Not according to Ben Bernanke. A fed chief he went so far as to say that he wanted to drive investors/savers away from short term instruments into riskier assets. >>
What are "riskier assets"?
PMs, equities, real estate....all got whacked for 50% in the last decade.
<< <i>dollar index beginning to experience lower lows and lower highs, good for PMs.
Saudis beginning what appears to be a price war with oil, bad for PMs. >>
It needs to consolidate for about 6 months before the next leg higher. Competing currencies have absolutely nothing going for them, just as was stated in this forum years ago.
In financial circles ,treasuries have always been touted as the risk-free investment and have been used as the standard to which all other investments are compared for risk purposes. At least, since 1980 or so.
Competing currencies have absolutely nothing going for them, just as was stated in this forum years ago.
True enough, insofar as there is nowhere else to run for large, fungible pools of liquid, tradeable paper securities.
It's all a matter of confidence between the large banks, as far as I can tell. The Libor scandal really had them going for awhile.
Q: Are You Printing Money? Bernanke: Not Literally
IMF is warning that a "rocky exit from low interest rates by the FED" risks $3.8 trillion of losses to global bond portfolios. Remains to be seen how the FED will respond to this.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Not according to Ben Bernanke. A fed chief he went so far as to say that he wanted to drive investors/savers away from short term instruments into riskier assets. >>
What are "riskier assets"?
PMs, equities, real estate....all got whacked for 50% in the last decade. >>
His statements were made within the last 24 months as he began to "twist" and print money like they were Nathans hot dogs at the 4th of july eating contest.
A booming stock market would solve all as cap gain taxes would increase and everyone would feel wealthier and increase consumer spending.
Busy day for me but I will provide citations later.
<< <i>His statements were made within the last 24 months as he began to "twist" and print money like they were Nathans hot dogs at the 4th of july eating contest. A booming stock market would solve all as cap gain taxes would increase and everyone would feel wealthier and increase consumer spending. >>
The money creation has had the opposite affect on consumer spending (money velocity) and has also failed in the area of job creation. The FED never intended for the funny money to reach Main St. It was intended as liquidity for Wall St. where it did serve its purpose - inflated asset prices and big bank profits. The FED bails out Wall St. to "protect" an over leveraged financial system and leaves it to Washington to bail out individuals via entitlements. Had the FED focused on reducing the leverage, bank bailouts would be ancient history.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Not according to Ben Bernanke. A fed chief he went so far as to say that he wanted to drive investors/savers away from short term instruments into riskier assets. >>
What are "riskier assets"?
PMs, equities, real estate....all got whacked for 50% in the last decade. >>
His statements were made within the last 24 months as he began to "twist" and print money like they were Nathans hot dogs at the 4th of july eating contest.
A booming stock market would solve all as cap gain taxes would increase and everyone would feel wealthier and increase consumer spending.
Busy day for me but I will provide citations later. >>
Just show me where he said he wanted people in "riskier assets". Im having difficulty with the term. Thank you.
In financial circles ,treasuries have always been touted as the risk-free investment and have been used as the standard to which all other investments are compared for risk purposes.
Interesting then as Bernankes supposed push to "riskier assets" actually encouraged investors to go the "risk-free" route.
BTW--Bonds are not "risk-free" and I believe most investors know that.
Risk as a concept is not binary, something is not either safe or risky, there is a continuum of risk/reward/probability that is multidimentional for any asset or activity, with different types and degrees of risk that are particular to the situation. Which is why a blended strategy is recommended for most people with diversified offsetting asset classes.
Of course, there are those who swing for the fences with an all eggs bet and maybe strike out more often, others have a system in which they grind out a profit trading the noise
Interesting then as Bernankes supposed push to "riskier assets" actually encouraged investors to go the "risk-free" route.
BTW--Bonds are not "risk-free" and I believe most investors know that.
I remember Bernanke's comment, and the intention was to push investors toward "risk assets" not "riskier assets", meaning - the stock market, which has been referred to lately as a risk asset on gov.tv, er, I mean CNBC.
Most people do know that bonds aren't risk-free, but Treasuries have always been referred to as that. Why would that be?
Risk as a concept is not binary, something is not either safe or risky, there is a continuum of risk/reward/probability that is multidimentional for any asset or activity, with different types and degrees of risk that are particular to the situation. Which is why a blended strategy is recommended for most people with diversified offsetting asset classes.
Back in ancient times, risk was defined for finance purposes as the degree of variability, not the probability for which a particular gamble would pay off. However, if you are inclined to gamble it pays to be aware of the level of risk.
Of course, there are those who swing for the fences with an all eggs bet and maybe strike out more often, others have a system in which they grind out a profit trading the noise
c'est marketum
And some of us accept the fact that metals trend up & down like just about everything else, but they have a few distinct advantages in being physically in place and verifiable, with no counterparty risk.
Risk is manageable over time, for gold, silver, stocks, bonds, and just about any other fungible asset.
