What is "wealthy?" Most millionaires say they're not

Not sure what I wrote that you are referring to. ...

But I suggested in my only post with regard to most people, that if you are relatively young -- have a time horizon that is 20, 25 or 30 years -- and are not sitting on a trust fund, for most people, who don't thrive on this stuff, it makes sense to put that money you are not going to need for decades into equities. I suggested for most people, that doesn't mean trying to time markets, be stock pickers or think they know anything they don't. Low-cost index funds that track broad indexes that give you broad exposure to stock markets make a great deal of sense. For several reasons. First, expenses and transaction costs are a bigger deal than most people realize. Even if you invest in only actively managed mutual funds, if they are taking, say, 1 percent a year to manage that fund, that is 1 percent of potential compounded return (over 20 or 25 or 30 years) that you are giving away. You can buy index funds that track the Wilshire 5000, S&P 500 or Russell 2000 that have an expense ratio that is less than .2 percent. Even though it might not seem like a lot, the difference between that and the expenses a lot of funds charge can add up to a lot of money when it is compounded over time.

Secondly, most actively managed funds / money managers don't outperform those broad indexes (if they use them as a benchmark) when you look over time. They might outperform for a year or two here or there, and use that performance to sell their services to more people, but there aren't a ton of people who are smart enough (or is it lucky enough?) to outperform those broad indexes over any length of time that isn't an anomaly.

Lastly, that broad approach requires most people to know relatively little. They are investing in the stock market, and for diversification purposes, they are trying to gain exposure to large baskets of stocks that mirror broad indexes. It could be as simple as owning one fund (a total stock market fund / Wilshire 5000 fund), or a bunch of funds that allocate it a bit differently - some in an S&P 500 index fund, some in a Russell 2000 (small cap stocks) fund, some in an international stock index fund (usually the MSCI All Country World Index ex USA). Using that approach, all you really need to do is figure out the asset allocation you are comfortable with and rebalance everything every quarter or so to keep that asset allocation.

Here was my post: http://www.sportsjournalists.com/forum/posts/3645323/

That might not be an approach someone wants to take, and no problems with anyone who takes an approach to growing their nest egg in a different way, but I really do think it is a smart approach for the vast majority of people. Is that what you disagreed with?

 

I should have put this in the last post. ... even if you just have owned the S&P 500 (500 of the largest stocks in the U.S. in terms of market capitalization) for the last 30 years, your annualized return would have been more than 7.9 percent. The 50 year annualized return (since 1963) is more than 6.5 percent. It is time tested, even if the past doesn't necessarily predict the future.

It's a very passive way of growing your money, as opposed to trying to be a real estate investor -- or any other type of investment / trading vehicle that requires you to be "smart" enough to avoid bad decisions, and also requires a great deal of work on your part just to manage your investment. With the approach I am suggesting, historically, you could dollar cost average money in every month, for example, and passively invest in an index that gives you broad exposure and diversification in equities, and have earned relatively easy returns (in that you don't have to manage it, the way you do a residential property with tenants) in the 7 percent annualized range.

 

I am not an expert on Argentine sovereign debt, other than that I am pretty sure they haven't issued any bonds since they defaulted way back, and they are incredibly high yielding relative to U.S. treasuries.

But Argentina having gotten a default out of the way before the massive defaults that are coming might make Argentine corporate debt the best fixed income bargain in the world. Their bonds are being discounted heavily, but they don't look any more risky than similar U.S. bonds.

I'm not sophisticated enough to invest this way, and it would require me putting money somewhere I don't have a complete handle on. ... but follow the reasoning:

The Federal Reserve has manipulated treasury interest rates to keep them ridiculously low. Market forces are fighting the Fed, and just with Ben Bernanke spouting off about asset purchase tapering in May, 10-year treasury yields have been bucking their way upward. That has created some havoc in U.S. corporate debt, which really isn't that much safer than corporate debt in other parts of the world, but benefits from flight to safety money.

With the signal of rising yields, a lot of money has been flowing out of the bond markets over the last two months, and in the one chain leads to another in the chain of events, that has meant that a ton of money has left emerging market bond funds. The money is mostly leaving because as bonds enter an uncertain period, as money flows out, it can cause liquidity problems in emerging market corporate debt, which offsets the people who will go there to reach for yield. They aren't the most liquid markets.

Which gets me to Argentina. Their corporate bonds (and these should be near investment grade bonds, regardless of what letter the ratings agencies assign them) pay between 10 and 15 percent. Because the default and the economic hardship has largely passed through, they have net debt that is an average of just 1.9 times earnings, according to Fitch. These are bonds that are rated B- -- at least I believe they cap out at B-.

But that debt to earnings ratio is in line with U.S. companies that are ranked BBB+ and are only paying somewhere around 4 percent.

Which if you look at the world logically (not based on bond market perceptions) might make Argentine corporate debt a huge bargain.