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[BigWeather]

It is tempting to shift a percentage of my 401(k) to a safer fund than the current investment in a 2030 (I'm 42) target retirement year fund. I wouldn't incur a tax penalty but would have to pay fees, I'm sure, right? How long would I need to leave it there before I could switch it back? While I'd be locking in the nearly 10% loss since New Years I could conversely see it as locking in the insane gains we saw last year -- gains which seem way too good to be true. Really torn on this one, don't think I can take seeing it drop like I did in 2008/9.

 

[GhaleonEB]

https://personal.vanguard.com/pdf/icriecr.pdf

This basically suggests that that 30-40% international is the ideal range. No idea if that will be true in the future, but it can't hurt to follow it.

I actually am about 60/40 as well. I really don't mind slightly over-weighting US stocks as well, especially since the biggest are international companies.

Thanks. I'll take this into account when I do my rebalance next year.

 

[Cyan]

I panicked

Shit was bleeding all over.

Sounds like you should maybe consider changing your asset allocation to something safer that won't give you ulcers whenever the market hiccups.

Seriously. (As long as you're not changing it all the time based on market conditions, at least.)

 

[RustyNails]

Sounds like you should maybe consider changing your asset allocation to something safer that won't give you ulcers whenever the market hiccups.

Seriously. (As long as you're not changing it all the time based on market conditions, at least.)

But this was more than a hiccup. More like a stroke, and people are saying it's gonna continue well into February and that's what worried me the most.

 

[Cyan]

But this was more than a hiccup. More like a stroke, and people are saying it's gonna continue well into February and that's what worried me the most.

We're talking about retirement investing. I'm going to take a wild guess that your retirement is a few decades from now at the earliest, yes?

It's a hiccup. You're barely going to remember this by the time you start taking funds out of your retirement accounts however many years from now. But if you're bothered by this kind of market movement, that's fine--it's important in investing to know yourself and what you're comfortable with. If big market movements make you uncomfortable, then you should probably lower your volatility a bit by increasing your allocation to bonds.

And never try to time the market.

 

[Randolph Freelander]

But this was more than a hiccup. More like a stroke, and people are saying it's gonna continue well into February and that's what worried me the most.

Do you plan to retire next month or something?

If this market reverses course tomorrow, all you've done is locked in losses. It could continue downward, of course, but if retirement isn't around the corner, you're going to be fine, and fine rather quickly.

At this point, if I had anything liquid sitting on the sidelines (and I don't), I would start to buy.

 

[teh_pwn]

SOLD EVERYTHING

Dow sinking is insane...I will rebuy after market settles. Maybe?

...what? I mean really, dude. You just locked in your losses for something you weren't going to touch for years. And you added brokerage fees to it.

Stock is owning pieces of companies. If you have broad stock funds, it's like taking a bet that society will continue to prosper.

Expand the stock market over 20+ years. Or 100+ years. It goes up nearly perfectly 9% nominally per year.

And yes there are dips. When the market went down over 50% back in late 2008, I didn't flinch. In fact I got excited and tripled my 401k investment rate. I was only slightly concerned about unemployment, but my company is really conservative and would only lay off if a great depression happened.

If you don't grasp this, then you should invest in blended funds.

I really don't understand this panic. Especially when things like unemployment and PMI are favoring market expansion. We're just experiencing a minor correction and a stimulus hangover.

 

[Piecake]

I panicked

Shit was bleeding all over.

Everyone makes mistakes. I know I made plenty when I first started investing. You just need to realize that if you are investing for retirement in 40 years, small market fluctuations do not matter AT ALL. If the market did an 80% crash tomorrow i would not give a shit. Well, I probably would because I would be looking for buyers for my kindey so I could invest it in the market, but thats beside the point. The point is that I definitely wouldnt sell.

But this was more than a hiccup. More like a stroke, and people are saying it's gonna continue well into February and that's what worried me the most.

You gotta realize that that these people have no idea what the fuck they are talking about. Don't listen to them. Its all noise. To invest for retirement in the long term it is vitally important that you don't panic and sell because that is the worst thing you can do. It ONLY hurts you. it only gains you loses.

