investments

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clarkkeith's picture
clarkkeith
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investments

I am 61 years old.  I only have $200,000 to invest: no ira, roth, etc.  (I  will be the beneficiary of a life insurance policy of $150,000 at some point).I am debt free and own my home.  I will quality for social security at 62 but will need to delay taking it to increase my allotment.  I have 15% in gold and silver but am uncertain what to do with the rest.  It isn't much to "play" with.  Any suggestions would be appreciated.

aggrivated's picture
aggrivated
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Posts: 572
Re: investments

You are young enough to look for a business opportunity that would work for you in retirement as a backup stream of income and that might weather &/or grow in the energy cost spiral up. 

Poet's picture
Poet
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Posts: 1892
Re: investments

 

I don't know your details, but...

  • Spend just a few thousand to be more resilient, per the "What Should I Do?" series.
  • If you have a job, put $6,000 (includes $1,000 catch-up contribution) for Tax Year 2010 and next year $6,000 for Tax Year 2011 into a self-directed, no fee Roth IRA such as with Scottrade. Money you put in there is after tax, and can be withdrawn at any time for any reason. Earnings that grow from your contributions can be withdrawn beginning in 5 years, tax free, or for a qualified distribution. (Note: I am not an accountant nor a tax attorney.)
  • Consider a few solid dividend paying stocks like PVR, NRP, AT.
  • Consider downsizing your house if you have a large house.

Poet

bluestone's picture
bluestone
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Posts: 263
Re: investments

Clark

I would spend at least a few thousand dollars on long term food storage, such as freeze dried foods, grains etc.  I don't see how you can go wrong with diverting a little of your wealth toward this goal.  

Brian

Jim H's picture
Jim H
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Re: investments

Clarkkeith,  Your biggest risk is losing the value of your dollar- based investments to high inflation, or even hyperinflation.  Of your long term investments, the life insurance payout is most at risk.. since it is denominated in today dollars, and you have no means to change the way that is invested.  In this respect, you and I are very similar - when the Corp. I work for "bought out" my traditional pension ten years ago, they left me with a lump sum, similar in current value to your life insurance, that sits in purgatory, earning passbook-type interest.  I can't touch it unless I quit my job  ):    

Another related risk you are facing is your dependency on Social Security.. and you talk as if this is long term secure in your comment (waiting to draw so that the dist is higher).  SS is the biggest legal ponzi scheme ever, and you will almost certainly be taking a haircut on what you (and I) get out of the system someday, either through legislative budget balancing actions, inflation/hyperinflation (underreported as ever by the gov'ts CPI), or both in combination.  To this end, you might reconsider drawing sooner, while all systems are still functioning, vs. later.  

So, from my view you have a huge, outsized dependency on the current system remaining intact, both your future SS income and your life insurance policy are sitting as long bets on stability.  You have stability (or deflation) covered!

I have > 50% of my total net worth in a combination of physical Gold/Silver, Sprott Gold and Silver (PHYS/PSLV), and Gold and Silver miners (which I believe offer higher leverage in the case of dollar default).  In my opinion, you are not adequately counterweighted against the high probability of some sort of default on the dollar, and you need to get more of your liquid, investable assets into things that will rise during inflation (assuming you have already built a comfortable level of resilience in terms of food and energy). 

It is interesting to me that Poet mentions AT... I own that too and it's pretty obscure, having become listed on NYSE only this year.  It's a utility, and the only (small) non PM/miner holdings I have are utilities (AT, SO).   

Anyway.... and I hope more folks chime in here to support or give critical analysis of my ideas... I believe you need more insurance... more protection against what I consider the inevitable haircut we are all going to take on our dollar holdings.  Up to you how you play that.. since you are already a Gold and Silver holder.. you know what you are doing.  I will certainly tell anyone not to invest in GLD/SLV for their PM exposure ,since these are most likely fractional reserve PM's, with more paper claims than physical holdings. I can talk all day about individual investments... but you get my drift.  Welcome to the community! 

