Recent equity moves the past week are directly tied to the rise in rates, across the board raises. I wonder if Burlington Ho wants to state otherwise? He hasn’t been on for 2 months, yet he was the biggest nay sayer.
It’s a sign of a healthy market, so I see it as a good long term play for another buying opportunity. If only I had more discretionary income to invest. Anyone feeling nervous yet?
No.
I added to a few positions today, concerned about the real estate market, bull case for equities still intact.
Yes Shiller PE is way too high.
We were overdue for a pull-back. Also note the rise in energy prices. I don't think that is going to stop either. $4 gasoline is on it's way.
^I noted the cost of gasoline was headed up last week, mark said it was skewed by just a few markets, still feel the same way ?
Investing in shit trucks has a great return even if the market is crappy
Market is normalizing. That’s a good thing.
800 point pullbacks are hard to stomach when you get to my age, I am fine with less that 50% in equities even so they get uncomfortable.
My gold, silver, and palladium just arrived. I think I timed this one just right.
No. But that's because I invested in Apple. I wish I bought Papa John's stocks though. That's going to go up in price once the bid completes
@mark94 how is it normalizing? The federal reserve rates just went up. Tarrifs are going to go up, imif you're not already wealthy and have a whole leg in, your going to be affected not so favorably. At least it seems that way. Please explain to me if otherwise.
You boys invested in real estate yet? Now that's a market I am trying to get into especially since the rate raises are coming.
@Estafador you’re right, the market is going through an extremely volatile period now, but it is a good time to buy if you’re young, be sure to buy quality, and eventually we will get to normal again, but you need to be patient. Buying real estate is good if you can swing it, but you lose a lot of liquidity.
For 8 years we had 0% rates and the Fed buying bonds like a drunken sailor. That’s not normal.
Normal is 6% mortgages. Normal is corporations paying interest on their bonds. Normal is earning an actual return on your savings.
25 - 800 points on the DJIA is not a pull back. That is a sneeze. A pull-back would be 3000 points. That would be a decent correction. And we will have one of those in the near future.
^ Im well aware I was just trying to explain the correlation between your age and where your holdings should be. I’m not going to tell you that what’s happening now is getting us to normal, I’m not also trying to say the sky is falling, but I’ll tell you this if we start to see 5-6% interest rates in federally insured institutions I’ll be a big buyer at this point in my life.
^Come on txtwat, that the best you’ve got !
This is just the beginning. Another black Monday is the buying opportunity ...... maybe.
PE ratios are about twice historical averages. Why? Because we had a tax cut that will increase the deficit 1 or 2 trillion over 10 years?
Just looks like another bubble to me. Even a 10,000 decline on DJIA puts PE well above average.
I was also a buyer today.
Bought some calls and added to a long position today
Also, I agree with the earlier comments, a 800 point drop at these levels is equivalent to a 300 point drop a few years ago, not as bad as it sounds.
Asian markets all down big overnight. US futures sharply lower. As of now, looks like Dow will open down another 400 points. Broke below the 50 day moving average today. Looks like more downside to come. Any rebound may be brief and followed by further selling. The 10 year bull market fueled by historically low and manipulated interest rates has to come to an end at some point...
It would be nice to have an experienced Fed chair in case this turns into a crisis. But Trump fired an experienced Fed chair (Yellen) in favor of lawyer (Powell). Yellen had years of experience as Fed chair and a PhD from Yale under a Nobel prize winner in economics. Trump doesn't know what he's doing.
Sorry @Dougster but fed chair should be an economist. You want to sue someone? Get a lawyer. Yellens probably glad she doesn't have to clean up the mess.
...a TV least Trump didn't appoint TV turd economist Larry Kudlow
Yawn. That’s the benefit of being an investor for 40 plus years. Been there. Done that. Maybe it goes down 5%, or 10%. Hell, 20%. It will come back. It always has.
Article about @Mark94's hero, Larry Kudlow:
"How the reality TV president found the perfect idiot chief economic advisor"
If you've been an investor for 40 years, you know it can go down 50% or more too.
Cryptos starting to tank overnight too.
