General Investing and Economics Discussion - No Politics

[herb]

It’s really not that hard. Averaging 13% return per year since 1997. Hang onto the winners, dump the losers quickly. Yeah I got plenty of war wounds from selling prematurely missing much larger gains, failures of analysis and absorbed 5-10% losses, etc. However, if your decent investments get you 15-25%, your good ones net you 25-50% and you nail 1-2 100%’ers in a year, the swings & misses along the way hardly matter. Rinse & repeat.

Sometimes we all need that reminder, dump the loser. Got one I am sitting on now as I “know” it will turn around, lol

 

[LibertyTurns]

Sometimes we all need that reminder, dump the loser. Got one I am sitting on now as I “know” it will turn around, lol

Admittedly it’s easier said than done but it’s the #1 investor lesson that needs to be learned. I had a great mentor. Taught me you shouldn’t try to catch a falling knife, gaffe off the losses, etc.

We’ve all probably had a bad Boss. Did he really ever get any better? You’ve probably worked in a bad department? Bet that department had been bad for more than a few days before you arrived & it probably was bad long after you left. Bad companies are bad. They’re usually bad at more than one thing. It’s the rare leader that has the skill to turnaround a bad company. Usually the people that take that job are marginal leaders trying to make a name by themselves by catching lightning in a bottle.

Why would you bet on any of the above? Seek out the winners.

 

[Deleted member 2897]

No true political context intended, but definitely can see how it could be interpreted that way.

I am P.O'd with both major political parties who think money grows on trees.

Taxes are going to have to go way up to pay for all of this. This is also true regarding the first and second go around of Covid stimulus last year, it is only being accelerated this year with Covid stimulus already passed and now the push for another $4T.

Granted the tax cuts from the Tax Cuts and Jobs Act are currently set to expire in 2026 anyway, top rates of 35% for corporate taxes, 39.6% for personal taxes, and still 20% for long-term capital gains. Will Congress just accelerate that to mid 2021 or starting in 2022?

When it comes to investing, tax increases have NOT necessarily killed stocks overall. Oddly, a little research shows that the S&P 500, has shown higher average returns, and higher odds of an advance even if not higher average returns. The push in part is due to Federal spending to drive the economy. Granted, I do not believe we can tax ourselves into prosperity.

When it comes to retirement investing, if someone has not already started a Roth IRA or a Roth 401k I would do so and put in as much as you possibly can so that it can grow tax-free. In essence pay a lower tax rate now versus a higher tax rate when you take it out if you are putting it in a standard 401k or IRA account. This of course assumes that you anticipate drawing out a similar or greater taxable income from your retirement funds.

Our quarterly economic numbers just came out and tax revenue was up something like 14%. Taxes have been increasing sharply, but no amount is ever enough. You can raise taxes to the moon and it won’t do any good of you increase spending to Mars.

 

[Deleted member 2897]

Another tax I forgot about - in addition to taxes on savings balances - negative rates, which are essentially taxes. -0.6% per year on your savings balances charged to you by the banks. . What a deal they have going over there!

Greed, Bankers and Politics Star in Danish Negative-Rate Debacle

(Bloomberg) -- The country with the longest history of negative interest rates just hit a milestone that may offer a glimpse of what’s to come elsewhere.In Denmark, commercial banks have had to absorb negative rates since they were first introduced by the central bank in 2012. By 2019, the...

finance.yahoo.com

 

[LibertyTurns]

Another tax I forgot about - in addition to taxes on savings balances - negative rates, which are essentially taxes. -0.6% per year on your savings balances charged to you by the banks. . What a deal they have going over there!

Well, perhaps 7 of 10 people do not even care because they have less than $1k in savings? 0.6% on $1k is only $60, or $1.25 a week, probably not even enough to get you 1 soda out of the vending machine each week.

21+ American Savings Statistics to Know in 2023

How much have you saved for the last year? American savings statistics will give you the insight and the kick you need to start saving more in 2023. ✅

spendmenot.com

 

[Deleted member 2897]

There are a few sites who track inflation using the old formulas before they were bastardized. Using what the CPI formula was in 1980, we’ve been running 10% inflation for a decade now. Cant wait to see what this shows in a few more months.

 

[LibertyTurns]

There are a few sites who track inflation using the old formulas before they were bastardized. Using what the CPI formula was in 1980, we’ve been running 10% inflation for a decade now. Cant wait to see what this shows in a few more months.

Thanks. I’ve often wondered what the real numbers were.

 

[Deleted member 2897]

Thanks. I’ve often wondered what the real numbers were.

