This story about the arrest of a Chinese investment tips blogger is interesting, and scary in several ways.
Chinese investment tips blogger arrested
First, it reveals that the Chinese government gives warnings by first arresting people. This is apparently their warning to other such people giving investment tips. This guy did apparently go beyond giving his advice, as I myself do on this blog -- he made over $1 by selling investment advice. Here in the U.S. I'd be breaking the law if I gave individual investment advice since I'm not legally qualified to do that. (Though if you want to pay me $1 million, I might consider risking the penalties! :) )
Secondly, the investing psychology of the Chinese people is a boom mentality. A few weeks ago I read an article about how some woman believed that the Chinese government would not let the stock market crash before the Olympics of 2008.
So many Chinese investors apparently think they're now getting a free ride from the stock market -- it's going to keep going up and make them rich because the government won't let it, at least before the 2008 Olympics, to keep from losing facing internationally.
They may even be right, which means the whole question becomes, will they all pull out right before/during or after the Olympics? And, who's going to pay for it all?
Thirdly, the Chinese people also want the security and comfort of taking investing advice, including tips on specific companies, from other people who supposedly are experts. I could be wrong, but I suspect that right now there're not a lot of Chinese shareholders who have heard of the Efficient Market Theory, asset allocation, diversification or the benefits of index funds.
Chinese investment blogger arrested
Chinese investment blogger arrested
Friday, July 13, 2007
Wednesday, July 11, 2007
Euro headed down thanks to euro-boomers?
So Richard Lehman is complacent about the coming baby boomer retirement "crisis" -- in the United States. Interestingly, he's not so complacent about what's going to happen soon in Europe. In his viewpoint, Europeans are too used to living on the welfare state. As I said in my last entry, he expect American boomers to just keep on working until they can afford to stop.
He expects European boomers to stop working and demand that their governments pay the promised retirement benefits -- no matter what.
Since few of them have this money (most Western European Social Security systems are in worse financial condition than that of the U.S.), they're going to have a problem meeting this demand. Also, birth rates in Europe in the past 30 to 40 have been lower on average than that in the U.S. Therefore, there're going to be even fewer workers per retireee than in the U.S.
Therefore, Western European governments are going to have to run their printing presses full-time, to send their baby boomer generation the pensions they've been promising them since they established their post-World War 2 welfare states.
End result -- the euro will be inflated and lose value in comparison to the dollar.
So the current situation where the euro is at a record high against the dollar won't last more than a few years or so.
euro baby boomer retirement crisis
euro baby boomer retirement crisis
He expects European boomers to stop working and demand that their governments pay the promised retirement benefits -- no matter what.
Since few of them have this money (most Western European Social Security systems are in worse financial condition than that of the U.S.), they're going to have a problem meeting this demand. Also, birth rates in Europe in the past 30 to 40 have been lower on average than that in the U.S. Therefore, there're going to be even fewer workers per retireee than in the U.S.
Therefore, Western European governments are going to have to run their printing presses full-time, to send their baby boomer generation the pensions they've been promising them since they established their post-World War 2 welfare states.
End result -- the euro will be inflated and lose value in comparison to the dollar.
So the current situation where the euro is at a record high against the dollar won't last more than a few years or so.
euro baby boomer retirement crisis
euro baby boomer retirement crisis
Monday, July 9, 2007
NO USA baby boomer crisis, says author
I just read Income Investing Today: Safety & High Income Through Diversification by Richard Lehman, and he casually dismissed the upcoming
baby boomer retirement crisis.
No problemo, he says. Most baby boomers just aren't going to retire, at least not for many years.
He notes that in 1935 when the Social Security Act was passed in the United States, the average life expectancy was 64. Therefore, they knew in advance that over half of all workers weren't going to collect Social Security at all!
Now life expectancy is in the 80s. There's no reason to stop working at age 65, and so baby boomers won't. They'll be too scared of running out of money before they die.
This will bolster the Social Security trust funds, because these older workers will keep paying into the system. Plus, they won't be drawing checks until they reach the age (I think it's now 70) when they can receive full checks no matter how much money they earn.
This will also bolster the Medicare trust fund, because these boomers will still be covered by health insurance (though he doesn't seem to think about how much demands will be placed on health insurance companies by covering so many people in the 60s and 70s).