A good investor knows that any drops are buying opportunities. In 10 - 15 years the market will be more than double from its current value, so who cares really about any swings downward, other than seeing it as a positive. Can’t wait for the next correction!
"In 10 - 15 years the market will be more than double from its current value,"
Did you pull that number out of your ass? The Shiller PE ratio (at valuation today of about 32) coincides with real rate of return of about -2.6% per year over the next 8 years for stocks. With a minus sign. Not a perfect prediction, but Shiller did win the Nobel Prize.
^^ Shiller PE prediction tool
The advice you give to a 60-yr-old is not the same advice you give to someone starting out
Gold is up $34 an ounce today. Buying in below 1190 looks pretty damn good now. I only kept stock positions where I am getting at minimum a 2% dividend, since my bank is paying 1.9% on anything sitting in the bank.
My 401k is down 6.5% to July 2, 2018 levels, mostly equities. The money sitting in savings in my bank pays 0.03% Still holding. Interesting stuff, guys! XD
^ you have the luxury of time, my point here was simple, I’d like to retire with my funds in a position to support my lifestyle the way I want, I believe in markets and investing, I no longer need to grow my principal to live off safe returns, and I’m not chasing risk any more, don’t get frightened, order will return, but I may not have the time to recoup losses that you do.
The stock market can't hurt me. I've put all my money in strippers' thongs.
Once you got it made, you gotta keep it made. Twentyfive understands that. There are a lot of people at retirement age who worked, sacrificed, and invested their whole life to get to this point. They've lived through market crashes before and are smart enough not to chase risk for an extra 3% or 5% return when the downside could put their entire life savings in jeopardy. The Dominics of the world have the luxury of time as 25 stated. I imagine there are a lot of baby boomers sitting on a million dollars or more (or a large amount) who saw their accounts crushed in 2001 and 2008 and aren't going to risk that happening again. It's been a heck of a run the last 10 years after the last crash. Pigs get fat, but hogs get slaughtered.
Arafat won a Nobel Prize in economics?
Very few people I respect more than Shiller. He predicted the dot com crash, then the housing crash. Maybe the crash in crypto currencies, too.
Supposed to be sarcasm dipshit.
Seems like most of economics prizes are going to MIT grads like Shiller. Another MIT prize this year for work studying economic impact of climate change.
Seriously @Dougster, have you ever been under psychiatric care? Hope you don't kill yourself, over stupid obsessions here.
Schiller has also been calling soon and gloom since 2010. He’s a broken clock always searching for stats to back up his “sky is falling”routines. Truth is interest rates are still way below historic rates, and the economy is heating up. Without this rate adjustment and market correction, we’d see run away inflation.
11 years ago in 2007, before the Great Recession hit, we had the Dow Jones @ 14k, and just recently it hit 27k. That’s after the market hit chopped in half allowing for dollar cost averages in retirement accounts to make huge profits from buying cheaply. So yes, going forward if we see another “Great Recession” like we saw 10 years ago, I do believe we will see the Dow Jones at 50k, double its current valuations.
The PE is just one indicator of hundreds out there. Just because PE ratios were out of each in 2000 and 2007 mean it will repeat in 2019 for a market collapse. If it did collapse it would also rebound quickly with the velocity of money picking up speed. Remember Obama era politics kept the recovery and velocity of money slow. Different times we find itself in today. Yee haw!
FYI, the Relative Strength Index (RSI) of the daily S&P 500 chart is at 17.6 at the end of today. FUN FACT: The RSI of the daily S&P 500 chart has been this low, or lower, ONLY 20 TIMES IN THE PAST 63 YEARS!!!! Some statistical analysis reveals that the average returns in the subsequent 1,2,3,4,5 days are inversely related to RSI, that is, for lower values of RSI, the return during the following few days is higher--considerably higher than a typical day. Here's a chart: imgur.com
Yellen was and is an ass clown who used artificially low lending rates to pump up the stock market and cause this bubble. Anyone notice YTD the market is up? All we need now is some bad economic news and maybe a Chinese ship ramming an American one and we'll see a drop. Those who said the advice for a 60 year old is different than a 30 year old. Less than 25% in stocks here. Rather have a slightly diminished lifestyle if things go bad and a slightly better one if things go good; than risk a bad lifestyle for the chance at a great one. I don't play inside numbers at craps either any longer.
