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The Real Reason Boomers Buy Bonds

Tyler Durden's picture




 

Day after day we are inundated with the apparent 'idiocy' of investors putting their hard earned money into Treasury bonds when they only earn 2% yields. Hour after hour, we hear why investors should buy stocks, 'get paid to wait', and bonds are in a bubble. So why is it that day after day, an entire generation appears to have found a new mantra of investing, preferring less risk to more, satisfied with less return as opposed to more. The simple answer comes down to two words - often misunderstood - risk and drawdown. While most consider the former to be some quantifiable measure of uncertainty (more is better because think of the upside potential); it is the latter that ends careers, crushes retirement hopes, and scars pysches for life - and is often ignored. As we discussed here previously - must read, comparing (risky uncertain cashflow stream) equity dividend yields to (risk-free certain cashflow stream) Treasuries is like comparing apples to unicorns, but more importantly as Boomers retire en masse, this chart explains why there is a third leg to the investment decision - risk, reward, and regret; and equity drawdowns are the real 'risk'.


 

Drawdown risk has kept equity investors at bay; bonds have appeal as a safety play - despite low yields as return OF capital still trumps return ON capital - even though bonds have provided both in recent years.

and some important lessons from Oaktree Capital's Howard Marks:

Question: Why do behaviour patterns and mistakes recur despite the plethora of information available now? Are we doomed to repeat our mistakes?

 

Howard Marks: It's extremely important to know history, but the trouble is that the big events in financial history occur only once every few generations. The latest global financial crisis began in 2008 and the one before that in 1929. That’s a gap of 79 years. So, while memory has the potential to restrain action and induce prudence by reminding us of tough periods, over time as memory fades the lessons fade as well.

 

In the investment environment, memory and the resultant prudence regularly do battle with greed, and greed tends to win out. Prudence is particularly dismissed when risky investments have paid off for a span of years. John Kenneth Galbraith wrote that the outstanding characteristics of financial markets are shortness of memory and ignorance of history. In hot times, the few who do remember the past are dismissed as relics of the old, lacking the ability to imagine the new. But it invariably turns out that there's nothing new in terms of investor behaviour. Mark Twain said that “history does not repeat itself but it does rhyme,” and what rhyme are the important themes.

 

The bottom line is that even though knowing financial history is important, requiring people to study it won’t make a big difference, because they'll ignore its lessons. There's a very strong tendency for people to believe in things which, if true, would make them rich. Demosthenes said, "For that a man wishes, he generally believes to be true" Just like in the movies, where they show a person in a dilemma to have an angel on one side and a devil on the other, in the case of investing, investors have prudence and memory on one shoulder and greed on the other. Most of the time greed wins. As long as human nature is part of the investment environment, which it always will be, we’ll experience bubbles and crashes.

 

Question: Is it volatility that’s made people scared of equity markets, particularly since 2000?

 

Howard Marks: Volatility goes in both directions but it’s declines that people dislike, not volatility. The equity markets of the last 50 years tell a long and meaningful story. Owning stocks wasn’t very popular back in the 1950s, until the brokerage houses popularised equity investing. People started buying equities and they went up, encouraging more people to buy them. This is the usual selffeeding spiral. So equities rose in nearly a straight line from 1960 to 1972. After this they had a bad decade, but then they did even better from 1982 to 1999. Overall, for 30 out of those 40 years, equities rose breathtakingly and people fell more and more in love with them. By the end of 1999 everyone had more equities than ever before and maybe too much of them. So, equity performance, equity prices, investor attitudes towards equities and equity allocations within portfolios all reached their acme in 2000, after which equity prices collapsed under their own weight. In 2000-02 we had the first three-year decline in equities since the Great Crash, and people started to fall out of love with them. This made them sell, driving prices down further and prompting even more selling. The same spiral, but now in reverse. And as investors fell out of love with equities, they fell in love with bonds.

The mantra in the last four decades of the 20th century was “growth” and the mantra in the last 12 years has been “safety and income.” And so, from 2000 to very recently, equity allocations have been going down, equity prices have been unchanged overall, equity returns have been close to zero, and we’ve seen people chase safety and income through bonds instead. But people often forget to look at the price they’re paying for the concept they’re buying into. In 2000, people pursued growth but forgot to ask themselves ‘at what price?’ And in recent years they've been pursuing safety and income while ignoring the same question. Today the price being paid for the safety and income of bonds is among the highest in history.

Chart: Goldman Sachs

 

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Mon, 02/18/2013 - 20:26 | 3254506 LawsofPhysics
LawsofPhysics's picture

What a load of horseshit. Look, it is real simple folks. There are far too many paper fucking promises with too few real assets. The boomers have seen two major market crashes and are now buying real assets and playing a game of attrition. Fuck you Bernanke.

Mon, 02/18/2013 - 20:29 | 3254507 McMolotov
McMolotov's picture

There's never been a better time to buy (worthless paper shit)!

Mon, 02/18/2013 - 21:22 | 3254589 CH1
CH1's picture

They've spent too many decades following the 'wisdom' of their collective generation and can't pull out of the spiral.

Their errors defend themselves: To change course means having to admit they were wrong, and most of them never learned how to do that.

Mon, 02/18/2013 - 23:46 | 3254944 Harlequin001
Harlequin001's picture

Boomers aren't buying bonds.

The Fed is.

Tue, 02/19/2013 - 07:19 | 3255546 negative rates
negative rates's picture

When you get daily amnesia, you are going to repeat your mistakes.

