Imminent and severe market correction

[Julia]

I tend to agree with the Uncle here, especially this point, but motorway also brings up a valid point. That being the Baby Boomers are setting up for retirement, and will be withdrawing super funds to use for spending.

While I don't believe it will happen at the rate proposed by Robert Kiyosaki, http://en.wikipedia.org/wiki/Robert_Kiyosaki in "Cash Flow Quadrant", there is bound to be a consistant withdrawel all the same, and with the number of X generationers being substantially less than the Baby Boomers, money flowing in is greatly reduced. 2010 should be the start of this phenomenon.

This prediction about the first of the baby boomers withdrawing their funds is made repeatedly. It doesn't make a lot of sense. The baby boomers are going to still require a source of income. To suggest they are going to take all their funds out of the sharemarket takes no regard for how they are gong to derive that income. Aren't they better to still own shares and achieve over time continued growth plus an income stream? Surely better than seeing the funds lose value in a cash account?

I'm a baby boomer and that's what I will be doing anyway. I don't know anyone who will simply be pulling their funds out on reaching retirement age.

 

[>Apocalypto<]

That's unfortunate because there is not much substance in this post.



Oh well spotted! I'm assuming in the drafted message that got lost in cyberspace you qualified the above statement by saying, that although the market is in a century long uptrend, it does matter when you time your entry.

For example, if you bought $10,000 worth of the S&P500 in 1966, you would have had precisely $10,000 in 1982. adjust for inflation and you lost money.

you're on fire today/tonight Dhukka! ouch!! :burn:

 

[ithatheekret]

Well the re-ratings have started to take their toll , add bond insurers to the list now ........ yes , freaky huh ......... , WTF is the market going to do without insurers , nothing will get sold . This is not getting better it's getting worse , George best just give the money to the bond insurers and try to keep them in the game or there'll be no game .

 

[habs]

baby boomers pulling money out the market... blah...

remember, almost everyone who works has 9% of there pay going into the stock market or managed funds, cash accounts..or whatever... every month there is just more and more and more money going into the markets via this source alone... from every single working person... and every single child coming through will keep it going for years and years to come.

 

[Gundini]

This prediction about the first of the baby boomers withdrawing their funds is made repeatedly. It doesn't make a lot of sense. The baby boomers are going to still require a source of income. To suggest they are going to take all their funds out of the sharemarket takes no regard for how they are gong to derive that income. Aren't they better to still own shares and achieve over time continued growth plus an income stream? Surely better than seeing the funds lose value in a cash account?

I'm a baby boomer and that's what I will be doing anyway. I don't know anyone who will simply be pulling their funds out on reaching retirement age.

In essence I agree with you. But you are one of the lucky few, as I, who have chosen to actively take interest in our financial future and retirement. Unfortunately, with all due respect to the majority, they were forced to contribute to super to ensure they don't become a burden on our society via a pension scheme or the like, and only consider themselves to be an investor. Add to this the individuals company contributions, and wella.... a retirement nest egg for all.

But how many of these Baby Boomers had the sence to switch their super funds into cash? I mean, Blind Freddy could see troubled times ahead if they paid any attention at all to the global economy.

My point being, the majority may want to pay off what is left in their morgages, maybe purchase a Winnebago, do a bit of OS travel, help the grand kids with a home deposit, put in a pool, buy a holiday home... etc... whatever! All the while, there is bound to be a growing hole in the dike, being the stockmarket of course...

There are many graghs as you would well be aware, but here is one, to show the impact that we have on society... Cheers...

 

[Whiskers]

There are many graghs as you would well be aware, but here is one, to show the impact that we have on society... Cheers...

The US certainly is in a lot of trouble with theirs... but I'm not quite sure what your graph represents and on what years data was it prepared?

Is this supposed to show what the Gov social security bill is expected to be?

What I would say is that there is five years until the forcast deficit starts. These sorts of scenerios offen come up in cash flow planning and I'm sure in Aus a lot of things can and will happen to overcome the problem.