SkiBirther: I'm at 35% stocks which is very conservative at my age. Agree with last part of your post on risk.
Bernanke and Yellen probably saved us from a true catastrophe by flooding the finanancial system with liquidity when it was needed. We're at full employment now with hints of inflation and interest rates need to rise.
I'm worried about the orange ones tariff trade war
Funny bit coming up with Trump attacking his hand picked Fed Chairman, I wonder how that helps.
The tariffs are a negotiating tactic. We saw that with Mexico and Canada. Now, that is playing out with Europe and Japan.
The only exception is China where we are likely to see major tariffs in place before China capitulates. That’s the end game.
Five years from now, a new global trade structure will be in place that is fairly open and less biased against the US. China will either be playing by the rules, or a second tier economy.
My guess is that China will have major political turmoil as its people turn on the communist government.
^ That's sorta funny, you just don't get it do you, Trump is like that lady that fell down the stairs with a lemon under each arm, then hollers, look folks I got lemon aid for you. I see his actions as they really are, unlike you, you seem to be confused, his version of three-dimensional chess, is really Tic=Tac-Toe, so simple they taught a chimpanzee to play.
"Funny bit coming up with Trump attacking his hand picked Fed Chairman, I wonder how that helps"
Powell doesn't give a shit about Trump's opinion which is a good thing. Maybe Powell was a good choice after all. Trump will take credit for a rising market and blame someone -- anyone -- when it falls.
^I agree with you I hope Powell is strong enough to withstand the bullshit, and keep the train on the rails. Let’s not be stupid though and believe this is somehow a master plan, ala, Mark94.
@twentyfive is becoming a landlord investor "swinging it". Because I'm not into the whole flipping deal.
I've had a couple brash actions over the years, 2001 market and getting de-motivated, and 2008 market and pulling out completely because I felt the game was rigged or legalized theft. I've been reading Jim Cramer's books recently and one lesson is guys pull out at the wrong time because they fear losses and their actions made their portfolio worse.
I'm still learning but I'm still humbled by some of the guys younger than who who write posts on this with language I still only 45/55 understand despite me learning investing. For now the one thing I can control is my illiteracy, which I am slowly getting rid of day by day. And like @OldGringo says, it's not like I'm setting on a one million dollar or even a hundred thousand dollar nest egg, so my losses are just lunch money right now, and serve a painful reminder that I still need to take action to change to make me less of a investor pathetic loser (PL).
I refused to be worried or have fear about things I don't understand. I don't know enough to be afraid. My biggest problem isn't market losses ATM. It's illiteracy and savings (and income). Which I CAN control.
@Estafador you need to look at the rent roll and get a feel for turnover, it’s purely a business decision, do your due diligence properly then make a decision.
Perhaps the first investment lesson is to recognize that no individual investor is smart enough to time the market or select stocks that outperform. Maybe Warren Buffet can. You and I can’t.
So, in times of turbulence, I just stick with my index funds and ride it out. I don’t go to cash. I don’t try and identify the bottom. That means I take the hit for the drops but I also get every penny of the recovery. That strategy has served me well for 40 years.
That approach has worked well enough that, even though I’m retired, I now have enough cushion that a severe market sell off doesn’t affect my lifestyle. That’s another reason that I’m primarily in equities and will stay that way.
^^^ Smart guy based on experience. However some people want to feel smart instead of just accepting what the market gives them. Don’t predict, just know your time horizon when you need to spend.
Example if you’re 60 years old with $1 million and need to live on $50k/year, store 5 years worth of withdrawals in cash= $250,000 and the rest ($750k) In equities. Don’t be guessing where the market is going and make your decisions that way, just know your time horizon and let it go!
^If you need 50K annually you need to have a minimum of 450K to cover 5 years you’re forgetting taxes unforeseen expenses and that assumes tha you’re healthy, and the cost of living doesn’t change. Sorry bud you’re a bit off in your planning. Sorry but the correct balance is +- 50% in equities and the same in cash equivalents.
Just a few observations --a 2600 point drop would have been 10%. To me that is when you consider it a correction.
