Short-term rates are going down because the Treasury is issuing related debt at lower rates. Meanwhile, long-term rates are going up because the Fed is not intervening.. The Fed is trapped in a vicious cycle. Can you see a way out?
Most of the time the yield on long-term bonds exceeds that on short-term bonds, in order to compensate for the greater risk attached to long-term debt. But until recently the yield curve was inverted, with short-term rates exceeding long-term rates. This happens when investors expect interest rates to decline in the future.
Protect yourself with Treasury Inflation Protected Securities (TIPS), precious metals, certain real estate like farmland, and other real assets.
GAO reports are intended to improve industry practices. GAO failed in its target date fund report but succeeded in its conflicts of interest report.
The ERISA Advisory Council is conducting hearings on Qualified Default Investment Alternatives (QDIAs), seeking recommendations for improvements. The big challenge is making better decisions for people who do not want to engage.
78 million baby boomers are about one-third of the voter-eligible population and 77 percent of them vote, so there are 60 million baby boomer votes. That 60 million is 38 percent of the 158 million votes cast in the 2020 presidential election. The baby boomer voters’ bloc is a big deal.
The “country” in this article is the wild and woolly market of small retirement savings plans (SRSPs) that have less than 100 participants. The “old men” are baby boomers who cannot afford to lose their lifetime savings. And the villain is the next stock market crash.
Baby Boomers likely won’t have time to recover from the next crash. Their loss is also their heirs’ loss. There’s $70 trillion in play. Baby boomers shouldn’t be greater fools.
Baby boomers need to be concerned about worst cases because the rest of their lives could be ruined by the next crash, and with $70 trillion at risk the stakes are high for them and their heirs. So rather than averages, let’s look at worst cases. That’s what baby boomers need to protect against.
Large-cap U.S. stocks, as measured by the S&P 500, have dominated in both absolute and risk-adjusted terms. They are soaring. It’s the Roaring ’20s again!
The next inflation wave will challenge the economy and the Fed. It will not be transitory. A pivot back toward a zero interest rate policy (ZIRP) will intensify the problem.
The GAO report was three years in the making. At $4 trillion and growing, target date funds are very important. The GAO report has the potential to improve the industry.
The Federal Reserve is expected to lower interest rates, but the economy and stock market don't need stimulation.
Inflation is not over. The next wave will be torturous and will last a long time.
The TDF industry is dominated by a few firms that form an oligopoly that is hard to disrupt. It’s no surprise that non-oligarchs are spearheading the movement to personalization.
Interest on our federal debt is 2% and heading towards 5%, which will crowd out other expenditures and escalate deficit spending.
Many boomers are invested in target-date funds that are not safe and do not provide the protection they desire.
Target-date funds, which make up over half of total 401(k) assets, are not following investment theory, exposing investors to excessive risk.
Early signs of economic unraveling are appearing. The federal corporation that insures bank deposits is woefully underfunded. The Fed is under pressure to pivot away from its inflation fight.
President Biden has proposed a $6.9 trillion budget that calls for reducing deficits and raising taxes on wealthy people and large corporations. There is a lot of spending in this budget that fuels inflation.
Reducing the U.S. deficit is praiseworthy. How was that accomplished in 2022?
This past year was disappointing for stock and bond investors. The real 25% loss in stocks was in the bottom decile and the real 20.3% bond loss is the worst in the past 97 years. Greater losses lie ahead.
This year could be the beginning of the bursting of a superbubble that inflated over the previous 13 years.
A new wave of lawsuits alleges that Blackrock’s target date funds (TDFs) have underperformed. These lawsuits open the door to a related and scandalous breach of fiduciary duty – excessive risk.
A few billion dollars cannot move a multi-trillion inflation needle. Two types of inflation are in play: one is transitory, but the other is not. The Fed cannot control inflation, but we want to believe it can.
We meet the official definition of a market correction and the unofficial definition of a recession, and we’re close to the definition of high inflation. Market corrections can and have caused recessions. Be prepared for all three problems coexisting for many years.
Last month I advised abandoning stocks and bonds in favor of inflation-protected alternatives. That hasn’t worked out. I have not changed my mind. Interest rates will increase and cause losses in stock and bond markets.
Depending on risk and diversification, 401(k) plans have lost between 4% and 20% so far this year. Unlike most other periods when stocks lost money, bonds have not defended well this time.
Two forecasting methods predict a 54% stock market loss in 2022. Someday the stock market bubble will burst. But the data says we have not seen the worst of equity market declines.
In 2003, at age 19, Elizabeth Holmes founded Theranos, and it became a $10 billion company by 2014. But it was a fraud. Aspects of target date funds mirror the Holmes story.
Those who are familiar with my articles know that I see market crashes in stocks and bonds occurring in this decade, combined with serious inflation. Readers ask how I recommend protecting. This is it.
The U.S. debt cannot be paid, even in inflated dollars. Serious inflation is inevitable that will crash stock and bond markets, in addition to devaluing the dollar.
The 60/40 stock/bond allocation is ubiquitous, but that’s stupid because it’s just not right for everyone, especially baby boomers.
The Rest of the Story was a radio show that aired from 1942-2008. Host Paul Harvey revealed little known facts that were previously not reported. The rest of the Federal Reserve story is that it is just pretending to be in control, and the rest of the Russian invasion story is about China and the U.S. dollar.
Interest rate manipulation has been achieved through massive money printing that is causing inflation. To control inflation, bond manipulation must stop. When the manipulation ends, bond prices will plummet, and stock prices will follow.
Last year was a good year for stocks, but not bonds. The post-2008 recovery has been spectacular, one of the best 13-year U.S. stock markets. I provide details for the entire 96 years as well as five-year and 10-year sub-periods
In this article, I examine the history of 13-year returns on stocks and bonds to put the most recent 13-year period into perspective. It has indeed been extraordinary.
Our economic experience could be driven by a con game – a hustle.
Successful investors must answer three questions: Will we have serious inflation? Will interest rates increase? Will stock prices fall?
Expected returns are derived in two distinct ways: from Federal Reserve actions, since it is manipulating bond prices, and from momentum, which is driving stock prices. How long can both last?
The fate of the global economy and stock markets rests on the successes of just a few megafirms that reside in the U.S. But have the prices of the world’s largest companies been bid up beyond what is reasonable and fair?
Money supply has quintupled in the past year, and because of this money printing, inflation is here for the long run. Inflation will force increases in interest rates.
Last year, after the March market correction, I warned baby boomers against buying the dip. Since the market rebounded 100%, that was bad advice. But I double down on that advice today for the same reason.
Pooled employer plans (PEPs) are the latest 401(k) rage, but they can be an asset or a liability. The difference is in their qualified default investment alternative (QDIA).
The U.S. stock market is thriving, while China’s deteriorates. China could intervene to limit stock market losses, but it is not. Is China purposely losing a battle to win a war?
The stock market and economy are hanging by a thread over an economic abyss. That thread is zero interest rate policy (ZIRP).
“It’s different this time” is usually not true, but this time it is. Will we get amplifying extremes, or returns toward average? The feasible and likely scenario spells disaster.
We’ve had serious inflation, but don’t know it because the barometer we use to measure it ignores security price inflation.
Two Congressional chairs have authorized a review of target-date funds (TDFs). The last such review was in 2009, and all that changed was that risk increased. It would be a shame if this initiative failed to produce results.
Who isn’t baffled by the continuing run-up in stock prices? Behavioral scientists. They explain that we have a host of biases that make us irrational. Here are the reasons that we have a stock market bubble, presented in two tables.
