OPENING MONOLOGUE....Brinker comments: It's "political fiction" to claim the middle class has shrunk...a recent Federal Reserve Study says that 70% say they are living comfortably........It depends on education - most lower-class have only high school or less.......It's hard to find the middle class in Mexico.....Artificial Intelligence (robots, etc.) will replace between 11 - 25% workers in the next ten years...Washington DC is not working on this problem......
THANKS TO dRahme, here is the clip of excerpts from the opening monologue above.
STOCK MARKET....Brinker's didn't talk about the current stock market action from last week. (It was up slightly after recovering from a one-day correction.)
Honey EC: According to the May 2017 Marketimer, BB is still fully invested and thinks any correction will be contained and "health restoring." He does not believe the market is over-valued and still recommends dollar-cost-averaging - and predicts the S&P 500 can trade "well into the 2400s." He talked about his year-2000 move to 65% cash and said the market at that time was "grossly overvalued," and (paraphrase) said it's different this time. :)
VTI VS VTSMX......BB explained to a caller that VTI is the exchange-traded-fund for the total stock market.
Honey here: Brinker did not explain to Brian from Illinois, who recently graduated from college and was going to become a "professional" loan writer, that the only important difference between a total stock market mutual fund and VTI is that exchange-traded-funds can be traded in real time, and regular mutual funds transact at the closing price of the day.
INTEREST RATES.....BB comments: Interest rates are up 1% off of the all-time-lows....The FOMC is having a two-day meeting in June (he did not say if he thought they would raise rates or not).
BOND FUNDS.... Caller Connie from Kansas City asked about T.Rowe Price bond funds. BB responded that he had no recommendations for their funds in his Marketimer investment letter. He then warned her to look for funds that have a two-year or less duration.
Honey EC: It's been FOUR YEARS since Brinker made his big move to very low duration bond funds in his income portfolio and his balanced model 3 portfolio. At that time, he sold all GNMA, (and for good measure, sold all NASDAQ holdings). In my opinion, very costly mistakes for anyone who followed the advice - especially if they paid taxes on their gains.
WEEK AHEAD....New home sales report...Jobless claims have been very low for a couple of years....estimate 237,000 - record low levels....GDP: Q1 is expected to come in revised up to 0.8%.... Looking for a rebound in Q2. Thanks to dRahme, more details of next week's expected reports.
FRANKJ'S MONEYTALK GUEST-AUTHOR SUMMARY
Alexandra Wolfe, author of Valley of the Gods – a Silicon Valley Story, stepped aboard the StarShip today for a quick spin on this Sunday, May 21, 2017. Ms. Wolfe is a contributor to the Wall Street Journal with a column called Weekend Confidential. She is also the daughter of the well-known writer Tom Wolfe.
I thought the interview was a bore. I don’t really care whether the monetary success leads to hubris. I don’t care that some of these Silicon Valley zillionaires are investing in “longevity projects,” i.e., technology to prolong life. The “Gods” in the title refers to Silicon Valley big shots that things seem to revolve around.
Bob asked her twice why she wrote the book. She gave basically the same answer each time which was she got interested in Peter Thiel’s challenge to university students to leave school and do something else, develop software or whatever. He gave $100K to each former student.
Bob brought up Steve Jobs of course. He and the guest agreed he was an innovative genius.
Reaction to the book: She ended up describing “Cougar Night,” in Menlo Park where older women chase after younger men at a weekly event. The reaction was some people didn’t like being included in that part of the book.
I tuned out before the interview was over.
Honey here: Thanks for listening as long as you could, Frankj. It became more ridiculous at the end when she started talking about researching the field of freezing people when they die and bringing them back to life hundreds of years from now. She did make the statement that so far, none of the super rich have done it. Really Alexandra? And why not? Duh!
I took a look at her book ratings on Amazon, and they are extremely low - don't see that often on "financial" books.
HONEY'S FUN FACTS: Today there were only two self-proclaimed multi-millionaires, but several who have reached the Land of Critical Mass - thanks to Bob Brinker. :)
Radio Stations:
710KNUS Denver
WNTK KION 1460 Monterey
Brinker's guest-author was Alexandra Wolfe: Valley of the Gods: A Silicon Valley Story
94 comments:
Caller has a degree in financial management and doesn't know what an ETF is. Golly!
Bob's reply to the lady with the underperforming muni bond fund in her tax-privileged account made me chuckle, where he said "we're starting with a million dollars". It reminded me of the old Steve Martin joke (on one of his live albums from the 80's) where Steve says, "It's EASY to be a millionaire. I'll show you how. First, get a million dollars..." Cracks me up every time!
Berkowitz, NYC
The Caller with a Financial Management degree must be a millennial. God help the USA. Jack K. In Lakeport
Hey Berkowitz: Didn't you used to be a mass-murderer or something in "an earlier life"? Isn't finance kind of boring in comparison?
I'm surprised the woman with a million or so originally invested in closed end fund muni fund IN HER IRA felt lousy after Bob was through with her. He's over the top with some callers, on mistakes they were led into by so-called advisors.
Connie in KC: T Rowe Price has some good bond funds. TRBUX is a very short duration fund whose price varies by 1 to 2 cents week to week.