If you were invested in 2008 this is mild. 2007-2008 was Mr Toad's Wild Ride. en.wikipedia.org
I'm in my early 60's and I am still 70% equites but overtime the equities I own have become more conservative. It beats overpaying for bonds.
There are numerous ways to invest in Real Estate but I've never done well in anything but local to me. REITS and managed trust never have for me at least performed what was promised.
25, whatch u smokin?
The qualifier was how much you need to withdraw, not how much are taxes. Case in point if you need to take out $50k net, that would be $60k gross at the most with a couple living in a low tax state like Nevada, Arizona, Texas, or South Dakota where state tax is low and your federal marginal income tax won’t hit much higher than the 12%. With the standard deduction themobwrall effective tax rate for that couple will be around 15% or less, since there will be no payroll (fica) taxes to pay. $50k divided by .85 ( for the 15% tax) = $59k-$60k.
Sorry buddy but my planning is a better strategy than your 50% equity allocation based on your confirmation bias. Even at $60k drawn before taxes equates to $300k in cash and $700k in equities for a $1 million portfolio. This is the perfect example of a typical middle class working person who is looking at retiring in most geographic areas of America. By the way, my above scenarios still haven’t even mentioned how much income will be drawn from social security(governmental pension), so that additional income proves my point even further how that couple can keep 70% of their portfolio in equities, even in retirement. 25, you just got served!!
Not really sure if that’s your lifestyle you’re going to be ok, but myself I like cushions, plus if you thought at 60 how much different costs are from when you were 50, you’d want a cushion also. I’m not going to debate you on this but you’re 5 year projections are just that projections. Nobody can accurately predict the needs 5 years into the future you can only go by history, and al we all know history isn’t a perfect circle, although similarities exist there are wobbles that make the circle elliptical. I didn’t get served I’m fine, I hear your thinking often, and I know plenty of folks that used your thinking that did get into trouble.
So, now we’re debating taxes ?
Everyone’s situation is different. So, giving advice to a stranger about taxes is almost certain to be wrong.
For example, if someone has a mutual fund with a cost basis of 66%, they could withdraw $120,000 and generate only $40,000 of taxable income. Assuming that is capital gains, the federal tax bill would be $0.
So, when Meat says he needs $50,000, maybe what he means is he needs.........$50,000. Shocking.
I’ve always heard that politics are in the purse strings, so it only goes to say that personal finance is the most politically charged conversation you can debate upon ends over the topic. Since it is subjective it is extremely personal. It’s one of the reasons why the broker business thrives, for the sheer psychological nuance are they purchasing that service. You all are right, depending on your comfort level. Risk is also subjective to opinions.
Ok. Bye!
A couple of quotes from the last few days that made me laugh:
@GSElevator on Twitter: "A market sell-off is worse than divorce. I lose half of my money, but my wife is still around."
I think Crazy Joe might like this one. @Nouriel on Twitter: "99% of crypto land is one shitcoin traded for another shitcoin. And the average shitcoin lost 90% or more of its value in the last year. So Crypto Land is Crap Land, a cesspool of lunatics with severe Freudian scatological obsessions that swim 24/7 in their own stinking shit."
Told you so!
Interest rates, again. I’ve been saying this since 2015.
When interest rates are zero, every company can make money. As rates rise, we’ll sort companies out. Some will continue to thrive. Others not.
That’s not entirely a bad thing.
^^^ Correct! The heavily leveraged organizations will suffer, but companies like Apple who have cash on their books without any debt are in prime position to eat up the market share, as mismanaged companies will be exposed. Capitalism at its finest.
i hope the frikin silver i bought in years past pays handsomely...
Rising interest rates are correlated with a rising stock market when interest rates are below about 5%; the opposite is true when rates are above about 5%.
Look at the graph dipshit
Rising interest rates doesn't always correlate with declining stocks. Probably depends on whether we're climbing out or recession or fighting inflation
Private companies have never been this leveraged, right? Raising interest rates, from 3-5%, might cause a decline in stocks now that corporations have so much credit.
^^^ Don’t forget the rise in rates takes out liquidity in the system. Also, companies repurchasing their own shares through buybacks will become less, and the demand will need to be come from somewhere else. I don’t see where that demand will come from once leveraged companies stop buying backbtheir stock.
