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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75539  
Subject: Re: Crystal Ball (the future?) Date: 4/17/1998 3:02 PM
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PSUEngineerFool,

<<Everybody get out their crystal balls and predict the future. I have a few questions.>>

O.k., just so long as we recognize that predicting the future about nearly everything is pretty much of a crapshoot, let's speculate.

<<Will the Foolish Four or one of the other approaches do ok in a market downturn? It has not been tested during a long downturn or recession. The bull market won't go on forever.>>

It along with other variants have been backtested, and they hold up quite well. In fact, the Retired Ralph Redux portfolios I constructed (see http://boards.fool.com/registered/Message.asp?id=1040013000079000&sort=postdate and go to Retiree Portfolios - 22 or 23) used a straight BTD4, the old FF, and the Dogs of the Dow ala the HY10 along with indexing. The models revealed that starting in the bear market of 1966 and continuing through the one in 1968 and the worst in 1973-1974, both the BTD4 and FF held up quite well and trounced the index approaches. Will that hold true in the future? I have no reason not to think so. Then again, anything can happen.

<<Will the government screw up by collecting more revenues now (traditional to Roth IRA conversions) and run short later and then come after the Roth IRA?>>

A future Congress might go after the Roth if it wants to commit suicide. Personally, I think they'll come at it some other way rather than via a direct tax on Roth withdrawals. A national sales tax or flat tax comes to mind along with means testing for Social Security and medicare. However, those will affect all sources of income, not just Roth withdrawals.

<<Will inflation stay low?>>

Don't hold your breath for a continued 2% or lower. Try almost double that for a long-term average.

<<What will happen to the stock market when all the boomers start removing their funds for retirement and when?>>

Not much. IMHO there's too much hoopla about that issue. First, it conjures up an image of the boomers all rushing to sell stocks on the same day. That just won't happen. Even if they all sold every equity position on the day they retired, you're still talking about a 20-year sell-off. Besides, there are still generations behind them - better savers, too! - that will be in the equities market. Nope…..At best it will be a minor long-term blip of statistical note only to academicians.

<<Will social security be means tested? (I believe so.)>>

Yes, above a minimum level. And it will be fully taxed, too. But that's not the real issue. The bigger question is will Medicare survive? And to that, I'll respond, "No way, Jose." The medical care system in this country for the elderly is broken beyond repair. Triage will be the norm except for those having the ability to pay for private care. Medicare will evolve into the worst possible socialized medicine imaginable and cost far more than it does today. Plan on dying early because you won't be able to afford the care necessary to live.

Now, check back with me in 20 years and we'll see how correct these prognostications were.

Regards…..Pixy


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