What's the end result of the US job drain?

[MrFun]

Originally posted by Imran Siddiqui

What is patriotic about exporting American jobs to other countries at the expense of hard-working, honest American workers?

It's patriotic to make more money . Who cares about patriotism in corporations, we had the "Buy American" campaign and resulted in people buying Ford Pintos instead of Toyota Camry's. bah..

I don't see why corporations find it so undesirable to find ways to maximize their profits while also contributing to strengthening our own country's economy by staying here, rather than exporting jobs.

I think in this case, we can have it both ways to some extent -- corporations can be happy with domestic-maximized profits, and our economy would be more healthy, as a result.

Or is this too much of a utopian vision???

[Lord Merciless]

Originally posted by Japher
Didn't Zkibbler say to put in to mutual funds? Ones that invest in small cap? I have a small cap mutual fund that has earned me 40% so far this year. Small caps always bounce out of recessions. In about 3-4 years I'll move some it to index funds and some to large cap/ blue chip funds. Personally, I hate mutual funds, but I have limited choices with my 401k.

I missed that.

Why do you want to move to Large-cap funds? Why not buying your own stocks?

[DanS]

Re the headline question, we don't know where the US economy will be in 5 years or whenever. However, we have a pretty good idea that unemployment will be reduced over the next couple of years. When the US economy is growing, as it is now, it tends to create more jobs than are drained.

To those who know the reason for the weak US dollar: IS it worth me buying a couple thousand with my strong Aussie dollar earnings? The rate seems ridiculously good ($.71 to $1), but I want to know when/if the US dollar is likley to strengthen significantly. (If it doesn't I'll just go over to the US and splurge all my excess cash anyway)

The US dollar is not likely to strengthen soon. Interest rates may stay at their current rate for a while and the current account deficit is still rather large.

[Lancer]

Thanks for the summary Dan.

Zkribbler, small caps, got it. Now, how do I get them?

Anyone?

I know there's a broker in town somewhere....or should I send a check to Sten the wise?

Haven't seen Sten...

[Imran Siddiqui]

I don't see why corporations find it so undesirable to find ways to maximize their profits while also contributing to strengthening our own country's economy by staying here, rather than exporting jobs.

'Cause they'll make more profits overseas. The companies do not have a responsibility to the country, but instead to their shareholders.

[Jack_www]

I too think that the US dollar will soon strengthen. Once inflation starts to creep back up and bussiness start to hire more people and demand rises they will start to tighten the money supply.

[Japher]

Now, how do I get them?

Don't you have a broker? Or a financial advisor? Many of the large chain banks will buy the security you want for you, at a fee of course. Or, go with e-trade, ameri-trade, etc... Mutual funds trade just like any stock, i.e. they have a ticker. Talk to people who handle your money, they will give you leads.

Why do you want to move to Large-cap funds? Why not buying your own stocks?

I am limited to what stocks are actually available for me to buy within my 401k, so I generally stick with my company stock and funds. Do this I go with market trends. A weak market generally see improvement in small cap stocks first, owing to big increase in value of small companies. This helps the market economy, and has classically been the first sector to pick up. As the economy stabilizes we will see the valuations move up the ladder as larger companies gobble up these smaller companies. This increase the valuation for those larger companies leading to an increase their value. Then, sooner or later, those large companies become to big for their briches, and for one reason or another they begin to downsize, lose valuation, and lose money, leading to a recession or the like... Just a cyclic trend.

With funds I bet on this trend (as this is what the fund represents), instead of an individual company to do well. Thus, right now, and for the next few years I will continue to invest in the small cap funds. In about 3-4 years, hopefully, I will begin migrating my small cap funds to larger funds, indexes, foreign funds, the like shedding some of the small cap funds as I predict the will not perform as well as the other funds then. Thus, I do not want to move now, but will in the future when I feel the market is right.

Personally, I invest in stocks only. It's more fun, and the reward is greater since I don't have some baffoon gambling with my money, I want to do that.

I like to say I make my own funds by holding different amounts, types, and values of stock.

The only fund I would consider owning privately would be indexes or some sort of Spider... A Spider is a fund that trades on the AMEX as a traker for whatever stocks you want, kind of like the qqq (NASDAQ Index) yet you get to pick what stocks you want in it. DJIA is only what? 50 stocks? Why those 50? Make up your own IA with a Spider.