Q: Are You Printing Money? Bernanke: Not Literally
And some of us accept the fact that metals trend up & down like just about everything else, but they have a few distinct advantages in being physically in place and verifiable, with no counterparty risk.
one would hope that most if not all of us accept those facts.
That's right, there is no counterparty risk that my metal coins and bars in my possession will have an accounting scandal, or lose a sales competition to a competitor, or go out of business entirely, the way a company might, and the price paid for that lack of those kinds of risks is the awareness that metals will never outperform inflation by thousands of percent, the way a stock might.
On the other hand, I risk my metals being stolen from me by stealth or force, and also risk that the market value of them may decline, forcing me to suffer a loss if I'm forced to sell them at the wrong time.
<< <i>Because the US has never defaulted on its debt..ie, not made a payment. Thats a record that will not be broken in our lifetimes. >>
I agree, but that hardly makes the investment "risk free" as the value of the asset in real terms loses at least a few points per year in most hold periods.
and monetizing the debt is perfectly acceptable? I say wipe the slate clean and start over. Better the creditors take a quick bath than a constant soaking by the taxpayers paying the interest.
concerning PMs, gold has never gone to zero - many, and eventually most, currencies do. As currencies move toward their ultimate zero, gold always takes the opposite path. This is the risk free nature of gold.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
I dont think that link will work right for you, but anyway its a graph of the price of the 30 yr bonds since 1980. It goes from 43 in the lower left to 143 in the upper right. And that doesnt include an average of 5%+ annual interest payments.
There are two primary reasons for holding US Treasuries. (1) profit on the yield with no intention of waiting on the principle payoff, (2) buy and hold US debt as a portion of a nation's foreign reserves. It is not the peace of mind that one day the bond will reach maturity and be paid, it is the knowledge that someone else will buy the paper as a safehaven - until they won't. Remove the ability to pass on the debt before maturity and you remove most of its demand. How many buyers are willing to wait til maturity to see IF they will get paid when it comes to loaning to any nation. As we learned with subprime debt in 2008, when it can be sold to a sucker before maturity, risk is greatly reduced.
There's a reason the FED had to step in and buy US debt.
BTW, coal is worth zero to those who don't need it. I will concede that there will always be those that do. How many people still need these:
I kept a dozen of them just in case I'm wrong about currencies.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
I dont think that link will work right for you, but anyway its a graph of the price of the 30 yr bonds since 1980. It goes from 43 in the lower left to 143 in the upper right. And that doesnt include an average of 5%+ annual interest payments.
BTW--Coal has never been worth zero either. >>
Bonds were a great pickup in the 1980's when rates were not manipulated on a daily basis as they are now. Those picking up 10 years today at 2.30% may feel some heat in their wallets, not in a good way.
<< <i>Because the US has never defaulted on its debt..ie, not made a payment. Thats a record that will not be broken in our lifetimes. >>
I agree, but that hardly makes the investment "risk free" as the value of the asset in real terms loses at least a few points per year in most hold periods. >>
Did not the US default on it's debt obligation in 1933 when Roosevelt announced the US would no longer honor it domestic promise to pay in gold? This was accepted by Americans because it became law.
Did not the US default on it's debt obligation in 1971 when Nixon announced the US would no longer honor its international promise to pay in gold? This was accepted internationally because only dollars could buy oil and our trading partners needed our dollars.
What happens when US dollars are no longer needed for international trade? We shall soon see.
Monetizing the debt with "print as needed" is nothing short of a rose by another name.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
""Bernanke states that the goal of the Fed's purchases is to force investors to rebalance their portfolios with "other assets." Later in the speech, he mentions that asset purchases help push investors into more risky assets; in previous speeches, he has mentioned "longer-duration, risky assets."""
....and from the federal reserve website.... Bernrnake, Jackson Hole 2012 speech.
""'Of course, one objective of both traditional and nontraditional policy during recoveries is to promote a return to productive risk-taking;""
I am for doing good to the poor, but I differ in opinion about the means. I think the best way of doing good to the poor is not making them easy in poverty, but leading or driving them out of it.
Benjamin Franklin
Diversification proclamation. Don't put all your chickens in one hen house.
When gov.com prints or keystrokes money into existence to deficit finance operations and entitlement spending, where do you draw the line before calling it a default? $1 Trillion? $15 Trillion? $300 Trillion? A $Trillion in every pot?
Q: Are You Printing Money? Bernanke: Not Literally
<< <i>Bumper crop prices drop~ cheap corn is great for all. >>
Unless you are a farmer or an ethanol producer. >>
If you were an ethanol producer, why would you want expensive corn? >>
It's not that they want it to be expensive, they just don't want it too cheap. They're forced to reduce sell prices along with the reduced cost of the corn. Production costs remain static however, so below a certain level they're making less money even though they may be doing slightly higher volume. At least that's what I'm told by a client who works for ADM.
<< <i>Because the US has never defaulted on its debt..ie, not made a payment. Thats a record that will not be broken in our lifetimes. >>
I agree, but that hardly makes the investment "risk free" as the value of the asset in real terms loses at least a few points per year in most hold periods. >>
Did not the US default on it's debt obligation in 1933 when Roosevelt announced the US would no longer honor it domestic promise to pay in gold? This was accepted by Americans because it became law.
