today gold approaches an all time high. it’s been a very gradual and mostly uneventful rise…no big bubble
today the dow approaches 10,000…and i’m expecting 10,300 before it goes tumbling down the mountain. the dow is waaay ahead of itself.
we hear “The recession is over.”
from a literal point of view that is probably true and probably will remain true for the next six months. the government stole a bunch of money from children and upper/higher income earners, and gave it to other people and told those people to buy cars and houses….the economy, through theft, definitely produced more than terrible.
so what will happen with gold and the dow?
gold doesn’t have a dividend (of course the dow’s dividend rate is pretty pathetic too)
it’s not likely they will both rise and stay …risen.
i’ll stick with the metal
i’ll hope that a miracle happens and the government quits spending money….on everything…and then maybe the recession could be over…but of course that isn’t going to happen. the metal looks good…and aside from government owned companies….what would you buy stock in for the long term?
platinum and silver look very, very attractive…maybe better than gold…

most people believe that things can go up up up up and fast and that it will “work” and make sense. they think “i deserve it.”

they will once again discover that greed doesn’t pay off. you can steal/tax money but that’s a crime. after that, there is greed and people think. “what’s a little greed?”

when the market sells off, and it will as soon as next month, probably in a big way….they’ll find out…”should’a taken my profits and been happy.”

May 27 I got the inclination to blog about money and stocks and gold…that’s worth a quick look over.

As you grow your business do remember to keep projects prioritized.

Early AM: BLOG (est. time 5-20 minutes) blogging will ultimately build products, books, etc. and your website’s organic growth to boot

Early AM: COMMENT est. time 20-60 minutes) hit everyone’s site. add useful content to what the person wrote about. you are commenting and you want to win a friend for life. and leave a link!

Early AM: (Next) Read email from Kevin and do whatever it says to do. (1-15 minutes)

Early AM: (Next) Read vox blog from the last moment you remember what you read and find the key points and underline them (you print it all out). This is where your long term life is solidified. (1-20 minutes)

Throughout day: Complete all audio’s. Complete all video’s and build your site through the video’s shown.

Evening: Stop by blog and keep Vox up most of the night. Follow the flow of the next 9 weeks. NOTHING is more important than the relationships you establish. There is NO system that can compete with relationships. None. I kid you not. The money ….the life…the good life….the life you want is in the people you meet here.

Consumers (human beings) are more “optimistic” about the “economy” than they have been for a few months. Good for them. What is happening in the REAL world?

1) Home prices got hammered. Here in Minneapolis home prices are back to where they were in 2001. That’s not “average” that’s how much did THAT house sell for in 2001? $300,000? That’s what it sold for yesterday. That’s 8 years. More expensive homes are doing a little less poorly. All told, a $300,000 house in 2006 is worth $200,000 today. Interestingly houses are moving FAST in St. Paul, staying on the market for 36 days. Now that’s just here in MSP. Throughtout the USA, house values continue to get hammered. (some places have moderated like Denver, Dallas, Cleveland and Detroit) But there is still plenty of room to drop for most of the country. Las Vegas and Phoenix home prices have been cut in HALF in the last three years. That’s flat out amazing. And when you look at the chart of sale prices of same homes, THEY HAD to come down, a lot. They still haven’t fallen in line with inflation over time, but they are getting closer.

2) The stock market has had a brilliant display of irrational exuberance. For absolutely no reason the market has added 2000 points without a correction or fall into hell. Truly an impressive streak. It will end soon. Could the market hit 10,000? Certainly. It’s all what someone will pay for it and of course the government is PRINTING money to PAY for the market so the government will soon OWN companies doing biz in INSURANCE, BANKING and AUTO’S.  (How ya’ feelin’ about that?) So do I think that shorting the market is smart today? Not a chance. Don’t get me wrong the market isn’t worth 8500 which is where the Dow is. It’s not worth CLOSE that amount. BUT you have people buying BECAUSE they are FEELING BETTER. Emotions trump intellect in the short term….in the short term….in the short term…

3) And what of Gold? Gold/Silver Stocks? I’ve kept my kids in Gold stocks and emerging market stocks for, well, without change.  I continue to have my “tax me later at a higher bracket/401k accounts” in gold and gold stocks (along with some Citibank). Gold’s at 950 an ounce but all the reports I see are that gold coins are selling at a blistering pace.  Gold should logically rocket into new highs and soon. Will it? I haven’t a clue. I’ve got about 20% of my net worth in gold/gold stocks.  Everything else is in FDIC backed stuff….because the FDIC is helpful? No, because money has to be SOMEWHERE. What do I tell my friends to do? 