I would sit down and create a plan. Determine what index funds you are going to invest in, what asset allocation you are going to use, and tell yourself what you are going to do when things get scary (dont sell). When you panic, refer back to this so you don't do anything stupid.

Sounds like you should maybe consider changing your asset allocation to something safer that won't give you ulcers whenever the market hiccups.

Seriously. (As long as you're not changing it all the time based on market conditions, at least.)

That too

 

[RustyNails]

I probably dun goofed. I let the jitters get the best of me.

For what it's worth, I'm planning on jumping back in as soon as I can. Well at least until I feel more comfortable with the stock market.

...what? I mean really, dude. You just locked in your losses for something you weren't going to touch for years. And you added brokerage fees to it.

Stock is owning pieces of companies. If you have broad stock funds, it's like taking a bet that society will continue to prosper.

Expand the stock market over 20+ years. Or 100+ years. It goes up nearly perfectly 9% nominally per year.

And yes there are dips. When the market went down over 50% back in late 2008, I didn't flinch. In fact I got excited and tripled my 401k investment rate. I was only slightly concerned about unemployment, but my company is really conservative and would only lay off if a great depression happened.

If you don't grasp this, then you should invest in blended funds.

I really don't understand this panic. Especially when things like unemployment and PMI are favoring market expansion. We're just experiencing a minor correction and a stimulus hangover.

But I didn't make losses on any of the funds except one and that too marginally. I was still in the black after selling. But I am planning on buying more after the dust settles.

 

[akira28]

quickie question. I just recently requested a termination payout for one of my 401k accounts. they say they have 30 days to act on it. Is there any reason why there would be a denial? And how possible is it that it might be denied? I haven't worked for the company since 2010, and just let the account build up. Plus they never contributed, it was all my money....so what are the odds?

 

[RustyNails]

Everyone makes mistakes. I know I made plenty when I first started investing. You just need to realize that if you are investing for retirement in 40 years, small market fluctuations do not matter AT ALL. If the market did an 80% crash tomorrow i would not give a shit. Well, I probably would because I would be looking for buyers for my kindey so I could invest it in the market, but thats beside the point. The point is that I definitely wouldnt sell.
That too

40 years? no way. I'm 30 and I'm trying to be as aggressive as possible. I'm planning to retire early and start business down the road. But coming from consulting background, I only started my full-time job last year and that's when my company set up my 401k and around when I got interested in stock market.

I told my wife to slap me when I start to panic and want to sell everything next time we see a market dip.

 

[Randolph Freelander]

But I didn't make losses on any of the funds except one and that too marginally. I was still in the black after selling. But I am planning on buying more after the dust settles.

Loss is a term used relatively. You sold off the peak, so you've locked in losses relative to the peak. If the market continues downward and you buy lower than it is now, then maybe you'll come out ahead. The problem people are cautioning you against is that it's hard to predict the bottom. For all we know, today was it. And if it was, you are coming out behind no matter when you buy back in.

 

[teh_pwn]

But I didn't make losses on any of the funds except one and that too marginally. I was still in the black after selling. But I am planning on buying more after the dust settles.

You probably made tons of losses. Losses to fees and to selling high-ish and buying higher soon.

You might have gotten lucky, but based on your tolerance level I think you'll do this again, stack up fees. There's a very good chance we're in the beginning of a long bullish market. One that will last a decade.

Global PMI is 54 (world economy growing after years of localized contraction and fear)
Unemployment rate dropping sharply

If I were a betting man, I'd say the next decade we'll see average annual interest in the stock market around 12-18%.

 

[Piecake]

It is tempting to shift a percentage of my 401(k) to a safer fund than the current investment in a 2030 (I'm 42) target retirement year fund. I wouldn't incur a tax penalty but would have to pay fees, I'm sure, right? How long would I need to leave it there before I could switch it back? While I'd be locking in the nearly 10% loss since New Years I could conversely see it as locking in the insane gains we saw last year -- gains which seem way too good to be true. Really torn on this one, don't think I can take seeing it drop like I did in 2008/9.

