The Unkle wrote:
wondering wrote:
So why do you play their game?
Becuz if you put $66k into a safe bond or CD a year later you have $66k.
It's just gambling.
OR
you put together a low-cost, tax-efficient, globally diversified portfolio of stocks, bonds and commodities and keep adding to it year after year until it makes you a rich person and you can stop working. If you want.
Ghost of Igloi wrote:
Really? That is an awful lot of unmentionables to justify where we are at. But, OK. We will see how that weathers as the year goes on.
I'm wondering if I should sell all or most of my clients' straight treasuries and own solely short term TIPS and long term bonds.
Short term TIPS to capture inflation.
Long term bonds because they will likely rise if stocks fall.
And abandon this 8 year intermediate zone that pays 1% but has downside risk due to interest rate risk.
Short term TIPS don't seem to have as much risk, and almost the same return.
That is a tough call. I would be inclined to keep a little of everything, but slant toward T-Bills, more for liquidity. The more critical decision is one’s willingness to overweight the equity bubble. Of course you don’t consider it to be a bubble.
See, Igy? Buy and hold works!
(Kiddding)
https://twitter.com/longconvexity/status/1361109134083559425?s=21
I saw that. ?
Portia wrote:
RE: Inflation
https://www.advisorperspectives.com/commentaries/2021/02/08/the-return-of-inflation?bt_ee=yLk8YUiEYaPSPl2X6yqf7klXbU8eN20N9oCrnQyKyL8qoQj35TBp3NHU985uAQMg&bt_ts=1613162391458
Inflation is nothing more than a scare tactic invented by boomers as a means for them to continue hoarding their wealth
agip wrote:
The Unkle wrote:
Becuz if you put $66k into a safe bond or CD a year later you have $66k.
It's just gambling.
OR
you put together a low-cost, tax-efficient, globally diversified portfolio of stocks, bonds and commodities and keep adding to it year after year until it makes you a rich person and you can stop working. If you want.
Or you get wiped out.
It's all gambling no matter how many buzz words you attach to it
The Unkle wrote:
agip wrote:
OR
you put together a low-cost, tax-efficient, globally diversified portfolio of stocks, bonds and commodities and keep adding to it year after year until it makes you a rich person and you can stop working. If you want.
Or you get wiped out.
It's all gambling no matter how many buzz words you attach to it
the whole point of diversification is that you *don't* get wiped out.
oh never mind do whatever you think is properly anti-establishment. That makes you happiest so do that.
UK is up 2% today and some stories like this, recapping the boom coming down the pipeline.
oooo boy this is gonna be good.
Before the Georgia elections, Zandi didn't think the US economy would return to full employment (a strong labor market with 4% unemployment) until the spring or summer of 2023. Now, he expects that achievement to happen next spring, echoing a forecast by Treasury Secretary Janet Yellen.
"Super-charged fiscal policy" means the argument for the US economy growing faster than its peers "seems to get stronger day-by-day," economists at Bank of America wrote in a recent report to clients.
Oxford Economics chief US economist Gregory Daco is calling for a "summer mini-boom" in the United States and 5.9% GDP growth in 2021.
Likewise, Jefferies economists say "explosive income growth (courtesy of fiscal stimulus) is likely to propel US GDP 6.4% higher this year and nearly 5% next year."
"If anything, our forecast might be too conservative," Jefferies told clients in a recent note, pointing out that its view incorporates just $1 trillion of the Biden plan.
Indeed, Goldman Sachs upgraded its 2021 GDP forecast to 6.8% earlier this week because the Wall Street bank now assumes additional fiscal relief of $1.5 trillion, up from $1.1 trillion previously. If Goldman's prediction comes true, it would be the fastest annual GDP growth for the United States since 1989, according to the St. Louis Fed.
https://www.cnn.com/2021/02/11/economy/economy-jobs-biden-stimulus/index.html
Even if you accept all that rosy stuff, you would still have the market trading at one of the highest multiples in the last two decades. All you and the Street are doing is concocting a narrative to justify where we are, with absolutely zero bad news baked in.
