Best Business Commentary

The next bubble: commodities

The commodity “bubble is about to burst,” says Jim Ostroff in Kiplinger.com. Prices for oil, grains, and metals are “unsustainably high,” and “our best estimate” is that this “balloon will deflate by midsummer.” Investors have pushed commodity prices “way out of whack,” mostly because other investments seem less lucrative these days. This “froth” accounts for about a quarter of the cost of $110-a-barrel oil, for example. The “bottom isn’t going to fall out,” but when any of these four things happens—lower demand, big stock market gains, a stronger dollar, or signs of low inflation—you can expect at least “gradual” deflation. Unless you’re a big speculator, that’s good news.

Saving to avoid a rainy retirement

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About 80 percent of Americans are worried about their retirement savings, says Robert Powell in MarketWatch, and “with good reason,” given rising health-care costs, dropping home prices, and “modest” savings. The odds are high that you haven’t even sat down and “crunched the numbers,” though. “If you do nothing more,” calculate how much money you’ll need for retirement—it’s probably going be “20 to 30 times your final work year’s salary.” For the median income, that’s $1.1 million, so you’ll probably find you need to save more than you thought. Oh, and working until you’re 70 is “a bad back-up plan.” You’ll retire sooner than you think, whether you want to or not.