Fire Hydrant of Freedom

While  suturing a cut on the hand of a 75 year old rancher, whose hand was
caught in the squeeze gate while working cattle, the doctor struck  up a
conversation with the old man.

Eventually the topic got  around to Obama and his role as our president.
The old rancher said,  'Well, ya know, Obama is a 'Post Turtle'.
Not being familiar  with the term, the doctor asked him, what a 'post
turtle'  was.

The  old rancher said, 'When you're driving down a country  road and you
come across a fence post with a turtle balanced on top, that's a  'post
turtle'. Have you ever seen one?

The old rancher saw the puzzled look on the  doctor's face so he continued
to  explain:

"You know  he didn't get up there by himself,
                    he doesn't belong up there,
                    he  doesn't know what to do while he's up there,
                    he's elevated beyond  his ability to function, and    
                     you just wonder what kind of dumb jerk  put him up
                        there to begin with."

At the start of the year Grantham of GMO figured the market would go down around October, but recently said he thinks it will happen sooner.

I'm more of a buy, hold, rebalance  index fund Boglehead than a stock trader.

I'm trying to figure out what inflation will do; I could get enough growth in bonds as long as they are not eroded by inflation.

What are lucid analysts saying about increases in interest rates and inflation?  And the chance of unexpected inflation?  Should bond holders pre-emptively shorten their duration, or is everything priced in to the market already?  Its important since the NAV of bond funds have often risen in the last couple of years, so swapping will incur some capital gains taxes.

I've read that the losses (stock market?  economic ? ) in Japan are running $600-800 Billion. If Japan sold that much in Treasuries, it would go a long way to reversing QE ? Or the other way around ?  The Fed would take the "phantom" QE  "bank reserve" money and give "real" money to the Japanese... and investors would buy some of the bills..  ?

Odd that Japan index ETFs are selling for 5% over NAV in expectation of a quick recovery.

Bothered by outing the locations of these places.  Yea there is backup, but its not instant.

Remember the Star Trek episode with the two planets at war controlled by computers?  The people in the destroyed sectors just walked to the disintegrator machines.  Their culture was never destroyed until Kirk broke the machine & instigated real nuclear retaliation.

WRT hedging downside variance -- This guy Milevsky theorizes a sort of annuity which does exactly that.  Other intersting papers on the site too:

A Different Perspective on Retirement Income Sustainability:
Introducing the Ruin Contingent Life Annuity (RCLA)

http://www.ifid.ca/pdf_workingpapers/WP2007SEPT15_RCLA.pdf

He's of the same school as Otar apparently; talking about the main risk being a bad sequence of returns in the first years of retirement.

This product would be a "reverse" index, based on a particular year matching your year of retirement.  If the index goes to zero, it means your portfolio probably has become unsustainable as well.  So the product would then begin paying out a defined amount to you for the rest of your life.  Very clever idea; it separates the growth and the risk components of Immediate Annuities.  You keep ownership of the growth part and export the risk to the policy.  Its cheaper if you are older (because you live for fewer years, if it needs to pay out).


worth quoting:

IN SUM
The creation of a stand-alone ruin contingent life annuity (RCLA) would be a triumph of
insurance and financial engineering. On the one hand it is a type of long-term equity put
option, but it also provides true longevity insurance. Indeed, it is currently embedded
within an assortment of GLiBs on variable annuities, but we believe they should be
given a separate life of their own and sold on a stand alone basis.

Another use of such a concept product is that it provides us with a mark-to-market (or at
least mark-to-model) value for one’s retirement income plan. If a 7% spending rate is
truly unsustainable, then the cost of 7% RCLA would tell us by how much – exactly.

If mom and dad are spending too much, the relevant x% RCLA value would provide the
beneficiaries with a rough (average) estimate of what it will cost them – in value terms –
to cover their anticipated spending if and when they run out. The children
might want to set this sum of money aside now, in a risk free saving account, to cover
the cost of a life annuity if-and-when mom and dad ever run out of money.

At the very least, the creation of such products would enable retirees and their financial
advisor to put a market price – as opposed to just simulation values -- on the risks they
are running by spending too much, not investing appropriately or simply living too long.
In this case, market prices would function as economic signals or even warning signs.

I just realized that the Crash of 2008 is 100% the fault of Roosevelt.

If the vast amount of money owed by Social Security was instead invested (real money, not phantom money replacing the real money stolen by the Govt to use for accounting trickery to hide inflation over the decades) by private insurance companies -- the financial greed of the 2000's would not have occurred.  Insurance companies would have placed all that money in truly rational, safe investments.  The percentage of the economy in whacky derivatives etc would have been small.

WRT hedging downside variance -- This guy Milevsky theorizes a sort of annuity which does exactly that.  Other intersting papers on the site too:

A Different Perspective on Retirement Income Sustainability:
Introducing the Ruin Contingent Life Annuity (RCLA)

http://www.ifid.ca/pdf_workingpapers/WP2007SEPT15_RCLA.pdf

He's of the same school as Otar apparently; talking about the main risk being a bad sequence of returns in the first years of retirement.

This product would be a "reverse" index, based on a particular year matching your year of retirement.  If the index goes to zero, it means your portfolio probably has become unsustainable as well.  So the product would then begin paying out a defined amount to you for the rest of your life.  Very clever idea; it separates the growth and the risk components of Immediate Annuities.  You keep ownership of the growth part and export the risk to the policy.  Its cheaper if you are older (because you live for fewer years, if it needs to pay out).

Done.

I thought about that, but the stock market thread seems to be focused on active trading of stocks, which is not at all the same.  And asset protection is the legal structure for owning valuable things in general, not stocks or funds themselves.  What do you think?

There are three religious truths:

a. Jews do not recognize Jesus as the Messiah.

b. Protestants do not recognize the Pope as the leader of the Christian faith.

c. Baptists do not recognize each other in the liquor store or Hooters.

My need is for a house & savings.  Many books on Am*zoid, but I'd like some recommendations on which.

Some states tax inherited trusts but not estates...  so finding something state specific would be great.

"The fact is, if we just turned our 18-wheelers to natural gas right now, we would reduce our dependency on oil by 50 percent"

No infrastructure to gas up.  Same problem w/ electric cars.

What are the precursors to a downturn in 2011?

I'm wondering if 2011 is going to be another Mid-Cap boom year.

Let's review some of these posts.  At the end of July, the WSJ article said:

"The market's really cheap right now. The P/E is only about 13...
Ask your broker about other valuation metrics...No metric is perfect, but these three have good track records. Right now all three say the stock market's pretty expensive, not cheap."

But in mid September, a supply side economist said "Despite cries of "uncertainty" that reverberate through the financial markets, U.S. equities remain grossly undervalued. Risk premiums are exceedingly high. Too high!"

So how do we determine who is right?