Wealth Transfer From Boomers

by | Sep 18, 2020 | Archives

Boomer’s wealth is a growing target.

There’s a huge wealth gap in America that’s tearing the country apart.  We see images of this dilemma reflected in political division, social unrest and economic turmoil.  But the root of all these tensions is a harsh reality in the gap between the rich and the poor coupled with the fact that the division is growing.  The rich are getting richer as there’s an increasing pinch on the poor.

Part of this distortion has to do with demographics.  As a demographic group, those born between 1946 and 1964 are by far the wealthiest.  Boomers  represent a quarter of the US population but hold more than half the largest portion of the wealth.

A recent article at marketwatch.com,  “This depressing chart shows the jaw-dropping wealth gap between millennials and boomers” (1)  shows what a big gap of wealth disparity there is.

The article says: As a whole, boomers have fared better financially than Gen Xers (born between 1965 and 1980) and millennials (born between 1981 and 1996) throughout every stage of their lives. Boomers currently boast more than half (57%) of the nation’s wealth, while Gen X owns just 16%, and millennials 3%.


This wealth distortion was bound to put pressure on the nation to shift some of the wealth from the older boomers to the younger gen Xrs and millennials.

Here’s three ways money is being shifted from the boomers as a whole.

Wealth Transfer #1: Low Interest Rates.  Who profits from low interest rates?  Governments do of course.  They can borrow more money, without debt service dragging them down.


An article at www.finance.yahoo, “US Debt Costs Falling Even as Borrowing Soars” tells how the US government gains from low interest rates.

The article says: Interest costs on the national debt have fallen about 10% this fiscal year, even as the amount of debt issued by the U.S. Treasury has hit record levels, Bloomberg reported Friday. And over the next few years, the cost of servicing the debt held by the public – which now totals more than $20 trillion – will be cheaper relative to the size of the economy than any time since the early 1970s, according to projections by the Congressional Budget Office.

The reason is simple, Bloomberg’s Liz McCormick and Alexandre Tanzi say: interest rates plunged in the wake of the coronavirus pandemic, despite the record supply of debt, and are expected to remain low for years to come.

A focus on net cost. The federal budget deficit is expected to total $3.3 trillion this fiscal year, more than three times larger than the year before, but the average interest rate on U.S. debt has fallen from 2.4% to 1.7%, and it’s expected to continue to fall.

“While there’s been a lot of concern about the mounting debt, it hasn’t caused the problems that were anticipated by the doomsters,” Ed Yardeni of Yardeni Research told Bloomberg. “It’s not just a question of how much debt is outstanding, but what is the cost to service that debt.”

Millennials are also gaining from from really low cost mortgages that these low rates bring.  This is why, despite a faltering economy and high unemployment created by the pandemic, there is house buying boom led by millennials.

A real estate broker we work with in Florida explained it this way.  A 30 year $100,000 mortgage at 5% requires a base payment of $536.82 a month.  When the interest on the mortgage drops to 2.47% the payment is only $393.56.  This means that buyers can afford to pay 26% more for the same house.  This also mans that many more young people with lower incomes qualify for larger loans.  This super heats the market.

The booming house market is not just in the USA.

Our friend Thomas Fischer at ENR Asset Management who lives in Copenhagen wrote: Real estate has gone crazy in Denmark also.  Danske Bank now offers a 30 year mortgage at a fixed rate of 1% (only up to 60% of the house value) with no re-payments interest only. You can then repay the mortgage after 30 years or when selling! Pretty amazing.

Young borrowers benefit most from low interest rates.  They buy assets that will appreciate due to inflation and have time to let the gap between the interest cost and inflation increase their wealth.

Wealth Transfer #2: Stop Social Security Contributions.

Once called the “Third Rail of Politics” (touch it and you die) There is an insidious three step attack on Social Security.

The first step is to stop Social Security deductions.

The Wall Street Journal article “Some Large Employers Reject Trump’s Payroll-Tax Deferral Plan” (3) shows how the government is encouraging this part of the attack already.

CVS Health, Wells Fargo and Home Depot are among firms opting not to change paycheck withholding

Some of the nation’s largest employers—including CVS Health Corp., Wells Fargo & Co. and the U.S. Postal Service—say they won’t implement President Trump’s payroll-tax deferral plan, opting to leave employee paychecks alone this fall.

