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The Bullard Bottom

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My Favorite chart for the month of October comes courtesy of Zerohedge. Zerohedge points out the schizophrenic policy views of St. Louis Fed President James Bullard. Bullard is sometimes a policy hawk and other times a dove, but mostly he is just consistently inconsistent. Just days before the market corrected, Bullard was out boasting about a strengthening economy and the need to remove monetary accommodation (read end QE and hike rates). Days later he had a change of heart. His change of heart didn’t come from the economic data that the Fed regularly assures us its policy is dependent … [Read more...]

How Long Can Your Nest Egg Last?

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I clicked through this lifespan calculator offered by Northwestern Mutual. Just click here to calculate your lifespan. Drawing down 1% per quarter (4% annually) from a portfolio is a good way to help avoid outliving one's money. Take a look at the chart below to see the effects a lower withdrawal rate will have on the lifespan of your savings. A $10,000 investment in 1945 would have lasted 54 years at a 4% annual withdrawal rate, but an 8% annual withdrawal rate would have burned through the nest egg in a mere 16 years. That's not enough for today's retirees who are living longer and … [Read more...]

The Monday Melee: Crumbling BRICS

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Currency Woes Aside from China, the BRIC currencies have crumbled since 2011. What We’re Reading The predictable "unintended consequences" of Obamacare. (The Wall Street Journal) MAULDIN: We Shouldn’t Be the Least Bit Surprised by Sluggish Global Growth (Business Insider) Washington rolling the dice with your tax dollars...again (The Wall Street Journal) There's No 'There' There With The Latest 'Deflation' Scare (Forbes) Minimum Wage Backfire--sadly this comes as a surprise to the Keynesian crowd. (The Wall Street Journal) How Quantitative Easing Contributed to the Nation’s … [Read more...]

Pop Quiz: Who Said It?

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1.) “I will be the first to say that it is always difficult to get monetary policy just right. But the Fed’s analytical prowess is top-notch and our forecasting record is second to none” 2.) “Q: Can you act quickly enough to prevent inflation from getting out of control?A: We could raise interest rates in 15 minutes if we have to. So, there really is no problem with raising rates, tightening monetary policy, slowing the economy, reducing inflation, at the appropriate time. Now, that time is not now. Q: You have what degree of confidence in your ability to control this [inflation]? A: … [Read more...]

Does this Look Like Austerity to You?

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The machinations and hand wringing from Euro-area politicians and bankers over austerity imposed by Germany in return for bailouts has masked the reality that Euro-area countries are quickly piling on government debt. Since the end of 2008 Euro-area debt as a percentage of GDP has risen from 70.8% to 96.4% with no end in sight. Does this look like austerity to you? … [Read more...]

Do This to Avoid Catastrophic Portfolio Losses

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If you are retired or soon to be retired, you know firsthand how the stress of managing money rises as retirement becomes a reality. Time, once your closest ally is now a nagging foe. The security blanket of steady wage income to get you through down markets is gone. Your primary source of income in retirement is your portfolio. If you suffer a catastrophic portfolio loss, you don’t just lose money, you lose your livelihood. The prospect of suffering a catastrophic loss can be nerve-racking. Every stock market correction is met with fear and angst. Is this the big one? Should I pull my … [Read more...]

$3 Trillion of Taxes

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It was reported by the Treasury Department recently that Federal receipts have crossed the $3 trillion mark for the first time ever in fiscal 2014. But even with the highest receipts in history (much of those receipts caused by onetime tax avoidance measures), a budget surplus is out of reach. … [Read more...]

Stocks Down 400 Points

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"I was at the post office today and overheard someone comment that the stock market was way down, something like 400 points," wrote a client to me last week. "I just wanted to let you know we'll be heading south for the winter and I need you to change my address. Glad to know you're handling my money and not me!" It's interesting how some investors live and die by the daily swings in the market. They either have too much riding on it, or enjoy watching it fall because they got out six years ago at the bottom and can't believe how they've missed the boat. Both feelings are rotten and not … [Read more...]

The Monday Melee: Fed Unsupported By Data

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What We’re Reading: It pays to be a dad (CNN Money) Cliff Asness on Inflation & Krugman's Arrogance (realclearmarkets.com) The hydrogen & coconut powered vehicle (Quartz) Fed Can — and Should — Ignore Markets Right Now (MoneyBeat) Eight Ways to Help Improve Your Child's Vocabulary (lifehacker.com) Fed's Bullard hits panic button after Fed inflated bubble starts to deflate. (FT Alphaville) Protect Your Wall with a Sponge When Pulling Nails (lifehacker.com) Doug Kass: The Day The Market Died (zerohedge.com)   … [Read more...]

The Heroin Connection

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Heroin is a highly addictive drug. It is an opioid like morphine, codeine, and methadone. One of the reasons heroin is so addictive is that our brains have receptors for opiates that our body naturally produces—the endorphins produced during or after exercise for example. When an addict starts using heroin daily, his brain stops producing natural opiates because it is getting all the opiates it needs and more from the heroin. If the heroin addict continues using for years and years, he slowly trains his own body to cease all natural dopamine production. A dependency is created where the … [Read more...]