Mon, 02/18/2013 - 20:54 | 3254536 riphowardkatz
riphowardkatz's picture

boomers are buying real assets, ha ha ha. not even close to the truth. talk to ten boomers about gold or oil or real estate and 9.9 of them will tell you, thanks but no thanks.most of them are scared out of their gord. real assets mean nothing to them, they think a bond is a real asset.

Unless the boomer you are talking to lives in or has recently moved  from India or Vietnam or Thailand or China. 

Mon, 02/18/2013 - 21:12 | 3254569 scottch
scottch's picture

Not this boomer or half the boomers who work for me.  Its all about RE right now.  Don't miss out!  Tenants, trash, and toilets, baby.  And 11% cap rates!!

Mon, 02/18/2013 - 21:59 | 3254647 Atomizer
Atomizer's picture

Agreed. RE has become a second income while putting your feet on the desk and doing nothing

Mon, 02/18/2013 - 22:16 | 3254678 ATM
ATM's picture

Until the governments of the states and localities decide that their only hope is to raise RE taxes.

and then they will raise them again and again and ultimately decide that they must take those properties in their jurisictions for the greater good.

Sorry but I am going to keep a good share of my net worth in assets that are portable.

Mon, 02/18/2013 - 23:48 | 3254951 Harlequin001
Harlequin001's picture

No body has to do any work.

All you have to do to get rich is buy a house and invest in the stock market.

That will end well won't it...

Tue, 02/19/2013 - 00:35 | 3255099 Atomizer
Atomizer's picture

ATM:

My assets are portable, they're called tenants. High end RE homes still drive a prime rental market under yearly contracts. Atomizer is by no means a slum lord. :)

Tue, 02/19/2013 - 05:21 | 3255493 Seer
Seer's picture

"Until the governments of the states and localities decide that their only hope is to raise RE taxes."

(that's what they HAD been doing going up, but now it's all going down)

They can decide anything they want, but it's the execution of their decisions that matter.

I'd stated a couple of years ago that property taxes would be coming down, and for these reasons:

1) Can't squeeze blood from a rock- as wages drop and people become unemployed they're not going to be able to carry higher taxes; foreclosures and sales bring lower assessments, which drops property taxes (I'd say that this is one of the prime reasons govt has helped bailout the banks- keep them from churning RE sales that would also push down property tax receipts);

2) As banks and other consolidators of assets/money acquire more RE they have more lobbying power to hold/lower property taxes; anyone who doesn't believe this has missed the FACT of how the banks have made out so far.

It's only one anecdotal, but MY property taxes HAVE decreased (12.9% since 2011).  And my taxes are lower to begin with because I have Ag land.

If you don't think smarter then out on that road you're more likely going to end up road-kill.

Tue, 02/19/2013 - 08:17 | 3255576 Bicycle Repairman
Bicycle Repairman's picture

You really do underestimate the local taxing people.  They can subdivide the classifications of RE to get at the people who have $ and can pay.  The big boys will then find a loophole at the federal level.  Don't think so?  Research the Tax Reform Act of 1986 and see how Reagan and his buddies socked it to the little guy in RE.

Tue, 02/19/2013 - 08:41 | 3255619 Never One Roach
Never One Roach's picture

Repairman has it right. My RE values plunged 20-30% after that 1986 "Reform" act. It was targeting certain groups while exempting others. Right now, house an dcondo insurance rates are soaring. Taxes increasing to pay for things like, "additional school security."

 

Localities keep nibbling away at house owners. I was a landlord awhile back and it's impossible to pass all these onto the tenant. And as a home owner you are stuck with these higher costs.

Mon, 02/18/2013 - 22:20 | 3254681 RealEstateWannabe
RealEstateWannabe's picture

Where are you finding 11% cap rates? Which property type(s)? 

Wed, 02/20/2013 - 10:19 | 3259064 TruthInSunshine
TruthInSunshine's picture

As someone immersed in a real estate issue deposited onto my lap by RE investors of various sizes on at least a weekly and often daily frequency, unless he's literally tied in with the boys at the NYFRB (i.e. Blackrock) or amongst the literal top 1% of RE investors (whether by sheer luck or mad skills), he's not.

Mon, 02/18/2013 - 21:23 | 3254592 caimen garou
caimen garou's picture

your right some may be clueless, but not all!

Tue, 02/19/2013 - 05:07 | 3255481 Seer
Seer's picture

Hm... most that I personally know ARE/HAVE BEEN.  Maybe it's because of my influence?

Mon, 02/18/2013 - 21:17 | 3254575 847328_3527
847328_3527's picture

Boomers are almost clueless and most missed the 250% increase in gold and over 300% increase in silver. Instead they lost their hard earned savings in the stock market or in housing.

 

Most are too brainwashed to stop watching MSM "business news" and recommendations on TV. 

Mon, 02/18/2013 - 22:41 | 3254737 CheapBastard
CheapBastard's picture

maybe the Boomers will get into the house flipping market so they can lose what's left of their savings. I don't know. Many are desperate with their 0.01% 'high yield savings accounts.'

 

Too bad AARP does little for them. Seniors have essentially zero voice in gubbermint from what I can see. Anybody disagree?

Tue, 02/19/2013 - 00:45 | 3255129 lasvegaspersona
lasvegaspersona's picture

Retirees are ALWAYS the victims of currency collapse. Read "When Money Dies". Read Daniel Amerman. Screwing retirees and pensioners is the PLAN! They fail to understand inflation and even if nominally they do OK (which they usually do not) then inflation and the taxes on their inflation derived 'profits' leave them robbed of purchasing power. Financial repression is not an accident, it is a government/ CB POLICY! Youngsters have the advantage of longer horizons and can often take advantage of inflation adjusted wages. Retirees are stuck, frozen at the moment they quit working. They are easy pickins for rapacious governments. It has been this way for a long time. It is even more true in this age of cradle to grave 'security'.

