Have We Hit The Top?

[gfp]

8 minutes ago, LC said:

Well yes but for folks like myself who are stuck with a chunk of assets with very few investable options (cash vs. SP500 are the best ones) - the level of the index is important.

 

Remember kids - don't let financial advisors convince you/your family to buy into convoluted investment structures!

 

You don't need a bunch of good "investable options" - really if you have 3 or 4 spots you really like just focus on those and ignore the rest.  I almost always have 90+% of capital in 3 or 4 ideas.

[John Hjorth]

12 minutes ago, gfp said:

You don't need a bunch of good "investable options" - really if you have 3 or 4 spots you really like just focus on those and ignore the rest.  I almost always have 90+% of capital in 3 or 4 ideas.

 

@gfp,

 

I personally speculate perhaps @LC here is alluding to tax deferred funds of his related to employment, or historical employment, subject to investment limitations. I may be totally wrong here, and @LC can naturally respond for himself, btw.

Edited December 6 by John Hjorth

[Blake Hampton]

I strongly believe that we are just one fiscal crisis away from calamity. Something of that magnitude won’t simply be some dip that gets corrected in a couple of years, especially when you consider how markets are currently priced.

 

However, I understand that I could always be wrong.

Edited December 6 by Blake Hampton

[Blake Hampton]

My theory is that almost everyone understands the general implications of past policy, being inflation, and is trying to find ways to escape it. The problem is that there is no escape, there are only better places to position yourself for what’s eventually to come.
 

Another risk is that Trump’s cabinet destroys the dollar through interfering with the FED’s independence.
 

Inflation also swindles the equity investor.

[John Hjorth]

28 minutes ago, Blake Hampton said:

I strongly believe that we are just one fiscal crisis away from calamity. Something of that magnitude won’t simply be some dip that gets corrected in a couple of years, especially when you consider how markets are currently priced.

 

However, I understand that I could always be wrong.

 

14 minutes ago, Blake Hampton said:

My theory is that almost everyone understands the general implications of past policy, being inflation, and is trying to find ways to escape it. The problem is that there is no escape, there are only better places to position yourself for what’s eventually to come.
 

Another risk is that Trump’s cabinet destroys the dollar through interfering with the FED’s independence.
 

Inflation also swindles the equity investor.

 

Blake [ @Blake Hampton ],

 

Please don't forget to post again about your thoughts, when you have figured out how to execute on them, 5, 10, 15 and 20 years out into the future.

[Junior R]

57 minutes ago, Blake Hampton said:

My theory is that almost everyone understands the general implications of past policy, being inflation, and is trying to find ways to escape it. The problem is that there is no escape, there are only better places to position yourself for what’s eventually to come.
 

Another risk is that Trump’s cabinet destroys the dollar through interfering with the FED’s independence.
 

Inflation also swindles the equity investor.

yeah theres alot of risk market isn't pricing in ...as right now theres a chase to catch the gains lol

[Spekulatius]

FOMO is a live and well. I wonder why the ticker $FOMO symbol isn’t utilized. I do see a lot of cheap stuff though , seems like an hourglass market where the cheap stuff gets cheaper and the expensive stuff pricier. 2002 was very similar in that respect too as well as the index getting tech heavy.

[LC]

6 hours ago, John Hjorth said:

 

@gfp,

 

I personally speculate perhaps @LC here is alluding to tax deferred funds of his related to employment, or historical employment, subject to investment limitations. I may be totally wrong here, and @LC can naturally respond for himself, btw.

 

Yep that's pretty much it. I have some personal funds tied up in 401k's with terrible options, I manage some family money which is locked in a variety of annuity/pension-esque types of accounts, also with limited options.

 

Pretty much I'm choosing between a short term T-bill fund, an SP500 index fund, or a variety of other very high expense / very low performance nonsense funds. So it's just a matter of trading in/out of the SP500. But I am not a good trader so I keep it to very small, infrequent moves, just trying to generate slight alpha over the index.