 

 

 

 

Doug's picture
Doug
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Posts: 3200
Re: investments

clarkkeith

Although others have passingly mentioned it, one of my biggest considerations has been what to do about my home.  You should make a careful assessment of how sustainable your home is.  Do you have room to grow food, raise chickens, produce compost, etc?  Are you dependent on utilities or do you have a well, septic etc?  Is your house energy efficient?  Does your heat source depend on fossil fuel?  Is your neighborhood organized in terms of shared projects, neighborhood watches or efforts to make your community more sustainable?  How secure are you in terms of protecting your family, possessions and neighborhood?

I finally came to the conclusion that my location is pretty good, I have plenty of land, water is good, my septic system is new and larger than I need, my house is fairly efficient and my community is small and can be readily mobilized to deal with crises.  Besides, moving would be more expensive than I'm willing to take on at this point.  But, those are my considerations.  Yours may be very different.  The important point is that you make the assessment.

Doug

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Panaman
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Re: investments

I would like suggestions on what kind of investment to make other than silver /gold. I would like to find commodity fund that that will do good in the inflatiionary period that is here now and will worsen with time. I would like to be able to have part of this investment liquid to pay for living expenses but hold the majority for investment.

Dogs_In_A_Pile's picture
Dogs_In_A_Pile
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Posts: 2606
Re: investments
Panaman wrote:

I would like suggestions on what kind of investment to make other than silver /gold. I would like to find commodity fund that that will do good in the inflatiionary period that is here now and will worsen with time. I would like to be able to have part of this investment liquid to pay for living expenses but hold the majority for investment.

Wouldn't we all?

My suggestion is to determine for yourself what trading and/or investing strategy best suits you given the situation and constraints in your life.  How old, where do you live, how many kids, how much debt, outstanding college loans, current standard of living, desired standard of living, etc., etc., etc.

My way probably wouldn't work for you because my goals and circumstances are likely different from yours. 

The bottom line is this - despite what a Financial Planner will tell you or whatever heart-string pulling Smith Barney commercial runs, nobody cares about your money and your investing more than you do.  It is in your own best interest to educate yourself, figure it out yourself and do your own trading and investing.  Depending on someone else for your financial health only works in up markets and while that someone else is still around.

Good luck - there are a lot of smart people here who might share what they are doing and how they are approaching the markets, but only you can determine your best method.

idoctor's picture
idoctor
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Posts: 1731
idoctor's picture
idoctor
Status: Diamond Member (Offline)
Joined: Oct 4 2008
Posts: 1731
Re: investments

So far Jim Rogers I feel has had the best overall investment ideas & Marc Faber is very close to him. I never owned Gold & Silver before until I found this site. Thanks to most everyone here for helping me see this light 2 years ago. I rather be the ant than the grasshopper over the next 10 years. This site helped clip my grasshopper wings LOL.

Jim H's picture
Jim H
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Posts: 2391
Re: investments

Dogs in a Pile wrote,

"The bottom line is this - despite what a Financial Planner will tell you or whatever heart-string pulling Smith Barney commercial runs, nobody cares about your money and your investing more than you do.  It is in your own best interest to educate yourself, figure it out yourself and do your own trading and investing.  Depending on someone else for your financial health only works in up markets and while that someone else is still around."

I can't agree more... this is maybe one of the most important bits of advice you will get.  

I will give you the synopsys of my investment learning journey;

Started out with buy and hold using DRIP plans 15 years ago - college fund for kids.  GE, PFE, JNJ, INTC, etc.  

Realized after 2000 tech crash, losing a whopping amount from my 401K, that I needed to be more on the ball, simultaneously  watched my biggest holding, INTC, lose a big chunk of it's value in my DRIP portfolio. 

Started a brokerage account and tried my hand at individual stock picking.... lost money at it.

