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End of Golden Era for Investors Spells Troubles

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Re: End of Golden Era for Investors Spells Troubles

#61

Post by cm2187 »

kabouseng wrote: post #29
cm2187 wrote: post #16

Earlier quoted context omitted.

The amount of debt that the baby boomers will leave behind is a very objective thing. This is the biggest accumulation of debt in peace time in the history of mankind (and objectively the parents indebting their children to buy a shiny new TV, a behaviour that would be universally unacceptable if it wasn't state wide).

Sorry this is taking your comment on a tangent, but it is not exactly peace time for the USA, nor has it been since the 1960's or arguably since WW2 if you take the cold war into account. The USA has been involved in one or another war for literally decades now...or does minor wars not count?

I don't think we can compare the Gulf wars with the all out World Wars. And none of the European countries or Japan were making any war effort, and accumulated as much if not more debt over the same period.

Re: End of Golden Era for Investors Spells Troubles

#62

Post by chinathrow »

noir-york wrote: post #48

We're gonna be overdue for a large war within 20 years so the pension pot of today's millenials, or indeed, anyone's, is going to be the least of their worries. By large I mean either a world war or a big regional one - and large wars have a habit of resetting economies, technology and societies. Most likely flashpoints: Russia and/or South East Asia. Best investment - I am guessing either a New Zealand or a South Am…

Russia and its neighbours is for sure a region to watch. Recent developments (Crimea, Putins private 400'000 men army etc) are a strong indication what may come next.

Re: End of Golden Era for Investors Spells Troubles

#63

Post by cm2187 »

RobertoG wrote: post #55
cm2187 wrote: post #50

Earlier quoted context omitted.

Then if you do not believe in default or inflation, what exactly do you think will happen? 1000% debt to GDP?

I believe in inflation. I just said it is not the problem now. Inflation happens when there is more demand from the economy that economy can satisfy or when there are too much strong demand of imported goods. What it is a fiction is public debt in monetary sovereign governments: http://bilbo.economicoutlook.net/blog/?p=31715

The sort of inflation we are talking about here is when the government will print money to pay their debt. This type of inflation will be wiping out savings and pensioners.

Re: End of Golden Era for Investors Spells Troubles

#64

Post by kartickv »

dantiberian wrote: post #20

So if emerging markets are going to outcompete western companies then... invest in emerging markets?

Isn't that information factored into stock prices? If you know something that everyone else knows (or assumes is true), then your information isn't worth anything.

If, on the other hand, you have information, analysis or insight that's not broadly known, that's valuable.

Re: End of Golden Era for Investors Spells Troubles

#65

Post by RobertoG »

cm2187 wrote: post #63
RobertoG wrote: post #55

Earlier quoted context omitted.

I believe in inflation. I just said it is not the problem now. Inflation happens when there is more demand from the economy that economy can satisfy or when there are too much strong demand of imported goods. What it is a fiction is public debt in monetary sovereign governments: http://bilbo.economicoutlook.net/blog/?p=31715

The sort of inflation we are talking about here is when the government will print money to pay their debt. This type of inflation will be wiping out savings and pensioners.

So, we agree that default is not an issue?

If there is any doubt here is in the words of Alan Greespan: "The United States can pay any debt it has because we can always print money to do that. So there is zero probability of default" http://www.cnbc.com/id/44051683

Can we agree also that inflation is not a problem at the moment?

Re: End of Golden Era for Investors Spells Troubles

#66

Post by Ntrails »

kspaans wrote: post #59
darawk wrote: post #43

Earlier quoted context omitted.

No, the point of the article is that all asset classes across the board will experience lower than normal returns. Diversification will not help you. Whether or not its thrust is correct is hard to say, but that appears to be their thesis.

I only see bonds, and equities specifically mentioned.

Indeed. There are whole investment industries built up around property, reinsurance etc etc because they do diversify. The risks are relatively uncorrelated, so the returns are too.

Honestly, this is a PR/opinion piece designed to get coverage - and that's fine. I'll bet you good money that there are opposing views on the 20 year outlook from different investment experts though.

Re: End of Golden Era for Investors Spells Troubles

#67

Post by kspaans »

cm2187 wrote: post #63
RobertoG wrote: post #55

Earlier quoted context omitted.

I believe in inflation. I just said it is not the problem now. Inflation happens when there is more demand from the economy that economy can satisfy or when there are too much strong demand of imported goods. What it is a fiction is public debt in monetary sovereign governments: http://bilbo.economicoutlook.net/blog/?p=31715

The sort of inflation we are talking about here is when the government will print money to pay their debt. This type of inflation will be wiping out savings and pensioners.

That's why you shouldn't keep most of your savings in cash. Non-cash assets can help you protect against inflation like this. But I do agree that if you've got a defined-benefit pension plan, your e.g. $500/mo will be doing less for you each year.

Re: End of Golden Era for Investors Spells Troubles

#69

Post by touristtam »

justinjlynn wrote: post #8
knieveltech wrote: post #3

Earlier quoted context omitted.

Gen X was standing on the same rug as you guys when it got pulled out. Take a look around next time you're in WalMart or McDonalds. All those 40ish looking people that look weirdly out of place in their uniform shirt? Yeah, that's us since the boomers nuked domestic manufacturing and construction wages made a run for the bottom. Don't even get me started on retirement. sigh

Well, I didn't say that Gen X got nothing at all. We all got hurt in some way by the GFC. Of course to generalise about an entire generation people is egregiously pointless. At the same time, simply due to the luck of timing, it feels as though Gen X had more of a chance to do something about it. However, they did not and in fact they had much more of an opportunity to take advantage of the selfish and short-sighted…

> it feels as though Gen X had more of a chance to do something about it

But they didn't had that chance to begin with. The predictions were as bad back then than they are now; back in the 80s the collapse of the market economy was predicted for shortly after 2000, and in the 90s, it was pushed back to as early as 2020 and as late as 2040. Last I have checked western countries are still on course to default by the mid to late 21st century.

I find this generation view short sighted and you should look at the different strate of the society instead to see who in that generation has managed to get ahead of the game and get a confortable situation for themselves. Those are the one that conformed to the rules and custom of the previous generation.

I am sorry to say this, but if you want to see a change you will have to get out of your way and make that change happens.

Re: End of Golden Era for Investors Spells Troubles

#70

Post by Amezarak »

cm2187 wrote: post #14

I think it can get much worse than that. I don't know why people think the current levels of accumulation of debt are sustainable but there is a limit to what even the US can roll in term of debt. All developped nations are at around 100% debt to GDP, more than 200% if you include private debt, and growing at 3-5% per annum. Now does anyone really think that sometime soon any developped country will start making publ…

The US federal debt was even higher in the wake of World War II.

The US government did not run surpluses and deleverage in the following decades. The economy grew, without hyperinflation, and the debt became irrelevant.

The solution to high levels of debt is sustainable economic growth, not deleveraging. Mass deleveraging would be an economic catastrophe.

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