Ready for a market correction?

[GrnBay007]

Yo, so what can I do to be a high powered stock owning Nabisco?

I always read this threads when you guys talk about $$$ but don't post in them cuz I don't have any info to contribute. What would be a good starting point?

I prefer stock owning Cracker...but, oh well. :P

EVERYONE advises a starting point is investing if your employer/company contributes or matches your contribution in a deferred comp....or whatever it may be called where you work. I have been doing that at the minimum amount for years....but this year took the plunge and tripled my contribution to get the max from the Department.

Your a smart cookie! Increase it 1% every year until you reach 10% of your salary. You'll be on your way to a nice retirement.

I also really applaud this. Payroll witholding automates savings discipline.

So 007, did the impact to your cash flow hurt? Or has it been relatively painless?

No, I can't say it hurt. I did notice a difference though, but it was also at a time my health insurance took a little hike. I raised my contribution at that particular time because I knew I would be getting at least a 3% raise in the next couple of months. (wowza....whopping 3%) ....but it sure does help offset it.

Increasing it 1% each year is a good plan and I'd like to do that, but I also just bought a house 2 years ago (30 yr. mortgage) and am trying like heck to get it paid off in 15 years. I also have college for 2 to think about. Not that I am going to try to pay for their college (I worked all the way through...they can too) but I have been stashing away money for that purpose as well.

I laugh when I read those articles that say you should pay yourself first when you get your paycheck. Yeah right!! Well, unless they are talking about investing for your retirement. And in that case, lets all hope we get to see a nice long retirement.

[LL2]

If you really want a market downturn, keep letting Greenspan shoot off his mouth, pass universal healthcare and the imigration reform bill.

What does greenspan have to do with the market?

Economists are basically glorified statisticians.

Isn't Patler a glorified statistian too?

[HarveyWallbangers]

Isn't Patler a glorified statistian too?

Unglorified.

[MJZiggy]

Ouch.

[Joemailman]

If you really want a market downturn, keep letting Greenspan shoot off his mouth, pass universal healthcare and the imigration reform bill.

What does greenspan have to do with the market?

Every time he opens his mouth publically, the market goes down. The problem is that he has been saying that we are headed for a recession for 3 years now and some people actually believe him! Economists are basically glorified statisticians. Everything they say is based off of a certain set of numbers and even if those numbers are inaccurate, it doesn't interfere with their logic.

The Truth:
Inflation - Directly affected by two factors: Price of Gas (not oil) and Minimum Wage hikes. When the price of gas is high, everything is affected because the cost of transportation rises. When minimum wage increases, most everything is affected because a majority of Union Wages are based off of the minimum wage so those wages go up, the hospitality business raises their prices because the minimum wage goes up. So now everything produced with union labor goes up and the price of a Big Mac, a hotel room and a pizza goes up. So in essence, everything the middle consumes goes up in price. The exception is the wages that non-union middle class workers get. Very few non-union and non hospitality jobs out there adjust their wages based on the minimum wage. Agricultural jobs are also affected by minimum wage. Minimum wage hikes are usually gradual increases so the average consumer does not realize that by the time the full minimum wage increase gets here that they are now paying more for products and also paying more in taxes for those products. It's a good scam and people fall for it every time. The rate of inflation doesn't appear to go up much because it was a "gradual" increase. If the price of your Big Mac goes from $1.99 to $2.25 over the course of a year, you don't even think about it. BUT, that is a 12.5% increase in price and much higher then the normal rate of inflation. The tax goes from (5.5% where I live in WI) $.11 to $.13 or an 18% increase in tax. Now apply that to most products out there. Hopefully you get the picture, congress bets you won't.

Recession - When you don't have any money or are do not feel confident in spending money, the economy tanks and our whole economic system tumbles. Some ways to tumble the economy: Raise taxes, higher interest rates, stagnant wages, job losses. Ways to prevent this: Tax Cuts (the government is taking in record amounts of money since the Bush tax cuts because the people & businesses are spending money), Allow the market to determine the rates, Allow the free market to determine the wages and not the government, Job losses are usually the last thing to go in a recession and shipping jobs overseas is a falacy. If as consumers we did not demand lower prices for goods, there would be no reason to purchase items from say, China. The fact is, we thrive on low price goods and most of us could not afford buying everything from American Made Union products.