Tue, 02/19/2013 - 01:59 | 3255284 TheDuke
TheDuke's picture

Governments are thieves. Their primary modus operandi is to steal from the present (taxation).

When that doesn't satisfy them they also steal from the future (debt).

When that form of extortion is exhausted they also steal from the past (inflation/currency devaluation).

If that doesn't work then the whole system collapses. Retirees are cannon fodder.

Tue, 02/19/2013 - 03:48 | 3255415 Parrotile
Parrotile's picture

You'll find thet 99% (or more) of the population are cannon fodder. This will become far more evident when "things start to get interesting".

Wed, 02/20/2013 - 06:06 | 3258756 StandardDeviant
StandardDeviant's picture

Very well put, sir.  I'll have to remember that sound bite about stealing from the present/past/future.  Like Dickens' Christmas ghosts, but scarier.

Tue, 02/19/2013 - 08:46 | 3255628 Never One Roach
Never One Roach's picture

"When Money Dies" is a must. Amerman is very good also:

 

http://danielamerman.com/

 

All Boomers should learn/read both.

Tue, 02/19/2013 - 05:45 | 3255499 Seer
Seer's picture

"Seniors have essentially zero voice in gubbermint from what I can see. Anybody disagree?"

Didn't they do well in the 2010 elections?  Most of the older vote goes GOP.

Mon, 02/18/2013 - 20:30 | 3254508 carambar
carambar's picture

I like it. this time I can accumulate good quality companies whose stock price are not bid up by the early boomers like in the 90s.

It will not last for ever though.

 

Mon, 02/18/2013 - 21:08 | 3254559 ebworthen
ebworthen's picture

While you're at it smoke some Meth and buy AAPL.

Tue, 02/19/2013 - 05:48 | 3255500 Seer
Seer's picture

I think that Meth users buy FB... (this would be the most fucked up combo I'd think)

Tue, 02/19/2013 - 05:48 | 3255501 Seer
Seer's picture

I think that Meth users buy FB... (this would be the most fucked up combo I'd think)

Mon, 02/18/2013 - 22:38 | 3254728 Oldwood
Oldwood's picture

You are buying nothing but pieces of paper to place bets with. They have no value other that what you can convince another fool to pay you for them. They only have value to people who would rather gamble than produce. No different than the ponzi game the government is selling. You can olnly win if you stay in the game, right?

Tue, 02/19/2013 - 03:51 | 3255417 Parrotile
Parrotile's picture

Depends on how long these "Good Quality Companies" have good-paying customers.

Once the customer base erodes (for a myriad of causes), even the best Companies will have problems.

I wish you luck (we do live in "Interesting Times" after all . . .)

Tue, 02/19/2013 - 08:20 | 3255581 Bicycle Repairman
Bicycle Repairman's picture

These companies are finding customers overseas.  As that trend continues, Americans will matter less and less.

Mon, 02/18/2013 - 20:34 | 3254513 surf0766
surf0766's picture

They are hoping to use them as diapers?

Mon, 02/18/2013 - 20:47 | 3254530 Mae Kadoodie
Mae Kadoodie's picture

Depends.

Mon, 02/18/2013 - 20:36 | 3254517 Yen Cross
Yen Cross's picture

eur/chf is a good example. The swiss love negative S/T rates.

Mon, 02/18/2013 - 20:36 | 3254519 redpill
redpill's picture

Investor Stockholm Syndrome - noun - An affliction typically identified by determining an individual has decided to purchase government bonds.

Mon, 02/18/2013 - 20:44 | 3254527 Yen Cross
Yen Cross's picture

 EKM, can nail this one down!  Primary Dealers are playing " Toss Across"...

Mon, 02/18/2013 - 20:46 | 3254528 Atlantis Consigliore
Atlantis Consigliore's picture

but but but wadda bout REEEL ESTATE,   the realtors say its time to buy, so does the NAR,  do it , for the children.  LOL.   gosh its even pimped on the alphabet pimp channels;

 

condos for sale, condos for sale,  3 % down fha, condos for sale.    its like an ocean cruise, hold your nose and buy buy buy;. 

Mon, 02/18/2013 - 20:55 | 3254541 Atomizer
Atomizer's picture


 

Times were different back then. Multi-National derelicts working under the auspicious theme of freedom, dreams, and mercantile global expansion thought they had it right this time around. Guess who ends up falling on the sword? History repeats.  Free markets will prevail, once the past mistakes are removed from the appetizer plate.

Mon, 02/18/2013 - 20:56 | 3254542 Yen Cross
Yen Cross's picture

 I'm tired. and stupid. You ZHer's are an articulate crowd. Thanks for giving me a ribbon>

Mon, 02/18/2013 - 21:02 | 3254549 Dewey Cheatum Howe
Dewey Cheatum Howe's picture

Boomers, who are invested in pensions (you know the ones that are large part of the labor force and soaking up the remaining job droplets in an evaporating pool), not personal investments are the big driver of private bond purchases. That is the key piece of information missed here. They can't invest their pensions in physical assets like gold. The only safe investment to hedge against a stock market crash right now are Treasury Bonds. The face value is guaranteed when they come due so if nothing else you don't lose your principal. It is about the only wealth preservation strategy with a small return that is fairly risk free right now for people in this particular boat. Those bonds are as good as dollars, if the T-Bills go, everyone has A LOT bigger problems than losing their investments at that point.

