Where Does All The Money Go?

When I think about who becomes an EWS client it’s quite a mix.  Most, but not all are married or were married with children.  They include but are not limited to doctors, dentists, lawyers, mechanics, teachers, therapists, state and federal government workers, business owners, real estate agents, sales people, traders, investigators, HR professionals, engineers, CPAs, retirees. Some are socialists.  Many are either liberal or conservative; Independents, Democrats and Republicans.  But for as varied as they are, there’s a consistent theme.  They all want to make educated decisions about their money.  They want to protect and grow it.  They want to quit working someday and enjoy the fruits of their labor.  Whether they have a pensions, social security or both, they want to count on those income streams for a portion of their future financial security.

I’ve spent the better part of this weekend and Monday reading economic data and analysis from a variety of sources.  You know that’s how I am.  I’m concerned we may have a bigger crash coming yet.  The analysis does not pinpoint the exact time ... obviously, but it could be a duzzie.   Between the 60 some trillion of derivatives hanging Deutsche Bank and only 1.2 trillion of actual physical dollars worldwide, the commercial real estate bubble that is currently replacing the housing bubble which made billions vanish, all the negative interest rate moves, of course our national debt and unfunded liabilities, the rally on Friday which seemed to be nothing more than short covering and so on and so on, I’m concerned. 

So, the portfolios that I manage are very cash heavy right now and have some defensive positions that can produce returns as the market declines.  Maybe you think you are young enough to ride it out. But, if you are with a less concerned money manager and want to get more conservative, tell me.  Now I don’t think the world will come to an end ... yet.  But I do think it’s time to be cautious.  If the DOW drops another 1,000 or 2,000 points or more, the rebound may take more than a little while.

Then There's Taxes

If you’ve spent any time with me at all you’ve seen this historical tax bracket chart. I placed the line at the 58.43% average so you could see what your IRA may look like if we do see this average tax bracket in our lifetimes.  Keep in mind, this chart only shows the top tax brackets and you may not be in the top.

If less than 50% of all Americans are paying taxes, it certainly seems fair to assume taxes are going higher.  If that happens, I mean when that happens, your lifestyle will shrink. It has to.

And if you look at the chart below, you can see why Social Security benefits were recently reduced and why cost of living adjustments can no longer be counted on ... even though your cost of living is increasing, even if the government says it’s not.

Where Does All The Money Go?

WHAT IF A TYPICAL FAMILY SPENT AND BORROWED LIKE THE FEDERAL GOVERNMENT?

So, yes I’m not optimistic today.  If all the analysis is wrong, then some of the market rise will be missed.  But if the analysis is correct, it’s better to be mostly on the side lines as the carnage goes by.