This really in a nutshell is everything wrong with our economy. At 10% inflation, costs double every ~7 years. If you’re a working class person, it is exceedingly difficult to find a way for your wages to double every 7 years. So you’re just fighting to tread water, but the water keeps rising. All this funny money printing and holding rates artificially low is the silent working class killer.

 

[Milwaukee]

Very scary.

 

[RonJohn]

This really in a nutshell is everything wrong with our economy. At 10% inflation, costs double every ~7 years. If you’re a working class person, it is exceedingly difficult to find a way for your wages to double every 7 years. So you’re just fighting to tread water, but the water keeps rising. All this funny money printing and holding rates artificially low is the silent working class killer.

Which tells me that 10% inflation is not accurate. I know for certain that my living costs are not 8 times what they were in 2000. Gasoline costs vary wildly, but are 2.5 - 3 times the cost in 2000. Electricity costs are probably 1.5 times what they were in 2000. Average milk price is 21.5% higher than it was in 2000. Going off of an inflation rate of 10%, a person who made $70,000 in 2000 would need to make $560,000 in 2021 to maintain the exact same lifestyle. That is not accurate. Not by a long shot.

 

[Deleted member 2897]

Very scary.

In the latest GDP report for Q1, it said tax revenue was up 14% to a yet another new record high. We should be running massive surpluses right now. It’s crazy.

 

[Deleted member 2897]

Which tells me that 10% inflation is not accurate. I know for certain that my living costs are not 8 times what they were in 2000. Gasoline costs vary wildly, but are 2.5 - 3 times the cost in 2000. Electricity costs are probably 1.5 times what they were in 2000. Average milk price is 21.5% higher than it was in 2000. Going off of an inflation rate of 10%, a person who made $70,000 in 2000 would need to make $560,000 in 2021 to maintain the exact same lifestyle. That is not accurate. Not by a long shot.

It depends on where you live too. You spend a lot more on healthcare and rent and groceries than on gas and utilities. Home prices are up by about 8x since then. Healthcare and groceries are somewhere around there too IIRC. Cost of major goods like cars and appliances haven’t increased but a fraction of that.

 

[RonJohn]

It depends on where you live too. You spend a lot more on healthcare and rent and groceries than on gas and utilities. Home prices are up by about 8x since then. Healthcare and groceries are somewhere around there too IIRC. Cost of major goods like cars and appliances haven’t increased but a fraction of that.

Let's take minimum wage. It was $5.15 in 2000. At that pay rate, pretty much everything would be spent on necessities. According to a 10% inflation, that person would need to make $41.20 per hour just to barely survive in 2021. Is that accurate?

 

[Deleted member 2897]

Let's take minimum wage. It was $5.15 in 2000. At that pay rate, pretty much everything would be spent on necessities. According to a 10% inflation, that person would need to make $41.20 per hour just to barely survive in 2021. Is that accurate?

Based on the numbers I just gave you, it’s probably not too far off. It feels like to me inflation might be 6%-8%.

My healthcare premiums for my family are $27k/year. Rent here for a 3 bedroom is $24k/year. That’s already $51k out of your hypothetical $82k salary. Then you still have food, gas, utilities, car payments, insurance, etc. That’s why I think it’s not too far off that number.

 

[Deleted member 2897]

Based on the numbers I just gave you, it’s probably not too far off. It feels like to me inflation might be 6%-8%.

My healthcare premiums for my family are $27k/year. Rent here for a 3 bedroom is $24k/year. That’s already $51k out of your hypothetical $82k salary. Then you still have food, gas, utilities, car payments, insurance, etc. That’s why I think it’s not too far off that number.

For illustration purposes, if inflation is 8%, costs have about quadrupled since 2000 versus up 8-fold at 10% inflation. I think my estimates are pretty close (that it’s probably a little less than 10%, but not much).

 

[forensicbuzz]

Based on the numbers I just gave you, it’s probably not too far off. It feels like to me inflation might be 6%-8%.

My healthcare premiums for my family are $27k/year. Rent here for a 3 bedroom is $24k/year. That’s already $51k out of your hypothetical $82k salary. Then you still have food, gas, utilities, car payments, insurance, etc. That’s why I think it’s not too far off that number.

LOL! Someone making minimum wage isn't paying $2,000/month for rent. I'd venture that someone paying $2000 in Charleston, SC probably has a household income in the $120k-$150k. I'd also say that their healthcare is NOT $27k/year. As a family of 7 in Illinois, I know my healthcare cost me about $10k/year. While I understand the point you're trying to make, your numbers aren't realistic.