.
Frankj....The caller (Veronica from Texas) that invested a cool million in those muni bonds (in her 401K) was really raked over the coals by Brinker - as you said.
Brinker told her to sell, but I question whether that was good advice in her case. She clearly stated that she bought them for the dividends and asked him if she should keep them for that reason - even though she had some losses.
Considering that the losses are not deductible, and she clearly wanted the divvies, I question Brinker's knee-jerk reaction. He gets real emotional when someone says they have advisors other than him - and loves to get them "fired."
Wouldn't you fire an advisor who placed munis in an IRA?
.
Mad as hell and Honeyone.....
.
The Governor and the Legislators of are up to no-good in Sacramento again! No wonder this state is known as Corrupt-a-fornia.
.
Everybody knows this state has a retirement funding crisis. To fix, as part of the 2017-2018 budget, they want to borrow $6B long term, from existing state short term savings/financing accounts, starting at 1.3% interest, to give to ( prop up? ) Calpers, who will invest it expecting a 7% return. And they want do this when the market already at an all-time high, from a multiyear Bull Run.
.
IMO, there is so much smoke in this plan and even mirrors won't help it work.
.
The S&P 500 has gained 11% post election but the last three months find SPY trading within a narrow range of plus minus two percent on lighter volume.
With earnings season behind us and the possible passage of tax reform pushed down the road, don't see a catalyst for significantly higher equity prices over the summer. Not to mention the self-inflicted wounds coming from the Oval Office.
“Cougar Night", you've got to be kidding. Stories like this are similar to high school and college escapades, mostly BS.
OPENING MONOLOGUE....Brinker comments:
"Artificial Intelligence (robots, etc.) will replace between 11 - 25% workers in the next ten years...Washington DC is not working on this problem......"
So, right off, it hits me in the face. How does the expansion of Artificial Intelligence become a problem for Wash. DC to fix? If it is a problem, let the creators of "A I" fix it. Experience might show that the "governments fix" of a problem is just as bad or worse than the problem itself.
Vigilant
The long and short of it is that one should look at total return! That is basic investment savvy. IMO Brinker was correct!
Gabe
Vigilant: I thought the same thing. Bobby thinks Washington should be "solving" the problem of temporary job displacement caused by technology? Haha, you must be kidding. How about reducing the red ink first?
What happened to all the buggy whip makers 100 years ago? Or all the men with picks and shovels who lost their jobs because of the invention of bulldozers and earthmovers? Did government "fix" all of that?
Nearby Lake Ontario is at record high water levels thanks to the way-above rainfall we've had this spring. Lakeshore homes and those within numerous bays are being destroyed by waves and high water. There is nowhere to pump the water to. One homeowner on local TV the other night said that "They have to do something about this."
Huh? The government should make it stop raining throughout the Lake Ontario drainage basin? Good luck. This is how the average American thinks now: Government can solve anything. Hahahaha.
Yaetmo: What you described sounds like financial alchemy.
HUGE UGH!
One of the Richest Real Estate Investors Thinks the Retail Apocalypse Will Leave Most Stores Empty
https://www.thestreet.com/story/14126909/1/one-of-the-richest-real-estate-investors-thinks-the-retail-apocalypse-will-leave-most-stores-empty.html
JC
I enjoyed listening to Brinker's broadcast not withstanding his guest section in which I turned off!
Gabe
birdbrain said...
"With earnings season behind us and the possible passage of tax reform pushed down the road, don't see a catalyst for significantly higher equity prices over the summer. Not to mention the self-inflicted wounds coming from the Oval Office."
==== == ====
bird, I respectfully disagree, I think we have just witnessed with the most recent Comey fired pressure off remark that the market unless it is totally confused is saying it doesn't matter anymore what happens with DC.
If the market did not selloff on this remark and the implications then I am interpreting this as a shift to the earnings story going forward. If prospects for earnings growth go down the tubes this market is toast. Fundamentals matter and maybe the political stuff does not matter so much to the market anymore.
The only measure we have is if nothing gets done in DC and the market continues higher because of earnings then this will confirm the theory.
There is a caveat but will save this for another time.
smile
1) No municipal bonds in my IRA - check
2) No non-traded REITs in my portfolio - check
3) Not stranded on an island with Mark Zuckerberg - check
Life is good!
Honeybee said:
OPENING MONOLOGUE....Brinker comments: It's "political fiction" to claim the middle class has shrunk...a recent Federal Reserve Study says that 70% say they are living comfortably........
WOW! THAT Bob really blew it this time! Of course the middle class has shrunk! But it's all a good thing! How else can one explain the recent deluge of calls from elite multimillionaires to his show each (live) week and coming soon to every cut-and-splice rerun?
Indeed, these multimillionaires are former "middle class" MT listeners who have made a giant leap to claim fame as new entrants into the One Percenters Club! As such, we must assume THAT Bob was instrumental in their recent meteoric rise in wealth and good fortune. Bob is just too darn modest about his many accomplishments. As I see it he missed an opportunity to give himself some huge pats on the back.
