the impact of our dollars directly. We are investing for our grandchildren, not just ourselves.

    • Kyle

      sitting on cash is probably not the end of the world right now with the market at an all-time high. Re-asses once it crashes next time. (FYI: I’m an engineer not an economist)

  • http://hlb-engineering.us/ HLB

    The NY Rangers, the underdogs*, are going to beat the Penguins tonight in Pittsburgh. Put all of your assets on the money. Hedge with a big Pepto-Bismol move.

    * Dogs, literally.

  • http://hlb-engineering.us/ HLB

    “We’re going to hold fiduciaries legally responsible from now on.”
    Norman Einstein, financial expert on Tom Ashbrook’s show

    Gee: is that why they were always called fiduciaries? Because they didn’t give a damn about you or your money?

  • WorriedfortheCountry
    • OnPointComments

      A good, easy to understand book that I read a decade ago about investing is “The Wealthy Barber,” which explains how even someone with a modest income can amass enough money to become financially independent.

      • injun2

        I haven’t read the Wealthy Barber, but a long time ago I read “The Millionaire Next Door.” Most millionaires are not heirs to a fortune nor Wall Street types, but average joes that drive the same car for20 years, live in the smallest house in their neighborhood, and have a small business they started.. Great book, full of surprizing statiscs, wish they would put out an updated version.

  • Steve_the_Repoman

    Invest in others – family, children, friends, community – you will most likely not do without.

    • stephenreal

      college, shoes, food and bills…did I mention the bills?

      • Steve_the_Repoman

        Give your children your time and optimism to face the future –

        Get their clothes from Goodwill.

        • stephenreal

          I got nice sports cars and a fat account. you miss the point dude.

        • hennorama

          Steve_the_Repoman — “Your child, like your stomach, does not need all you can afford to give it.”

  • stephenreal

    Dr. Shiller is right. The average joe needs advice.

  • Government_Banking_Serf

    Weaning the Stock Market from Casino Capitalism will be anything but Pain Free

    http://www.zerohedge.com/news/2014-05-01/weaning-stock-market-casino-capitalism-will-be-anything-pain-free

    and then the High Freq Trading Fraud- FREE MONEY FOR WALL ST

    We all know the market is rigged from the Fed on down, and that while the INTENTIONS OF DREAMY EYED ACADEMICS AND TECHNOCRATS MAY BE GOOD history has shown that the rigging will ALWAYS lead to a CRASH FROM WHICH WALL ST BENEFITS AND MASSES LOSE.

    ITS NOT THE CAPITALISM ITS THE RIGGED CAPITALISM AND BUBBLE ECONOMICS.

    The belief that Central Planners are the panacea to deliver us magical returns and a beautifully engineered future is a JOKE!

    • Kyle

      Love figure 3 and 4 in that article

    • J__o__h__n

      How can you possibly eliminate bubbles from capitalism?

      • Government_Banking_Serf

        Sound Money.

        Little bubbles are far less destructive than massive ones. The size comes from the Feds monetary policies and leverage they create/make possible & the schemes they allow (malinvestment).

        Meanwhile Wall St profits from “investment” fees while it expands, we lose when it pops (while of course Wall St reloads for pennies on the dollar), and we pay for bailouts and will suffer the inevitable inflation.

        And Clinton got to pretend he Balanced the Budget!

        Everybody wins.

        Rinse, Repeat.

  • creaker

    This is all nothing new – the whole reason SS started in this country was that this system of personal investment for retirement failed so badly.

    • jmpo’lock

      I had the SS debate with a conservative friend of mine some years back. He was a pretty well off guy, and the weekly withdrawal from his paycheck was “not much” for him. My argument was that most people live paycheck to paycheck, and would spend that money, NOT invest it like he would.
      So, this Government insurance really just protected people from themselves, where they would have ZERO at retirement of disability.

      This program came into being after the Great Depression where people and the elderly literally were dying in the streets! I asked, do you want to go back to that?

      He then came around and agreed that it was a small price to pay for social order, not to mention civilized behavior.

      • TFRX

        Civilized behavior?

        Maybe that–the threat of violence simmering in this country during the Depression, and aboil in other countries then–is the only thing the uberrich will listen to now.

        • jmpo’lock

          It would seem that they forgot that important lesson. FDR was called a traitor to his class, and he stated he was saving capitalism from itself…

  • Bill98

    Excellent points by the caller (Patrick). The absurdity of the 401k system is it requires everyone to be a fund manager. Most folks lack the training and temperament to do so. Perhaps Social Security should morph into more of a pension system? That is, it would invest not just in government bonds, but in stocks, as well. Folks could then contribute to this, rather than to a 401k. This way, we would all have access to a pension.

    • injun2

      I thought that Patricks points sounded like he was scapegoating everyone else for his own failure to prepare for retirement. One doesn’t have to be a financial wizard to invest, but one does have be willing to do a TINY amount of self education. At best he could follow what jmpo’lock the Gen X’er did (see above comments) or at worst do what I did and read a couple of Investing for Dummies type books. All you need to know are some simple concepts, the terminology, and the willingness to sacrifice 5-10 percent of ones income over 40 years. As they say “pay yourself first before you pay others.”

      • Bill98

        What I sensed was frustration from Patrick, which many people share. While I agree with you that one does not need to be an expert, in order to invest, many people have no idea how to get started, and they often fall victim to sharks. There is also discipline necessary to stay with a plan, even in extreme market fluctuations.

        I have done fine with my personal investing, as I’m sure that others have, as well. But I also know people who have done extremely poorly. My suggestion is simply to provide professional money management as part of the social security system. While not everyone would need this, I believe that many would benefit.

        • injun2

          If what you are mentioning is the Chilean plan, then we are in total agreement. It’s brilliant and has worked since 1981. http://www.cato.org/publications/commentary/retiring-chile

          • Bill98

            Good link, thanks! I remember reading about that plan quite some time ago. And, yes, I think it could serve as a model for Social Security.