a) have their own Coffee table business. Part Time/Full Time. Whatever. DO IT. This is far and away the most important thing you can do. If you rely on a “pension” or “social security” or “medicare” or Obama or a State or ANYONE but yourself to take “care” of you, you have lost your mind. Grow up. Be responsible. Get IT together.

b) keep cash on hand. keep gold on hand. speculate 10% of retirement in gold stocks. They’ve already had an amazing run this year returning massive profits. AND be prepared to sell stocks when they go DOWN because ANY STOCKS can crash at a moments notice. In the old days (like 2007) consumers were told by planners that their retirement accounts were to be monitored quarterly. I have different advice. MONITOR THEM DAILY. Decide in ADVANCE what is an acceptable loss on your gamble and SELL when you hit that number. SIMILARLY, decide what is an acceptable win/gain and SELL when you hit THAT number. Do NOT get greedy. You’ve made 30% on gold stocks this year. The Dow/SP 500? ZERO.  You did right. You bought logical stocks when they were dirt cheap. Good job. NOW WATCH your money lest someone take it from you.  

c) Bank stocks are priced at what they are worth. Almost nothing. But the GOVERNMENT is taking OWNERSHIP in banks/insurers/autos. You figure it out. The government SCREWS UP EVERYTHING….ALL THE TIME, but IF they got this right it’s worth having 5% of your money where the government has their new pieces of paper.

First and foremost, take care of yourself in the NEAR TERM. If you have less than 100k to invest, THINK ABOUT IT. That is two years of income when you pull that from the 401k and almost certainly LESS because of new taxes that will come in soon.

SPEAKING OF WHICH…..TAXES…. What a surprise, the government receipts for April were $134 BILLION less than they “expected.”

WHY?
How stupid is the government? They are so stupid they hire people who brought down the world’s economies…from Goldman Sachs and similar and let them RUN the SHOW.  So they will TAX the small business person and people who work TWO JOBS EVEN MORE. And they will GIVE that money in exxchange for NOTHING to people of their choice.

You figure it out. How long does that party last?

Not long….

Is there good news?

Sure.

All of it’s good news if you are invested correctly and have friends and family who care about you and vice versa.

Kevin Hogan

www.kevinhogan.com

The Justice Department here in Minnesota has put online gamblers “on notice.” They are coming.

What is the bottomline: The Justice Department is using a law from 1961. (I was born in 1961) that they claim says gambling online is illegal.

I’m sorry I don’t remember having access to the Internet in High School.

They are telling Minnesota Online Gamblers that the act of gambling online is illegal.

They are INSTRUCTING ISP’s to BLOCK access by all Minnesota based computers to about 200 gambling websites.

They haven’t done their homework. There are thousands.

Now, Minnesota is where I reside and have the pleasure of paying taxes so that The Justice Department can catch criminals from doing things to hurt people.

But the Department says they have no idea how much gambling online is actually happening.

Really.
Do they know how many murders took place in Minnesota last year?
Do they know how many women were raped?
How about a good guess at how much white collar crime?

So they have data about all real crimes but they have no idea about imaginary crimes.

Fascinating.

Must be hurting a lot of people.

I find things like this interesting because I be on the Super Bowl this year. There is no law in the United States that makes gambling online illegal. In fact Barney Frank has been working on making it legal. Maybe he enjoys poker too, I don’t know. He’s right on this one.

Let’s look at a few quick arguments against “gambling” both online and in general.

1) Gambling is unregulated…………….(Not my fault.)
2) Gambling is sinful………………..(For some religions)
3) Gambling includes games of chance where the player loses more often more than they win.
——–Life Insurance. A HUGE gamble
——–Insurance and warranties of ALL kinds. A MONSTER gamble.
——–Stocks, futures and options…all done on line where the probability is that the gambler will lose…..But this is “different” because the government owns banks and companies that profit from gambling in stocks, futures and options.

And then one would have to determine just what gambling online is. “Any time you put money at risk and can lose it,” perhaps?