JC
1) I have no munis because I'm in a low tax bracket - check
2) I never make changes in my AA because of who is in the White House or what is happening politically - check
Honeybee said in Program Summary:
VTI VS VTSMX......BB explained to a caller that VTI is the exchange-traded-fund for the total stock market.
Honeybee, in addition to the point you raised (regarding intra-day vs. closing pricing):
Mutual Funds vs. ETFs (even in the same family) can often vary in terms of commissions, expense ratio, tax efficiency, etc.
I don't trade Vanguard ETFs or mutual funds, but as a "for instance" in this particular case here are the expense ratios relative to VTI vs. VTSMX:
VTI: Expense ratio = 0.04%
VTSMX: Expense ratio = 0.15% Investor Shares: $3,000 Minimum
(VTSAX: Expense ratio = 0.04% Admiral Shares: $10,000 Minimum)
JC
Market had a good day!
Gabe
Yes, it certainly was a troubling call. The guy (name deleted out of pity) with the newly minted degree in finance from ISU (Illinois State Univ.) who claimed to be a "long-time listener and first-time caller" and had 25% of his and wife's savings in a 401k needed to ask Bob which funds he would recommend for "young professionals".
Holy smokes, did he learn anything in college? Bob did him a favor and didn't embarrass him too much by simply saying, "Use VTI." Then the young lad was afraid that the mystical exchange-traded fund might be "actively managed". Bob then corrected his misguidance and all was right with the world.
We need to drill down a little on this one. Premise: the caller was a "shill" for Bob (Webster's: an accomplice of a hawker who acts as an enthusiastic customer to encourage others), probably a nephew or grandson or some such. Because why would a "long-time listener", especially one with a "degree" in finance, not know Bob's simple investment recommendations, broadcast (semi-)weekly all across America for 35 years?
-Stengel in Flushing Meadows
Calpers is having its problems meeting its income requirement projections to sustain its pension obligations.
Gabe
It looks like THAT Bob missed out on the "2017 Talkers Heavy Hundred." Too bad, I say. Perhaps something to do with his attendance record?
I see Bluce's hero (Rice Delman) checks in at #86. And Dave Ramsey clocked in at #3! Personally, I can't stand any more than about 3-5 minutes of either of them. Less is more for those fellas as far as I am concerned.
But back to THAT Bob - I classify myself as a short-time listener-no time caller, but long time follower and hilarious laugher (thanks to Honeybee and the entire BRT who dutifully report and comment on his incorrect/incomplete advice, many outbursts and assorted shenanigans!) I truly hope that THAT Bob never retires. Of course if he does, I'm pretty sure that Honeybee has a treasure trove of Best-of-Blog "reruns" that she can post!
http://www.talkers.com/2017-talkers-heavy-hundred-1-25/
Bob (not THAT Bob): Rice is hardly my hero -- he's just my favorite radio guy to yell back at. Plus, there's nothing else to do on Sunday mornings from 11-1 p.m.
Last weekend was classic: He was warning people to beware of financial sharks trying to rope people into their seminars.
Wut???
The King of Seminars warning about other people who have seminars? His next seminar will probably be about "How to avoid seminars." Sign up now! 1-800-EAT-RICE
But, aside from that (as I've noted before) there's good in everybody -- he's not a market timer. As they say, even Hitler liked animals.
Shiller PE is at 29. It peaked at 44 back in December 1999. If earnings remain steady, Shiller PE should go down as the ten year trailing window is from 2009 to 2019. 2007-2009 was when earnings dived.
AD
Off topic of BB financial show, somewhat. We've all heard the down fall of brick and mortar retail as direct result of Amazon convenience and lower cost due to lower overhead. Walmart stock has taken a beating from German low cost stores such as Aldi's and Amazon advantage. Walmart has attempted to compete with Amazon with some success, but they are indeed investing and shuffling the management deck to make it happen.
This may be a great long term hold. Per my purchasing, Amazon, is not the incredible price leader anymore at least on a growing percentage of items. It use to be my go to one source supplier for smaller hard to purchase items per large selection, ease of purchase, low cost, comparative shopping, and great review info. Amazon Achilles Heal is they must use commercial shippers and make home deliveries. They know this weakness and the reason they are attempting drone delivery. Walmart operates the most efficient supply chain on the planet. They have successful ubiquitous stores that are already engaged within this supply chain. So, shoppers, we can receive our orders without shipping cost and receive them quicker by dropping by your neighbor hood Walmart in the process pick up some needed items. Also, a piece of cake to return or complain on defective purchases. This beats Amazon hands down and it is no problem to purchase large items that the Mail lady can't. What say you?
Trees: Walmart prices are relatively higher in most cases than Amazon. Comparison shopping proved that to me. Both as a consumer and an investor in their stock, they win hands down!
Just my opinion.
Gabe
Bluce
I actually like Edelman. Of all the talking heads, IMHO he is the best for starting investors. But.... I've been to one of his seminars, he said nothing and charged for it. Actually, I though it was a thinly disguised book tour. I didn't buy his book but I do think, "The truth about money" is a good book on finance." Edelman invests in DFA funds like me, but his fees are way to high.
