Note in a forum re: my stock market speculations








Anyway, the market had its rally. Some pundits considered it a bear rally. Cramer, for example, has shown much mistrust of the bounce that reclaimed lost territory since late March. Most discussion has focused on the bifurcation between this rally and the actual dismal state of the economy. A common view is that there is always going to be a "dead cat bounce." If anything falls far enough, it will bounce. Others opine that maybe the government stimuli have altered risk in the market so that large companies have benefited and kept the market afloat. Computer trading based on technicals may also have kept the market up.



The sentiment in the news the last few days is decidedly dismal. Most stories seem to focus on the utter disarray of the economy. Likely here is where we might get the swing down to what is expected to be many the next leg. Market started out down, climbed a little, is down again today. Generally, I was noticing a sort of scalloping where the market moved against its opening, then at the end of the day moved back, and past its opening. The market makers had a start in the negative today, it has climbed, and now crescenting back. Hopefully it doesn't dip heavily at the end of the day.



Should those savings for retirement change their strategy. Is this really a new economic world. Some say the usual 60-40 portfolio is no longer the most viable option. Possibly buy and hold still is the best.  But I have never hears such draconian pronouncements of catastrophe as recently. 



In the past, brokers will say, "don't sell." They hold the hands of their customers through these times--naturally, they don't want to lose business. My perception is that some brokers do not really know how the economy works, some do.  But now there seems a slightly strange message in the air--"maybe it is not so crazy to go to cash." With so much of media theatre, its hard to say what is the quality of data or spin in any report. On the other, hand, it may not be a bad idea to look in a dispassionate way about how one chooses to plan for retirement. Again, this is meant more as musings rather than advice--my own projections of things going on.

On Mon, Apr 20, 2020 at 3:03 PM Gregory DeClue <gregdeclue@mailmt.com> wrote:

~Psychology Practice in Florida

Here’s an alternative perspective, tangential to what Damon wrote.

The federal government has deliberately taken half of the retirement income for Americans who utilized the products that were created for people to use as safe, secure, government-backed savings.  That is, savings or certificates in a bank or credit union, that are insured by the FDIC (Federal Deposit Insurance Corporation, for banks) or NCUA (National Credit Union Administration, for Savings and Loans).

Last year, I set up a new, federally insured SEP-IRA Certificate of Deposit (CD), which would earn 3% per year for 5 years.

This year, the Fed, following public pressure from Trump, has cut the interest rate so much that the same product (5-year CD) would earn 1.5% per year.

So, at a time when people need secure investments, the Fed, following public pressure from Trump, has cut such income in half.

—

There may, of course, be other reasons why the Fed has cut interest rates.  But the above is exactly the effect that the Fed created, on purpose.  They have deliberately cut the income in half, for those who choose to invest safely (low risk, low yield).

Take care of yourself and be generous with others,

Greg DeClue

Gregory DeClue, Ph.D., ABPP (forensic)
16443 Winburn Place
Sarasota, FL  34240-9228
phone 941-951-6674
gregdeclue@me.com
http://gregdeclue.myakkatech.com

Live Sustainably on a Habitable Planet

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~Psychology Practice in Florida

even worse - the only way out of all this spending is to increase the inflation rate. Thus, not only will the income go down due to reduced interest rates, but inflation will result in a net loss of capital (for those investing in fixed rate instruments).

BB