Tuesday, March 29, 2011

The Twilight Years of the 401(k) and Roth IRA

I've suspected for a while that the federal government will eventually start taxing contributions to 401(k)s, withdrawals from Roth IRAs, and capital gains and dividends in both. In other words, there won't be any more tax benefits to our retirement accounts, and therefore there won't be any reason to have retirement accounts in the first place.

Today I no longer just suspect that 401(k)s and Roth IRAs are doomed - I'm convinced of it. I'm convinced because of the gradual implosion of underfunded pension programs that are leading to riots at state capitals. Sure, public employees will continue to fight against the budget cuts, but they are ultimately doomed because they can't fight the simple math that says there won't be any money left to pay for their retirement. When they eventually lose, they're going to turn their rage on those of us who never had pensions, but who have instead been building our nest eggs in retirement accounts. It doesn't matter that the public pensions rely on yearly payments from cash-strapped taxpayers while private retirement accounts are funded entirely by decades of saving - it will become an issue of "fairness", because "it's not fair that we have to lose our pensions while they get to keep their retirement accounts."

And that will be that.

Thursday, March 24, 2011

It happens again

It seems like every time I identify a trend it gets broken the next day. The S&P 500 index has now broken through the declining tops trendline.

This is could be the beginning of another rally.

Wednesday, March 23, 2011

Still a little too perfect

The current correction in the S&P 500 index is forming another strangely precise pattern - this time a declining tops trend line.

If I were looking for a medium-term buy signal, I'd wait for the S&P to cross above this line.

Wednesday, March 16, 2011

It's not time to panic. Yet.

So far there's no technical data to indicate that the current downturn in the market is anything more than a run-of-the-mill correction.Sentiment indicators are becoming more pessimistic as expected during a correction in a bull market. Of course stocks are still highly over-valued, and the world still owes more money in private and public debt payments than it can afford, but that doesn't mean this rally can't ultimately continue.

I'm curious to see, if and when the recovery occurs, whether or not the S&P 500 index will return to the oddly precise rising trend that it's been following for the past six months.