Posted on 02/13/2014 11:28:40 AM PST by blam
People tell me that while everyone else will get burned (because the market is propped up by Federal Reserve funny money), their 401K, IRA, and stocks will not because they "pay attention to details".
Private Carparzo from Saving Private Ryan, minutes before he gets shot and killed by a sniper
I am a little more concerned with this part:
...we are much more likely to be made uncomfortable by fear than we are to be take pleasure....
&&
Yipes! Honey, lock the front door!
“I lost a third of my money at the last crash but it recovered and did well since then.”
*****
Because of the Fed Reserve’s QE, the valuations today are in cheaper dollars. That has to be taken into account when comparing the value of a stock today versus February 2008.
Inflation has been very low since 2008.
Official inflation (just like the propaganda spewed by Argentina's government) is understated.
Traditionally, a doubling of the money supply leads to a six-fold increase in prices. Since 2008, the Fed has quadrupled (at least) our money supply.
It's kept partially in check because the money isn't circulating (electronic notations rather than printed dollars) and by massive manipulation of various markets, including precious metals through the trading of contracts for the stuff where there's no underlying physical to fulfill (e.g. JP Morgan).
Even with manipulation, staples such as food have been hit with inflation. What cost $100 at the grocery store five years ago now costs $150 plus.
Inflation in other markets too with the cheap money. Real estate comes to mind, with $100 million apartments in NYC and now billion-dollar homes down in Florida.
You have any historical examples of that 2-to-6 relationship?
Since 2008, the Fed has quadrupled (at least) our money supply.
Using which money supply measurement?
and by massive manipulation of various markets, including precious metals through the trading of contracts for the stuff where there's no underlying physical to fulfill
How much of CPI consists of precious metals? What other markets do you feel are manipulated?
Even with manipulation, staples such as food have been hit with inflation. What cost $100 at the grocery store five years ago now costs $150 plus.
Even if that were true, that would be 8.5% inflation annually, for something that makes up 14% of expenditures.
I'm still doing well, even after accounting for the cheaper dollars. My assets are diversified. My stocks since 2008 have outperformed other assets including bonds and interest. I took a hit on metals because I continued buying to their peak and they dropped in value. I've found that my investments in stocks since the late 1970s have returned more value than other investments. I'm in for the long term.
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