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Future Trends 2012

When 85-year-old Yogi Berra opines, “the future ain’t what it used to be,” it should be a reminder of how impossible it is to predict coming events with any accuracy. The best we can hope for is an educated guess. One of the best forward indicators, actually, is the bulls/bears+bulls index. Historically, when money managers as a group are more than 50 percent bullish, the market usually tanks soon after and vice versa. At least investment professionals are good for something, even if it’s not for what they would want us to think they know. That index is still bearish.

Reading between the lines

National Public Radio featured an interview with Michael Lewis on April 1 during which he offered some valuable investment advice. Lewis is arguably one of this era's top financial journalists after having started with the book "Liars' Poker" and "Moneyball" about the Oakland A's. While "The Big Short" is his account of the financial implosion, he will soon be dogging President Barack Obama's footsteps to produce an inside account of what it's like to walk in that man's shoes.

Staying the course can pay dividends

What you see isn't always what you get.

I designed the "Mother of All Thumbwheels" that calculates Social Security benefits and the degree to which we will under- or overshoot our retirement income need. It also illustrates how much we will have in our retirement plans in 10, 20 and 30 years given different monthly contribution levels. It shows, for instance, that $500 a month for 10 years will accumulate to $91,000 if it earns 8 percent over that period. At 12 percent, the same $500 grows to $114,000. In 20 years, the comparable numbers are $294,000 and $494,000 respectively.

Scare tactics used in debate over debt

In my freshman year of 1962, my college roommate pointed out that government debt is different from the money we owe other people. Government bonds amount to just money we owe to ourselves. Fifty years later, I'm in a business that has me explaining that when we borrow from our 401(k) accounts, it is just money we owe to ourselves. Every dime of interest we pay accumulates as part of our plan's annual earnings. The irony of 401(k) loans is that, for much of the past decade, they have been the best-performing asset in retirement plans.

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