 

[RonJohn]

For illustration purposes, if inflation is 8%, costs have about quadrupled since 2000 versus up 8-fold at 10% inflation. I think my estimates are pretty close (that it’s probably a little less than 10%, but not much).

Look at the poverty level. In 2000, the poverty level for a family of four was $17,050. That would mean that the poverty level in 2021 for a family of four at 10% would be $136,400. That is nowhere near poverty level. Reduce inflation to 8%, and the poverty level would be $68,200. That is close to the median household income in the US. So, by your numbers, the median household income in the USA is at the poverty level?

 

[Deleted member 2897]

Look at the poverty level. In 2000, the poverty level for a family of four was $17,050. That would mean that the poverty level in 2021 for a family of four at 10% would be $136,400. That is nowhere near poverty level. Reduce inflation to 8%, and the poverty level would be $68,200. That is close to the median household income in the US. So, by your numbers, the median household income in the USA is at the poverty level?

[replying to both you and forensic]

Based on what I hear people telling me on TV with how miserable the economy is, it must be true.

I lived in Charleston 25 years ago and paid $500/month in rent. So 8% inflation = $2,000. You won’t find a $500/month apartment here. You won’t find a $1000/month apartment here. My second apartment in 1998 backed up to a pond by a golf course and was an upgrade and was $600/month.

I was referring to health insurance premiums. On top of that, we probably pay another $5k in healthcare costs. If between you and your employer your total health insurance and healthcare costs $10k/year I’d surmise to might be on Medicaid.

 

[RonJohn]

Based on what I hear people telling me on TV with how miserable the economy is, it must be true.

I lived in Charleston 25 years ago and paid $500/month in rent. So 8% inflation = $2,000. You won’t find a $500/month apartment here. You won’t find a $1000/month apartment here. My second apartment in 1998 backed up to a pond by a golf course and was an upgrade and was $600/month.

I was referring to health insurance premiums. On top of that, we probably pay another $5k in healthcare costs. If between you and your employer your total health insurance and healthcare costs $10k/year I’d surmise to might be on Medicaid.

The median house price in Georgia is now $232,144. In 2000 it was $111,2000. That is slightly over double in 21 years. That would mean inflation rate on housing is around 3.5% per year in Georgia. I don't know all of the food items, but bread is about double and milk is only up about 21%. Meat is up greatly, but most of that happened in the COVID shutdowns, not during normal inflation. I would guess overall food costs are close to double what it was in 2000. Once again that is around 3.4% per year inflation.

Healthcare costs have risen much faster than other parts of the consumer price index. There are a myriad of reasons: Technology(Including advanced medicines), pharmacy brokers, regulation compliance, overbuilding, use of medical care for issues that weren't taken to doctors years ago, etc. Total healthcare costs in the US have gone from $1.3 trillion to $3.8 trillion since 2000. That is an increase of about 3 times. That would be an average inflation rate of about 5.4% for healthcare since 2000. Higher than other items, but still not 8% and still not anywhere close to 10%, and that is the one item of the CPI that has increased more than others.

The chart that you posted does not hold up to scrutiny.

 

[Deleted member 2897]

The median house price in Georgia is now $232,144. In 2000 it was $111,2000. That is slightly over double in 21 years. That would mean inflation rate on housing is around 3.5% per year in Georgia. I don't know all of the food items, but bread is about double and milk is only up about 21%. Meat is up greatly, but most of that happened in the COVID shutdowns, not during normal inflation. I would guess overall food costs are close to double what it was in 2000. Once again that is around 3.4% per year inflation.

Healthcare costs have risen much faster than other parts of the consumer price index. There are a myriad of reasons: Technology(Including advanced medicines), pharmacy brokers, regulation compliance, overbuilding, use of medical care for issues that weren't taken to doctors years ago, etc. Total healthcare costs in the US have gone from $1.3 trillion to $3.8 trillion since 2000. That is an increase of about 3 times. That would be an average inflation rate of about 5.4% for healthcare since 2000. Higher than other items, but still not 8% and still not anywhere close to 10%, and that is the one item of the CPI that has increased more than others.

The chart that you posted does not hold up to scrutiny.

LOL. The current advertised CPI is even worse. If you estimate slightly less at 8%, it holds up well in my opinion. Homes where I live are up about 5-6x. Inflation isn’t 2%. It’s a completely hilarious notion. If you have a new iPhone come out at the same price with 2x the computing power, the CPI formula calculates an enormous reduction in cost. It’s a joke.

BTW, you can’t look at healthcare SPENDING. People spend less and hold back when things get expensive. You have to look at per unit costs.