[Japher]

Don't you have a broker? Or a financial advisor? Many of the large chain banks will buy the security you want for you, at a fee of course. Or, go with e-trade, ameri-trade, etc... Mutual funds trade just like any stock, i.e. they have a ticker. Talk to people who handle your money, they will give you leads.

Lancer; life insurance agents usually are able to purchase funds as well. If you have a lot of money you can get really good deals as they buy and sell them in packages, 3rd party trading. I know a lot of people who trade within their life insurance policies and borrow agains the policy so that they can keep their money active even while spending it. Also, the insurance companies generally do not put in calls on the loans due to market fluxuations like some brokers do on margin accounts... I'm not to knowledgable on how the whole investing thru life insurace goes, but as I said many people do this.

[Lord Merciless]

I have these general criteria for selecting specific mutual funds, after I have already worked all the diversification needs:

1. Fund Manager. A mutual fund's future performance is all about the current manager. It doesn't matter how well the fund did in its past, it just take one looney/newbie to screw everything up. Fidelity Magellan is the perfect example here. What I'm looking for is a manager that shows some dedications to a particular fund (tenure > 5 years) and their funds consistently beat the average(>2/3 of the years).

2. Expense Ratio. For small cap and international stock funds, where management is intensive and costly, I can tolerate a max expense ratio of 1.5%. For large caps, my tolerance is 1.0%. For index funds, it's 0.5%. High expense ratios usually implie either greedy managers or poor fund management.

3. Turn-Over Rate. I generally don't like hyperactive managers. It's worth to remember that fund managers have to pay commissions too when trade securities. You can't believe how these trading costs can eat up your gains. Only for highly speculative funds do I tolerate a turn-over of 200% and more.

[el freako]

Originally posted by DanS
The US dollar is not likely to strengthen soon. Interest rates may stay at their current rate for a while and the current account deficit is still rather large.

'Still rather large'???

Don't you mean 'biggest for nearly 120 years'?

Originally posted by Japher
DJIA is only what? 50 stocks?

30 actually, and it's a plain average of all of them (no weighting due to market capitalization) - which is why I ignore the DJIA in favour of the S&P500

[DanS]

Don't you mean 'biggest for nearly 120 years'?

Well, you could also say that it isn't, since it went down slightly last quarter and it might go down this quarter as well (figures released tomorrow).

[el freako]

Well, we'll have to wait and see for Q3 figures tomorrow (yes I do expect a fall in the current account deficit, but only on the magnitude of $15bn to $25bn at an annual rate, bringing it back to where it stood in the first half of the year).

But you are wrong to say that it was already falling, the defcit was $559.9bn in Q2 and $570.0bn in Q3 (these are annualized rates).

Anyway, as the data pre-1946 is only available for whole years I think we should compare only whole years with it. As Q3 is likely to be around -$545bn to -$555bn and Q3 2002 was -$495bn that means that the annual figure is still getting worse.

[Lancer]

Ok guys, lets say I have $5000 to burn or grow. Exactly what do I tell the broker? I have no life insurance in the conventional sense, my wife inherits the mortgage that pays me over $1000 per month, hopefully for the next 30 years. There is a broker in town, I can get him through the phone book I'm sure.

[Tingkai]

Originally posted by Ned
Tingkai, I think you and I are in agreement. While the labor intensive and thus low paying jobs have left for places like China, SE Asia and India, Americans are still nearly fully employed in higher-paying jobs. This actually shows just how free trade has benefitted the US. To the extent we imposed tarriffs to prevent this, we would have severely harmed the US.

I take a more moderate view on global trade. It can be a win-win situation, but only if countries maintain strict regulations and avoid creating fly-by-night situations.

Tariffs/trade subsidies will decrease international trade, but can also create other benefits.

The US could impose tariffs on countries that lack proper environmental protection laws. That would raise the cost of consumer goods in the US, but it could be argued that the price increase is offset by the value of protecting the environment.

China's controls on foreign exchange opens the door to long-term investment while preventing fly-by-night exploitation.

Countries like the Philippines are discovering that free trade is less than its cracked up to be. Companies that moved there when the Philippines government offered tax holidays, are leaving now that they are required to pay taxes. The benefits from the industries are questionable.

Or to put it simply, there are opportunity costs either way. Greater free trade involves a cost as does less free trade.

[Tingkai]

Originally posted by Lancer
Ok guys, lets say I have $5000 to burn or grow. Exactly what do I tell the broker?

The first questions is: What kind of risk do you want to take.

Possible high return, with the high risk of a big loss?
Moderate return, with moderate risks?
Low return, with low risks?