The market? I ask Todd, my favorite financial adviser. He answers:
“”All you have to do is look at the price oil.
“Doesn’t make sense to me.
“But then nobody is asking my opinion.
“But there’s a lot of snow around and $11 trillion on the sidelines.
“And interest rates are at 2% on the 10 year treasury.
“Ultimately, people will come back to the market chasing returns.”
The New York Times ran a piece on Friday: Lower Oil Prices are not bringing Economic Gains.” It began:
WASHINGTON — It has been a truism of the American economy for decades: When oil prices rise, the economy suffers; when they fall, growth improves.
But the decline of oil prices over the last two years has failed to deliver the usual economic benefits.
As oil prices have fallen to levels not seen since 2003 — sagging below $27 a barrel on Wednesday before rebounding to about $30 on Thursday — many experts now say they do not expect lower prices to bolster the domestic economy significantly in 2016.
“We got this wrong,” John C. Williams, president of the Federal Reserve Bank of San Francisco, told an audience in Santa Barbara, Calif., this month.
Lower oil prices historically were a cause for celebration in the developed world, including the United States. The effect was akin to a tax cut for consumers who could fill their gas tanks for less money. And since much of that oil was imported, the windfall was generally larger than the damage to domestic oil producers.
Every dollar gained by consumers was a dollar lost by producers, but when the dollars were lost by foreign producers, the American economy should have benefited.
But this time is different. The losses from lower prices are larger and quicker than expected as energy companies cut back on investment and lay off workers, while the gains are smaller and slower to materialize, as consumers save some of their windfalls.
Economists at JPMorgan Chase, who predicted last January that lower oil prices would add about 0.7 of a percentage point to the economic growth rate in 2015, now estimate that lower prices might have shaved 0.3 of a percentage point off the growth rate.
You can read the full piece here.
Earlier in January, the Times’ Ron Lieber wrote a piece
6 Tips for Investors When the Stock Market Tumbles
The impulse when the stock market falls hard for a few days in a row is to do something. Anything. Our life savings are often on the line, after all. But that’s the idea: Stocks are most useful for long-term goals. So unless those goals have changed in the last few days, it probably doesn’t make much sense to overhaul an investment strategy based on a blip of market activity.
Consider the following points.
1. You Are Not the Stock Market
Chances are, your portfolio is a diverse mix of investments. While stocks may be falling, you probably also have some bonds and cash. Perhaps there are some real estate mutual funds, too. Then there’s your home equity if you own a home, not to mention the value of your future earnings. These things probably won’t all fall simultaneously.
2. You May Have Done Quite Well in Stocks
If you were in stocks from 2009 to 2015, or in the 1990s or consistently since the early 1980s, you are most likely a big winner. It’s generally a bad idea to look at your investment statements too often, but take a quick peek at your long-term performance. That outsize gain you see is one reason you were in stocks in the first place.
Plenty of research shows that if you miss just a few days of the market’s biggest gains, your long-term portfolio will suffer badly. If you decide to put a lot of your money in cash right now, how will you know when to get back in the market? You’ll probably be looking for a sign, and that sign will be the rebound days on which you missed out
3. Your Goals Probably Have Not Changed
At some time in the past, when you were not scared, you made a decision to construct your portfolio a certain way. You knew that stocks involved risk and that the returns they have traditionally delivered, above and beyond what cash and bonds do, was the reward for your persistence.
Nothing about recent market events suggests that the fundamentals of capitalism have changed. So neither should your confidence in very long-term ownership of the pieces of the for-profit enterprises that benefit from your fortitude.
4. Most Investors Have Plenty of Time to Recover
Too many 70-year-olds sold all of their stocks in 2009 and are healthy enough to live to 100. They would be going on a lot more vacations now and be worrying less about long-term care if they had held firm.
Worried about a 529 college savings plan for a 12-year-old? Let’s hope you weren’t 100 percent in stocks with six years to go before needing money for tuition. Still, you have at least nine years for a portion of that portfolio to recover from any sustained downturn.
5. Some People Cannot Handle the Stress of Stock Investing
Maybe you are one of them. But try to give this more time, and consider the alternatives. There are few investments that can deliver the kinds of returns that stocks can without their own accompanying anxiety. An alternative is to save a lot more in safer investments like cash or certain bonds. Most people don’t have enough income to do that easily, so settling for lower returns will mean a combination of working longer and living modestly. For some people, that is a fine trade-off.
6. Dear New Investors: This Is Just What Markets Do
There is absolutely nothing abnormal about what is going on here. Most of us have to save somewhere, and history suggests that stocks are the most accessible route to getting the returns you will need to retire someday. It would take decades of systemic economic erosion to prove otherwise, and a few days of market declines do not suggest that anything like that is upon us.
Oh my God, what is wrong with Walmart?
Is anybody paying attention? To wit: I’m curious about a new TV. Walmart.com has a nice curved 55 inch Samsung for $997.99 — nearly half the MSRP.
I look at Amazon. Exact sme price. But there are some “minor”differences.
+ Amazon tells me it’s a 2015 model. Walmart doesn’t.
+ Amazon tells me its size specs. That way I can figure out if it will fit on my wall. Walmart doesn’t.
+ Amazon has customer reviews. Walmart doesn’t. Maybe no one has ever bought this TV from Walmart?
+ Amazon has people it will send to hang my new TV. Walmart doesn’t. Maybe people who shop at Walmart online don’t have walls?
Why would anyone ever buy from Walmart.com? Why do they even bother with an online website? Total waste of money!
No one in our family shops at Walmart. Their stores are awful. Fortunately, they’re closing a bunch.
Now comes news that shopping for food at Aldi versus Walmart saves 30%. Click here. And Aldi, the German chain, which my Australian family loves, is expanding with zillions of new stores. They even have one now in Manhattan.
Should I sell Walmart short?
Don’t get me started on Best Buy. I dropped by last night to buy a Logitech keyboard for my iPad Mini. They wanted $90. Amazon wanted $32. Best Buy’s minimum wage salesman was clueless. Hasn’t anyone from Best Buy ever shopped at B&H?
Short Best Buy?
Airlines are running auctions to entice you to upgrade:
I recently snagged a couple of first class seats for less than had I bought them outright.
The key, says Conde Nast Traveler, is not to bid too little — perhaps 20 to 40 percent of the difference between coach and business.
Read more here.
More on suicide bombers
A suicide bomber completed his mission and went to Paradise, as foretold.
When he arrived there he said to Allah that he was ready to claim his 72 virgins, as promised. Out of curiosity he asked Allah why there were so many virgins in heaven.
Allah regarded him for a moment, then replied, “Actually, the 72 virgins are here in heaven because people like you murdered them before they could experience the pleasure of sex. So you’re here to service them. Since they’re virgins, they’re quite sexually ravenous and, frankly, you’ll be on constant, exhausting duty. I shall banish you from Paradise should you fail!”
The bomber responded, “Well, I guess I can deal with that. How hard can it be to keep 72 women satisfied for all eternity?”
Allah replied, “Who said they were women?”
Harry Newton who’s having a new grandchild today. Michael, my son, the father, asked for our wishes. My biases:
Today will be born the greatest tennis player the world has ever seen.
Or perhaps America’s best President.
Or the writer of the Greatest American Novel.
Or a great software coder entrepreneur who will create the next Facebook, Twitter or Uber (and allow his/her doting grandfather to invest).
Or perhaps a nice happy, healthy kid who will love his/her parents, his/her grandparents and other relatives and be much loved in return.