True, Walmart is doing just that as far as making adjustments for e-commerce and competing with Amazon. JC Penney is doing the same especially with appliances and home furnishings, and taking on the Lowes, Home Depots and Best Buys. I am seeing this with JC Penney and Walmart in the Florida panhandle. And they seem to be embracing that role quite a bit. JC Penney also goes out of its way to attract customers with coupon deals.
I was looking at the S&P 500 chart. If you examine around April 2000, it was at 1500 points. It is now about 2390 points. I calculated just by points level alone, the S&P 500 only appreciated by about 2.75% annually.
So another market correction of 20% then the S&P 500 would only appreciate about 1.5% annually :-/
What is to not say that the S&P 500 would have undergone "two lost decades" since 2000 ? Especially if the historic norm was that it should appreciate about 5% annually ?
AD
WSJ:
Only Robots Can Tally What the Largest U.S. Pension Fund Pays in Fees
Calpers turns to algorithms after official admits staff ‘can’t track’ certain fees on their own.
By Heather Gillers and Dawn Lim
Updated May 22, 2017 11:51 a.m. ET
The nation’s largest pension plan has 380 people overseeing roughly $320 billion in assets. But when one of its top officials was asked during a board meeting how much in performance fees was paid to private-equity managers, he had to acknowledge no one knew.
MAD Suggestions:
1) Do an in-depth personnel audit
2) Fire everyone who can't track the fees
3) If no one is left, hire a dozen or so college graduate-USA-citizens who CAN track the fees and will actually work (instead of spending their entire day on social media).
4) Petition Guv Moonbeam and the CA legislature to phase out ALL California public pension funding and disband all of the agencies that have allegedly "managed" them.
Problem Solved! Now that wasn't so hard was it?
Maybe I should enter the next Guv race?
Rice Delman blows his own horn more than a NY taxi driver. He spends most of his radio show hawking his books and seminars. It is funny to hear him rattle off 50 cities that are having his seminars. And of course there is his "Exponential Technologies" segment, like last week, in which he talked about hotels renting rooms by the minute. I guess he considered that an "Exponential Technology"? Sometimes I think that he wasting good bandwidth.
Another timely article on low-cost investing from Morningstar.
Imagine if a statue of John Bogle were to be placed at the top of the stairs at the NYSE.
The 1% would freak-out!
The article referenced above is titled: Fund Fees Paid by Investors Continue to Decline. Google would not let me post the direct link.
Trees: As I've noted here numerous times, worded differently, comparing Amz to Wally's is not apples to apples.
Also stated before: "There is nothing new under the sun." My late mother used to order from Sears and Montgomery Wards' catalogs when I was a kid. Sure, it's easier today, but it can't compare to being out and about amongst "the masses," (lol), buying lunch, coffee, fresh seafood to take home, washing your car, etc. while you're plundering Wally's.
But people aren't thinking about this point, it doesn't seem. Or the media isn't thinking about it, and therefore humans, with their herding instinct intact, follow along. It's the same non-critical thinking that goes along with believing that the advancement of technology will lower overall employment throughout the economy.
Looking at my EFS (Edelman Financial Services) disclosure booklet, the retail fee schedule says:
First $150,000... Fee 2.00%
Next $250,000... Fee 1.65%
Next $350,000... Fee 1.25%
Next $250,000... Fee 1.00%
Next $2 million... Fee 0.75%
Next $7 million... Fee 0.60%
And the scale continues as you might expect.
Fee includes ongoing financial planning advice and transaction costs, and other costs such as custody, et. al. and (believe it or not) "free admission to seminars."
But the really interesting paragraph is titled "Investment Strategy". It says (not quoting) that EFS utilizes academic research such as Modern Portfolio Theory (broad diversification with a resulting reduction in risk level) and also the Fama-French Three-Factor Model, which "through research, found that over long periods of time, value stocks outperform growth stocks and, similarly, small cap stocks tend to outperform large cap stocks." (Edelman Financial Services, LLC, Investment Advisory Services, March 31, 2017, page 15)
-Chuck, Overland Park KS.
Chuck again:
Change the reference on the recently submitted quote to (Edelman Managed Asset Program (EMAP) Wrap Fee Brochure, March 31, 2017, page 15)
-Thank you.
Bluce,
All of that is well and good, but holographic "stores" will soon be available for those who wish to participate in the herding experience.
JC
Google did well today!
Gabe
As technology makes people expectations change, tben shopping orconsumer norms will change. Instant gratification and convenience drive consumrs to online shopping in addition to price competitiveness. Walmart has figured this out and is trying to adjust toward e-commerce. And walmart is figuring how to offer more than amazon since it has the physical or bricks and mortar presence. Yes walmart just like the other big boxes like Bass Pro deliver to home
AD
Came across this “Retirement Income Literacy Quiz” recently; it may be of interest to some of the blog team.
https://retirement.theamericancollege.edu/retirement-101/retirement-income-literacy-quiz
Bluce- ya the catalog sales analogous to one line shopping, however, the online catalog is huge and allows reviews and comparison shopping. Amazon has the best online shopping experience. I think their delivery is expensive for the company and has limitations. The extra step of packaging for commercial shipment is more expensive as well as home delivery. As you say the customer will take a shopping trip with intent of combining multiple activities. This is to Walmart's advantage.