Did not the US default on it's debt obligation in 1971 when Nixon announced the US would no longer honor its international promise to pay in gold? This was accepted internationally because only dollars could buy oil and our trading partners needed our dollars.
What happens when US dollars are no longer needed for international trade? We shall soon see.
Monetizing the debt with "print as needed" is nothing short of a rose by another name. >>
No. No. We will not soon see. In fact, we may see the dollar as the only currency accepted.
""Bernanke states that the goal of the Fed's purchases is to force investors to rebalance their portfolios with "other assets." Later in the speech, he mentions that asset purchases help push investors into more risky assets; in previous speeches, he has mentioned "longer-duration, risky assets."""
....and from the federal reserve website.... Bernrnake, Jackson Hole 2012 speech.
""'Of course, one objective of both traditional and nontraditional policy during recoveries is to promote a return to productive risk-taking;"" >>
The first quote is an opinion of what he said.
The second says he wants to "promote productive risk-taking". That doesnt mean buy "riskier" (whatever that term means) assets. To me it means people need to go out and purchase capital equipment to start or build a business.
And the quote refers to the approach taken after any recession.
<< <i>Because the US has never defaulted on its debt..ie, not made a payment. Thats a record that will not be broken in our lifetimes. >>
I agree, but that hardly makes the investment "risk free" as the value of the asset in real terms loses at least a few points per year in most hold periods. >>
Did not the US default on it's debt obligation in 1933 when Roosevelt announced the US would no longer honor it domestic promise to pay in gold? This was accepted by Americans because it became law.
Did not the US default on it's debt obligation in 1971 when Nixon announced the US would no longer honor its international promise to pay in gold? This was accepted internationally because only dollars could buy oil and our trading partners needed our dollars.
What happens when US dollars are no longer needed for international trade? We shall soon see.
Monetizing the debt with "print as needed" is nothing short of a rose by another name. >>
No. No. We will not soon see. In fact, we may see the dollar as the only currency accepted. >>
so if the US decides to honor it's debt with something other than what it promised, say with coal, then according to you it has not defaulted on their debt. What's to stop them from fulfilling existing obligations (bonds) with only new obligations (new bonds)? Would that not also be a default?
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
so if the US decides to honor it's debt with something other than what it promised, say with coal, then according to you it has not defaulted on their debt. What's to stop them from fulfilling existing obligations (bonds) with only new obligations (new bonds)? Would that not also be a default?
Unless it was a negotiated settlement agreed to by both parties, of course it would be a default.
Q: Are You Printing Money? Bernanke: Not Literally
""""The first quote is an opinion of what he said.
The second says he wants to "promote productive risk-taking". That doesnt mean buy "riskier" (whatever that term means) assets. To me it means people need to go out and purchase capital equipment to start or build a business.
And the quote refers to the approach taken after any recession.
I still want to know what a "riskier asset" is."""
Interpret as you wish, Cohodk. Bernanke was very clear in his post fed meeting pressers about his intention of driving savers into "riskier" assets. You can do the deep dive if you wish, I have already seen and listened to the presentations.
<< <i>Riskier assets tend to be the ones that are productive and those are the ones that drive the economy (albeit at risk of loss)
If everyone sits still on their piles of cash and gold, nothing gets done. There must be movement, i.e. risk, in order for there to be progress >>
All true, Baley. They are also, well, riskier. Not everyone is prepared to possible lose 30-50% of their assets in a bad market.
The Bernanke risk comments as I recall came during the debt crises in Europe. I believe that Bernanke intended (and succeeded) in driving down near double digit rates on problem sovereign debt in nations like Italy, Spain and Portugal.
In a mild (or not so mild) deflation, US Treasury securities are the best securities to hold. They are not risk free, but as the dollar becomes more valuable in a deflation, interest rates fall and bond prices increase. There is almost no risk of default.
In an inflation bonds and dollars are not good and precious metals are the asset of choice. Gold also makes the best "get away money." Gold fluctuates in price vs currencies, but remember, the Israelites made a golden calf. It would still be worth $1225/oz.
In a very slow growth economy with very low interest rates equities are the best investment. To a point. It has been a great party, but we could be at the point where the lights come on and the staff starts to vacuum.
"All true, Baley. They are also, well, riskier. Not everyone is prepared to possible lose 30-50% of their assets in a bad market."
Such people are also not prepared to gain the 30% return we had last year or the tripling of return we had in the last 5 years. You should also not cry over the current measly returns on "fixed income" investments which do lose overall value in the face of current inflation. You have to be flexible and become educated to make your own wise financial decisions. You can't be passive and think the government with their bonds, fiat currency or anything else will "take care of you" like in the old days. Be proactive, not passive. Become your own financial advisor and live within your level of risk tolerance...and accept the corresponding level of return your risk rewards or punishes you with. Don't play victim and blame the system, bankers, gov.com or whomever else you imagine is screwing you over.
