The Stingy News Weekly (08/28/2016)
New from StingyInvestor
The lost decade
"Bond yields remain near historic lows with long-term Canadian government bond yields hovering near 1.7% this week. That doesn't leave much room for error. If interest rates rise, bond prices will fall. Rising inflation could also wipe out the small gains. More ominously, interest rates and inflation could climb at the same time like they did in the 1970s. It's a period that older investors remember all to well and one that younger investors should learn from."
"the CPP enhancement seems to do so little to ensure that future generations have an appropriate level of retirement income" [Retirement]
Most retirement accounts never run dry
"Consequently, while most retirees accumulate a portfolio with the plans to spend it in retirement, when faced with the ever-open-ended potential of living many more years they may feel compelled to keep extra assets available, and never actually deplete the retirement portfolio, even in their later years. This isn't a sign of inefficient portfolio spending or a consumption gap, but merely a prudent response to an uncertain future." [Retirement]
Re-evaluation of pension returns
"In an April 2016 report, McKinsey & Co. forecast that under a slow growth scenario, U.S. stocks will return 4 percent over the next 20 years while government bonds won't make any money. Ten-year returns for Connecticut's teachers' and state employees' pensions is 5.25 percent and 5.14 percent, respectively, far short of the annual gains it currently expects." [Retirement]
Times are ripe
"Net profits are dependent on more than just business profitability. Net profit margins are also driven by economy-wide interest rates and corporate tax law." [Markets]
Take-downs of Warren Buffett
"Buffett achieved that record without embracing the tightrope-walking risks, the ethical shortcuts, or the death-by-slow-obsolescence that have undone so many big corporations (of the 30 companies in the Dow Jones Industrial Average when Buffett took the helm at Berkshire, only three remain.)" [Buffett]
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