Where is the US economy headed?

cicerone imposter wrote:

Here's a pretty good explanation from NPR of the liquidity problem we faced.

Analysis
Pumping Money: Financial Market Liquidity Explained

But the article doesnt admit that by the central banks 'stepping in' like they say that they are creating inflation right now.. They are.. but the people at the article seems to be mum on that...

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Think in terms of how our economy was boosted during the past few years by the value of homes going up. Many people borrowed money on the equity in their homes to "keep up with the Joneses." All of a sudden, the value of those homes have depreciated, but their monthly payments have remained the same or their sub-prime mortgage payments went up.

Money was taken out from "other assets (homes)" people thought will sustain their standard of living.

All of a sudden, their payments are worth more than the value of their homes. Example: Before the housing bust, their homes was worth $500,000. Their mortgage payment reflected that "value." All of a sudden, the home is worth $300,000, but their mortgage payment stays the same.

This is one sector of our economy that is all feeding into our inflation.

This is one of the reasons why I opined that the quarter percent adjustments of the short-term rates by the feds is a big joke. What matters most to consumers? Their $2,000 more payment on a house worth $200,000 less or a quarter point in the short-term interest rate?

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The AP had a couple of articles this afternoon on July Home Foreclosures:
July 2007: 179,599 up 93% over July 2006: 92,845.
July 2007 up 9% over June, 2007: 164,644.

CA, FL, MI, OH and GA accounted for more than half of the foreclosures. GA and NV had high numbers of foreclosures per number of households.

Factors contributing to the big increase have been discussed here before: loans being given to folks who shouldn't have qualified with terms that were not sustainable even in a stable or moderately rising housing market, much less in a market where prices have declined.

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Morningstar is one of the premier stock and fund quality historians. Even they try the game at trying to out-perform the stock market by their recommendations.

What I wanted to show here is that even the "experts" can be wrong in picking stocks or the trends of our economy. That's the reason I've always recommended funds for people who cannot spend their waking hours watching the market from minute to minute, hour to hour, day to day, and week to week. What matters most is the long-term performance.

This is the performance of stocks picked by Morningstar:

Contrarian Portfolio Performance Update

Company Morningstar Rating* Six-Month
Total Return*

Jabil Circuit (JBL Sponsored by:
JBL) -13.24%

Angiotech (ANPI Sponsored by:
ANPI) -12.22%

Advance Auto Parts (AAP Sponsored by:
AAP) -18.30%

Radware (RDWR Sponsored by:
RDWR) -1.73%

GMH Communities (GCT Sponsored by:
GCT) -21.95%

Celestica (CLS Sponsored by:
CLS) -15.11%

Finish Line (FINL Sponsored by:
FINL) -54.78%

MarineMax (HZO Sponsored by:
HZO) -18.36%

Carter's (CRI Sponsored by:
CRI) -8.74%

Vimicro International (VIMC Sponsored by:
VIMC) -28.84

Average -19.33%

S&P 500 -2.56%

Performance -16.77%

*As of 08-15-2007.

Our total invested funds with Vanguard lost less than one percent for the same period. It's a tough world out there!

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Quote:

This is one sector of our economy that is all feeding into our inflation.

Ah! But the government claims there is no inflation and for that reason the rate on the I-bond is kept at a low level.

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cicerone imposter wrote:

Morningstar is one of the premier stock and fund quality historians. Even they try the game at trying to out-perform the stock market by their recommendations.

What I wanted to show here is that even the "experts" can be wrong in picking stocks or the trends of our economy. That's the reason I've always recommended funds for people who cannot spend their waking hours watching the market from minute to minute, hour to hour, day to day, and week to week. What matters most is the long-term performance.

This is the performance of stocks picked by Morningstar:

Contrarian Portfolio Performance Update

Company Morningstar Rating* Six-Month
Total Return*

Jabil Circuit (JBL Sponsored by:
JBL) -13.24%

Angiotech (ANPI Sponsored by:
ANPI) -12.22%

Advance Auto Parts (AAP Sponsored by:
AAP) -18.30%

Radware (RDWR Sponsored by:
RDWR) -1.73%

GMH Communities (GCT Sponsored by:
GCT) -21.95%

Celestica (CLS Sponsored by:
CLS) -15.11%

Finish Line (FINL Sponsored by:
FINL) -54.78%

MarineMax (HZO Sponsored by:
HZO) -18.36%

Carter's (CRI Sponsored by:
CRI) -8.74%

Vimicro International (VIMC Sponsored by:
VIMC) -28.84

Average -19.33%

S&P 500 -2.56%

Performance -16.77%

*As of 08-15-2007.

Our total invested funds with Vanguard lost less than one percent for the same period. It's a tough world out there!