Successful trades/buys/sells with gdavis70, adriana, wondercoin, Weiss, nibanny, IrishMike, commoncents05, pf70collector, kyleknap, barefootjuan, coindeuce, WhiteTornado, Nefprollc, ajw, JamesM, PCcoins, slinc, coindudeonebay,beernuts, and many more
<< <i>"All true, Baley. They are also, well, riskier. Not everyone is prepared to possible lose 30-50% of their assets in a bad market."
Such people are also not prepared to gain the 30% return we had last year or the tripling of return we had in the last 5 years. You should also not cry over the current measly returns on "fixed income" investments which do lose overall value in the face of current inflation. You have to be flexible and become educated to make your own wise financial decisions. You can't be passive and think the government with their bonds, fiat currency or anything else will "take care of you" like in the old days. Be proactive, not passive. Become your own financial advisor and live within your level of risk tolerance...and accept the corresponding level of return your risk rewards or punishes you with. Don't play victim and blame the system, bankers, gov.com or whomever else you imagine is screwing you over. >>
Most of what you say is true. Many seniors though are uncomfortable trading or holding equities. Does that mean that the government owes you a safe, risk free return on your savings? Of course not.
Does it mean that rates should not be artificially skewered to favor one group of investors/savers over another? Yes, I believe that to be true. Perhaps if a bunch of retiree's got together and offered Ben Bernanke $500,000 for an evening get together, rather than the quarter million that wall Street is now paying, the markets would be less corrupt and more equitable.
Everything is "skewered" , that is the way of the world now and has been for a long time. If you can't beat them then join them. Be or winner or loser but don't play victim. Accept the path and fate you chose in life and face the reality of it. Believe what you want.
Successful trades/buys/sells with gdavis70, adriana, wondercoin, Weiss, nibanny, IrishMike, commoncents05, pf70collector, kyleknap, barefootjuan, coindeuce, WhiteTornado, Nefprollc, ajw, JamesM, PCcoins, slinc, coindudeonebay,beernuts, and many more
<< <i>Everything is "skewered" , that is the way of the world now and has been for a long time. If you can't beat them then join them. >>
I believe that the skewering today is much more excessive than it has been in any of our lifetimes. State, local and the federal governments are now paying off the big boys to locate or expand at a troubling rate. Seems that the payoffs issued after they leave office is ok and not considered bribery. I disagree.
Are you suggesting that we join them in corruption or just join them by riding their coattails of investing? I believe that you are referring to the latter. In a short time, when the stock market tanks, let's see who is holding the bag? It will of course be the average schmuck who came in late when he was told that it was the "only game in town".
<< <i>In a short time, when the stock market tanks, let's see who is holding the bag? It will of course be the average schmuck who came in late when he was told that it was the "only game in town". >>
If this statement ever became true, then who stuck the gun to the schmuck, took away his free will, put em in a straight jacket and forced him into the markets?...and if they did y do u care?...
<< <i>In a short time, when the stock market tanks, let's see who is holding the bag? It will of course be the average schmuck who came in late when he was told that it was the "only game in town". >>
If this statement ever became true, then who stuck the gun to the schmuck, took away his free will, put em in a straight jacket and forced him into the markets?...and if they did y do u care?... >>
Nobody did.
By the same logic, why is insider trading illegal? No one is forced to counterparty the trade.
The Alibaba offering, like PALM in March 2000, may have marked a multi year high for equities.
While there might have been thinking earlier this year that inflation was inevitable, that no longer seems to be the case. The falling interest rates and falling equity prices indicate that we may well have reached a tipping point. In that case, low rates are not enough to sustain equity prices at triple their level in March 2009.
Cash and US Treasury notes and bonds may be the asset of choice now.
"""The falling interest rates and falling equity prices indicate that we may well have reached a tipping point. In that case, low rates are not enough to sustain equity prices at triple their level in March 2009."""
Good perspective, especially if dividends get cut, going forward.
As low rates could not hold gold above $1800, the same may well be true of equities.
With the Fed backing off I don't think QE is going away. In a nutshell the Fed's current existence is to keep the equity and RE markets propped up so 'Mericans can feel wealthy and spend. I saw a blurb by Schiff opining that they, the Fed, never intended to get rid of QE. He thinks it's QE Infinity until the string can't be pushed any more. Once the World wakes up to this we face a currency crisis.
<< <i>With the Fed backing off I don't think QE is going away. In a nutshell the Fed's current existence is to keep the equity and RE markets propped up so 'Mericans can feel wealthy and spend. I saw a blurb by Schiff opining that they, the Fed, never intended to get rid of QE. He thinks it's QE Infinity until the string can't be pushed any more. Once the World wakes up to this we face a currency crisis. >>
Yes , we can know with virtual certainty that QE4 will be here before next summer . The question is how far equities will be allowed to fall before more QE is announced. It's been 3 years without so much as a correction being "allowed". This time the 10% drop will happen. Will the major indices take a 20% haircut? This time I believe they will but that won't stop new all-time highs within 18 months.
