Have We Hit The Top?

[73 Reds]

1 minute ago, John Hjorth said:

 

It's an economic main stream media thingy / phenomen, it's all about clicks, subscriptions, also as a basis attracting advertising, and thereby advertising income, etc.

 

Next, the people in all kind of financial institutions responsible for sales, assets under management, fees and commisions set in on how they are there for you to help you out of your actual misery from what other  or maybe yourself may have done of harm to your selfs related to your actual situation [just to get the opportunity fleece you, that is].

 

Simultaniously and together with those first and second wave of gobbling you have members and participants in the political systems everywhere venting their stances on this and that that is actually up for discussion, with 'this can't be right, this is not going to end up well, -we absolute take decisive actions to avoid the future consequenses of that now!'.

 

Turkey farm behavior and pattern all over it :

 

 

 

That said, for the last few years that I've had a subscription on Economist, I read and scrutinize the byweekly tables of Economic & financial indicators and Makets data, which provides a great pushback on all the 'Turkey noise', ref. above, because you get data, - data with no comments and no noise attached, and gradually one gets an overall feeling how certain parts or countries in world are doing, which matters to me, for my basic understanding of local conditions at given location on the planet.

Yeah, the financial investment industry and the diet/weight loss industry share a lot in common.  In both cases "experts" charge a lot of money to tell you what you have to do, while in order to be successful in both, all you really need is discipline.

[Red Lion]

On 8/13/2024 at 5:34 AM, Blake Hampton said:

It couldn't be a lump-sum deal and it would have to gradually revert to fixed-income like a lifecycle fund, but it might be able to work. I just have a perceived problem, possibly irrational, with mindless investment that has no fixation on underlying fundamentals. Over time, indexes average out to returns that are relatively simple to forecast from the onset. Is it possible though that money could keep flowing into an index without there ever being a huge correction? What is the longest period after an index drops for it to reach all-time highs again?

 

It is just the simple nature of fixed income vs the stock market. The income from treasuries is fixed and certain whereas the returns from stocks aren't.

Why not just have the SS trust fund dump all of its treasuries, which will then cause financial panic with rising interest rates, then go scoop up a bunch of discounted stocks? 

[Blake Hampton]

54 minutes ago, Red Lion said:

Why not just have the SS trust fund dump all of its treasuries, which will then cause financial panic with rising interest rates, then go scoop up a bunch of discounted stocks? 

 

Genius

[gfp]

1 hour ago, Red Lion said:

Why not just have the SS trust fund dump all of its treasuries, which will then cause financial panic with rising interest rates, then go scoop up a bunch of discounted stocks? 

Alas, the Social Security trust fund and SS disability trust fund don't own any marketable treasury securities.  Only the special issue IOUs of the US gov.

[Blake Hampton]

2023 Financial Report of the United States Government

 

Scary stuff

[Blake Hampton]

^ Janet Yellen said it's her "pleasure to present the Fiscal Year 2023 Report to the American people."

[Spekulatius]

1 hour ago, gfp said:

Alas, the Social Security trust fund and SS disability trust fund don't own any marketable treasury securities.  Only the special issue IOUs of the US gov.

Government bonds are IOUs too, if you think about it.

Edited August 14 by Spekulatius

[TwoCitiesCapital]

13 minutes ago, Spekulatius said:

Government bonds are IOUs too, if you think about it.

 

Yes - this is why many people include the unfunded liabilities in our total debt calculation. 

 

Once you add Social Security and future Medicare/Medicaid liabilities, the numbers are just nonsensical. 

Edited August 14 by TwoCitiesCapital

[Red Lion]

5 hours ago, gfp said:

Alas, the Social Security trust fund and SS disability trust fund don't own any marketable treasury securities.  Only the special issue IOUs of the US gov.

Isn’t this something that could be easily corrected by an act of congress? Swap out the iou’s for marketable securities and then dump them on the market? 
 

edit:

 

Or is an act of congress even necessary? Seems like this could conceivably be executed by the treasury? 
 

Sorry for the hypothetical, I’m sure nothing like this will ever happen, but it seems like a damn good idea. 

Edited August 15 by Red Lion

[UK]

https://www.reuters.com/markets/summer-market-shock-not-quite-over-investors-brace-more-turmoil-2024-08-15/

 

"Money managers' risk mandates tend to prevent them from buying equities when prices are fluctuating widely."

 

 

[mattee2264]

"The debt-to-GDP ratio was approximately 97 percent at the end of FY 2023. Under current policy and based on this report’s assumptions, it is projected to reach 531 percent by 2098. The projected continuous rise of the debt-to-GDP ratio indicates that current policy is unsustainable"

 

This is shocking really. Also begs the question as to how much of the increase in corporate profits compared to pre-pandemic levels is attributable to huge deficit spending (not to mention massive expansion of the Fed's balance sheet). And even before the pandemic from 2015 to 2019 the US annual deficit increased from approximately $500m to just under $1TR. Not to mention the cumulative expansion of the Fed's balance sheet over this cycle which is far in excess of the half hearted attempts at QT. 

