Stock markets are flirting with record highs. With the bull market going on six years, it begs the question, "where will it go from here?"
Economists can't predict the future and neither can anyone else. Yet there are a lot of charlatans and soothsayers anxious to advise you on such matters - for a price, that is. Ads for these newsletters that cross my desk, claiming to have the answers for your invested dollars, are pretty ridiculous.
These ads usually start out with some screaming headline designed to scare you. Their newsletter will ostensibly give you what you need to salvage your retirement years.
Here's an example: "The Rumors are True; The Secret Society that has "Controlled' the World's Wealth for 60 years ... is Scared." I guess that means that the rest of us should be too.
Well, maybe we should but, if so, I doubt that this mysterious "secret society" has much to do with that, or anything else for that matter. But if you subscribe to that newsletter, you will supposedly be armed with the ammunition with which to protect you from financial disaster.
How about this one? "Millions of Investors Will Soon be Devastated by this "Safe Asset Slaughter.'" The ad goes on, "the U.S. economy is in dangerous territory. More dangerous than anything we've seen since the Great Depression."
Really? More dangerous than the Great Depression? Surely, not all is peaches and cream with our economy, and there are some things that need serious attention, like growing income inequality and hollowing out of America's middle class. But the ad goes on to advise us to sell the asset that is billed as one of the "safest and most popular," but will turn into "the most toxic investment on the planet."
So, what is this asset that is billed as soon to be the "most toxic?" It is gold. He advises us to sell gold and accumulate dollars. This soothsayer forecasts deflation, which would make dollars more valuable.
Who knows? I don't think he's right, but my point is that here is a contrasting sales pitch that crossed my desk. "Boom or Bust Ahead for Wall Street - the shocking answer could make you 50 percent richer or 50 percent poorer, depending on what you do today."
Holy smokes. We better do something today, like subscribe to this soothsayer's newsletter so we can find out the real scoop.
As we read on, this charlatan expects the opposite of the previous peddler. He expects inflation. He hawks a newsletter complete with a freebie entitled "6 Ways to Grow Rich from the Great Inflation Surprise."
So, you can subscribe to one newsletter that predicts deflation, and another that predicts inflation, advising you to load up on gold and precious metals stocks.
No matter the stance of these newsletters, they have some things in common. The authors all claim to have predicted every major financial event since the Great Depression. They all list a number of stocks that have dramatically increased in value - stocks they claim to have recommended early on. Of course if they listed a large number of stocks when markets were in a trough, most of them would have been winners during rising markets. A monkey throwing darts at the Wall Street Journal during the early 90s would necessarily have hit a bunch of winners.
Another thing these newsletters have in common is trashing politicians, with emphasis on Democrats. Typical is this one: "Obama and his cronies have made a mess of the U.S. economy. Now they're planning to use your money to save their own hides."
Never mind that President Obama inherited an economy that was in deep recession, and never mind that it has improved, however slowly, under his administration. The ad goes on to insist that the president and his colleagues are doing everything possible to get their hands on your money and sacrificing "the future you worked so hard to build."
Naturally, this sales pitch is designed to appeal to a mostly Republican clientele, and to seduce them into subscribing to this newsletter that will lead the sheep out of the financial wilderness.
Another favorite target of these newsletters is former Fed Chair Ben Bernanke, and current chair, Janet Yellen. The newsletters predicting wild inflation blame the Fed's expansionary monetary policy for the inflation that has long been predicted, that has not yet arrived, but surely, as these newsletter scream, is about to explode any time.
Of course prices will rise over time. The Fed's objective is about a 2-percent rate, and most economists, me included, agree that to be a reasonable target. Would these screaming critics of the Fed really have recommended high interest rates and a tight monetary policy during recession? I think not.
This brings us once again to the matter of Wall Street money managers getting nervous about rising interest rates. With rising employment, the markets could go either way. We have seen markets decline with rising employment because of fears that this would impel the Fed to raise rates. But last week, we saw markets rise with rising employment because it meant the economy was improving.
After the fact, it can be explained either way. It would seem to make more sense to look at corporate profits and employment than to worry about the Fed. But then, a lot of this has more to do with mass psychology than economics, at least in the short run.
None of this is to suggest staying out of the market. But I like Warren Buffet's advice. Base long-term retirement investing around low-cost funds, indexed to the S&P, for example. And, with the aid of a legitimate financial planner who won't churn your account to generate commissions.
If this is too boring, there are those financial newsletters authored by charlatans and soothsayers that, in my opinion, are good for nothing but relieving you of your cash.