Unemployment in this country has been in the low 4% range for years now, lower then when Clinton was in office. Our GDP is up, Government Revenues are up, health care costs are stabilizing and our economy has been solid. This has all transpired since the Bush tax cuts of 2002-2003. Yet, a moron like Greenspan opens his mouth and it all falls apart. Yet, we have a congress and in a lot of cases state governments that are clamoring for more money, universal health care and taxing the evil rich who are already paying half the tax burden as it is in this country.

And yet, people still vote for them.

In 2006, the unemployment rate was 4.6%, compared to 4.0% in 2000. The average unemployment during the Bush adm. has been 5.4%, compared to 5.2% in the Clinton adm. The average increase in health care costs has stabilized the last 2 years at just under 10%. While an improvement, it is hardly good news to U.S. workers whose wages have increased at 3-4%. Combine this with the rise in fuel costs, and this economy has hardly been good for middle class workers. In addition, more than 7 million people have lost health care benefits due to the loss of quality jobs, and the percentage of people in this country living under the poverty level has started to increase again after years of decline. You point to statistics to suggest a strong economy, but ignore the fact that the Bush adm. has had to add trillions to the national debt to achieve it.

I'm curious as to why you claim that most union wages are based on the minimum wage. Most union workers make far more than the minimum wage, and would not seem to be affected by it. The people whose wages are most likely to be affected by the minimum wage are those earning the minimum wage, and those just above it.

[the_idle_threat]

Yo, so what can I do to be a high powered stock owning Nabisco?

I always read this threads when you guys talk about $$$ but don't post in them cuz I don't have any info to contribute. What would be a good starting point?

I prefer stock owning Cracker...but, oh well. :P

EVERYONE advises a starting point is investing if your employer/company contributes or matches your contribution in a deferred comp....or whatever it may be called where you work. I have been doing that at the minimum amount for years....but this year took the plunge and tripled my contribution to get the max from the Department.

Your a smart cookie! Increase it 1% every year until you reach 10% of your salary. You'll be on your way to a nice retirement.

I also really applaud this. Payroll witholding automates savings discipline.

So 007, did the impact to your cash flow hurt? Or has it been relatively painless?

No, I can't say it hurt. I did notice a difference though, but it was also at a time my health insurance took a little hike. I raised my contribution at that particular time because I knew I would be getting at least a 3% raise in the next couple of months. (wowza....whopping 3%) ....but it sure does help offset it.

Increasing it 1% each year is a good plan and I'd like to do that, but I also just bought a house 2 years ago (30 yr. mortgage) and am trying like heck to get it paid off in 15 years. I also have college for 2 to think about. Not that I am going to try to pay for their college (I worked all the way through...they can too) but I have been stashing away money for that purpose as well.

I laugh when I read those articles that say you should pay yourself first when you get your paycheck. Yeah right!! Well, unless they are talking about investing for your retirement. And in that case, lets all hope we get to see a nice long retirement.

From what I understand, Iowa has an outstanding 529 College Savings Plan that might help you out. Perhaps you know that already.

[Freak Out]

If you really want a market downturn, keep letting Greenspan shoot off his mouth, pass universal healthcare and the imigration reform bill.

What does greenspan have to do with the market?

Every time he opens his mouth publically, the market goes down. The problem is that he has been saying that we are headed for a recession for 3 years now and some people actually believe him! Economists are basically glorified statisticians. Everything they say is based off of a certain set of numbers and even if those numbers are inaccurate, it doesn't interfere with their logic.

The Truth:
Inflation - Directly affected by two factors: Price of Gas (not oil) and Minimum Wage hikes. When the price of gas is high, everything is affected because the cost of transportation rises. When minimum wage increases, most everything is affected because a majority of Union Wages are based off of the minimum wage so those wages go up, the hospitality business raises their prices because the minimum wage goes up. So now everything produced with union labor goes up and the price of a Big Mac, a hotel room and a pizza goes up. So in essence, everything the middle consumes goes up in price. The exception is the wages that non-union middle class workers get. Very few non-union and non hospitality jobs out there adjust their wages based on the minimum wage. Agricultural jobs are also affected by minimum wage. Minimum wage hikes are usually gradual increases so the average consumer does not realize that by the time the full minimum wage increase gets here that they are now paying more for products and also paying more in taxes for those products. It's a good scam and people fall for it every time. The rate of inflation doesn't appear to go up much because it was a "gradual" increase. If the price of your Big Mac goes from $1.99 to $2.25 over the course of a year, you don't even think about it. BUT, that is a 12.5% increase in price and much higher then the normal rate of inflation. The tax goes from (5.5% where I live in WI) $.11 to $.13 or an 18% increase in tax. Now apply that to most products out there. Hopefully you get the picture, congress bets you won't.

