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Strategies & Market Trends : Heinz Blasnik- Views You Can Use -- Ignore unavailable to you. Want to Upgrade?

To: Win-Lose-Draw who wrote (854)	5/7/2003 6:10:07 PM
From: Box-By-The-Riviera™	Read Replies (2) \| Respond to of 4904

i don't think there's enough of these folks with those kinds of windfalls to make up or offset the broad population living by the grace of a piddly cash flow to pay the folks who actually own what they have.... and in that environment what they have is mostly depreciating at a rapid pace while the cost of ownership from insurance, maintenance and taxes is rising. and those are the things they own that are not necessarily life sustaining. they still have health insurance and food costs and energy costs on top of the shakey load. from kids who can't afford college (even a state tuition school, let alone a job part time to pay for it... retiree's are taking those), to the shrinking free cash of that part of society formerly known as the broad taxpayer base, a mass of folks will not find themselves able to get ahead and have less and less to maintain their status quo.... the others... the black market folks who work for cash, make do with less already to the windfall folks who batten down the fort and tighten up the entrances....they are in the best position in my view to play hide and seek. the former, because they've been practicing, the other, because they can learn if they haven't awaken too late. you can change the bankrupty laws all day long, but what you gonna do, throw 10 million people into jail who can't pay any longer? hold it against them? big deal, when there's no water left in the turnip. it doesn't matter to me who is at fault. it is a "what is" it does matter to me when lawmakers and others do everything in their power to do everything but recognize this fact. as heinz might say, the slate will be wiped clean one way or another. just because someone comes along and "thinks" or has faith things won't take this course, does not mean I should drop everything and quit trying to protect myself from millions of other people who (wrongly or rightly) landed themselves into this mess. whether i like it or not, i am suddenly going to be affected by all of them. it is my job to quietly stay as far away as possible as NUMBER ONE becomes a very very powerful force. when i change my mind. i'll say so <G>

To: Win-Lose-Draw who wrote (854)	5/7/2003 7:11:25 PM
From: Wyätt Gwyön	Read Replies (2) \| Respond to of 4904

so the big question in my mind is this: will they blow all that loot on reverse-mortgages to pay off credit card bills run up at Williams-Sonoma i'd suggest you want to look at the aggregates and what the median monetary position will be of these "retirees". back a few months ago, Steve Roach, i believe, stated that the median (or average, i forget, but probably median) net worth of the baby boomers was like negative $155,000 (or maybe more, give or take, but in any case well north of 100K in the hole). we were discussing this on i think the real estate thread (residential real estate crash thread) and there was quite some confusion over what this meant (further compounded because really Roach was quoting somebody else's analysis). but it turned out that Roach or whoever it was meant that was the amount of money the average person was short, in their present portfolio, compared to the estimated amount they'd eventually need to retire on time. so imagine that the median baby boomer's current net worth is 150K short of funds needed today (in order to grow into some peak required portfolio value in the future based on assumed returns) for future on-schedule retirement. and that's even assuming other fund sources like Social Security and pension funds come through--the median net worth is still minus 150K or so. basically this seems like a very bullish scenario for Alpo. another issue that is not discussed much is the problem that will arise due to an oversupply of sellers vs buyers as boomers and their pension funds draw down stock-heavy plans for future disbursements. there are some pretty compelling demographic arguments here with very bearish conclusions. i read an interesting if dismal book on this a while back. i will post the title if i can find it. if one considers that fewer buyers and more sellers will result in lower equity prices, and given that dividends are low, the return assumptions of pension funds and individual retirees could turn out to be way too high. my personal feeling is that even Buffett is being overly generous in suggesting 6-7% future returns, even though corporate pension funds still average around an insane 9% assumed return (quite ridiculous when one considers that half their assets are low-yielding bonds, so with today's low dividend yields and low inflation rate, real capital gains will need to be twice the long-term average, and playing that out for the next 15 years or so would put the SPX in lala-land with a PE well north of 100).