Ok - you have to take it as a 'given' that our economy is not going to ever be what it used to be, so how should we adapt our strategies to protect ourselves?
These are days when one should be concerned with the RETURN OF THEIR MONEY, NOT THE RETURN ON THEIR MONEY.
IOW, in the past, I always rated the different investment vehicles according to the ROI (Return on my Investment), but today that is not the case. I'm mostly concerned with where can I put my assets so that the government can't steal them.
So,
No one really knows what to do with certainty.
No budget passed for three years. We are going off the tax cliff. Businesses can't plan, can't hire, can't expand, because they have no clue as to their tax liability in succeeding years.
With a corrupt regime such as this one, anything, including blatant asset confiscation is always possible.
Commitments to the bond market are a bit late since interest rates are near "0" for Fed Funds, and short treasuries. Current market betting suggests the 30 year US bond will drop to around 2%!!! Can you believe a 10 year treasury at 1.68%?
Now would you lend money long term for 2%?
No, nor would I.
How many retirees have worked a lifetime, accumulated say,..........$1 million in assets and can afford no risk, but their million will only develop around $20,000 a year in income, with the tax rates on that income going up!! Just a few years back, one million in treasuries would generate, $50,000, $70,000 annually and more. Many retirees are being FORCED to go back to work and to lower their standard of living.
Think about insurance companies which are required to keep a percentage of their assets in treasuries. Their rates for policies are based on the expected return of their treasury issues. And then banks, same requirement.
Want to know why banks are not making loans? There's your answer!
The Fed thief, Ben Bernanke, is buying trillions of treasuries to drive down rates with IOUs. money created from thin air! How long can this go on?? His original design was to reinflate the economy driving up prices, especially homes, which would address the default and bankruptcy issue. His maneuver failed, as did the quantitative easing ploy.
It will go on until THE MARKETPLACE stops the federal government by lenders refusing to show up at treasury auctions. At that point or before, they will focus on other assets such as the trillions in 401k, IRAs, Keoghs, SEPs, Roths.
Expect a move to attempt nationalization of these retirement assets!!
These are perilous financial times.
What has history taught us?
- Own stocks of solid companies paying dividends which are generally assured to continue
- rental property
- land
- a low profile profitable business
- have NO debt
- a few treasuries, even though they yield little
- tax frees for those in the high income brackets
- gold, silver coins, etc.
One MUST be diversified!
The asset allocation of the above is predicated entirely on EACH individual. No two will be the same.
This last bullet list is precisely how people survived in all the countries that failed financially. Europe is littered with such examples, as well as Central and South America! Remember Weimer Republic Germany and their hyperinflation which gave rise to Adolph Hitler?
Long term plans cannot be made. Only short term, with provisions for instant revision!
What am I missing? What other strategies should we be using NOW?