Finally in 2006 came to realize a few things;

1)  Buy and Hold was a crock... Wall street mumbo jumbo to keep the sheeple invested.

2)  I did not have good enough information to deal with individual stocks (now we learn about the "expert networks" hedgies employed)

              -  GE is a like a bank?  you don't say.  Big loss in DRIP portfolio 2008

3)  The admonition, "you can't time market" was in a sense BS.. again, to keep the sheeple fully invested.  I believe it is of utmost importance to practice market timing with regard to bubbles.... for instance, i would not touch (anything but very short) gov't bonds, especially munis at this point... you would have to be nuts IMO.  On the other hand.. people can say that they think Gold/Silver are in a bubble.. but they have no idea what they are talking about.. and I know what I am talking about.  I trust myself.  Mind the Macro.. position for the Macro...    

In late 2007 I took my entire 401K out of stocks and went to cash... literally at Dow 14000.  Wow... I did something right!

I didn't reinvest because I saw no sign that fundamentals were there to drive a real recovery... tried to short the market (primarily commercial real estate) through 2009.. fighting the FED all the way.   I missed the recovery investment-wise , because I didn't understand that the FED had the power to create a fake one.  43% of our budget expenditures are borrowed money.  12% of GDP is borrowed money.  The idea that you can say we are, "growing" at 2% or 3% or whatever, when 12% of GDP is borrowed... is absurd.   

This was my final lesson.... I now know what information sources to trust and how to monitor what is really going on.  I can now see the ponzis, the carpets under which things are swept, and the ever coiling debt that is ultimately going to collapse the roof like a massive snow load.  And I sleep better at night because at least I know.

You need to get to a similar place of trusting yourself.  It's a really good feeling.. and you don't need to take near as long as it did for me to get there.   

 
To your question about liquidity and yield... you can't do much better than utility stocks right now... though the share prices will go down with all boats (but to lesser extent.. buffered by their div yield) in a major market correction.  AT stock, discussed earlier, yields 7.3%.  Most of the bigger utilities still throw off in the 5% range.  If you must be in stocks, I don't think you can do much better.     

idoctor's picture
idoctor
Status: Diamond Member (Offline)
Joined: Oct 4 2008
Posts: 1731
Re: investments
Dec 23, 2010
3:20 PM

Uh-Oh: Confidence ‘Sky High,’ Says Trim Tabs

Posted by Tiernan Ray

Late yesterday, our friends at TrimTabs sent over the transom something to stop the pulse: “multiple sentiment measures reveal sky-high confidence.”
Which metrics? almost half of 92 hedge fund managers surveyed in the past week are bullish on the S&P 500, only 19% bearish. Most plan to keep their leverage ratios as is, while 23% aim to increase leverage. Only 12 % plan to lever down, says TrimTabs. Margin debt is up, short interest is down, and cash as a share of equity mutual fund assets sits near a record low.
Moreover, “retail investors are as upbeat as the pros,” the report notes. TrimTabs advises cautious investors to take profits or perhaps rotate into bonds, “which are universally hated right now.”
Doug's picture
Doug
Status: Diamond Member (Offline)
Joined: Oct 1 2008
Posts: 3200
Re: investments

idoctor

John Hussman makes the same point here:

http://www.hussmanfunds.com/wmc/wmc101213.htm

Quote:

In recent weeks, the U.S. stock market has been characterized by an overvalued, overbought, overbullish, rising-yields syndrome that has historically been hostile to stocks. Last week, the situation became much more pointed. Past instances have been associated with such uniformly negative outcomes that the current situation has to be accompanied by the word "warning."

