iShares Lehman Aggregate Bond (AGG)

All Comments on AGG

  • commenter
    icandoitdon
    Jun 10 03:07 PM
    The Reverse Wealth Effect [view article]
    johngonole...

    "Spend your money or we'll spend it for you."

    very perceptive comment and absolutely true. the bastards punish savers and reward debtors. it's been that way for 40 years and it's getting worse.


    Reply
  • commenter
    Jerbear
    Jun 10 02:23 PM
    The Reverse Wealth Effect [view article]
    Thanks rigel,
    With all the political rhetoric we forget how depended we are on one another.
    Reply
  • commenter
    rigel
    Jun 10 12:50 PM
    The Reverse Wealth Effect [view article]
    Jerbear, while they arguably could do it, there's very little incentive for them to do so. Sovereign wealth largely funded the booms in the US. If they tried to manipulate oil prices to tank the US economy, those investments would be lost. In fact, as the recent bust happened, foreign dollars stepped in (arguably too early). If you were manipulating a downfall, you might be more careful about picking the bottom.

    China has a lot of US treasuries and manufactures a lot of US goods. It's certainly not in their best interest to help orchestrate a US downfall.     Reply
  • commenter
    Alpha Seeker
    Jun 10 11:31 AM
    ETF Top 10 Lists: Fastest Growing, Largest By Net Assets, Top Providers [view article]
    Usually, i rely on FRC in Boston for ETF research and data... Reply
  • commenter
    bbzz24
    Jun 10 02:03 AM
    The Reverse Wealth Effect [view article]
    great article! the theory of capitalism is based on the creation of capital and stockpiles of money do not constitute capital. so are the current u.s./u.k. run more or less like the already defunct soviet socialist republics? yes. and there can't be any inflation-wage spiral as the lack of production resources in the above countries leaves the emolyees powerless before the threat of outsourcing even in healthcare. gloomy future indeed. Reply
  • commenter
    johngonole
    Jun 10 01:46 AM
    The Reverse Wealth Effect [view article]
    Eagle Chief - the low hanging fruit has been picked in many areas of the world. The north sea is declining. Russia is declining. Many countries that used to produce oil no longer can. Many believe the world has reached peal oil production and production will decline slowly at first and then drop exponentially. Of course prices will slow the decline of reserves.

    Icandoitdon - Agree speculation is way up. The printing of money forces people to speculate to preserve their purchasing power.

    I believe that we are seeing stagflation. The global economy is holding labor prices in check in terms of real income adjusted for inflation. Meanwhile the government and the federal reserve are printing money to force interest rates lower. This is causing the inflation in just about everything but housing which is pretty much tapped out. Too many houses. In sum I believe the politicians and the bankers abuse the monetary system and its power to line their pockets. Low interest rates are caused by the expansion of the money supply. The expansion of the money supply is essentially the same as saying the expansion of obligations or debt (since it is debt that backs our paper money). The politicians gain a smoother economy in the short term and money to fund their social spending schemes and ear marks. The bankers take their cut of an ever enlarging pie of debt making them rich. Think about it we as citizens give the banks our purchasing power. They lend it out like 30 time over all the while taking a cut of it in term of interest. Depositers in essence bear the risk and are compensated nothing. If we don't deposit the dollars are still wiped out by the expansion of the money supply and th ensuing inflation. Alternatively we can invest in stocks, bonds, etc... Again however the same bankers/finacial firms take their cut. They bear no risk because the government is ready to use the power of taxation to bail them out.

    This is ultimately the problem with Fascism and Socialism. Unfortunately the monetary policy failures continue to breed more and more people who are willing to entrust more power to the same persons holding them down.

    The grip of power that the government and the Federal Reserve have over the purchasing power of the people (as well as being a monopoly) is so vast and lock tight it is scary. Spend your money or we'll spend it for you. Then we'll tax your assets. We'll tax your income. Perhaps this is the price we pay for living in the type of society we have but clearly their were times when we didn't have all this regulation and things worked out pretty much the same or better. They have the power to bankrupt everyone at will. The only checks on this system are pitch forks and shot guns. This could very well happen if they drive our economic system into the ground. Our economic realities are less and less dependent on free market allocation of resources and more and more on how the government decides to allocate resources. The public needs to be more mindful of this and DEMAND and end to corruption, a balanced budget, and less tinkering with the economy.


    Reply
  • commenter
    Eagle-Chief
    Jun 09 11:55 PM
    The Reverse Wealth Effect [view article]
    Chris -

    good article, however, your point about the price of oil increasing because of "....it is becoming increasingly difficult and more expensive to get oil out of the ground. Much of the world’s low hanging fruit has already been snatched from the oil patch."
    C'mon, Chris. Think about it. If we believe this, we're all being taken for a bunch of suckers. Other factors such as government policies (not allowing for drilling in many parts of the USA, especially offshore) affect the price of oil. Turmoil in the mideast may also adversely affect the price of oil, and the falling dollar is a huge factor. But your argument above, no Chris, I don't fall for this one.

    Take at the one year crude oil spot price here:
    www.wtrg.com/daily/cls...
    Oil went from about $65/barrel one year ago to $138/barrel today.

    C'mon Chris. Think again. We're being taken for suckers.     Reply
  • commenter
    Jerbear
    Jun 09 11:01 PM
    The Reverse Wealth Effect [view article]
    Is it possible that Saudi arabia, Iran, Russia, Venezuela and others could manipulate the oil commodities market to such an extent that they can control the price of oil and tank the US economy??

    There are intelligent people out there suggesting such a thing. The Hunt Brothers tried to corner silver but they had to buy the silver. The Saudis and other already have the oil.