The president’s plan lets employers stop withholding the 6.2% Social Security tax now for most workers and requires them to pay it back early next year through additional paycheck withholding. Mr. Trump wants Congress to forgive those deferred taxes, but without any assurance of that happening, the plan continues to find little footing in the private sector as companies make their decisions.

Other large employers, including United Parcel Service Inc., JPMorgan Chase & Co., Costco Wholesale Corp. and Home Depot Inc., say they aren’t participating either. Wells Fargo wanted “to avoid creating a future financial burden for employees,” said spokesman Peter Gilchrist.

That lack of interest from companies—some of which employ hundreds of thousands of potentially eligible workers—limits the broader economic impact of the deferral. Mr. Trump, who had hoped to get Congress to slash payroll taxes to boost the economy, has been left with a program that has little reach across the country.

For now, the largest group of affected workers is the one controlled by Mr. Trump—federal executive-branch employees and military-service members who will see their paychecks grow this month and then shrink in January.

The second step would come after the election.  Whoever is in power would  forgive the deferral.  The third step is when the Social Security Trust Fund runs out of money… to make Social Security dependent on income contributions.

An article at the AARP site, “Social Security Trust Fund to Be Depleted by 2031” (4) shows how this three step trick allows slippery politicians to change Social Security without touching the third rail.

The September 2020 article says: This year, payroll taxes will be enough to pay full retirement benefits to beneficiaries. Next year, however, the Social Security Administration (SSA) will have to tap the $2.8 trillion in its OASI trust fund to help pay retirement and survivor benefits. The trust fund’s assets would be depleted in 2030, according to CBO projections, and in 2031 beneficiaries would be paid only from incoming payroll tax revenue, unless Congress passes legislation to address Social Security’s longer-term funding shortfall.

The reality is that the government does not have to do anything to gut Social Security. They only have to wait a few years and NOT pass new legislation.  The fuse on this pension time bomb is already lit.

The pandemic gave the excuse for take the first step of deferring contributions.

Wealth Transfer #3: Fed’s new policy of long term inflation.


Federal Reserve Bank Washington DC

A NASDAQ article “Fed’s new policy shift to have no major impact, say economists” (5) explains why the Fed’s policy is likely to hurt those who are retired as well as the unemployed.

The U.S. Federal Reserve’s latest policy shift will not have any significant impact on the economy, according to a majority of economists in a Reuters poll who do not expect the central bank to meet its dual mandate until 2023 at least.

In a landmark shift to a more tolerant stance on inflation, the Fed’s new monetary policy strategy pledged to address maximum employment by letting inflation run above its 2% target and suggested interest rates would stay near zero for years to come.

In short the Fed’s policy is really an excuse for letting inflation rise while doing nothing.  Those who are hurt the most by inflation are those who retire and do not have an income and assets that can rise along with higher costs of living.

Are these shifts fair?  Who knows.  Boomers, especially those born in the 1940s had such huge luck. We grew up having the ultimate socio-economic  platform for building wealth.

The younger generations will get the wealth, eventually, but building their wealth now would go a long way towards easing many of the social tensions that have risen.  Regrettably history suggests that government interference, such as forcing down interest rates and opening up the floodgates for inflation, is not an effective way to transfer wealth.  The transfer should not be a zero sum game.

Like it or not (most boomers won’t like it) these transfers are in place.

Low interest rates, higher inflation and attacks on Social Security are here and will be hard to change because millennials are now a larger demographic group than boomers, so as more millennials vote, their say will have increasing sway.

Hopefully this glimpse into what’s happening will help you, boomer, gen Xr or millennial understand and place your investments and income earning activity in a way that takes advantage of low interest and high inflation.


Profitable Investing Made EZ

There are only three steps to sustained, safe profits in investing.   Seek value.  Cut losses.  Take profits.

Quotes from three great value professional investors support this thought.

Be fearful when others are greedy, and greedy when others are fearful.” Warren Buffett

“In the short run, the market is a voting machine, but in the long run it is a weighing machine.” Ben Graham

We don’t have to be smarter than the rest. We have to be more disciplined than the rest.” Charlie Munger

We do not have to be brilliant to preserve our wealth.  When it comes to investing, discipline can make professional investing EZ because you become smarter than the smartest man in the world.


