Down goes the Dow

Fun with lines and long term patterns. But makes a fair point...it's been a while since a good 50% haircut. Probably overdue?

2s 10s inversion 106 bps which, eyeballing it, appears to be the biggest yet. What the devil is going on?

My best guess is that inflation is actually 3% so the 10 year paying 3.8% is probably correct, where it should be. But the short term rate of 5%ish is incorrect, higher than it ought to be because it is more affected by the Fed's decisions, not the market. So my guess is that this inversion ends when the Fed goes another meeting or two without raising. Then the short term yield starts falling back to the long term rate. Without the recession an inversion usually predicts.

Which makes sense....we *should* trust the market rate (that is, the 10-year) and we *should* be deeply suspicious of the fake, artificial rate set by error-prone humans (the 2 year rate). Some think we should take the Fed's job of setting a short term rate and give it to a formula, because humans get it wrong so often.

So what should investors do? Buy short term bonds to take advantage of the artificial bump in rates we are getting, and expect some solid capital appreciation in your bonds when those rates start to fall.

I bought AAPL, NDVA and TSLA so far today. Kind of a weird feeling because they will always go up - UNTIL they go down. How long can the top 7 or 8 tech stocks keep on going up with this kind of pace?

Since we last talked, I've bought each of these as well.

A mid-year check in on the prediction from Igy that the S&P 500 would be near 3000 by the end of 2023.

When he made that prediction, the index was at about 3991.

Today the S&P 500 is 4452 as of this writing.

Carry on.

with that said, I know that you are a big proponent of buy and hold, and even to extremes.

Holding shares of individual companies is a bit different than mutual funds/etfs. Are you just as vehement about your strategy if things head south or if a companies fundamentals change? I only ask because it is best to have a strategy thought out in advance and consider all possible eventualities.

I sold two of the 3 today. Made a killing!

92% of the performance from 8 stocks, the other 492 less than a 6 month T-Bill. :-)

Carry on:

So new bull market, or bear market rally?

It is abundantly apparent that Hussman's only reason for existence is to prey on the fears of investors, and enough fall for it to keep him solvent after one of the most abysmal track records in the industry. He says what he needs to sell his product, a hedge to the market.

It would be one thing if he could adapt to a changing landscape, but he has not proven to have that ability.

No, he just expresses a fundamental view on investing. He is correct that value of any asset is a matter of cash flow and price. Your current experience, like most here, is just a reflection of Fed zero interest rate policy, Fed liquidity, and Government stimulus and transfer payments. All that does is encourage speculation. There is no changing landscape, just an expansion of multiple. I demonstrated that recently with the Apple example, same goes for every one of your favs.

The top 8 S&P 500 stocks have a Forward PE of 31, while the remaining 492 at 16.5.

Investors are willing to ignore the 2000-2011 experience in favor of 2011-2022. Today people are willing to pay $500,000 for a house with a 7% mortgage on a house that sold a decade ago at $250,000 with a 3% mortgage. Reconcile that any way you like. It’s your money.

Yeah, I know. I read the same article you did. I don't care. It's working and has been for as long as I can remember. That trumps everything else.

Everything's crazy. Get over it.

It's this simple. The marketplace, whether it be the stock market or the real estate market is just like an online auction place. Like ebay. Whatever people are willing to pay is it's value. Period.

Hussman Strategic is YTD down 10%. NVDA is up 190% YTD. The other 7 or so high tech have been doing great YTD. I don't really care why they are up so much but will continue investing in them. There may be some rough times along the way but I feel confident that 5 years from now my portfolio will have flourished.

Sure.

The other 492 less than a 6-month T-Bill but still considerably better than Hussman Strategic.