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"Macro" Musings


giofranchi

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I see this one as a positive

 

"About 39% of Millennials picked cash as the preferred way to invest the money that they don't need for at least 10 years -- the biggest percentage of any age group."

 

Why do see this one as a positive?

 

Gio

 

Fewer buyers usually mean lower prices. I remember Buffett talking about how the Great Depression scared a lot of people so he had a long time to invest with decreased competition. To be fair, though, the assets of Millennials are fairly small compared to longer working and older generations.

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Fewer buyers usually mean lower prices. I remember Buffett talking about how the Great Depression scared a lot of people so he had a long time to invest with decreased competition.

 

Maybe… But short/medium term that would only imply low prices are to be expected in the future… because certainly I don’t see low prices anywhere today… Sounds bearish… not bullish…

 

To be fair, though, the assets of Millennials are fairly small compared to longer working and older generations.

 

Moreover it implies:

1) They are ignorant to the point of being unaware that cash doesn’t produce anything… Keeping cash idle is like having skills without making the effort of using nor developing them.

2) Trust is broken… We have failed to communicate them the trust needed to do business.

Long term both 1) and 2) are imo bearish… not bullish…

 

Gio

 

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I see this one as a positive

 

"About 39% of Millennials picked cash as the preferred way to invest the money that they don't need for at least 10 years -- the biggest percentage of any age group."

 

Why do see this one as a positive?

 

Gio

 

It's not like they can hit the "sell" button in a panic.  Sell my cash!  Sell it all now!

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It's not like they can hit the "sell" button in a panic.  Sell my cash!  Sell it all now!

 

They can panic the other way. That's what people did in the late 90s.

 

"Gotta buy now before it goes up more!"

 

 

The economy has also already adjusted to their cash-hoarding ways.  As you suggest, they can spend their cash on things/assets.  It's a better problem than worrying about them selling things/assets in order to have cash.

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It's not like they can hit the "sell" button in a panic.  Sell my cash!  Sell it all now!

 

They can panic the other way. That's what people did in the late 90s.

 

"Gotta buy now before it goes up more!"

 

 

The economy has also already adjusted to their cash-hoarding ways.  As you suggest, they can spend their cash on things/assets.  It's a better problem than worrying about them selling things/assets in order to have cash.

 

I don't think this is meaningful. As you have read on Hoisington Q2 2014 commentary, debts are at all-time high precisely because the PSR is at all-time low. And prices are very high because of monetary policy.

In a panic selling will be violent… I am not saying it will happen… far from me! But to say there won’t be indiscriminate selling in a panic is imo a bit delusional…

 

Gio

 

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But to say there won’t be indiscriminate selling in a panic is imo a bit delusional…

 

Gio

 

Now, has anybody made any such claim?

 

I continue to maintain my argument that it's a bit delusional to assert that the lunar landings were faked. 

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While not definitive, it does give small (very small) gauge of the market.

 

A buddy of mine has some mutual funds but I'm not sure if he has ever bought an individual stock, but I received the following text from him yesterday:

 

(Edited slightly due to grammar)

 

"Should I buy $10,000 worth of facebook stock in my roth?"

 

"I think it will get pretty big. I don't want to miss out."

 

A bit odd that he didn't send this when it was around $17.

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The drumbeat diet of ZIRP seems to go on, and on.  As Japan continues to print, the bonds continue to rise (rates going lower).  The 10-year JGB is up nearly 20% over the last 18 months.  Its like the limbo dance of how low can you go. 

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I saw a short interview on BNN today - I believe the main driver was the consumer spending at 2.5%, which accounts for 2/3rd of economic activities.

Note the 4% is real GDP - nominal was at 6% - which is quite terrific.  The economic engine in your country seems to be firing all cylinders :)    Europe had better look here for how to solve its problem.

 

there's more explanation here i just found: http://www.bnn.ca/Blogs/2014/07/30/Its-all-about-Uncle-Sam-today.aspx

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"I think it will get pretty big. I don't want to miss out."

 

 

Which rock does your friend live under?  :D

 

(assuming he is a younger guy)

 

haha. I was thinking the same thing. I think he's 30.  :o

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Forgive me if this was already posted:

 

Stanley Druckenmiller: CNBC Delivering Alpha

http://video.cnbc.com/gallery/?video=3000296912#.

 

Thanks for that. Around 13 minutes in, that banker who advises/represents Herbalife is asked how much due dilligence he did before signing up to defend the company after Ackman called it a pyramid scheme, and he literally says that it's not about doing due dilligence, that he knows the people, the CEO is a personal friend, so when they called up he said yes. Wow. That guy is going to end up in so much trouble some day...

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I need some help here on how to explain away Q2 GDP if it comes in at 4%. 

 

Shall we just say it's due to the weather?  This year is warmer than average.

 

We probably have to wait 3 month for the real numbers, given what happened to Q1 GDP. :D

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http://money.cnn.com/data/fear-and-greed/?iid=H_INV_QL

 

-interesting sentiment index that I have been following

-index ( at 5 or extreme fear) => may be time to be greedy + review your shopping list

 

Thanks, very interesting.

 

Extreme greed to extreme fear in 1 month? Is this thing just very volatile?

 

1 down week and we are at extreme fear? ...

???

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I've looked at the fear and greed index before and it's a joke.

 

If we're in "extreme fear" now, what would that have looked like in 2008?  :o

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