 

Edit: but otherwise @gfp I totally agree. ~70% of my freely-investible assets are in two stocks.

Edited December 6 by LC

[TwoCitiesCapital]

On 12/5/2024 at 4:56 AM, Luke said:

Benjamin Graham - The retarded investor

 

Congrats for Bitcoin Holders!

 

Lol. It might be a bottom for value investing. Not convinced it's a top for Bitcoin. 

 

As someone who casually observed the prior bull markets, and actually lived/invested through the 2017 and 2021 bull markets - it's currently much different. 

 

Back in 2018 and 2021, it was hard to find people NOT talking about Bitcoin (2018) or shitcoins (2021). Every holiday party/social gathering I went to, someone was talking about tripling their money in an absurd amount of time. 

 

This time around? Bitcoin hovered around $60-70k (prior ATHs and 4x off the lows) for months and the only real chatter was in financial circles around the ETF approvals. It has only been post election that I've started to hear stories from non-financial types catching wind of the move. The move to $100k will grab attention and then the FOMO may start. 

 

There's still months left IMO. 

 

On 12/5/2024 at 5:01 AM, Luke said:

My fundamental chart and trend analysis tells you are wrong @Paarslaars, there is a significant correlation! xD

 

Zoom out. Bitcoin crashed from mid-2021 while stocks ripped. Bitcoin bottomed mid-2022 while stocks continued to drop. Bitcoin rallied on the bank failures in March 2023 while stocks temporarily tanked.

 

Just because both have been in a general uptrend recently doesn't mean they're correlated just like stocks and bonds traditionally go up together, but are often negatively correlated where it matters. The longer term correlation to equities was approaching multi-year lows pre-election. The day to day fluctuations in BTC are often very different from equities. But both have been generally rising (as have bonds and just about every other asset class). 

Edited December 7 by TwoCitiesCapital

[Whensthepaintdry?]

@Gregmal do you still follow Ripple at all? I’m starting to hear people talk about it amongst my friends and try to sell me on it. 

[coffeecaninvestor]

On 12/6/2024 at 6:22 PM, TwoCitiesCapital said:

 

Lol. It might be a bottom for value investing. Not convinced it's a top for Bitcoin. 

 

As someone who casually observed the prior bull markets, and actually lived/invested through the 2017 and 2021 bull markets - it's currently much different. 

 

Back in 2018 and 2021, it was hard to find people NOT talking about Bitcoin (2018) or shitcoins (2021). Every holiday party/social gathering I went to, someone was talking about tripling their money in an absurd amount of time. 

 

This time around? Bitcoin hovered around $60-70k (prior ATHs and 4x off the lows) for months and the only real chatter was in financial circles around the ETF approvals. It has only been post election that I've started to hear stories from non-financial types catching wind of the move. The move to $100k will grab attention and then the FOMO may start. 

 

There's still months left IMO. 

 

 

Zoom out. Bitcoin crashed from mid-2021 while stocks ripped. Bitcoin bottomed mid-2022 while stocks continued to drop. Bitcoin rallied on the bank failures in March 2023 while stocks temporarily tanked.

 

Just because both have been in a general uptrend recently doesn't mean they're correlated just like stocks and bonds traditionally go up together, but are often negatively correlated where it matters. The longer term correlation to equities was approaching multi-year lows pre-election. The day to day fluctuations in BTC are often very different from equities. But both have been generally rising (as have bonds and just about every other asset class). 

Antidotally I saw the same thing in my friend group. Every party I went to back in 2021 everyone was buying shitcoin and bitcoin (this is a group who does virtually zero stock investing otherwise),and saying it was going to the moon. Then in the crash they became disenchanted, and haven’t said a word about it until very recently. But even now they aren’t as enthusiastic as they were then. The convo started up and died quickly because the missed the rip off the bottom for the most part. I will be curious to see how long it takes for those animal spirits to rev up again. I do feel like it is frothy, but have no idea how it will play out.  I haven’t sold any significant amount of stock, but I do plan on letting a lot of new capital accumulate in some short term MMA/bonds versus trying to stay fully invested. 