Mon, 02/18/2013 - 21:03 | 3254552 Bobbyrib
Bobbyrib's picture

If Treasury bills go? Don't you mean when?

Mon, 02/18/2013 - 22:27 | 3254698 Go Tribe
Go Tribe's picture

Ben has to print. He can't let Treasuries fall until the last boomer is buried.

Tue, 02/19/2013 - 01:46 | 3255257 CrashisOptimistic
CrashisOptimistic's picture

And that's that.  The infinite source of all money has said what he's buying.  If you fight the Fed, you die.  We all know he won't let yields rise.  How could he?  And currency collapse?  How?  All the central banks coordinate so that no one can collapse.

Forget this financial stuff.  They have total control of it by edict.  Gold has no importance to society so it can't be the mechanism of disintegration.

Only oil is outside their control, and it is oil that will take it all down.

 

Tue, 02/19/2013 - 05:53 | 3255503 Seer
Seer's picture

"Only oil is outside their control, and it is oil that will take it all down."

And it's oil that is the driver of growth.

"Men argue, nature acts." -Voltaire

Tue, 02/19/2013 - 08:23 | 3255584 Bicycle Repairman
Bicycle Repairman's picture

"Only oil is outside their control, and it is oil that will take it all down."

Not completely.  That's what the 700 bases around the world is about.

Tue, 02/19/2013 - 11:24 | 3256073 nofluer
nofluer's picture

Ben has to print. He can't let Treasuries fall until the last boomer is buried.

Can't stop even then - don't forget the Rebound Generation!!! Population will not drop (without a cataclisim of some kind) into the forseeable future.

 

Mon, 02/18/2013 - 21:06 | 3254555 ebworthen
ebworthen's picture

Yes you motherfuckers on Wall Street, I DON'T CARE if I lose money.

I laugh out loud when I hear one of those Wall Street fucks saying "People HAVE to invest in equities, they'd be crazy to buy bonds!"

No shit for brains, I'd be crazy to buy into your corrupt casino EVER AGAIN!

FUCK YOU!

I'm in cash and buying Gold and Silver.

I don't care if I lose 50%!

I don't care if I'm not making 7%-10%!

What I do care about is not participating in your criminal enterprise!!!

Go hang yourselves before the People have to do it for you!

Fucking bankers.

Mon, 02/18/2013 - 21:22 | 3254584 HondaFullOfSilver
HondaFullOfSilver's picture

My grandfather died in 2012 and 50k of his estate was in GM bonds and we all know how that turned out..  I don't think I could buy a bond anymore, knowing that in this brave new world, unions and special interests take precedence over lawful claims.  Granpas will probably forgive Obama and the US government, but he was a die hard Democrat to the very end.  I'm a bit more pragmatic.

I do care if I lose 50%, I do care if I'm not making 2-4% (because it means I'm not beating inflation), and I do believe the deck is stacked against the common American.   Physical assets are probably the best protection we can get.  (Physical assets can include guns, ammo, copper, gold, silver, etc)  However, it would be a mistake not to look at how easy money from the Fed effects stock market returns, which beat gold for many years.  (People who waited for their $800 gold in the 80s to be worth $800 again waited a very long time.)

However, the thing that bothers me most about the 50k in GM bonds?   He was screwed by his own government.

Mon, 02/18/2013 - 22:50 | 3254755 Oldwood
Oldwood's picture

We all see the same things. No one wants to lose, but how do you particiapte in a game that you know is rigged against you. Its like being livestock and acknowledging that the farmer is only feeding you to eat you, but you believe somehow you will escape or be rescued before the fateful day when the trailer shows up from the slaughterhouse. The free food is just too good to walk away?

Tue, 02/19/2013 - 11:37 | 3256118 nofluer
nofluer's picture

Livestock see nothing but the current status of the feed bunk. Is it full? Empty? Has the Magic Farmer (government analog) arrived to fill it yet today?Do they even associate the arrival of feed with the farmer? Or is the feed magic manna that just appears?

Unless you're a bull... then all you see is cow asses, food and fences be damned.

I'd suggest that livestock do not think about tomorrow, much less 6 months or two years from now. If they knew, and thought about what was coming, they'd kill the farmer at the first moment of his inattention, then starve to death because they have no hands with wich  to open the grain bins. The farmer has all the cards.

Livestock have no future. Moooo.

Tue, 02/19/2013 - 06:01 | 3255505 Seer
Seer's picture

"I do care if I'm not making 2-4%"

Sorry to break the news to you, but you're talking about GROWTH, and, well... growth is dead (perpetual growth meme has finally run into the brick wall that is "finite planet?).

"However, the thing that bothers me most about the 50k in GM bonds?   He was screwed by his own government."

He failed the fundamental rule of investing- don't put all your eggs in one basket.  No one forced him to put all his eggs in the GM bonds.

GM's failure had NOTHING to do with the govt.

Listen, even I, as someone who wants ZERO GOVT, don't believe that govt is the only fucked up entity (and consider the revolving door- it's one and the same).

Mon, 02/18/2013 - 21:09 | 3254561 Withdrawn Sanction
Withdrawn Sanction's picture

Volatility goes in both directions but it’s declines that people dislike, not volatility.

Indeed.  Markowitz when he was working on his Portfolio Theory at U-Chicago in the 1950s, considered using semi-variance for his risk metric rather than std dev.  Too bad.  SD masks the fact that volatility exhibits runs in the data, which a rolling semivariance can capture.