    • jefe68

      People forget that 401k’s were never meant to be retirement funds but part of a three legged system which was pensions plans, SS, and the 401k.
      401k’s are ripoff with all the fees they impose.
      Over the course of a lifetime, an ordinary American can pay as much over $100,000 in retirement fees
      to their mutual fund providers.

      http://www.pbs.org/wgbh/pages/frontline/business-economy-financial-crisis/retirement-gamble/how-retirement-fees-cost-you/

  • jmpo’lock

    From this Gen-X’er: It’s really just planning, discipline and courage. I started buying $50 per month in various individual stocks immediately after 9/11 when the market fell hard. I slowly have increased my monthly purchases to $450 per month today. During this time the markets have gone through several doozy dips: the “Dot Con” the millennial bug, the Great Recession. I just continued to buy throughout. I had to weather some real frights, watching my balance half each time. Today I have beaten the index funds and market returns, and my balance has more than doubled (over capital). I fully expect to go through a few more of these before my anticipated retirement (hopefully about 20 years from now).
    My tips: buy individual stocks (protecting and saving yourself from Wall St. Fees etc. I personally use Sharebuilder.com as my buying service) that you personally have researched. Look for products/services you know and understand, and believe will be in demand for the foreseeable future. Try to buy dividend bearing stocks and always reinvest the dividends. As you get older add in Bond FUNDS, and similarly reinvest all dividends. Buy systematically every month with a set amount. Do this and you will eventually create a money machine. As you approach retirement, slowly cash out of high priced items (not all stocks though) and into safer securities like annuities, CDs, Bond FUNDs etc. If you do this for 4 decades, you should be able to secure your retirement, most certainly when paired with SS.

    • hennorama

      jmpo’lock — congrats on your success thus far.

      The adage is Buy Low, Sell High. You mentioned or referred to Buying 10 times, and Selling only once.

      What is your Selling strategy?

      Selling is far more difficult than buying.

      • jmpo’lock

        When this money is put into the “retirement” pot, that is where the discipline part comes in. I have, and will, sell when I need emergency money, or for balancing out my portfolio, or just to take profit and begin re-buying again. (example, one stock popped up 15% in one day, so seeing that as unusual I sold a chunk) But you are right, I am mainly just buying, achieving what they call “dollar cost averaging” where the various ups and downs of the market, over the LONG run, end up UP.
        Even just a small amount in this manner will add up over time. I started with only $50 month.
        When I get closer to retirement, then I will slowly sell into cash, Bond funds, annuities, any similar cash making, safer things….but good companies that are profitable and pay dividends will still be a good part of the mix, because they just historically perform better than anything else. I’ll just want to miss a major market correction in retirement (as this On Point is about) where I will not have the time for the bounceback.

        • hennorama

          jmpo’lock — thank you for your response.

          Again, congrats on your success thus far. Your strategy and habits have served you well.

          I’m quite familiar with the tactics and strategies you describe. As you said, you’re “mainly just buying,” using the DCA concept. That was the point of my comment, that you’re focused on only half of the Buy Low, Sell High adage.

          With the DCA concept you’re actually Buying Low, Buying Medium, and Buying High, and generally not Selling, unless you are rebalancing your portfolio.

          There’s nothing fundamentally wrong with this, especially in that you do indeed rebalance (I assume you mean rebalance your asset allocation; if not please advise) your portfolio. You’ve also recognized anomalous circumstances that prompted selling, but again, this is infrequent.

          You may want to educate yourself a bit more, especially about the Value Averaging concept and practice. It involves both parts of the adage, which means it takes more time and effort than simple routine buying.

          Thanks again for your response.

          • jmpo’lock

            Thank you for your concern. I completely understand what you’re saying too, and I DO take profits when they are obvious, and too good to pass up. Except for few risky puts on new technologies, the companies I have been buying have only been going up, and continuously paying dividends. I am INVESTING in the companies I pick, I am not gaming, or “playing” the market. Market timing is a big risk too…in both directions.
            More people lose trying to time, or high speed trade, as compared to my techniques. As I think I said before, my portfolio has beaten all the indexes, managed and non-managed funds by several percentage points since 2001.

          • hennorama

            jmpo’lock — thank you again for your response.

            I understand your approach completely, and again, you are to be congratulated on your success thus far.

            I was not “concerned” about what you’ve done, but rather was freely sharing a perspective that you may have missed. Understanding and routinizing Selling, as you clearly have done with Buying, may lead you to better outcomes.

            If you have not yet done so, check out the concept of Value Averaging. It is a sort of hybrid of DCA and portfolio rebalancing. The basic idea is to add a specific Value to your portfolio over a specific timeframe. If your portfolio surpasses the target, you sell down to the target, and accumulate cash. If it misses the target, you buy more than usual (at lower prices), using the accumulated cash in addition to your regular routinized investment dollars.

            In other words, you Sell High, and Buy Low, in a more disciplined manner.

            Congratulations again on your success. Just don’t be blinded by it.

    • Shag_Wevera

      Goody for you. What about those who do not or who utterly fail?

      • jmpo’lock

        This is why I am strongly for the safety net in all its permutations, and especially Social Security.
        This could be easily protected in perpetuity by eliminating the income cap. I do not see any reasonable moral excuse not to.
        My post was intended to help those younger people reading find a way not to end up in the same bind as these Boomers being discussed.

  • Yar

    Self reliant on slave labor! We built our wealth on the sweat of hords of exploitation. We pretend we are self reliant, you came into this world with someone wiping your butt, you may go out the same way. Or you may die in your own soiled mess.

    • John Cedar

      “the misery of being exploited by capitalists is nothing compared to the misery of not being exploited at all”

      • Yar

        You discount the creativity of community. You think you are all we got, when it’s the other way round. Who are you without exploitation?

        • John Cedar

          God created his only begotten son in my image, if that answers your question.

          You discount the invariable abject poverty found in all communities that lack exploitation.

          • Yar

            I don’t like your definition of marriage.

  • http://hlb-engineering.us/ HLB

    They’re going to add another slot to the 38 already on the roulette wheel. Number 401(k). Half way between zero and double zero.