China is in deep kimchi right now. It’s been riding a debt bubble for 20 years. The best estimate is that total debt is about 4x GDP.
That debt has kept jobs growing in a planned economy and kept real estate prices steadily rising. The Chinese investor really has only two options, buy real estate or send the money overseas. However, real estate prices have recently dropped as the government tries to gain some control over lending.
The tariffs have just begun kicking in but foreign companies, reading the tea leaves, are putting new jobs in SE Asia and India rather than China.
All this means that a Tsunami of economic and political disruption is going to hit China sooner rather than later. The population will grow angry at the government. Economic growth will slow or even decline. Companies will fail. Cash will flow out of the country.
A cornerstone of the world economy, Chinese growth, demand for commodities, cheap labor, will quickly cease. What happens then ?
^^^ China has empty cities that are overbuilt. Huge skyscrapers that are sitting empty. I can’t understand why so many people want to say “China owns us” when in fact you’re correct anout their unabated debt load and currency manipulation.
Trump is just trying to return the favor.
Oh yeah...... about your interest rates. You may want to check on the inversely correlated movements to the stock market lately. This should continue until they (rates)normalize, whatever is considered normal these days?
Just a friendly reminder before markets open today, and what’s happening overseas (equities) as a result of this.
And here we are facing the same issue in today’s markets. Keep in mind most highs are hit in a rising rate environment, so I’m not pulling out yet. That’s what she said.
I am all set with my cd's paying .09% lol.
The last time we had these economic conditions ( the Carter administration ), the best investment was owning farm land. Time to move to Iowa !
Keep an eye on China property markets. A collapse has been predicted for years. It may finally happen in the next few weeks, or the next few years. When it finally happens, it will have a huge impact on the world economy.
China is having energy issues. Black outs and cutting power to manufacturing plants and what not.
Also you talked about buying land in Iowa.... That is about $7500 to $12000 an acre.
If things happen like when Cater was president... those will be cut in half or more!!! That is when you buy. :)
I'm still holding on to my Kmart stock - that shit is bound to turn around
Our currency is collapsing. It is related to the wreckless use of the printing press, Pay Check Protection Act, Bail out money, etc. All that did was use the public treasure to prop of the real estate market, landlords and mortgagee lenders.
We need much more than that. We need social democracy.
Struggles over getting the Biden Budget passed:
SJG
full backdoor uniform curvynbeautiful.com
Wow SJG, I guess you couldn’t be any more unintelligent than this^^^! The US dollar just hit a one year high, and stacked against all other currencies it remains the most constant, and in light of rates domestically and globally set to rise it is in prime position to maintain its strength, unlike the organization yiu claim to be building.
Another note, Randumbmember’s posts from 3 years ago quoting PE and a Schiller reminds me how smart he wants to think he is. In fact, if anyone listened to his advice they’d lose purchasing power all due to his false analysis on correlations, but I guess he is just a wanna be Nobel prize winner to hide the insecurities of paying college girls on SA to “date”. How did the 35% equity allocation treat you these last 3 years?? I held my small and mid cap allocation to 70% of my portfolio throughout the downturn from the pandemic and reaped significant rewards where I can retire before I hit age 50, but I won’t since I would be too bored reading the PE Schiller index reports with too much time on my hands. Lmfao!!! Dougster would be proud of Randumbmember, NOT!!
In times of high inflation, including the stagflation of the Carter (andBiden ) years, the wealthy come out just fine. They own real assets ( including stock and real estate ) which appreciate as inflation climbs and the purchasing power of the dollar declines.
The currencies of other countries might also be collapsing. Not sure. But when everything is going up, you have to assume the currency is collapsing.
And thanks mark94, your point is well understood.
The Carter years had a lot to do with OPEC. Then when Reagan came in he destroyed OPEC by giving Saddam Hussein the green light to attack Iran.
SJG
Talks about why this inflation ( currency collapse ) is happening, and why central banks are raising interest rates.