The following set of conditions is one way to capture the basic "overvalued, overbought, overbullish, rising-yields" syndrome:

1) S&P 500 more than 8% above its 52 week (exponential) average
2) S&P 500 more than 50% above its 4-year low
3) Shiller P/E greater than 18
4) 10-year Treasury yield higher than 6 months earlier
5) Advisory bullishness > 47%, with bearishness < 27% (Investor's Intelligence)

Doug

idoctor's picture
idoctor
Status: Diamond Member (Offline)
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Posts: 1731
Re: investments

More from InvestorPlace

NEW YORK (InvestorPlace) -- According to the Chinese zodiac, 2011 will be the "Year of the Rabbit," which is considered to be a lucky sign. But I think China's luck is about to run out, and I'm not the only one who sees the writing on the wall.
Despite what you hear from the China bulls out there -- and there are plenty of them -- 2011 will not be the "Year of China" for investors ... unless they plan on shorting China stocks and ETFs, that is.  
Here are five reasons to bet against China in 2011:

1. The Great Chinese Credit Bubble

The most pernicious impact China is having on world markets stems from a massive credit bubble similar to the one that blew up Japan in the early 1990s and the U.S. markets in 2007-2008. Hedge fund manager Mark Hart, who made a killing anticipating the U.S. subprime mortgage meltdown and the European debt crisis, is now focusing on China, saying in an article in The Telegraph that China is in the "late stages of an enormous credit bubble," and the "economic fall-out" will be as "extraordinary as China's economic out-performance over the last decade." Here are some of the problems Hart highlights:

Property construction: Excess floor space exceeds 3.3 billion square meters, yet 200 million square meters per year is being constructed. Property prices: The average price-to-rent ratio of eight key cities is 39.4 times, which compares to 22.8 times in the United States just before the housing crisis. Banking: Chinese banks are concealing the extent of their exposure to the credit bubble in shell entities that borrow from the banks and invest in fixed assets.

In short, this bubble is ready to burst. Remember, Chinese state banks are arms of the government, and their debts are assumed to be backed by the government. (Do the names Fannie and Freddie come to mind?) And, according to Hart's analysis, the government-debt-to-GDP ratio is 107%, which is five times higher than "official" numbers.

2. The Great Chinese Labor Force

According to Chinese data, as well as more reliable sources such as the World Bank, in the next five years, the Chinese labor force available for industry will add the same number of industrial workers as currently employed in the United States and Europe. This mass increase is the single greatest deflationary force on the planet.

Related Article: 

Combined with non-existent labor laws, non-existent environmental regulations, and dodgy loans from state banks and other entities, this labor force has destroyed tens of millions of jobs around the world while reducing the cost of many products. The end game: more job relocation to China. And any industry segment targeted by China is subject to massive price deflation, a terrible and unpredictable situation for traders.

3. The Great Chinese Commodity Gobbler

China's commodity imports are driving the price of everything from iron and coal to rare earth minerals. The country's excess capacity is staggering. For example, Mark Hart's analysis states that China's steel output is more than that of the next seven largest producers combined, and their excess steel capacity is more than the EU and Japan's combined total production so far this year. Additionally, only 65% of the cement produced (after exports) has been consumed.

Related Article: 

This has created false prosperity and inflated asset values in exporting countries. The bulls believe the country will eventually use this capacity and consume these commodities as it builds out roads, bridges and other public works. However, this kind of public-funded consumption can only go on for so long since it is fueled by government credit, which is already overextended.

4. The Great Chinese Currency Reserve

The Chinese love to remind the world about their currency reserves and drop hints about shifting away from the U.S. dollar if the United States does not do this or that. China is now in a trap of its own making by restricting the flow of capital and pegging its currency, the yuan, to the dollar.

Related Article:.

With $2.4 trillion or so in dollar-denominated bonds, any revaluation diminishes the value of these bonds. This is what Japan did as it accumulated reserves through tough capital controls and then watched its newfound wealth melt away when the world forced it to let the yen appreciate

 

 

Metal Wrap from King World NEws worlth a listen also: http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2010/12/24_KWN_Weekly_Metals_Wrap.html

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