<< <i>Yes , we can know with virtual certainty that QE4 will be here before next summer . The question is how far equities will be allowed to fall before more QE is announced. >>
The question is, with 10 years at 2.30%, will lower rates, even if possible ratchet up the moribund economy.
More likely the last surge, a result of low rates, has petered out and we are really only continuing on with the 6 year recession that never went away.
"What we've seen in Japan is an amazing chapter in the ongoing drama of economics and the market -- a drama that no doubt has more in store for us."
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Comments
<< <i>Text
Not according to Ben Bernanke. A fed chief he went so far as to say that he wanted to drive investors/savers away from short term instruments into riskier assets. >>
What are "riskier assets"?
PMs, equities, real estate....all got whacked for 50% in the last decade.
Knowledge is the enemy of fear
<< <i>dollar index beginning to experience lower lows and lower highs, good for PMs.
Saudis beginning what appears to be a price war with oil, bad for PMs. >>
It needs to consolidate for about 6 months before the next leg higher. Competing currencies have absolutely nothing going for them, just as was stated in this forum years ago.
Homer.
Knowledge is the enemy of fear
In financial circles ,treasuries have always been touted as the risk-free investment and have been used as the standard to which all other investments are compared for risk purposes. At least, since 1980 or so.
Competing currencies have absolutely nothing going for them, just as was stated in this forum years ago.
True enough, insofar as there is nowhere else to run for large, fungible pools of liquid, tradeable paper securities.
It's all a matter of confidence between the large banks, as far as I can tell. The Libor scandal really had them going for awhile.
I knew it would happen.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>
<< <i>Bumper crop prices drop~ cheap corn is great for all.
Unless you are a farmer or an ethanol producer. >>
If you were an ethanol producer, why would you want expensive corn?
<< <i>
<< <i>Text
Not according to Ben Bernanke. A fed chief he went so far as to say that he wanted to drive investors/savers away from short term instruments into riskier assets. >>
What are "riskier assets"?
PMs, equities, real estate....all got whacked for 50% in the last decade. >>
His statements were made within the last 24 months as he began to "twist" and print money like they were Nathans hot dogs at the 4th of july eating contest.
A booming stock market would solve all as cap gain taxes would increase and everyone would feel wealthier and increase consumer spending.
Busy day for me but I will provide citations later.
<< <i>His statements were made within the last 24 months as he began to "twist" and print money like they were Nathans hot dogs at the 4th of july eating contest. A booming stock market would solve all as cap gain taxes would increase and everyone would feel wealthier and increase consumer spending. >>
The money creation has had the opposite affect on consumer spending (money velocity) and has also failed in the area of job creation. The FED never intended for the funny money to reach Main St. It was intended as liquidity for Wall St. where it did serve its purpose - inflated asset prices and big bank profits. The FED bails out Wall St. to "protect" an over leveraged financial system and leaves it to Washington to bail out individuals via entitlements. Had the FED focused on reducing the leverage, bank bailouts would be ancient history.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>
<< <i>
<< <i>Text
Not according to Ben Bernanke. A fed chief he went so far as to say that he wanted to drive investors/savers away from short term instruments into riskier assets. >>
What are "riskier assets"?
PMs, equities, real estate....all got whacked for 50% in the last decade. >>
His statements were made within the last 24 months as he began to "twist" and print money like they were Nathans hot dogs at the 4th of july eating contest.
A booming stock market would solve all as cap gain taxes would increase and everyone would feel wealthier and increase consumer spending.
Busy day for me but I will provide citations later. >>
Just show me where he said he wanted people in "riskier assets". Im having difficulty with the term. Thank you.
Knowledge is the enemy of fear
In financial circles ,treasuries have always been touted as the risk-free investment and have been used as the standard to which all other investments are compared for risk purposes.
Interesting then as Bernankes supposed push to "riskier assets" actually encouraged investors to go the "risk-free" route.
BTW--Bonds are not "risk-free" and I believe most investors know that.
Knowledge is the enemy of fear
with different types and degrees of risk that are particular to the situation. Which is why a blended strategy is recommended for most people with diversified offsetting asset classes.
Of course, there are those who swing for the fences with an all eggs bet and maybe strike out more often, others have a system in which they grind out a profit trading the noise
c'est marketum
Liberty: Parent of Science & Industry
I agree, looking forward to Mark backing up this claim.
BTW--Bonds are not "risk-free" and I believe most investors know that.
I remember Bernanke's comment, and the intention was to push investors toward "risk assets" not "riskier assets", meaning - the stock market, which has been referred to lately as a risk asset on gov.tv, er, I mean CNBC.
Most people do know that bonds aren't risk-free, but Treasuries have always been referred to as that. Why would that be?
Risk as a concept is not binary, something is not either safe or risky, there is a continuum of risk/reward/probability that is multidimentional for any asset or activity, with different types and degrees of risk that are particular to the situation. Which is why a blended strategy is recommended for most people with diversified offsetting asset classes.
Back in ancient times, risk was defined for finance purposes as the degree of variability, not the probability for which a particular gamble would pay off. However, if you are inclined to gamble it pays to be aware of the level of risk.