  • Jo Bleaux

    I always cringe when I hear that people will have to work longer. Good luck finding or keeping a job as an older person. I’m in my early 50s, and haven’t had much luck in that respect. A couple of years ago, my corporation had massive layoffs (targeting mostly more experienced and higher-paid workers), and since then I’ve found freelance and part-time work, but not enough to live without steadily chipping away at my savings.

  • http://hlb-engineering.us/ HLB

    Willie Sutton had a fiduciary obligation to every bank he walked in and out of. He was obliged to empty the safes.

  • Erica

    How is high frequency trading effecting this high?

  • Yar

    The average investor can’t do better than average! What happens when average isn’t good enough?

    • http://hlb-engineering.us/ HLB

      They move to Lake Wobegon. HD

  • nostoppingprogress

    Instead of making retirement saving mandatory, make it “opt out”. Famous case: organ donation in Austria vs. Germany. Fairly similar culture. Austria is “opt out”, Germany is “sign up”. In Austria 98% are organ donors and 2% opt out. In Germany only 12% sign up. Apply the same “default” to US retirement savings. Those who want to opt out can preserve their American exceptionalism.

  • http://hlb-engineering.us/ HLB

    Let’s all bow to Chancellor Otto von Bismarck. Who thought up worker pensions and protections for them.

    • stephenreal

      he didn’t think it up. you just bought into his press release

  • Kyle

    agree with the caller, Boomers have ruined the world for me (a millenial) and my children (who are coming very soon).

    • John Cedar

      Actually, the world has improved because of boomers, its just our country that is worse off because of them.

  • Jeff

    How about an opt out for social security? Why can’t I just opt out of that system so I can get my 10% yearly returns from my investments vs just getting my money back from the current social security system.

    • http://hlb-engineering.us/ HLB

      Why not opt out of taxes? Since you’re not getting your money’s worth. Or you could move to FREEdonia or Erehwon. HD

      • Jeff

        If the purpose of all taxes was to supply me money for retirement then I’d be fine with that. Social Security was supposed to force people to save for retirement; why not give people greater freedom to invest their own money!

        • Shag_Wevera

          Because too many will fail or be duped. Then what?

          • Jeff

            My assumption is that the many people will far exceed expectations and have even more money than they would with social security and a small number will fail. Just like we do with poor older people today, they will be taken care of by the government but that will be far offset by the amount of people who succeed in investing in the markets.

            Check out the way public retirement funds are handled in Chile:
            http://news.investors.com/ibd-editorials/092613-672776-score-another-one-for-the-chilean-model-of-private-pensions.htm

          • TFRX

            Chile’s retirement funds?

            Don’t try to turn that sow’s ear into a silk purse.

          • Jeff

            Read the article, then form an opinion.

        • AnneDH

          If we have a such a system, then we would have to add money-saving & investment strategies to our high school curricula.

          • StilllHere

            We’d probably have to shorten the portion of the day devoted to teacher education of deviant sexual lifestyles.

          • Jeff

            I agree, we should require a financial investment/credit class for all high school students…regardless of what we do with Social Security.

          • AnneDH

            A life skill everyone needs regardless of whether or not they decide to get post-HS education/training.

    • Charles

      Damn right.
      Let me keep that money. Even if the system doesn’t go broke, I can do more with that money now than SS will return in the long run.

    • jmpo’lock

      Because, if you fail and loose it all, we’d rather you be insured by the Government rather than be homeless and starving…don’t forget the disability part too. You could get sick or injured by no fault of your own. Should civilized society just abandon you then? Should we (society) have to support you after the fact that you “opted out”?
      Tea Partiers would say yes, let em die.

    • Shag_Wevera

      Why do you have to be superman? How about just being man?

    • TFRX

      Go Galt already.

    • Vandermeer

      You can’t opt our of car insurance for the same reason Jeff. Think about that.

      • John Cedar

        Because car insurance is a Ponzi Scheme?

  • Shag_Wevera

    You know why social security is a great idea that should be sustained? It is a program that will and has kept millions from becoming desperate and destitute. The US will be a much less pleasant place with millions of hopeless, angry people milling about. Look at it as an investment in your future safety and peace of mind.

  • http://hlb-engineering.us/ HLB

    Never borrow more than 5% or two pigs.
    –Aesop

    Or LIBOR squared minus 1 bitcoin.

  • Dab200

    Why is there a salary cap on SS contribution? It should be a percentage of whatever salary one makes!

    • hennorama

      Dab200 — conceptually, it’s due to the limit on benefits.

    • StilllHere

      Why, because it’s really tax?

      • jmpo’lock

        OK, fine, grant you that. So like other taxes, if the median earner can pay on the total income, so should rich folks.
        And I’d rather my taxes go to higher quality of life for all Americans rather than a zillion other subsidies and handouts to corporations, military, penitentiaries et al…..

        • StilllHere

          Corporations, military, penitentiaries are all Americans, why do you hate them?

          • jmpo’lock

            Just pointing out that we all have certain things we think are more worthy to pay for. I’d rather people live better here, rather than building Bagram City in Afghanistan
            Not hate either (where’d you get that idea? oh that’s right in your own biased mind), just preference.

          • StilllHere

            So you just hate Afghans, got it.

          • jmpo’lock

            Colbert?! Is that you?
            You’ve got to stop thinking about “hate” so much.
            But on that note. NO, I’d just rather we were building hospitals and schools and good government rather than dropping drone bombs and torture centers. See?
            That’s opposite of hate ;]

          • John Cedar

            “Just pointing out that we all have certain things we think are more worthy to pay for”

            Correction: You have certain things you think RICH PEOPLE SHOULD PAY FOR.

          • jmpo’lock

            Where do you get that asinine idea? Sure you’ve pegged me as for progressive taxation, but you know nothing and I find your presumption hilarious…since I probably pay more in taxes than most, especially since I’m a self-employed business owner…
            But yeah, rich people should pay more than poor people duh!

          • AnneDH

            And hiring overseas contractors to replace American employees, like the company I worked for did.

