What potential does natural gas have in making serious inroads into becoming a viable alternative to gasoline or diesel powered vehicles? Investors Business Daily discusses some of the obstacles and opportunities natural gas has as a vehicle power source for commercial and residential vehicles.
Natural Gas Family Cars? CNG Cheap But Many Potholes.
I’m linking to a very informative document I came across from Bridgewater Associates. The document was composed/compiled by Ray Dalio, the founder of Bridgewater Associates. If you are unaware, Bridgewater is the largest hedge fund in the world with $120 billion under management (Jan, 2012).
The document discusses how Dalio sees the ‘economic machine’ and discusses many topics very pertinent to today’s environment, like deleveraging and credit cycles. The material is presented in a way that is not overly academic…In other words, it’s a lot of text book material, but presented in a more readable manner.
Ray Dalio – How the Economic Machine Works
If you’ve ever looked at a population chart that lists age ranges from greatest and least within the U.S. (or other Western country), you’ll notice a noticeable bulge representing the group known as the Baby Boomers. Today we hear numerous concerns over the future prospects of runaway inflation. While inflation is a threat, given an emerging dependance on a loose monetary policy, it will have a hard time growing out of control in an environment where a significant amount of the population is reducing their consumption (Boomers).
The following link provides consumer demand curves across a myriad of economic activities. As you will see, the vast majority of these graphs demonstrate a decline in demand once a person enters their 50′s-60′s. The exception comes mainly in the area of health/wellness products and services.
Having a sizable portion of the population move into a period where consumption is reduced, is not an inflationary force. This is not to say inflation is not to be feared. It is simply to note that a strong current in the economy is pulling away from rapid inflation.
A picture is worth a thousand words.
Original post: http://www.zerohedge.com/news/biggest-shock-fridays-payroll-report-sorry-men
It’s not out of the ordinary hear or read commentary about the stock market and how it is out of touch with what is actually occurring in the economy. This point isn’t that outlandish. Day to day market activity can be very disjointed and not a good representation of e actual changes in the economy.
Though the short term can be manic, the market can only run from ‘reality’ for so long. Eventually what is actually occurring in the economy will be reflected in the prices of securities. The process does work, but it is certainly not like clockwork. Behind all trades, computer generated or not, is a human finger or programming at work. Remember that.
To gain a sense of the markets ‘rationality’, I’m including an exhibit below of a +10 year chart of the ISM’s Purchasing Managers Index (Manufacturing) compared to the S&P 500. The chart is measuring month to month changes in each index. As you can see, deviations do occur between the two. Though the S&P 500 may buck the trend of the PMI, it cannot continually snub its nose at economic realities (as reflected in manufacturing contraction or growth).
What’s the PMI? An indicator of the economic health of the manufacturing sector. The PMI index is based on five major indicators: new orders, inventory levels, production, supplier deliveries and the employment environment. It is reported at the beginning of each month. Investors widely regard the ISM PMI Index as a general barometer of economic health. Readings of less than 50 indicate contraction, while greater than 50 indicate expansion.
Month to month growth of the Purchasing Managers Index compared to the S&P 500.
Originally appeared in the August, 2012 edition of the Newsletter.
I’m constantly amazed by the targeted savings rates offered in personal finance magazines and other outlets providing financial advice. Saving 10% or 15% or your monthly income is something I see as being on the low end of the spectrum for investors. The problem with setting goals at these levels is that people lack a context around why they’re saving and the logic behind their rate of savings.
Telling someone that they should save 10% is nice, but it leaves many questions unanswered. First, are we saving 10% of the money you actually take home or your pre-tax earnings and benefit reduced earnings? The two values can be greatly different. Secondly, how does this 10% play into the ‘end game’. In other words, what’s the purpose of your savings and how does the rate of savings address your goal?
On a practical level, I would advise the rate of savings you seek to obtain be based on your paycheck’s net earnings (The actual dollar value that can be deposited per month.). I suggest this because this amount is that which you have control over. Basing the amount on your gross earnings can certainly work, but it leaves you more openings to find excuses as to why you did not meet your savings goal.
For many people the reasoning behind their desire to save is based on retirement needs or some other long-term financial goal. If the goal can be defined by a certain lump sum figure that is a one-time cost, then equating how your rate of savings meets your need is pretty simple. For example, if I want to buy a car that cost $30,000 in the next 5 years, then I need to save $500 per month over a 5 year period ($500 x 12 x 5 = $30,000).
In the case that you are saving for something more indefinite in size and scope, such as retirement, then the calculation above will not work. You do not buy your retirement as you would buy a specific good. Retirement might be 10 years away for one person and 30 years for another. Neither person can say with 100% certainty that they know this answer. Yet, we must make the most of the incomplete information we have and use reasonable assumptions.
Consider the following assumptions:
If you’re serious about obtaining an estimate as to how your retirement savings will look based on your current savings and spending patterns, use the newly released Retirement Savings & Expenses Calculator .
What you will find inside…