Ready for a market correction?

[the_idle_threat]

I wouldn't rule out CDs entirely. Short term CDs can be very useful to enhance the return on cash that is sitting around in money markets. Lots of times there are 6-month or even 3-month CDs out there that offer a little better rate than the money markets. This is really only worth the trouble, however, if you have a fair amount of money in the money markets (e.g. more than 10K) because the difference might only be 25 basis points or so (0.25%).

[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'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.

Agree 100%. The key is to get started at saving. Once you have some money put away, there are all kinds of ways to invest it.

[Merlin]

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.

First, for every 20 doom and gloom articles you find, you will only find 1 article stating the converse. Why? The media wants you to believe everything they say. It is well known that the MSM (Main Stream Media) slants solidly left. You won't hear or see very many positive stories about the Bush administration, unlike the Clinton administration where even an extra marital affair wasn't his fault, it was the evil right wing. As I stated, people throw the Clinton unemployment rate out there and slam Bush for his. From what your numbers show (and depending on how you read into those numbers), Bush isn't doing a bad job in comparison to what has happened during his presidency, but you would have us believe otherwise. If you want to take a closer look, look at where the economy was headed in 2000 (If you think it was on the rise, you are sadly mistaken) and then 911 happened in 2001 which rocked our economy hard. So with an economy already going into the tank and events that made it worse, Bushes domestic policies pulled us out from under that. What exactly did Clinton do with the gas prices, the economy again? Oh yeah, tank it by the time he left office. There is mountains of evidence that support supply side economics and even more evidence that shows that raising taxes does nothing but tank the economy long term.

On to Unions. Most union wages are based off of the minimum wage and their contracts have built in escalators should the minimum wage rise. If you read what I said, I did not say that union workers were paid minimum wage, I said that their wages are effected by minimum wage. There are many jobs out there that are like that, not just your average McDonald's job (oh and BTW, they normally pay higher then the minimum because they can't get enough help, that's how a free market works).

[Merlin]

I grew up in a solid Union family. My dad worked for the Communication Workers of America basically his whole adult life. My dad took me to a Union meeting when I was 10 and I got grounded because I asked a simple question. I remember it like it was yesterday and my dad knew that I was not a flaming liberal and that he was in trouble from that point on. After listening them talk about how "bad" their jobs were (you know, 5 weeks vacation, huge wages, free health care, dollar for dollar retirement match, etc), they decided that if they didn't get what they wanted that they were going to strike. So I asked the question "What gives you the right to do this?". My dad was livid, embarrassed and Merlin never attended another meeting.

For all of you that wondered why your phone bill was so high before deregulation, I thank you. My father is now retired, earning more money then he did when he was working with full life time health insurance for he and my mom for only $5 a month (the $5 was negotiated by the union in 2004, prior to that it was free). Neither of them will ever have to worry about money again. My father has gone through several major surgeries and he didn't pay a dime and I thank you.

I don't begrudge my dad for working as hard as he did. He did work "somewhat" hard, but only when something broke or needed replaced. Otherwise he spent his time reading books on the job. The last 10 years or so of his career, he got to drive around to trouble spots and fix things. However, even by his own admission, it was a waste of money for the company because they were too few and far between. Subsequently when he retired, they abolished his job. He knew they were going to abolish it almost as soon as he transferred into it. BUT, the job was his until he decided to retire.

He got lucky, like a lot of previous union workers have. However, that was the pinnacle of unions and also the epitome of what was and still in part is wrong with unions.

Unions were brought upon by poor working conditions many years ago. Now they are little more then extortionists. You paid a high phone bill BECAUSE of the unions. You do PAY for their luxury. When people let the market decided wages, you will find that wages will go up in areas requiring a specific expertise. And yes, those wages are passed onto the consumer. However, I seriously doubt that any of us could afford to just up and strike and hold our company hostage like a Union can. I applaud companies for finally standing up and holding firm with these extortionists. Unions are outdated and serve no useful purpose anymore but to give someone someplace to bitch about work.