            During my last year of employment in 2005 before becoming disabled, I had to train three Indian computer programmers, who were replacing American co-workers. It was a nightmare, since:

            1) they were so competitive with one another that they wouldn’t share information you told them to
            2) they lied about qualifications & skills big-time
            3) not to mention the emotional toll it took to be forced to participate in this loss of 3/4 of co-workers, who were very capable at their jobs and very good friends.

    • Shag_Wevera

      The rich don’t favor that idea because they don’t need SS and don’t want to pay for yours.

      • jmpo’lock

        BINGO!

      • TFRX

        It gets better.

        Its not that they don’t want to pay for “yours”. Many of the rich people who want to ruin fix SocSec have one of the following traits:

        Privatize it, because it’ll cost more, but they want to get their hands on managing that money.

        Put it in the stock market, because (see above).

        Eighty years of bitter resentment at the political and financial success that SocSec has, for the tens of millions of Americans whose parents and grandparents had something called retirement, rather than just dropping dead at the job or in penury.

        Some folks want means-testing for SocSec. That way they get to lump it in with welfare, and you know who is in favor of anything with “welfare” on the title.

  • Vandermeer

    Boomers didn’t pass Medicare Prescription Drugs that wasn’t in the budget, REPUBLICANS did.

  • Kyle

    We have to work in a worse economy, with more uncertainty and pay for the boomers who were able to buy single family homes when they got out of college, so that we can be poor in retirement. Great, thanks for that future.

    • Vandermeer

      Stop with the BOOMERS… check out what the Republicans have in mind… they want to do away with social security so you can invest in the market period.

    • StilllHere

      This is a generation that’s had everything handed to them.

      • Kyle

        which generation is that?

  • Yar

    When the chained CPI goes to cat food you have revolution. David you last caller hit the nail on the head.

    • Shag_Wevera

      Personally, I’m rooting for revolution.

      • Charles

        Seems like a couple of folks here are pretty steamed today…you might not have to wait long.

        • harverdphd

          Keyboard Kommandos…nothing to worry about, right Cory?

          • Shag_Wevera

            I’ll celebrate when you are pitchforked.

  • Vandermeer

    Tom, Make Social Security work for our kids too… just RAISE THE CAP!! Why isn’t this considered as fair and easy to do? Please ask your guests.

    • OnPointComments

      There is a salary cap on Social Security contributions because there is a cap on the Social Security benefit that is paid.

      • Vandermeer

        Thanks…

    • Jeff

      Removing the cap turns the social security system into a welfare system completely. The program was created out of a promise that it would not turn into a welfare program and people would generally get out what they generally put into it. I could see increasing the cap to capture 90% of all income (the historical average) but you cannot and should not remove the cap completely.

      • Kyle

        I think it should be a welfare program, that is what makes it work

        • Vandermeer

          How about a jobs program that would rebuild our infrastructure and retrofit buildings so they are more energy efficient. Yes good FDR… get the country working… that is what works… but as long as this President asks for it, it will go undone.

          • Alchemical Reaction

            The only problem is Keynes was a child molester and satanist and all his ideas are unproven theories.

            But other than that, could work.

          • harverdphd

            Minimum wage, no unions, youth conscription per YAR…I’m in.

      • Yar

        What do you do with the needy?

      • Vandermeer

        Hey, I’m saying INCREASE the cap which now limits the contribution … right now the maximum is $117,000 in 2014. Jeff.. check this out.

        • Jeff

          Yeah, I’d suggest it should be closer to $200,000; we should increase the age of benefits by 2 years over 2 decades and we should use the chained CPI instead of regular CPI…that would save the program for 100 years.

      • Vandermeer

        NO ONE IS SUGGESTING TO REMOVE THE CAP!

    • Shag_Wevera

      Cuz the people who would have to pay don’t want to.

  • http://hlb-engineering.us/ HLB

    Tom didn’t want to hear from onliners today. Pity. Some of these points are parfait.

  • WorriedfortheCountry

    Did I miss the discussion of the Fed and QE?

    • Yar

      85 billing a month! That is a big market fee!

  • http://hlb-engineering.us/ HLB

    We could all join the Windsor extended family.

  • creaker

    Endless drivel of everyone needing to buckle down and continue working the status quo. Never any discussion that maybe things need to change.

    Be content. Be good. Work hard. And you will one day receive your reward.

    • StilllHere

      But you can have it all.
      Spend what you earn and then when you run out, get some freebies from your government.

      • jmpo’lock

        Good example of a bad faith comment.
        Here’s hoping you never “run out” due to no fault of your own (insert lightning bolt cartoon here).

        • StilllHere

          Moral hazard dominates social welfare.

          • jmpo’lock

            That is fact free mon ami. MOST people are on various forms of assistance, like food stamps etc., for a temporary period.
            Sure, MH does exist, but like voter fraud and Benghazi, it is not a real issue….whereas Wall St. execs gaming the system is.
            Why would you be more worried about someone getting a couple hundred bucks a week, and not the Billionaire who steals more than the entirety of disability fraud?

    • Vandermeer

      I wish that were true in tne here and now… maybe in the hereafter but not with a system that is controlled by the corporate elite…

  • Michiganjf

    AMAZING!!!!

    How can you bring up what a good idea it was to create the Consumer Financial Protection Bureau to protect Americans from predatory practices by corporations and the wealthy, then not mention how Republicans have fought the bureau tooth and nail since before it was finally created, up to the present day??!!!

    No wonder voters are SO LOW INFORMATION!!!

    Where’s the media when you need them?

    Et tu, Tom?

    So disappointing!

    • OnPointComments

      The CFPB is an excellent example of an unaccountable federal agency with little oversight. If the unaccountable power given to this agency doesn’t bother you, then maybe the agency’s collection of data on hundreds of millions of credit card accounts should. CFPB’s data collection rivals the NSA.

    • John Cedar

      There was more than a few months when democrats had complete control of our government. Not only that, but states can pass laws too…and more than a few states are dominated by democrats. At least the republicans TELL you they believe in free markets. What is your parties excuse???

    • Alchemical Reaction

      I think I love you.

