The Impossible Dream: 70 Million Boomers Retire in Style

The younger generations expecting to inherit the immense wealth piled up by Boomers in home equity and stocks may be in for a shock.

I've reached the point in life where I see a sharp line dividing the adult populace: there are those of us who are old enough to retire who are taking care of very elderly parents / family members at home, and then there's everyone else.

Instead of life getting easier as we age, it gets harder--much harder , as we no longer have the same energy we had in our 40s and 50s.

This article captures what life is like for those of us fulfilling parents' wishes to live out their final years at home: The Crushing Financial Burden of Aging at Home: Families face soaring costs and mounting pressures in taking care of their loved ones. 'I never feel truly free.' (WSJ.com)

In my case, we spent the last 8 years taking care of my mother-in-law, the last 6 years of her life here at our home. (She passed away at 92 last year.) So from ages 62 to 70, we had two jobs: caregiving and our self-employed paid work. In those years, we managed one vacation--not exactly the ideal retirement scenario.

Many others have it much worse: they're caring for an elderly, ill parent or spouse by themselves, with limited financial resources. Those who opt to pay for 24/7 home care for parents or spouses with dementia or Alzheimer's are paying $240,000 a year--a sum that will consume the entire wealth of most families in a few years:

Here are excerpts from the article:

"Americans want to grow old in their own homes. But pursuing that dream has gotten harder, and is putting huge financial and emotional strains on families.

In Nebraska, Christine Salhany spends about $240,000 a year for 24-hour in-home care for her husband who has Alzheimer's. In Illinois, Carolyn Brugioni's dad exhausted his savings and took out a home-equity line-of-credit to pay for home healthcare.

Traci Lamb closed her business to take care of her mom in Florida. And in California, Cheryl Orr delayed retirement to help pay for care and home modifications for her wife, who has dementia.

Soaring costs of in-home care, medical advances that extend lives but require ongoing help, and the growing ranks of older baby boomers are creating new pressures. Spouses, adult children and siblings are putting their lives on hold to care for relatives, wrestling with sleep deprivation and constant worry. Families are draining savings to hire help, pay for medical care, and modify homes.

More than 11,000 people in the U.S. are turning 65 every day and the vast majority--77% of Americans age 50 and older according to an AARP survey--want to live as long as possible in their current home.

Those needing round-the-clock in-home care can expect a median cost of about $290,000, which is more than double the annual median cost of a private room in a nursing home facility and four times the annual median cost of a private room in assisted living, according to Genworth."

The drain on caregivers isn't just financial--it's physical and emotional:

"I have to be very vigilant. I never feel truly free," says Christine. That is a feeling expressed by many. Four in 10 family caregivers rarely or never feel relaxed, according to a 2023 AARP survey. Dementia care is among the most taxing, physically, financially and emotionally."

For those families opting to place a parent or spouse in an institutional care facility, the cost is around $13,000 a month and up. Assisted living and private care homes generally cost between $6,000 and $9,000 a month.

How many families have the means to pay these rates for years?

My Mom is 95 and has lived in an assisted living/care facility that she bought into 18 years ago with the proceeds from selling her house. The monthly fees have consumed her own inheritance from her parents, who passed away in the late 1980s.

My siblings and I are relieved that there are still funds to pay for our Mom's care. That there is no inheritance doesn't matter; what matters is that we're not burdened with enormous monthly fees for her care in our own retirement.

We are not alone. Our neighbors are 80 years old and they recently moved her 102-year old mother from their home to a care home, as she and her husband could no longer lift her Mom out of bed.

In many cases, the caregivers don't get to actually retire until they're well into old age. Family conflicts arise as some adult children refuse to do their share, burdening one sibling with the workload and financial costs.

People living longer put an enormous strain on families and the government. The wealth that was intended to be an inheritance passed onto children and grandchildren is consumed by elderly care: at $150,000 a year, even $1 million is consumed in a few years.

The strategy pursued by many families is to transfer ownership of the parents' home to the adult children long before retirement, so the parent's remaining assets will be modest enough to qualify for Medicaid, where the federal government pays for the parents' care home expenses.

Federal programs for retirees, the disabled and the elderly already consume 44% of the budget, and this percentage will rise sharply in the decades ahead.



As we all know, the federal government is already borrowing trillions of dollars to cover its ballooning expenditures, and 80% of the expected growth of federal spending is Social Security, Medicare, Medicaid and interest on the debt.