[Gregmal]

1 hour ago, Whensthepaintdry? said:

@Gregmal do you still follow Ripple at all? I’m starting to hear people talk about it amongst my friends and try to sell me on it. 

I sold the XRP as it was really just a trade, but I still have all my Ripple Labs shares minus a few that have been tendered. You start doing a little math on the Ripple balance sheet which holds XRP and is cash flow positive…an IPO would be fun.

[73 Reds]

17 minutes ago, coffeecaninvestor said:

Antidotally I saw the same thing in my friend group. Every party I went to back in 2021 everyone was buying shitcoin and bitcoin (this is a group who does virtually zero stock investing otherwise),and saying it was going to the moon. Then in the crash they became disenchanted, and haven’t said a word about it until very recently. But even now they aren’t as enthusiastic as they were then. The convo started up and died quickly because the missed the rip off the bottom for the most part. I will be curious to see how long it takes for those animal spirits to rev up again. I do feel like it is frothy, but have no idea how it will play out.  I haven’t sold any significant amount of stock, but I do plan on letting a lot of new capital accumulate in some short term MMA/bonds versus trying to stay fully invested. 

Brings to mind Buffett's two most important rules of investing:  Rule 1, don't lose money.  Rule 2, don't forget Rule no. 1.

 

Easiest way to follow these rules is don't speculate - at least with money you can't afford to lose.  Buy productive assets, preferably those that thrive in any economy.  Avoid investments that depend solely on human psychology for success.  In other words, buy companies that generate essential products and services, and productive, hard assets that provide acceptable returns regardless of variable economic factors.  And avoid having to make too many investment decisions; every time you sell something two decisions are required and chances are one of them may be wrong or suboptimal.  

Edited December 8 by 73 Reds

[Gregmal]

27 minutes ago, 73 Reds said:

Brings to mind Buffett's two most important rules of investing:  Rule 1, don't lose money.  Rule 2, don't forget Rule no. 1.

 

Easiest way to follow these rules is don't speculate - at least with money you can't afford to lose.  Buy productive assets, preferably those that thrive in any economy.  Avoid investments that depend solely on human psychology for success.  In other words, buy companies that generate essential products and services, and productive, hard assets that provide acceptable returns regardless of variable economic factors.  And avoid having to make too many investment decisions; every time you sell something two decisions are required and chances are one of them may be wrong or suboptimal.  

Yup, the exact opposite of what everyone does. Poor people try to get rich by speculating. Rich people buy solid, stable assets and then speculate. Basically, you should speculate when it’s funded from your passive income, not your day job.

[coffeecaninvestor]

19 minutes ago, 73 Reds said:

Brings to mind Buffett's two most important rules of investing:  Rule 1, don't lose money.  Rule 2, don't forget Rule no. 1.

 

Easiest way to follow these rules is don't speculate - at least with money you can't afford to lose.  Buy productive assets, preferably those that thrive in any economy.  Avoid investments that depend solely on human psychology for success.  In other words, buy companies that generate essential products and services, and productive, hard assets that provide acceptable returns regardless of variable economic factors.  And avoid having to make too many investment decisions; every time you sell something two decisions are required and chances are one of them may be wrong or suboptimal.  

That's why WEB is the GOAT. I think that probably part of the reason why he has a little bigger cash pile now.. Given his wealthy shareholder base he doesn't need to swing for the fences in what feels like an aging bull market. 

 

Personally, the biggest risk isn't that my portfolio gets cut in half temporarily its that I am in a position of weakness, and sell at the bottom due to panic. We have saved enough that I can just let the current capital compound for the next few decades and we will retire just fine. Therefore, I figure having a little cash around is just going to make me sleep at night better while I wait for a favorable pitch. 