Even beyond that, however, it is true people don't like the negative variety of SV and tend to attribute its occurrence to systemic issues or manipulation or whatever.  Trouble is, people tend to treat the positive variant of SV as confirmation of their own good judgment.  Doesn't mean there isn't information content in the data however for those willing to look for it.  Just means people are same as they ever were:  they'll internalize credit for gains, while they externalize blame for losses.

Mon, 02/18/2013 - 21:29 | 3254576 Yen Cross
Yen Cross's picture

 I/C where you( r )going with your comment.. Fuck off ya Limey Bastard!  You pussy! Let me down vote you!

  You are a fucking snake! You are a cunt! You {Flagellating CUNT!} it takes a lot to/too piss me off, and you did it! You worthless ass poacher<  
Withdrawn Sanction is sucking my right nut!

Mon, 02/18/2013 - 22:31 | 3254709 NoDebt
NoDebt's picture

Don't hold back, Yen.  Tell us how you really feel.

Mon, 02/18/2013 - 22:42 | 3254740 Yen Cross
Yen Cross's picture

 I'm a placid man. Sometimes unique individuals upset me. I have worked my ass off all of my life. I don't do well with barristers and bullshit!

Tue, 02/19/2013 - 06:41 | 3255531 Withdrawn Sanction
Withdrawn Sanction's picture

 I/C where you( r )going with your comment..

Sadly, I cannot say same about your "comment."  My observations in the original post were neither about you nor directed at you.  They were merely observations about historical fact triggered by the article.  It is indeed unfortunate that history upsets you so, as do, apparently, iconoclasts ("unique individuals" to use your turn of phrase...a redundancy if ever there were one). It is regrettable that such things disturb your otherwise placid life.  Perhaps you should get out more?

And for the record, I am not an Englishman, I am not a barrister, and I do not swing that way.  So you can keep your pants on. 

Tue, 02/19/2013 - 11:50 | 3256171 nofluer
nofluer's picture

It was my prof in Org Policy & Behaviour" who first called me an iconoclast. I asked him what that was and he just said, "look it up." And so I learned why my prospects for success in the business world were zero, and my life on Earth was doomed to a life of poverty and frustration.

Tue, 02/19/2013 - 06:06 | 3255507 Seer
Seer's picture

"Just means people are same as they ever were:  they'll internalize credit for gains, while they externalize blame for losses."

Exactly!

I wasn't bellyaching when things were bubbling up: I also wasn't bellyaching now they're going down, because, I understand that it does no good running around blaming others for my situation- I take full responsibility for my actions.

Mon, 02/18/2013 - 21:18 | 3254579 Downtoolong
Downtoolong's picture

Unfortunately, thanks to recent Fed policies and actions (ZIRP), Bonds are now a risky asset to own too.

The most important lesson to learn for the new future is that there is nowhere to hide in the paper markets.

Mon, 02/18/2013 - 21:25 | 3254594 wcvarones
wcvarones's picture

That's a lot of words, but it all boils down to that boomers are idiots.

Mon, 02/18/2013 - 21:27 | 3254597 buzzsaw99
buzzsaw99's picture

Boomers are idiots? I'll try to remember that while you're changing my oil.

Mon, 02/18/2013 - 21:36 | 3254616 wcvarones
wcvarones's picture

Now there you go again, proving the stereotype of spoiled boomers' contempt for honest work.

You inherited and blew your parents' hard-earned wealth, and now you're leeching off the Social Security and Medicare systems, taking far more from your children's future than you ever paid in.

You must be proud.

Mon, 02/18/2013 - 21:52 | 3254635 Ricky Bobby
Ricky Bobby's picture

Hey dude I am boomer and ain't dont nothing but honest work. Don't make the mistake of blaming generations, that is almost as bad as the left - right paradigm. Keep your eye on the ball don't take the head fake.

Mon, 02/18/2013 - 21:58 | 3254644 Theos
Theos's picture

So whats the "ball" when the old and feeble can't do honest work?

 

What if their kids don't give a shit?

 

What if I don't give a shit?

Tue, 02/19/2013 - 01:38 | 3255246 BooMushroom
BooMushroom's picture

What if they didn't bother to HAVE kids?

Tue, 02/19/2013 - 04:03 | 3255430 Parrotile
Parrotile's picture

What if they were not ABLE to have kids? There's many of us in this particular boat, who were also not deemed "suitable foster parents" owing to our job commitments (1 in 4 on call rosters and the like, regular Public Holiday work demands, etc.)
AI /GIFT? VERY costly in Australia (well it was when we needed it - had the "PBS-allowed" number of cycles, nil implantation), and in those days the money wasn't there. Simple as that.

Tue, 02/19/2013 - 04:28 | 3255453 SilverMoneyBags
SilverMoneyBags's picture

You still sat by and rode the wave. Your generation elected people for decades that did the wrong thing. Now your generation is in power and is raping everyone. Not my fault you didn't plan or save.

Mon, 02/18/2013 - 22:26 | 3254694 boogerbently
boogerbently's picture

We'll never make the progress necessary as long as there are morons like you, blaming us for the govt. corruption that broke the system. It's the same as red Vs. blue, dem Vs. GOP.

A game suckers are brainwashed into playing while BOTH parties "plunder our childrens future."

Grow up, read a little or go away. Try FB, it';s more your speed/mentality.

Mon, 02/18/2013 - 22:54 | 3254771 wcvarones
wcvarones's picture

Bush: Boomer.

Obama: Boomer.

Bernanke: Boomer.

Geithner: Boomer.

Need I say more?

