Baby Boomers: Still Too Scared of Stocks

Pumping stocks are an excuse

If you had an honest government that was not printing limitless funny money from thin air, and an honest Federal Reserve monetary policy in setting the Fed Funds rate, your after-tax bank certificates of deposit WOULD BE "keeping up with inflation". They might not be earning a positive return above inflation, but they would be "keeping up".

Ask yourself why the Fed Funds rate is at 2% while inflation is three times that.

Ask yourself why banks expect to borrow from you at 2 or 3 percent and lend on credit cards as high as 32% "default" rate (even for some people not in default.)

Instead we're told to roll the dice in the stock market, when the right answer is to elect Democrats that tax until the budget is balanced, the ballooning federal debt is retired, and rates are not lowered when they should have been raised to fight inflation. Don't believe me? Do you not "get it" that today's oil prices (and food prices, and college prices, and health care prices) are more about a falling dollar than about anything else?

Retirement money

I put my retirement money in secure items such as certificate of deposits etc. The returns are not great, but the principal is secure. The interest also covers inflation plus a little extra.

Many experts are recommending stocks or the stock market as the way to go. They point out the rate of return over an extended period of time. What they forget is that stocks are at an all time high. The current period started in 1981 with the Dow Jones at about 600 and has risen to about 12000. There have been some temporary dips, but nothing sustained. Someone else can cite other indexes that have not done quite as well or may have done better.

The issue is whether there is a downside risk and do you want retirement money in a vehicle with this down side risk. Look at the various depression years. Start with 1929 and look to see how long it took for stocks to recover. Look at 1966 (a high time) to 1981 (a low time) when the Dow dipped . by 40%.

One can argue that stocks are risky over the short or the long haul. In the 1970's the philosophy was to put in the stock market only the amount you can afford to lose. Would I feel comfortable with losing my money? No. But I can afford to lose it.

To those experts who tout stocks I ask: What do you gain by touting these stocks? Do you have a vested interest in doing so?

I say that one should invest the way one is comfortable.

Dollar Bills - simple supply vs. demand

The paper U.S. dollar is another commodity truely subject to the normal supply and demand. When $$ Billions can be electronically created out of thin air, the suppy is nearly unexhaustable. There are already $$ trillions of dollars sloshing around the world due to deficit spending. Demand wise as time goes on nobody wants the dollar because there are too many of them out there. So don't be surprised if OPEC changes pricing to Euros or some other stable currency.