10 Tuesday AM Reads

Our hand-crafted, Two-for-Tuesday morning train reads:

• Are Grantham And Hussman Correct About S&P 500 Valuations? (Value Walksee also To the guy who thinks that stocks for the long run is “dangerous,” I say thank you. You are the equity-risk premium (Irrelevant Investor)
• 25 things I wish I knew when I graduated from high school (MarketWatch)
• Symposium: The Bailouts of 2007-2009 (Journal of Economic Perspectives)
• Net Outflows Befall 401(k) Plans (WSJsee also Are You Missing Out on the Roth 401(k)? Few workers use the retirement plan despite its advantages and growing availability (Bloomberg)
• EBRI: Forcing Workers to Save Just 3% Won’t Solve the Retirement Crisis (Real Time Economics)

Continues here

 

 

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  1. NoKidding commented on Jun 16

    EBRI: Forcing Workers to Save Just 3% Won’t Solve the Retirement Crisis:
    “In response, behavioral economists have called for making retirement savings automatic rather than voluntary.”

    How would this differ from a 3% increase in Social secrurity tax? A special new overlay of investment, administrative, regulatory and lobbying professionals to house lifetime rentseekers?

    • DeDude commented on Jun 16

      The main difference is that if you run it through social security then Wall Street predators will not have the same opportunity to milk those retirement savings.

    • formerlawyer commented on Jun 16

      Yet.

      Remember the Republican efforts to “privatize” social security years under President Bush?

    • willid3 commented on Jun 16

      and thats what wrong with that. besides that it actually might help retirees. which isnt the point of all the savings plans, unless its a pension or ss

    • VennData commented on Jun 16

      In Chile they make you save 10%

    • catclub commented on Jun 16

      Another way to encourage savings might be to say: 12% of your salary is going to SS. And how much income will that produce for you in retirement? Is that enough? You may want to save a lot more than 3% in your own account.

  2. rd commented on Jun 16

    In case you wondered why Iraq is currently unstable with ISIS making large inroads.

    After WW I, Iraq was created with three completely different groups within it. The British often did this in order to make places more governable by having the internal groups fight each other (or setting one group in power over the others) so they wouldn’t fight the British. So the Kurds, Shias, and Sunnis were packaged up and stuck into an artificial boundary. Saddam Hussein held this together through sheer force and brutality.

    When the US invaded, the logical thing to have done would have been to simply separate the country into three pieces for the three groups. However, the concerns were two-fold: Iran would link up with the Shias (which is what happened anyway); and Turkey (a key NATO ally) was adamantly opposed to the Kurds having a separate state since they view the Kurdish PKK as a terrorist organization inside Turkey and the Turkish Kurds want to have their own state breakaway from Turkey (like the Basques in Spain).

    So here is how Turkey views the successful advances that the Kurds are making against ISIS:

    http://www.japantimes.co.jp/news/2015/06/16/world/turkey-uneasy-increasingly-powerful-kurds-u-s-help-seize-key-syria-border-town-islamic-state-fighters/#.VYApGczD_Z4

    http://news.yahoo.com/turkey-accuses-kurdish-forces-ethnic-cleansing-syria-093148734.html

    I don’t see any way to stabilize this area since all the parties despise each other so and rational borders can’t be formed.

  3. rd commented on Jun 16

    Re: 401k withdrawals

    The industry is just now figuring out that an aging demographic means people will retire and take money out of their 401ks? I assume they had been living on the hope that underpaid, under-employed, and under-saved boomers would just keep working and saving money in their 401ks.

    Oh yes, and they ensured that the jobs were shipped overseas so the millenials and Generation X wouldn’t have money to save either, especially after paying off their student loans.

    BTW – one thing the media has done a pretty good job of is putting the message out there to delay taking Social Security to increase its payments later in life. One of the things that will do is accelerate 401k withdrawals as people have to take money out now in order to cover the income SS would have provided while they wait for those delayed benefits. A drop in the stock market will also mean that the people who had been told in the ZIRP era that stocks were like bonds that would increase with inflation will dump their stocks to make sure they still have the remnants of their nest egg in their 60s and 70s.

    We are probably close to peak retirement account assets now for the next decade or two until the millenials enter their 40s. The financial industry needs to understand that the politicians that they fund in order to get deregulation and maximization of shareholder value are going to position the financial industry to destroy itself. It had a crack at itself in 2008 and almost succeeded but the government stepped in with a bailout. The next attempt at suicide will likely do more destruction to the industry but less to the overall economy.

    • intlacct commented on Jun 17

      Doom and gloom abounds. Vote Republican!

  4. rd commented on Jun 16

    Re: Roth 401ks

    Between my wife and I and two children, we have two 401ks and two 403bs. Only one of the 403bs has a Roth option. The other three do not.

  5. swag commented on Jun 16

    Re: Grantham and Hussman above,

    I am not an investment professional (as though being one imbues anybody with wisdom or competence), but it occurs to me that CAPE may be broken as a valuation metric and as an indicator at the moment due to the presence of the Great Recession in the trailing 10-year window.

    ~~~

    ADMIN: It has not been especially useful — since 1990 the CAPE has only been below its historical average 2% of the time

  6. VennData commented on Jun 16

    Pelosi Contrasts Fast Track Trade Pact to Slow Track Infrastructure Funding

    “…Rep. Paul Ryan, R-Wis., chair of the House Ways and Means Committee who is leading the Republican effort to pass H.R. 1314, the comprehensive trade package, said the House could vote again on the trade proposal as early as Tuesday.