As the 70+ million baby Boomers (those born between 1946 and 1965) retire, how will families and the nation pay for the retirement of a generation of this scale? As this chart illustrates, in retirement, the Boomer generation will be more than twice the size of the preceding Silent Generation.



As a rough estimate, let's say there will be 30 million more elderly than there were in the previous generation--the equivalent of adding an entire nation of elderly retirees. Yes, many elderly people continue working into their 70s and 80s, and many are still living alone and do not need any assistance. One of our neighbors is a World War II vet who is 102, and he still drives and lives on his own. But he is an outlier. Few reach old age without needing assistance of some kind.

The decline of the population's health as poor diet and inactive lifestyles take their toll will heavily impact the Boomers' need for care. And the decline in the health of younger generations will also impact the ability of the nation to fund the costs of caring for 60 to 70 million elderly and supply the workforce to provide all the care.

Anecdotally, there is little evidence that new care facilities are being built at a rate anywhere close to meeting the future need for such facilities. Even if elderly Boomers wish to move out of their own homes into a care home, there may not be enough facilities to meet demand. There may be few options to spending one's last years at home, but with what level of care if that care costs $13,000 a month--$156,000 a year?

The younger generations expecting to inherit the immense wealth piled up by Boomers in home equity and stocks may be in for a shock as they learn that 24/7 home care for a grandparent with dementia costs $250,000 a year unless they provide the care themselves, and that even modest care facilities can cost $100,000 a year.

Combine the popping of the Everything Bubble with the rising costs of care, and it becomes apparent that dreams of inheriting fortunes are as unrealistic as the dreams of 60 to 70 million elderly Boomers of living comfortably at home with caregivers doing all the work.

The retirement hopes of those with elderly parents to care for will also go up in smoke, as I can attest from our own experience: the Golden Years of one's 60s and 70s can be consumed by caregiving, at the cost of one's own retirement funds and health.

It's estimated that around 30% of the debilities of aging are the result of genetics; the other 70% are the result of our lifestyle and life choices. Piling up money in the hopes it will be enough may not be enough. The higher-return investment may well be in radically changing our lifestyle to become as healthy as possible as we age so we won't need the kind of care that will bankrupt families and the nation.

New podcast: Is the Everything Bubble About to Pop? (37 min, 40 charts)

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When You Can't Go On: Burnout, Reckoning and Renewal $18 print, $8.95 Kindle ebook; audiobook Read the first section for free (PDF)

Global Crisis, National Renewal: A (Revolutionary) Grand Strategy for the United States (Kindle $9.95, print $24, audiobook) Read Chapter One for free (PDF).

A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook $17.46) Read the first section for free (PDF).

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World
(Kindle $5, print $10, audiobook) Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake (Novel) $4.95 Kindle, $10.95 print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 Kindle, $15 print) Read the first section for free


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What's "Free" About "Free Speech"?

Without being aware of it, we've privatized "free" speech in the form of digital monopolies.

Free speech is getting a lot of attention these days, so let's consider what's actually "free" about it and what's not "free." The general view seems to be that censorship is the threat to free speech, and that's certainly an issue. But that's not all that's going on in the realm of free speech.

Let's return to the pre-social-media days and consider what "free speech" meant. It did not mean we could demand a newspaper publish our opinion. The newspaper was a private enterprise and its offices were private property. As such, it had the right to choose what it would publish. Free speech meant that we could pass out leaflets on the public sidewalk outside the newspaper offices, or we could launch a competing publication.

On a smaller scale, consider my blog / site. Over the years, some readers have complained that I didn't host a "comments" forum where they could post their views. I tried one such option many years ago and gave it up as too much work. This is a private enterprise. I pay for the server. The content is copyrighted. I am not obligated to offer a forum for others to post their views. They are free to launch their own blog / site. That's free speech in the digital age.

In other words, free speech doesn't mean everyone has a right to address an audience hosted by a private enterprise; it means everyone can stand on the public sidewalk and pass out leaflets or pay for a server to post their views online. I complain about being shadow-banned by various institutions, but they have no obligation to post whatever content I create; they're private enterprises pursuing their private interests by maximizing profits.

The way they maximize profits is encourage users to post content / perform searches for "free" and then monetize that "free" content / search by collecting data on users and selling it at a premium. This model has generated enormous profits and trillion-dollar enterprises.

There's nothing "free" about these enterprises' platforms accepting our "free" content. We choose to give these enterprises content for free, and they're free to monetize this content and the data they collect on us. We can opt out by not posting content on their platforms and not using their search engine.