Of course, there are those who swing for the fences with an all eggs bet and maybe strike out more often, others have a system in which they grind out a profit trading the noise
c'est marketum
And some of us accept the fact that metals trend up & down like just about everything else, but they have a few distinct advantages in being physically in place and verifiable, with no counterparty risk.
Risk is manageable over time, for gold, silver, stocks, bonds, and just about any other fungible asset.
I knew it would happen.
one would hope that most if not all of us accept those facts.
That's right, there is no counterparty risk that my metal coins and bars in my possession will have an accounting scandal, or lose a sales competition to a competitor, or go out of business entirely, the way a company might, and the price paid for that lack of those kinds of risks is the awareness that metals will never outperform inflation by thousands of percent, the way a stock might.
On the other hand, I risk my metals being stolen from me by stealth or force, and also risk that the market value of them may decline, forcing me to suffer a loss if I'm forced to sell them at the wrong time.
Liberty: Parent of Science & Industry
Because the US has never defaulted on its debt..ie, not made a payment. Thats a record that will not be broken in our lifetimes.
Of course the principle value could decline or interest and principle payments could be eroded due to inflation.
PMs can and do lose value and should never be considered risk free, as is so often referred to. IE, no counter-party risk, inflation hedge, ect.
Knowledge is the enemy of fear
<< <i>Because the US has never defaulted on its debt..ie, not made a payment. Thats a record that will not be broken in our lifetimes. >>
I agree, but that hardly makes the investment "risk free" as the value of the asset in real terms loses at least a few points per year in most hold periods.
concerning PMs, gold has never gone to zero - many, and eventually most, currencies do. As currencies move toward their ultimate zero, gold always takes the opposite path. This is the risk free nature of gold.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
30 year US Treasury
I dont think that link will work right for you, but anyway its a graph of the price of the 30 yr bonds since 1980. It goes from 43 in the lower left to 143 in the upper right. And that doesnt include an average of 5%+ annual interest payments.
BTW--Coal has never been worth zero either.
Knowledge is the enemy of fear
There's a reason the FED had to step in and buy US debt.
BTW, coal is worth zero to those who don't need it. I will concede that there will always be those that do. How many people still need these:
I kept a dozen of them just in case I'm wrong about currencies.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>I said bonds are risk free?
30 year US Treasury
I dont think that link will work right for you, but anyway its a graph of the price of the 30 yr bonds since 1980. It goes from 43 in the lower left to 143 in the upper right. And that doesnt include an average of 5%+ annual interest payments.
BTW--Coal has never been worth zero either. >>
Bonds were a great pickup in the 1980's when rates were not manipulated on a daily basis as they are now. Those picking up 10 years today at 2.30% may feel some heat in their wallets, not in a good way.
<< <i>
<< <i>Because the US has never defaulted on its debt..ie, not made a payment. Thats a record that will not be broken in our lifetimes. >>
I agree, but that hardly makes the investment "risk free" as the value of the asset in real terms loses at least a few points per year in most hold periods. >>
Did not the US default on it's debt obligation in 1933 when Roosevelt announced the US would no longer honor it domestic promise to pay in gold? This was accepted by Americans because it became law.
Did not the US default on it's debt obligation in 1971 when Nixon announced the US would no longer honor its international promise to pay in gold? This was accepted internationally because only dollars could buy oil and our trading partners needed our dollars.
What happens when US dollars are no longer needed for international trade? We shall soon see.
Monetizing the debt with "print as needed" is nothing short of a rose by another name.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>"Just show me where he said he wanted people in "riskier assets". Im having difficulty with the term. Thank you."
I agree, looking forward to Mark backing up this claim. >>
MGLICKER….???????
<< <i>
<< <i>"Just show me where he said he wanted people in "riskier assets". Im having difficulty with the term. Thank you."
I agree, looking forward to Mark backing up this claim. >>
MGLICKER….??????? >>
Here ya go fellas!
Text
""Bernanke states that the goal of the Fed's purchases is to force investors to rebalance their portfolios with "other assets." Later in the speech, he mentions that asset purchases help push investors into more risky assets; in previous speeches, he has mentioned "longer-duration, risky assets."""
....and from the federal reserve website.... Bernrnake, Jackson Hole 2012 speech.
""'Of course, one objective of both traditional and nontraditional policy during recoveries is to promote a return to productive risk-taking;""
Benjamin Franklin
Diversification proclamation. Don't put all your chickens in one hen house.
I knew it would happen.
<< <i>
Bonds were a great pickup in the 1980's .... >>
Ah, those were the days!
I had an IRA deal back then were I was paid with STRIPS that were discounted to a coupon yield in the teens with a 20 to 30 year maturity. OMG!
<< <i>
<< <i>
<< <i>Bumper crop prices drop~ cheap corn is great for all.
Unless you are a farmer or an ethanol producer. >>
If you were an ethanol producer, why would you want expensive corn? >>
It's not that they want it to be expensive, they just don't want it too cheap. They're forced to reduce sell prices along with the reduced cost of the corn. Production costs remain static however, so below a certain level they're making less money even though they may be doing slightly higher volume. At least that's what I'm told by a client who works for ADM.
