The Savvy Boomer

Boomers blamed for bust

It was bound to happen.  Boomers have been blamed for most of the problems in today's society such as global warming, inflation, wars, high house prices, etc. and now the Wall Street Journal has laid the current financial crisis on our doorstep.  You can read the complete article which is copied below.

Thanks to Dick Stroud

Are younger people actually happy about the financial crisis?

I remember the economy went through a particularly rough time in the early 70's just when I was graduating from University.  Like everyone else, I was concerned about the future and hoped for a recovery.  I never once thought it was good for my age group.

But this piece that UK marketing consultant Dick Stroud found in the London Evening Standard is somewhat disconcerting if the media is saying that it is good for younger people and and bad for older people.  It makes you think!!

 CLICK on the graphic above for a clearer copy

AARP sponsored seminar/webinar on retirement

AARP, along with Business Roundtable, SEIU, and NFIB are sponsoring a conference where experts will discuss how baby boomers can help make their assets last in retirement.  The moderators include Tom Nelson, AARP; Christian Weller, Center for American Progress; Eleanor Blayney, Financial Planners Association; Lynn Dudley, American Benefits Council and Jamey Delaplane, Davis & Harman. Speakers include representatives from government, business and the private sector such as the Employee Benefit Research Institute, the Senate Finance Committee, and Ameriprise.

The event is on May 14th from 9 -3:30 in the Ronald Reagan Building, Atrium Ballroom in Washington but will also be available via webcast: http://www.aarp.org/money/financial_planning/retirement_security_webcast.html

Questions can be submitted via web after each panel.

Click below to see the agenda

Dateline exposes "Annuity University"

Tyrone Clark tells his trainees to treat seniors "like they are 12 year olds."

Watch the Dateline expose of this low life snake oil sales process.

Questions to ask before getting a reverse mortgage

If you are over 62 (the qualifying age) or close to it and own your own home, you may have considered investigating a reverse mortgage in order to free up some of your equity to assist in your retirement years. 

There has recently been a lot of press about this with one of the downsides being the fact that there are some companies that try and take advantage of the situation by having the mortgagee divert some of the funds into questionable investments offered by the mortgagor.  While many people are happy with the process, others have paid a lot of fees and not received all the proceeds they thought they would.

If you are in the market, there are 2 articles you should read by Charles Duhigg in the New York Times that 1) talk about people being taken advantage of by reverse mortgage lenders and 2) questions to consider before taking out a reverse mortgage.

Canadian mortgage lenders offering mortgages to last a lifetime

Here in Vancouver, we have one of the highest housing markets in North America and unlike the U.S., because of  high qualification requirements, there are very few foreclosures.  Actually, most Canadians had never heard of the term "sub-prime" used in a negative sense until it became the prominent reason for U.S. foreclosures.  Combine that with foreign investment and our housing prices keep escalating.  The average home in Vancouver is now over $1 mil and only by moving to a suburb where the commute is well over an hour, can you find a home in the $300-$500k range.

So how do you qualify for a mortgage that is beyond your means?  Lenders are now moving to 40 year mortgages and some say a 50 year mortgage is on the horizon.  Not only are the interest costs going to be much higher over the life of the mortgage, but people in their 30's will be paying into their 70's.   Sure the monthly payments will be lower now but these mortgages are renewable every 5 years.  What happens if your mortgage is renewed say in 30 years at a rate of 20%?  It happened to me in the early 80s and thank God I had a high enough income to renew but it was a scary commitment at the time.

Maybe I'm wrong, but the thought of 40 and 50 year mortgages are even scarier to me. 

Eagle beneath a full moon= a sign?

When I got up about 6AM PST to see how the markets were doing, the first few minutes on both the TSE (Toronto) and the NYSE led by a 12% drop in Apple looked bad.  Trying to reassure myself, I made a quadruple latte and stood at my kitchen window staring at the full moon setting over the ocean wondering if maybe my post yesterday about  how things will always turn around in the market was a little hasty and perhaps even smug.

Charlie the cat looked kind of interesting in silhouette looking over the Vancouver mountains so I decided to snap a couple of pictures of him viewing his territory.  And then it happened.  A huge eagle streaked pass about 5 feet from the window scaring the crap out of both myself and Charlie who almost fell off his perch trying to duck.  While eagles are fairly common around here, I never tire of them and watched in awe as he flew quite some distance over the marsh on the ocean's edge and then as it turned towards the favorite viewing tree for eagles, it was directly underneath the moon.  I snapped the picture above which unfortunately because of time of day and distance is blurry, but that figure between the moon and its reflection on the ocean is the eagle and I hope you get the point of this majestic moment.  I watched him until he reached his perch at the top right of the tree (I took the picture below about an hour later after he had made a couple of hunting trips over the marsh.)

I turned back to the TV and the market was on a big upswing.  Was this a sign?  Probably not, because as I write this, the Dow is down about 200 again.  Oh well, it certainly was a great start to the day.

UPDATE:

Maybe it was a sign-the DOW closed up 298.

Boomers reaction to black market days-been there, done that

First, a disclaimer.  I don't know this to be a fact but it is partly based on what I hear from friends and associates who are all boomers.  More importantly, it is what I have experienced first hand and it simply makes sense if you think about it.

The first point I want to make is that boomers have seen markets like this is in the past.  When I graduated from college in the early 70's, the markets were depressed yet they slowly came back and then broke new territory until 1987 when they got whacked again, on black Monday.  It took 2 years to get back where it was, but it came back.  That's when I learned the lesson about panic selling.

The DJIA grew every year until 1997 when it take a big hit late in the year only to more than recover the next day.  Then it rose by leaps and bounds until Sept 11, 2001 and that took about 2 months to recover from.

It doesn't matter what the causes were-the point is, it always came back.  Now let me ask you an important question.  Who do you think is buying all this stock at deflated prices?  People and institutions who know that stock market history repeats itself because they have lived through it.  And like all other big drops, this market is going to come back after the panic selling.  And believe me, most of those doing the buying right now, outside of institutional investors, are boomers because we know this is the time to make money.  If you are an investor, this is a great reason to keep some of your portfolio in cash because there are some great buys around at times like this.  It may take time, but the market is like the weather,  You hate it and bitch about it when it's miserable, but once the sun comes back out, you forget about the rain.

Who are the losers?  Not only those who panic, but also people who buy on margin and get caught in margin calls, forcing them to sell their stocks to come up with the cash to pay back their debts.  Just like, the subprime problem, margins will kill you every time if your timing is bad.  And if you're a savvy boomer, you know that you shouldn't be wasting your time panicking,  you should be looking to find the bargains.

But that's just my opinion.