I personally invest in only 5 mutual funds, none associated with vanguard, exept the Roth account.

Based on the stock results of Morningstar, looks like I'm a better stock picker than is Morningstar.

Always stick with high quality companies and high quality stocks. What consumables will Americans always be "consuming"?

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Miller: I personally invest in only 5 mutual funds, none associated with vanguard, exept the Roth account.

Based on the stock results of Morningstar, looks like I'm a better stock picker than is Morningstar.

Always stick with high quality companies and high quality stocks. What consumables will Americans always be "consuming"?

I've managed our portfolio too during my working years, and the over-all performance has been pretty good - enough to retire in comfort. When I retired, I sold our income property, and eventually transferred all our funds (from about five different ones) to Vanguard, and we paid a consulting fee for their advise (I feel it was worth it).

I'm satisfied with how it's been performing since then.

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I prefer companies that have real lasting assets, one good example being oil in the ground owned by energy companies.

Certain mutual funds have proven track records, and usually you won't go wrong with those, but one must stick with them over the long haul and don't look at daily or weekly cycles.

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okie wrote:

I prefer companies that have real lasting assets, one good example being oil in the ground owned by energy companies.

Certain mutual funds have proven track records, and usually you won't go wrong with those, but one must stick with them over the long haul and don't look at daily or weekly cycles.

Interestingly, I don't consider oil to really be a 'lasting asset.'

Cycloptichorn

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It's a "lasting asset" concerning our life span and investment performance. Wink

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cicerone imposter wrote:

It's a "lasting asset" concerning our life span and investment performance.

Maybe YOUR life span, lol

Cycloptichorn

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For sure! LOL

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Cycloptichorn wrote:

okie wrote:
I prefer companies that have real lasting assets, one good example being oil in the ground owned by energy companies.

Certain mutual funds have proven track records, and usually you won't go wrong with those, but one must stick with them over the long haul and don't look at daily or weekly cycles.

Interestingly, I don't consider oil to really be a 'lasting asset.'

Cycloptichorn

If you hear of a complete replacement of oil, please let us all know, cyclops.

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okie wrote:

Cycloptichorn wrote:
okie wrote:
I prefer companies that have real lasting assets, one good example being oil in the ground owned by energy companies.

Certain mutual funds have proven track records, and usually you won't go wrong with those, but one must stick with them over the long haul and don't look at daily or weekly cycles.

Interestingly, I don't consider oil to really be a 'lasting asset.'

Cycloptichorn

If you hear of a complete replacement of oil, please let us all know, cyclops.

Well, it's a limited resource. One way or another, it will run out. So it's not really a 'lasting asset.' Not in the long run.

Cycloptichorn

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When man feels oil is at the point of depletion, another energy source will be found.

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Cycloptichorn wrote:

okie wrote:
Cycloptichorn wrote:
okie wrote:
I prefer companies that have real lasting assets, one good example being oil in the ground owned by energy companies.

Certain mutual funds have proven track records, and usually you won't go wrong with those, but one must stick with them over the long haul and don't look at daily or weekly cycles.

Interestingly, I don't consider oil to really be a 'lasting asset.'

Cycloptichorn

If you hear of a complete replacement of oil, please let us all know, cyclops.

Well, it's a limited resource. One way or another, it will run out. So it's not really a 'lasting asset.' Not in the long run.

Cycloptichorn

And, to add to this, I think that solar power has the potential to eclipse oil -- as a source of cheap power generation - by a huge margin, if the facilities for collecting it were properly constructed.

I've read that less than 400 square miles of solar panels, using today's technology, would power the whole world. That's not very many square miles of collectors, really.

Cycloptichorn

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Cyclo, Do you have a source for that claim?

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cicerone imposter wrote:

Cyclo, Do you have a source for that claim?

Hmm, well, left off a zero or two. Damn scientific american!

Here's a popular map of the subject

http://i.treehugger.com/images/2007/5/24/solar-world-jj-001.jpg

According to this map, we'd need somewhere around 300k square miles at 8% efficiency, if we put them at the best possible spots. Current solar cells run somewhere closer to 20% efficiency, so let's chop that number in half, and say 150k square miles.

Now, will that all be in the desert? A lot of it will, but inventions such as solar shingles, solar windows, and other methods of generating energy on the spot will help spread the load out further. I also look to increases in battery and capacitance technology to help.

If we can double our efficiencies up to 40% (something which looks increasingly possible as new technology is introduced) then the numbers drop even further.

Cycloptichorn

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cicerone imposter wrote:

When man feels oil is at the point of depletion, another energy source will be found.

Where?

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I agree that solar energy in combination with both internal (home) and external (utility companies) sources is a good option for future energy needs. I also believe that government subsidies for this energy is a good way to go.

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Where is the US economy headed?

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