 

 

[73 Reds]

4 minutes ago, coffeecaninvestor said:

That's why WEB is the GOAT. I think that probably part of the reason why he has a little bigger cash pile now.. Given his wealthy shareholder base he doesn't need to swing for the fences in what feels like an aging bull market. 

 

Personally, the biggest risk isn't that my portfolio gets cut in half temporarily its that I am in a position of weakness, and sell at the bottom due to panic. We have saved enough that I can just let the current capital compound for the next few decades and we will retire just fine. Therefore, I figure having a little cash around is just going to make me sleep at night better while I wait for a favorable pitch. 

 

 

Yeah, you know you've made it when you no longer need or even want to speculate, other than for fun.  Can anyone recall any event of widespread speculation throughout history when the eventual outcome has not turned out bad for the last remaining speculators?  

 

[Fly]

1 hour ago, Gregmal said:

I sold the XRP as it was really just a trade, but I still have all my Ripple Labs shares minus a few that have been tendered. You start doing a little math on the Ripple balance sheet which holds XRP and is cash flow positive…an IPO would be fun.

 

Key point: Ripple Labs equity =/= XRP token

 

[Spekulatius]

1 hour ago, Gregmal said:

Yup, the exact opposite of what everyone does. Poor people try to get rich by speculating. Rich people buy solid, stable assets and then speculate. Basically, you should speculate when it’s funded from your passive income, not your day job.

You really don’t need to speculate at all, says the guy with the handle @Spekulatius

[Gregmal]

3 hours ago, Spekulatius said:

You really don’t need to speculate at all, says the guy with the handle @Spekulatius

Nah, if you’ve been around long enough, and seen enough, you know there’s clearly pig moments where you can make fortunes speculating. 

[Junior R]

[dealraker]

So being both old at 70 and having lost my parents at a very early age basically I got throwed (pardon my grammar...but I am from the south) out into the real world financial abyss long-long ago.  So I've seen things, things that see-saw such that it makes the mind come to life with both excitement and anticipation.

 

Here's a good summation:  I own the best lots in my waterfront development, a development that was done by the family builders supply and millwork where now I am a 25% (was 12.5% until last week) owner back in 1980 and I had enough position and luck in the family to get to choose my place to live.  Today my southeast facing waterfront (don't ever buy a west facing home on water unless you want to boil in summer and freeze in winter) home and land across the street (large acreage...3 digits of land acreage) would sell for a big price.  I have seen three times in my life living here where I would have had a reasonable amount of difficulty selling my home for 50% of tax value, and once where I'd have been lucky to sell it for 25% of tax assessment.  

 

Times change.  Today is not one of those times when things don't sell well.  The world is full of people in full mode of desperately wanting eggs from others baskets to come to their basket!  Fear ain't happening, but greed is glory!

 

Today in this world we just gleefully elected to the pres a man who has been a comical failure in business, yet a resounding success in consistently establishing and maintaining a profitable cult-like following.  But business performance wise, that's net profits from sales, the pres stuff shows there's only a massive decay of wealth for 50-60 years from keeping up with inflation.  

 

It doesn't matter today because things with little sales and no profits have huge market caps and these aren't just the pres's holdings such as DJT, these wildly "valuable" things are literally everywhere.  Money chasing what moves the fastest is the theme.  It isn't new and it is not unique whatsoever that the desperation to chase dance comes.  It happens repeatedly over time.

 

There will be a time when I won't be able to sell my home and land for 50% of tax assessment value again.  Count on it.  The more intense today's chase becomes, the more intense the future discount.  Miss-allocation of capital is the long game weighting temporarily obliterated by the chase of voting.

 

Welcome to boom and bust capitalism.

 

Oh, one last thing: Could the Donald become "capitalism's" most disliked person- even for no real logical blame at all?  If you aren't quite sure of that answer you've got "wet behind the ears" as we say in the south.

