Economy has about 16-30 years before total melt down, any ideas?...

[createdtoworship]

I think you have some good intuitions and while you are right on the cost of government debt, the days of normalized interest rates are over. If you pay attention to some of the past and current Federal Reserve members, they have been talking more about negative interest rates. That is the government's way out of paying such large interest payments, along with their balance sheet expansion where the Federal Reserve buys debt by increasing the money supply. It seems likely to me that rates will go to zero before they might implode. At some point, I think that everyone will dump the major currencies and the reaction will be to form a new world currency in; pushed under the guise of greater stability.

It is a mystery to me but there are currently, trillions in mostly Euro nations, where people are paying the government to loan them money. Amount of global debt with negative yields balloons to $15 trillion

As of last year, I have been buying US corporate bonds and some of the longer-term ones have done quite well, some up 15% in a year. I would dump them at the hint of more inflation or if interest rates go down another percent. I figure the stock market will implode first. For instance over coronavirus fears, bond funds had a record inflow of money last week pushing yields to very low levels.

Because of the sheer supply of money, it seems unlikely that the USA would ever go back to the gold standard. Even when it worked, private holding of gold was prohibited and I doubt the government can ever make that illegal again.

I too am a bearish on the economy, with this reasoning. If the end times are coming and God wants to get everyone's attention, what would work faster than some event that would also lead to the biggest stock market collapse in history? I also guess that this would be the most dramatic when stocks are at an all-time high. I figured this would have already happened by now though some say the USA postponed it by the election of Trump. (I missed some great stock gains with this poor timing.)

I agree, right now from my sources, I don't think that negative rates are anywhere near happening. But you are probably correct, they may be used instead of a ballooning debt. But I fear that negative rates due to the fact the theory behind them does not work our fiscally speaking according to most economists. I fear that our credit rating would fall father with negative rates, than it would simply printing more money as usual. As far as 15% yield on corporate bonds, I would stay away from high risk corporate bonds. Bonds are good, and corporate bonds a safe yield can be five percent or so, although not anymore. But people call them junk bonds for a reason. But I like the idea of bonds simply because if they go absolvent, they pay bond holders first. However I would not go with a bond rating of less than AA or so rating. Because even if bond holders are the first paid, that does not mean that they a required to pay if they just can't do it. So that is the whole reason behind the ratings of bonds. Treasury bonds typically have the highest rating. But if it's below an A rating I would call it a junk bond and no more safer than a stock purchase. I can't mention what funds are good to buy but I would research low volitility index funds to start. For a high market low volitility limits your downside risk, while still allowing for better performance on the year than a wall street manager will give. As far as the one world currency, I would not bet someone will do something like putting everything on gold standard, doing away with social security and reducing expenses on the federal balance sheet. But it involves healthcare reform, and social security reform, it's not just a reduction in federal spending that will get us out of this mess. A gold standard will perform that. And for now fort knox has enough gold for ten or twenty years. If they continue the mining and such, we could have an indefinate supply, if we simply reduce expenses. And financial advisor will say as the first step to get out of debt, is to cut up a credit card. So that should be our first step.

 

[Richard T]

I agree, right now from my sources, I don't think that negative rates are anywhere near happening. But you are probably correct, they may be used instead of a ballooning debt. But I fear that negative rates due to the fact the theory behind them does not work our fiscally speaking according to most economists. I fear that our credit rating would fall father with negative rates, than it would simply printing more money as usual. As far as 15% yield on corporate bonds, I would stay away from high risk corporate bonds. Bonds are good, and corporate bonds a safe yield can be five percent or so, although not anymore. But people call them junk bonds for a reason. But I like the idea of bonds simply because if they go absolvent, they pay bond holders first. However I would not go with a bond rating of less than AA or so rating. Because even if bond holders are the first paid, that does not mean that they a required to pay if they just can't do it. So that is the whole reason behind the ratings of bonds. Treasury bonds typically have the highest rating. But if it's below an A rating I would call it a junk bond and no more safer than a stock purchase. I can't mention what funds are good to buy but I would research low volitility index funds to start. For a high market low volitility limits your downside risk, while still allowing for better performance on the year than a wall street manager will give. As far as the one world currency, I would not bet someone will do something like putting everything on gold standard, doing away with social security and reducing expenses on the federal balance sheet. But it involves healthcare reform, and social security reform, it's not just a reduction in federal spending that will get us out of this mess. A gold standard will perform that. And for now fort knox has enough gold for ten or twenty years. If they continue the mining and such, we could have an indefinate supply, if we simply reduce expenses. And financial advisor will say as the first step to get out of debt, is to cut up a credit card. So that should be our first step.

