this is a good thread on it, pasted below. It's basically arguing that the Fed has to kill off the rich people's money because they are spending too much of it, against low supply of goods and services. Causing inflation. That something has changed - in the past globalism would ensure that somewhere, somehow, the invisible hand would create more supply when demand surges like this. but maybe at THIS moment the invisible hand is broken, because of the confluence of the wild demand spike and the retreat of globalism and the war. That now, with supply lines coming home, things will just be more expensive for us all for a while. We have to make low-margin widgets now, and we can't do it as cheaply as Asia can.
The point is, I usually don't care about the Fed's impact on stocks...but now maybe we need to worry about the Fed, because they are the only way to kill off inflation...by killing demand. There is no new supply coming to the rescue.
Which means recession or slow growth.
Which would clearly not be good for the stock market at these high valuations.
Bonds have already posted perhaps their worst 3 months ever. Bonds don't kid around like stocks. Bonds are saying interest rates are going higher, and the inverted yield curve is saying that demand will in fact be much lower in the future. I
n other words, the bond curve has decided that the Fed is about to kill the economy's growth. The stock market hasn't made that decision yet.
But on the flip side, the actual stock market performance from the 2022 bottom is remarkably bullish, if the past repeats. And certainly stocks do have some predictive ability. They aren't predicting recession.
Right now I'm thinking of lightening up in equities, with the market quite high. The US is still up 7% over the last 12m and down just 7% from its ATH. Not selling low.
But I use LRC to vent worries. Every time I've been worried in the past like this and acted on my worries, it has been a mistake. But maybe this time is different. That's a joke.
Good tweet storm here. I forgot if Bianco is a permabear...I think he might be. Not sure.
I suppose one retort to this is that in spring and summer the economy will come up against much harder comps in terms of inflation, and suddenly inflation will be 5%, then 4% and the Fed may not be so compulsed to act, if inflation is falling without the Fed wrecking demand.
just to keep hammering on the idea that the economy might be fine but stocks might not be...
earnings estimates for the full year continue to rise, even in this period of higher borrowing costs and higher COGS.
Sp500 PE based on est 2022 earnings = 19.7. Those days of PEs in the mid-high 20s are gone. Below 20 seems much less expensive. The market accurately predicted this earnings surge, to its credit.
"According to FactSet, analysts expect the S&P 500 to earn $227.80 per share in 2022. This estimate is 2% higher than the $223.43 expected as of December 31, 2021."
... Sometimes, I have put in a ton of money when the market was really down which can and has really skewed my results.
Why would that skew your results? Your allocation would be basically the same, and you weren't selling and buying back in. That confirms my suspicion that you're just calculating something wrong here.
BTW anyone notice many of Flagpole's posts get +4 upvotes within 2 minutes? I love upvoting my own posts but brother Flagpole has the dedication to do it from 4 different IP addresses
... Sometimes, I have put in a ton of money when the market was really down which can and has really skewed my results.
Why would that skew your results? Your allocation would be basically the same, and you weren't selling and buying back in. That confirms my suspicion that you're just calculating something wrong here.
BTW anyone notice many of Flagpole's posts get +4 upvotes within 2 minutes? I love upvoting my own posts but brother Flagpole has the dedication to do it from 4 different IP addresses
So funny that you say that. I noticed the same thing ... I figured that it was Flagpole, his wife, his mom, and his very rich brother doing the upvotes but maybe he doing it from different IP addresses.
What is funny is that when Flagpole talks about diversification he has no idea what that truly means. He knows little about investing. I am pretty sure he has no clue the difference between an index fund and an actively managed one.
BTW anyone notice many of Flagpole's posts get +4 upvotes within 2 minutes?
Yeah, I noticed the same thing. And the posts he was arguing against would get 4 quick down votes at the same time. Coincidence? Unlikely, I think. Possible, sure. In the same universe where flagpole beat the DOW 32 years out of 33, anyway.
The MIT geniuses who outwitted Las Vegas with their brilliance are being made a mockery of by the Ohioian better known as Flagpole. The smartest geniuses in history can maybe beat the casino 1 out out of 3 times or 2 out of 5 times, but our Flagpole can beat the market 32 out of 33 times.
...we aren't buying companies, really...we are buying what it's worth to own companies.
These days, companies are only being bought indirectly.
What is being bought directly is FUNDS. ETF's have changed everything. MF's were one thing, but ETF's are IMO now dominant.
What individual companies do or don't do is rapidly becoming less relevant, as they get absorbed into funds. It is only if they are dominant in a particular fund that people might be paying attention to what they are doing individually.
We tried using the appearance across funds, and the strength of that appearance, as a sole criterion. Very interesting model portfolio.
I was talking to a girl that a friend worked with, and the subject turned to investing. She mentioned that she had beat the S&P every year she had been investing. I was curious, because I know she/her family had also invested in a house, a vacation property, farmland lease, and a woodlot, so I asked--but the performance she was talking about was that of only her securities portfolio.
Fascinated, I dug a little deeper. It turned out that she was just looking at the value of her IRA, which included, of course, ongoing contributions--which were maxxed, during the 2010's. LOL! She had no clue. She was devastated when I explained to her that she would quite possibly have to pay taxes on those gains one day, from her traditional IRA. :) I didn't even go any further with the convo.
At that same party, I had to explain to someone the differences among life insurance policy types. Somebody had been scammed by their employer into buying term life, when they thought they would have something with a payout at death or a cash value that they could pass on to inheritors. They only found out about it at age 60, when the policy terminated.
Ouch. Of course she asked me what her legal options were. After telling her that it's not what you know but what you can prove, and to collect all the info she had and present it to a lawyer who worked that type of case, I left her to her woes. Good grief.
Doing well again today, DXY nice and high, everything up decently to finish off a good week.
trbcx down 7-8% after a good spike, I still haven't gotten rid of it. Should have sold it when it was down only single digits. Will fall again today. FAIL!
Doing well again today, DXY nice and high, everything up decently to finish off a good week.
trbcx down 7-8% after a good spike, I still haven't gotten rid of it. Should have sold it when it was down only single digits. Will fall again today. FAIL!
Sometimes lightning does strike, like the guy I know who has beat over 3-year periods.
Once, I was fabbing a replacement part for a fancy Danish lamp. I needed a bit of spring steel of a certain width, and I was replacing my snow tires with summer tires, sitting on the curb, when my glance happened to fall upon the gutter, where there lay--I kid you not--a roll of spring steel ribbon, of EXACTLY THE RIGHT WIDTH AND THICKNESS.
WTF. I took it as proof of the existence of a god, and that I was finally being rewarded for my kindness to animals and kids. And all I got was a stinking roll of spring steel ribbon!
But it was absolutely perfect. The part I fabbed is now indistinguishable from an original, it is uncanny.
Doing well again today, DXY nice and high, everything up decently to finish off a good week.
trbcx down 7-8% after a good spike, I still haven't gotten rid of it. Should have sold it when it was down only single digits. Will fall again today. FAIL!
Hey Igy EMD is down to 10.28--you buying?
I think EMD will be under $10 again. If not, I missed it. I think the market is headed for 3800 S&P 500, and if so, EMD will at least be closer to $10.
Earnings Scorecard: For Q1 2022 (with 20 S&P 500 companies reporting actual results), 14 S&P 500 companies have reported a positive EPS surprise and 16 S&P 500 companies have reported a positive revenue surprise.
Earnings Scorecard: For Q1 2022 (with 20 S&P 500 companies reporting actual results), 14 S&P 500 companies have reported a positive EPS surprise and 16 S&P 500 companies have reported a positive revenue surprise.