Sponsor

2014/03/31

We're Not Going Broke

Is it possible for human beings to live centuries at a time?

It's not only possible, but technology is already available to make it happen. Geneticists at Cambridge University and MIT all are predicting we will live far longer than most people believe possible. And one tiny company in Massachusetts holds the key to radically increasing our lifespans... while radically expanding our investment returns. Click here to see what this is all about.

Monday, March 31, 2014 | Issue #2260

America Is Not Going Broke

Alexander Green, Chief Investment Strategist, The Oxford Club

Alexander Green When I speak at investment conferences, like Investment U's annual conference last week in Carlsbad, Calif., I often give an overview of The Oxford Club's investment philosophy, method of analyzing stocks and a few recommendations.

Then the inevitable hand goes up...

"But what difference does all this make when the country is going broke?"

You could easily get this impression listening to the national media or gloomy prognosticators - many of whom have held the same bleak view not just for years but for decades - but the truth is far different.

Our #1 asset banned?

All over the U.S., bans are popping up on what we consider our safest investment. Get the details.

According to the Federal Reserve, the net worth of U.S. households and nonprofit organizations rose 14% last year to $80.7 trillion. Even adjusting for inflation, this is an all-time high. Thank rising home and stock prices. And, bear in mind, a net worth calculation is assets minus liabilities.

There is great inequality in the distribution of wealth in this country, of course. Many households have few assets or are swimming in debt. But the total net worth of Americans on the whole has never been higher.

Incidentally, at a recent conference a (lone) member of the audience suggested that this inequality was a strong argument for redistribution. Another attendee claimed that if you divided the world's wealth equally among all 7.2 billion people on the planet, you'd have the same mal-distribution in 20 years.

Not one person in the room challenged him as to why. The obvious feeling is that there are those who have ingrained habits of education, hard work, saving and risk-taking and those who do not.

Corporations Are Flush

As for corporate America going broke, forget about it. Corporate profits have never been higher. Corporate profit margins have never been higher. Corporate profits as a percentage of GDP have never been higher. And public companies in the U.S. are sitting on more than $2 trillion in cash. Those wondering why the stock market has hit one new high after another might want to read this paragraph again.

Then, of course, we must turn to Uncle Sam. Here the picture is not nearly so bright. The national debt is a hefty $17.5 trillion.

But as I mentioned in my last column, debt is meaningless except in relation to income and assets. The national debt is roughly equal to the national GDP, similar to a person with $100,000 in income having $100,000 in debts.

But that's just the income side of the equation. Total national assets are $112.2 trillion, a figure that dwarfs the national debt. Of course, we don't want to confiscate private assets to pay down the public debt. But you can't go broke unless your liabilities exceed your assets. National assets - and household net worth - are far greater than the national debt. And the annual deficit as a percentage of GDP is declining, not rising.

Yes, the debt is too large and we have work to do to get our financial house in order. Reforming the runaway entitlement system should be priority one. But the U.S. going broke? It isn't happening - and it won't happen.

As Warren Buffett wrote in his new annual report to Berkshire Hathaway shareholders, "The dynamism embedded in our market economy will continue to work its magic. America's best days lie ahead."

Good investing,

Alex

P.S. Alex's column from last week is already generating some buzz among readers. To join the conversation or ask Alex a question, use the comment link below.
 
Recent Articles:
Investment U
Why the Deficit Won't Derail This Bull Market: Here are two reasons why the national debt - as huge and indefensible as it is - isn't derailing this market.
RFID Not So Creepy After All: Despite the worries concerning the misuse of RFID technology, it has captured the attention of nearly every industry on the globe.
Recent Articles:
Wealthy Retirement
Dividend Battle...
Rio Tinto vs. BHP Billiton:
Who wins when we pit a solid dividend payer against the London-based mining giant Rio Tinto? The result should please anyone who owns either stock.
Mamas, Don't Let Your Babies Grow Up to Be Financially Illiterate: Most of us couldn't imagine not helping our kids with their reading and math skills. Yet many people completely ignore a skill set that will be just as important if not more so than those.
Kept in the Dark: 99% of All USA Residents

Practically no one in America knows about this story. It involves two maverick scientists from England... a "miracle" material that sounds like it's from outer space... and a small Midwestern company about to render $357 billion in big-name electronics obsolete. If you get the scoop before the rest, you'll be well positioned to make a killing. Here's what your neighbors likely don't know.
IU Weekly Update
Warren's Way
Detroit... Atlanta... Baltimore... Bankrupt Pensions Could Jeopardize Your Retirement!

The Motor City was just the first domino to fall. Others such as Atlanta, Baltimore and Providence are in line to tumble next. Of course, good old Uncle Sam (funded by your taxes) will end up bailing them out. But what happens when there's no money left for the rest of us? That's why we recommend you check out a new retirement plan. Over time you could see gains 6 to 21 times higher than you're getting now. Full details here.

Click here to post a comment on InvestmentU.com


             

Sea Island

– SHARE INVESTMENT U –
If you enjoy reading Investment U, why not share it with your family and friends?
Simply send them this link, so they can sign up (for free, of course).

– QUESTIONS –
Republish Investment U on your website or blog for free. Learn how.
Have a question for our editorial team? Contact us.

You are receiving this email because you subscribed to Investment U.
To unsubscribe from Investment U or to manage your account, click here

To cancel by mail or for any other subscription issues, write us at:
Investment U Attn: Member Services 105 West Monument Street Baltimore, MD 21201

Keep the emails you value from falling into your spam folder. Whitelist Investment U.
Email: CustomerService@InvestmentUInfo.com
Website: www.investmentu.com | North America: 855 402 3939; International: +1 443 353 4057

© 2014 The Oxford Club, LLC All Rights Reserved
The Oxford Club | 105 West Monument Street | Baltimore, MD 21201
North America: 1 866 237 0436; Fax: 1 410 329 1923
International: +1 443 353 4540; Fax: +1 410 329 1923
Email: customerservice@oxfordclubinfo.com
Privacy Policy  |  Whitelist The Oxford Club

The Oxford Club is a financial publisher that does not offer any personal financial advice or advocate the purchase or sale of any security or investment for any specific individual. Members should be aware that although our track record is highly rated by an independent analysis, investment markets have inherent risks and our past performance does not assure the same future results. The stated returns may also include option trades.

Protected by copyright laws of the United States and international treaties. This newsletter may only be used pursuant to the subscription agreement and any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), in whole or in part, is strictly prohibited without the express written permission of The Oxford Club 105 W. Monument Street, Baltimore MD 21201.

No comments:

Post a Comment

Keep a civil tongue.

Label Cloud

Technology (1464) News (793) Military (646) Microsoft (542) Business (487) Software (394) Developer (382) Music (360) Books (357) Audio (316) Government (308) Security (300) Love (262) Apple (242) Storage (236) Dungeons and Dragons (228) Funny (209) Google (194) Cooking (187) Yahoo (186) Mobile (179) Adobe (177) Wishlist (159) AMD (155) Education (151) Drugs (145) Astrology (139) Local (137) Art (134) Investing (127) Shopping (124) Hardware (120) Movies (119) Sports (109) Neatorama (94) Blogger (93) Christian (67) Mozilla (61) Dictionary (59) Science (59) Entertainment (50) Jewelry (50) Pharmacy (50) Weather (48) Video Games (44) Television (36) VoIP (25) meta (23) Holidays (14)

Popular Posts