But this isn't the entire story, either, is it? These enterprises are monopolies, dominating the search / social media realms, realms which are now dominant cultural, social and political influences in the digital / online era. The appeal of reaching a vast audience so easily is simply too irresistible, and so we not only give these enterprises our content for free, we've granted them extraordinary powers few of us truly understand.

Bruce Schneier served up a nuanced, wide-ranging critique of this revolution in his essay The Hacking of Culture and the Creation of Socio-Technical Debt. Here are some key excerpts:

"Blending Stewart Brand and Jean-Jacques Rousseau, McKenzie Wark writes in A Hacker Manifesto (2004) that 'information wants to be free but is everywhere in chains.'

Ultimately, this notion was foundational in the construction of the era we find ourselves in today: an era in which internet companies dominate public and private life. These companies used the supposed desire of information to be free as a pretext for building platforms that allowed people to connect and share content. Over time, this development helped facilitate the definitive power transfer of our time, from states to corporations.

Like any well-designed operating system, culture is invisible to most people most of the time. Hidden in plain sight, we make use of it constantly without realizing it. As an operating system, culture forms the base infrastructure layer of societal interaction, facilitating communication, cooperation, and interrelations.

Culture can also be hacked--subverted for specific advantage. If culture is like an operating system, then to hack it is to exploit the design of that system to gain unauthorized control and manipulate it towards a specific end.

Culture hacks under digital capitalism are different. Whereas traditional propaganda goes in one direction--from government to population, or from corporation to customers--the internet-surveillance business works in two directions: extracting data while pushing engaging content.

The extracted data is used to determine what content a user would find most engaging, and that engagement is used to extract more data, and so on. The goal is to keep as many users as possible on platforms for as long as possible, in order to sell access to those users to advertisers. Another difference between traditional propaganda and digital platforms is that the former aims to craft messages with broad appeal, while the latter hyper-personalizes content for individual users.

The far more pressing issue is that both have virtually unchecked surveillance power. They are both reshaping societies by hacking culture to extract data and serve content. By determining who sees what when and where, platform owners influence how societies articulate their understanding of themselves.

This has two consequences. First, companies that control what users see in a nontransparent way influence how we perceive the world. Second, by optimizing algorithms for individual attention, a sense of culture as common ground is lost. Rather than binding people through shared narratives, digital platforms fracture common cultural norms into self-reinforcing filter bubbles.

This fragmentation of shared cultural identity reflects how the data surveillance business is rewriting both the established order of global power, and social contracts between national governments and their citizens.

The rise of digital surveillance as the business model (is) turning instruments of social cohesion and connection into instruments of control.

(Citizens) become de facto free labor for the tech companies providing them. The value generated by this citizen-user-laborer stays with the company, as it is used to develop and refine their products. In this new blurred reality, the relationships among corporations, governments, power, and identity are shifting. Our social and cultural infrastructure suffers as a result

Permitting internet companies to hack the systems in which culture is produced and circulates is a short-term trade-off that has proven to have devastating long-term consequences."

Without being aware of it, we've privatized "free" speech in the form of digital monopolies. "Free" speech is now subject to "community standards" that are both Orwellian in the finality of their control (no recourse, no appeal process) and Kafkaesque in their arbitrariness and vagueness. As in Kafka's The Castle, we can peer through a peephole at the power of "community standards" but cannot engage it. We are powerless observers.

There are only two ways to retrieve the power we have unknowingly transferred to digital monopolies: 1) regulate these monopolies as public utilities, or 2) nationalize them and strip out all the surveillance / monetization features, leaving only the basic search / social media functions.

This runs into the buzzsaws of The Market and private enterprise, which are core to the ideology of "free enterprise." The government regulates privately owned utilities, as these provide essential public services. If we consider this common sense, then why is it anathema to regulate digital monopolies for the same reason?

We can have either "free" enterprise, or "free" speech. We can't have both when "free" enterprise has a lock on "free" speech.

This photo is from the 1976 film All the President's Men which elevated journalists to heroes / heroines in a world of power hiding its abuses. Now that digital monopolies are the power hiding their abuses, who will be the heroes / heroines that rescue the citizenry from digital exploitation and servitude?





New podcast: Is the Everything Bubble About to Pop? (37 min, 40 charts)

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My recent books:

Disclosure: As an Amazon Associate I earn from qualifying purchases originated via links to Amazon products on this site.