Tue, 02/19/2013 - 04:17 | 3255442 Parrotile
Parrotile's picture

Most (if not all) of your senior Consultants, Clinical Managers, Department Heads, and Executive Branch will be boomers too.

The Boomers designed all today's MRI / CT / PET imaging technology, provided the technology that enabled these technologies, and provided the information background to train today's technicians, not just in Medicine / Nursing / Pathology / Imaging / Radiotherapy, but in ALL of today's technology (so by extension, knowledge) - based Industries - everything from Public Works (water / wastewater / capital infrastructure) to the more glamorous "higher tech" industries - Chem. Engineering (including Pharmaceutical and Biotechnology Industries), Microelectronics . .  the list just goes on.

Maybe those from "good families" who arrived fortuitously at the start of the Baby Boom did have the advantage, however us who arrived right at the tail end (from far less than ideal parentage) certainly did not. We had to work hard just like Gen X and Gen Y have had to work hard. The "Early Hatchlings" had by then snaffled all the "good jobs" and were comfortably settled in their sinecures for the rest of their working lives . . . . . .

A good example of "Timing being everything" don't you think!!

Tue, 02/19/2013 - 11:56 | 3256192 nofluer
nofluer's picture

Bush: Boomer.

Obama: Boomer.

Bernanke: Boomer.

Geithner: Boomer.

Need I say more?

Yeah... you forgot the Clintoons.

 

Mon, 02/18/2013 - 23:15 | 3254830 Totentänzerlied
Totentänzerlied's picture

You voted for it. You benefited from it. You didn't try to stop it. No one did, but that includes YOU and EVERYONE in your generation too. And your generation had the best shot at it for 1000 reasons. Corruption cannot occur in one sector of society if the rest of society has determined not to let it happen. Neither can deficit spending, wars, or much of anything else.

Tue, 02/19/2013 - 06:08 | 3255509 Seer
Seer's picture

ALL of them?

Please do tell your secret for "success" (at being a non-idiot).

Mon, 02/18/2013 - 21:27 | 3254600 Timmay
Timmay's picture

Equity Indexed Life Insurance and Annuities. That's where that shiite is going. Oh, which means it isn't going into the market but into bonds. There is no "equity" in equity indexed products.

Mon, 02/18/2013 - 22:35 | 3254720 NoDebt
NoDebt's picture

They use futures contracts under the hood of index-linked annuities, not bonds.

Mon, 02/18/2013 - 21:33 | 3254607 caimen garou
caimen garou's picture

they can keep their fucking paper, never bought bonds and never will! and yes I'm a Fucking boomer and still stacking!

Mon, 02/18/2013 - 21:36 | 3254615 pitz
pitz's picture

Return-free risk, motherfuckers. 

Mon, 02/18/2013 - 21:46 | 3254630 Theos
Theos's picture

Go ahead and buy your government bonds. They wont pay you back.

 

After there is a sufficent amount of gold in your store, all thats left is equity.

 

Like it or not ZH, owning things that earn money is how you grow wealth. While I can appreciate the resentment of companies who cook their books, hold finanical alchemy and then blow up, there are utlimately businesses that do make money.

 

Invest in your friends resteraunt. Buy and rent some real estate. Own some portion of an oil well.  Hell, start your own business with some people you trust.

 

Its all better than depending on the bernack to print your principle back in X years.

Mon, 02/18/2013 - 22:53 | 3254764 Oldwood
Oldwood's picture

Like we never heard of a Greek haircut before.

Tue, 02/19/2013 - 06:12 | 3255511 Seer
Seer's picture

"there are utlimately businesses that do make money."

Or they "report" that they do. </sarc>

But, isn't it "wealth" that is desired, not "money?"

Mon, 02/18/2013 - 21:53 | 3254640 disabledvet
disabledvet's picture

well as they say "the only difference between an outlier and an outright liar is right." i'll be the first to admit "this deflation world sure is a weird one" but unlike inflation where it's bong hits and boogie woogie in a deflation you EARN your pennies.

Tue, 02/19/2013 - 06:15 | 3255515 Seer
Seer's picture

"in a deflation you EARN your pennies."

Yup, gotta operate a LOT smarter.

When you think about it, this is the point that we start laying the groundwork for the future (REAL construction).  My bets are on farming...

Mon, 02/18/2013 - 22:11 | 3254659 Yen Cross
Yen Cross's picture

 Central Bankers's are doing Zero/Hedge?  that little prick Withdrawn Sanction is on my list! Red arrow away you pussy<

   At least I have the balls to keep my posts open. I'm coming for you , you ponzi euro/dollar swapping bitch!

Mon, 02/18/2013 - 22:12 | 3254665 Bunga Bunga
Bunga Bunga's picture

80 million baby boomers and average life savings of $500k makes $40 trln in total. After they have converted everyting into bonds, let's go hyperinflational and debt problem (government, financial and private) is solved.

Mon, 02/18/2013 - 23:26 | 3254791 TruthInSunshine
TruthInSunshine's picture

@bunga bunga - I think that the "average life savings" you've stated is a teeny bit off the mark, chief (as in about 95% too high).

 

More Americans delaying retirement until age 80 - Oct. 23, 2012

@CNNMoney October 23, 2012

As a result, there's a huge disparity between what people need and what they have saved. While respondents said they will need a median of $300,000 in total savings to support themselves in retirement,  the average amount saved is only $25,000.


America's Retirement System Is Failing Us: Economist

The majority of Americans (75 percent) nearing retirement age had less than $30,000 in their retirement accounts in 2010. For the poorest Americans in the 50-to-64-age bracket, the average amount saved for retirement was $16,034.