Recession - When you don't have any money or are do not feel confident in spending money, the economy tanks and our whole economic system tumbles. Some ways to tumble the economy: Raise taxes, higher interest rates, stagnant wages, job losses. Ways to prevent this: Tax Cuts (the government is taking in record amounts of money since the Bush tax cuts because the people & businesses are spending money), Allow the market to determine the rates, Allow the free market to determine the wages and not the government, Job losses are usually the last thing to go in a recession and shipping jobs overseas is a falacy. If as consumers we did not demand lower prices for goods, there would be no reason to purchase items from say, China. The fact is, we thrive on low price goods and most of us could not afford buying everything from American Made Union products.

Unemployment in this country has been in the low 4% range for years now, lower then when Clinton was in office. Our GDP is up, Government Revenues are up, health care costs are stabilizing and our economy has been solid. This has all transpired since the Bush tax cuts of 2002-2003. Yet, a moron like Greenspan opens his mouth and it all falls apart. Yet, we have a congress and in a lot of cases state governments that are clamoring for more money, universal health care and taxing the evil rich who are already paying half the tax burden as it is in this country.

And yet, people still vote for them.

In 2006, the unemployment rate was 4.6%, compared to 4.0% in 2000. The average unemployment during the Bush adm. has been 5.4%, compared to 5.2% in the Clinton adm. The average increase in health care costs has stabilized the last 2 years at just under 10%. While an improvement, it is hardly good news to U.S. workers whose wages have increased at 3-4%. Combine this with the rise in fuel costs, and this economy has hardly been good for middle class workers. In addition, more than 7 million people have lost health care benefits due to the loss of quality jobs, and the percentage of people in this country living under the poverty level has started to increase again after years of decline. You point to statistics to suggest a strong economy, but ignore the fact that the Bush adm. has had to add trillions to the national debt to achieve it.

I'm curious as to why you claim that most union wages are based on the minimum wage. Most union workers make far more than the minimum wage, and would not seem to be affected by it. The people whose wages are most likely to be affected by the minimum wage are those earning the minimum wage, and those just above it.

Look at the big concesions some labor unions are having to make just to keep a few jobs....40 percent wage cuts! Gotta love free trade...or should I say freedom for American companies to move all their manufacturing to the lowest wage nations.

[GrnBay007]

From what I understand, Iowa has an outstanding 529 College Savings Plan that might help you out. Perhaps you know that already.

I was not aware of that and looked it up....interesting. I'm surprised when I talked to my accountant this year at tax time he didn't mention this. He said if they were younger he'd go with stocks with the money but at the age they are now he'd suggest a CD.

[HarveyWallbangers]

In 2006, the unemployment rate was 4.6%, compared to 4.0% in 2000.

Both historically low.

The average unemployment during the Bush adm. has been 5.4%, compared to 5.2% in the Clinton adm.

Do you want to claim that Clinton didn't come into office with an economy on the upswing, and left office with an economy on the downswing? What was the trend when Bush came to office? Don't you think 9/11 affected the stats a bit, and likely would have at least wiped out all of the difference.

In addition, more than 7 million people have lost health care benefits due to the loss of quality jobs, and the percentage of people in this country living under the poverty level has started to increase again after years of decline.

I don't trust any of the health care statistics that the MSM pushes. It's fuzzy math. The poverty level is still historically low, and it had started rising before Clinton left office (funny, at the same time that the economy started sputtering).

Look at the big concesions some labor unions are having to make just to keep a few jobs....40 percent wage cuts! Gotta love free trade...or should I say freedom for American companies to move all their manufacturing to the lowest wage nations.

