Juggling Dynamite

As the mainstream blathers on about stock markets being attractively valued in an improving economy and consensus GDP growth estimates of 2.6% in Q4, reality does not corroborate.  See Atlanta Fed GDPNow real GDP forecast for 2015:Q4.  To wit:

The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2015 is 1.9 percent on November 2, down from 2.5 percent on October 30. Following this morning’s Manufacturing ISM Report On Business, the forecast for fourth-quarter real consumer spending growth declined from 2.9 percent to 2.4 percent while the forecast for real equipment investment growth declined from 3.9 percent to 1.3 percent.

No credit-sellers, people are not ‘richer than they think’, home equity lines of credit tend to be financially harmful not smart, and people don’t need to consume more to be happy.  In fact studies show that happy people tend to spend less and save more.   Today the average American worker is unhappily living pay cheque to pay cheque. See:  The hidden reasons people spend too much.

Researchers are beginning to discover why you can break your budget despite getting all the basics right.

This clip outlines some refreshingly honest points on building household financial strength.  Here is a direct video link.

Another area of massive price-delusion the past few years has been dividend paying equities:  preferred and common shares and funds–typically marketed as low risk, blue chip picks for conservative investors.

Unfortunately with interest rates plunging over the past 7 years,  income-paying securities have become some of the most dangerously over-valued assets.  “How much could they drop?”, you ask in disbelief. Previous broker-favorite utility Transalta Corp offers a glimpse–down 63% and counting. Dividends are poor salve for missing chunks of capital.

Buying over-priced assets for a hoped for income stream has always been a terrible investment plan. Intelligent investing this is not.