Castanza Posted January 8 Posted January 8 Just now, Blake Hampton said: situation that we have never before experienced. go on....
Gregmal Posted January 8 Posted January 8 Yea what is it that we havent experienced before? 5% rates? 7% mortgages? Tax cuts? Inflation is nowhere to be found despite people trying to sell you a story due to a slight uptrend in treasuries during a low liquidity holiday window. The recession has been obsessively called and then "pushed back" 6-12 months now every 6-12 months since covid happened. And before then it was a depression about to occur. Things are pretty freaking boring and unspectacular right now.
Blake Hampton Posted January 8 Posted January 8 8 minutes ago, Castanza said: go on.... Record high market valuations for basically every single asset class, record fiscal deficits and debt levels, a moron as our president-elect and more waiting in congress, a ton of money in the system from past QE. 1 minute ago, Gregmal said: Yea what is it that we havent experienced before? 5% rates? 7% mortgages? Tax cuts? Inflation is nowhere to be found despite people trying to sell you a story due to a slight uptrend in treasuries during a low liquidity holiday window. The recession has been obsessively called and then "pushed back" 6-12 months now every 6-12 months since covid happened. And before then it was a depression about to occur. Things are pretty freaking boring and unspectacular right now. Just because things are boring now means nothing.
gfp Posted January 8 Posted January 8 1 minute ago, Blake Hampton said: Record high market valuations for basically every single asset class, record fiscal deficits and debt levels, a moron as our president-elect and more waiting in congress, a ton of money in the system from past QE. Just because things are boring now means nothing. There will always be a record debt level. Every year. We call those liabilities "money." QE doesn't do anything but create excess bank reserves that aren't useful in the real economy and don't circulate. The coupon securities the government takes form the private sector when they "do QE" are more useful to the private sector - they can be pledged as collateral, transformed into anything, etc. When you think about excess "money" in the system it is not QE, it is deficit spending and sometimes a boom in bank lending (not currently). Deficit spending and growth in bank lending is the only way new federal money gets into our system. International money can be created by non-US banks in huge amounts. There are a lot of moving parts. QE is not a major factor in any of it.
Eldad Posted January 8 Posted January 8 2 minutes ago, Blake Hampton said: Record high market valuations for basically every single asset class, record fiscal deficits and debt levels, a moron as our president-elect and more waiting in congress, a ton of money in the system from past QE. Just because things are boring now means nothing. I hear you. Warren Buffett I think hears you, so you are in good company. Just in general people are not thoughtful at all anymore and everyone has lost their minds to a certain extent. If present society was a spoiled child, it would desperately need to be grounded for a couple of months and assigned to hard labor for its own future good. I don’t know when or why it will happen but it’s coming and it actually needs to happen very badly. At same time I can’t really bring myself to raise more than about 10% cash.
Jaygo Posted January 8 Posted January 8 1 hour ago, Blake Hampton said: You guys are absolutely right when you say I don’t have a handle on this—it feels impossible to. I’ve spent the last couple of years really digging into this stuff, and every time I think I’ve figured something out, I quickly realize I’m wrong. We don’t know what’s going to happen. That said, I do think it’s possible to understand the different ways it could play out and position yourself for each scenario. The only thing I’m sure of is that none of this is good, and whatever bad comes from it will hurt a lot of people. I don’t plan to be one of them. Blake how old are you, where do you live, your situation. I am curious if you dont mind my being nosey. The question is based on my own experience in the gfc fresh from school. I had a huge blow up on leverage and frankly was a very bleak individual for a few years. I just want to see if our paths are similar
Blake Hampton Posted January 8 Posted January 8 (edited) 14 minutes ago, Jaygo said: Blake how old are you, where do you live, your situation. I am curious if you dont mind my being nosey. The question is based on my own experience in the gfc fresh from school. I had a huge blow up on leverage and frankly was a very bleak individual for a few years. I just want to see if our paths are similar I’m 22 and I currently live in Oklahoma. I’m a part-time federal employee that’s also going to school for a Bachelors in Computer Science. I grew up with my grandparents in a nice middle-class home and neighborhood. I went to a good elementary school, but went to some pretty ghetto middle schools and high schools. Additionally, I’d say that I’ve done pretty well with money so far, but I’ve learned some hard lessons too. I’ve also experienced childhood struggles but I’m sure not as bad as some others. It’s good to see the bad sometimes, it keeps you grounded. Edited January 8 by Blake Hampton
Castanza Posted January 8 Posted January 8 11 minutes ago, Blake Hampton said: Record high market valuations for basically every single asset class, record fiscal deficits and debt levels, a moron as our president-elect and more waiting in congress, a ton of money in the system from past QE. Just because things are boring now means nothing. The sooner you accept the world has always been and always will be held together by bubble gum and shoe strings the sooner you can get on with life. There is no positioning that will protect you from the asteroid event you seem to be afraid of. The line of thinking you're stuck in will be more detrimental to your long term market returns than any future market correction you are likely to experience in your lifetime. You either believe in general continued progress of humanity within your lifetime or you don't.
