<p>It used to be, most of the financial calculations assume 8% of annual return. As of lately, 6% is much more widely used. Personally, I think even 6% is too optimistic.</p>
<p>Was with our banker yesterday review all our accounts. The only ones making any money are those buying some every month. Those buy and hold accounts all have loses.</p>
<p>Basically, from 2007 to todate, the overall retun is less than 2%. </p>
<p>Looking forward, we are switching all to cash and Gold/silver. IMHO, it is going to be ugly.</p>
<p>In a deflationary environment, just about everything goes down
including gold and silver. The idea behind buying gold and silver is
that central bankers will print like mad to try to inflate resulting
in gold and silver (and oil and soybeans) increasing in currency
denominated terms. So hopefully gold and silver won’t drop as much as
the currency.</p>
<p>So I’m all with gold and silver.</p>
<p>As far as cash goes, I’d like to move it to other countries, particularly
Australia and Singapore. There are other countries that I’m interested in
but these two would be particularly easy for us.</p>
<p>Australia for preservation of capital and for high-income (they are paying
close to 6% on CDs). Singapore for preservation of capital - their interest
rates are like those in the US.</p>
<p>In general, we’d all like to invest in US stocks that are growing and
maybe paying out income but valuations may be a little frothy ahead of
an economic slowdown. The Central Bank and Administration and many
economists are saying that things will pick up in Q3 based on current
economic indicators but what if they are wrong? Companies are spending
on capital investments but economists are starting to realize that the
tax incentives for those investments have companies buying machines
that require fewer people to operate and use them. So the “soft patch”
so often mentioned by economists might actually be a misreading of the
economic environment that has shifted from labor to capital.</p>
<p>As a market participant, you have to consider the risk that the market
is dealing with right now and obviously, many have moved to the
sidelines. The level of pessimism on the trading boards and the financial
news sites is amazing this weekend and this is options expirations week.
I was considering buying on Friday afternoon but my workout went a bit
late and I didn’t wind up buying. I could see a bounce this week on
excessive pessimism as a pause in the larger trend.</p>
<p>I think that it could be ugly. The Central Bank and the Administration
both appear to be sitting things out this summer - they appear to want
to see the data for the summer before possibly taking action in the
fall. I think that the Fed really wants to unwind QE2 and not do a
QE3. I do not know what the Administration is trying to do; I think
that it has limited options based on the current political
landscape. So it could be a long summer for Mr. Market.</p>
<p>I would really love for the Central Bank and Administration to be correct
on a rebound in the fall and hiring to go along with it. But you don’t
manage your household investments based on hope.</p>
<p>Well gold and silver are in a bubble right now so switching to a all cash gold/silver account would be stupid. If you are an investment professional and cant pull in 6% right now you should quit your job. Just buy a dividend stock and sell deep in the money calls. Buy VZ, sell 2013 strike 17.50 calls and pick up 18.9… with VZ’s 5.5% yield you will have gaurenteed 11% year over year for two years! With the 18.9 you pick up you can buy up PBI another high yield stock and do the same.</p>
<p>"Basically, from 2007 to todate, the overall retun is less than 2%. </p>
<p>Looking forward, we are switching all to cash and Gold/silver. IMHO, it is going to be ugly.</p>
<p>What do you think? "</p>
<p>I think you were not sufficiently diversified in your holdings and I think that what you are planning on doing going forwards is not sufficiently diversified either.</p>
<p>BCEagle – The Australian bank info is fascinating. Are Australian CD’s held by foreign nationals insured (a la FDIC insurance)? Is there a publication (on or offline) you recommend that evaluates Australian financial products well?</p>
<p>They don’t have insurance though they have discussed it.</p>
<p>Their feeling is that not having insurance will result in their banks not taking on excessive risk. BTW, we’ve had money there for over 25 years.</p>
<p>You inspired me to tool around the internet reading about this. So going through an insured US fund that invests in Australian cd’s but has a lower return than going directly through the Australian bank seems silly?</p>
<p>you have to realize that by going back to 2007 you are encompassing the entire stock market crash of whatever year in there. Things are slowly rebounding but things were really bad there for awhile. I had a 13 percent gain in 2010, like a 20 or 30 percent gain in 2009 and like a 20 or 30 percent loss in 2008 if I’m remembering right.</p>
<p>The DJ average is 12,077.09 Jan 2007 and now it’s 11,951.91 so it’s been 4.5 years and no gain. I’ve always estimated my annual return to be 5% before the bubbles(dot com & housing) popped and post-bubbles to be 3%.</p>
<p>When Happydad got tired of losing money by picking his own stocks, he subscribed to one of the Motley Fool newsletters, and now follows their suggestions religiously. Yes those stocks do go up and down with the market, but overall he’s seen consistent gains. I understand that the MF has more than one type of newsletter, so your mileage will almost certainly vary.</p>