Sir Issac Newton

Sir Isaac Newton is widely regarded as one of the most influential scientists of all time.  His role was key in the scientific revolution.

His book “Mathematical Principles of Natural Philosophy” laid the foundations for mechanics.

He supplied a foundation to optics.

He helped develop modern calculus.

Newton formulated the laws of motion and gravitation and confirmed the heliocentric model of the cosmos.

Newton built the first practical reflecting telescope.

His theories about color and cooling and the speed of sound were spring boards in physics.

In math, Newton contributed to the study of power series, the binomial theorem to non-integer exponents, and a method for approximating the roots of a function.

He is said to have been the greatest genius who ever lived!

But Sir Issac Newton also lost his shirt in the stock market. 

Newton said: “I can calculate the motions of the heavenly bodies but not the madness of the people.”

Sir Issac forgot the intelligence in seeking value. He ignored the fact that buying and selling discipline is more important than being smart.

How can we gain this discipline?  Discipline comes from simple math which is why my Purposeful investing course (Pi) is based around mathematicians not economists.

I am happy to introduce an investing math program that instills investment discipline in our Pi course.

Use math and time, not emotion and timing to protect your wealth.

We need a strategy so our savings, investments & income are sufficient for a full lifetime which can be much longer than statistics suggest.  That’s really good to know but longer life expectancy is expected to worsen the shortfall in Social Security by 11 percent over the next 75 years.

What will a longer, active life do to our savings and budgets?

During nearly five decades of global investing I have noticed that some people, such as Warren Buffett, have a three point good value strategy that increases their wealth again and again.

What are the three tactics of this strategy?

The first tactic is to seek safety before profit.

A research paper that studied Warren Buffet’s investing strategy was published at Yale University’s website. This research shows that the stocks he chooses are safe (with low beta and low volatility), cheap (value stocks with low price – to – book ratios), and high quality (stocks of companies that are profitable, stable, growing, and with high payout ratios).

The second tactic is to maintain staying power so you can let time do its work.  At times Buffet’s portfolio has fallen, but he has been willing and able to wait long periods for the value to reveal itself and prices to recover.

keppler asset management chart

This chart based on a 45 year portfolio study shows that holding a diversified good value portfolio (based on a  good value strategy) for 13 month’s time, increases the probability of outperformance to 70%.  However those who can hold the portfolio for five years gain a 88% probability of beating the bellwether in the market and after ten years the probability increases to 97.5%.  Time is your friend when you use a good value strategy.  The longer you can hold onto a well balanced good value portfolio the better the odds of outstanding success.

The Buffet strategy integrates time and value for safety and profit.

A third, limited leveraging, tactic in the strategy boosts profit.  Buffett leverages his portfolio at a ratio of approximately 1.6 to 1.   The Yale published research paper shows the leveraging methods used by Warren Buffett to amass his $50 billion fortune.  The researchers found that the returns from Buffett’s investment company, Berkshire Hathaway, far outweighed those achieved by any rival that has operated for 30 years or more.  The research shows that neither luck nor magic are involved.  Instead, the paper shows that Buffet’s success hinges on using leverage at the rate of 1.6.

To sum up the strategy, Buffet uses value, time and leverage to buy and hold “cheap, safe, quality stocks”.  He uses limited leverage so he can hold on for very long periods of time, surviving rough periods where others might have been forced into a fire sale or a career shift.

You can learn how to use this type of three point strategy with the Purposeful investing Course (Pi).  This course is based on my 50 years of global investing experience combined with wisdom gained from some of the world’s best investment managers and economic mathematical scientists.

Pi reveals investing secrets and the sciences that make investing easy, safer, less time consuming and increases the chances of profit.

Lessons from Pi are based on the creation and management of a Pi Model Portfolio.  There are no secrets about this portfolio except that it is based entirely on good math and uses time to take advantage of value.

The value analysis is used to create a portfolio of MSCI Country Benchmark Index ETFs that cover  stock markets that are undervalued.  I have combined my 50 years of investing experience with the study of the mathematical market value analysis of Michael Keppler, CEO of Keppler Asset Management.

In my opinion, Keppler is one of the best market statisticians in the world.  Numerous very large fund managers use his analysis to manage over $2.5 billion of funds.  However because Keppler’s roots are in Germany (though he lives and operates from New York) and most of his funds registered for the European Union, Americans cannot normally access his data.

