Speaking of financialization, this is a gift link to an OpEd piece that ran a few days ago in the New York Times about how financialization has impacted the American economy. The article says that the financial sector “now claims the highest share of corporate profits and attracts the highest share of top talent from top schools, in part by offering the highest compensation. But actual business investment has declined, to an average of 2.9 percent of G.D.P. over the past decade from 5.2 percent in the 1960s.” In other words, we’re not making anything any longer in this country except for financial products. It’s a little depressing.
I guess this general discontent is one of the reasons people voted for trump, and something similar is happening in Europe. More finance, less primary production, about the same agriculture but with much less workforce. Workers feel superfluous.
The production has shifted to Asia, but with low wages, so that they are not satisfied either. The feel exploited.
I don’t see how to solve this. Least of all with private investment measures or consumption patterns like boicotts.
The less industrial production is not particularly accurate. Industry is certainly a much smaller portion of the US GDP, but it’s as high as it’s ever been historically. It’s kinda plateaued since 2008, but in general line continues to go up.
Production though is not jobs. Automation with much greater productivity per worker. Fewer with jobs actually making things.
Sure, that’s why it’s a declining portion of GDP. Workers are doing other things. But the US has not stopped making things. The same thing has happened to an even greater extreme in agriculture.
If you want to discuss the socio-political impact of the loss of manufacturing jobs, that’s a whole ‘nother thing probably not germane to this thread.
It’s germane to the conclusion claim that was made:
Also I suspect that while the United States States has increased the absolute amount of stuff it makes that the relative global share of stuff, even the relative share of stuff present in the domestic market, is much less. The power of the American economy is its financial instruments, its intellectual property (getting undermined currently), and our consumption of what others make.
Had my second meeting with Fidelity, and this is where the sales pitch came in. They want me to switch to an account where they manage my asset allocation, all for the cheap, cheap price of 0.95%.
Yeah, that’s not going to happen, and I told the guy so much. For 0.95%, I can login to my account and click on a few different mutual funds once per quarter.
The balance they came up with was 60% US stocks, 25% foreign stocks, 15% bonds and other. That is pretty much exactly what my allocation looked like a year ago.
For sane economic times, that seems perfectly reasonable. With a danger of the Fed becoming captured, and the US dollar losing its place as reserve currency, I don’t think that makes any sense. It will probably work if TACO holds true, but I specifically do not want to take that bet, which is what I’ve been trying to say this whole time.
I think my asset allocation should be something closer to 35% US stocks, 35% foreign stocks, and 30% bonds and other.
We have one more meeting in a month when we’ll discuss some actual funds to invest in, which is what I was hoping to get out of this meeting.
35% domestic, 35% international and 30% bonds is one form of a three-fund portfolio and is completely reasonable.
I just took a withdrawal from my funds. They get taxed at marginal rate regular income but doing a kitchen and baths and kid in grad school … reasonable investments to me! Sharing because got a pitch about moving out of the employer sponsored plan to an IRA and selling that free guidance comes with that. Still Empower. I guess I don’t have that option now? Who knew? 
Addressing the last couple of threads.
Maybe it’s a smart idea to move into (rooftop) solar (et al) if that is something that works for you. You lock in high shareprices and convert them into a IRL-dividend paying asset class that isolate you from Trump’s craziness.
I think at the current stage does a very little upward momentum to be expected on Wall Street.
In my inexperienced opinion the sentiment of the investment tide is turning.
At current cost and expected generation my $15,500 investment in solar should net me about $100/month, simple, not compounding. It is a hedge against inflation, in that if electricity prices go up, so does my return. That is what, a 7.75% annual rate of return?
If I had another investment that could guarantee that rate of return, I’d probably put a lot more money in it.
The value could collapse, though. Solar is cheap enough, that we might get to a place where daytime electricity is free for everyone, and all people pay for is draining the utility’s batteries at night. I think the likelihood of that is low, but definitely not zero.
Do you have negative power prices in the USA too? In Germany power is metered depending on production and demand, and when more is produced than can be consumed, exported or stored the price turns negative, that is: you get paid to consume (if you have the right meter, they call them smart meters), you must pay when you produce. If you don’t switch off your PV or stop your wind generator it costs you:
Clever people would set up batteries to store that surplus electricity and give it away again when it turns expensive, but it is not so easy as it sounds. But we’ll eventually get there, I guess.
Maybe you (generic you) can add an EV to the setup and convert the $100 electricity savings into 200 or $300 in gas savings. Then you should have a return of 15 to 20%.
I hope you can see my rationale and we don’t have to start arguing if an EV is suitable for you or not.
Either way the idea is to convert Fairytale money from Wall Street into real money and lock in Savings in real life. And by doing so depend less on Donald’s mental state.
Have you seen my posting history? If I get a badge for anything on this board, it should be that I’ve managed to keep my shit together well enough to not get a warning in any of the EV threads. I get triggered.
According to the car’s app, I’ve already saved $57 on gas in February. That is based on the miles I drove (800), the average gas price in my area ($2.53), and the MPG of a “comparable” car (35 MPG, working the numbers backwards). I’m not sure if I can quite double dip, as the $100 savings already includes the electricity I spend on charging the car.
The way I prefer to look at it is the first kettle of water I boiled when the solar came on cost me $15,000 in electricity, and from this point on, it’s all free.
I do think that capital expenditures to realize future savings are a form of investing, or more accurately a form of effectively managing your finances.
It certainly is.
~12 years ago I installed hi-E double-pane hurricane-proof doors & windows in my then-condo. Between the energy savings & insurance saving it pays 20% APR which is effectively inflation corrected. And practically guaranteed.
As expensive as the project was, I’d gladly fund another 50 such projects at that ROI.
I sold that place a couple years ago, so somebody else is getting that APR on my investment. Drat. Even if I got full incremental value for my investment (which is not likely) I can’t invest my proceeds that profitably.
Just a note: current news in the ME. Other eras you’d see major market reactions. Now? A shrug. As of this moment S&P down a mere 0.28%.
I watch (but don’t actually hold) a basket of biotech startups where I have an interest (friends work there, technology I find interesting, etc), and every one of them is down big.
Which I assume is avoidance of risk, but most of these are years away from revenues, so it really doesn’t make sense to me. Whatever happens in the ME won’t materially affect them, at least not for a long time. Hell, most won’t even bother to seek registration in most ME countries.
It was suggested to me to look into high yield savings accounts and was sent this link for options. Do any stand out as better than others? Do you have other suggestions? I intend to keep a savings account at my credit union for day to day use. I do have an AmEx, but I don’t think I’ve ever had business with the others.
I get why the market is down today, even if I don’t get why there was the day delay in it happening. Why though the drop in gold? I would’ve thought it would jump up in this circumstance. Which shows the limits of my understanding I guess!
It seems people who went long on shares and were highly leveraged had to sell gold to cover some losses and margin calls or did sell gold pre-emptively expecting those losses and margin calls. Same happened in 2008 and at the beginning of Covid-19. But those explanations are always offered ex post, so could well be rationalizations of the unexplainable. Gold has not fallen that much, btw, silver fell much more (now half-recovering). Technology is no longer in danger of overinvesting in AI but has turned into a perceived save haven, says the Handelsblatt. Huh. Weird times. Trump Media & Stupidity is faling 6.5%, go figure. And the dollar is rising.
And you think your understanding has limits? Hold my beer!