So all the civilization games that the kids, like my 11 year old play that cost money, money constantly invested into the online civilizations where by both skill and chance the kids (and adults) can actually win or lose PLENTY of money. That would not be gambling because?????

The biggest gambles people take (the highest probability of loss putting up real money for a chance to win money) are life insurance, futures, options, warranties….yeah…. nothing in the poker/casino market comes close. Nothing.

Yet I can go to Ameritrade right now and pop $1000 on whether gold will go up today, or not and cash out or lose it all in 30 seconds, or 3 hours.

The very notion that a government agency has the audacity to attempt to tell Internet Providers not to allow Minnesota residents they can’t access whatever they consider gambling sites to be, rings of a far greater crime. Censorship. Sounds like China to me. Not that that matters. After all, the guys at the Justice Department are just “doing there job.”

So be it. Perhaps they would be willing to list just what forms of gambling online are illegal so one could have an understanding.

Can I gamble on a stock? An option? Can I play the futures market. I defy ANYONE in the Justice Department to explain to me the difference between betting on the futures market or buying/selling options and say blackjack or poker.

I can’t WAIT to hear not a list of criminal activities like “craps” or “pai gow poker” but the RATIONALE of WHY that is gambling vs. other forms of gambling that actually destroy people’s lives and retirements.

The argument I hear is that there is “an underlying security” in stocks, futures, etc. etc.

Cool. So the $100 TRILLION of derivatives are NOT gambling? The chips they play with that are NOT US Currency are not illegal?

Perhaps the Justice Department would explain THAT….to anyone.

…oh you could become “addicted” to “gambling.”

Yes you can.

I know plenty of people who trade stocks, buy stocks, futures and options in the hopse of winning more money. Most lose. It’s the nature of gambling. Plenty become addicted because of the rush involved in winning.

There is of course no difference in the feelings. The reward centers in the brains don’t cease working because a game is in the futures market instead of the stock market.

Here’s a question:

How much did Minnesota gamblers lose last year. I’m going to say $50 million as a guess.

How much did Minnesota residents lose playing the markets in a way that it has utterly destroyed their futures?

I’m going to say $10 billion.

I would be very happy to use this space to interview any employee of the Minnesota Department of Justice explaining just WHAT they believe gambling is and what it is not and create a definition where someone would know whether they were gambling or doing something illegal.

After all, we get the idea that we can’t walk outside and shoot our neighbor. That is a fundamental principle. Simple ways to understand.

So what would the RULE be for gambling? How could a citizen KNOW?

If someone buys a warranty on a computer at Best Buy the return on that gamble is about 10%. If you gamble on a hand of blackjack your return on the gamble is about 48%. If you buy futures you could argue it’s 50/50 but give me 10 minutes and I’ll show you that is not correct…at all.

People can watch TV online, they can do anything oline but I can’t play poker? Because…………………………………………someone “said so?”
What was the criteria?
What is the principle?
How do you draw conclusions from the principle?

Are citizens really going to stand for having the DoJ enter their home because they THINK someone is playing “cards” online?

WOW.

That is Russia 1975. China 2009….Wait, no it’s not. It’s far worse than anything I’ve ever heard.

To call something criminal when no one is harmed is *wrong.*

And if the are going to call it games of chance, then please tell me that they will contact the government and tell them that they can’t let “investors” play the markets, or futures markets…. oh wait…that won’t happen…because,

there is no rational principle involved.

Only a game to take government away from what it should be doing.

PROTECTING AND SERVING her citizens.

Not trying to determine the entertainment in someone’s home.

See how big this is?

DoJ readers: post a comment here on this blog, I’ll instantly post it so residents can gain understanding immediately. Particularly me because I don’t do illegal stuff. But by censorship without cause of any kind, the government commits a huge crime. We become….. no longer a free society.

Each month you find out what the comparative value of homes all across the country are. In a survey of sales of existing homes, The Case Shiller Index gives us the answers to the questions we must have.

The index makes adjustments for houses that were neglected or had a lot of remodeling, so they don’t count for big gains or big losses in the index. The index only matches a home and it’s prior sales price.
Across 20 cities, in October 2006, the value of the index reaached it’s peak of 206 and has been falling since then, now at 143 after including February sales. January finished at 146.

Roughly speaking you could look at that and say the average house in America that was worth 206,000 in 2006 is now worth 146,000. That would not be exactly correct but it makes the index easier to understand.

