Critical Mass - Care and Feeding For Once Attained

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Top 792. Apr 9, 2005 10:05 AM

» Normxxx - Re: Re: Re: Re: Earn 57% more in retirement

In response to Re: Re: Re: Earn 57% more in retirement posted by Kirk:

Guys! Check out Jeremy Siegel's latest book:

"The Future for Investors : Why the Tried and the True Triumph Over the Bold and the New"

I think you will both be surprised and impressed at how it impacts your strategies!

-- posted by Normxxx

Top 793. Apr 9, 2005 10:11 AM

» Normxxx - Re: Monte Carlo calculators

In response to Monte Carlo calculators posted by pbradford6:

This is ideally handled by Monte carlo, if you know what you are doing. Monte Carlo can be used to compare and contrast strategies; 'predict' how your investments will do using different strategies at different phases, etc.

It can even be used to 'predict' outcomes if the strategy is gradually changing over time.

-- posted by Normxxx

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Top 794. Apr 12, 2005 1:54 PM

» Normxxx - New Ways of Thinking For a Secular Bear.

New Ways of Thinking For a Secular Bear.

I have been giving some thought to why I was so wrong about the 2003 market-- I never thought it would develop into a full fledged Bull-- But it fooled me. Yet, I was not alone. Many others were fooled. Sy Harding was (as usual) bearish all through the summer, which proved to be (uncharacteristically) quite strong. But he was also uncharacteristically Bearish at the start of the seasonally strong period in October, 2003. Later, he ascribed the strength to the Fed pouring liquidity into the markets, huge increases in Federal spending, and, of course, the tax cuts and rebates. All good reasons why the economic strength didn't show up until the market move was almost over. Yet, market moves usually anticipate the economy.

I think 2003 must serve as a lesson for all of us-- even those who were correctly Bullish. It was our first cyclical Bull in the current secular Bear market, and we must expect there to be a pronounced difference from cyclical Bulls in a secular Bull market.

For those who appreciate this difference, I heartily recommend a new book by Ed Easterling-- "Unexpected Returns: Understanding Secular Stocks Market Cycles." Forget most of what you learned about the market over the last 20 to 40 years-- it's all different; and Ed tells you how and why. Beware: any financial adviser who is not conversant with Ed's book or what he is talking about is likely to do real harm to your portfolio over the next 10 - 20 years!

But see also the conclusions of Evergreen Capital Management, LLC (in three posts, since it wouldn't fit in one). The Evergreen strategy is likely to be even more important during a secular Bear!

FYI, at a Houston CFA dinner recently, three of the four panelists (these three were all equity guys with the other being a fixed income guy) all recommended large caps as the next asset class to buy. One of them (the CEO of AIM Funds) mentioned that this "consensus" among them was pretty scary - however, he said the huge outflows coming out of his large cap mutual funds are somewhat analogous to the large amount of inflows they were experiencing during the early parts of 2000-- suggesting that retail investors are being irrational once again. Only this time they are selling instead of buying large caps.

As for myself, I think large caps will start to outperform small caps going forward on a relative basis but the performance of large caps may not necessarily be (absolutely) positive. Get used to the difference!

Still looking for a more oversold situation here (to go long)-- or a place to go short (sometime in April/May?)

The contents of this letter/report does not necessarily reflect the opinions or viewpoint of normxxx. They are provided for informational/educational purposes only.

The content of this message is not to be construed as constituting market or investment advice. It is intended for educational purposes only. Individuals should consult with their own advisors for specific investment advice.

-- posted by Normxxx

Top 795. May 27, 2005 9:50 AM

» bob90245 - Millionaire Ranks Hit New High

Millionaire Ranks Hit New High
The Wall Street Journal Online
By Robert Frank

Fueled by Investment Gains, Growth
In Number of Households Is Highest Since 1998

The number of millionaires in the U.S. increased to a record last year, boosted by gains in stocks and global financial markets, according to two new studies.

The number of U.S. households with a net worth of $1 million or more rose 21% in 2004, according to a survey released yesterday by Spectrem Group, a wealth-research firm in Chicago. It is the largest increase since 1998, according to the study, which was based on data from more than 450 qualified respondents. There now are 7.5 million millionaire households in the U.S., breaking the record set in 1999 of 7.1 million. The study excluded the value of primary residences, but included second homes and other real estate.

A separate study, also released yesterday, by Boston Consulting Group found that the U.S. continues to lead the world in creating new millionaires. The number of households in the U.S. with liquid assets of $20 million or more is increasing by 3,000 households a year.

The studies suggest that despite falling wages for nonmanagement employees in 2004, the fortunes of those at the top continued to rise. Unlike many wage earners, the wealthy rely on investments for much of their increasing wealth. They also tend to invest in higher-risk and potentially faster-growing investments, including hedge funds, private-equity funds and debt instruments.

