Commentary: These 'hot' investments won't beat our strategies
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Is Fortune's Shawn Tully bullish? Or bearish? Or just swinging and missing? "Forget stocks. Don't bet on gold. The most attractive asset class in America is housing. Time to buy again."
What about these curve balls from USA Today's John Waggoner: "Funds have a good first quarter." Is it "time to dump the bond fund?" "Emerging markets could roar again," but after a bad first quarter.
Then MarketWatch's Robert Powell knocks it out of the park, between market gurus Bob Arnott and Bill Gross: "Don't buy stocks and don't buy bonds." Don't bet on it!
So what should you do? Buy? Sell? Trade? Bunt? Listen folks, it's very simple. The solution: Build, maintain, add to and fall in love with a Lazy Portfolio, one of those well-diversified portfolios of no more than 11 low-cost, no-load index funds.
Every one of our eight Lazy Portfolios is beating the S&P 500 by as much as five percentage points on the longer-term retirement benchmarks of 3-, 5- and 10-yearr returns. And they're respectably close on the more volatile one-year basis. Fabulous benefits, and no time wasted with risky stock-picking and short-term trading. Check out the latest data on the Lazy Portfolios.
That's right, forget all Wall Street's hoopla about active trading. Stop, never again. Set it, forget it. Set your allocations, and they'll beat the Street for you. Why? Stats prove that roughly 80% of all active trading schemes are money losers, when you factor in transactions costs, taxes, fees and commissions.
And remember, Wall Street only cares about Wall Street: After inflation they lost a whopping 20% of your retirement money between 2000 and 2010.
Solution: Build a successful Lazy Portfolio by adding new investment and retirement money to keep your allocations in balance. It's simple. It works. But if you still don't believe a Lazy Portfolio is the best way to protect your retirement in bear and bull markets, if you still insist on gambling at Wall Street's stock market casino, you tell us which of the following 11 alternatives will top the scoreboard, win the series in 2011.
The wheel spins, place your bets folks:
IPOs? Warning, 2011 Hotter Than 1999! Is Facebook a New Sock Puppet?
The New York Times DealBook warns: "A rush to invest in start-ups recalls era of tech bubble." You bet Wall Street loves the action: $71 billion in 1999, and $71.3 billion already set to go public in 2011. Hang on to your hats, this new game's a killer-thriller.
Commodities? Inflation's Near Flash Point, Cheap Money Ending Soon
BusinessWeek warns: "Global inflation starts with Chinese workers ... As pay raises on the mainland get generous, companies begin to hike prices." Inflation will ripple across the world. The Wall Street Journal warns that Chinese farmers and merchants are stockpiling cotton to drive the price higher. American farmers are also jumping on the bandwagon, planting cotton rather than corn. Why? USA Today: "Corn up 52% in the past 12 months." Sugar 60%. Soybeans 41%. Wheat 24%. Wall Street traders love a great commodities bet.
Downside: Capitalism is creating a global food crisis. "Hunger, despair for millions," warns USA Today. With two billion worldwide living in poverty, "food costs push many to the brink," as "Africa sinks deeper into despair as famine worsens." "Cheap food" is a thing of the past for America, too, where inflation will soon force Bernanke's rates up.
Currency Speculation? Bernanke's Monetary Bubble Fueling a Crash
Reagan's Budget Director David Stockman also warns MarketWatch readers: "Someone has to stop the Federal Reserve before it crushes what remains of America's Main Street economy." He's "pumping operations which will harm the real economy, even as these actions juice Wall Street's" speculators, "reassuring them that in the global financial casino operated by the world's central bankers, the house is always there for them."
Stockman warns: "The global economy is being pummeled by one speculative tsunami after the next." Why? Bernanke's blind obsession with near-zero rates is "transforming the dollar into a weakling even against the misbegotten euro." Warning, rates will rocket soon. The dollar will sink further. And the market will melt down again thanks to the self-destructive Reaganomics ideology of this myopic Greenspan-clone.
Foreign Bonds? European Central Bank Raises Rates. Who's Next?
Rates are going up sooner than you think. Yes the Bank of England is still holding rates low, but the Telegraph warns: "when rates do start to rise they will do so quickly." Catch you by surprise. The European Central Bank just raised its key rate by a quarter point to 1.25%, first increase since the 2008 meltdown. The rate went up despite economic problems with Portugal, which just asked for a bailout, and Greece and Ireland, bailed out earlier.
Warning: "Analysts who follow the bank had expected a quarter-point increase, followed by several more by the end of the year." Yes, rates must rise. You can bet the Fed will soon be forced to end its near-zero interest rates and QE2 gifts favoring Wall Street banks. Protect yourself over there.
Nuclear Power? Invest in Nuclear? Before an American Tsunami?
Fortune asked six experts "What's next for nuclear power?" "Black Swan's" Nicholas Taleb explained: "In 2003 the Japanese Nuclear Commission said that a fatality due to radiation exposure from an accident at one of its facilities should happen less than once per million years. That was the standard." Took just eight years for the million-year "nightmare scenario." This is a "criminal stupidity of statistical science," says Taleb, a game poorly played by scientists, politicians and financiers alike.