So a house today is worth 70% of what it was just 2 1/2 year ago. That’s a pretty impressive drop.

In Minneapolis, where I live, the same house is now selling for the same as it did in April 2001. The index peaked here in 2006 where it spent most of the year around 170. So today that home is indexed at 116, or about 69% of it’s peak value.

In Las Vegas the index peaked their in 2006 and was at about 234, now 121. So the sales price of the average existing home sold in February compared to that same home in 2006, just 2 1/2 years ago is way down. That house is now sold for just a little more than 1/2 of what it was

You can also use the index to compare what the average price of a home sold in San Diego is with one sold in Las Vegas against one sold in Chicago. Buying a house in Las Vegas is going to cost about the same as it does in Minneapolis. In 2006 that wasn’t the case.

What’s particularly interesting is that these numbers continue to impress as to just how bad things are in the real estate market.

i.e. a home that one bought in April 2001 in Minneapolis is now selling for the same price 8 years later. And inflation is not taken into account.

Why didn’t the media report that fact this week? Instead they reported that the rate of decline was slowing down. Wow. That’s like getting paid $50,000 per year in 2006, then $35,000 in 2009 and then the pace slows down so you’d be earning say $33,000 and that is supposed to be a sign of better things to come.

Well, it certainly is humanly possible…yes, that is true. The fact is however that home prices are going down.

Why does this matter?

Because the government is doing everything in it’s power to get consumers, particularly those that are poor, to buy homes. They are offering tax credits and all kinds of short term perks to do so.

However, they are encouraging the precise behavior that was one of the major causes of the recession we are in today.

So, while everything could look better from the vantage point of a decelerating price in homes….and more homes could be sold to people on the fringe, on the edge of able to afford the home…in two years when the tax credit money is spent the person still has the same productivity and buying power in the same country. There is a short term blip of lower priced homes going up, perhaps, maybe, in “value.” But when the tax credits (money stolen from other taxpayers who could afford a mortgage without a likelihood of default) aren’t there….unless they are going to continually steal money at a higher rate from those who pay more taxes already…

And of course that is possible.

And of course that would get a President re-elected.

We’ll see how things play out. For now I’m fascinated.

www.kevinhogan.com

Week Two.
Some of you guys were amazing last week. Let’s get your picks in tonight for the Friday close of the Dow. Now. It closed this week at 8076.

Gold was up a chunk and I rather think it will be again.

The Dow closed at 8076.

John Ho was off by only 82 points, he predicted 8158

Lynn took a stab at 8000 and was off by just 76.

Darryl? 8007, missed by only 69.

Duane predicted 8020, off by only 56.

and the winner was PHIL with 8102, missing only by 26. That’s pickin!

 

Pleasantly gold jumped to 914 and it was a verrrry good week for the portfolio….

Back Sunday for next weeks picks!

I was visiting blogs today. Visited Rod Schulz who had an interesting poser this week. I won’t replicate. You can check it out yourself. Rod is a smart guy.

Two things became evident as they referred to people’s perceptions of my thinking on the market. Here are my responses to that “thinking.”

First, there aren’t a lot of people who should have all of their money in gold. (Of course just as you say that it could go nuts, but really, it probably won’t for a few years.)

Second, people can’t evaluate their life situation based on flawed modeling.

Planners (not Rod) want to test your risk tolerance.
Baloney.
I went in the bank the other day, and I sat down with a banker telling him to stash some of my cash in other banks around the country that were offering higher returns. All of a sudden he pulls out a risk assessment tool.

I asked him, “What the hell do you use that for?”

“We do that to assess your risk aversion.”

“Insane. Are you saying that you put people in crappy investments because of how they FEEL INSIDE?!”

“Well know, we want people to feel comfortable.”

I explained in voluminous detail that he was not cocaine. His job is to place his clients in investments that have the highest probabilty of return over the near term. Right now, that’s CD’s and maybe government bonds and bills.

“You should have most of your money in stocks.”

“Really, can I ask to see your portfolio and how you did in 2008?”

He knows how I did in 2008 because I showed him Q/A at my website for the last few years.

“Well that’s confidential.”

“Uh huh. Listen, Steve, it was great seeing you, didn’t mean to pick on you. I’m averse to people who don’t see trains coming and stand on the tracks….and there is another train coming.”

