<DrumBeat: June 26, 2009 The Oil Drum DrumBeat: June 27, 2009>

175 comments on Have We Reached an Inflection Point in Economics History?: “Indeflation” and Energy

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P. Coyle on June 26, 2009 - 10:59am Permalink | Subthread | Parent | Comments top

First, it means long-term investing in a diversified portfolio of stocks is probably not going to be a good strategy for a long time to come (if ever); it’s time to play defense and look for low-risk yield.

Most TIAA-CREF holders I know have shifted to 70% bonds / 30% stock regardless of their age.

My institution offers retirement plans through both TIAA-CREF and Fidelity. For the very reasons that Chris alludes to, I wanted to switch from CREF's "diversified portfolio of stocks," where I've dumped my money for years, into a couple of Fidelity energy funds before my retirement assets got shredded even further. But guess what? Those funds aren't available under the basic retirement plan....

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memills on June 26, 2009 - 1:20pm Permalink | Subthread | Parent | Comments top

I was on a committee at my university that evaluated our retirement plans. We bailed out of TIAA/Fidelity and got into Diversified (where we can choose our own fund lineup, and there is less of a conflict of interest since they are only a record keeper -- they have no funds of their own to push).

Most importantly, we opted for the availability of a "Brokerage Account" (or a "Mutual Fund Window")wherein employees can, as with a typical brokerage account, choose any mutual fund (and, maybe ETF too, not sure yet re that). I was a strong proponent of making this Brokerage Window available so that employees could create their own retirement mutual fund portfolio, with access to energy, precious metals, sector, and inverse funds. None of these were available to us before.

Without this, the fund lineups are based on the assumption the economy and stock market will grow, and that taking long positions is rational. With peak oil, it isn't.

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dohboi on June 26, 2009 - 1:41pm Permalink | Subthread | Parent | Comments top

I threw all of my TIAA-CREF investments into their money market just before the crash, thanks mostly to postings on this and related sites--thanks to all for that.

I would like to take it out completely and invest locally in institutions that help the community here, but the penalties and complexities have helped me put that off so far.

I don't think its safe, and increasingly I am questioning the morality of having my money, such as it is, helping to keep the wheels of a corrupt and destructive national and global economy turning.

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P. Coyle on June 26, 2009 - 1:40pm Permalink | Subthread | Parent | Comments top

Without this, the fund lineups are based on the assumption the economy and stock market will grow, and that taking long positions is rational. With peak oil, it isn't.

I agree. Was this among the arguments that the committee made publicly in favor of the switch from TIAA/Fidelity to Diversified, or was the whole "peak oil" thing left unmentioned?

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memills on June 27, 2009 - 2:35am Permalink | Subthread | Parent | Comments top

I did not mention peak oil (although I have given lectures about it at the university).

The primary argument that got the Brokerage Account in the mix was my repeated complaints that those who wished to invest in energy, commodities, precious metals, or inverse funds could not do so with TIAA/Fidelity.

I have only 4.5 years to go to age 59.5 when I get get my money the hell out of my 403b retirement fund. Just hope money still has meaning then.

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mcgurme on June 27, 2009 - 10:10am Permalink | Subthread | Parent | Comments top

I recently contacted my University's HR department about this very issue. They wouldn't budge - the guy thought I was a lunatic for wanting to invest in gold and whatnot. He told me "we know what we're doing". Yeah, right.

Since I am so far away from retirement age (at least 15 years), this is a significant motivation for me to just quit my present university. At least then I can withdraw from my 403b (with penalties). That is probably a better option than loosing it all, which is what will happen if I wait too long.

Glad to hear someone got their university to think about this.

Morgan

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Jason Bradford on June 27, 2009 - 3:13pm Permalink | Subthread | Parent | Comments top

My wife and I have been out of those retirement accounts for years for the same reason. In the course Andre and I did together (see Post Peak Living, Uncrash Course) we spent a lot of time discussing this sort of subject as it is a highly relevant one for many people right now.

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rockhound on June 28, 2009 - 8:56pm Permalink | Subthread | Parent | Comments top

After losing more than 31% in my 401K in 2008, I decided to take a good look at how my money was to be invested. My company retirement account through Fidelity also does not offer anything other than Mutual funds and Bonds. In February, I decided to stop all pay deductions into the 410K. I lost another 5% in January. I figured it would be money better spent to put the measly 2% onto my debts than to waste it away into Funds. Even though there is company matching, I determined it was not feasible to just have the money sitting there losing value. I bought some silver (even though the price has went down some), but I still have a physical commodity with value. When the SHTF and the dollar is worthless, I can still atleast use the silver to eat a meal.

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porge on June 28, 2009 - 9:06pm Permalink | Subthread | Parent | Comments top

Why don't you by the meal now?
Even if you don't go the survivalist route and buy purpose made storable food, regular old canned items last a long time. Read the "best by" dates on tuna in oil or any canned food next time you are in the market.
Just the fact that food will continue rising is enough of a motivator to buy long term shelf life stuff now.
Died beans, pasta, canned pasta sauce, rice flour.....you get the point.
Might sound kooky and extreme now but it will look like a prudent move later.

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rockhound on June 29, 2009 - 12:45pm Permalink | Subthread | Parent | Comments top

I agree on your point. The reason why I decided on silver is because it is much easier to hide the months worth of food equivalent than the actual food itself. Because when THSTF there will be a large majority of every person for themselves mentality. It is much easier to hide a small box than a small room from the hordes. Because if people find out that you have food, some will want to take that food by force. Just look at every TV clip of refugee camps when the food truck arrives. Any semblance of order is short lived and then turns to chaos. It might seem dooms dayish, but I am just going with the general trend that I see. I would like to think that people are better than that. But when it comes to filling the belly, all nice and fuzzy feelings about humanity disappear.

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175 comments on Have We Reached an Inflection Point in Economics History?: “Indeflation” and Energy

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