<p>Maybe we should give incentives to companies that make things in this country instead. Maybe we should give more incentives for education.
Maybe we should give more incentives for labor.</p>
<p>We keep giving incentives to firms to speculate. I am pretty positive people will still trade. If they trade less, maybe that is a good thing.</p>
<p>“That’s true only if you look at the dollar amounts of the trades. If you look at the number of people trading futures, it is very small compared to the stock market.”</p>
<p>Maybe, just maybe, we shouldn’t give subsidies to hedge funds, and market makers and hft firms. Pe guys. Banks.</p>
<p>I can say this because my career is pretty much over. :)</p>
<p>I am not sure if we were starting an economy from scratch, we would argue that it is better to trade 2,000,000 es futures a day rather than 1,000,000. </p>
<p>Gold futures. Really? That is more important than education? Health care? Job training? Really?</p>
<p>I think society has been snowed and it is very bad for the economy.</p>
<p>What happened to subsidies distorting the economy? The same people that say stop the subsidies get subsidized. </p>
<p>You watch CNBC. It is just a parade of wealthy subsidized people going on the air complaining about others’ subsidies. People think their subsidies are better than the other guys subsidies. It is a delusion of grandeur.</p>
<p>I usually trade Emini s&p, WTI crude, Nat gas, and VIX. Why do I trade these and not OJ or some of the other lesser known futures? Liquidity. I can get in without fear of being able to get out. </p>
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<p>If we were starting from scratch, we would have ordinary income and low income rates and no long term capital gains. All these subsidies distort the economy but they get politicians elected.</p>
<p>“If we were starting from scratch, we would have ordinary income and low income rates and no long term capital gains. All these subsidies distort the economy but they get politicians elected.”</p>
<p>In terms of making suggestions to my son, the idea is to give him suggestions for investments that do not require a lot of care and feeding–an approach that he can continue to follow in a variety of different conditions unless and until he wants to spend a substantial amount of time on figuring out what to do with his money. He asked for several options. VBINX is the standard asset allocation, but is entirely tied to the US economy. My personal favorite would be the Permanent Portfolio idea, which would entail simply buying GLD, SPY and TLT and looking at them once a year. (Actually, in a tax-sheltered account, VCVSX has performed better than SPY since its inception with lower volatility, but that is another story. You could also substitute the appropriate Vanguard mutual fund for SPY and TLT and save a little on the expense fees).</p>
<p>There are several attractions to PCEF. First, since the heavy option income representation is a good proxy for equities, it gives you good diversification. Second, a number of the funds in the basket invest in foreign securities, giving you further diversification. Third, the fact that the algorithm is tilted toward funds trading at discounts to net asset value, it gives the ETF a value component. Finally, there is the psychic benefit to being paid every month–something my son mentioned.</p>
<p>The big downside is that the distributions are taxable as ordinary income. But it still might be a good choice for his Roth IRA.</p>
<p>I don’t like bonds for people in their 20’s.
That rules out VBINX.
That rules out TLT.
GLD is a speculation not an investment.
High yield has had a big rally. I am not in love with that sector. If rates stay low and the economy muddles along, I guess that sector will be ok.</p>
<p>PCEF…I don’t know enough about PCEF. I don’t know what you are really buying. </p>
<p>Your son mentioned income. So, he is conservative and his time horizon is not necessarily very long term?</p>
<p>I’m not sure that my son has a really systematic view of his time horizon yet. He is savvy and thoughtful enough to understand that he should put money into his Roth during the short period when his tax rate is low, but beyond that he has a lot going on making career type decisions and just doesn’t have the energy to make detailed decisions about his investments, but mentioned that he liked the psychic comfort of seeing that his money is making money.</p>
<p>I think that gold is a complicated “investment.” In the Permanent Portfolio, I think that the underlying idea is that money has to flow somewhere, and if it is not flowing into either stocks or bonds, gold is a surrogate for everything else. Gold also has the virtue of being the place where people run in case of real trouble.</p>
<p>But in any event, would your advice be to invest the money in world stock and real estate funds?</p>
<p>Real estate funds and international funds…Sure…actually, when somebody invests in the s&p you are getting international exposure. These are international companies for the most part that make up the s&p. </p>
<p>I see no problem with somebody investing in world stock funds or real estate funds.
I have given my 20+ daughter very little advice. She invested in an international fund on her own. I told her if she was going to invest in funds, to invest in low cost funds. Fees kill a performance. She chooses her own stocks. She makes her own mistakes. I don’t know what she owns these days. I do know that she is a saver and an investor and is
pretty careful with her money. That is what counts. Good money habits count.</p>
<p>Now, if my daughter ever loses her job, we might have a talk. :)</p>
<p>There isn’t any discussion because 1. Nobody knows anything about why this happened and 2. Does it really make any difference?</p>
<p>The earnings season doesn’t have to be great, it just has to be better than the low bars that the really ignorant or intentionally misleading analysts set.</p>
<p>“Growth becomes more fragile” in countries with high levels of inequality like the United States, said Jonathan D. Ostry of the International Monetary Fund, whose research suggests that the widening disparity since the 1980s might shorten the nation’s economic expansions by as much as a third.”</p>