Investing Thread

[Goose]

Muggsy

I said months ago that there are going to be an awful lot of nervous 50-60 somethings that retired early. Many were prepared and I believe many, many made a mistake. It help will the labor market when they go back to work.

[tower912]

There are job openings.  Maybe part time, maybe something less stressful and more rewarding.

[Uncle Rico]

There are job openings.  Maybe part time, maybe something less stressful and more rewarding.

My company needs to fill about 60 positions if anyone is interested that retired too early but I wouldn’t hire quitters.

[MuggsyB]

There are job openings.  Maybe part time, maybe something less stressful and more rewarding.

No kidding.  That's not the point Tower.  We have a severe labor shortage.  Our overall production levels are low, we're very stagnant. 

[TSmith34, Inc.]

How do you think we should mitigate a severe labor shortage?

[tower912]

Exactly.  Options:  Some retirees return to the labor market.   Affordable day care opens up some more moms can re-enter the work force.   More immigration.

[MU Fan in Connecticut]

Exactly.  Options:  Some retirees return to the labor market.   Affordable day care opens up some more moms can re-enter the work force.   More immigration.

All of the above.

1 million died from COVID.  They weren't all retirees.  That's a big chunk of people no longer available for the job market. 

[MuggsyB]

How do you think we should mitigate a severe labor shortage?

I think it kind of  depends on the industry but there has to be some sort of incentive in addition to wages and perhaps less dependence on government programs.  Obviously an increase in immigration would help and more 50+ retirees coming back to the workforce.

I'm certainly not an expert but as an example my great aunt moved into one of the best assisted  living  places in the North Shore of Chicago a few years ago.  Before covid it was run beautifully with a tremendous staff which served a variety of purposes.  In the last year it has turned basically into a dumpster fire because they are so short staffed.   

This is clearly common right now in all service industries.  So maybe you offer certain benefits or find a way to be more creative in hiring people?  I don't know but inflation had to be lessened for starters.

[tower912]

Inflation is caused by two basic things.  Too much money and not enough product.   
Right now there isn't enough product.  Supply chain issues and not enough workers, causing wages to go higher.  To mitigate the upward pressure on wages, you need a larger labor pool.   How do you increase the size in the labor pool?

Supply issues are going to continue until COVID, Putin, and labor shortages are under control.

[MU Fan in Connecticut]

It is time for the Fed to make a bold move to combat inflation. In addition, the tariffs on goods imported from China need to be removed ASAP. That would do wonders for the cost of goods purchased in the US.

25% tariff never should have been dropped on everything from China in the first place.  More "brilliance" from TFG.  (Sorry, couldn't help myself.)  US mills had lots of planned capacity ads in the works, but it's a big investment and takes time (in years) to build and implement.  They weren't no where even remotely near ready when the tariffs dropped.

I think I garnered from my metals trade magazines over the last 2-3 years that the tariffs created 5,000 jobs at USA steel mills, but caused lay-offs of about 25,000 people at secondary steel fabrication plants.  I.E. Companies who did importing and companies that purchased off shore steel then did some sort of stamping and forming operations on a product from the imported steel.  A big industry net loss overall.
Also, a lot of lower volume but very important specialty grades/alloys are only made overseas (like in South Korea or Japan, not China) because they are lower volume so the US mills wouldn't make them for profitability reasons. 

The tariffs are a big part of the longer lead times too.  It's not all COVID closure related.  They put in quotas with the tariffs.  With Europe, Japan, Korea, the Biden admin has kept the quotas but removed the tariffs for quantities within the quota quantity.

[Skatastrophy]

Inflation is caused by two basic things.  Too much money and not enough product.   
Right now there isn't enough product.  Supply chain issues and not enough workers, causing wages to go higher.  To mitigate the upward pressure on wages, you need a larger labor pool.   How do you increase the size in the labor pool?

Supply issues are going to continue until COVID, Putin, and labor shortages are under control.

This is reductive regarding the causes of inflation (not in a bad way, it's hard to boil something complex down to a statement). One of the major causes of inflation is when, psychologically, everyone agrees that inflation is happening and comes to expect rising prices. Every business I'm working with is raising prices across the board and no customers are batting an eye.

I'm not saying that there aren't hard causes to inflation, but the soft causes make a huge impact too.

[PointWarrior]

61 year-old brother retired in Nov, likely influenced by the market being at an ATH.

Now it's a triple hit - not earning towards retirement, taking cash out at much higher premium, and not getting future growth of the extra needed to cash out now..

Muggsy

I said months ago that there are going to be an awful lot of nervous 50-60 somethings that retired early. Many were prepared and I believe many, many made a mistake. It help will the labor market when they go back to work.

[Goose]

skatastrophy

Since the start of the pandemic, we have had clients accept price increases that they never would have pre pandemic. Literally, we have clients that will fight for pennies, yet have been accepting sizable increases for over two years. IMO, that has been a part of the inflation issues. Everyone has passed on higher costs without any concern how it may affect their business. It has been a crazy two years.

[Goose]

Point

A wise man once told me "if you think you have a lot of money, double it". Boomers get bashed on here, and everywhere, but the irresponsible early retirement by many is the worst move I think Boomers have made. IMO, I would need 2-3 times the money  I currently have to feel comfortable retiring early and I still would be nervous.

[Skatastrophy]

skatastrophy

Since the start of the pandemic, we have had clients accept price increases that they never would have pre pandemic. Literally, we have clients that will fight for pennies, yet have been accepting sizable increases for over two years. IMO, that has been a part of the inflation issues. Everyone has passed on higher costs without any concern how it may affect their business. It has been a crazy two years.

