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The Best of What They Said and I Read Week Ending 11/4/18

Short excerpts from articles I found interesting

I may not agree with the author and the following material is not intended as investment advice

Barron’s – November 2, 2018 – Stock Rally Fizzles in Wake of Strong Payrolls Report – Ben Levisohn

  • “…the Dow Jones Industrial Average rose 582.52 points, or 2.4%, to 25,270.83 last week, while the S&P 500 gained 2.4%, to 2723.06, and the Nasdaq Composite climbed 2.6%, to 7356.99. After a brutal October—the S&P 500 dropped 6.9%, its worst month since 2011...”
  • “…He compares the situation to 2011 and 2016, when worries about Europe’s debt crisis and problems in the U.S. oil patch, respectively, caused sharp pullbacks, but ended when investors realized no recession was imminent. “We will see that capitulation,” he says. “And it will be the start of a buying process.”  That could take a while. In 2011 and 2016, the S&P 500 suffered peak-to-trough declines around 19% before bouncing. The S&P 500 is 7.1% off its September high.”

U.S. Global Investors Investor Alert– November 2, 2018 – Frank Holmes

  • “The world is more fragile today than it was in 2007. That’s the opinion of former derivatives trader Nassim Taleb, whose bestseller, The Black Swan, is about how people make sense of unexpected events, especially in financial markets”
  • “…Taleb said the reason why he has reservations about today’s economy is that it suffers from the “same disease” as before. The meltdown in 2007 was a “crisis of debt,” and if anything, the problem has only worsened.  Indeed, debt is on the rise. By the end of the first quarter, the total amount the world owes climbed to a record $247 trillion...A lot of this debt, Taleb said, may have moved to different places since the financial crisis—it’s shifted from housing to governments and corporate balance sheets—but the debt “is still there.” Student loan debt in the U.S., for example, stands at about $1.5 trillion today, or nearly $33,000 per borrower. After mortgages, student debt is now the largest form of debt in the U.S.”
  • “…President Donald Trump said this week that “we’re going to start paying down debt.” But all the signs appear to say otherwise. The Treasury Department estimates that it will issue some $1.338 trillion in debt this year—more than twice the amount as last year.”

The Wall Street Journal – November 3, 2018 – The New Retirement Plan:Save Almost Everything, Spend Virtually Nothing – Anne Tergesen and Veronica Dagher

  • “…For a new generation of Americans, the traditional retirement age of 65 is getting old.  Some of the youngest members of the U.S. workforce are saving aggressively and spending little so they can leave work decades ahead of schedule, defying the career arc that typically defines adult life.  Their reasons for flouting conventional career norms and saving at high rates range from dissatisfaction with unfulfilling work to the decline of traditional social safety nets to a desire for more economic security in an era defined by events such as the 2008 financial crisis.”
  • “Even though they are better educated than their parents and grandparents, people between 25 and 35 have less wealth than prior recent generations, and “are behind in almost every economic dimension…The younger generation’s radical solution – dubbed Financial Independence, Retire Early – has spawned an ecosystem of podcasts, blogs, books, conferences and informal discussion groups.  One online forum dedicated to the concept, known to it followers by the acronym “FIRE,” has more than 450,000 subscribers.”
  • “…FIRE adherents are often millennials and younger members of Generation X who have college degrees, above-average incomes and the discipline to adopt a strict do-it-yourself approach to retirement.Some say they are saving as much as three-quarters of their income, or five times the 15% savings rate conventional financial advisers often recommend, and growing their own food.Others are taking more modest measures such as living in smaller houses and driving older cars.”

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