[Merlin]

Whoops.....double post..

[oregonpackfan]

[quote="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.

Wow, Scott! I admire your fiscal discipline in your savings/investments.

Sadly, too many Americans lack your discipline and foresight for savings. We are conditioned to "Buy, buy, buy" and put our purchases on credit cards were the interest will add to our financial burdens.

I have read two disturbing statistics recently. First, is that Americans are currently saving/investing at a -1%!. Yes, that is a NEGATIVE one per cent!
Second, over half of American workers at age 50 have not saved a dime for their retirement!

Twenty years from now, we may see a rising number of impoverished elderly people in the USA.

More Americans need to do what you are doing with your money.

[LL2]

I grew up in a solid Union family. My dad worked for the Communication Workers of America basically his whole adult life. My dad took me to a Union meeting when I was 10 and I got grounded because I asked a simple question. I remember it like it was yesterday and my dad knew that I was not a flaming liberal and that he was in trouble from that point on. After listening them talk about how "bad" their jobs were (you know, 5 weeks vacation, huge wages, free health care, dollar for dollar retirement match, etc), they decided that if they didn't get what they wanted that they were going to strike. So I asked the question "What gives you the right to do this?". My dad was livid, embarrassed and Merlin never attended another meeting.

For all of you that wondered why your phone bill was so high before deregulation, I thank you. My father is now retired, earning more money then he did when he was working with full life time health insurance for he and my mom for only $5 a month (the $5 was negotiated by the union in 2004, prior to that it was free). Neither of them will ever have to worry about money again. My father has gone through several major surgeries and he didn't pay a dime and I thank you.

I don't begrudge my dad for working as hard as he did. He did work "somewhat" hard, but only when something broke or needed replaced. Otherwise he spent his time reading books on the job. The last 10 years or so of his career, he got to drive around to trouble spots and fix things. However, even by his own admission, it was a waste of money for the company because they were too few and far between. Subsequently when he retired, they abolished his job. He knew they were going to abolish it almost as soon as he transferred into it. BUT, the job was his until he decided to retire.

He got lucky, like a lot of previous union workers have. However, that was the pinnacle of unions and also the epitome of what was and still in part is wrong with unions.

Unions were brought upon by poor working conditions many years ago. Now they are little more then extortionists. You paid a high phone bill BECAUSE of the unions. You do PAY for their luxury. When people let the market decided wages, you will find that wages will go up in areas requiring a specific expertise. And yes, those wages are passed onto the consumer. However, I seriously doubt that any of us could afford to just up and strike and hold our company hostage like a Union can. I applaud companies for finally standing up and holding firm with these extortionists. Unions are outdated and serve no useful purpose anymore but to give someone someplace to bitch about work.

Very good read! I dislike unions myself. I have relative that are so pro-union it's pathetic. I don't think the mindset of a union worker is much different than a welfare recipient. They both have an entitlement minset.

[oregonpackfan]

Union abuse is far less than what it used to be. For one thing, there are fewer unions and fewer members of unions than there were before.

Many union members, particularly airline members, have had to sacrifice 25-33% of their wages and benefits to keep their airlines/corporations afloat.

If one wants to attack excessive corporate expenditures, just take an examination of the multi-million dollar salaries/stock options given to CEO's. A few CEO's, like the one for Home Depot, do not even last a full year but are given exorbitant buyout packages. Meanwhile, the average worker at Home Depot makes $10 an hour.

[Merlin]

I agree with the CEO thing OPF. No one deserves that kind of cash for a title unless they are actually making that kind of difference in the company and very few do. However, there are more examples of powerful Unions then there are of ones like the airlines. The airline unions negotiated exorbitant benefits and salaries when the airlines could afford it. That was the unions mistake. Instead of checking their hand, they went all in too early. Union job loss is a reality, why? Because Unions are a pain in the ass. When the going is good they want more then their share and when the going is bad they want that same share and expect to keep their jobs. Free Markets don't function well that way. Leave it up to the employers to determine the wages. If they all start gouging the employees then look no further then the overwhelming number of liberals who own companies. The tide has turned and big business is no longer run by the evil right wing conspiracy. All of those baby boomer hippies grew up and they control a lot more then people want to believe!

