7 Warning Flags and Financial Risk Factors We Face Today

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You know people have gotten too complacent about investing in the stock market and what it takes to grow real wealth when…

  1. People bragging about becoming 401(k) millionaires and posting their balances on social media has become a “thing” (remember when everyone from the company executives to the janitor were bragging at the water cooler about being real estate millionaires, just before the last crash?)
  2. People start to think they can actually retire comfortably on $1,000,000 (you can’t, because the IRS will take at least 25% – 33% off the top, and you’ll need $500,000 just to cover out-of-pocket healthcare and long-term care costs in retirement)
  3. The personal savings rate fell to its third-lowest on record at the end of 2017
  4. Consumer spending is rising, and more of it is being fueled by debt (the last quarter registered the second-largest percentage increase in charge-card debt in a decade)
  5. Inflation is taking a bigger bite out of Americans’ paychecks (real average hourly earnings of 80% of employees fell by half a percent in January – its fifth decline in six months)
  6. Hundreds of major companies have price earnings ratios that are higher than during the height of the 2000 and 2007 bubbles
  7. For a decade now, central banks have pretended they can print up prosperity (which they’ve done at a magnitude beyond imagination… and we’re supposed to have blind faith that they know what they’re doing)

[Read more…] “7 Warning Flags and Financial Risk Factors We Face Today”

Nobel Economist Warns of Irrational Exuberance in the Stock Market

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Richard Thaler, who won the Nobel Prize in economics in October of 2017, observed…

We seem to be living in the riskiest moment of our lives, and yet the stock market seems to be napping.”

Thaler has made a career of studying irrational and temptation-driven economic behaviors.

The current bull market is the second longest in modern history. If it manages to last until August 22, it will become the longest running bull market, at 9½ years.

No bull market has ever made it to its 10th birthday.

Which brings me to a very simple, but profound question…

What Happens When a Bull Market Ends?

[Read more…] “Nobel Economist Warns of Irrational Exuberance in the Stock Market”

Stock Market Reaches New Highs – Do You Trust It?

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When we released our Stock Market Survey a few weeks back, we were surprised so many readers responded. We were even more surprised by the results of the Survey, which we promised to share with you, so read on…

Nearly half (45%) of those who took the survey said, “I don’t trust the market with money I can’t afford to lose.” They clearly understand that the money they’re setting aside for something as important as retirement or a college education is money you really can’t afford to lose.

Fully 45% of our subscribers believe a major market crash – a plunge of 50% or more, as we had in 2000 and again in 2008 – is imminent. And another 34% expect that calamity to happen in the next 3-5 years.

But when we brought the situation closer to home and asked readers how a severe market crash would affect them personally, we found wave after wave of denial.

About 12% said that even if the market drops by 50%, “I have plenty of time to recover.” I suspect these folks don’t realize that since 1929, we’ve had three market crashes where the Dow took between 16 to 25 years to recover. What if history repeats itself? [Read more…] “Stock Market Reaches New Highs – Do You Trust It?”