Self-Reliance in the 21st Century print $18, (Kindle $8.95, audiobook $13.08 (96 pages, 2022) Read the first chapter for free (PDF)

The Asian Heroine Who Seduced Me (Novel) print $10.95, Kindle $6.95 Read an excerpt for free (PDF)

When You Can't Go On: Burnout, Reckoning and Renewal $18 print, $8.95 Kindle ebook; audiobook Read the first section for free (PDF)

Global Crisis, National Renewal: A (Revolutionary) Grand Strategy for the United States (Kindle $9.95, print $24, audiobook) Read Chapter One for free (PDF).

A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook $17.46) Read the first section for free (PDF).

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World
(Kindle $5, print $10, audiobook) Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake (Novel) $4.95 Kindle, $10.95 print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 Kindle, $15 print) Read the first section for free


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When Local Newspapers Close, We Lose What Matters: Journalism

Self-serving special interests are delighted to fill the void when local journalism disappears.

The vast majority of social media is opinion, spin or all about me. Whatever passes for analysis is often cherry-picked data packaged to support the spin.

There are a number of dynamics driving this post-truth competition for attention and engagement, but they boil down to money and selfhood in the online era.

Money is an obvious dynamic: the tech monopolies in search and social media and the media conglomerates all reap billions of dollars in revenues from users' attention and engagement, as the data collected from users is sold at a premium. The more time users spend online, the greater the revenues and profits.

Why do people spend such large chunks of their lives posting "free" content on platforms? Many, including myself, of course, are hoping to make money by attracting subscribers, viewers, sponsors, advertisers, etc. to their feed / site, while others seek to establish a selfhood online that is larger and more fulfilling than the one they have in the real world.

Changing our selfhood in the real world is difficult; it's much easier to curate a carefully edited mise en scene version of ourselves and our life online.

What's been lost in this frenzied competition for eyeballs and "likes" is the distinction between opinion and journalism. The post-truth cliche is that there is no distinction, that everything is mere opinion and spin, but this is not true: journalism is different from opinion and spin.

In the post-truth competition for attention and engagement, the more sensational the content, the better. In contrast, much of journalism is DBI: dull but important. It's never going to attract the same attention as sensationalist extremes, and few are willing to pay for it.

The core claim of the post-truth era is that there are no facts, there are only ambiguities and interpretations that can be spun 360 degrees at will. Actually, there are facts, for example, the city council voted 5 to 2 to approve the transit station project, and the county received funding for the rehab of the bridge.

From 1988 to 2005, I was a free-lance journalist for metropolitan newspapers, paid to cover housing and urban design issues as well as other topics. Under the guidance of editors, I learned what I call the journalistic style of research, interviews, fact-checking and composition.

The basic idea is to interview subjects who are involved in the issue or knowledgeable observers, gather facts (who, what, when, where, budget, policies, master plans, etc.), confirm the quotes from the sources and if there was a controversial decision looming, make sure the competing views were represented, while making clear who had a financial stake in the issue.

I've endeavored to maintain the core tenets of the journalistic style in my posts from 2005 to the present.

Though few seem to notice, old-school journalism is still being done the hard way, and no, it's not all opinion and spin. Yes, a point of view can be established--for example, the muckraking investigative journalist makes it clear that The Little Guys are uncovering the dirt the Big Guys have been successfully hiding from the public--but this is different from opinion and spin. It's in plain sight, and part of the story being presented.

Yes, bias can slip in, for journalists are human, too, but the goal is objectivity--a standard that has been buried by an avalanche of spin, both institutional and online.

While most of what passes for "news" focuses on national and international events, what has more direct impact on our lives is what's happening in our city and county. These local decisions are the beat of local newspapers, who pay journalists to do the dull but important work of showing up to county council meetings, public hearings, judicial hearings, interview elected and appointed officials and their critics--all the scutwork of journalism that actually matters in our real-world lives, as opposed to the make-believe "life" we present online.

While the precise percentage of mass media ownership concentrated in the hands of a few corporations is open to debate, that most of the mass media is owned by a few corporations is not open to debate. This concentration is especially apparent in the tech monopolies in search and social media, where a cryptic Orwellian message that you've "violated community standards" sends you to Digital Siberia without any recourse.

The 6 Companies That Own (Almost) All Media

These global corporations have little interest in local journalism because it's expensive and rarely profitable. Local newspapers were once supported by advertisers, classified ads and subscribers. Craigslist and similar sites dismantled classified ads, and few younger readers bother subscribing to the local newspaper because "all the news is online for free."

