Still adjusting to my blood pressure medicine. Since starting it two weeks ago I find I am very tired and my brain is slow. I am pretty sure I will adjust and when they tested me today they saw real improvement although more tests to come. In the meantime I thought I might make a couple of comments.
In January the Federal Reserve will be getting a new chairman as Mr. Bernanke leaves. There are three ways this could go down. Firstly, the Fed might cut back on their bond purchases in September, three months before he leaves giving his replacement an chance to decide to continue the QE and say he wasn't responsible for the consequences. Secondly, his replacement can immediately reduce the QE and claim he never was a supporter in the first place. Thirdly, he can wait three months and then just end it. Those are all distinct possibilities.
Here is what we should keep an eye out for even more that Wall Streets volatility while this is all being discussed. Lets say that the Federal Reserve stops QE in any of the three scenarios I outlined above. Well, they are not the only ones doing it. China, Japan, the European Union and England are all actively having their central banks do just about the same thing. In fact, the Federal Reserve has loaned hundreds of billions of dollars to foreign banks. All of these currencies have been commingled. What happens if we stop QE; but, the other countries continue or vice versa? The stock market is just one market, what happens when the currency markets fail?
This is a video talking about the rigging of the aluminum market and QE. YouTube - Keiser Report Royal Goldman Household E475
Monday, July 29, 2013
I am stunned and really bored. Detroit.
I woke up, am getting ready to go back to bed and see my doctor today. I read this article and laughed. New York Times - Detroit Looks to Health Law to Ease Costs. I thought they told us Obamacare was more expensive than regular health insurance. Read the article and go back and read my posts, they are just lying and I said what would happen. LOL. Oh my gosh, Obamacare may save the municipal governments, what a surprise. LOL. Just imagine, everyone will love Obamacare when it means your retired civil servants get less than you promised them.
The Stock Market and Investing - Very Basic
So some guy bought some stock in some company 5 years ago at $2 a share. The company is doing well and is giving a 50 cent dividend for the year which is a 5% return based on it's current stock value of $20 and a 25% for the year on the guy who bought stock 5 years ago if he doesn't sell. That is the essence of the genius of Warren Buffet. He buys companies, does not give a dividend and has the companies stock valuation rise by reinvesting in the companies. By doing this, his stock has had a 25% increase in value for each of the last 45 or so years.
In 2003 the Dow Jones Industrial Average sat at 8,000 and ended at 10,000. Today it is at around 15,000. That is a 50% increase in ten years. If you just put your money on one of the index funds, that is how much you would have made. That is how pension funds should invest, betting on the long term. The housing market traditionally worked the same. It averaged 5% appreciation a year for the past 200 years and that is what the average for inflation was also.
Here is wisdom for investing. If inflation sits at 5% a year and a company which invests in itself appreciates at 10% or better a year, you win. You beat inflation and your investment is compounding. Remember that this means putting about $85 a month in your retirement. That is only a buck an hour at minimum wage. Investing pension money is simple. Lets say you work for a company for 30 years. Each year, $1,000 is put into your pension. The first $1,000 would now be at $4,300 or so. The total contribution at a thousand a year is now worth about $69,000 just by doing 5% a year in appreciation.
Lets try this logic with a house. If I bought a house in 1983 for $100,000, it should be worth about $250,000 today. I am not trying to get into fancy math, just simple numbers. 5% a year inflation and appreciation. Mind you, the cost for 30 years of that mortgage is about $300,000 at 5% interest. The extra $50,000 is the interest you pay for the loan. Still, with tax right offs and such, buying a house was the best investment you could make because, you cut out a lot of expenditures at the end of the 30 years. You don't have to invest; but, you do have to have a place to live. In it's simplest terms this is why financial advisers have said to eliminate all debt and then buy a house for the average person.