You are right, about high yielding, junk bonds, (best to avoid) I meant that my BBB and higher rated bonds that were 20 years out have increased in price as yields have moved down.

 

[createdtoworship]

You are right, about high yielding, junk bonds, (best to avoid) I meant that my BBB and higher rated bonds that were 20 years out have increased in price as yields have moved down.

I guess I would go with the A rated. But that is me. People all have their own risk tolerance. But realize that those companies can file bankruptsy and they are not required to pay you. I wouldn't mind an A rated corporate bond myself, accept yields are down now, I think this year they are are 1 to 2 percent apr. That does not even keep up with inflation. 2018 they were five.

 

[createdtoworship]

You are right, about high yielding, junk bonds, (best to avoid) I meant that my BBB and higher rated bonds that were 20 years out have increased in price as yields have moved down.

Moody's Seasoned Aaa Corporate Bond Yield
(safe corporate bonds less than inflation at 3%), it's safe but in long run ,10 years you will have diminishing returns. For example in 10 years you may have minus 5-10% instead of gaining money in like an index fund (thats low volitility).

 

[Richard T]

Just to give a realistic example (Using figures as close as I can recall) I bought Baltimore Gas and Electric with a A- rating that had a 3.3% yield and it matures n 2042. If I bought at par, 1000 dollars, and interest rates for this kind of bond moved down, which they did, now pays only 3%, the price of the bond has moved up and today someone would give me 1100 for the bond. Thus, if I sell now I have gained 10% plus whatever interest I have earned up to the point of sale. I looked at one bond fund PRPIX, and it earned 15% last year on its whole bond portfolio. Now of course those gains can turn into losses if interest rates do climb but if interest rates drop further, there would be more gains. I do not hate stocks and over the long haul they will perform better, but the stock market has far more volatility and I am happy focusing primarily on bonds for the moment.

 

[createdtoworship]

Just to give a realistic example (Using figures as close as I can recall) I bought Baltimore Gas and Electric with a A- rating that had a 3.3% yield and it matures n 2042. If I bought at par, 1000 dollars, and interest rates for this kind of bond moved down, which they did, now pays only 3%, the price of the bond has moved up and today someone would give me 1100 for the bond. Thus, if I sell now I have gained 10% plus whatever interest I have earned up to the point of sale. I looked at one bond fund PRPIX, and it earned 15% last year on its whole bond portfolio. Now of course those gains can turn into losses if interest rates do climb but if interest rates drop further, there would be more gains. I do not hate stocks and over the long haul they will perform better, but the stock market has far more volatility and I am happy focusing primarily on bonds for the moment.

well that certainly is the safer way to play the market. But remember that most hedge funds lost performance wise in comparison with the general market any year since 2008. And recovered 2008 losses in two years. So many are leaving hedge funds and/or learning to invest in ETF's which were ten years ago, all trash according to Hedge Funds. There is a particular low volitility fund that I am going to move my retirement into, then at the bottom of the next recession move into a triple leveraged index fund. Here is an article that I made with some of the recommendations, I cannot post stock recommendations on the site due to the "no advice" claus of the forum rules.

but you are free to read this article if you wish:
Recession (converted).pdf

 

[Richard T]

My main problem is that I got a lump sum

well that certainly is the safer way to play the market. But remember that most hedge funds lost performance wise in comparison with the general market any year since 2008. And recovered 2008 losses in two years. So many are leaving hedge funds and/or learning to invest in ETF's which were ten years ago, all trash according to Hedge Funds. There is a particular low volitility fund that I am going to move my retirement into, then at the bottom of the next recession move into a triple leveraged index fund. Here is an article that I made with some of the recommendations, I cannot post stock recommendations on the site due to the "no advice" claus of the forum rules.