RIP Mom- 1932-2012
<< <i>
<< <i>
<< <i>Because the US has never defaulted on its debt..ie, not made a payment. Thats a record that will not be broken in our lifetimes. >>
I agree, but that hardly makes the investment "risk free" as the value of the asset in real terms loses at least a few points per year in most hold periods. >>
Did not the US default on it's debt obligation in 1933 when Roosevelt announced the US would no longer honor it domestic promise to pay in gold? This was accepted by Americans because it became law.
Did not the US default on it's debt obligation in 1971 when Nixon announced the US would no longer honor its international promise to pay in gold? This was accepted internationally because only dollars could buy oil and our trading partners needed our dollars.
What happens when US dollars are no longer needed for international trade? We shall soon see.
Monetizing the debt with "print as needed" is nothing short of a rose by another name. >>
No.
No.
We will not soon see. In fact, we may see the dollar as the only currency accepted.
Knowledge is the enemy of fear
<< <i>
<< <i>
<< <i>"Just show me where he said he wanted people in "riskier assets". Im having difficulty with the term. Thank you."
I agree, looking forward to Mark backing up this claim. >>
MGLICKER….??????? >>
Here ya go fellas!
Text
""Bernanke states that the goal of the Fed's purchases is to force investors to rebalance their portfolios with "other assets." Later in the speech, he mentions that asset purchases help push investors into more risky assets; in previous speeches, he has mentioned "longer-duration, risky assets."""
....and from the federal reserve website.... Bernrnake, Jackson Hole 2012 speech.
""'Of course, one objective of both traditional and nontraditional policy during recoveries is to promote a return to productive risk-taking;"" >>
The first quote is an opinion of what he said.
The second says he wants to "promote productive risk-taking". That doesnt mean buy "riskier" (whatever that term means) assets. To me it means people need to go out and purchase capital equipment to start or build a business.
And the quote refers to the approach taken after any recession.
I still want to know what a "riskier asset" is.
Knowledge is the enemy of fear
<< <i>
<< <i>
<< <i>
<< <i>Because the US has never defaulted on its debt..ie, not made a payment. Thats a record that will not be broken in our lifetimes. >>
I agree, but that hardly makes the investment "risk free" as the value of the asset in real terms loses at least a few points per year in most hold periods. >>
Did not the US default on it's debt obligation in 1933 when Roosevelt announced the US would no longer honor it domestic promise to pay in gold? This was accepted by Americans because it became law.
Did not the US default on it's debt obligation in 1971 when Nixon announced the US would no longer honor its international promise to pay in gold? This was accepted internationally because only dollars could buy oil and our trading partners needed our dollars.
What happens when US dollars are no longer needed for international trade? We shall soon see.
Monetizing the debt with "print as needed" is nothing short of a rose by another name. >>
No.
No.
We will not soon see. In fact, we may see the dollar as the only currency accepted. >>
so if the US decides to honor it's debt with something other than what it promised, say with coal, then according to you it has not defaulted on their debt. What's to stop them from fulfilling existing obligations (bonds) with only new obligations (new bonds)? Would that not also be a default?
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Unless it was a negotiated settlement agreed to by both parties, of course it would be a default.
I knew it would happen.
The second says he wants to "promote productive risk-taking". That doesnt mean buy "riskier" (whatever that term means) assets. To me it means people need to go out and purchase capital equipment to start or build a business.
And the quote refers to the approach taken after any recession.
I still want to know what a "riskier asset" is."""
Interpret as you wish, Cohodk. Bernanke was very clear in his post fed meeting pressers about his intention of driving savers into "riskier" assets. You can do the deep dive if you wish, I have already seen and listened to the presentations.
If everyone sits still on their piles of cash and gold, nothing gets done. There must be movement, i.e. risk, in order for there to be progress
Liberty: Parent of Science & Industry
<< <i>Riskier assets tend to be the ones that are productive and those are the ones that drive the economy (albeit at risk of loss)
If everyone sits still on their piles of cash and gold, nothing gets done. There must be movement, i.e. risk, in order for there to be progress >>
All true, Baley. They are also, well, riskier. Not everyone is prepared to possible lose 30-50% of their assets in a bad market.
The Bernanke risk comments as I recall came during the debt crises in Europe. I believe that Bernanke intended (and succeeded) in driving down near double digit rates on problem sovereign debt in nations like Italy, Spain and Portugal.
They are not risk free, but as the dollar becomes more valuable in a deflation, interest rates fall and
bond prices increase. There is almost no risk of default.
In an inflation bonds and dollars are not good and precious metals are the asset of choice. Gold also
makes the best "get away money." Gold fluctuates in price vs currencies, but remember, the Israelites
made a golden calf. It would still be worth $1225/oz.
In a very slow growth economy with very low interest rates equities are the best investment. To a point.
It has been a great party, but we could be at the point where the lights come on and the staff starts to vacuum.
Such people are also not prepared to gain the 30% return we had last year or the tripling of return we had in the last 5 years.
