tede02

Will be interesting to see how far things go on the downside. It does seem a lot of the extreme excess has been wrung out. There are tons of stocks down > 50%. Crypto is getting crushed, etc. That said, I personally expect a recession. The magnitude is anyone's guess. Perhaps corporate earnings are weak for several quarters and stocks keep sliding. Hard to know.

It's amazing how much Treasury yields have moved. The 10-year yield has basically doubled this year. 1-year Treasury now at 2%. Looking attractive on a relative basis compared to the various high-yield savings.

With respect to demand and inflation, my thinking is demand for discretionary goods and services would wane as consumers burn more income on necessities and debt service. Likewise, if rising rates push asset prices down, the equity on a consumer's balance sheet shrinks which means less to spend or borrow against. These are the things running through my mind as I try to gauge how long-lasting inflation will be. But it seems really complicated because the inflation clearly also is related to the pandemic supply chain problems and tight labor force. And it's weird that long rates are still so low despite the raging inflation. It's quite the puzzle.

This is a subject that's been on my mind. The Fed sure seems to have screwed this up. They are sooooo far behind. But that's water under the bridge. I just keep thinking about how long the high inflation is going to last especially if the Fed starts pushing rates up 50 bps every 6 weeks for a few quarters. This is going to really test the economy and the markets. You have rising prices on everything and now the cost of debt is really going to ratchet up. Seems like we're on a collision course for a significant slowdown. Consumers are going to be under a lot of pressure. Will demand wane and inflation ease? Or will inflation stay hot because of all the supply chain problems, tight labor market, etc.? I also keep wondering if long-term interest rates are going to stay relatively anchored. Yields have moved up mostly in the 1-5 year part of the curve. Will we see a big jump in the 10-30 year segment? Or does the market think think we're going to bust and revert to pre-COVID economic trend? It seems like a crazy set-up with the Fed getting very aggressive with the backdrop of stock and real estate prices that have surged in recent years; plus bond yields that are still extremely low. Looks like some extremely choppy waters lie ahead. Just a bunch of random thoughts.

I'm way late on the cigar question but my go-to yard-work/mowing the lawn smoke would be a Romeo Y Julieta 1875 or a Macanudo (Connecticut wrap for both because I like a more mild smoke). Last few summers I've gone with some "Connecticut samplers" which as worked out well.

It sure seems like we're on a track toward demand destruction. If energy stays up, and inflation stays elevated more broadly AND the Fed ratchets rates up all year, this is going to start eating into consumers.

The two-year was in the 2.3% range today. Significant move over the last few weeks.

I think it depends on the type of angle you're looking for. I used to love Fortune magazine. They'd go deep on companies. It was just a great magazine that talked about business. I've always kept an article that I read in 2010 or 2011 that predicted a massive housing short-fall (that we're now in the midst of). I enjoyed The Economist too for it's more global and macro analysis. Never was a huge fan of Businessweek. Forbes was OK. However everything seemed to change over the last decade as everything went digital. This is my totally subjective opinion but it seemed like the content of most business magazines began to wane and I let my subscriptions go except for the WSJ.

To answer your first question, yes. In-fact, I also noticed the relatively attractive looking yield on the two-year this week and put some idle cash to work. My accounts are at Fidelity and it is very easy to buy individual Treasurys. Treasurys are the most liquid market in the world so very little risk. Small duration risk but with the individual securities you can alway hold to maturity. Outside of I Bonds, the 2-year treasury looks like the best deal out there for cash presently.

That is really cool. Several cold winters ago I was scrolling through Youtube and watched a few segments on the Hubble Deep Field. That totally blew my mind and got me generally more interested in things beyond earth. The vastness of space completely mesmorizes me.

I'm wondering if we're going to see a repeat of Q4 2018 at some point in the rate hike cycle. Although, a lot of stuff has already been washing out. Separately, I personally expect a significant economic slowdown between the combination of inflation eating away at disposable income, rising interest rates and waning demand on big-ticket items that were pulled forward during the first 18 months of the pandemic. Basically all the forces that have propelled asset prices and the economy are turning the opposite way. It just looks liked a difficult set-up for the economy and market.