 

And fiscal stimulus operates to some degree with a lag so there is a cumulative benefit from all the deficit spending over the last decade. Imagine what would happen then if at some point the US government was forced to either increase taxes or cut spending or if interest rates rose significantly to reflect the unsustainability of the fiscal trajectory?

 

Really we do seem to be heading to the Japanification of the US economy and no doubt interest rates will have to stay low so that government debt (not to mention consumer and corporate debt) can continue to increase at a breath-neck pace and ultimately it will be the USD that takes the hit. The difference is that Japan has been able to keep inflation under control helped by a shrinking population and global disinflationary trend which only reversed post-COVID as well as a pretty stagnant economy. 

 

Inflation is now below 3% in the USA. But that reflects a slowing economy as well as a benefit from mass immigration which has kept wage inflation in check and strong dollar and the decline in energy prices has helped. But inflation probably remains the fly and the wall that will prevent another decade of the virtuous cycle of debt and money supply expansion. 

 

[Gregmal]

Todays headline:  Market surges after most recent isolated data point quells recession fears raised by disgruntled Fintwit warriors bitter about not being on vacation with everyone else.

 

Wonder what next week will bring! 

[UK]

Interesting take: 

 

https://www.cnbc.com/video/2024/08/15/leon-cooperman-nothing-is-overvalued-with-bond-yields-where-they-are.html

[Kupotea]

I started buying out of the money SPY puts on Friday with a Dec/Jan expiry. My portfolio is up nicely for the year and despite the flash crash volatility is cheap again and the S&P is close to all time highs. I don’t want to sell my current holdings so this should give me some cash to deploy if things turn for the worse.
 

On the economy side, unemployment is trending upwards like a recession is coming. Bankruptcies and delinquencies are doing the same. The election means any policy response will be delayed. FED is unlikely to cut significantly until it’s obvious to everyone that the economy has turned over. A lot of the positive data out there has been consistently revised downwards over the last year or so. 
 

I could be wrong obviously but if i’m right it’s likely a 10x return and if i’m wrong i lose 5% of my portfolio so whatever.
 

 

[Spekulatius]

@Kupotea what SPY options  are you buying and what are your assumptions for a 10 x return?  As someone who dabbled in index puts before, I find it hard to make 10x returns with them.

[Kupotea]

2 minutes ago, Spekulatius said:

@Kupotea what SPY options  are you buying and what are your assumptions for a 10 x return?  As someone who dabbled in index puts before, I find it hard to make 10x returns with them.

Puts spreads. Buy $510 sell $490. I don’t usually hold to maturity and would sell on any spike in vol but given that these are hedges for a very specific scenario i probably would just hold.

[coffeecaninvestor]

Read this last night..

“It’s ruinous for the soul to be anxious about the future and miserable in advance of misery, engulfed by anxiety that the things it desires might remain its own until the very end. For such a soul will never be at rest—by longing for things to come it will lose the ability to enjoy present things.” —SENECA, MORAL LETTERS, 98.5b–6a

 

..and the first thing that came to mind was this thread.

 

Personally I struggled for awhile with always trying to predict the next top or market crash, and letting it impact my day to day life. I can't imagine the toll it takes on those that worry about every new indicator reading, and worry about quarterly performance. 

[Gregmal]

Yea it’s circus clown behavior. They’re currently “bracing” for clueless Jerry’s speech. Trigger finger ready to instantly smash buy or sell buttons in reaction lol 

[Spekulatius]

6 hours ago, Gregmal said:

Yea it’s circus clown behavior. They’re currently “bracing” for clueless Jerry’s speech. Trigger finger ready to instantly smash buy or sell buttons in reaction lol 

These are all institutional investor that trade on the Powell’s speeches or Fed meeting notes. I don’t know any individual investor who even knows what he said today.

 

Besides, I would argue that the Fed has done a good job so far. The economy is doing fairly well and seems to be set to do the soft landing that they have been aiming for.

[gfp]

2 hours ago, Spekulatius said:

These are all institutional investor that trade on the Powell’s speeches or Fed meeting notes. I don’t know any individual investor who even knows what he said today.

 

Besides, I would argue that the Fed has done a good job so far. The economy is doing fairly well and seems to be set to do the soft landing that they have been aiming for.

 

I wouldn't give the Federal Reserve any credit for that.  

[dealraker]

Given time and some age progression you guys are going to realize that the investment world is simply dominated by the latest prices, both the quotes on this day and their direction up or down.  "Are we at the top?"  The obsession, and it is a dominating focus, is that literally everyone ranks both themselves and those they follow in the "in-the-moment" avoidance of lower stock quotes.

 

Step back and think about me - given I'm old as dirt - for a moment.   I'm reading a forum that's better than any other I've participated on...better by far, yet there are a couple of things that stand up and scream at me all the time.  First is the yearly performance - this year about December or early January their will be the chants of how we all did this year and it will rule the minds of all - that's the envy mind steal - you can't avoid it because it is real.  The second thing is that when markets fall those with cash are going to flood the discussion.  Yep cash levels will rule like nothing else ever!