You should also not cry over the current measly returns on "fixed income" investments which do lose overall value in the face of current inflation.
You have to be flexible and become educated to make your own wise financial decisions. You can't be passive and think the government with their bonds, fiat currency or anything else will "take care of you" like in the old days.
Be proactive, not passive. Become your own financial advisor and live within your level of risk tolerance...and accept the corresponding level of return your risk rewards or punishes you with. Don't play victim and blame the system, bankers, gov.com or whomever else you imagine is screwing you over.
<< <i>"All true, Baley. They are also, well, riskier. Not everyone is prepared to possible lose 30-50% of their assets in a bad market."
Such people are also not prepared to gain the 30% return we had last year or the tripling of return we had in the last 5 years.
You should also not cry over the current measly returns on "fixed income" investments which do lose overall value in the face of current inflation.
You have to be flexible and become educated to make your own wise financial decisions. You can't be passive and think the government with their bonds, fiat currency or anything else will "take care of you" like in the old days.
Be proactive, not passive. Become your own financial advisor and live within your level of risk tolerance...and accept the corresponding level of return your risk rewards or punishes you with. Don't play victim and blame the system, bankers, gov.com or whomever else you imagine is screwing you over. >>
Most of what you say is true. Many seniors though are uncomfortable trading or holding equities. Does that mean that the government owes you a safe, risk free return on your savings? Of course not.
Does it mean that rates should not be artificially skewered to favor one group of investors/savers over another? Yes, I believe that to be true. Perhaps if a bunch of retiree's got together and offered Ben Bernanke $500,000 for an evening get together, rather than the quarter million that wall Street is now paying, the markets would be less corrupt and more equitable.
If you can't beat them then join them.
Be or winner or loser but don't play victim.
Accept the path and fate you chose in life and face the reality of it.
Believe what you want.
<< <i>Everything is "skewered" , that is the way of the world now and has been for a long time.
If you can't beat them then join them. >>
I believe that the skewering today is much more excessive than it has been in any of our lifetimes. State, local and the federal governments are now paying off the big boys to locate or expand at a troubling rate. Seems that the payoffs issued after they leave office is ok and not considered bribery. I disagree.
Are you suggesting that we join them in corruption or just join them by riding their coattails of investing? I believe that you are referring to the latter. In a short time, when the stock market tanks, let's see who is holding the bag? It will of course be the average schmuck who came in late when he was told that it was the "only game in town".
<< <i>In a short time, when the stock market tanks, let's see who is holding the bag? It will of course be the average schmuck who came in late when he was told that it was the "only game in town". >>
If this statement ever became true, then who stuck the gun to the schmuck, took away his free will, put em in a straight jacket and forced him into the markets?...and if they did y do u care?...
<< <i>
<< <i>In a short time, when the stock market tanks, let's see who is holding the bag? It will of course be the average schmuck who came in late when he was told that it was the "only game in town". >>
If this statement ever became true, then who stuck the gun to the schmuck, took away his free will, put em in a straight jacket and forced him into the markets?...and if they did y do u care?... >>
Nobody did.
By the same logic, why is insider trading illegal? No one is forced to counterparty the trade.
<< <i>I Think u said, "they were told"... and u then presuppose they accept that law and in turn must and will act on it... >>
I believe most investors, though they often act like sheep lining up at the packing plant, realize that they have the option to pass or play.
While there might have been thinking earlier this year that inflation was inevitable, that no longer
seems to be the case. The falling interest rates and falling equity prices indicate that we may well
have reached a tipping point. In that case, low rates are not enough to sustain equity prices at
triple their level in March 2009.
Cash and US Treasury notes and bonds may be the asset of choice now.
have reached a tipping point. In that case, low rates are not enough to sustain equity prices at
triple their level in March 2009."""
Good perspective, especially if dividends get cut, going forward.
As low rates could not hold gold above $1800, the same may well be true of equities.
<< <i>With the Fed backing off I don't think QE is going away. In a nutshell the Fed's current existence is to keep the equity and RE markets propped up so 'Mericans can feel wealthy and spend. I saw a blurb by Schiff opining that they, the Fed, never intended to get rid of QE. He thinks it's QE Infinity until the string can't be pushed any more. Once the World wakes up to this we face a currency crisis. >>
Yes , we can know with virtual certainty that QE4 will be here before next summer . The question is how far equities will be allowed to fall before more QE is announced. It's been 3 years without so much as a correction being "allowed". This time the 10% drop will happen. Will the major indices take a 20% haircut? This time I believe they will but that won't stop new all-time highs within 18 months.
<< <i>Yes , we can know with virtual certainty that QE4 will be here before next summer . The question is how far equities will be allowed to fall before more QE is announced. >>
The question is, with 10 years at 2.30%, will lower rates, even if possible ratchet up the moribund economy.
More likely the last surge, a result of low rates, has petered out and we are really only continuing on with the 6 year recession that never went away.
"What we've seen in Japan is an amazing chapter in the ongoing drama of economics and the market -- a drama that no doubt has more in store for us."
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey