Down goes the Dow

I bonds are looking better every day.

How's your track record at timing the market? Genuinely curious.

You mentioned pension index to inflation in an earlier post. A few minutes ago CNBC snippet said with current trend our Social Security benefit could rise by as much as 10.5%. That would be one benefit for our family. Real estate is our home so moves up or down are more psychological. Zillow says our home price dropped 2.9% the past month. I would say that understates the market.

Market can't be timed. Plain and simple. You can anticipate when a market that has beaten down severely might rebound but that is just guessing. As far as getting in and out of positions frequently, that is a losing proposition.

The average American household with 2 workers has lost $7,000 to inflation. Come on Joe - do something! You promised you would be a good president - but you are the worst!

foxbusiness.com

Average American worker has lost $3,400 in annual wages under Biden thanks to inflation

American workers have experienced a whopping $3,400 decrease in annual wages thanks to inflation under President Biden, erasing all money received from pandemic stimulus checks.

Link:www.foxbusiness.com/politics/average-a...

Maybe earnings will be decisive…but maybe not. Stocks are down 20-25%…a pretty big earnings cut is already baked in. Earnings could fall and stocks could rally.

I read somewhere that this is one of the biggest reratings we’ve seen in recent times. Meaning the market PE went from 22 to 17 in 6 months. That’s a big move and provides some margin of error with earnings.

Interesting that the 10 year yield is down today. In the face of higher inflation than expected. It’s supposed to go up when the Fed is challenged to raise rates.
probably a good sign that the market still sees inflation ending soon.

We have seen very little in EPS markdown, what we have seen is multiple compression. So, if the Street begins to mark forward EPS down to $200 and then apply a multiple at 15, we are 3,000 S&P 500. Even that is an optimistic assumption, in my view.

Sure you can.

It's a guess.

Sometimes you guess right.

Why is frequent moves a losing proposition (assuming you are not paying a fee for every move)?

Market doing fine overnight but all of a sudden drops at 8:30 AM.

Trump leading overnight on election night 2020, but in the morning is behind Biden,

Connection?

Inquiring minds may want to know....

I follow your logic perfectly, and largely agree. But I think it goes beyond just inflation to a broader consideration of likelihood of recession, and if so, for how long, and how deep.

Isn't inflation just one of several related factors interlocked like hiring, unemployment rate, supply chain issues, etc.? Really, it's not just inflation, which i do suspect is easing (esp. with energy in the last few weeks, notably since the CPI was calculated), it's what the Fed and Powell do to combat it, and whether or not that might in effect cause a recession.

Also, I think we need to keep a lot of this in perspective. Much of what is happening has been influenced by the massive pandemic stimulus interventions, and the thought was, we need to get over that disaster, and we will deal with inflationary pressures later, which is now. Rather than suffering a massive economic calamity in 2020 and 2021 (pandemic era), the impacts were spread out to later years, and this perhaps is not surprising, given what had to be done at the time to avoid a collapse. Any truth to that?

Actually Trump was leading in the three key states of PA, WI, and MI the next morning

The Troll was lauding Mike Wilson of Morgan Staley the other day. Here’s some of what Wilson said:

“So, rates will stay elevated, probably closer to 3%, maybe even higher, as the economy continues to grow and the Fed continues to raise rates. And so, the multiple... you really can't get much more than 14 and 15 times earnings, and that's $3,400 sometime this fall. Now, the good news is from there you'll grow again and then earnings will drive the market higher. In the bear case, the recessionary outcome, which is growing in chance, the earnings risk is obviously greater. It's probably closer to 20%. And now you're talking about $195, $200 in earnings power... And the multiple still isn't going to be much higher because when you go into recession, the equity risk premium usually blows out because when you go into recession, you don't know if you're gonna come out.

So, that's the trick. And I would say the downside target in that recession scenario is about $3,000 before you can recover.”

Outrageous!

Oh, the irony!

I would not say so.

The fact that you claimed he was behind the next morning when he was in fact ahead is unsurprising.

I absolutely think that it's different this time...that economics in the post-pandemic period is unprecedented. So many things have recently happened and economists say 'well we've never seen THAT before..." So we have to be very careful to look at the 1970s and say 'well that's where we're going - a deep depression to kill inflation and then rebuild from there.' I mean maybe, but that was a different situation.

the best metaphor I know is of a ship hit by a big rogue wave, symbolically covid in this case. It rocks the ship over on its side, water spills over the gunwales, but does not sink. That was march 2020. Then the great ship rocks back the other way and grows too fast, too hot. That was 2021's 6% real growth. Then the ship rocks back again, but not as violently as the first time. That is now. Maybe a recession but nothing like 2020's.

Next the ship should rock back toward growth but not as violently as the 2021 keel over. And then rock back, each move less violent than the last until we get to a new normal.

I'm still buying in size VCSH....short term corporate bonds. I think getting 4% from short term bonds with a duration of 2.8 years is pretty good. That's c. half the return of the stock market with a lot less risk, right?

in 2022 it is down just 5% while regular bonds are down 10%.

Looks like Biden took the lead for good at 11:10 PM on Nov 3.