One of my personal heroes is George Washington. I visited Mt. Vernon most recently. At the end of Washington's life, he built a distillery and some estimates suggest he was making more whiskey than anyone in the United States. Relatively recently the distillery was rebuilt in the same location as the original and they began making whiskey using 18th century methods. They even found Washington's recipe among preserved records and that's what is used today. I bought a bottle while I was at Mt. Vernon. Very expensive but pretty good! https://whiskey.mountvernon.org/

Opened a small position in FB. Have been following the company increasingly over the last 18 months. Owning some always makes me dig deeper.

My nuclear family took our turn with this thing over Thanksgiving weekend. We probably had the delta variant but who knows. It's been a brutal 6-7 weeks not because anyone was seriously ill, but after COVID, my kids came down with hand, foot and mouth virus (from daycare) around Xmas and in just the last two days now they have cold symptoms again. Talk about a slog. With respect to our experience with COVID, fortunately it was very mild. My wife is a healthcare professional so she got a booster shot back in September. Tested positive the day after Thanksgiving as did my two kids (5 & 2). My wife was mildly sick for about two days (fatigue and aches). My 5 year old, who had the first round of Pfizer about 3 or 4 weeks prior to testing positive had no symptoms. My two year old had cold symptoms. I somehow escaped (I tested twice) despite being in a household with three people that tested positive. I got my booster shot about a week before this whole thing went down so maybe the timing was just lucky. Lots of mysteries to this virus.

I always think about this in terms of simple compounding math. For example, how much will profits grow over 10-years if a company compounds at 15%, 20% or 30%? The numbers are pretty amazing: 1. At 15%, earnings are up 3.5X 2. At 20%, earnings are up over 5X 3. At 30%, earnings are up over 10X To me, this illustrates why rapidly growing companies are worth very high multiples. If you paid 30X earnings for a business growing at 30% annually for a decade, by year 10 you'd be earning 33% on your original investment. Even if the growth rate really slowed in the second decade, you'd still come out very good. This math, as basic as it is, really has helped me evolve after being indoctrinated with value investing principles very early on (and as a consequence, missing a lot of great businesses because the multiple looked rich).

Keep the poison of politics sequestered from the rest of the forums as it is.

My understanding is the $10k limit is per person, so husband and wife could buy total of $20k. Anyone done this out of curiosity? Edit: sleepydragon seems to have answered my question above. Thanks.

Just grabbed my $10k.

So the correct answer is D. If we extrapolate, that would put the DJIA at around 158,000 in ten years and the Nasdaq at 113,440 for context.

We're on a pretty epic bull run. I checked trailing 10-years returns out of curiosity this morning which notably don't include the depths of the financial crisis. I wasn't shocked but the figures are pretty intriguing. Intuitively, what would you guess through the end of October 2021? And what do you think these figures portend for the next 10-years?

I'd be surprised in the US. Seems like an issue ripe for hyper politicization. Would probably really stoke the conspiracy/anti-establishment/don't tread-on-me fervor.

Gundlach is an interesting guy to listen to...I'd even say entertaining. He's got a lot of insight (which probably explains why Howard Marks backed Doubleline when it launched). The story of Gundlach's path into the asset management industry is legendary.

Is anyone else worried that the central banks (the Fed in-particular) have backed themselves into a corner they can't get out? They know as soon as they start to raise rates and slow bond purchases, it's highly likely asset prices go south. If severe enough, it could impact the real economy. Additionally, some suggest there isn't enough demand in the market for treasurys without Fed purchases so they can't stop QE even if they want to without rates going up significantly. Obviously if the 10-year jumps to 5% for example, that is going to create some real problems. So does the Fed just keep right at it because they can't stop? Basically it just seems like we're screwed. LOL.

One of my clients got me into Jameson whiskey. I can see why he likes it. Goes good with lemonade and hot weather.

That's a great line. LMAO over here!