I was lucky to have crossed paths with Michael about 25 years ago, so I am one of the few Americans who receive this data and you will not find his information readily available in the US.

In a moment you’ll see how to remedy this fact.

The Pifolio analysis begins with Keppler’s research that continually monitors 46 stock markets and compares their value based on current book to price, cash flow to price, earnings to price, average dividend yield, return on equity and cash flow return.  Then Keppler takes market’s history into account.

Fwd: keppler

Michael Kepler CEO Keppler Asset Management.

Listen to Michael Keppler explain his philosophy for 6 minutes and 43 seconds here.

Michael’s analysis is rational, mathematical and does not cause worry about short term ups and downs.  Keppler’s strategy is to diversify into an equally weighted portfolio of the MSCI Indices of each good value (BUY) market.

This is an easy, simple and effective approach to zeroing in on value because little time, management and guesswork is required.  You are investing in a diversified portfolio of good value indices.

A BUY rating for an index does NOT imply that any one stock in that country is an attractive investment.  This eliminates the need for hours of research aimed at picking specific shares.  It is not appropriate or enough to instruct a stockbroker to simply select stocks in the BUY rated countries.  Investing in the index is like investing in all the shares in the index.  You save time because all you have to do is invest in the ETF to gain the profit potential of the entire market.

To achieve this goal of diversification the Pi portfolio consists of Country Index ETFs.

Country Index ETFs are similar to an index mutual fund but are shares normally traded on a major stock exchange that tracks an index of shares in a specific country.  ETFs do not try to beat the index they represent.  The management is passive and tries to emulate the performance of the index.

A country ETF provides diversification into a basket of equities in the country covered.  The expense ratios for most ETFs are lower than those of the average mutual fund as well so such ETFs provide diversification and cost efficiency.

Here is the Pifolio I personally held at the beginning of 2020.

70% is diversified into Keppler’s good value (BUY rated) developed markets: Australia, France, Germany, Hong Kong, Italy, Japan, Norway, Singapore, Spain and the United Kingdom.

30% of the Pifolio is invested in Keppler’s good value (BUY rated) emerging markets: Brazil, Chile, China, Colombia, the Czech Republic, South Korea, Malaysia and Taiwan.

iShares Country ETFs make it easy to invest in each of the MSCI indicies of the good value BUY markets.

For example, the iShares MSCI Australia (symbol EWA) is a Country Index ETF that tracks the investment results the Morgan Stanley Capital Index MSCI Australia Index which is composed mainly of large cap and small cap stocks traded primarily on the Australian Stock Exchange mainly of companies in consumer staples, financials and materials. This ETF is non-diversified outside of Australia.

iShares is owned by Black Rock, Inc. the world’s largest asset manager with over $4 trillion in assets under management.

There is an iShares country ETF for every market.

How you can create your own good value strategy.

I would like to send you, on a no risk basis, a 130 page basic training course that teaches the good value strategy I use.   I call this strategy Purposeful Investing (PI).  You learn all the Pi strategies, what they are, how to use them and what each can do for you, your lifestyle and investing.

When you subscribe to Pi, you immediately receive a 120 page basic training course that teaches the Pi Strategy.   You learn all the Pi strategies, what they are, how to use them and what each can do for you, your lifestyle and investing.

You also begin receiving regular emailed Pifiolio updates and online access to all the Pifolio updates of the last two years.  Each update examines the current activity in a Pifolio, how it is changing, why and how the changes might help your investing or not.

Included in the basic training is an additional 120 page PDF value analysis of 46 stock markets (23 developed markets and 23 emerging stock markets).  This analysis looks at the price to book, price to earnings, average yield and much more.

You also receive two special reports.

In the 1980s, a remarkable set of two economic circumstances helped anyone who spotted them become remarkably rich.  Some of my readers made enough to retire.  Others picked up 50% currency gains.  Then the cycle ended.  Warren Buffett explained the importance of this ending in a 1999 Fortune magazine interview.  He said:  Let me summarize what I’ve been saying about the stock market: I think it’s very hard to come up with a persuasive case that equities will over the next 17 years perform anything like—anything like—they’ve performed in the past 17!

I did well then, but always thought, “I should have invested more!”  Now those circumstances have come together and I am investing in them again.