  • Rick Evans

    To caller David’s anti-Jimmy Carter rant,

    I don’t care what the interest rate on my credit card is because I pay off the balance monthly. Unless you need to spend beyond your ability to pay because of an emergency there is never a reason to carry a balance on a credit card.

    • WorriedfortheCountry

      The credit card rant was overplayed. However, auto loans were in the 17% range during the Carter era.

      • John Cedar

        I paid 12% on my fist commercial loan back in early 90′s and and on my first 4plex back in the mid 80′s. And 9.9 on my first home and new cars back in late 90′s Kids today are spoiled rotten with the low interest they can get on auto and home loans, not to mention the low down-payment and long terms.

    • IsaacWalton

      Amen brother. I’m afraid you and I are in the minority on that one. Hard lesson to learn, but everyone should learn it. Everyone needs credit at some point, I get it. But man, some of the people I see around me abusing it is just disgusting.

    • John Cedar

      I pay for everything with cash but understand that most people cannot do that. But when starting out as a young adult, it is impossible for most people to get a decent car and a new house without borrowing money.

      Besides that, emergencies are not rare.

      • Rick Evans

        You don’t buy a house or a car with a credit card. Also, by paying cash for everything you don’t help your credit. If you plan to use credit in the future to buy a house or car mature use of a credit card helps your FICO score.

        “Besides that, emergencies are not rare.”

        No one said emergencies are rare. It helps to read what someone actually said before formulating a rebuttal.

    • AnneDH

      Sure does help the credit rating, too.

  • George

    The idea that financial advice should be available free of charge is baloney and is an impediment to people getting started or managing their money correctly. The concept that nobody can beat buying total market funds ignores the big issue of allocating between fixed income and stocks. The crooks running hedge funds beat the “total market” every day-every millisecond in fact. A target date fund with fees of less than 1% is a bargain. There is a big difference between that and paying 5% to your New York Life salesman who wants to sell you an annuity.

    • jmpo’lock

      It is simple to beat any mutual fund. Buy the stocks directly yourself, monthly and systematically, ones that provide dividends, reinvest those dividends. Save on fees etc. Rinse and repeat. Add Blue Chip and Emerging Markets Bond FUNDS, reinvest all dividends

      • Vandermeer

        You would have done well with an index fund in 2013.

        • jmpo’lock

          Sure, but still better with Activision! :)
          No fees either

    • Vandermeer

      I’ve learned to stay away from annuities… already lost a lot of money to fees before in them. And forget financial advisor who are supposed to have a fiduciary responsibility to you.

    • http://www.401kinvestor.com 401k Investor LLC

      There is a service online that helps people invest for retirement. This site shows do-it-yourself investors how to build and manage a diversified portfolio of low-cost ETFs that carries internal expenses of 0.07% to 0.17%. This is far less than what the average investor is paying. To access the portfolios you can become a member for only $19.99 a month (or $199.00 two months free). Check out http://www.401kinvestor.com.

      • hennorama

        401k Investor LLC — this is even worse than your post above, wherein you at least disclosed that this is your own company.

        Please delete this post ASAP.

        • jefe68

          The question here is where is the moderator?

          • hennorama

            jefe68 — it took a while, but the post was deleted.

      • tbphkm33

        WARNING – Troll scam above.

    • Shag_Wevera

      George, you are baloney.

  • skeptixxx

    I highly recommend this youtube program that shows that NO bank execs have been arrested for fraud after having cost this country 10 trilliuon dollars. Wtach it and weep. .https://www.youtube.com/watch?v=ClfBxWPkBKU&feature=em-uploademail

  • StilllHere

    SS is another bureaucracy ripe for waste, fraud and abuse but apparently that’s the cost of another form of income redistribution.

    • TFRX

      Hahahaha.

      Just another deadender rightie who’s jealous that SocSec is popular and stable and has been keeping older workers out of penury for 80 years.

      You really are a wingnut.

      • AnneDH

        And keeping my head above water (I’m disabled).

        What would the disabled do without SS benefits?

        • TFRX

          Yeah, when it comes to “preserving” SocSec there’s never any talk about the widows, orphans, survivors, etc.

          • brettearle

            Thanks…

            Let’s remember to talk more about it.

        • brettearle

          Anne–

          When the Right Wing, in this Forum, offer sentiments and ideas and `false facts’– that might threaten, or misrepresent, appropriate Entitlement programs, that might affect the disabled–please confront them.

          If you are disabled, you will be more effective in keeping the Right, honest, here, on this Forum.

          • AnneDH

            Will do that when I can.

        • jefe68

          You’re asking the wrong chap. Ask the right winger how thinks SS is a ponzi scheme. Which is the latest right wing meme on SS. They have been trying to guy SS since it was enacted.

          • AnneDH

            You’re right- I was only trying to remind everyone, really, that SS serves others besides retirees.

      • StilllHere

        LOL, just another slacker lefty who expects me to pay for your poor choices in your pitiful life.

        • AnneDH

          Just what drives such malevolence in this comment?

          Can’t we be civilized in this (and all) forums?

          • StilllHere

            Funny you target mine but not his.

          • AnneDH

            You’re right. Note my new post above.

      • AnneDH

        Just what drives such malevolence in this comment?

        Can’t we be civilized in this (and all) forums?

    • jimino

      Well that’s the right-wing plan, isn’t it? By letting Wall Street, the global hub of waste, fraud and abuse, get it’s hands on all that cash.

      • StilllHere

        There’s no there there.

    • Shag_Wevera

      Ahh yes, the big three. Waste, fraud, and abuse. The bell-tower of the right.

      • StilllHere

        The bell-tower is where the left lives.

  • X Y & Z

    How did the Federal Reserve get the nickname, “the lender of last resorts”?

    I’d love to get loans at less than one percent interest like the big investment banks on Wall Street get from the Fed, and then get bailed out 100% on dollar (courtesy of the US taxpayer) if my investment tanks.

    That’s the greatest scam ever, if you can get in on it.

    • John Cedar

      They got the name because most of the overnight loans were supposed to take place between the banks.

