The S&P 500 ended 1999 at 1,469 and was recently at 2,814. That's an increase of 92% -- almost doubling -- over the nearly 19 years represented in the table, and it represents an average annual gain of about 3.5%. That's well below the average annual gain, driving home the lesson that over any particular investment period, your average returns may be well above or below average.
On the other hand, tax increases can have the opposite effect. One potential way to fix the Social Security funding problem would be to raise payroll taxes on employees and employers. There are several ways this could happen, but this would mean lower paychecks for workers and higher expenses for employers, and could certainly be a negative catalyst.
NR, still stacking myself. Picked up some more .22 and .30 Carbine at the last gun show a month ago. My next big purchase is a new 12-ga. pump, Mossberg 500 or 590. 6 cords of wood are stacked at the BOL now. My cousin just got finished replacing the batteries for the solar system and installed a new Flojak hand pump for the well. Still have the creek out back as a backup source of water. What I have left to move now is just enough to fill up the truck for bugout. The woodstove at the cabin was just replaced 2 years ago along with the pipe. Cabin was totally remodeled 3 years ago. everything is in top condition there. Bugout time can’t come soon enough for me.
Mathematicians have studied housing bubbles, such as The University of Pennsylvania, and their HOUSING BUBBLE STRUCTURAL MODEL AND HYPOTHESES models couldn’t figure it out. The factors they studied do play a role, but housing bubbles and crashes are likely a cultural phenomenon (outside of major recessions). It comes down to values, attitudes, dreams and panic emotions.
The next step that was taken was striving to make reforms in accounts. That implied that the companies now needed to make clearer balance sheets that disclosed more information on the transactions and investments of the company. The companies were asked to make a proper disclosure of all details such as stock options and investments that were made offshore by the companies. This was done to give the investors a better understanding of a company before they actually did invest in a particular company. Since this was not mandatory earlier, the investors couldn’t judge a company properly and invest in nonprofitable ventures which led to losses. Since the conflict of interest of the research firms led to losses, the new rule that was laid was that the investment bankers and the research analysts had to work separately. This was needed to be followed very strictly as there were high penalties charged in case of breach of regulations.
On October 31, Halloween, children and adults alike enjoy playing with the frightful themes of death surrounding the feast’s mixture of Christian All Saints’ Day and Celtic pagan origins. But, in 2017, if you are one of millions of people who have investments, here’s something all too real and scary to rob you of your sleep. This Warren Buffett Indicator predicts a stock market crash in 2018.
In the US, news on the trade dispute with China will remain a focus. Beyond that, the focus will be the US Federal Reserve (Fed) (Wednesday) which is expected to raise interest rates for the eighth time for this cycle taking the Fed Funds rate range to 2-2.25% and signal that more gradual rate hikes are likely. Markets have already fully factored this in, so the interest will be on the Fed’s commentary about the outlook and its “dot plot” of future rate hikes. While the Fed may remove its description of policy as being “accommodative” its economic commentary is likely to be upbeat and the dot plot is likely to remain consistent with more gradual rate hikes, ultimately taking the Fed Funds rate above the Fed’s currently assessed long run “neutral rate” of around 2.75-3%. This will likely mean more rate hikes over the next two years than the three and a half the market is currently allowing for. On the data front in the US, expect ongoing home price gains and another strong consumer confidence reading (both Tuesday), slight gains in new home sales (Wednesday) and pending home sales (Thursday), ongoing strength in durable goods orders (also Thursday) continued strength in consumer spending but a fall back in core private consumption deflator inflation to 1.9% year-on-year for August (Friday).
On Black Monday, the markets were a bit different than today. That’s the explanation that many market optimists like to offer when they explain why another Black Monday can’t happen. That is, the market cannot lose some 23% of its value in a single trading session. They might be right, but in the opposite direction. The markets now have human as well as computer input through so-called robot trading. They have more variables and are more complicated. But information and risks travel much faster. If anything, the risks of a major market crash are higher today.
Housing crash warnings have been sounding for many years both here and in China, which means the pressure for a big crash has been building. China is in trouble and so is Canada. With pressure, the human element, the human reaction, built on expectations built up by obsessively negative anti-Trump propaganda, could be sufficient to launch a panic-induced collapse. A panic meter might be the most significant crash signal.