I think he's correct to a degree, but it won't be as smooth as he implies. For one thing, I'm sure that most baby boomers will not want to continue working at the same job they've hated for the past 30 years.
Start an online auction business, yes. Sell macrame designs, yes. Teach English to children in Nairobi, yes. Open up a bait shop in the Ozarks, yes.
Keep working the same, dull boring job -- no.
no baby boomer retirement crisis
no baby boomer retirement crisis
baby boomer retirement crisis.
No problemo, he says. Most baby boomers just aren't going to retire, at least not for many years.
He notes that in 1935 when the Social Security Act was passed in the United States, the average life expectancy was 64. Therefore, they knew in advance that over half of all workers weren't going to collect Social Security at all!
Now life expectancy is in the 80s. There's no reason to stop working at age 65, and so baby boomers won't. They'll be too scared of running out of money before they die.
This will bolster the Social Security trust funds, because these older workers will keep paying into the system. Plus, they won't be drawing checks until they reach the age (I think it's now 70) when they can receive full checks no matter how much money they earn.
This will also bolster the Medicare trust fund, because these boomers will still be covered by health insurance (though he doesn't seem to think about how much demands will be placed on health insurance companies by covering so many people in the 60s and 70s).
I think he's correct to a degree, but it won't be as smooth as he implies. For one thing, I'm sure that most baby boomers will not want to continue working at the same job they've hated for the past 30 years.
Start an online auction business, yes. Sell macrame designs, yes. Teach English to children in Nairobi, yes. Open up a bait shop in the Ozarks, yes.
Keep working the same, dull boring job -- no.
no baby boomer retirement crisis
no baby boomer retirement crisis
Sunday, July 8, 2007
The Power of Gold
I've started reading Peter Bernstein's next book, The Power of Gold. Its theme can be discerned from the subtitle: The History of an Obsession. Its focal point seems to be the old story of a man who was transporting his fortune -- in the form of many pounds of gold -- when this ship he's on is hit by a bad storm. He strapped the gold to his body and of course it drags him to the bottom of the ocean. He didn't have the gold -- it had him.
Still, as always, Bernstein weaves a fascinating narrative of belief and history. I'm pretty sure that when we get to modern times, he's not going to come down on the side of those who believe that we should return our money to a gold standard.
But this book's copyright is in 2000, before the current run-up in gold's price. Are we in the early stages of a new bull market in gold? Should we care?
My own attitude is shaped by the realization that gold doesn't dividends, although it's possible for gold mining stocks to do so. It's not common, though BHP Billiton is a top international dividend paying stock.
gold
gold
Still, as always, Bernstein weaves a fascinating narrative of belief and history. I'm pretty sure that when we get to modern times, he's not going to come down on the side of those who believe that we should return our money to a gold standard.
But this book's copyright is in 2000, before the current run-up in gold's price. Are we in the early stages of a new bull market in gold? Should we care?
My own attitude is shaped by the realization that gold doesn't dividends, although it's possible for gold mining stocks to do so. It's not common, though BHP Billiton is a top international dividend paying stock.
gold
gold
Wednesday, July 4, 2007
Income Investing Book
Today I just made an important addition to my income investing site - I launched by sales letter for the book YES, YOU CAN BE A SUCCESSFUL INCOME INVESTOR! by Ben Stein and Phil DeMuth.
It's a good book, the one which opened my eyes to the absurdity of throwing money at common stocks in the hopes of capturing capital gains in the future, which you can't profit from without selling the stock and losing future.
In the near future I will finish my own book on income investing, but in the mean time you can read about Stein and DeMuth's here:
Income Investing for Baby Boomer Retirement
income investing book
income investing book
It's a good book, the one which opened my eyes to the absurdity of throwing money at common stocks in the hopes of capturing capital gains in the future, which you can't profit from without selling the stock and losing future.
In the near future I will finish my own book on income investing, but in the mean time you can read about Stein and DeMuth's here:
Income Investing for Baby Boomer Retirement
income investing book
income investing book
Preferred Stock Investing -- good book
I've finished reading PREFERRED STOCK INVESTING by Doug K Le Du and I'm quite impressed.
While I've been (justifiably) writing about the temporary, unpredictable nature of capital gains of common stocks, this guy has been looking at preferred stocks -- and figured out a system to capture the capital gains that many preferred stocks have, particularly during periods that interest rates are decreasing.