The findings mark the second straight year of growth for millionaires in the U.S. After rising rapidly in the late 1990s, the fortunes of the wealthy tumbled with the bear market of 2001 and 2002. Last year, however, with the economy expanding and stocks recovering, the wealthy staged a comeback.

The surveys also show that despite growing pessimism among wealthy investors about the outlook for the economy, the rich continue to increase in both numbers and in wealth.

"People's attitudes toward the economy are so negative, but the reality is that the affluent are bouncing back to where they were before the bear market," says Catherine McBreen, managing director of Spectrem.

Economists question, though, whether the wealth boom will continue in 2005. Stock markets have swung wildly this year, and many are predicting slower growth -- and potentially even losses -- in hedge funds.

Reflecting their doubts about the future of the financial markets and the economy, the affluent continue to hold large amounts of cash. The Spectrem survey showed that 9% of their assets were in cash deposits.

Households with net worth of $3 million or more garnered 34% of their wealth last year from investment gains, according to the Spectrem survey. Only 31% of their wealth last year came from compensation. The remainder came from privately owned businesses, inheritances and other sources.

Those at the very top of the wealth ladder did the best in 2004. According to the Spectrem survey, the number of households with a net worth of $5 million or more rose 38% to 740,000. That is up from 480,000 in 2001 and more than triple the level in 1997.

The amount of money held by the wealthy also surged. Millionaire households in the U.S. controlled more than $11 trillion in assets in 2004, up more than 8% from 2003, according to the Boston Consulting Group.

The wealthy remain highly skeptical of financial advisers, given their stock-market losses in 2001 and the wave of scandals on Wall Street. Fully 30% of affluent investors make most of their financial decisions without the help of a professional -- an increase from past years, according to the Spectrem survey. Only 10% let their advisers make all the decisions.

Specifically, stronger financial markets and higher real-estate values helped drive the growth in 2004. Wealthy investors continue to keep most of their assets in more-liquid investments. In 2004, investors with total assets of more than $500,000 had 46% of their holdings in investible assets, such as stocks and bonds. Of the remainder, they held 21% in privately held businesses, 6% in insurance and annuities, 10% in their primary residence, 7% in other real estate, including second homes, and 10% in retirement plans.

The richest investors kept more of their wealth in investments, as opposed to hard assets. Investors with total assets of more than $3 million had 49% of their holdings in investible assets. Investors with from $500,000 to $1 million had 29% in investible assets.

Last year, the wealthy invested mostly in stocks, bonds and managed accounts. Of the total assets held by investors with $500,000 or more, 24% was in stocks and bonds and 23% was in managed accounts. The survey said 9% of the assets were in alternative investments such as hedge funds and private-equity funds, with 13% in mutual funds. Employer equity participation, such as options and restricted stock, accounted for 7% of their holdings.

Europe also showed growth in affluent households and millionaires, according to the Boston Consulting Group study. Europeans with more than the equivalent of $100,000 in investible assets rose 4%. The number of households with more than $20 million in investible assets in Germany rose by 1,000 a year in 2004.

-- posted by bob90245

Top 796. May 27, 2005 11:14 PM

» Happy_2 - Hard to believe

According to the previous article:

"...There now are 7.5 million millionaire households in the U.S...."

According to the Census Bureau there are about 100 million households in the US.

It is hard to believe one out of every thirteen households in the US have over a million dollars in net assets not counting their primary residence. Could this be right?

-- posted by Happy_2

Top 797. May 28, 2005 9:55 AM

» Normxxx - Re: Millionaire Ranks Hit New High

In response to Millionaire Ranks Hit New High posted by bob90245:

What is that in 1932 dollars?

-- posted by Normxxx

Top 798. May 28, 2005 10:42 AM

» eccm - Re: Re: Millionaire Ranks Hit New High

In response to Re: Millionaire Ranks Hit New High posted by Normxxx:

$82,297.50

-- posted by eccm

Top 799. May 28, 2005 12:35 PM

» Normxxx - Re: Re: Re: Millionaire Ranks Hit New High

In response to Re: Re: Millionaire Ranks Hit New High posted by eccm:

Thanks. I thought about as much-- though we probably still have lots more millionaires today than there were people who had $82,297.50 in 1932-- and demography is not the reason.

Still, on present trends, it'll likely shortly be back to "the good old days."

-- posted by Normxxx

Top 800. May 29, 2005 10:58 AM

» bob90245 - Re: Hard to believe

In response to Hard to believe posted by Happy_2:

It is hard to believe one out of every thirteen households in the US have over a million dollars in net assets not counting their primary residence. Could this be right?

Is this a great country or what!!

Take a look in the April 2005 issue of Money Magazine. The article on page 171 gave even more detail on millionaires in America. Here is the breakdown by age range:

Age Range . . . Number of millionaire households in millions

25-34 . . . 0.2
35-44 . . . 1.0
45-64 . . . 3.9
65 and up . . 2.3

Source: Boston College Center on Wealth and Philanthropy

-- posted by bob90245