 

And here I sit, years of hearing this stuff now given I've participated in investment forums for 30 years and heard it all in the years prior to forums on TV and in investment clubs.  But there's one thing that stands out more than anything else, it stands so tall above all other things that it literally dwarfs them.  Here it goes:

 

I go around in life and see where the money is, where the net worth's are.  When donations are needed for this or that there's the same ole thing cropping up endlessly.  Those with the means are always long term business owners.  The "nailed the top" bunch and the "I'm 90% cash in this downturn" superiors?  I know online there's claims of fame and fortune, but not once ever in real life have I ever encountered these "nailed the top" and "got cash and avoided the plunge" people as to substantial net worth.  We've had a few come and go in our investment club that I've been in for 50 years.  They come in hot and leave frustrated and angry because we didn't have their level of expertise.  Yet once they are gone?  Hell, they are gone - took their intensity and what's evidently a small pot ----- somewhere else.

 

Yet it - the lower stock quote obsession - dominates...and will dominate.  It will dominate passionately.

 

I just watch.  My yearly performance is always among the lowest online in every single group I'm reading.  And above all I NEVER own the hot stocks!   

 

Life is great...if you can stand it.

[Spooky]

11 hours ago, Spekulatius said:

These are all institutional investor that trade on the Powell’s speeches or Fed meeting notes. I don’t know any individual investor who even knows what he said today.

 

A bunch of my friends who lean more towards the meme stock / Bitcoin / Nvidia universe are so wrapped up in Fed watch. Some were buying short term options on Nvidia. Seems to be a big thing with the younger reddit generation of traders - very short term oriented so Fed speeches are big events for them.   

[UK]

6 minutes ago, dealraker said:

I go around in life and see where the money is, where the net worth's are.  When donations are needed for this or that there's the same ole thing cropping up endlessly.  Those with the means are always long term business owners.  The "nailed the top" bunch and the "I'm 90% cash in this downturn" superiors?  I know online there's claims of fame and fortune, but not once ever in real life have I ever encountered these "nailed the top" and "got cash and avoided the plunge" people as to substantial net worth.

 

I agree with you basically 100 percent. Yet I think there are a few exceptions, such as:

 

https://covestreetcapital.com/wp-content/uploads/2015/03/Druckenmiller-_Speech.pdf

[nwoodman]

14 minutes ago, dealraker said:

  I know online there's claims of fame and fortune, but not once ever in real life have I ever encountered these "nailed the top" and "got cash and avoided the plunge" people as to substantial net worth.  We've had a few come and go in our investment club that I've been in for 50 years.  They come in hot and leave frustrated and angry because we didn't have their level of expertise.  Yet once they are gone?  Hell, they are gone - took their intensity and what's evidently a small pot ----- somewhere else.

 

Yet it - the lower stock quote obsession - dominates...and will dominate.  It will dominate passionately.

 

I just watch.  My yearly performance is always among the lowest online in every single group I'm reading.  And above all I NEVER own the hot stocks!   

 

Life is great...if you can stand it.

Thank-you, this struck a chord.

[73 Reds]

20 minutes ago, dealraker said:

Given time and some age progression you guys are going to realize that the investment world is simply dominated by the latest prices, both the quotes on this day and their direction up or down.  "Are we at the top?"  The obsession, and it is a dominating focus, is that literally everyone ranks both themselves and those they follow in the "in-the-moment" avoidance of lower stock quotes.

 

Step back and think about me - given I'm old as dirt - for a moment.   I'm reading a forum that's better than any other I've participated on...better by far, yet there are a couple of things that stand up and scream at me all the time.  First is the yearly performance - this year about December or early January their will be the chants of how we all did this year and it will rule the minds of all - that's the envy mind steal - you can't avoid it because it is real.  The second thing is that when markets fall those with cash are going to flood the discussion.  Yep cash levels will rule like nothing else ever!

 

And here I sit, years of hearing this stuff now given I've participated in investment forums for 30 years and heard it all in the years prior to forums on TV and in investment clubs.  But there's one thing that stands out more than anything else, it stands so tall above all other things that it literally dwarfs them.  Here it goes:

 

I go around in life and see where the money is, where the net worth's are.  When donations are needed for this or that there's the same ole thing cropping up endlessly.  Those with the means are always long term business owners.  The "nailed the top" bunch and the "I'm 90% cash in this downturn" superiors?  I know online there's claims of fame and fortune, but not once ever in real life have I ever encountered these "nailed the top" and "got cash and avoided the plunge" people as to substantial net worth.  We've had a few come and go in our investment club that I've been in for 50 years.  They come in hot and leave frustrated and angry because we didn't have their level of expertise.  Yet once they are gone?  Hell, they are gone - took their intensity and what's evidently a small pot ----- somewhere else.

 

Yet it - the lower stock quote obsession - dominates...and will dominate.  It will dominate passionately.

 

I just watch.  My yearly performance is always among the lowest online in every single group I'm reading.  And above all I NEVER own the hot stocks!   

 

Life is great...if you can stand it.

Dealraker, you make a very good point.  Many (most?) successful people I have ever known pay entirely no attention to a published price unless it works to their benefit.  For that matter, many of these folks own assets with no published price at all.