Blake Hampton Posted January 8 Posted January 8 1 minute ago, Castanza said: The sooner you accept the world has always been and always will be held together by bubble gum and shoe strings the sooner you can get on with life. There is no positioning that will protect you from the asteroid event you seem to be afraid of. The line of thinking you're stuck in will be more detrimental to your long term market returns than any future market correction you are likely to experience in your lifetime. You either believe in general continued progress of humanity within your lifetime or you don't. I believe in progress. But I also believe you can always form excuses to justify crazy situations.
Blake Hampton Posted January 8 Posted January 8 (edited) 18 minutes ago, Jaygo said: Blake how old are you, where do you live, your situation. I am curious if you dont mind my being nosey. The question is based on my own experience in the gfc fresh from school. I had a huge blow up on leverage and frankly was a very bleak individual for a few years. I just want to see if our paths are similar I'm sorry you had to experience that by the way. I think the GFC was disproportionately harder on younger people such as yourself. Probably made it worse that older people didn't and still don't understand. Edited January 8 by Blake Hampton
Value_Added Posted January 8 Posted January 8 Pretty good memo from Howard Marks put out yesterday. More of the same old stuff but there are good points made about current macro…There are alot of indicators that say the market is very expensive but there are also a lot of indicators that say we’re not really in huge bubble territory yet. Aside from the memo…I think there is a lot of value in the market right now away from the tech and fads. These companies will not be immune from huge drawdowns but boy it’s tough stay in a large cash position with them sitting there looking all cheap and such. https://www.oaktreecapital.com/insights/memo/on-bubble-watch
73 Reds Posted January 8 Posted January 8 25 minutes ago, Blake Hampton said: I’m 22 and I currently live in Oklahoma. I’m a part-time federal employee that’s also going to school for a Bachelors in Computer Science. I grew up with my grandparents in a nice middle-class home and neighborhood. I went to a good elementary school, but went to some pretty ghetto middle schools and high schools. Additionally, I’d say that I’ve done pretty well with money so far, but I’ve learned some hard lessons too. I’ve also experienced childhood struggles but I’m sure not as bad as some others. It’s good to see the bad sometimes, it keeps you grounded. Blake, you're young and lucky. I'm old and lucky. Wanna trade places? I was lucky to have discovered Berkshire Hathaway when interest rates were at all time highs and the US economy was in the dumps - circa 1980. Took me a while to get comfortable with it too. Not long thereafter I discovered MO. Two entirely different companies, both hugely successful for shareholders. I sold MO on moral grounds (couldn't trust management after the MSA) but the lesson is that there is always something to buy in any economic environment. As an aside I stopped caring at all about macro issues and instead simply buy and hold stocks (pieces of businesses) I believe will prosper no matter what.
Blake Hampton Posted January 8 Posted January 8 24 minutes ago, Value_Added said: https://www.oaktreecapital.com/insights/memo/on-bubble-watch "There’s usually a grain of truth that underlies every mania and bubble. It just gets taken too far."
Jaygo Posted January 8 Posted January 8 46 minutes ago, Blake Hampton said: I’m 22 and I currently live in Oklahoma. I’m a part-time federal employee that’s also going to school for a Bachelors in Computer Science. I grew up with my grandparents in a nice middle-class home and neighborhood. I went to a good elementary school, but went to some pretty ghetto middle schools and high schools. Additionally, I’d say that I’ve done pretty well with money so far, but I’ve learned some hard lessons too. I’ve also experienced childhood struggles but I’m sure not as bad as some others. It’s good to see the bad sometimes, it keeps you grounded. Thanks for that. Blake you may be too smart for your own good. I fell in love with the stock market long before I had any money, I won a stock picking challenge in high school and after that it was on full blast. I graduated in 2005 and worked construction finally making money. In 2007 I found a gloriously rich client who advised the markets would keep going for a long time. He helped me turn my 50k I had saved into an investment loan of 100K it went up and up for a few months, I thought I was brilliant, all that studying the markets paid off, then it started to fall. My 100k was down to 40 after 12 months and I was devastated. I sold half for a loss and worked to pay off the debt. Now my 50k was basically -5k. I just knew the market would keep going down right through 2009 and 2010 and 2011 and 2012 and on and on. I studied harder, I read and read but the market didn't do what it was supposed to do. Europe in 2012 was burning, Greece was toast and the great depression was coming. The market just "climbed a wall of worry" that was the tag line then and "Green Shoots" Well by 2014 I gave up and bought some BRK, it slowly went and up and for the first time in my life I saw what owning a real company could do. I focused on work and not the