Your 401k could be screwy, bad, or different, so don't take this as gospel, but my bet is if there are any fees, the fees will be negligible, like 5-10 bucks a trade. I don't think there are any with mine, so that might be the same with yours.

You can buy and sell whatever funds you want in your 401k. Some funds in your might have a mechanism that charges you a fee if you sell it in 6-12 months, but I forgot the term. So I would look at the specific fund you want to buy and sell. That mechanism is fairly rare though and usually tied to very specific and 'difficult' asset funds.

I really don't see that being on a target date fund so I doubt there would be any problem switching to a more conservative one and I doubt you'd gain any fees, if any, but I would check out your 401k details and the fund to make absolutely sure.

quickie question. I just recently requested a termination payout for one of my 401k accounts. they say they have 30 days to act on it. Is there any reason why there would be a denial? And how possible is it that it might be denied? I haven't worked for the company since 2010, and just let the account build up. Plus they never contributed, it was all my money....so what are the odds?

Do you need the money? If not, its a really bad idea to cash out your retirement account because you are literally pissing away money. I would definitely recommend canceling that and rolling that over into an IRA if you can.

As for your question, I highly doubt that you would be denied since I can't fathom any reason why they would do that, but I have no real specific information on it

 

[akira28]

As for your question, I highly doubt that you would be denied since I can't fathom any reason why they would do that, but I have no real specific information on it

That's good to hear.

Oh yeah I definitely need it. Daddy needs a new pair of Jordans. (Cert tests ain't cheap.) I'm willing to say goodbye to 30%, as I've been warned. I had wanted to roll it over, but I still have another account from a few years back with a lot more in it, and I'll probably roll that into another 401K once things get popping again.

 

[GhaleonEB]

40 years? no way. I'm 30 and I'm trying to be as aggressive as possible. I'm planning to retire early and start business down the road. But coming from consulting background, I only started my full-time job last year and that's when my company set up my 401k and around when I got interested in stock market.

I told my wife to slap me when I start to panic and want to sell everything next time we see a market dip.

To add to some of the responses you go so far.

Each month I sum up where our total investments are at in an Excel file I use to manage our finances. I build a new, improved file each year, but one tab stays the same: our long-term trend. I've updated it every month since I got out of college, over 10 years ago. I use it as a way to look back on where we've been, and also as a check to put these kind of market corrections into context.

Along the way was the second largest crash in stock market history. Right now, that crash is a small blip. If I didn't know when it took place, I wouldn't be able to spot it. Similarly, a few years from now you'll be able to look back and probably have no idea the current correction ever took place.

Bear in mind I've kept investing steadily all along, so that offsets some of the declines. Retirement investing really takes a long-term perspective to see through.

 

[RustyNails]

To add to some of the responses you go so far.

Each month I sum up where our total investments are at in an Excel file I use to manage our finances. I build a new, improved file each year, but one tab stays the same: our long-term trend. I've updated it every month since I got out of college, over 10 years ago. I use it as a way to look back on where we've been, and also as a check to put these kind of market corrections into context.

Along the way was the second largest crash in stock market history. Right now, that crash is a small blip. If I didn't know when it took place, I wouldn't be able to spot it. Similarly, a few years from now you'll be able to look back and probably have no idea the current correction ever took place.

Bear in mind I've kept investing steadily all along, so that offsets some of the declines. Retirement investing really takes a long-term perspective to see through.

I will start doing something similar.

 

[Piecake]

If I were a betting man, I'd say the next decade we'll see average annual interest in the stock market around 12-18%.

Man, I sure hope you are right, but I highly highly doubt we are going to see figures even close to that. I'll be the first one to admit that I have no idea what the fuck is going to happen, but I have a hard time being that optimistic about the future.

 

[Sarye]

This thread is awesome. I have a question about what to if I'm planning on buying a home for the family. So little background... I'm in my 30s, no kids, married with a 401k and Roth IRA totaling 130k.