The circumstances that created fortunes 30 years ago were an overvalued US market (compared to global markets) and an overvalued US dollar.  The two conditions are in place again!

30 years ago, the US dollar rose along with Wall Street.  Profits came quickly over three years.  Then the dollar dropped like a stone, by 51%  in just two years.  A repeat of this pattern is growing and could create up to 50% extra profit if we start using strong dollars to accumulate good value stock market ETFs in other currencies.

This is the most exciting opportunity I have seen since we started sending our reports on international investing ideas more than three decades ago.  The trends are so clear that I have created a short, but powerful report “Three Currency Patterns for 50% Profits or More.”   This report shows how to earn an extra 50% from currency shifts with even small investments.  I kept the report short and simple, but included links to 153 pages of  Good Value Stock Market research and Asset Allocation Analysis.

The report shows 20 good value investments and a really powerful tactic that shows the most effective and least expensive way to accumulate these bargains in large or even very small amounts (less than $5,000).  There is extra profit potential of at least 50% so the report is worth a lot.

This report sells for $29.95 but in this special offer, you receive the report, “Three Currency Patterns for 50% Profits or More” FREE when you subscribe to Pi.

Plus get the $39.95 report “The Silver Dip” free.

With investors watching global stock markets bounce up and down, many missed two really important profit generating events over the last two years.  The price of silver dipped below $14 an ounce as did shares of the iShares Silver ETF (SLV).   The second event is that the silver gold ratio hit 80, compared to a ratio of 230 only two years before.

In September 2015, I prepared a special report “Silver Dip 2015” about a silver speculation, leveraged with a British pound loan, that could increase the returns in a safe portfolio by as much as eight times.  The tactics described in that report generated 62.48% profit in just nine months.

I have updated this report and added how to use the Silver Dip Strategy with platinum.   The “Silver Dip” report shares the latest in a series of long term lessons gained through 40 years of speculating and investing in precious metals.  I released the 2015 report, when the gold silver ratio slipped to 80.  The ratio has corrected and that profit has been taken and now a new precious metals dip has emerged.

I have prepared a new special report “Silver Dip” about a leveraged speculation that can increase the returns in a safe portfolio by as much as eight times.

You also learn from the online Value Investing Seminar, our premier course, that we have been conducting for over 30 years.  Tens of thousands of delegates have paid up to $999 to attend.  Now you can join the seminar online FREE in this special offer.

This three day course is available in sessions that are 10 to 20 minutes long for easy, convenient learning.   You can listen to each session any time and as often as you desire.

Triple Guarantee

Enroll in Pi.  Get the basic training, the 46 market value report, access to all the updates of the past two years, the two reports and the Value Investing Seminar right away. 

#1:  I guarantee you’ll learn ideas about investing that are unique and can reduce stress as they help you enhance your profits through slow, worry free, easy diversified investing.

If you are not totally happy, simply let me know.

#2:  I guarantee you can cancel your subscription within 60 days and I’ll refund your subscription fee in full, no questions asked.

#3:  You can keep the two reports and Value Investing Seminar as my thanks for trying.

You have nothing to lose except the fear.   You gain the ultimate form of financial security as you reduce risk and increase profit potential.

Subscribe to Pi now, get the 130 page basic training, the 120 page 46 market value analysis, access to over 100 previous Pifolio updates, the “Silver Dip” and “Three Currency Patterns For 50% Profits or More” reports, and value investment seminar, plus begin receiving regular Pifolio update lessons throughout the year.

Subscribe to a Pi annual subscription for $197 and receive all the above.

Your subscription will be charged $99 a year from now, but you can cancel at any time.


(1) www.marketwatch.com/story/this-depressing-chart-shows-the-jaw-dropping-wealth-gap-between-millennials-and-boomers-2019-12-04

(2) finance.yahoo.com/news/us-debt-costs-falling-even-224646813.html

(3) www.wsj.com/articles/some-large-employers-reject-trumps-payroll-tax-deferral-plan-11599840079?mod=itp_wsj&mod=&mod=djemITP_h

(4) www.aarp.org/retirement/social-security/info-2020/benefits-trust-fund-runs-out-by-2031.html

(5) www.nasdaq.com/articles/poll-feds-new-policy-shift-to-have-no-major-impact-say-economists-2020-09-10