[GoPackGo]

That was a great market correction today!

[Freak Out]

That was a great market correction today!

$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$! Time to make some more.

[Freak Out]

Iran Asks Japan to Pay Yen for Oil, Start Immediately (Update1)

By Megumi Yamanaka

July 13 (Bloomberg) -- Iran asked Japanese refiners to switch to the yen to pay for all crude oil purchases, after Iran's central bank said it's cutting holdings of the U.S. dollar.

Iran wants yen-based transactions ``for any/all of your forthcoming Iranian crude oil liftings,'' according to a letter sent to Japanese refiners that was signed by Ali A. Arshi, general manager of crude oil marketing and exports in Tehran at the National Iranian Oil Co. The request is for all shipments ``effective immediately,'' according to the letter, dated July 10 and obtained by Bloomberg News.

The yen rose on expectations for an increase in demand for the currency to buy shipments from Iran, Japan's third-largest oil supplier. Central bankers in Venezuela, Indonesia and the United Arab Emirates have said they will invest less of their reserves in dollar assets because of the weakening currency, while the United Nations Security Council is preparing for another round of sanctions against Iran because of the nation's nuclear research.

``What else can Japan do but to accept the request, once the oil producer sent its wish?'' said Hirofumi Kawachi, an analyst at Mizuho Investors Securities Co. in Tokyo. ``The tensions between the U.S. and Iran are escalating, and it's Iran's measure to hedge risk.''

A spokesman for Iran's oil ministry in Tehran said he could neither confirm nor deny that the letter had been sent. Most Japanese oil refiners have until now used U.S. dollars to pay Iran for oil, said the spokesman, who declined to be identified by name because of government policy.

Yen Advances

The yen advanced to 122.15 per dollar at 10:34 a.m. in New York, from 122.42 late yesterday.

The Islamic republic, holder of the world's second-largest oil and gas reserves, has refused to halt uranium enrichment that it says is for use in nuclear power plants to produce electricity. The U.S. says Iran seeks instead to develop an atomic bomb. Enriched uranium can be used to make nuclear fuel or build nuclear weapons.

The government in Tehran has failed to suspend its nuclear activities after the imposition of two sets of United Nations- sponsored sanctions since December.

Iran isn't alone in wanting to drop the dollar for pricing oil. Russia has been examining plans to price the Urals oil export blend in rubles to curb currency risks. The nation plans to open the Energy Stock Exchange in St. Petersburg in the first half of next year to trade oil in rubles, UBS AG reported June 14.

`New Payment Mechanism'

Iran asked the refiners to use the yen exchange rate quoted at the Bank of Tokyo Mitsubishi UFJ on the date oil cargoes are loaded. The use of yen-based letters of credit for oil ``has finally been approved'' by the Iranian central bank and the NIOC, according to the letter, titled ``New payment mechanism for Iranian Crude Oil Cargoes.''

Payments from Japanese refiners to Iran rose 12 percent last year to 1.24 trillion yen ($10.1 billion), according to the finance ministry in Tokyo. Japan imported 1.59 million kiloliters of Iranian crude oil in May, the least since June 2006, according to government data.

Iran is cutting its U.S. dollar reserves to less than 20 percent of total foreign currency holdings, and will buy more euros and yen as tensions with the U.S. increase, Central Bank Governor Ebrahim Sheibany said on March 27.

Only Saudi Arabia and the United Arab Emirates are larger oil suppliers to Japan than Iran.

To contact the reporter on this story: Megumi Yamanaka in Tokyo at myamanaka@bloomberg.net .
Last Updated: July 13, 2007 10:59 EDT

[Freak Out]

Damn...

[LL2]

Damn...

Not too worry. Stocks are on sale tomorrow. 300 points is just over a 2% drop. Not exactly a bloodbath.

[the_idle_threat]

Dollar cost averaging is your friend. That, and time.