 

[Kauri]

In essence I agree with you. But you are one of the lucky few, as I, who have chosen to actively take interest in our financial future and retirement. Unfortunately, with all due respect to the majority, they were forced to contribute to super to ensure they don't become a burden on our society via a pension scheme or the like, and only consider themselves to be an investor. Add to this the individuals company contributions, and wella.... a retirement nest egg for all.

But how many of these Baby Boomers had the sence to switch their super funds into cash? I mean, Blind Freddy could see troubled times ahead if they paid any attention at all to the global economy.

My point being, the majority may want to pay off what is left in their morgages, maybe purchase a Winnebago, do a bit of OS travel, help the grand kids with a home deposit, put in a pool, buy a holiday home... etc... whatever! All the while, there is bound to be a growing hole in the dike, being the stockmarket of course...

There are many graghs as you would well be aware, but here is one, to show the impact that we have on society... Cheers...

Instead of pumping billions into inflation boosting tax-cuts why doesn't a forward thinking Gov. set up a future fund (investing independantly of Gov. pork-barrel inspired initiatives, in Aus infrastructure/assets) to guarantee the future social security needs. I note that they had no hesitation in setting up the 50Bln. future fund with public money to guarantee their own and public servants super into the future, or am I simply being naive...
Cheers
........Kauri

 

[dhukka]

uh oh, AMBAC has suspended plans to raise capital and is 'evaluating alternatives' to keep it's AAA rating. I posted about this the other day, these guys are evaluating any alternative to stave off bankruptcy. It's chapter 11 or a Countrywide style buyout for these guys. Between them, the monoline insurers insure something like $2.4 trillion in municipal bonds. Their demise could cause a rather nasty chain reaction. Yesterday Merrill Lynch took the step of writing down the value of bond insurance contracts provided by ACA Capital after it's credit rating had been slashed to junk. The Merrills and Citis of the world would be in for another round of writedowns if AMBAC and MBIA lose their AAA ratings.

 

[Gundini]

In all fairness to those interested in the Baby Boomers, there are many arguements to support both theories, and the effect they may have on the financial markets. Here is an exceptionally good piece directly related to the topic. http://www.profutures.com/article.php/448/

Rather than hijack this important thread with my opinions, that are off topic, I am happy to continue in another thread, and debate the varied reasoning.

Cheers

 

[Whiskers]

When the US housing and credit crunch resurfaced late last year I was in the catagory for awhile, but having owned rental property I have since tempered my concern to a large degree, basically along the lines of the below article.

People were being evicted everywhere and some TV reports showed rundown and neglected houses by the street full. My thought was that if you (the banks/lenders) can't sell the property, why let it sit there and decay into ruin. It's much smarter to have the house occupied and looked after for future sale even at reduced rates.

I think all the housing forclosure/sales/company loss figures have been a bit knee gerk. Once we get over the corporate write downs it will be pretty much back to usual business... just all the other usual US problems.

There will certainly be a severe slowdown in new house building, but as more property comes into rentals at lower rates consumer spending will probably settle down in the next month or two.

As I said earlier, Friday after Bush makes his announcement is probably the last chance for the Fed to announce an early rate cut. The Fed obviously feels that it can't stave off recession without Gov assistance. My feeling is that if the Fed acted first without some commitment from the Gov it would be akin to whittling it's only weapon down to the bone for little or no effect.

Once Bush makes his announcement that the rescue package being proposed is to kick in urgently the Fed may be inclined to make an announcement with some confidence that the markets will respond more positively.

If I recall correctly Bush will be making his announcement abt 10.45... after the consumer sentiment and lending indicators are released at 10.00.

http://finance.yahoo.com/real-estat...enters-Gain;_ylt=AmXKHQSaZ1fnqdQQkuwxp6u7YWsA

 

[wayneL]

In all fairness to those interested in the Baby Boomers, there are many arguements to support both theories, and the effect they may have on the financial markets. Here is an exceptionally good piece directly related to the topic. http://www.profutures.com/article.php/448/

Rather than hijack this important thread with my opinions, that are off topic, I am happy to continue in another thread, and debate the varied reasoning.