  • Benjamin Williams

    I’m just frustrated that the Boomer generation, which has spent our financial resources, drained our government, axed our services, and mired our international image, refuses to at least retire with quiet and dignity without once again trying to ruin others’ lives to serve their own. Every week I hear another attempt by boomer populations to take away my now hard-won health benefits, refusing to extend unemployment benefits despite a continuing high unemployment rate among young people, and still demanding cheap healthcare, medicine, and retirement benefits for themselves in exchange. Boomers, please, just step aside already.

    • Pam G.

      I think you are mixing up the word boomers with the words politicians and the 1 percent. Get your facts right.

    • Alchemical Reaction

      Benjamin, unfortunately, no part of society exists in a vacuum. If you want a better future for yourself, it requires making a better future for everyone. Unless you want to be financially secure and paranoid and unhappy. THat is attainable out of selfishness.

      But if you want a better world, and you want to enjoy it, it requires respecting society’s elders; not because they DESERVE it, I’m not saying they do deserve it. I am saying deserving has nothing to do with it. He who has not sinned cast the first stone.

      It is a responsibility to society to work for the betterment of all, the commonwealth, the public good.

      Binary Economics, Left Libertarian ideals, ecological economics, cooperative corporations, employee owned firms, profit sharing plans, etc.

      • Kevin Burber

        “If you want a better future for yourself, it requires making a better future for everyone.”

        Absolutely with you there and I think that was the point. We are slashing everything from Education to R&D. We are sacrificing everyone’s future for a better Boomer today.

    • jimino

      Are you a cynical, alienated, and depressed gen X’er who bends the rules to get things done, or maybe a self-centered and narcissistic gen Y’er who has high expectations, high need for praise, and difficulty with criticism?

      Boomers are no more monolithically stereotypical, as you indicate, than your or any other generation

  • John Cedar

    You can.

  • Alchemical Reaction

    How are you, Eliot?

  • jimino

    I couldn’t get through to ask the professionals my question: How does the small investor short the U.S. economy, which is how the big money is made? I realize I can’t actively tank the economy for my own profit like the market makers can, but how can I tag along with my hard-earned savings?

    • hennorama

      jimino — assuming that was a serious question:

      There are several inverse ETFs that you can purchase, or you can just short the broader US stock market by shorting the SPDR S&P 500 ETF (SPY).

  • John Cedar

    As a Romney voter, I understand what Roosevelt was trying to do. He was trying to get the unwashed masses to start paying income taxes. Before 1936, less than 2% of people paid income taxes. But once he set up this “trust fund”, suddenly there was extra money for him to spend.

    Looks like the first year, he took in $265 million and paid out…zero.
    The next year he took in $402 million and paid out…$5 million.
    A great tax scheme, disguised as insurance, and masqueraded as a trust fund was born.

    So no, I don’t want to privatize it. Its the only way we can get those 47% to kick in some real money to uncle sugar.

    http://www.gpo.gov/fdsys/pkg/BUDGET-2009-TAB/html/BUDGET-2009-TAB-15-1.htm

    • Alchemical Reaction

      People like you are the reason the republican party has absolutely no chance of winning another presidential election.

      I strongly encourage you to recklessly engage in dangerous, high-risk activities without adequate training, preparation, or equipment…

      Then, go learn about Binary Economics. If it was easier for the poor to become wealthy, if the system was more fair and just, then the poor wouldn’t resent the rich.

      As it is right now, upward mobility does not live up to its promise even if one works hard and smart. There is no guarantee of a business loan that doesn’t require credit or collateral.

      No one gets rich by themselves. They rely on other people’s labor, government infrastructure and services, and intellectual capital of their employees to become wealthy.

    • ExcellentNews

      Romney was a wimp. I liked better the Tea Party ideas. Let’s take the money in the Social Security Trust, and give them to Patriotic American ™ bankers, CEOs and Spiderman. Tax free, of course (taxes are for stupid workers). Then we sit back and watch the trickle down create millions of jobs and free beer out of the kitchen faucet. And if only we can abolish the EPA, we can get to this promised land much faster…

    • ExcellentNews

      I absolutely support your idea! Since the 47 percent are already working 2 service jobs at $7/hour to pay the landlord and the banker, I propose to use ORGAN HARVESTING to raise the money. Deregulate the market for kidneys and lungs and you will see some trickle down from the offshore accounts in the Cayman Islands…

  • Charles Vigneron

    33 minutes after the hour Patrick nailed it!
    Your money managers are not legally required to invest your money to your best interest.
    No trust is built in the system

  • B.P.B

    I’m chiming in here again because the comments so far have been lively and valuable. However, since the focus is primarily financial, I’ll just add that it’s rare that Boomers as a group are singled out for critical discussion. Yes, I’m flogging my book: BUSTED BOOM: THE BUMMER OF BEING A BOOMER http://my.bookbaby.com/book/busted-boom# , but what guest or ‘expert’ on NPR, or the mainstream media in general, isn’t? I had no corporate or academic backing for my project, mainly because the one thing Boomers hate above all is criticism. As a Boomer myself, I know what I’m talking about. I have benefitted by the Boomer culture, and I think it needs to be examined for what it is. At any rate, ‘Boomers & the stock market’ is only one tiny aspect of the Boomer effect, and I’ve tried to ‘start a conversation’, as they say, that goes beyond the specific. From Clinton to Dubya to Obama, from O’Reilly to Jamie Dimon to Michelle Bachmann, Boomers are wielding the big power levers, and now that they and others have been at it for this long, the effects are more fully known. It’s no conspiracy theory – it’s conspiracy fact.

  • http://www.401kinvestor.com 401k Investor LLC

    From listening to today’s show, it seems that their are quite a few people out there who could benefit from the service my company offers. We offer a service online that helps people invest for retirement. This site shows do-it-yourself investors how to build and manage a diversified portfolio of low-cost ETFs that carries internal expenses of 0.07% to 0.17%. This is far less than what the average investor is paying. To access the portfolios you can become a member for only $19.99 a month (or $199.00 two months free). Check out http://www.401kinvestor.com.