SJG
new TJ Street video youtube.com
they have a slut wear store in the zona youtube.com
I’m a longtime technology investor (focusing on big tech like MSFT, APPL) with a long-term perspective. I survived the dot com crash, the bank failure crash, the Trump China correction, and the Covid crash. As I get closer to retirement, I am shifting to dividend paying stocks and ETFs in my IRA, while keeping some tech to fuel my mongering. I don’t need to hit big winners anymore, just singles and doubles. Buffett says when people get scared is when you should be buying.
Be careful when limiting stock holdings to high dividend stocks. These tend to be in a few sectors, like energy. If most of your assets are in just a couple sectors, you are assuming more risk than a portfolio spread across many sectors.
My favorite taco truck today had a sign posted, due to the national coin shortage, they want exact change or they will have to round up to the next dollar.
I have no idea what is causing this, but it looks like our economy is going into total chaos.
What we need is 1. UBI, 2. Strong public housing offering, 3. Medicare for all, 4. Free college. These will make our economy work. And the net cost to the government is zero. You only have to raise taxes to the extent that the money is siphoning upwards, fattening the fat. And usually the fat are such because they have somehow been able to install themselves into our cash flows so that money accrues to them.
SJG
^^^ you stupid fuck! The coin shortage is due to people not exchanging coins during the pandemic so it is being hoarded and not circulated. Have you been living under a rock the last 28 months? Gosh your dumb. It has nothing correlated to the economy. Go post some more pics of fat Mexicans, you’re fantasy women.
Well, with the taco truck asking for exact change, people besides me will now be using coins. So maybe the problem will go away. But it still suggests a slow economy.
SJG
look at the different colors and the models they use. wickedtemptations.com
^ Your favorite taco truck needs to start taking plastic, the reason they require exact change is because they are dealing in cash and cheating on their taxes, the exact change problem wouldn't exist if they accepted debit and credit cards but they are trying to cheat the system and evade taxes, which they couldn't do if there was a record of their sales which would be credit card and debit card receipts.
Often that way in small ethnic businesses. They actually do take plastic, but most people don't use it.
That there is a coin shortage I still find most interesting.
SJG
^ There is no coin shortage, people are hoarding, and most business is conducted over the internet, cash is starting to go away, it's only being used by micro business as it's wasteful and inefficient. Businesses like your taco truck discourage the use of anything other than cash, many of them don't even maintain proper books and records.
No, they do take plastic. I don't know why people would be hoarding coins.
I have heard that in other countries they have a standardized and required way of using the cash register and having a record be automatically kept.
SJG
^ they are hoarding coins, only because for the last year and a half, many people have been staying home, having goods and services delivered, and using contactless payments, as a result much of the cash has not circulated, piled up in jars or ended up in shoe and cigar boxes and that is why there are not enough coins in circulation, and if cash registers are not on line which most single non chain businesses the only way to tabulate sales has been thru keeping tabs on bank deposits, if the cash is not deposited it can't be recorded and as a result many businesses of this type, either under report or don't report any revenues.
"What we need is 1. UBI, 2. Strong public housing offering, 3. Medicare for all, 4. Free college. These will make our economy work."
Free housing, free healthcare, free access to college campuses, and a bit of spending money just because. Make our economy work? Hell, no one would be working. Look what a temporary unemployment boost did. Companies still can't find workers. There might be an initial spike in weed and video games, but soon there would be no one to produce, distribute, or sell those either.
btw none of that shit is free. The productive members of our society end up paying for it.
^ SJG is a one note wonder. He'll tout that as a cure for anything from the economy to AIDS.
Free shit is popular until you see the bill.
Unfortunately SJG is not the only one looking for free shit that you and I have to pay for, he's one of many leeches, that's what's wrong with this country.
JustinTolook, We live in a society of great surplus, not scarcity. We want people pursing occupations because they believe in them, not because they are being pressured.
The only reason we do not see this surplus and abundance is because we still demand that people prove that they can earn a living. So it becomes an ever tightening squeeze for those at the bottom. And the leeches are the financializers. We can be retraining them to do something useful, like grave digging.
SJG
Tijuana Street New tuscl.net
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^^ tye only thing our society has in great surplus are fat Mexicans that your fetish centers around. Your Mexican fatties need to go on a diet to lower their carbon footprint on global warming because they release CO2 in the air!