Ghost of Igloi wrote:
Even if you accept all that rosy stuff, you would still have the market trading at one of the highest multiples in the last two decades. All you and the Street are doing is concocting a narrative to justify where we are, with absolutely zero bad news baked in.
It's not a concocted narrative - it's actually what is happening.
But I'll agree with most of the rest you are saying and extend it - the huge rally we've already seen was because of the growth we're about to get. The market predicts, it doesn't meter what is happening now.
So there are multiple scenarios where the market turns down this spring and summer even as the economy heats up, as the market starts to predict what comes toward the end of the year and in 2022.
And, of course, exogenous threats are always an issue. Something bad could happen in war or politics or health to knock us down.
Most of the economic damage was done to the travel industry and service sector. So, it is not as if all those trips, meals, hair cuts, etc. are made up in this wave of economic activity. There is real economic hole that was hastily filled in a largely non-targeted manner. Leading of course to the speculation in the housing, stock, and bond markets. That is where your inflation is.
agip wrote:
Ghost of Igloi wrote:
Even if you accept all that rosy stuff, you would still have the market trading at one of the highest multiples in the last two decades. All you and the Street are doing is concocting a narrative to justify where we are, with absolutely zero bad news baked in.
It's not a concocted narrative - it's actually what is happening.
But I'll agree with most of the rest you are saying and extend it - the huge rally we've already seen was because of the growth we're about to get. The market predicts, it doesn't meter what is happening now.
So there are multiple scenarios where the market turns down this spring and summer even as the economy heats up, as the market starts to predict what comes toward the end of the year and in 2022.
And, of course, exogenous threats are always an issue. Something bad could happen in war or politics or health to knock us down.
Sorry, I just don’t buy the theory that the Fed and Congress throws $Trillions of liquidity and we’re all good. And it is just an unproven theory.
Real damage caused by unhinged policies.
Ghost of Igloi wrote:
agip wrote:
It's not a concocted narrative - it's actually what is happening.
But I'll agree with most of the rest you are saying and extend it - the huge rally we've already seen was because of the growth we're about to get. The market predicts, it doesn't meter what is happening now.
So there are multiple scenarios where the market turns down this spring and summer even as the economy heats up, as the market starts to predict what comes toward the end of the year and in 2022.
And, of course, exogenous threats are always an issue. Something bad could happen in war or politics or health to knock us down.
Sorry, I just don’t buy the theory that the Fed and Congress throws $Trillions of liquidity and we’re all good. And it is just an unproven theory.
it's not just the government...people with good income have saved up an absolute mountain of dollars and they will spend them when they get comfortable doing so. I've been saving probably $5000 per month, which is astonishing. Multiply that over a nation of 330 million people and you start to see the magnitude of pent up spending about to unleash.
As for the government spending...no one knows how that will resolve. Uncharted waters. But if we can keep inflation and therefore interest rates low...we should be ok. Debt service is not a problem at these low interest rates.
The current chatter about bonds, diversification, and growth reminds me of a debate going on in my own head.
Some people see the current stock market as a bubble that will be followed by an inevitable correction. I think the current overvaluation in the market is not a bubble but a new phenomenon that I call the "picnic ant market." (Others have probably already thought of this and written about it in other terminology.)
Today's millennial and GenX investors are like picnic ants. When an ant finds a tasty morsel, it sends out a viral tweet or post and other ants swarm to the stock, driving the price up. Eventually, interest wanes. Some ants stay with that morsel, but others are drawn to the next potential stock. Unlike previous market bubbles, the picnic ants have an insatiable appetite. Instead of investing their retirement funds, these new investors are investing an almost unlimited supply of discretionary income... money that they previously would have spent partying, driving a new car, etc.
Instead of leaving when the market declines, more picnic ants will be drawn in by the allure of catching the next ten-bagger. In previous corrections, most stocks turned down. I wonder if that will happen on the same scale in the future since the picnic ants can just move from one stalled sector to another sector with more promise.
Regardless, I've abandoned the balanced approach and I've decided to move with the ants until such time that the ants start leaving the picnic in mass. With over 600,000 new Robinhood downloads so far this year, I think the picnic ant movement has a long way to go before the mass exodus from the picnic begins.
Thoughts? ...other than trailing stop loss is your friend? :)