Archive - October 2014

1
Japan’s QE Increase Makes US Stocks Go Up
2
To Roll or Not to Roll?
3
GDP is Misleading: Real Economy is Weaker
4
The Great Crash of 1929: Far Less Of A Concern When Carefully Reviewed
5
Social Security Bend Points for 2015

Japan’s QE Increase Makes US Stocks Go Up

The SP hit a new high of 2016 today because of Japan’s decision to increase Quantitative Easing. Investors are mistaken about being bullish because QE doesn’t work and is just a placebo. Additionally to make QE cause inflation requires a change in attitude where the Japanese people would have to trust that their government can stimulate the economy enough to create inflation. Since the Japanese Central Bank created the world’s worse asset bubble through easy money policies in the 1980’s they have been unable to fix it for 24.9 years. In two months it will be the 25th anniversary …

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To Roll or Not to Roll?

puppy-110193_640At some point in almost everyone’s lifetime they have gone through the process of changing jobs. Many times those jobs offered retirement plans such as 401(k)s 403(b)s, etc. Conventional wisdom would say that for most employees it may make sense to roll their employer sponsored plan into an IRA. Based on a request from a reader (thanks David!), I thought I would go over some of the issues to consider before rolling your employer sponsored plan to an IRA.

  1. Check expenses. Generally, many employer sponsored plans are able to offer their respective investments (generally mutual funds) for much cheaper than
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GDP is Misleading: Real Economy is Weaker

Today the government released the 3rd quarter GDP which was 3.6% but 2% of it came from defense and net exports which are temporary, unsustainable increases. The 3rd quarter figure would be roughly 1.7% if there were no defense or export increases, which is lower than the 2.3% 12 month average, thus indicating a downturn. The stall speed is 2% so a dip below 2% is a bad sign. Bond yields on the 10 year Treasury went down 2 BP. The 12 month real GDP was 2.3% so GDP was not that great. The core PCE inflation gauge …

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The Great Crash of 1929: Far Less Of A Concern When Carefully Reviewed

Today and yesterday are the anniversaries of the great 1929 stock crash that was connected to the Great Depression. The market went down 13% on the 28th of October, 1929 and 12% on the 29th. At the bottom in 1932 it was down 85%.

It took 25 years for stocks to recover based on price and ignoring dividends, but when deflation and huge dividends are factored in things were much better. Jeremy Siegel said the inflation-adjusted total return index of the U.S. stock market was just as high in late 1936 and early 1937 as it was …

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Social Security Bend Points for 2015

bend pointAlong with the increases to the maximum wage base and the Cost-of-Living Adjustment (COLA) announced by the Social Security Administration, the 2015 bend points used to calculate both the Primary Insurance Amount (PIA) for Social Security benefits were announced as well. In addition, the Family Maximum Benefit (FMax) bend points for 2015 were also announced.

Primary Insurance Amount Bend Points

The bend points for calculating individuals’ Primary Insurance Amounts (PIA) for 2015 will be $826 and $4,980.  These are used to calculate your PIA from your Average Indexed Monthly Earnings (AIME). The SSA indexes your lifetime earnings and takes the …

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