I'm planning on maximizing my Roth and continuing with 401k. Everywhere I read said to just put the extra money into savings like ING but I'm pretty flexible with the timing of the purchase. Anywhere between 3-8 years. I was thinking of splitting my savings with a 40/60 split into ING savings and Wellesley vanguard fund. If the market crash in my timeframe then I'll just wait a few years until it goes back up.

Is this a stupid idea?

 

[Smushroomed]

Is the lowest roth I can open with vanguard 3k?

I still don't know if I should do a trad vs a ira

 

[BigWeather]

Your 401k could be screwy, bad, or different, so don't take this as gospel, but my bet is if there are any fees, the fees will be negligible, like 5-10 bucks a trade. I don't think there are any with mine, so that might be the same with yours.

You can buy and sell whatever funds you want in your 401k. Some funds in your might have a mechanism that charges you a fee if you sell it in 6-12 months, but I forgot the term. So I would look at the specific fund you want to buy and sell. That mechanism is fairly rare though and usually tied to very specific and 'difficult' asset funds.

I really don't see that being on a target date fund so I doubt there would be any problem switching to a more conservative one and I doubt you'd gain any fees, if any, but I would check out your 401k details and the fund to make absolutely sure.

Thanks a ton for the insight, Piecake. I'll definitely read up on the funds available within my 401k with respect to fees, hold times, etc. Still torn on whether I'll do anything -- just having ridden out 2008 - 2011 I'm not too eager to go through it again. Sure, it came back (this time, at least) to stronger than ever but it cost me five years. At 40+ those five years make a difference. My wife and I had just reached a major milestone amount in our 401k and it stinks to see us back below that milestone nearly immediately (like within the same week).

 

[Husker86]

Is the lowest roth I can open with vanguard 3k?

I still don't know if I should do a trad vs a ira

Fidelity is also a good company for investing. They have a lot of commission free ETFs (iShares) with no minimums (besides the share price).

 

[alstein]

Is the lowest roth I can open with vanguard 3k?

I still don't know if I should do a trad vs a ira

Some of the index funds only require 1K, though I'd put a bit more in just to be safe.

If you're behind schedule and young, I'd suggest taking a higher share of risk than normal to catch up.


I often wonder what I should be doing in my situation, where things are as good as they'll ever get for me, I'm likely to lose my career at some point in the future- I'm keeping a larger than usual cash nest egg and investing the max each year. My expectation is that I'll have to live in minimum wage the last 15-20 years I"m working.

 

[Sarye]

Is the lowest roth I can open with vanguard 3k?

I still don't know if I should do a trad vs a ira

when you say trad vs ira do you mean trad vs roth? There's two types of IRAs. Traditional and Roth. As to which one you should do... it depends. In general it depends on whether you're expecting to pay more taxes now or when you retire. The benefit of a Roth is that the money is yours when you retire. You do not need to pay taxes when you take it out. There are other benefits... like being able to take out the principal for education or for home purchases with no penalty but I wouldn't do that for obvious reasons unless situation is dire.

I would definitely choose a Roth IRA over a Trad IRA.

 

[Zoc]

I live in Japan and want to start investing, but the language barrier on Japanese investment websites is intimidating (I'm a professional translator, but these are far from familiar waters!). Does anybody here have any advice to offer? I gather I should start with a NISA account, but I don't know the best way to do that.

 

[RuGalz]

What do you guys do with the cash for rainy day on hand? The interest rate for saving or CD accounts are fairly crappy it just seems like a waste let it sitting there.

 

[Sarye]

What do you guys do with the cash for rainy day on hand? The interest rate for saving or CD accounts are fairly crappy it just seems like a waste let it sitting there.

What do you define cash for Rainy Day as? If this is money you need for emergencies, (ie getting laid off, car broke down, etc) then just put it in a savings account the highest APR you can find.

The interest rate sucks, but with anything, higher rewards mean higher risk. If this money is extra money that you don't need, then there are many other options.

 

[negreenfield]

This thread is awesome. I have a question about what to if I'm planning on buying a home for the family. So little background... I'm in my 30s, no kids, married with a 401k and Roth IRA totaling 130k.