 

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

 

 

 

 

 

 

Edited Friday at 02:25 PM by dealraker

[Spooky]

29 minutes ago, dealraker said:

So being both old at 70 and having lost my parents at a very early age basically I got throwed (pardon my grammar...but I am from the south) out into the real world financial abyss long-long ago.  So I've seen things, things that see-saw such that it makes the mind come to life with both excitement and anticipation.

 

Here's a good summation:  I own the best lots in my waterfront development, a development that was done by the family builders supply and millwork where now I am a 25% (was 12.5% until last week) owner back in 1980 and I had enough position and luck in the family to get to choose my place to live.  Today my southeast facing waterfront (don't ever buy a west facing home on water unless you want to boil in summer and freeze in winter) home and land across the street (large acreage...3 digits of land acreage) would sell for a big price.  I have seen three times in my life living here where I would have had a reasonable amount of difficulty selling my home for 50% of tax value, and once where I'd have been lucky to sell it for 25% of tax assessment.  

 

Times change.  Today is not one of those times when things don't sell well.  The world is full of people in full mode of desperately wanting eggs from others baskets to come to their basket!  Fear ain't happening, but greed is glory!

 

Today in this world we just gleefully elected to the pres a man who has been a comical failure in business, yet a resounding success in consistently establishing and maintaining a profitable cult-like following.  But business performance wise, that's net profits from sales, the pres stuff shows there's only a massive decay of wealth for 50-60 years from keeping up with inflation.  

 

It doesn't matter today because things with little sales and no profits have huge market caps and these aren't just the pres's holdings such as DJT, these wildly "valuable" things are literally everywhere.  Money chasing what moves the fastest is the theme.  It isn't new and it is not unique whatsoever that the desperation to chase dance comes.  It happens repeatedly over time.

 

There will be a time when I won't be able to sell my home and land for 50% of tax assessment value again.  Count on it.  The more intense today's chase becomes, the more intense the future discount.  Miss-allocation of capital is the long game weighting temporarily obliterated by the chase of voting.

 

Welcome to boom and bust capitalism.

 

Oh, one last thing: Could the Donald become "capitalism's" most disliked person- even for no real logical blame at all?  If you aren't quite sure of that answer you've got "wet behind the ears" as we say in the south.

 

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

 

 

 

 

 

 

 

Thanks for the post Dealraker. I generally agree that the pendulum is swinging too far towards euphoria. One of the signs to watch out for will be a wave of new IPOs which is always a good counter indicator. Time to be more cautious / selective.

 

[dealraker]

2 minutes ago, Spooky said:

 

Thanks for the post Dealraker. I generally agree that the pendulum is swinging too far towards euphoria. One of the signs to watch out for will be a wave of new IPOs which is always a good counter indicator. Time to be more cautious / selective.

 

The "time" thing Spooky gets hard, really hard.  An example I've mentioned is Abbey Joseph Cohen and her incredible status that really got started in the mid the late 1990's.  Even when she began her crusade of big cap promotions these stocks were (based on the outcome...any time period after 2001 - it matters little as they all prove it) over-valued.  Not over-valued for that time period, but over valued even considering their prices decades later.

 

Yet the parade she led kept on for years and she still had her reputation - despite the outcome - all the way up until 2008. 

 

What popular "analysts" today are wrong?  Well, you don't know yet.   

[Spooky]

2 minutes ago, dealraker said:

What popular "analysts" today are wrong?  Well, you don't know yet.   

 

Good thing I don't follow them or even know who they are!

[dealraker]

1 minute ago, Spooky said:

 

Good thing I don't follow them or even know who they are!

Since I'm out on the limb this morning...

 

What businesses are most at risk?  My view is that while AI is absolutely as meaningful as "we" think it is, the capital mis-allocation towards dealing with it will inevitably prove unsustainable.  So in my view the businesses getting sales and profits from AI spending are the most at risk of losing market cap over time, no matter what the growth of those businesses is today.  Doesn't mean they won't stay in business and stay profitable, but Intel, Cisco, EMC, etc were....well, Intel, Cisco, EMC.....