- John Waelti's column appears every Friday in the Times. He can be reached at jjwaelti1@tds.net.
Economists can't predict the future and neither can anyone else. Yet there are a lot of charlatans and soothsayers anxious to advise you on such matters - for a price, that is. Ads for these newsletters that cross my desk, claiming to have the answers for your invested dollars, are pretty ridiculous.
These ads usually start out with some screaming headline designed to scare you. Their newsletter will ostensibly give you what you need to salvage your retirement years.
Here's an example: "The Rumors are True; The Secret Society that has "Controlled' the World's Wealth for 60 years ... is Scared." I guess that means that the rest of us should be too.
Well, maybe we should but, if so, I doubt that this mysterious "secret society" has much to do with that, or anything else for that matter. But if you subscribe to that newsletter, you will supposedly be armed with the ammunition with which to protect you from financial disaster.
How about this one? "Millions of Investors Will Soon be Devastated by this "Safe Asset Slaughter.'" The ad goes on, "the U.S. economy is in dangerous territory. More dangerous than anything we've seen since the Great Depression."
Really? More dangerous than the Great Depression? Surely, not all is peaches and cream with our economy, and there are some things that need serious attention, like growing income inequality and hollowing out of America's middle class. But the ad goes on to advise us to sell the asset that is billed as one of the "safest and most popular," but will turn into "the most toxic investment on the planet."
So, what is this asset that is billed as soon to be the "most toxic?" It is gold. He advises us to sell gold and accumulate dollars. This soothsayer forecasts deflation, which would make dollars more valuable.
Who knows? I don't think he's right, but my point is that here is a contrasting sales pitch that crossed my desk. "Boom or Bust Ahead for Wall Street - the shocking answer could make you 50 percent richer or 50 percent poorer, depending on what you do today."
Holy smokes. We better do something today, like subscribe to this soothsayer's newsletter so we can find out the real scoop.
As we read on, this charlatan expects the opposite of the previous peddler. He expects inflation. He hawks a newsletter complete with a freebie entitled "6 Ways to Grow Rich from the Great Inflation Surprise."
So, you can subscribe to one newsletter that predicts deflation, and another that predicts inflation, advising you to load up on gold and precious metals stocks.
No matter the stance of these newsletters, they have some things in common. The authors all claim to have predicted every major financial event since the Great Depression. They all list a number of stocks that have dramatically increased in value - stocks they claim to have recommended early on. Of course if they listed a large number of stocks when markets were in a trough, most of them would have been winners during rising markets. A monkey throwing darts at the Wall Street Journal during the early 90s would necessarily have hit a bunch of winners.
Another thing these newsletters have in common is trashing politicians, with emphasis on Democrats. Typical is this one: "Obama and his cronies have made a mess of the U.S. economy. Now they're planning to use your money to save their own hides."
Never mind that President Obama inherited an economy that was in deep recession, and never mind that it has improved, however slowly, under his administration. The ad goes on to insist that the president and his colleagues are doing everything possible to get their hands on your money and sacrificing "the future you worked so hard to build."
Naturally, this sales pitch is designed to appeal to a mostly Republican clientele, and to seduce them into subscribing to this newsletter that will lead the sheep out of the financial wilderness.
Another favorite target of these newsletters is former Fed Chair Ben Bernanke, and current chair, Janet Yellen. The newsletters predicting wild inflation blame the Fed's expansionary monetary policy for the inflation that has long been predicted, that has not yet arrived, but surely, as these newsletter scream, is about to explode any time.
Of course prices will rise over time. The Fed's objective is about a 2-percent rate, and most economists, me included, agree that to be a reasonable target. Would these screaming critics of the Fed really have recommended high interest rates and a tight monetary policy during recession? I think not.
This brings us once again to the matter of Wall Street money managers getting nervous about rising interest rates. With rising employment, the markets could go either way. We have seen markets decline with rising employment because of fears that this would impel the Fed to raise rates. But last week, we saw markets rise with rising employment because it meant the economy was improving.
After the fact, it can be explained either way. It would seem to make more sense to look at corporate profits and employment than to worry about the Fed. But then, a lot of this has more to do with mass psychology than economics, at least in the short run.
None of this is to suggest staying out of the market. But I like Warren Buffet's advice. Base long-term retirement investing around low-cost funds, indexed to the S&P, for example. And, with the aid of a legitimate financial planner who won't churn your account to generate commissions.
If this is too boring, there are those financial newsletters authored by charlatans and soothsayers that, in my opinion, are good for nothing but relieving you of your cash.
- John Waelti's column appears every Friday in the Times. He can be reached at jjwaelti1@tds.net.