Quite often I make bad purchases with Amazon and feel the return cost and inconvenience not worth it. With online purchases with stores such as Walmart, I can tape the receipt to the box and just put in the car for eventual return when convenient. Also, more recent cost comparisons are indicating Amazon is not the price leader. Also, as you say the brick and mortar stores aren't going anywhere as some want the experience and evaluate a real object in hand. Problem is the customer can whip out their cell phone and quickly check pricing and reviews. Competition will be fierce as the customer wants it all. Variety, service, information, a pleasant experience, marketing, and low cost. This is a trend hurting small town America as well. Everyone wants a selection of super centers for ultimate shopping experience.
Amazon opening a gigantic bookstore in NYC tomorrow! In my opinion and experience Amazon has better service and prices than Walmart. Given the more recent experience of brick and mortar retail stores (poor) ...latest retail figures released today, on line stores are doing better. It makes me wonder why Amazon is getting into the retail space (brick and mortar) with its book store. Amazon shares are up in early going.
Gabe
Bluce said:
It's the same non-critical thinking that goes along with believing that the advancement of technology will lower overall employment throughout the economy.
---
Bluce, that may or may not be true - time will tell. However, what concerns me even more is that "stuff happens" when people turn their entire lives over to technology and revert into non-thinking mindless blobs. For instance:
News anchor sets off Alexa devices around San Diego ordering unwanted dollhouses
- Carlos Correa
http://www.cw6sandiego.com/news-anchor-sets-off-alexa-devices-around-san-diego-ordering-unwanted-dollhouses/
sn said...
"Came across this “Retirement Income Literacy Quiz” recently; it may be of interest to some of the blog team."
Good practice for the MoneyTalk Final Exam. I missed 4 of 38 for an overall score of 89%. Plenty of room for further study and improvement. Anybody score 100%?
Biker is at the head of the class so far.
I missed 8 out of 38 for a score of 79%
Missed 14...score 63% not good! Passed!
Gabe
Does anyone here have a reversed mortgage. I don't have any inheritors to leave the house to. Your experiences, pros and cons would be appreciated.
Trees: FWIW, I *always* take the free shipping option from Amazon. Yes, I have to "wait" 5-7 days (the horror! -- unheard of in modern 'Murrica) but there is never anything I'm ordering from them that I need any faster. And no, I ain't joining Prime. Like my no-annual-fee credit card (which I always pay off fully every month) I use them to MY advantage -- not theirs.
But FYI: Amazon has made it very easy to return things -- I've done it twice in the past year or so. You go to their site, print out a pre-addressed UPS sticker with a barcode on it, re-package the item and UPS will be there the next day to pick it up, no money involved. But it still doesn't compare to shopping "in real life."
JC: We don't need more time to prove that technology puts a damper on overall employment. Technology has been on the march since man sharpened flint to make spears and knives, then advanced to using iron instead, started planting crops and herding animals instead of hunting and gathering, bows and arrows led to crossbows then firearms, he invented steam power, then gas power, then hydro power, sent electricity to anyone who wanted it which replaced candles, lanterns, hand milking, led to people having running fresh water inside their homes, yadda yadda yadda. Sure, jobs were displaced, but within a generation or so all those new, higher-paying careers were invented. It raises everyone's standard of living.
There is nothing revolutionary going on here.
However, I do agree that people are becoming too dependent on some technologies -- like cell phones and computers, which aren't necessarily an improvement. Just today, I was going to pick up a monthly prescription that I've been taking for 13 years, which I've been getting from the same drugstore since. They maybe get two months in a row without screwing up, but rarely more. Today they screwed up and it wasn't ready as promised. She blamed the computer. It really gets to be a PITA, and being a "controlled substance," NYS will not allow anyone to get more than 30 pills at a time.
I missed 9 out of 38, including the trick questions.
Bud
7 wrong out of 38. The male life expectancy question is useless as there is so much variance. Blue zone has a questionnaire that is rated high for guessing life expectancy. Use that with family history. Averages are mostly useless. Also, adjust income expenses for the go-go years, slow-go, and no-go years. Living expenses go down with age, but health expenses go up.
The annuity and life insurance questions are not my bag. I've enough info to know they are not for me. Notice how much marketing cost going into selling these products. That is a sure indicator of poor value. Also, I don't like handing off my money per some contract. Just to complicated and risky to put money within one financial device upon a huge contract legal jeopardy. Same with reverse mortgages. Same with long term health care. Better to have control and flexibility no matter how much money the financial advisor makes by selling you.
I did think dividend paying stocks were supposed to have the highest return over the long run. I like that small cap stock do as I do have NAESX for my HSA. By the way the HSA is my long term health care insurance. The calculating I've done upon present costs vs benefit indicate long term health care is not for me. One has to not be scared of all the stories and use good judgement upon statistics. Life is a gamble and even with long term insurance a gamble. The HSA is a better use of finances and can be utilized as inheritance if not needed. If needed it can be used for health or income.
I don't agree with the research that proves that a 65 year old should take the least risk when retiring as compared to an 80 year old. I've always heard and believe the risk is based on age. Why would a 65 year old with decades of life left need less financial risk than an 80 year old? For example a 65 year old has many options to produce income and has low health costs. A 65 year old even has maximum control of living costs as compared to a 80 year old. The research must not take any of that into consideration.
