American Retirement: Scrambling To Stay Ahead
Americans may be more prudent than often depicted…
Portion of workers saving for retirement, ranked among 15 countries
1.
Singapore 80%
2.
Belgium 77
3.
U.S. 76
14.
Italy 38
15.
Netherlands 33
…but even the affluent are anxious about the golden years.
Portion of U.S. working millionaires worried about retirement health-care costs
92%
Planning to work full- or part-time in retirement
42
Fretting about a stock-market decline
88
Concerned about inflation
80
Worried about large tax increases
75
Sources: AXA Retirement Scope; Northern Trust Co.
March 18th 2005
Hello
Yes I know what you have been thinking: but take a look at the above charts seems the DOWJONES Industrial Index from the early 1930’s has an amazingly similar pattern as the current NASDQ Composite. Don’t tell me you think things are worse now than in the heat of the great depression? Looks to me like we are currently running a little behind, about 6 months give or take on the time line. It is still all about energy .Short term oil prices continue to impact the market, putting us squarely in the midst of a secular bull market in energy. Higher Oil Prices are driven by risk. Risk takes many shapes and forms .There is demand risk, disruption risk, extraction risk, and production risk. For the moment these risks all seem to be heightened and look to be heightened for some time to come.
There is some concern that the real estate party is about to come to an end. 5 years of non stop gains are leading many to use the phrase, “when it can’t get any better than this it can only get worse.” I have noticed that the same people who were buying Tech stocks in March of 2000 are now talking up real estate. After the bubble burst in 2000 the FED flooded the economy with liquidity in an attempt to rescue us from the specter of deflation. This process involved lowering interest rates to 40 year lows. Low interest rates, easy credit and a powerful dynamic of a sweet spot in the demographic cycle produced a huge housing boom. Lower rates and increasing prices in housing spurred huge amounts of refinancing allowing consumers to pull equity out of there homes and apply it to other projects. As this all started many professionals wondered what would be the net effect on the bond market and interest rate sensitive equities as the FED raised rates slowly for a prolonged period of time. Higher interest rates depress bond and, preferred stock prices, as well as hurt bank, REIT and utility stocks. So far none of this has been true. The prolong raise in interest rates has not effected long bond yields and to some degree high quality tax free bonds have rallied in price. It seems to date we have something more akin to the post world war two housing boom which is also leading to a new baby boom. My concern is that as rates continue to increase there is going to be an inflection point that may undue this process and burst a bubble in housing the same way it was burst in the NASDQ.
On a final note if you recently sent your IRA or SEP contribution I have been a bit over whelmed by the volume of checks in recent weeks so I have been a bit slow letting people know their check has been deposited. Please bear with me, checks get deposited as soon as they arrive and if you haven’t herd from me you’ll hear shortly.
James
1(888)599-1188
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