Remember Wall Street's 2008 meltdown? "Every captain should go down with every ship ... every captain, every ship. Follow that rule, and we'll live in a much better, safer world." Not a chance: Wall Street's conspiracy of "ship captains" and their lobbyists are running Washington. Sadly, next crash the crew will once again go down while the captains all get bailed out, again.
Big Banks? Regulators Guarantee Bailouts for Too-Big-to-Fail Banks
Yes it's true: Reuters warns "a council of regulators that includes the Fed, the Securities and Exchange Commission and others is soon expected to designate a number of firms as explicitly too large to be allowed to fail." Yes, "designate:" Protect, grant immunity, a free pass.
Folks, this is bad, bad economics. Banks are tightening their stranglehold on taxpayers: Designating, by law, that a particular bank is too-big-too-fail guarantees bailouts, in advance, to cover their gambling bets, even before these incompetents crash our economy. America is out-of-control.
This self-fulfilling prophecy gives Wall Street a license to kill the economy, at no risk. Such reckless gambling triggered the 2008 crash. This is not capitalism, giving profits to Wall Street, losses to taxpayers. Total Insanity.
Muni Bonds? $300 Billion Pension Fund Shortfall, Bubble Getting Bigger
State and city finances are so bad off that the $2.9 trillion muni-bond market could see 50-100 defaults, warns guru Meredith Whitney. Worse, not only do these pensions have more than a $300 billion funding shortfall, it will get worse. The Journal: "Battle's between actuaries vs. local governments over return rates."
Example: The actuary for Calpers, the $227 billion California Public Employees Retirement System, recommended a conservative 6% return rate assumption. Yet, Calpers's board kept their "assumed investment return rate at 7.75%, arguing the lower rate would create hardships on local governments." So they contribute less, but the problem grows, the shortfall gets bigger.
Hedging and Private Equity? Absolute Power Corrupts Absolutely
Over at SeekingAlpha, Jim Quinn shares this borrowed quote: "We now have an economy in which five banks control over 50% of the entire banking industry, four or five corporations own most of the mainstream media, and the top one percent of families hold a greater share of the nation's wealth than any time since 1930. This sort of concentration of wealth and power is a classic setup for the failure of a democratic republic and the stifling of organic economic growth."
Treasuries? America's a Ponzi Scheme, Government Will Soon Collapse
"It's unbelievable, Goldman ... no one has any criminal convictions," Bernie Madoff told Steve Fishman in a New York Magazine interview. "The whole government is a Ponzi scheme. New regulatory reform is a joke. The SEC looks terrible."
Even as J.P. Morgan Chase is "accused of deliberately ignoring hints about the illegal nature of Madoff's activities during the financial crisis," its CEO Jamie Dimon got a $19 million raise last week. Yes my friends, Madoff got caught, but Wall Street pulled off the perfect crime.
Exporters? World Trade Organization Warns: Exports Will Fall by Half
Over at Huffington Post Lila Shapiro explains that last year's 15.4% boom in US exports was "the biggest rise since 1950." Global exports up by 14.5%. Developed economies export growth was nearly 13%, with a whopping 16.5% across the rest of the world. China led the pack with 28%.
But it's temporary: "WTOs forecast for global export growth this year is little less than a half of last year's growth, at 6.5% ... some economists worry that even this number could be high ... violent protests in the Middle East pushing up energy prices, rising food prices throughout the world, European governments facing financial instability and a series of catastrophes rocking Japan, the WTO report acknowledges that the short-term outlook on global trade is clouded and difficult to gauge."
Oil? Alternative Energy Is Dead, Buy Oil, Only Choice, Pray for the Kids
In a Good magazine feature, "Cap and trade is dead, now what?" Brian Walsh warned: "There is no saving the planet, only managing it. That's hard for environmentalists to hear ... the old dream didn't work. ... and it's not coming back."
Yes, Obama's failure to fight the Copenhagen 2009 Climate Change Summit agenda weakened the anti-oil folks. Now the Big Oil/GOP/Tea Party/Lobbyists are killing cap and trade, deregulating energy, pushing America backward into the self-destructive Reaganomics policies of the Bush/Cheney oilmen era. Near term, politics guarantees a massive redux of the 2008 meltdown. Long term, politically, oil can't be regulated, will rise over $200 a barrel, choke taxpayers.
So you think you're a great stock picker? Think you can beat our Lazy Portfolios in 2011? Try hitting it out of the park. Bet you'll have to settle for a bunt, maybe steal second, then die out there with the bases loaded.
Sorry, but it's impossible to win against Wall Street. Their game's rigged, their playing field's not level, they got ringers in the lineup. Play at their casino, you'll lose. Worse, Vegas and Macao odds makers warn that every one of these 11 alternative investments have serious risks, black swan risks. So what's your bet?
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