I have done a really bad job of explaining this. Let me try again. If you put $1,000 a year in the bank and get 0% interest, in 30 years you will have $30,000. I know that makes sense. If you get 5% a year in interest then the money you put in 30 years age will be worth about $4,000 because it compounded interest. The thousand you put in last year would only be worth about $1,050. It only had a year to compound. That is easy to understand I hope. A house does about the same thing except it eventually becomes an expense that you don't have to pay anymore. I hope that made it simple.
Now, lets look at retirement. A house should be about 40% of your costs. If you retire with your house paid off, you should be able to live on 40% less. Again simple math. A depression is claimed to be when the stock market loses 20%. The housing market never lost 20% nationwide in history until the crash of 2007 came. This is why the value of your house does not matter. If you can pay off your house in 30 years and retire, you have cut your expenses by 40%. Simple math. In fact, if you take out a loan on a house and pay it for 30 years, while getting a 5% a year pay increase, inflation, at the end of 30 years your house payment is even less of your income as a percentage. That is what it means to be middle class. It means that if you are a good boy or girl, invest in your retirement and do your job, you should be able to retire because you own your home and have paid enough in to your pension to live on 40% less while doing better each year,
Here is Deming in action. If I promise to let you retire in 35 years, if you commit to my company and make us keep up with inflation or perhaps surpass it, would you? That is his theory. Mutual gain and mutual prosperity. I am still adjusting to my medicine and see the doctor today. Oh, boy, what fun. Best wishes.
In 2003 the Dow Jones Industrial Average sat at 8,000 and ended at 10,000. Today it is at around 15,000. That is a 50% increase in ten years. If you just put your money on one of the index funds, that is how much you would have made. That is how pension funds should invest, betting on the long term. The housing market traditionally worked the same. It averaged 5% appreciation a year for the past 200 years and that is what the average for inflation was also.
Here is wisdom for investing. If inflation sits at 5% a year and a company which invests in itself appreciates at 10% or better a year, you win. You beat inflation and your investment is compounding. Remember that this means putting about $85 a month in your retirement. That is only a buck an hour at minimum wage. Investing pension money is simple. Lets say you work for a company for 30 years. Each year, $1,000 is put into your pension. The first $1,000 would now be at $4,300 or so. The total contribution at a thousand a year is now worth about $69,000 just by doing 5% a year in appreciation.
Lets try this logic with a house. If I bought a house in 1983 for $100,000, it should be worth about $250,000 today. I am not trying to get into fancy math, just simple numbers. 5% a year inflation and appreciation. Mind you, the cost for 30 years of that mortgage is about $300,000 at 5% interest. The extra $50,000 is the interest you pay for the loan. Still, with tax right offs and such, buying a house was the best investment you could make because, you cut out a lot of expenditures at the end of the 30 years. You don't have to invest; but, you do have to have a place to live. In it's simplest terms this is why financial advisers have said to eliminate all debt and then buy a house for the average person.
I have done a really bad job of explaining this. Let me try again. If you put $1,000 a year in the bank and get 0% interest, in 30 years you will have $30,000. I know that makes sense. If you get 5% a year in interest then the money you put in 30 years age will be worth about $4,000 because it compounded interest. The thousand you put in last year would only be worth about $1,050. It only had a year to compound. That is easy to understand I hope. A house does about the same thing except it eventually becomes an expense that you don't have to pay anymore. I hope that made it simple.
Now, lets look at retirement. A house should be about 40% of your costs. If you retire with your house paid off, you should be able to live on 40% less. Again simple math. A depression is claimed to be when the stock market loses 20%. The housing market never lost 20% nationwide in history until the crash of 2007 came. This is why the value of your house does not matter. If you can pay off your house in 30 years and retire, you have cut your expenses by 40%. Simple math. In fact, if you take out a loan on a house and pay it for 30 years, while getting a 5% a year pay increase, inflation, at the end of 30 years your house payment is even less of your income as a percentage. That is what it means to be middle class. It means that if you are a good boy or girl, invest in your retirement and do your job, you should be able to retire because you own your home and have paid enough in to your pension to live on 40% less while doing better each year,
Here is Deming in action. If I promise to let you retire in 35 years, if you commit to my company and make us keep up with inflation or perhaps surpass it, would you? That is his theory. Mutual gain and mutual prosperity. I am still adjusting to my medicine and see the doctor today. Oh, boy, what fun. Best wishes.