Myrtle said...
Does anyone here have a reversed mortgage. I don't have any inheritors to leave the house to. Your experiences, pros and cons would be appreciated.
May 24, 2017 at 1:08 PM
Myrtle ----I have no real experience in reverse mortgages, so let me say that my input here is only offered as a point of conversation. But I have done some research into reverse mortgages.
Primarily, neutral financial advisers will point out that reverse mortgages have a very high cost. That being said, there are a lot of actors and other Hollywood types doing advertising for the reverse mortgage industry. Their time doesn't come cheap. TV commercials and magazine adds aren't inexpensive. At the closing of a reverse mortgage contract, the fees and expenses are generally high and more numerous.
Of course, everyone's experiences, needs, and financial situation will shape the decision process. Not having any inheritors, as you state, makes your situation, I would think, a little unique. But it may make your decision to do a reverse mortgage simple. I think that if cashing in the equity in your home would allow you to live better now or allow you to payoff other debt, or pay medical needs; well then, a reverse mortgage might work for you.
If you have a neutral financial adviser working for you and they are someone in which you have confidence, then their advice you should seek.
Vigilant
Sears (SHLD) shares soar after sales beat estimates! The stock is currently up 29.45%.
Granted, "good" news. But in no way does it change the inevitable. Up 29.45%? C'mon, are people nuts? With all due deference to our beloved Bacon Boy, who in their right mind would be buying this PIG when it is trading up 29.45%.
But it would guarantee a nice, juicy ST or LT tax loss offset for those who are looking for one.
JC
HB: My blog note did not appear re:: my score on the exam sent yesterday.
Gabe
I tend to agree with the research that indicates a 65 year old should take slightly less risk when retiring as compared to an 80 year old. This is because of "Sequence of Returns" risk. I am closing in on age 65 and don't want the retirement savings I can't afford to lose to be exposed to potential bear market losses of 50% or more. If I make it to age 80, my investments will be more oriented toward leaving a legacy and probably could be invested a skosh more in equities at that time.
On the test I wasn't very comfortable with questions on long-term care, cash-value life insurance, and annuities. Instead of guessing at the answer, if I had answered truthfully "Don't Know," my score would have been much lower.
A summary report on the findings from this test is given here:
http://knowledge.theamericancollege.edu/blog/6-disturbing-findings-from-americas-failed-retirement-quiz
Quote:
"In 2014, The College conducted 1,019 online interviews with individuals between the ages of 60-75, with at least $100,000 in household assets. Below are six of the most disturbing findings gleaned from the quiz which, in case you missed the headline, America failed at an alarming rate.
1.Only 19 percent of respondents passed the retirement income quiz, receiving a score of 60 percent or higher. Alarmingly, not even one respondent received an A (90 percent or higher), and only 1 percent scored a B (between 80 and 90)."
End Quote
So those of you who scored 80% or better can now consider yourself one of the "One Percenters." ;)
Reverse mortgages make little sense to my thinking. Only in early retirement do some think a good idea to place a mortgage on house for extra money. Later, property owner gets sick, tire of maintenance, or just desires to move. They want to live closer to relatives or within a warmer or cooler climate. They think a condo makes more sense. So, if there is any change in your plans you will have paid dearly for the pleasure of reverse mortgage money. Do you really want another legal contract in your life that is always optimized against you.
I think even a condo is a mistake. This is the inherited thinking baggage. Most are convinced that rental money is lost as opposed to owning property. This the wisdom Realtors have pushed. In reality a widower or elder couple would benefit more from careful selection of a rental duplex. First it has less maintenance than even a condo. No market risk. Maximum flexibility and cash flow. As we get older best to down size and simplify. Best to travel and enjoy life. A rental is hassle free living without worry. A twelve month rentals in a place you want to visit in any part of the world or country is a very cost effective choice. You can probably cash out of your home with no tax load and invest the capital in loan payoffs or financial instruments. Then off to have some fun. Sitting in your old home is not as much fun and can be a prison to keep cost down. I would rather pay less for housing and have maximum flexibility for future needs. Even if you want to stay put, the old house probably not a best choice. Sell the property upon premium market opportunity and rent until the real estate collapses. This is a good time to sell and not buy. The same for about half your stocks.
You are correct, my wife and I only rent now which leaves us time to travel. Good cash flow and no maintenance.
there is an e mail, "contact us" page on Moneyradio 1510 Phoenix....Bob Brinker is listed on "select recipient".......think he will get it? SHIFTY in Skokie
IMHO Many if not most of the questions in that retirement quiz were pretty irrelevant to numerous near or actual retirees. That is especially true for long time Brinker followers who already have their financial houses in order. When I saw that and the ridiculously high quantity of very esoteric and total questions, I stopped and made better use of my time. Kudos to those who persevered and enjoyed that exercise.
Record territory for thew S&P and Nasdaq! Save your pennies!
Gabe
Forrest and Jan Butterfield said...
Reverse mortgages make little sense to my thinking.
Forrest and Jan build a good case against using a reverse mortgage.