Outsourcing. Another one of those emotional issues that liberals like to use for political means (see minimum wage). Historically, America has insourced way more than it has outsourced. Last I looked, there were still more jobs insourced than outsourced. Want to argue that overall outsourcing/insourcing has been a drain on our economy? The facts don't back it up. I've also read that outsourcing has actually leveled off (although I haven't verified it), but it's good political BS to fire up the base. Traditionally, we've outsourced low paying jobs (usually manufacturing or hard labor) for high paying insourced jobs. The fact that the likes of China and India have evolved dramatically in the IT sector has provided a new dynamic, but then there are the arguments that the increased revenue from the savings made on outsourced jobs provide increased revenue streams that companies use to create new jobs domestically.

Get used to outsourcing though. With the baby boomers retiring, there will be sectors of the economy that will have to outsource just to find an adequate number of laborers for the available positions.

[the_idle_threat]

From what I understand, Iowa has an outstanding 529 College Savings Plan that might help you out. Perhaps you know that already.

I was not aware of that and looked it up....interesting. I'm surprised when I talked to my accountant this year at tax time he didn't mention this. He said if they were younger he'd go with stocks with the money but at the age they are now he'd suggest a CD.

I took a look, and there's a small state tax advantage---a state (not federal) tax deduction on all contributions during a calendar year, capped at $2595 per beneficary per year. If you put in maybe $1000.00 per year for both kids combined and you're in, say, an 8% state tax bracket, that's 80 bucks you'll get back on your state taxes. Nothing mindblowing if you're putting away peanuts. And IMO you should be putting away only peanuts for the kids' college savings unless you are fully funding your own retirement plans first (for most this means max out company match in workplace retirement plan and then max out Roth IRA). There are many other ways to fund college, and not nearly so many ways to fund retirement.

And if you're gonna keep the college stuff ultra-conservative, then the tax-deferred growth and (potentially) tax-free distributions will be less advantageous as well. Might still be worthwhile though if it's money you're specifically putting away for college savings.

Strange that your accountant is so polar---either ultra-aggressive with stocks or ultra-conservative with CDs. There are things in the middle.

But then again there are a lot of investors like that.

[Patler]

Isn't Patler a glorified statistian too?

Unglorified.

..and I deserve this why???

[the_idle_threat]

Probably for the same reason I bet all the money in your wallet.

[LL2]

Isn't Patler a glorified statistian too?

Unglorified.

..and I deserve this why???

I said you were glorified...that's more of a nice thing...great with stats. Ol Harv probably doesn't like stats too much.

[Bretsky]

From what I understand, Iowa has an outstanding 529 College Savings Plan that might help you out. Perhaps you know that already.

I was not aware of that and looked it up....interesting. I'm surprised when I talked to my accountant this year at tax time he didn't mention this. He said if they were younger he'd go with stocks with the money but at the age they are now he'd suggest a CD.

Some other brilliant genius also mentioned a 529 Plan to you lol

Anyways, putting $$ in CD's is great if you are 65 or so; scratch that. I'd still probably use Money Markets. If I had my securitied license I'd be setting up a meeting with you to discuss the 529 plan as well as mutual fund alternatives. Say no to CD's

[Scott Campbell]

Yo, so what can I do to be a high powered stock owning Nabisco?

I always read this threads when you guys talk about $$$ but don't post in them cuz I don't have any info to contribute. What would be a good starting point?

I'd do exactly what 007 just did. Increase your rate of savings. Keep ratcheting it up until you're socking a pretty good amount away each year. The #1 critical key is learning to live within what's left over after saving. That's why despite all the arguments you hear from B and RG on HOW to invest, they're both on the exact same page when it comes to what I refer to as discipline. Save the money first. You have plenty of time to worry about the finer points of investing later.

I max out my 401K every year (15% of the paycheck), max out my Roth every year (8G - 4G for both me and my first wife), max out my Employee Stock Purchase Plan every year (15% of the paycheck), and max out the kids Utah state 529 college savings plans every year. While this rate of saving might sound impossible to some, my wife and I started maxing out any available tax incentives right out of college. We were dirt poor. Any time the government offers me free money (tax incentives) to save, I try and take advantage of it. This free money is all use it or lose it - you have to take advantage of them now.

When you're young and have a smaller net worth, your rate of return (or how you invest) is far less important than your savings rate. As your savings pool grows over time, then your retrun on investment % will surpass your savings rate in terms of impact to your net worth.