Planners need to invest your money where it is going to make you money with the highest utility value. (I’ll explain that later in the week, it basically means highest probability of best return over some period .)

I noted in a comment on Rod’s site that most people should be 10% in gold, 10% in cash in the mattress (safe in the ground), 10% in stocks with an average PE of <8 and 70% in CD’s of 6 months, 1 year and 2 year maturities.

But then that’s people with a million dollar net worth outside of their home.

But life doesn’t work on percentages. Someone with a million dollar net worth doesn’t invest and shouldn’t invest the same way as someone with a $50,000 net worth. Someone who is 80 years old MUST have their money very differently placed than someone who is 30.

If you take out your home from the picture, add up your assets, subtract your liabilities and see what’s left:

Make Rod your financial planner and have him invest logically.

Stocks are extremely expensive right now.

There is no reason to believe they will return higher than inflation for quite some time, so what is the point of being in stocks? Save the gambling for Vegas where there is a cute cocktail waitress bringing you a drink.

Your net worth outside of your home is $50,000 and you are 50 years old. You are screwed. You MUST have your own Coffee Table business. That 50 k is one years worth of income because it’s probably in a 401k and when you pull it out you’ll have $30,000 instead of the 50 that it looks like. At age 50, you need to earn $100,000 annually with your own biz, stash 30,000 of THAT income in 401 k sheltered choices. and those choices would be Certiificates of deposit at the bank for the most part. you will need cash to be safe while you invest in yourself in your small biz from home.

Does it matter if you have all of your money in cd’s or all of it in stocks or gold? Not really. You have $50,000 in the above scenario which is essentially nothing. It’s a rainy day fund….a very short rainy day. One disability, layoff, firing, medical situation for one of your kids or adult parents and that cash is flicked off the face of the earth in an instant.

A good financial planner will help you place that money at a fixed rate of say an annual 1% of assets under management.

What if you are worth 100,000 after your house?
If you are 20 that’s good. If you are 50 you have two years of stash. Again, it’s not that important. Your greatest loss probability is going to be in stocks and bonds going forward. (tough to argue platinum/gold will be lower than inflation in 10 years)

but if you have $500,000 after your home that’s different. now you can gamble some of that money on the market. find that basket of stocks that have a PE of < 8 or 9 and pop $50,000 in there. THOSE stocks might actually return OK. But to invest in the market with the PE where it’s at today, just makes no historic sense. Stash it in cash equivelants.

A note of caution: I just put a chunk of money into government bond fund. It’s 401 k money, but this is a SHORT term (3-6 month) trade in a LONG term setting. obviously keeping this money in this kind of a fund for the long haul is insane as a /billbond prices are through the roof. as soon as interest rates start to jack up your principle is going to crumble. most people don’t realize that and they think they are safe in bond funds. you’re safet buying a bill or a bond and taking the interest payment. same is true for CD’s. They don’t pay much but they aren’t supposed to. They are there to keep your money safe that you worked hard for. I will be shocked if i still have money in that specific fund in six months.

Why am I there now?

Because interest rates are under Fed control right now. They are buying bonds and bills reducing the Obama Supply, and that will force rates to stay down making some gains possible in the value of the bonds, not the interest rate. At least that’s the LIKELY scenario for the rest of 2009.

So where does gold fit in?

Well in a disaster, where currency becomes worth less or worthless that’s where gold/platinum/silver come in handy.

It’s hard to think in terms of percentages in gold. I think people should have 6-12 months of INCOME equivelant in gold. so maybe $50,000 or $100,000. That’s 10% of a net worth of a $1,000,000. If someone was worth 2,000,000, you might want to have MORE gold, say 20% in metal. but at these levels investing becomes more complex.

And of course the thinking seems to conflict right? We just said that people should have 70% in CD’s and if someone’s net worth is $50,000 and they have $35,000 in CD’s you can’t have $50,000 in gold.

so what to do?

It depends.

I’m very risk averse.

Gold has tripled in value in the last decade. Take out inflation and say it’s up 250%.

The stock market has gone down 1/3. After inflation, you have 1/2 of what you started with.

Stashing it in CD’s would have kept you even against inflation.

And inflation IS the great enemy.

For the last four years it was pretty obvious a disaster was about to occur. Everyone with an understanding of the markets was ready for it. They either got mostly in cash or gold. They are fine.