Vigilant
DJS: It took me two nights to get through it. I'm not a lawyer or accountant, so I missed a total of ten -- most of which had to do with those subjects. But the subjects that pertain to my life I got generally right.
Or like long-term care. All I know about it is that I cannot get it. So why would I bother to learn anything more about it?
.
Hi Shifty....I took a look at that radio station webpage to email hosts. I did not see Bob Brinker listed there.
Did you see an email address for him there?
.
Re Vincenzo....Do not ever again send comments for this blog that contain blasphemous use of the Lord's name.
They will go in the trash faster than you can apologize.
Blogger Honeybee said...
"Hi Shifty....I took a look at that radio station web page to email hosts. I did not see Bob Brinker listed there."
---
Honeybee,
Nice catch!
BTW, I noticed that Ray "Buckets of Money" Lucia has a program on that station. He is now a Financial Planner/Talk Show Host.
Apparently Ray and the SEC are still engaged in their boxing match. The link below is from an article published on Sep 26, 2016. While that is a bit dated, I don't see any current articles that depict recent rulings, etc.
http://www.investmentnews.com/article/20160926/FREE/160929942/talk-show-radio-host-and-adviser-ray-lucia-sr-still-fighting-sec-bar
JC
HB: Here is the link to the page where Bob Brinker is listed in the drop down menu for "Select Recepient" (as noted above by Shifty):
http://moneyradio1510.com/contact.php
This is reached by clicking on "Contact Us" on the front page. I doubt that it would work, since BB isn't found under the other "Email The Hosts" link on the front page.
.
Thanks Biker...Brinker has never allowed himself to be available via email or phone.
When he talks about getting "communiques," I always question how he got it. The only possible way to reach him indirectly is via his address in Colorado - which is also his son's address.
You will find no way to "communicate" with him on his website.
"You will find no way to "communicate" with him on his website"
Maybe THAT Bob is just shy.
I recall that some others have called him shy. But I can't remember if that was the entire word, or if it was another word that included "shy."
A mixed market, Market up for the week!
Gabe
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Gabe...What percentage is the S&P up for the week? It would be very helpful to me if you could find out and post.
Honey: I'm not Gabe (but you probably knew that already) but according to CNN Money, the S&P was up 1.43% for the week (see the lower right corner of the chart).
HB: S&P up 1.4% for the week!
Thanks,
Gabe
Favorite market weekly update. Comes out about 4pm eastern Friday.
https://www.edwardjones.com/market-news-guidance/recent-news/weekly-recap.html
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I hereby dub the three who answered my question about the S&P this week as BRT (Blog Research Team) Members. :)
Thank you Honey!
Honeybee,
Am I still a BRT member in good standing? I'm sensing quite a bit of competition here. Also, I haven't received my initial check yet. ;-)
On a different note, I really like this (somewhat lengthy) article about choosing one ETF from similar competing ETFs (in a very crowded field). Surprisingly, I have been doing almost exactly the same routine for the past several years. Hmmm...maybe I need to put black tape back on my monitor camera! :-)
http://stockcharts.com/articles/journal/2017/05/charts-im-stalking-action-practice-16.html
PS: I am not vying for a BRT atta-boy for this, but WSJ produces very nice Market Data tables and graphs. I start out with their "Overview" and then drill down to other items via the tabs at the top of the page. And...believe it or not...it's free (at least as I post this). Rumor has it that they are redoing some of their features, but for now at least this data is both Available and FREE!
http://markets.wsj.com/usoverview#mod=mdc_topnav_2_3021
JC
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Jerrod....Not only are you still a BRT member - you are a CHARTER member.
We can't have too big of a team to keep this blog accurate, educational and up to date. :)
My last post today - PROMISE!
For those with Schwab accounts, some excellent research is available, and Schwab will deliver it daily/weekly to you via email or wireless device. (Be sure to complete the "Deliver Options" section).
To reach this section, navigate as follows on your Schwab account main landing page:
1. Choose "Service" tab
2. Choose "Alerts" tab
3. Choose/Expand "Schwab Research Alerts" and check the reports you desire and/or
4. Choose/Expand "Third Party Research Alerts" and check the reports you desire.
Schwab Research Alerts
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-Market Edge Daily Commentary
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-Ned Davis Research Daily Economic Perspectives
-Ned Davis Research Market Digest
JC
Just a thought.....I was thinking about retirement and specifically about the distribution stage. My observation is that those folks that I speak with at the clubhouse re: spending in retirement appear conservative with respect to total return spending and reluctantly will do so but prefer only to, spend what their portfolios throw off and not touch principal. I've read Die Broke and have heard Bob say emphatically to folks who call that many continue to stay in the accumulation stage and that they should SPEND!
4% is a guideline....many who are fortunate who have pensions, SS, IRA's and other investments could and should spend and enjoy the things and activities that they have saved for during their working life time. I do!
Just needed to ventilate a bit.
Gabe
Gabe,
With your multiple pensions, horses, real estate, bond and equity investments, etc. you could probably support an entire city of retirees. So, as I see it you have an abundance of choices.
If you wish to donate to The Mad as HELL! Foundation, kindly advise. (To manage and conserve administrative expenses we respectfully and gratefully request minimum donations of $250,000 per year).