Why You Might Not Want to Be an “Average” American | CIF

Even scarier is the report from LIMRA that indicates half of Americans aren’t saving for retirement. At all. That means that the average American isn’t even saving for retirement. Those in the younger age bracket of 18 to 34 aren’t really saving, either: 56% are not saving at all. Only about 1/3 of Americans starts putting money aside for retirement in their 20s, according to a report from Bankrate.

 

But Zero Hedge reported on all this a few months ago, in bullet-item form:

Retirement: The Scary Actual Numbers Behind The Soothing Lies ... - Zero Hedge
  • Only 58% of us are even saving for retirement in the first place. Of that group, 60% have less than $25,000 put away, not including home equity or defined benefit plans. Even worse, a full 30% have less than $1,000. A meager 10% have $250,000 or more. (For comparison’s sake, a quick survey of different retirement advisors’ websites showed that the average recommended savings is about 8x-10x final salary – by some estimates, around $1 million)
  • While these low savings might be expected of the youngest age cohort, almost half (48%) of workers ages 45 and up have less than $25,000 saved.
  • Savings rates and the amount saved are strongly positively correlated to education, income, and health status. 93% of those making more than $75,000 are saving, compared to 35% of those with and income of $35,000 or less.
  • Only 38% of all American workers participate in an employer-sponsored retirement savings plan. That said, only 74% are offered this kind of plan. Of those that choose to participate (81%), savings and investments typically total at least $50,000.
  • 34% of workers that had saved said they have had to dip into their savings to pay for everyday expenses. 22% of retirees claim they’re taking more than they thought they would out of their accounts, depleting their savings even faster than they anticipated.
  • Overall it’s a pretty bleak picture. On the whole, Americans are hugely underprepared for retirement, leading quite a few of them (22%) to put off retirement to a later date, or not retire at all (7%).

 

Tue, 02/19/2013 - 08:55 | 3255641 Never One Roach
Never One Roach's picture

<< 34% of workers that had saved said they have had to dip into their savings to pay for everyday expenses.

 

 

I think it's higher now. Just about every retired person I know has now knawed away at their principal in one way or another and/or raided their retirement plan.

Wed, 02/20/2013 - 10:24 | 3259087 TruthInSunshine
TruthInSunshine's picture

I MEANT TO WRITE THAT BUNGA'S CLAIMED (PULLED FROM HIS ARSE) "AVERAGE BOOMER 'SAVINGS' FUND" WAS 2,000% TIMES TOO HIGH, NOT A MERE 95% TOO HIGH, ABOVE-- big differnce

25k x 20 = 500k

Tue, 02/19/2013 - 12:19 | 3256285 nofluer
nofluer's picture

In keeping with the human habit of justifying our own biases, I have thought for a couple of decades that anyone who saved $ denominated "investments" (stocks, bonds, IRAs, etc) for their "old age" was a fool.

Cash/investments is/are too easy to steal, be the thief a scammer with a computer or the government. So instead of "saving" we spent our current earnings on current expenses and on paying-down debt while said earnings had known value.

An unbreakable Law of Accounting is:

CURRENT EXPENSES MUST BE PAID WITH CURRENT RESOURCES!!!

Which for the accounting challenged means - if you need something in said future, you'll have to convert those "savings" into cash to pay for it - said conversion will occur at the THEN CURRENT REDEMPTION RATES in terms of value. So saving said cash assets (stocks, bonds, ownership percentages in fertilizer factories) means you have absolutely NO idea what your "savings" will buy in the future. So any attempt to quantify the value of said $$$ savings into the future is a redonkulous exercise in foolishness and demonstrates your ignorance of How Things Work in the Real World.

Did I mention above that I'm an iconoclast?

Mon, 02/18/2013 - 23:20 | 3254848 Totentänzerlied
Totentänzerlied's picture

$500k? Got a source for that?

Tue, 02/19/2013 - 00:54 | 3255115 TruthInSunshine
TruthInSunshine's picture

Both the "average of 500k" and the "40 trillion USD" figures were pulled forth from some dark crevice, but failed to pass the smell test.

Mon, 02/18/2013 - 22:14 | 3254675 chump666
chump666's picture

I am thinking, you know, a meteorite shower in Russia, takes out windows, scares a f*ck load of humans, then shortly after the big one misses us on Friday, but then this:

http://www.latimes.com/news/nation/nationnow/la-na-nn-meteor-florida-coa...

So maybe a load of meteorites are getting flung our way.

 

Mon, 02/18/2013 - 22:30 | 3254679 Yen Cross
Yen Cross's picture

google. withdrawn sanction     We have a fucking Public Defender on our hands!  The tool is basement bound and I'm going to Bitch Slap him!

   I never ever give up. I never quit. I will find you if it's the last thing I do!

Mon, 02/18/2013 - 23:44 | 3254927 therover
therover's picture

Holy Shit...you are like the fucking Terminator ! 

Tue, 02/19/2013 - 04:55 | 3255476 Yen Cross
Yen Cross's picture

 Thanks for the complement.

Tue, 02/19/2013 - 12:27 | 3256323 nofluer
nofluer's picture

Nope. Definitely NOT the terminator. The terminator had an onboard computer with the most up-to-date programming including the Advanced Spellcheck function. What was said was NOT a "complement."

Mon, 02/18/2013 - 22:40 | 3254735 max2205
max2205's picture

PE...