    “…America is being watched by the rest of world,” Ryan said. “The President has some work yet to do with his party to complete this process.”

    “…Ryan has proposed an amendment to Obama’s trade bills stipulating their passage does not “require changes to U.S. law or obligate the United States with respect to global warming or climate change.”

    “…Ryan’s amendment is the reason she opposes the trade bill, Pelosi said in a floor speech advocating a ‘no’ vote. House Democrats also oppose the no-amendment provision in the fast-track trade pact, she said.

    http://www.bondbuyer.com/news/washington-infrastructure/pelosi-links-trade-pact-to-htf-bill-lobbyists-say-its-unrealistic-1076448-1.html

    So first the GOP cuts Medicare to get Trade, now they want to make Climate Change rules illegal.

  7. VennData commented on Jun 16

    Blackhawks Win Cup. Chicago Loses Its Mind.

    http://www.wsj.com/articles/blackhawks-win-cup-chicago-loses-its-mind-1434466647

    FANS, HAWKS CONTINUE CELEBRATING NEXT DAY

    http://abc7chicago.com/sports/wheres-the-cup-fans-hawks-continue-celebrating-next-day/787508/

    The bars this morning were quite inviting. It’s that magical feeling of drunkiness and no sleep. Arrests way down. Chicagoans learned, we’re being more clever about our over-the-topedness. I see no let up going into the lunch hour…

  8. VennData commented on Jun 16

    Prince Alwaleed settles Forbes defamation suit that he was not as rich as he really is.

    ​”…Saudi Arabian billionaire Prince Alwaleed bin Talal said he had settled a libel suit against the Forbes magazine group over its reporting on his fortune, which he claimed was billions of dollars larger than the [twenty billion] the magazine estimated…”

    http://www.businessinsider.com/r-saudi-prince-alwaleed-says-settles-forbes-libel-suit-over-fortune-2015-6

    I hope Forbes paid dearly for this grievous injustice.

  9. Jojo commented on Jun 16

    May 26, 2015
    Why The Oldest Person In The World Keeps Dying
    By David Goldenberg

    As the oldest person in the world, Gertrude Weaver was making the best of her time in the limelight. When I called the 116-year-old Arkansas resident two days into her reign on a Friday in early April, she was resting after a couple of television appearances and a half-dozen phone interviews. With the help of her 73-year-old granddaughter, she offered up theories about her longevity (“hard work, love God,” as her granddaughter put it) and even invited President Obama to her next birthday party.

    Kathy Langley, the administrator at Silver Oaks Health & Rehabilitation Center, the Camden facility where Weaver was living, estimated that Weaver was getting more than 50 calls a day from media outlets wanting to speak to her. “It’s somewhat overwhelming,” she said, asking me to call back Monday. When I did, I learned that Weaver had died that morning.

    Weaver was part of what is perhaps the world’s most wizened sorority, one open only to those who were once the oldest living person on Earth. When I looked into everyone who’d had that distinction, I found that more people than ever are clustering at the outer edge of human aging and that the tenure of the world’s oldest living person isn’t as long as it used to be. Better record-keeping and longer lifespans have helped lead to quite a crowd.

    Weaver’s five-day run as the oldest person in the world was short, but it turns out that the oldest person in the world never holds that title for very long. Since records started being kept in the 1950s, the average tenure has been just around a year, according to the Gerontology Research Group; it has dipped to just seven months since the year 2000. Weaver’s incumbency isn’t the shortest in recent years; North Carolina’s Emma Tillman died four days after becoming the world’s oldest person in 2007.

    http://fivethirtyeight.com/features/why-the-oldest-person-in-the-world-keeps-dying/

  10. VennData commented on Jun 16

    I am older then Brett Arends and his list is half wrong:

    Dress for yourself.
    Do find luxuries that give you value and teach you.
    Take off time before or after college if you need to
    Don’t rely on a test to tell you who you are.
    Do become a tech junkie. I went to grad school in the pre and post laptop era, a laptop for notes is much better.
    And he thinks tax cuts pay for themselves too.

    Avoid Arends.

    • Winchupuata commented on Jun 16

      The problem is that there are actually people that take this clown seriously.

  11. VennData commented on Jun 16

    Prime Minister Alexis Tsipras accused Greece’s creditors on Tuesday of trying to “humiliate” Greeks

    http://www.reuters.com/article/2015/06/16/us-eurozone-greece-idUSKBN0OW16320150616

    No, you’ve done an excellent job yourselves Greece. Your shipping tycoon’s stealth at avoiding taxes for generations is not something to aspire to but something that has pervade our economic culture that you should be embarrassed by

    • Winchupuata commented on Jun 16

      Playing the victim and whining, there’s nothing else they can do

  12. bonderman commented on Jun 16

    The Greeks can’t seem to figure out that someone has to come up with the money to pay their government employees.
    .
    The reason you see all that rebar sticking out of roofs is that proves the house is still not finished and thus no tax is owed.

    • intlacct commented on Jun 17

      Similar to Canada – ‘The reason you see all that rebar sticking out of roofs is that proves the house is still not finished and thus no tax is owed.’ Check out the unfinished homes in BC…

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