How to Make 16.5% on Your Money Without Touching Stocks
But first the big game.
Never were the working class in Baltimore happier with their lot. Yesterday, neighbors greeted each other with a smile. Co-workers exchanged stories, laughed, and slapped each other on the backs.
No one seemed to care about crime or trash, or corruption, or school teachers who can't read, or acres of boarded-up houses. Baltimore may be a dump. But no one complained yesterday.
It was pandemonium on Sunday night. Fireworks, horns, street parties, accidents. The drunks poured out of bars and basements, eager to give each other high fives before stumbling to their cars. Old timers said they couldn't recall so much merriment. Ever. Even when World War II ended.
But this is a sports town. Football is more important to Baltimoreans than warfare. The typical resident of the Hampden or Dundalk neighborhoods would sooner lose a major war than lose the Super Bowl.
But the Ravens came through. They got so far ahead in the first half we worried that the ref would have to stop the game... out of pity for the opposing side. Instead, a cunning 49ers fan must have thrown the switch and stopped the game.
When the power came back on, the birds couldn't find their mojo. But they didn't need it. They had enough of a cushion accumulated to protect their lead. And this morning a parade will take the team from City Hall to the stadium. Woe to uninformed travelers in the downtown area: You shall not pass!
More to Lose Than Gain
Meanwhile, over in the stock market, the Dow fell 129 points yesterday. The S&P 500 also took a tumble. And the Nasdaq too. Here is some advice, worth every penny you pay for it: Get out!
Yes, dear reader, get out of the U.S. stock market. Stocks are near an all-time high. Barron's tells readers to prepare to break the record this week.
Maybe. But when you are near the top you have more to lose than to gain.
Besides, we have a better idea.
"I took my money out of the stock market," said a friend over the weekend. "I figure stocks went up. So they can go down too. And I'm too old for that. I used the money to buy two new houses down by the military base at Solomon's Island.
"I paid only $160,000 apiece. And they're new. I'm renting them for $1,900 a month to soldiers with families. You can do the math yourself. But I figure I'm netting about 10%. And I don't think they're going to go down from here. I think they're going up."
We gave our friend some advice too:
"Want to do even better? Get the biggest mortgage you can. You can get 30-year fixed-rate financing for, what, about 3.5%? And the real inflation rate is probably about 10%, depending on where you live. So, you're making about 6.5% on borrowed money, plus the rental income. Let's see, that's about 16.5%. With low risk. That's a lot better than the stock market."
Try it. Let us know how it works out for you. Just send your thank you notes to our email address: firstname.lastname@example.org.
The Boomer Bust
Meanwhile, The New York Times tells us that the people who suffered most from the financial crisis were neither the young, nor the very old, but people preparing for retirement:
In the current listless economy, every generation has a claim to having been most injured. But the Labor Department's latest jobs snapshot and other recent data reports present a strong case for crowning baby boomers as the greatest victims of the recession and its grim aftermath.
These Americans in their 50s and early 60s -- those near retirement age who do not yet have access to Medicare and Social Security -- have lost the most earnings power of any age group, with their household incomes 10% below what they made when the recovery began three years ago, according to Sentier Research, a data analysis company.
Their retirement savings and home values fell sharply at the worst possible time: just before they needed to cash out. They are supporting both aged parents and unemployed young-adult children, earning them the inauspicious nickname "Generation Squeeze."
The article goes on to tell us that people who lose their jobs shortly before retirement actually live shorter lives. This is because they also lose important health benefits, says the Times.
Hmmm... How valuable are those health benefits? We've never seen any evidence that getting healthcare benefits (whatever they are) adds to your life expectancy. It seems odd that taking them away would reduce it.
A person who has to pay his own medical bills might be a little more careful. And he'd be less likely to get caught up in the drugs and constant testing of the modern healthcare industry. He may actually live longer. We say that with no evidence whatever. Don't bother to argue with us. It's just a hunch.
We also have a suspicion that although the initial punch may have hit baby boomers hard, over the long run young people will take the bigger beating. In a few years, the boomers will fall back on the ropes -- enjoying the Medicare and Social Security benefits they so generously voted for themselves. Younger people will be pummeled for years - maybe their entire lives -- trying to pay for them.