No, the financializers will go to a lower carbon footprint as they use their muscles to dig graves.
SJG
Sinema Faces Vote Of No Confidence From Arizona Democratic Party youtube.com
"We live in a society of great surplus" Guess that means capitalism has been working pretty well.
"We want people pursing occupations because they believe in them, not because they are being pressured." I know this is wasted effort, but.... I love a good pizza. I appreciate the fact that I can order one and pick it up 30 minutes later. What 18 year old has fulfilled their life ambition by working at night, on the weekend, in front of a wood fired oven? Money is a good motivator. Do you honestly believe there would be dancers in the strip clubs for your imaginary FRMOS if they didn't need the money? Money (or the need there of) is a good motivator.
We live in a society of extreme material surplus, but the rules we impose on the poor are still based on extreme scarcity.
With UBI, people would have money to spend, but not without limits. Say 1/2 goes to their monthly public housing bill, the rest they spend as they wish.
And as far as the sex industry, that exists only because we have set up rules which have created pervasive extreme sexual frustration.
SJG
BBW tuscl.net
Backdoor yandy.com
OMS youtube.com
In today's NYT, Nobel prize winner Robert Shiller (behavior economists) points out that stocks, bonds, and real estate are all simultaneously and severely overvalued in a way that hasn't been seen in modern history:
There's no single factor that explains why -- except for the aggregate behavior of investors trading on popular narratives.
You can get behind the paywall by clearing browser cookies.
The New York Times? Yeah, like that’s not a slanted pro-liberal biased news source (input sarcasm). The truth is that there is no other place to put your money unless you want to lose purchasing power, and the fact that the feds and Congress have pumped so much cash into the system for support, people have excess funds to purchase appreciable assets like real estate and stocks. Add the fact that most of us aren’t spending like we did pre-pandemic and you’ll see excess cash used to hoard these assets. Are they inflated? Yes, but it doesn’t necessarily mean it’s in a bubble due to some over rated PE measurements from Schiller. This guy is an academic, but he has severe limitations such as it doesn’t adjust for modern economic times. I’ve been saying for years to place your bets on domestic small and mid size companies to capitalize on the growth opportunities, but if you listened to these academics since the financial crisis began, you’d be hoarding cash and not invest; essentially losing purchasing power. Academics do not belong in finance because they have no real world knowledge. It’s like when kids go to college and believe their professors are speaking g the gospel truth, then get hit with a hard dose of reality when they get out in the real world and try to fit into the workforce.
Treasury Secretary Janet Yellen, Fed Chair Jerome Powell testify before Senate committee 2 1/2 hours youtube.com
SJG
Action Teddy wickedtemptations.com
More stores with signs up about exact change or plastic. And the operators tell me the coin shortage is getting worse. I assume the judge by how much the bank is willing to give them in coins.
SJG
^^ SJG’s portrayal of our economic system is simply rong headed!
From the 1930's up through the end of 1980 were the years of the greatest expansion of the middle-class and the greatest increase in standard of living.
Then Ronald Reagan took office and it is been Supply Side Voodoo and contraction ever since.
SJG
What about post civil war era? The economy has been overly dependent on industrial production and has been in a Ponzi scheme since then, right SJG?
Damn Abraham Lincoln, if it wasn’t for him our country would be in a much better position than the rong headed direction we have gone in the past 155 years!
Production capacity started to radically exceed consumption in the 1870's. It was technological advance giving payoff.
So we had the first world wide recession because of gross excess productive capacity, centering on the steel industry in England. Everything slowed down.
We needed to adopt Social Democracy then.
But instead we pressured the lame duck Grant administration to end Reconstruction in the South, so that the South would become a consumer base for Northern Industries, like an internal third world. And the West would be a natural resources base, like buffalo hides.
And then the Spanish American War, two World Wars, Korea, Vietnam and two Iraq Wars to soak up excess production.
At this point, well into an advanced industrial and information age, Capitalism is a cancer.
SJG
Funny how today’s equity movements are primarily from the possibility that rates are closer to becoming more predictable for the future rate/pace creating a little certainty going forward. I guess investors have become data dependent, too.