It takes a village!
Thanks Gabe,
I agree. You should not only spend your assets down, you should also eat and drink what you like. Hell, we're all going to end up dead...why not enjoy your older years while you can?
Bob
Mad and Bob: Thanks for your input!
I understand that the State of California is seriously looking at Single Payer health insurance. The Wall Street Journal...May 27 issue editorial suggested that if California introduces legislation for single payer then the other 49 States might follow in order to compete for the 2020 Democratic Convention. Interesting! Governor and Lt Governor are in favor.
Gabe
Yes, all we need is full-blown socialized medicine in all 50 states. Make no mistake, that *IS* the goal and that *IS* the proper name for it. "Single payer" is the sanitized version the left favors, because it sounds harmless and "free" to the duped masses. This is language manipulation, typical for the left.
The vast majority of Americans know nothing of the millions slaughtered in the past century under the name of socialism -- which always ends up failing. Venezuela is the latest example, following in the footsteps of Cuba, the Soviet Union, etc., etc.
Good take Gabe , spend enjoy help your loved ones if you can. Anybody listen to Larry Kudlow, guest today are negative on the mkt.
Gabe,
There are more than a few problems with regards to the proposed California Single Payer proposal. To name just a few:
- California would have to collect $200 Billion in private funding to run the $400 Billion program.
- Californians would be taxed an additional $200 Billion yearly which is substantially more than the state’s entire $124 billion general fund budget.
- The $200 Billion single payer added tax is in addition to Gov. Brown's recently passed $52 billion in additional taxes to (allegedly) fix roads. But now, after the bill was passed, we discover that, at best case 15-20% of the taxes will actually be spent on roads. (Frankly, I am doubtful that any of the money will be spent on roads).
Then there is the increase in gasoline taxes.
By 2019, when we add up all CA gas taxes and fees, we get 58.3 cents for each gallon :
47.3 cents in primary and secondary excise taxes
2 cents on underground storage tank fees
9 cents on the sales tax (as per the Tax Foundation estimate)
Total: 58.3 cents per gallon in total CA taxes and fees on gasoline.
But when we add in Federal per-gallon gas taxes, the total 2019 cost escalates even more:
58.3 cents per gallon in total CA taxes and fees on gasoline in California
18.3 cents per gallon in total Federal taxes on gasoline in California
New 2019 Total: 76.6 cents per gallon in total CA and Federal taxes and fees on gasoline in California
So, if you fill up a 20 gallon car gas tank, you've just popped $15.32 in CA/Fed taxes!
I wish I could say that the above is a "worst case scenario" but I can't. The above are preliminary estimates. And, since the CA increases are linked to CPI, they presumably will increase every year.
And once again I emphasize that very little (if any) of the CA taxation will go to road repair and upkeep. Jerry Brown and his fellow clowns in Sacramento want to get all taxpayers out of their cars, and this plan will certainly achieve that objective within a number of years.
Oh, I almost forgot this. Los Angeles Mayor Eric Garcetti recently said this:
"As a city and county, we’ve moved away from freeways. Voters don’t see freeways as meeting their transportation needs anymore.”
HUH? Say what?????
A delusional Governor, delusional State Representatives, delusional Mayors. What could possibly go wrong?
Well, if the Senate does not really improve upon the House Bill many individuals will look at the Single Payer more favorably!
Mad details exactly what will and what will come with regard to taxation in the Golden State. Single Payer is very attractive to a liberal audience.....California is a liberal state. Again, I am hopeful that the Senate comes up with a better bill, one that can dissuade our liberal friends from going into that rathole that MAD so vividly described!
Just my opinion.
Gabe
Medicare is single payer health insurance. LOL
smile
Single payer national healthcare will become a litmus test for any politician seeking the 2020 Dem presidential nomination.
Gabe,
Spending in retirement is an interesting topic. In general, most retirees I meet don't like to talk finances and most have pensions. (My wife and I don't have pensions) We came up with our yearly budget loosely based on 4% rule. Because our financial lifestyle has always been conservative, we now feel like drunken sailors with a 3-day pass. Most couples we meet in retirement can't agree on what to spend the money on:
-Downsize vs buying bigger home (typically their dream home)
-save the money for the children vs spend it on themselves
-They are still supporting a grown child (or one still living at home)
-One wants to travel and other wants to stay home
-One gets ill
It's their money so they can do whatever they want-- but for me, I'm attempting to spend a little more each year. It turns out my wife and I like expensive wine but the good news is that we can't consume like we did earlier in our life.
FWIW: I do not know of any country (although there may be some) that rejected socialism in the beginning.
After domesticating animals, they get used to the endless supply of food, water, and shelter. But they give up liberty. Take all the "free stuff" away? -- they will not survive. Humans are the same.
The masses are easily manipulated as history shows. Demonize and destroy the actual, free market, then offer a carefully-worded government "solution." The solution never works, so more government interference is offered as the solution. And round and round we go, until the market is 100% destroyed, taken over 100% by government.
There is nothing new going on here.
With respect to spending in retirement.....remember, one cannot enjoy in their 80s' as much as what one can enjoy in their 70s for obvious reasons!
My input.
Gabe
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