Yes, all the corporate-packaged and sensationalized news is online, but local journalism dies when local newspapers go under. Investigative journalism and shoe-leather journalism are time-consuming, unglamorous and do not lend themselves to sensationalization. Few people are willing to pay for this work via direct subscriptions to journalists. Yes, there are a few superstars with thousands of paying subscribers, but local coverage attracts few subscribers. The investigative journalists I know only survive financially because their spouse has a steady job.

Self-serving special interests are delighted to fill the void when local journalism disappears. Once there's nobody left who is paid to dig beneath the surface of press releases, then there's no pushback when local power brokers carve up whatever's available. The public, uninformed and clueless, is powerless.

This California city lost its daily newspapers--and is living what comes next.

Relying on stalwart volunteers to do all the work local journalists once did is not realistic. Imagining that local journalists can recruit a couple hundred people to pay them a monthly stipend is also not realistic, as the work is DBI: dull but important, and few people will pay for what they imagine is "free" online.

The best way to support local journalism is to subscribe to your local newspaper before it disappears from lack of public support. Journalism is a trade, a profession, and it's not the same as opinion or PR-marketing-spin. We don't seem to even miss it when it's gone, but we are so much poorer when it's gone, a profound poverty we don't even recognize until it's far too late to reverse it.





New podcast: Is the Everything Bubble About to Pop? (37 min, 40 charts)

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My recent books:

Disclosure: As an Amazon Associate I earn from qualifying purchases originated via links to Amazon products on this site.

Self-Reliance in the 21st Century print $18, (Kindle $8.95, audiobook $13.08 (96 pages, 2022) Read the first chapter for free (PDF)

The Asian Heroine Who Seduced Me (Novel) print $10.95, Kindle $6.95 Read an excerpt for free (PDF)

When You Can't Go On: Burnout, Reckoning and Renewal $18 print, $8.95 Kindle ebook; audiobook Read the first section for free (PDF)

Global Crisis, National Renewal: A (Revolutionary) Grand Strategy for the United States (Kindle $9.95, print $24, audiobook) Read Chapter One for free (PDF).

A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook $17.46) Read the first section for free (PDF).

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World
(Kindle $5, print $10, audiobook) Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake (Novel) $4.95 Kindle, $10.95 print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 Kindle, $15 print) Read the first section for free


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Does Anyone Else Smell a Market Crash in the Air?

Markets are manipulated, yes, but they're still structures of tightly bound, self-organizing complexity which lend themselves to sudden non-linear collapses.

Just as thunderstorms scent the air before their arrival, market crashes often announce themselves in the autumn zephyrs. Markets don't crash when everyone's in full-blown panic; they crash when the headlines and data are reassuring, analysts are confident in ever-higher profits, and complacency reigns supreme, evidenced by record-high household allocation in stocks and Bullish sentiment readings.

Markets crash after a brief bit of panic selling is immediately bought and markets are returned to a permanently high plateau of valuation as we saw in August, as the S&P 500 shot back up within a whisker or two of all-time highs. Punters buy every dip because this quick reaction to any drop has been richly rewarded for 15 years, and everyone has confidence in the Fed Put, i.e. the belief that the Fed will move Heaven and Earth to restore "market confidence" and the wealth effect.

In other words, market participants have embraced moral hazard: there is no real downside, there is only upside to buying every dip.

Markets crash when the rot beneath the surface is invisible or goes unnoticed. The few doom-and-gloomers who note extremes are immediately mocked off the stage, and the headlines tout the resilience of the economy, markets, employment, profits, and the techno-wonders heading our way.

After the crash nobody predicted, analysts swarm like ravenous locusts to the digital airwaves to lay claim to their prescience: look, look, I added a one-line disclaimer about "irrational exuberance" at the end of my report!

I'll spare you the analog charts and go right to the chase: the Oasis Indicator, brought to our collective attention by Joe Sullivan-Bennett via BondVigilantes.com: The Peculiar Relationship Between Oasis & Periods Of Extreme Market Volatility (Zero Hedge). (Fun fact: Before Oasis Wonderwall, there was George Harrison's 1968 soundtrack LP Wonderwall.)

Those turning up their nose at the Oasis Indicator might benefit from pondering these "jaws of death" charts. Everything is extreme and stays extreme until it doesn't. Consider the gaping pearly teeth of the SPX (S&P 500) and JPY (Japanese yen).



Or the Mack the Knife of SPX and Fed reserves: You know when that shark bites with his teeth, Scarlet billows start to spread...



And last but not least, the 2-year Treasury yield and the Nasdaq Index: a loaded mousetrap if there ever was one.