Anyway, I predict rate cuts by the beginning of 2024, and leveling out next year, and since equities look ahead 12-18 months, now could be a sweet spot to enter w/cash held on the sidelines.
I also predict that inflation will go down, interest rates will decline, and the stock market will go up. It will happen sometime in the next 5 years. When it does, I’ll take full credit for my market savvy.
What I don't understand about today's market buying panic (up 5% as I write) is that it's entirely in response to something that happened 12 months ago. Month-to-month, October 2022 looks exactly like September 2022, but because prices jumped a lot in 2021, the headline number of year-to-year inflation looks a lot better now than it did before.
I would sell this market today, except that people can be even crazier tomorrow.
"Here Are The Areas Weighing Heavier On Your Wallet As Inflation Persists"
Though year-over-year inflation declined last month, a closer look at the data shows that many of the costs households experience on a daily basis are still increasing.
Price levels rose 7.7% between October 2021 and October 2022, according to a Thursday report from the Bureau of Labor Statistics, indicating that inflation has begun to slow amid contractionary policy from the Federal Reserve. The month-to-month increase of 0.4% was below analysts’ forecasts, while the 0.3% increase in core inflation, which factors out the more volatile food and energy categories, was likewise lower than expected.
The lower headline number was driven by declines in areas such as used vehicles, apparel, and medical care services, which have a lower day-to-day impact upon consumers. Overall food prices rose 0.6% while energy prices rose 1.8%, the first such increase since June. Shelter costs rose 0.8%, marking their fastest increase since the beginning of the year.
“The pervasiveness of price increases remains problematic,” Bankrate Chief Financial Analyst Greg McBride said in a statement provided to The Daily Wire. “In categories that are necessities — shelter, food, and energy — we continue to see large and consistent increases. The areas posting declines are for the most part either irregular or more discretionary in nature — airfare, used cars, and apparel.”
Markets rallied on Thursday in reaction to the inflation report, with the Dow Jones rising 1,036 points, or 3.2%, and the S&P 500 rising 176 points, or 4.7%. McBride added that if the most recent inflation news “constitutes improvement,” market actors have “set a very low bar.”
“Any meaningful relief for household budgets is still somewhere over the horizon,” he continued. “Inflation has run far hotter for far longer than expected and we have yet to string together any kind of winning streak… there is plenty of opportunity for further disappointment.”
Scrub, as I rethink my previous prediction regarding rate cuts it didn’t really make much sense as you pointed out. Cuts are probably further away, but the leveling off and maintaining rates at a current level is right around the corner. Fed funds rate will likely be 75-100 basis points higher and then stay for a bit, but no cuts. That will normalize things and equities will see that certainty as a sign to buy, as evident in todays rise after yesterdays big gains.
With inflation at a 7.7% annual rate and interest rates currently set by the Federal Reserve at 4%, real interest rates are still negative. That's a stimulatory monetary policy that is unlikely to bring inflation down to the 2% target rate set by the Fed. To reach that target, real interest rates need to be positive not negative. If the Fed did that, though, it would push the country into a severe recession. There would then be political pressure put on the Fed to pivot and start lowering rates.
In a similar situation Reagan resisted the pressure to fire Volcker when his interest rate hikes drove the country into a bad recession. Volcker then got inflation under control. Biden is not Reagan and Powell is not Volcker. It is likely when a recession hits the Fed will pivot and start lowering interest rates and then inflation will worsen again.
There are clear signs that housing and vehicles are reacting to higher interest rates. In Phoenix, and elsewhere, home prices are dropping about 1% per month and I expect that to continue for at least another year. The crash in 2008 took 2 years to bottom out. Dealers are actually seeing inventory on their lots.
The problem is, it takes many months for this to find its way into inflation numbers. Inflation is 7% now but I’m confident that recent rate hikes mean inflation will be in the 4%-5% range in 6 months.
However, the Fed always overshoots on rate hikes and cuts because they use current inflation to guide them. I expect they will keep raising rates until rates exceed current inflation. They’ll get up to 5%-6% by Spring then be shocked to see their rates are under inflation. Hundreds of PhDs in the Fed but none of them can see beyond tomorrow.
Over inflation, not under
Yes