markets. I stopped predicting the end of the world and started understanding what all the numbers really mean. Hint! They dont mean shit, the numbers are fake, the money is fake, the real thing is production and trade. Blake I hope you can focus on the productive parts of the global economy and not just on the numbers getting bigger. That's what counts. You are on the right track by recognising the world is messed up, but you kind of have to figure out how to play within the chaos rather than avoid it all together. Caution is always a good thing but please understand that the numbers will go up forever, by the time you are old the numbers will be far bigger. I would suggest reading about the purchasing power of gold, oil and other timeless items and then get a baseline for the money from there. Check out the gold to suit ratio. It remains unchanged since the days of Shakespeare. I guess my point is that big numbers should not be the determining factor and they do not necessarily lead to a collapse. I'm running long here but one example is Canadian housing. Many say we are in bubble that should burst any day but according to the gold housing ratio we basically right around the mark. Gold 1950 34$ USD per oz Toronto House price average 1950 $ 19,000.00 CAD really hard to find but this is close Gold 2025 $2675 USD per oz or 79 times the 1950 average price Toronto house price average 2024 $ 1,282,000.00 or 68 times the 1950 price
cubsfan Posted January 8 Posted January 8 2 hours ago, Blake Hampton said: It took the S&P 500 13 years to fully recover from the Dot-com bubble, even amid the FED lowering rates to 0% and conducting large amounts of QE. I vehemently doubt we will be so lucky in the future. I think we have all been there before - where the market looks expensive and scary - and the future looks clouded with obvious macro traps. It's rarely clear sailing. But as a small investor @Blake Hampton - all you have to do is shift through opportunities and find a handful of good ones. Maybe 4/5/6 - and you can do incredibly well while others try and call the market.
james22 Posted January 8 Posted January 8 12 minutes ago, Jaygo said: Blake you may be too smart for your own good. The most difficult thing for a young investor to accept is that their intelligence and education, no matter how demonstrable (test scores, grades) and analytically rigorous (field of study, school ranking), gives them very little advantage.
cubsfan Posted January 8 Posted January 8 13 minutes ago, james22 said: The most difficult thing for a young investor to accept is that their intelligence and education, no matter how demonstrable (test scores, grades) and analytically rigorous (field of study, school ranking), gives them very little advantage. That would absolutely be the John Hussman story. Brilliant, well written and terrifying conclusions while others ignore him and make a fortune.
Gregmal Posted January 8 Posted January 8 1 minute ago, cubsfan said: That would absolutely be the John Hussman story. Brilliant, well written and terrifying conclusions while others ignore him and make a fortune. Yup. Whenever I hear these long macro diatribes I immediately think one of two things…naive, or selling a newsletter lol.
james22 Posted January 8 Posted January 8 11 minutes ago, cubsfan said: That would absolutely be the John Hussman story. Brilliant, well written and terrifying conclusions while others ignore him and make a fortune. But absolute catnip to the intelligent investor.
Castanza Posted January 8 Posted January 8 Pretty much every young investor who is genuinely interested in the market and investing outside of index funds in their 401k goes through this phase. Eventually you read some Peter Lynch and come to terms that forecasting is a fools errand.
james22 Posted January 8 Posted January 8 2 hours ago, Blake Hampton said: I’m 22 My career in Corporate Planning was longer than you've been alive. We built Long-Range Forecasts for one of the largest companies in the world. How often? Every year. Why? "Events, dear boy, events."
Blake Hampton Posted January 8 Posted January 8 Just now, james22 said: My career in Corporate Planning was longer than you've been alive. We built Long-Range Forecasts for one of the largest companies in the world. How often? Every year. Why? "Events, dear boy, events." And you're still pushing Bitcoin and MicroStrategy. The world has lost its mind.
james22 Posted January 8 Posted January 8 2 minutes ago, Blake Hampton said: And you're still pushing Bitcoin and MicroStrategy. The world has lost its mind. Admittedly, being cocksure at 22 is more forgivable. But only if I'm wrong.
Haryana Posted January 8 Posted January 8 2 hours ago, Value_Added said: ... https://www.oaktreecapital.com/insights/memo/on-bubble-watch The following part of it self-discredits the whole memo. Lately, I’ve been repeating a quote I attribute to Warren Buffett: “When investors forget that corporate profits grow about 7% per year they tend to get into trouble.” What this means is that if corporate profits grow at 7% a year and stocks (which represent a share in corporate profits) appreciate at 20% a year for a while, eventually stocks will be so highly priced relative to their earnings that they’ll be risky. (I recently asked Warren for a source on the quote, and he told me he never said it. But I think it’s great, so I keep using it.)
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