    • hennorama

      401k Investor LLC — self-promotion is not the purpose of this forum.

      Per the “community rules”:

      Feel free to share your ideas and experiences about religion, politics and relevant products or services you’ve discovered. But this is not a place for advertising, promotion, recruiting, campaigning, lobbying, soliciting or proselytizing.

    • tbphkm33

      Well you know, 401K’s are a scam imposed on the American people. Offer an honest retirement, not these scams tied into Wall Street. 20 years of the finance lead economy has ruined this country.

      • JGC

        I don’t want to vote you up on this comment, tbphkm33, but so many ways to approach a 401K…unfortunately many of them negative.

        I still believe in saving for the future.

    • StilllHere

      Great ideas, unfortunately we’re hoping the government will do the saving for us.

    • JGC

      Or you could just educate yourself to only invest in low-cost ETFs and totally avoid the high cost “management” wrap fees you are recommending, 401K Investor LLC.

      Buyer, beware!

    • JGC

      Just to update, on your site I saw the “low monthly fee” is advertised at $14.99 per month, not $19.99. Oopsy-doodle, as they say on Wall Street…

      • jefe68

        You want to invest, use an index fund.

  • fizmath

    The caller David is correct to compare modern usury to murder and slavery.

  • StilllHere

    $13 billion in fraudulent IRS refunds for EITC just last year.
    Get your free money!

    • Shag_Wevera

      That’s nearly the cost of a Nimitz class aircraft carrier!

      • StilllHere

        And we buy one of those every year?

        At least we get an aircraft carrier.

        EITC fraud, we just get more taxes.

    • hennorama

      StilllHere — unsurprisingly, you’ve mischaracterized what the TIGTA report indicated.

      The TIGTA report discussed “improper payments,” about which the report indicated:

      Generally, an improper payment is defined as a payment that should not have been made or that was made in an incorrect amount or to an ineligible recipient.

      Certainly some of these improper payments were fraudulent, but there were no doubt a significant number that were due to simple error. EITC rules are not simple, to say the least.

      See:
      http://www.treasury.gov/tigta/auditreports/2014reports/201440027fr.pdf (Page 1 of the report, which is page 6 of the .pdf)

  • soundfriend
  • realedreform

    Fiat money – nothing new under the sun – printing money out of thin air does not work

    • The poster formerly known as t

      The opposite is true as well. Too much of the private sector has become dependent of the fiat money ~ A.K.A. a “a weak dollar” to boost the sales of goods sold by multinational corporations.

      The U.S. dollar is not backed up by economic output or gold but by military might. Any country that stops accepting U.S. notes simply gets bombed.

  • Kevin Burber

    Here’s my issue – We keep talking about income inequality, but EVERY study I look at evaluates salary only. Back in the day, you got a pension, so a much larger percentage of your income would be available to you. As it is, you have to save 15% off the top to fund your 401K because your employer contribution basically pays the fees to Wall St…that’s it. Never mind much, much higher education and health care costs and child care because both parents have to work just to scrape by…it is never-ending.

    • ExcellentNews

      Inequality has skyrocketed since the conservative revolution of the 90s. No real surprise, every ordinary “red” or “blue” American feels this in their guts. The studies on salaries, inflation…etc. are just a smokescreen for the powers to be to make us believe in something that isn’t.

  • jefe68

    Well said, but wasted on that right winger.

  • Alchemical Reaction

    If you want a better future for yourself, it requires making a better future for everyone. Unless you want to be financially secure and paranoid and unhappy. THat is attainable out of selfishness.

    But if you want a better world, and you want to enjoy it, it requires respecting society’s elders; not because they DESERVE it, I’m not saying they deserve it. I’m saying deserving has nothing to do with it. He who has not sinned cast the first stone.

    It is a responsibility to society to work for the betterment of all, the commonwealth, the public good.

    Binary Economics, Left Libertarian ideals, ecological economics, cooperative corporations, employee owned firms, profit sharing plans, etc.

  • Alchemical Reaction

    I’d love to get loans at less than one percent interest like the big investment banks on Wall Street get from the Fed, and then get bailed out 100% on the dollar (courtesy of the US taxpayer) if my investment tanks.

    • X Y & Z

      Here’s an idea for you,

      try thinking up something original instead of shamelessly stealing 90% of someone else’s blog and then claiming it as your own.

      • Alchemical Reaction

        it will NEVER happen again. have fun in your ivory tower of feces.

        Any respect I may have had for you just evaporated. I will never reply to you again. And once I figure out how to block you, I will.

        • X Y & Z

          Likewise, I don’t give a flip about you, or anything that you think,

          except when you copy the work of someone else and claim it as your own.

          • http://alchemicalreaction.blogspot.com/ Alchemical Reaction

            You seriously need psychological help.

            You remind me of the character on Family Guy who, every time he sees Peter he says, “Hey everybody, this guy’s a great big phony.”

          • X Y & Z

            You’re like one of those cockroaches that keeps coming back at you no matter how many times you step on them.

          • http://alchemicalreaction.blogspot.com/ Alchemical Reaction

            You’re like one of those receptacle bags women use when they self-administer deep internal genital cleansing protocols when feeling not-so-fresh.

            I strongly encourage you to engage in dangerous, high-risk behavior without adequate training, preparation, or equipment, and without telling anyone your plans or where you will be, and without taking a phone with you.

          • X Y & Z

            I apologize as well.
            Peace.

  • hopeful61

    Once again, people are told to save more. Yet being a “saver” in the era of extremely low interest rates is not rewarded….and it appears that low interest rates are here to stay for quite a while. Thus savers are essentially losing money (to inflation) by saving. What is rewarded is taking out a huge mortgage (tax deduction) with a low interest rate, and going into debt.

    In this unprecedented super low interest rate era, savers are forced into the market (with great risk of losing their hard earned savings) in order to try to get ahead.

    • StilllHere

      Saving, and the independence it brings, is its own reward.