I'm planning on maximizing my Roth and continuing with 401k. Everywhere I read said to just put the extra money into savings like ING but I'm pretty flexible with the timing of the purchase. Anywhere between 3-8 years. I was thinking of splitting my savings with a 40/60 split into ING savings and Wellesley vanguard fund. If the market crash in my timeframe then I'll just wait a few years until it goes back up.

Is this a stupid idea?

Yeah, this is a tough one. I would imagine most would steer you towards the guarantee of a CD even over a savings account since you'll get higher rates for that amount of years. If you really think you can save enough with that 40 portion and willing to be risky on the 60 and have a large time frame I guess you could go for it but you better be prepared for a dip and be willing to realize the house will have to take longer.

 

[meow]

Awesome thread! I've skimmed it completely once and planning and rereading it through completely again. I'm looking at Fidelity because I already had an account with them. Can someone explain to me what these mean?

"Fidelity's sector ETFs offer the lowest expense ratio in the industry—just 0.12%. Plus, you can purchase each of these ETFs commission-free online."

vs.

"Trade other ETPs for only $7.95 and use the ETF/ETP screener to find the ETP that meets your criteria." and "Why trade ETFs with Fidelity: $7.95 online commissions for U.S. equities—lower than Schwab, TD Ameritrade, and E*Trade"

 

[xnipx]

What's a good amount to pay in fees for a 401k?

My jobs 401k for index funds is charging between 1.75-2.35 for the different funds in total fees. I'm only contributing the 5% so I can get the match so even with the fees I'm still getting free money but I'm wondering if its worth it to invest any more than that.

 

[clav]

Awesome thread! I've skimmed it completely once and planning and rereading it through completely again. I'm looking at Fidelity because I already had an account with them. Can someone explain to me what these mean?

"Fidelity's sector ETFs offer the lowest expense ratio in the industry—just 0.12%. Plus, you can purchase each of these ETFs commission-free online."

vs.

"Trade other ETPs for only $7.95 and use the ETF/ETP screener to find the ETP that meets your criteria." and "Why trade ETFs with Fidelity: $7.95 online commissions for U.S. equities—lower than Schwab, TD Ameritrade, and E*Trade"

Look at Spartan index funds if you're sticking to Fidelity.

One of them emulates the DOW, and the other the S&P 500.

 

[Piecake]

This thread is awesome. I have a question about what to if I'm planning on buying a home for the family. So little background... I'm in my 30s, no kids, married with a 401k and Roth IRA totaling 130k.

I'm planning on maximizing my Roth and continuing with 401k. Everywhere I read said to just put the extra money into savings like ING but I'm pretty flexible with the timing of the purchase. Anywhere between 3-8 years. I was thinking of splitting my savings with a 40/60 split into ING savings and Wellesley vanguard fund. If the market crash in my timeframe then I'll just wait a few years until it goes back up.

Is this a stupid idea?

I would probably do that as well in your situation. I think the key thing for investing in the intermediate term is to be flexible and obviously stop investing when you reach your goal. So yea, having a goal might help.

I live in Japan and want to start investing, but the language barrier on Japanese investment websites is intimidating (I'm a professional translator, but these are far from familiar waters!). Does anybody here have any advice to offer? I gather I should start with a NISA account, but I don't know the best way to do that.

I have absolutely no idea. This might be one of those times when you need to talk to a financial adviser to get you set up. If he tries to steer your into some shitty funds, you just need to push back against it.

What do you guys do with the cash for rainy day on hand? The interest rate for saving or CD accounts are fairly crappy it just seems like a waste let it sitting there.

Thats why I am more of a 3 month person, but yea, I just keep it in my bank account.

Look at Spartan index funds if you're sticking to Fidelity.

One of them emulates the DOW, and the other the S&P 500.

Pretty sure Fidelity has total US and Total international Spartan funds as well. Personally, I think the Dow is kinda a shitty index fund. Its not really all that diversified.

 

[clav]

Pretty sure Fidelity has total US and Total international Spartan funds as well. Personally, I think the Dow is kinda a shitty index fund. Its not really all that diversified.

http://www.bogleheads.org/wiki/Fidelity

Fidelity tracks the Dow Jones US Total Stock Market Index. Vanguard tracks the CRSP Total Market Index.