There's no convincing the complacent. You either sense what's coming or you don't. It's like a sixth sense in a way, an intuitive awareness developed by absorbing huge losses in previous "unpredicted" crashes.

Markets are manipulated, yes, but they're still structures of tightly bound, self-organizing complexity which lend themselves to sudden non-linear collapses.

But never mind, a little autumn shower never hurt anyone. And so nobody carries an umbrella on a day that starts out sunny and clouds over too quickly to respond.

Playing It Safe (9/6/24)

Is the "Everything Bubble" About to Pop? (9/4/24)

What If All the Conventional Models Fail to Predict What Happens Next? (9/2/24)

New podcast: Is the Everything Bubble About to Pop? (37 min, 40 charts)

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My recent books:

Disclosure: As an Amazon Associate I earn from qualifying purchases originated via links to Amazon products on this site.

Self-Reliance in the 21st Century print $18, (Kindle $8.95, audiobook $13.08 (96 pages, 2022) Read the first chapter for free (PDF)

The Asian Heroine Who Seduced Me (Novel) print $10.95, Kindle $6.95 Read an excerpt for free (PDF)

When You Can't Go On: Burnout, Reckoning and Renewal $18 print, $8.95 Kindle ebook; audiobook Read the first section for free (PDF)

Global Crisis, National Renewal: A (Revolutionary) Grand Strategy for the United States (Kindle $9.95, print $24, audiobook) Read Chapter One for free (PDF).

A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook $17.46) Read the first section for free (PDF).

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World
(Kindle $5, print $10, audiobook) Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake (Novel) $4.95 Kindle, $10.95 print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 Kindle, $15 print) Read the first section for free


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Playing It Safe

Violent crashes followed by equally violent rip-your-face-off rallies as we experienced in August are not signs of a healthy, stable stock market.

An astute reader recently asked me: "If you had to rollover a pot of money from a 401K in the next month, how/where would YOU invest it?" Please note that my answer is not investment advice; I am only responding to the reader's direct question: what would I do? In other words, given my circumstances, age, risk appetite, assets, income, obligations, etc., what would I personally do? My answer is only relevant within the context of my own individual circumstances. Everyone else with their own unique circumstances will have their own answer.

My answer: I'd play it safe. What "safe" means depends on the person, but for me, "safe" means cash, and cash equivalents that earn some sort of yield, for example, short-term Treasury bills / notes / bonds which I can buy via TreasuryDirect.gov. For someone else, "safe" may be some other asset or perhaps diversifying their bets in the casino: some on the roulette wheel, some on the poker tables, etc.

Why would I play it safe? Two reasons come to mind. 1) Mr. Buffett just sold a dollar amount of Apple stock equal to the GDP of a small nation. That is a very clear signal of how he views valuations and the global economy. Mr. Buffett was widely considered an out-of-it old fool when he missed the dot-com NASDAQ bubble in 1999, but a few years later after the NASDAQ had fallen 85% from its peak, perceptions of the out-of-it old fool changed.

2) Violent crashes followed by equally violent rip-your-face-off rallies as we experienced in August are not signs of a healthy, stable stock market. This kind of action smells very strongly of insiders and major players "distributing" (i.e. selling) to retail (households with stock portfolios, 401Ks and IRAs, and passive index funds which are bagholders all the way down should stocks crash) in anticipation of a serious, prolonged decline in valuations.

There is an overwhelming abundance of signals and analyses--Treasury yield inversions, etc.--but these two suffice. But if you insist on two more, consider 3) the percentage of household wealth in stocks has reached an all-time high. This has a very strong correlation with major multi-year tops in the stock market.

4) Volatility remains complacently untroubled. Sure, volatility as expressed in the VIX index is suppressed to keep stocks nicely elevated, but the complacency is evident in other readings as well. Recency bias has made punters extremely complacent and confident that A) buying the dip will be handsomely rewarded every time, without fail, and B) the Federal Reserve will do "whatever it takes" to save the stock market from any spot of bother. That these conditions may no longer be guaranteed hasn't yet entered the risk-return analysis of most punters.

OK, here's a lagniappe indicator: the bat guano-quatloo / JNK-Mongolian Cattle Futures Index ratio. Interpret this one however you like, but to me it is suggesting that playing it safe has a favorable risk-return thingy.



Is the "Everything Bubble" About to Pop? (9/4/24)

What If All the Conventional Models Fail to Predict What Happens Next? (9/2/24)

New podcast: Is the Everything Bubble About to Pop? (37 min, 40 charts)

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