Cheers

I started a new thread for discussion here ==>> https://www.aussiestockforums.com/forums/showthread.php?t=9555

 

[chops_a_must]

Before you do, would you mind selling all your stock at ridiculously low prices?

thanks in advance

 

[ithatheekret]

In all fairness to those interested in the Baby Boomers, there are many arguements to support both theories, and the effect they may have on the financial markets. Here is an exceptionally good piece directly related to the topic. http://www.profutures.com/article.php/448/

Rather than hijack this important thread with my opinions, that are off topic, I am happy to continue in another thread, and debate the varied reasoning.

Cheers

I think the boomers are part of this , it's the take the money and run theory when touching off in retirement . The cash is needed to fund new enterprises or just a lifestyle , but many would be looking at little businesses etc, to keep the brain active and maintain an income .

They been dealt a blow in most western and westernized countries with pension rorts and blow outs in fixed income funds , that should never have touched the CDOs etc. Completely out of there charter , now the boomer charters will sudside hitting many industries , cruises , airlines , caravans and motels , restaurants , coffee shops , you name it all will be affected by this , just as the collapse in the US real estate , will affect many small businesses .

They are all a part of the physical makeup in a healthy economy , the add ons , which will be cut back on .

 

[sassa]

Why the stockmarket is likely to continue its selloff.

http://www.cnbc.com/id/22730427

 

[wayneL]

FYI The sunday paper her in UK:

 

[dhukka]

This is starting to bother me wayne. Now everybody is talking about it, could be a good contrary indicator. Although we haven't seen people completely lose it and swear off stocks forever yet.

 

[wayneL]

This is starting to bother me wayne. Now everybody is talking about it, could be a good contrary indicator. Although we haven't seen people completely lose it and swear off stocks forever yet.

I'm waiting for Bubblevision to turn bear. When Art Laffer screams SELL, I'm buying with ears pinned back.

 

[dhukka]

It's been interesting watching Kudlow & Co recently, maybe we should start a thread about it? Did you see Art Laffer throw in the towel and admit a recession is under way? Also Don Luskin admitted to being totally wrong in telling people to buy all the way down in this latest market retracement/correction insert what you like here. (big of him to admit it though). Recently I think I want a US recession to materialize just to see Kudlow, Jerry Bowyer and Brian Westbury eat a little humble pie.

 

[wayneL]

It's been interesting watching Kudlow & Co recently, maybe we should start a thread about it? Did you see Art Laffer throw in the towel and admit a recession is under way? Also Don Luskin admitted to being totally wrong in telling people to buy all the way down in this latest market retracement/correction insert what you like here. (big of him to admit it though). Recently I think I want a US recession to materialize just to see Kudlow, Jerry Bowyer and Brian Westbury eat a little humble pie.

No I didn't see that!! Is this the same mocking, smirking and jeering Art Laffer who last year made fun of Peter Schiff at every opportunity? Oh how I wish I had seen that.

Anyhow, just for laughs \/ ROTFLMAO

 

[numbercruncher]

Bond insurers offer insurance for bond issuers. The insurance encourages bond buyers. The trouble for the bond insurers is that they’ve insured a lot of credit derivatives too. Moyer says, “Ambac guaranteed $38 billion of debt linked to subprime mortgages and has exposure to $45 billion of other mortgage investments.” Yet those numbers are tiny compared to $45 trillion in credit default swaps outstanding.

Concerned with the amount of risk faced by the bond insurers, and chasing a horse that’s firmly out of the barn, the credit ratings agencies are threatening to downgrade the credit ratings on Ambac and fellow bond insurer MBIA. Ambac fell as much as 60% on Thursday. MBIA fell as much as 40%.

Who wants to be long this weekend again?

http://www.dailyreckoning.com.au/dow-asx200/2008/01/18/