but you are free to read this article if you wish:
Recession (converted).pdf

Thanks for the article, I browsed it for now but shall read it more thoroughly later. My problem is that i transferred nearly all my retirement to my own IRA (The company offered very little choice). With the huge runs and recent highs, rather than go into stocks, I am sitting in bonds of various durations, nearly all investment grade along with some guaranteed CD's. I know I could buy some of the ETF's that track various indexes but I figure they are near their peak and I do not want to take a haircut should things go south. There have been historical periods in the stock market where it took over 20 years to recover to new highs. The Japanese market for instance, hit an all time high in December of 1989 and still has not recovered. How Japan has fared in 30 years since the stock market bubble burst
Normally, I might try and say I am trying to "time" the market. However, I entertain the notion of a severe downturn, where nearly everything could be lost, including anything that is not a hard asset. I get this idea from all the counter-party risks that are out there. One domino falls and the others lose their ability to pay as well. Not too mention there will come a time when people will lose faith in a major currency and a panic will ensue. Anyway, that is where I am at. If you have any other ideas by all means share.

 

[createdtoworship]

My main problem is that I got a lump sum

Thanks for the article, I browsed it for now but shall read it more thoroughly later. My problem is that i transferred nearly all my retirement to my own IRA (The company offered very little choice). With the huge runs and recent highs, rather than go into stocks, I am sitting in bonds of various durations, nearly all investment grade along with some guaranteed CD's. I know I could buy some of the ETF's that track various indexes but I figure they are near their peak and I do not want to take a haircut should things go south. There have been historical periods in the stock market where it took over 20 years to recover to new highs. The Japanese market for instance, hit an all time high in December of 1989 and still has not recovered. How Japan has fared in 30 years since the stock market bubble burst
Normally, I might try and say I am trying to "time" the market. However, I entertain the notion of a severe downturn, where nearly everything could be lost, including anything that is not a hard asset. I get this idea from all the counter-party risks that are out there. One domino falls and the others lose their ability to pay as well. Not too mention there will come a time when people will lose faith in a major currency and a panic will ensue. Anyway, that is where I am at. If you have any other ideas by all means share.

you are not wrong thinking this market is at the top, but it could rally for another six months with trump in office, and usually at the top, it euphoric, meaning a parabolic lift in price. Like a rocket launcher. So I am long the market with my 401k but will transfer to a low volitility ETF mentioned in the article as soon as I can. Then when market bottoms in a year or whatever, increase leverage to a 3X fund. After all being at the bottom you can't really go wrong on a higher risk asset. I explain this in the article. I also mention how to time the market bottom, which is really hard to do, because you have no price history behind you. Just as hard as timing a market top. But I agree now is the time to hedge. But again don't hedge to much against the market simply due to shorts will have to cover if euphoria continues for another few months.

 

[Mountainmanbob]

Best we make Trump our King for life.
That will buy us many, many good years.
M-Bob

 

[grasping the after wind]

I think it is absolutely unwise to think one can predict the future. If one attempts it however, it is best to pick a time frame when one thinks one will no longer be around so people will not have the chance to laugh right in one's face about how wrong one was. And be sure not to place any bets based upon those predictions.

 

[createdtoworship]

I think it is absolutely unwise to think one can predict the future. If one attempts it however, it is best to pick a time frame when one thinks one will no longer be around so people will not have the chance to laugh right in one's face about how wrong one was. And be sure not to place any bets based upon those predictions.

The OP is just a calculation, there are lots of factors. The government could raise taxes, the government could do some other miracle to fix the economy, they could endorse a gold standard, so you are right, we don't know. But at the current trajectory as of this year, if we kept up the pace of money printing as it sets this year (2020), we have about 16 years until our credit payment is larger than all federal revenue.

