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curmudgeon 2 wrote:
If you are not in the stock market your investments will barely keep up with inflation.
That's baloney. My investments have been in fixed income only funds since 1997 and have kept up with inflation nicely. "Inflation" is a broad term and varies highly amongst products and services. Some will tend to purchase a certain spectrum of products for which inflation runs 5-8%. Others for which it will run lower (1-2%). Same with services. In my own case inflation has barely made a dent, but then I am not a "consumer", nor do I extract many services. (Medical - yes, occasionally - but no one is making out ahead of those, the answer is simply to save more)
The market can be a win-win situation, as opposed to gambling, because good companies increase their real value over time.
The problem, as a Financial Times report noted three yrs. ago, is that such companies can also "bleed red" and an ordinary investor wouldn't know (until too late) because it's not on the prospectus. Thus, one only obtains the most generic and general feedback and hence cannot make the correct investment decision when the time comes - as M. Skapinker has noted.
I also detest the Fed stepping in and cutting either the discount rate or the fed fund rate (as they are likely to do next month by 0.25%) to help speculators. If people wish to speculate in markets, fine - but take your goddam medicine (as in major corrections or downturns) without "Nanny Fed" coming in and helping your asses out.
When we in fixed income funds get slagged, as if the Fed lowers the main fund rate to assist you lot -we have to make do with less yield- and we can't piss and moan. We have to accept a lower return, even perhaps in an inflationary atmosphere. We get this without the Fed suddenly bumping up our rates. The speculators, having chosen to partake of the Wall street genie should take their medicine like men too. And NOT expect help from ANY quarter - especially the Federal Reserve.
Had the Fed not hit the chicken switch and cut the discount rate there's a good chance the Dow would have tumbled another 500 -800 for its full correction. And this is the price you pay for dabbling in the markets. But with the artificial boost given- now you can all get back to partying in your leveraged (on debt) bubble, while you leer and mock those of us in the fixed income investments.
All it tells me is you all are a bunch of molly-coddled babies.