 

[negreenfield]

What's a good amount to pay in fees for a 401k?

My jobs 401k for index funds is charging between 1.75-2.35 for the different funds in total fees. I'm only contributing the 5% so I can get the match so even with the fees I'm still getting free money but I'm wondering if its worth it to invest any more than that.

Ideally 0.5% or below, 1.75-2.35 is awful, so go to the match then fully fund roth IRA. After that you will have to do some math if you want to do after tax to find out if it is even worth it to contribute beyond the match. If you want to I might ask that question at bogleheads.

 

[Piecake]

http://www.bogleheads.org/wiki/Fidelity

The Dow and the Dow Jones US total stock market index are two separate things. The Dow Jones, which is what everyone thinks of when they hear that, is only the 30 biggest companies in America. The DJ total stock market, is, I am assuming, comprised of all of the stocks in the US

What's a good amount to pay in fees for a 401k?

My jobs 401k for index funds is charging between 1.75-2.35 for the different funds in total fees. I'm only contributing the 5% so I can get the match so even with the fees I'm still getting free money but I'm wondering if its worth it to invest any more than that.

Yea, thats horrendous. I agree with the above poster that the match is still worth it, but you will need to do some math to see whether or not it makes more sense to simply invest in a taxable account instead. Obviously you should fully fund your IRA after you meet the company match first though.

 

[Cyan]

But I didn't make losses on any of the funds except one and that too marginally. I was still in the black after selling. But I am planning on buying more after the dust settles.

Not to pile on you too much, but this is why people say not to try to time the market. When has the dust settled? How can you tell? Is it when everything starts going back up and stays that way for a few days? We're back up almost 1% today--has the dust settled?

See, the way the human mind works, you will tend to want to sell on a large downward spike--during the downward spike, not before!--and buy on an upward spike (again, during). Which means that while it might feel like you're acting to save yourself from losses, you're only saving yourself from a portion of the loses. And of course you're also "saving yourself" from a portion of the gain (as a historical note, a significant portion of recovery from crashes tends to come from only a few trading days, which you would be likely to miss if you were "waiting for the dust to settle").

In short, trying to time the market is likely to result in selling low and buying high. I don't need to tell you that this is a bad thing.

 

[clav]

The Dow and the Dow Jones US total stock market index are two separate things. The Dow Jones, which is what everyone thinks of when they hear that, is only the 30 biggest companies in America. The DJ total stock market, is, I am assuming, comprised of all of the stocks in the US

Ah, I didn't know that.

Still, we both agree that he is better off investing an index mutual fund, right?

 

[Husker86]

iShares ETFs are commission free through Fidelity, look into those.

 

[FalsettoVibe]

Good information here.

 

[HammerOfThor]

Can I contribute to my 2013 IRA in 2014 until a certain date? I thought I read somewhere I could do that but I can't find it anymore.

 

[negreenfield]

Can I contribute to my 2013 IRA in 2014 until a certain date? I thought I read somewhere I could do that but I can't find it anymore.

April 15th, or there about.

 

[Piecake]

Ah, I didn't know that.

Still, we both agree that he is better off investing an index mutual fund, right?

Definitely. I think index funds are the only sane choice for the vast majority of investors

 

[vehn]

So my 401k has lost 3.9% this year. Is everyone else pretty much doing bad the past month?

 

[RustyNails]

So my 401k has lost 3.9% this year. Is everyone else pretty much doing bad the past month?

-4.8% =(

 

[Cyan]

So my 401k has lost 3.9% this year. Is everyone else pretty much doing bad the past month?

Assuming we're all indexing, we're probably all doing somewhere around there, depending on allocation. I don't usually pay much attention to short-term swings, but I'm guessing I'm doing about the same.

On the plus side, who cares?

 

[vehn]

edit: nm I can't read OP, it was listed as "Total Stock Mkt" not "Total Stock Market"

 

[Cyan]

VITSX is the US total market. For international, you might look up "world ex us" or some such.