 

[Richard T]

you are not wrong thinking this market is at the top, but it could rally for another six months with trump in office, and usually at the top, it euphoric, meaning a parabolic lift in price. Like a rocket launcher. So I am long the market with my 401k but will transfer to a low volitility ETF mentioned in the article as soon as I can. Then when market bottoms in a year or whatever, increase leverage to a 3X fund. After all being at the bottom you can't really go wrong on a higher risk asset. I explain this in the article. I also mention how to time the market bottom, which is really hard to do, because you have no price history behind you. Just as hard as timing a market top. But I agree now is the time to hedge. But again don't hedge to much against the market simply due to shorts will have to cover if euphoria continues for another few months.

Yes, I have heard of the term "melt up" for a parabolic move. I also believe those Christian leaders who think America is in a time of mercy or prosperity. Still, I recognize that God does actually control the economy, and there could be a reckoning or judgement sooner or later. Prosperity preaching types might be caught off guard, as testing in finances is much like other areas such as health or relationships. ( I believe in prosperity, though it is subservient to other more important things in the kingdom)

In your pdf, your past gains and expectations are tremendous, and hope it works out for you. It is tough to call a bottom and holding during a bear market can be difficult. For instance, I bought Boeing stock the first market day after 9/11, I think around 32 a share. It proceeded to go to 25 or so and irritated me immensely, so when it got back to 32, a few months later, I sold. My plan was to hold, of course, it later went to over 300, but the psychology of the trade losses got to me. Anyway, thanks for the posts and Pdf concerning these topics.

 

[createdtoworship]

Yes, I have heard of the term "melt up" for a parabolic move. I also believe those Christian leaders who think America is in a time of mercy or prosperity. Still, I recognize that God does actually control the economy, and there could be a reckoning or judgement sooner or later. Prosperity preaching types might be caught off guard, as testing in finances is much like other areas such as health or relationships. ( I believe in prosperity, though it is subservient to other more important things in the kingdom)

In your pdf, your past gains and expectations are tremendous, and hope it works out for you. It is tough to call a bottom and holding during a bear market can be difficult. For instance, I bought Boeing stock the first market day after 9/11, I think around 32 a share. It proceeded to go to 25 or so and irritated me immensely, so when it got back to 32, a few months later, I sold. My plan was to hold, of course, it later went to over 300, but the psychology of the trade losses got to me. Anyway, thanks for the posts and Pdf concerning these topics.

yeah most 401k's gain in money because of a simple principle. Buying and holding. In general the market recovers and goes up more than it goes down, so in the last 30 years or so for sure, this tactic has worked. I think we have another decade of buying and holding working out. If we have a recession in the next year or so, I think it may take 2-3 years to recover the losses, but they will recover I believe. But ultimately our money printing will overtake our wages as a country. But that is like I said 16 years away. So we have a good decade left of gains. So use it wisely. But don't get me wrong there are inverse funds to the market as well like SDS. So if one was bearish on the economy funds like that will gain exponentially. Things like gold and bitcoin prosper I believe when the world currencies go through correction. (the dollar). but something called dollar cost averaging. Really works. It's just buying at regular intervals into a general market fund. And if you are using a brokerage, place a trailing stop on it. (I mention that in the PDF). I also mention how to time the market bottoms. which is important because if your long holds stop out, you will need to know when to reenter.

 

[createdtoworship]

Yes, I have heard of the term "melt up" for a parabolic move. I also believe those Christian leaders who think America is in a time of mercy or prosperity. Still, I recognize that God does actually control the economy, and there could be a reckoning or judgement sooner or later. Prosperity preaching types might be caught off guard, as testing in finances is much like other areas such as health or relationships. ( I believe in prosperity, though it is subservient to other more important things in the kingdom)

In your pdf, your past gains and expectations are tremendous, and hope it works out for you. It is tough to call a bottom and holding during a bear market can be difficult. For instance, I bought Boeing stock the first market day after 9/11, I think around 32 a share. It proceeded to go to 25 or so and irritated me immensely, so when it got back to 32, a few months later, I sold. My plan was to hold, of course, it later went to over 300, but the psychology of the trade losses got to me. Anyway, thanks for the posts and Pdf concerning these topics.

I think God's hand is on the economy. And there is ways to hedge investments during prosperity as well. For example gold investments have been doing well last month. And it just happens that they also do well in recessions. So that is why I love watching gold funds, I talk extensively about NG in the article. Read up on it.