Today, as with the last two yeas, ….against inflation, the markets are likely to go down….that means they could go UP 10% per year vs. 11% and thus lose 1% even though the Dow is “up”, make sense?

Just like this morning in Coffee the market was predicted to drop. Again, it’s fairly obvious. Now, that said, you can’t predict markets short term. This week simply looked terrible at the end of last week.

It’s gambling and it’s interesitng and fun but it’s gambling. And you can’t stay invested (in stocks) for the long term because that doesn’t really pay off over time. After expenses, inflation, taxes and dividends, the best any 20 years period has done since 1900 is 4% return annual.

See www.crestmontresearch.com for the easiest to understand, literally color coded charts you’ll ever see.

Ed Easterling is the scientist who runs the site. Like most of the sharp minds he called the disaster of 08 with great precision. he indicated last month that the market was due for an uptick and there it is. The way he measures PE it’s about historically average. His assesment is a bit more optimistic than mine but one thing is for sure, if you spend an hour looking at the STOCK MARKET section of his website you will become educated in the SCIENCE of the market, and not the broker view of the market. And it’s EZ to understand because it is literally color coded.

The cool thing is that ed doesn’t care if it goes up or down. He’s a scientist. And an honest one. He prints the numbers as you have never seen them. Simple, straight forward and with no emotion, simply shows that the assumptions about big returns in the market were never warranted.

OK, it’s 2 a.m. and it’s time to call it a night.

If you have 100,000 don’t be stupid. you lost 1/3 last year…please….don’t lose another 1/3 this year….

You can play. Each weekend you can post a comment on my blog telling the world what you think will happen with the market. We’ll say the DOW.
You have to say the direction and the number of points you think the down will be up or down from the Friday close.

I go first this week.

The Dow closed at 8131.

People have been buying the market for a month and a half.

I could predict up or down. The trend is clearly up. Marty Zweig always said don’t fight the tape.

However, Kevin Hogan said when things look to good to be true, go the other way.

Getting to 8100 from 6500 was quite a feat. The market has momentum.

But I’m predicting the Dow will have a very unstable week with two up days, pretty big and three down days. I predict the market will close at 7700 this week.

We’ll play the contest every two months. You have to participate in 7 of every 8 weeks minimum. The number of points you are off each week will be tabulated and the person with the lowest score at the end of the contest (June 19 at the close) wins. Wins what?
Bragging rights to being number one at calling the market when everyone else hasn’t got the guts to put it out there in public.

So go ahead, PLAY and have fun.

 

PS Bonus predictions.

Gold closed at 868 yesterday. I think it will stay very close to that by weeks end perhaps pushing 900. I don’t think it will go down much more. My best guess is the horrible economic news of last week will kick stocks down and gold up.

Also, don’t be surprised if we have one really bad headline day for the market this week, i.e. “Dow down 500+ points on heavy trading….”

Yes indeed, who else wants to have MILLIONS of dollars to play with by investing in the stock market?

After all, today we set a record for foreclosures, the economy has the most unemployed in two decades and there is absolutely no good news in the world of money and business.

BUT WAIT: My Citibank which i bought four weeks ago, has DOUBLED in price. Yes it has. The idea behind buying Citibank at $2 was that it is now owned in part by the government and because the government runs the show, it is a fairly logical short term play.

And guess what?

I WISH I would have bought 1000 times as many shares as I bought.
Had the stock gone down to $1 instead of up to $4 I would “wish” today that I had not purchased the stock in the first place.

OK: The reality is that you are not going to earn millions from the stock market.
You aren’t going to earn enough to retire on (unless you plan on retirning a year or two and then passing away).
Your friends, colleagues and various advisors will not accomplish these well publicized goals either.

Want proof?

Ask WHOEVER wants to control your money to SHOW YOU their PERSONAL RETIREMENT PORTFOLIO.

Fact 1) They are broke. That means they have less than $100,000 stashed if they are under 50 years old. And that means they have saved less than $3000 per working year of their life. I’m not going to say they are idiots…just that they believed their various companies nonsense.

FACT: If your financial planner/buddy/uncle who is a “really smart investor” can’t show you $200,000 stashed between age 50 and 60 (now you’re up to 4 whopping years of retirement income) and he can’t, he isn’t the right person to be listening to either.