 

[teh_pwn]

Man, I sure hope you are right, but I highly highly doubt we are going to see figures even close to that. I'll be the first one to admit that I have no idea what the fuck is going to happen, but I have a hard time being that optimistic about the future.

Remember that the long term average is 9% nominal USD, or 6% real. Like clockwork. For that to be true, you have booms and busts. I think we're entering a boom because we need to catch up, sustain, and because I think there's going to be a breakthrough like Graphene that will be like the plastics of our time.

The US has been doing fine for 4 years, but the market has been held back because "well, we're doing okay, but the Eurozone...or Asia, so let's hoard money like cash under mattress stuffers". That's no longer true. Global PMI is above 50. Unemployment is dropping. We're crossing the chasm into a boom unless something stupid happens which is always possible.

 

[iamblades]

Assuming we're all indexing, we're probably all doing somewhere around there, depending on allocation. I don't usually pay much attention to short-term swings, but I'm guessing I'm doing about the same.

On the plus side, who cares?

I'm actually up about 2%, but that's just because all my dividends drop in January, annual, quarterly, and monthly, and I am more heavily invested in income paying index funds than most here. My preferred stock and junk bond index funds are up. My REIT index is down heavily, but that shit is yielding like 13% SEC(16% TTM), so I ain't even mad.

 

[Piecake]

Remember that the long term average is 9% nominal USD, or 6% real. Like clockwork. For that to be true, you have booms and busts. I think we're entering a boom because we need to catch up, sustain, and because I think there's going to be a breakthrough like Graphene that will be like the plastics of our time.

The US has been doing fine for 4 years, but the market has been held back because "well, we're doing okay, but the Eurozone...or Asia, so let's hoard money like cash under mattress stuffers". That's no longer true. Global PMI is above 50. Unemployment is dropping. We're crossing the chasm into a boom unless something stupid happens which is always possible.

I think you are making a few assumptions that aren't guaranteed. I don't think 9% return is a given or that we will make up for it because we are behind. You are assuming that our economy is, structurally, very similar to the past. I don't think that is really the case.

The biggest shift is obviously in the transition from manufacturing to the service sector as well as the huge increase of credit use around that time as well. I think this had pretty serious consequences because it was the beginning of huge inequality and the decline of the middle class. All of that resulted in stagnant wages and depressed demand because everyone's money is now going towards health care, home, education, and car. Discretionary spending was going on credit, until that started to bite us in the ass.

This is a good article that explains our current situation

http://www.nytimes.com/2014/02/03/b...eroding-just-ask-the-business-world.html?_r=0

“As a retailer or restaurant chain, if you’re not at the really high level or the low level, that’s a tough place to be,” Mr. Maxwell said. “You don’t want to be stuck in the middle.”

In 2012, the top 5 percent of earners were responsible for 38 percent of domestic consumption, up from 28 percent in 1995, the researchers found.

Even more striking, the current recovery has been driven almost entirely by the upper crust, according to Mr. Fazzari and Mr. Cynamon. Since 2009, the year the recession ended, inflation-adjusted spending by this top echelon has risen 17 percent, compared with just 1 percent among the bottom 95 percent.

More broadly, about 90 percent of the overall increase in inflation-adjusted consumption between 2009 and 2012 was generated by the top 20 percent of households in terms of income, according to the study, which was sponsored by the Institute for New Economic Thinking, a research group in New York.

“It’s going to be hard to maintain strong economic growth with such a large proportion of the population falling behind,” he said. “We might be able to muddle along — but can we really recover?”

All of the demand and consumer spending is being driven by the top 20%. Thats not good and will have pretty serious repercussions on the economy. An interesting implication that might not be apparent is that it might hinder innovation. Good article explaining it

http://www.slate.com/articles/busin...dy_can_afford_new_products_who_will_make.html

Basically, my point is, is that we need some serious structural changes to our economy to reach 9% growth because we aren't going to reach that if only 20% of the population now can drive demand and consumer spending. We actually need to changes so that the middle class can be apart of that growth like in the past.