    I don't know enought about commodities markets to know. How about one of you experts telling me.     Reply
  • commenter
    icandoitdon
    Jun 09 09:31 PM
    The Reverse Wealth Effect [view article]
    chris:

    "If speculation was pushing prices significantly higher than what the fundamental market demands, wouldn’t stockpiles of oil be building up?"

    you conclude that speculation cannot be causing the increase in oil prices, because oil inventories would build if speculation pushed the price of oil beyond the natural equilibrium price. this might be true in the long run but it is not true in the short run. oil has a very inelastic demand curve, i.e. short term demand is not price-sensitive

    gasoline is a good example we can all relate to. it is only after doubling of price in the last couple of years that consumers are starting respond to the price by cutting back on consumption. cigarettes are another example. demand for cigarettes is notoriously insensitive to price and for decades has been the classic example of an inelastic demand curve taught in economics classes in universities through the world.

    in two years if the price of oil remains at current levels i will throw in the towel and agree that speculation has not influced the price of oil. but it's far too early to draw that conclusion...i believe that financial speculation is a significant driver of the doubling we've seen over the last year.

    "there are speculative forces in every asset market."

    this is true, with a big BUT

    BUT nothing comparable to today's market.

    speculative activity is every market far greater today than in the past,made easier by futures exchanges that didn't exist 30 years ago, and by the emergence of trading entities that either didn't exist or didn't stray from their traditional domains of stocks and bonds. today hedge funds, mutual funds, soverign funds, pension funds and my grandmother can trade virtually any kind of futures for which a market exists. the cost of trading, in terms of exchange costs, margin and opportunity costs (i.e. cost of short term money) are lower than they've ever been. trading volume has exploded...and speculators far outnumber those who trade these futures for the purpose of hedging their production or consumption activities.

    there is good reason to speculate in oil today. we have a wreck of a financial system, a declining currency, a runaway national debt, wars we can't win....and people are afraid of a crash. seems like an intelligent bet for turbulent times, but for those who haven't laid the bet long before now they're a little late to the party...

    i would bet my mother in law that speculation accounts for at least 1/3 of the cost of a barrel of oil today. matter of fact you can have her even if i lose the bet.     Reply
  • commenter
    Rabbito
    Jun 09 07:57 PM
    My Website
    The Reverse Wealth Effect [view article]
    who deleted my post? Reply
  • commenter
    Rabbito
    Jun 09 07:47 PM
    My Website
    The Reverse Wealth Effect [view article]
    Why is their no wage-price spiral now???

    I have 2 theories

    1. Today's consumers easy access to credit cards. With that access consumers put the higher balances on their cards instead of asking for higher pay at their jobs. What happens when their balances get too high? Bankrupcy.

    2. Too much competition for jobs. In the world economy. If Americans ask for more $$ their jobs will be shipped over seas.

    Anyone else have any theories as to why wages won't keep pace with inflation like what happended in the 70's     Reply
  • commenter
    Lisa
    Jun 09 06:25 PM
    The Reverse Wealth Effect [view article]
    Excellent overview.

    Here's an alternative way of looking at the situation:

    Unlike the 70s, there's no wage-price spiral now. Inflation is being fuelled by growing global demand due to the opening of the Soviet Union and E Europe and the economies of China and India. That's boosting demand for commodities, particularly oil. But wages are being held down because those countries are also supplying a ton of low-cost labor. As a result, it's hard to imagine that there will be an inflationary spiral as there was in the 70s.

    Rather, we're suffering from a repricing of commodities due to a step shift in demand. That means that countries like the U.S. are facing a decrease in relative wealth, because their "cost of living" just went up due to external factors. Nothing to do with printing money. U.S. consumers now have less to spend on other things, because the price of gas and food just went up. Combine that with a negative wealth effect from declining house prices as the article suggests, and there's a big hit to consumer demand. A weak U.S economy will lead to loose monetary policy, and that will leave the dollar weak. Weakness in the U.S will spread to Europe and China; it's only a matter of time.

    How best to invest in that environment? The only thing I can think of that's a cert is agricultural commodities. But as the comment above points out, that's somewhat backward looking.     Reply
  • commenter
    The Real
    Expert
    Jun 09 05:59 PM
    The Reverse Wealth Effect [view article]
    Chris, it is easy to explain the situation now that it has occurred. But where were you 2 or 3 years ago? I would venture to guess you were riding the wave of thought on our "great economy," similar to all of the other "pros." If you are going to hold yourself out as a CIO, you need to predict what is going to happen instead of reporting what has happened. As far as I can tell from this article, you are way behind the curve. If you would like some real insight let me know. I'm here to help. Reply
  • commenter
    nickgogerty
    Jun 06 09:35 AM
    My Website
    Portfolio Theory: The Unnatural Alternative? [view article]
    portfolio theory is trend following in drag and assumes "knowledge" in the Soros sense that isn't there. Reply
  • commenter
    Equity Style
    Jun 05 04:51 PM
    Portfolio Theory: The Unnatural Alternative? [view article]
    Buy and Hold strategies have always been poor. With the documented effect of Momentum, style rotation strategies have brought significant increase in returns. I have data since 1994. Others, such as Paul Merriman, have data back to the 1980. Using major asset classes (stocks, bonds, real estate, and commodities) data is available back to the early 1920's. Fundx has data over the past 24 years.

    Momentum investing is given a bad name because groups such as Vanguard do not want their investors to use the strategies as the jumping back and forth in equity and assets would play havoc with their funds.

    Equity Style     Reply
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