YOU WANT TO HAVE THE GUY WHO HAS EARNED $50,000 per YEAR in his portfolios and last year he didn’t lose money because he was smart enough to stay OUT of the market when it was insanely expensive.
RIGHT?

This is pretty common sense, kindergarten simple right?

People often save 2-8% in their retirement accounts at the office. How’s that working so far? It doesn’t work. Don’t even wait for the next paragraph.

My Mom used to tell me to save at LEAST 10% of my income each year. (She was a wonderful human being, passed away almost 11 years ago and was in debt.) Most people don’t do that…save 10%, but I’ll tell you if you would have listend to my Mom you’d only have about 5 years of retirement income stashed, which is ok if you retire at 65 and die at 70.

But people love to gamble especially when it’s called “investing.”

The game goes like this: Gamblers like me who love to play Poker and Blackjack and trade stocks for fun, win or lose we know one thing: We are gamblers.

Gambling becomes dangerous when you play with TOO MUCH MONEY in proportion to your income. My rule of thumb is that I get 10% of my income per year to PLAY with. That means trade stocks, play blackjack, etc. etc.

That’s the same as some people going to the movies (expensive movies), traveling, etc.

However DENIAL is what happens when the gambler tells you “I will win.”

There is NO WAY any intelligent scientific gambler can tell you he will “win.” It’s all statistics, probabilities, percentages and FUN because you will end up with less than you started.

Now, take a look at your retirement “portfolio.” I have a “retirement portfolio” which I gamble with….I’m sorry…invest with.

See your “portfolio” is PRECISELY what is known as a bankroll to a blackjack player.

A bankroll is what you will play with. Double your money, you put everything in your pocket and play one last hand. Win? Keep going at the same unit. Lose your bankroll? Go see a show or go to dinner or go to the pool or go to the Playboy Club.

“Investing?”

Same thing. you take 10% of your income and HAVE FUN. Win, lose or draw you become more knowledgeable about the world you live in and misspell the world knowledgeable probably….

You become a wiser person realizing there is NO FREE MONEY THAT IS NOT EARNED.

So if you make $100,000 this year, take 10% and write it off. Put it in an account called retirement and go have fun. Buy, hold, sell, trade. Whatever. LEARN.

Here are the lessons: That $10,000 will grow to become next to nothing more than $10,000 whether you put it in the stock market, bond market, treasury bonds or pretty much anything.

20 years @ $10,000 is $200,000. Adjusted for inflation and take out all the costs of the company running the retirement plan and TAXES when you TAKE THE MONEY OUT and you have four years of income. Maybe 5 if you live on the cheap.

THERE”S NOTHING WRONG WITH THAT.

But the illusion of earning 10% on 10% and having it grow into a mountain of money is the same as believing that God is a slot machine and reaps green on those he loves….

…the same as believing there is such a thing as PUSH BUTTON MONEY.

Can criminals turn pennies into dollars?

You bet.

BUT

They play a risk game in addition to a money game.

IF they get caught, they go to jail and don’t get to play the game any more.

Your FUTURE is secured not by the hopeful “growth” of your investments, but by THE SAVINGS from your EFFORT.

The nearest thing to push button money is getting money while you sleep.

How do you do that?

You set up systems that allow you to get paid more than once for the things you do.

Write a book. Sell 100 copies today, you get 100.00. Sell 50 copies in Turkey tomorrow and you wake up with $30 in your email.

There are a number of legitimate ways to LEVERAGE KNOWLEDGE and EFFORT and turn it into your SECURITY.

Have fun in the markets. They are fascinating. You follow, you play, you enjoy, but you secure your life with money you do NOT GAMBLE (and gamble = invest). THAT is the money that will take care of you for the rest of your life. This money comes from money you SAVE (Saving is not gambling/investing) and money you earn while you sleep… the money you EARN and because of the VALUE you generate you replicate yourself and get paid over and over for having done something once.

Make sense?

Counterargument?

Happy to listen to them all. One requirement: What is the balance in the 401 k/IRA accounts.

The market was up today again on the worst news of the year.

It never ceases to amaze or be fascinating!

YOU are YOUR FUTURE.

BET ON YOU.

DON’T BE ON CHEVRON (though Chevron is a good company for the long haul…for say 2% over inflation per year)

BET ON YOU.