  • tominwestford

    We make lemonade out of lemons; I never wanted to be a mutual fund professional responsible for feathering my retirement bed, but that was what I was tasked with. So I invested in good times and in bad, I never took it out, not in ’87, ’91, ’00, or ’07, just kept plugging away, 100% in the stock market and lo and behold there is something there now that I can rely on when I hang up my mouse. I am proof it can be done, just another desk jockey who only knew enough that no one else was looking out for my family and me.

  • Kevin Burber

    I have a relatively simple strategy in terms of investment. I have an MBA, but I do not work in finance and I don’t want to think about it.

    1. I decide what percentage of my account at the highest risk. That’s my stock vs bond decision. I am 42, and probably more aggressive than most, knowing that I have more than 20 years to go. I have 80% in stock and 20% in bonds.

    Stock portion –

    a. 80-90% of that goes into a broad based market index. Most plans have a S & P Index fund of some type. These are good because they are NOT actively managed. They basically do whatever the S&P does and they have very low fees. Sorry, professor, but I think that when you take the fees into account, a broad based index fund is every bit as good as investment advice and it is a hands-off approach which tends to decrease costs. I don’t need to look all the time – If the S&P is up so is my account.

    b. The rest goes into a mix of:
    1. international (geographic diversity is impt) These tend to have high fees, but it’s worth gettting that diversity. For the most part, the funds are split – European and Asian and sometimes combined.
    2.important events – when there is a huge event with an industry or particular company that the govt won’t allow to go under or can’t go under, I buy. When the banks blew up, I bought. When BP had the spill, I bought. You really need to know something about the companies to do this…you could lose big if they go under, so I don’t recommend this to anyone – I just like it. In fact, for the record, I am not a financial advisor and am not making any kind of recommendation to anyone…this is my strategy..that’s all…take it for what it is.

    Bond Portion

    The problem here is that most 401K’s offer bond funds, not bonds. There is a big difference. Bonds give you interest. The price of bond funds tend to reflect the bond market as a whole. It isn’t as straightforward. I generally look for a fund with low fees and large companies. I’m not that interested in bonds. In general, when interest rates go up, the price of bonds and bond funds go up. As a general, broad rule, when stocks are down, bonds are up. That’s because when the interest rate is high, it makes things more costly to companies and they back off any kind of investment, etc. There’s a lag, but that’s the jist of it. I think most of us would prefer to buy the bond at a particular rating and interest rate and be done with it. You can still do this with a IRA, but not so much with many 401K’s. This is because companies don’t want the risk of selecting one or a couple bonds/companies in case they go under. They fear their employees will blame them for the loss.

    Anyway, that’s my strategy. I never hear discussion of a straightforward strategy like this and have to wonder why. It’s a simple formula. I look every year and will adjust my stock/bond mix with my risk tolerance as I get older. I don’t sell and buy – I just change my investment elections going forward so that the total mix will be where I want it. This avoids unnecessary fees. I hear people talk about Target Date funds like they’re the next greatest thing and I don’t see it. I spend a couple of hours every year around tax time and I get to keep thousands that I would have otherwise have handed over in fees. I suppose if you REALLY don’t want to think about it, it’s okay, but I’ll take the $2,000/hour payback…because I am not getting that at work!

  • arcadiaOsfan

    Hello,

    I caught part of
    this show, and it was very good. It is troublesome to hear how
    difficult it is for Boomers and others planning for retirement to get
    good advice. It is clear to me that Wall Street and gurus like Robert
    Shilling are not meeting these needs.

    I was absolutely
    stunned to hear Shilling suggest that financial advisors should have
    hourly rates. Really?!?! So, an hour with an advisor is enough to plan
    10 years of investment strategy?

    That was probably the single most irresponsible suggestion I’ve ever heard. And from a Nobel prize winner, no less.

    And
    the thing is, there is a huge pool of knowledge and strategy that was
    not represented on your show. Newsletters. I write one that’s focused on
    income and dividends, and I’ve been doing this for 20 years. And I can
    tell you right now that for $49 a year, I give better advice than any of
    the guests who appeared on that show, including Shiller.

    There
    may be no more democratic model than an investment newsletter. I don’t
    make money off my readers’ profits, and don’t make more if they have
    more to invest. Its $49 a year no matter what, and If my advice stinks,
    you get your $49 back. And I’ll tell you my cancellation rate is VERY
    low, because my performance is very good.

    How I wish I was on that show when Shiller was offering up his ridiculous ideas…

    Briton L. Ryle

  • Kevin Burber

    ??

    I was talking about the studies that are put out by think tanks and academia that evaluate income inequality and my point had to do with disposable income, not total compensation. Perhaps you misread or misinterpreted my comment?

  • Kevin Burber

    I agree with most of what you said. And btw, SS isn’t the problem – Medicare is.

    The picture you paint most certainly is NOT of the America of today. Today, CHILDREN are more likely to live in poverty than Elderly. I’m not saying that we should take from the elderly and give to the kids, but just take the picture you painted and instead of the elderly, paint in a 5 year old kid and THAT is the America of today.

  • ExcellentNews

    Please LISTEN to the caller at 41:10. I don’t know how they let someone on the show who is intelligent and brave enough to speak TRUTH to power. Our economy has been gutted since the 90s. We have been turning into an oligarchy just like Mexico or the Philippines thanks to the betrayal of the American middle class by the Republican Party for the benefit of job-outsourcing CEOs, predatory bankers, and global energy despots.

    We are in the last stages of their shell game, where they want to convince the peons to vote them a permanent inheritance tax cut, so that the TRILLIONS taken by the 0.01% from the 99.99% can be passed down like the feudal estates in old times.

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Jul 30, 2014
Smoke and fire from the explosion of an Israeli strike rises over Gaza City, Tuesday, July 29, 2014. Israel escalated its military campaign against Hamas on Tuesday, striking symbols of the group's control in Gaza and firing tank shells that shut down the strip's only power plant in the heaviest bombardment in the fighting so far. (AP)

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Conservative firebrand Dinesh D’Souza says he wants an America without apologies. He’s also facing jail time. We’ll hear him out.

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