Yep spot on. But to bring this back to the investing thread: If a company you own or are considering buying into aren't raising their prices right now start asking yourself why that is. Poor leadership? Not as competitive in their space as you originally thought?

[The Hippie Satan of Hyperbole]

I think it kind of  depends on the industry but there has to be some sort of incentive in addition to wages and perhaps less dependence on government programs.  Obviously an increase in immigration would help and more 50+ retirees coming back to the workforce.

What "government programs" are people depending upon right now that is keeping people from the workplace now more than before?

[PointWarrior]

Goose - I am a long ways off from retirement and this correction has proven that even stronger. Wish I was smarter to hold more cash positions to invest during the dips. I do want to find a balance to not work up to my death (my father died 2 years after retiring at 65) but I think there are better options (like consulting or working part-time) rather than full retirement at at earlier age.  We also don't have kids to fund college tuition or weddings which helps the financial projections, but also do not have kids to help look after us when we may need it.

Point

A wise man once told me "if you think you have a lot of money, double it". Boomers get bashed on here, and everywhere, but the irresponsible early retirement by many is the worst move I think Boomers have made. IMO, I would need 2-3 times the money  I currently have to feel comfortable retiring early and I still would be nervous.

[Goose]

skatastrophy

I have been a believer that well run companies have always been confident in raising or lowering prices. IMO, one's that are afraid to raise pricing are likely not a long term company I would invest in. My Dad always wanted to be the first person to raise prices and the first person to lower prices. His business was a commodity driven price industry and he always wanted to lead the way, up or down. There is no crime in raising prices that match rising costs and that has to be passed onto the end customer

One a side note, I think removing the tariffs will help companies that raised prices accordingly and will hurt companies that lagged passing on the increase. We have clients that were in both camps. IMO, there are too many companies out there and I think we will see a weeding out of the bad ones over next year or so.

[Goose]

Point

Not having kids does change things quite a bit. Aside from having four kids, we now have three granddaughters, and it does continue to add expenses to our lives. No doubt having the big family has me being more cautious.

[JWags85]

Yep spot on. But to bring this back to the investing thread: If a company you own or are considering buying into aren't raising their prices right now start asking yourself why that is. Poor leadership? Not as competitive in their space as you originally thought?

I think it depends.  I know companies who have not changed prices cause they have, lets say a 50% markup, to their end customer.  Thats a bit rich most of the time.  Now that their costs have gone up 10%, they're tempted to raise their prices, but that may also trigger an evaluation of overall costs by the end customer, so they'll take short term heat hoping things temper down and they can keep their favorable long term markup.

And FWIW, not all price competition is equal.  For example, in my industry niche, we are the clear quality leader.  But our main competition is involved in a variety of different product lines and their competitive product to ours is usually a loss leader, or attempted add-on.  So we need to be VERY careful moving prices due to market factors, or inflation, cause while good, reliable customers understand the difference and value, others view it as a keeping up with the Jones' box tick and will take any excuse to cut costs.  Its stupid, but sometimes that's business.   Same as when new management boots a long time reliable supplier just to shake things up and put "their mark" on a business.

[Hards Alumni]

Muggsy

Unless tariffs are removed and the Fed acts responsibly we are in for a long haul. The Fed claims they are not in business to protect the stock market, but they fully realize how a watered down 401k will affect the economy. They padded the market for two decades with QE and cheap money and now have to figure out how to create a healthy balance. My bet, they are forced to get more aggressive.

IMO, Biden will rip the tarriffs off and rates will continue to rise to combat inflation.  They only reasonable solutions right now.

[Hards Alumni]

No kidding.  That's not the point Tower.  We have a severe labor shortage.  Our overall production levels are low, we're very stagnant.

lol

[Skatastrophy]

I think it depends.  I know companies who have not changed prices cause they have, lets say a 50% markup, to their end customer.  Thats a bit rich most of the time.  Now that their costs have gone up 10%, they're tempted to raise their prices, but that may also trigger an evaluation of overall costs by the end customer, so they'll take short term heat hoping things temper down and they can keep their favorable long term markup.

And FWIW, not all price competition is equal.  For example, in my industry niche, we are the clear quality leader.  But our main competition is involved in a variety of different product lines and their competitive product to ours is usually a loss leader, or attempted add-on.  So we need to be VERY careful moving prices due to market factors, or inflation, cause while good, reliable customers understand the difference and value, others view it as a keeping up with the Jones' box tick and will take any excuse to cut costs.  Its stupid, but sometimes that's business.   Same as when new management boots a long time reliable supplier just to shake things up and put "their mark" on a business.

Interesting point, I suppose I am in an info bubble on this one. I only work with companies that have a huge moat and that raise their prices frequently to desensitize their customers.

[Hards Alumni]

Point

A wise man once told me "if you think you have a lot of money, double it". Boomers get bashed on here, and everywhere, but the irresponsible early retirement by many is the worst move I think Boomers have made. IMO, I would need 2-3 times the money  I currently have to feel comfortable retiring early and I still would be nervous.

My parents are older boomers.  They've done really well with their investments over the years.  Not to mention they both have teachers pensions, and my father has a military pension.  They've been extremely fortunate to be able to be retired for 15+ years at this point.  But when I was growing up, we never did the things that a lot of other families did.  Almost never went out to dinner.  Didn't go to the movies.  Vacations were always fairly bare bones.  At this point, when I travel with them and they're being stingy (a lifetime of being that way won't change easily) I tell them they can't take it with them. 

[The Hippie Satan of Hyperbole]

My parents are older boomers.  They've done really well with their investments over the years.  Not to mention they both have teachers pensions, and my father has a military pension.

I think people who have defined benefit plans are at a huge advantage in retirement, assuming they chose the right option.  For as long as they live, they are going to have that income.