To reinforce his point that this system is very safe, he continually contrasts it with the benefits of certificates of deposit, but finds that he can usually get a total return more than 3 times that of a CD. He claims that the risk is the same. I'd say that's not true -- but it's true that the risk of high quality preferred stocks is low. He has criteria for screening out the risky ones.
If you work his system for enough years, you may eventually lose some money to a company that goes out of business, but it'll be rare. In the meantime, you can make a lot more money than with a certificate of deposit.
This book is a lead generator for his email notification service, which charges you for the information to work the system. However, he's fair - the book gives enough information to work the system yourself. But it'll take some time and trouble and paying fees to some websites, so it's probably cheaper to let him do the work for you if you're going to commit to making money this way. The price of this service may change, but it's quite reasonable - a lot less than I expected, in fact. I pay more a month for my Internet access.
And the worst that can happen is -- you collect quarterly dividend checks that are probably 3 times higher than the interest a CD would be paying you.
preferred stock investing
preferred stock investing
While I've been (justifiably) writing about the temporary, unpredictable nature of capital gains of common stocks, this guy has been looking at preferred stocks -- and figured out a system to capture the capital gains that many preferred stocks have, particularly during periods that interest rates are decreasing.
To reinforce his point that this system is very safe, he continually contrasts it with the benefits of certificates of deposit, but finds that he can usually get a total return more than 3 times that of a CD. He claims that the risk is the same. I'd say that's not true -- but it's true that the risk of high quality preferred stocks is low. He has criteria for screening out the risky ones.
If you work his system for enough years, you may eventually lose some money to a company that goes out of business, but it'll be rare. In the meantime, you can make a lot more money than with a certificate of deposit.
This book is a lead generator for his email notification service, which charges you for the information to work the system. However, he's fair - the book gives enough information to work the system yourself. But it'll take some time and trouble and paying fees to some websites, so it's probably cheaper to let him do the work for you if you're going to commit to making money this way. The price of this service may change, but it's quite reasonable - a lot less than I expected, in fact. I pay more a month for my Internet access.
And the worst that can happen is -- you collect quarterly dividend checks that are probably 3 times higher than the interest a CD would be paying you.
preferred stock investing
preferred stock investing
Tuesday, July 3, 2007
Preferred stock investing
I wouldn't have thought there was anything exciting about investing in preferred stock, but it turns out I've been wrong. I'm reading PREFERRED STOCK INVESTING by Doug K Le Du. I haven't finished, but it's clear he's outlining a clever way to take advantage of the ups and downs of preferred stock prices that result from interest-rate changes.
Figure out the interest rate trend, combine with his knowledge of how preferred stocks work, be very selective in your buying of these stocks (he gives 10 strict criteria, and only one to three such preferred stocks are newly issued every month), buy them cheap (using a smart method I'd never heard of), and then hold them until they reach their maximum value.
While I don't believe he can predict interest rate rises and falls, you can figure out the overall trend -- enough to use this system to make a profit.
I also like how one of his principles is reducing work. I think far too many financial/investing writers want readers to do tremendous amounts of research, read annual reports and so on.
My one possible objection is that his system does include selling for capital gains. However, finding new preferred stocks to "ride" on their way up, and using a smart system to get predictable capital gains is so different from common stocks that I am inclined to think this may be worth it. I'll reserve judgment until I've finished reading the book.
You can get it at: preferred stock investing.
preferred stock investing
preferred stock investing
Figure out the interest rate trend, combine with his knowledge of how preferred stocks work, be very selective in your buying of these stocks (he gives 10 strict criteria, and only one to three such preferred stocks are newly issued every month), buy them cheap (using a smart method I'd never heard of), and then hold them until they reach their maximum value.
While I don't believe he can predict interest rate rises and falls, you can figure out the overall trend -- enough to use this system to make a profit.
I also like how one of his principles is reducing work. I think far too many financial/investing writers want readers to do tremendous amounts of research, read annual reports and so on.
My one possible objection is that his system does include selling for capital gains. However, finding new preferred stocks to "ride" on their way up, and using a smart system to get predictable capital gains is so different from common stocks that I am inclined to think this may be worth it. I'll reserve judgment until I've finished reading the book.
You can get it at: preferred stock investing.
preferred stock investing
preferred stock investing
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