Going to Bed, Have a Doctors Appointment and Penn Jillette
I have had the very great pleasure of being on stage with Penn and Teller, I have also had the pleasure of meeting them in person. M. Jillette is a very big man and I am rather small. He is also incredibly kind, quiet and gentle in my experience. Mr. Jillette is also an atheist. I disagree with him. I want to post two videos where he talks about what he believes and talk about his mistake, at least in my mind.
YouTube - Piers Morgan Is A Dick To Penn Jillette (Part 1 of 2)
YouTube - Piers Morgan Is A Dick To Penn Jillette (Part 2 of 2).
Now, I shall correct his basic fallacy and what he says, "You may already be an Atheist. If God (however you perceive him/her/it) told you to kill your child - would you do it? If your answer is no, in my booklet your an Atheist." Watch the video, it is 30seconds in, his words not mine. Moses told God no. Abram should have when asked to kill his child. Mr. Jillette is mistaken as are most christians. God told us to be good slaves and that we have free will. How does one reconcile the two comments? He clearly does not believe in a God who allows free will and responsibility. I do. You cannot blame the Devil or God for your choices, you can only blame them for the options you were given and you have to face all options to define yourself, not just the easy ones.
I shall simplify, what Mr. Jillette was referencing was where God told Abraham to kill his son, Jacob. Abraham agreed to do so and in stealth went to do so; but, when he got to the mountain, God stopped him and told him that he wasn't the type of God who required such things. This is often used by some to show that God wants our complete zombie like obedience; but, what if Abraham had said no? We have an example of that, we have Jonah. He told God no and God had a tree grow and shade Jonah and told him why he wanted him to do a certain thing (preach to Nineveh). God did not kill Jonah for saying no or even punish him for it. Mr. Jillette assumes that if you tell God no, you are an Atheist; but, Jonah said no and knew God, he was no atheist. Both Mr. Jillette and most Christians misunderstand the meaning of the stories because they assume God wants them to be brain dead followers rather than free will people who care about one another.
YouTube - Piers Morgan Is A Dick To Penn Jillette (Part 1 of 2)
YouTube - Piers Morgan Is A Dick To Penn Jillette (Part 2 of 2).
Now, I shall correct his basic fallacy and what he says, "You may already be an Atheist. If God (however you perceive him/her/it) told you to kill your child - would you do it? If your answer is no, in my booklet your an Atheist." Watch the video, it is 30seconds in, his words not mine. Moses told God no. Abram should have when asked to kill his child. Mr. Jillette is mistaken as are most christians. God told us to be good slaves and that we have free will. How does one reconcile the two comments? He clearly does not believe in a God who allows free will and responsibility. I do. You cannot blame the Devil or God for your choices, you can only blame them for the options you were given and you have to face all options to define yourself, not just the easy ones.
I shall simplify, what Mr. Jillette was referencing was where God told Abraham to kill his son, Jacob. Abraham agreed to do so and in stealth went to do so; but, when he got to the mountain, God stopped him and told him that he wasn't the type of God who required such things. This is often used by some to show that God wants our complete zombie like obedience; but, what if Abraham had said no? We have an example of that, we have Jonah. He told God no and God had a tree grow and shade Jonah and told him why he wanted him to do a certain thing (preach to Nineveh). God did not kill Jonah for saying no or even punish him for it. Mr. Jillette assumes that if you tell God no, you are an Atheist; but, Jonah said no and knew God, he was no atheist. Both Mr. Jillette and most Christians misunderstand the meaning of the stories because they assume God wants them to be brain dead followers rather than free will people who care about one another.
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