Mon, 02/18/2013 - 23:03 | 3254796 FreeMktFisherMN
FreeMktFisherMN's picture

if the old timers and anyone in general is most concerned about preserving their wealth/purchasing power (return of capital) then buying gold is the best way. Even if nominally it goes down as on Friday, so did crude oil big time, and while they can move inversely, this is just a microcosm of what owning gold does. It usually enhances wealth, too, as prices go down in terms of real money, but at a minimum is the best way to 'lock in' wealth. If gold got blowtorched down to say $1000 somehow (highly improbable given mining companies margins as is as well as all the fiat already printed and the stronger hands who relish the chance to BTFD, as opposed to the 'shaking of the weak hands'), crude would probably be down to $60/bbl. or so. And other commodities would correspond, too. 

The most conservative asset to buy is gold. 

Tue, 02/19/2013 - 06:27 | 3255521 Seer
Seer's picture

"It usually enhances wealth, too, as prices go down in terms of real money"

"Enhances?"  Isn't this another way of saying "increases?"  The ONLY way to INCREASE wealth is to get MORE of something: sitting on a static pile of gold (or anything else for that matter) isn't "getting more," in which case it's what it is: the same pile.

It's not gold that's increasing in "wealth," it's that the primary currency is losing its purchasing power.  Recall the old saying about how a good suit cost about 1 oz of gold back in the early 1900s and that (at any given point in time) it's the same today (1 oz of gold gets you the same good suit)?

It's quite ironic that gold can keep you afloat, yet it seems so responsible for boating accidents...

Tue, 02/19/2013 - 12:55 | 3256455 nofluer
nofluer's picture

Gold is a STORE of wealth. The value of gold does not change. Gold is THE standard of value. It is the rest of the world, economically speaking, that changes (up or down) in relation to gold. The only way to increase wealth with gold is to trade gold for some other asset, then trade back in a series of transactions that INCREASES the amount of gold you have.

 

Mon, 02/18/2013 - 23:44 | 3254928 mt paul
mt paul's picture

the sheep still trust

das government...

 

Tue, 02/19/2013 - 01:48 | 3255261 Venerability
Venerability's picture

And once again, you are confusing Boomers with Boomers' Parents.

Boomers are aged 48-66 this year. The best -educated and most likely to be investors in this group - 1/3 of the US population - are not "retiring en masse" and possibly will never retire at all.

Most legislators and senior government officials are Boomers. Most senior people on Wall Street are Boomers. Most senior media people are Boomers. Most senior corporate executives are Boomers.

The only influential group right now which ISN"T mostly Boomers is the Kiddie Trader Cadre on many prop desks, whose average age may be under 30 - and who often act like their average age is 3 1/2.

Tue, 02/19/2013 - 13:26 | 3256562 nofluer
nofluer's picture

The only influential group right now which ISN"T mostly Boomers is the Kiddie Trader Cadre on many prop desks,

Ummm... Congress - still largely WW II droolers.

Tue, 02/19/2013 - 04:09 | 3255436 douglas
douglas's picture

The title itself is inacurate, its Spanky-Bernanki whose buying all the bonds!  Why do they keep trying to tell us everyone´s buying bonds?  Not even the Chinese want them anymore, its mostly the FED (90%) doing the buying and we all know it.  If you´re even considering buying bonds at this point in the game - you´d better turn off that MSNBC and snap out of it.

Tue, 02/19/2013 - 06:29 | 3255526 Seer
Seer's picture

Expect the sloganeering to ramp up... "Buy anti-terrorist bonds today and keep America strong!" (and, of course, if you don't buy them then you're a "terrorist!)

Tue, 02/19/2013 - 04:14 | 3255439 Haus-Targaryen
Haus-Targaryen's picture

Now that this has been explained, if someone could explain to me why all boomers buy sand colored Toyota Camrys it would be fantastic. 

Tue, 02/19/2013 - 04:53 | 3255474 Yen Cross
Yen Cross's picture

 The ponzi Australian T10 is pushing 4% Courtesy of Club Fed!

Tue, 02/19/2013 - 04:58 | 3255475 Yen Cross
Yen Cross's picture

 The swiss are back to(almost) negative yields on 2 year notes.

Tue, 02/19/2013 - 11:05 | 3256026 moneybots
moneybots's picture

"And that's that.  The infinite source of all money has said what he's buying.  If you fight the Fed, you die.  We all know he won't let yields rise.  How could he?"

 

The FED cannot prevent the laws of math.

Tue, 02/19/2013 - 11:14 | 3256050 moneybots
moneybots's picture

" Today the price being paid for the safety and income of bonds is among the highest in history."

 

The price of the S&P is among the highest in history. 150 dollars for one share of SPY.  The price of gold and silver are high.  Houses are expensive.

Tue, 02/19/2013 - 11:17 | 3256058 moneybots
moneybots's picture

"The most conservative asset to buy is gold."

 

Until the government slaps a windfall profit tax on it or confiscates it.

Tue, 02/19/2013 - 11:36 | 3256114 moneybots
moneybots's picture

"over time as memory fades the lessons fade as well.

Greeenspan's memory did not fade.  He did not forget that he wrote in the 1960's, that 1920's FED policy lead into the Great Depression.  He deliberately ignored the lesson.

None of this happened by lessons being forgotten.  Congress was warned by experts not to dismantle Glass Steagall.  The experts reminded Congress of the lessons. They willfully ignored the experts, as the experts got in the way of what they wanted to do.

It was known that leverage above 12 to 1 was dangerous, yet the SEC gave leverage waivers to the investment banks.  No one forgot any lesson.

Alan Greenspan didn't forget what a bubble looked like as it was building- he lied.  No lessons were forgotten, a monumental fraud took place.

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