Down goes the Dow

agip wrote:

Ghost of Igloi wrote:

Beyond creating a lemonade stand economy, it is encouraging a lemonade stand populace. That is, mommy and daddy government will take care of you, even if it continues to encourage moral hazard. How else do you create a populace so disconnected from traditional behavior, they can’t take care of themselves or families without massive handouts? Amazing is the decline in just a decade. It will collapse under the weight of abnormal, and goes against anything that is cohesive to society. Either that or something far worse.

The US rates very high in productivity, hours worked and especially in wages earned. I think you are barking up the wrong tree here. Europeans would drop their jaws to hear you suggest Americans don't work hard enough and rely on the government too much.

As has been said, Americans are rich but live like poor people, Europeans are poor but live like rich people. Meaning Americans work crazy hours (making lots of money like rich people) but spend so much of their incomes that they are always short and don't get enough vacation. (like poor people)

Europeans don't work as much and get a lot of vacation (living like rich people) but they don't get nearly the wages. (like poor people)

agip wrote:

Ghost of Igloi wrote:

Beyond creating a lemonade stand economy, it is encouraging a lemonade stand populace. That is, mommy and daddy government will take care of you, even if it continues to encourage moral hazard. How else do you create a populace so disconnected from traditional behavior, they can’t take care of themselves or families without massive handouts? Amazing is the decline in just a decade. It will collapse under the weight of abnormal, and goes against anything that is cohesive to society. Either that or something far worse.

The US rates very high in productivity, hours worked and especially in wages earned. I think you are barking up the wrong tree here. Europeans would drop their jaws to hear you suggest Americans don't work hard enough and rely on the government too much.

As has been said, Americans are rich but live like poor people, Europeans are poor but live like rich people. Meaning Americans work crazy hours (making lots of money like rich people) but spend so much of their incomes that they are always short and don't get enough vacation. (like poor people)

Europeans don't work as much and get a lot of vacation (living like rich people) but they don't get nearly the wages. (like poor people)

Ghost of Igloi wrote:

Sanford Bernstein on Apple via Zerohedge:

1. Apple’s recent results were quite similar to IBM’s on a topline basis, with Apple seeing a third straight quarter of negative YoY revenue growth.

2. Bernstein finds that financial comparisons with IBM two decades ago are not unfounded: "Apple between 2015 and 2023 has had strikingly similar pre-tax income and EPS growth as IBM did between 1997 and 2012."

3. Apple has seen a dramatic re-rating, especially between 2019-2021, resulting in the stock going from a below market multiple at ~11z in 2015 to ~29x today.

4. Bernstein sees two takeaways we can learn from IBM twenty years ago for Apple today (a) "....revenue growth matters, and strong EPS growth absent revenue growth is unlikely to be afforded a rich multiple...(b) customer lock-in can prove ephemeral when platforms change. IBM's strength in mainframes and associated account control once seemed unassailable, but the world moved to industry standard servers and the cloud"

-Sanford Bernstein

agip wrote:

agip wrote:

Love the double down.

not really, I’m just saying that.

but in it goes to the agip-matic calendar for Labor Day.

DGTD Prediction Resolution!

The facts of the case are a bit complex so I will simplify. The asker was a poster named 'Investor Noob.'

4/3/22 Noob asked for 401k advice. He uses the Vanguard Total US Stock Market Fund.

He said he had $285,000 on 4/3/22. Igy said it would be worth just $150,000 a year later if he held onto it. But that prediction came a cropper as it was worth $260,000 on 4/3/23. So Igy was correct on the direction - downwards - but was too pessimistic on the downward slope.

On 4/3/23 Igy doubled down and said the 401k would be down to $150,000 by 9/4/23.

Instead, since then, as of 9/5/23 the 401k has rebounded to $286,500. So Igy was wrong there too. It went up 10% instead of falling 42% over the summer.

We do have to recognize that the 401k is worth now...exactly what it was worth on 4/3/2022, and a good deal less after inflation. Shows you how long this market is going between new highs. 1.7 years so far. Igy has been correct to predict no new highs in the US stock market. Similar to the post-2000 peak that took a decade-ish to get your money back.

Ghost of Igloi wrote:

agip wrote:

DGTD Prediction Resolution!

The facts of the case are a bit complex so I will simplify. The asker was a poster named 'Investor Noob.'

4/3/22 Noob asked for 401k advice. He uses the Vanguard Total US Stock Market Fund.

He said he had $285,000 on 4/3/22. Igy said it would be worth just $150,000 a year later if he held onto it. But that prediction came a cropper as it was worth $260,000 on 4/3/23. So Igy was correct on the direction - downwards - but was too pessimistic on the downward slope.

On 4/3/23 Igy doubled down and said the 401k would be down to $150,000 by 9/4/23.

Instead, since then, as of 9/5/23 the 401k has rebounded to $286,500. So Igy was wrong there too. It went up 10% instead of falling 42% over the summer.

We do have to recognize that the 401k is worth now...exactly what it was worth on 4/3/2022, and a good deal less after inflation. Shows you how long this market is going between new highs. 1.7 years so far. Igy has been correct to predict no new highs in the US stock market. Similar to the post-2000 peak that took a decade-ish to get your money back.

Yet via Carter Braxton Worth S&P 500:

The first trading day after Labor Day 2 years ago, Tuesday, Sept 7, 2021... to today, the first trading day after Labor Day, Tuesday, Sept 5, 2023.
What a bloody waste of time!
Unchanged, 2 years later.
Max gain: +6.8%
Max loss: -22.8%
Net: UNCH (groan)

Ghost of Igloi wrote:

“While the Fed has suspended the “zero interest” part of its experimental policies, it has been extraordinarily slow to reduce its balance sheet to a size that would allow it to manage interest rates without hundreds of billions of dollars of annual public expense. The Fed has done only half its job, and seems insistent on maintaining a ruinously bloated balance sheet. The real problem is that a decade of experimental distortion encouraged unprecedented speculation in every conventional asset class, not to mention fringe speculation in assets detached from any standard of value, including meme stocks, pictures of bored monkeys, and digital Pokémon posing as “currency.” As with every similar episode across history, the unwinding of this bubble in the form of financial crisis is already quietly baked in the cake.

In defending the deranged and experimental notion of an “ample reserves regime,” the Fed is defending continued misalignment between monetary aggregates and economic output. It is defending exactly the element of monetary policy that contributed to a decade of yield-seeking financial speculation, forced $8 trillion of uninsured deposits into the banking system, encouraged the passive acceptance of enormous government deficits, leaves in place the fuel for future episodes of inflation, and has already produced trillions of dollars of losses both in commercial banks and in the Fed itself – invisible because the assets are not marked to market. Even as the Fed battles the flames of a fire-breathing dragon, it insists on keeping that dragon as a house pet.”

-John Hussman, September Market Commentary

Sally Vix wrote:

Ghost of Igloi wrote:

“While the Fed has suspended the “zero interest” part of its experimental policies, it has been extraordinarily slow to reduce its balance sheet to a size that would allow it to manage interest rates without hundreds of billions of dollars of annual public expense. The Fed has done only half its job, and seems insistent on maintaining a ruinously bloated balance sheet. The real problem is that a decade of experimental distortion encouraged unprecedented speculation in every conventional asset class, not to mention fringe speculation in assets detached from any standard of value, including meme stocks, pictures of bored monkeys, and digital Pokémon posing as “currency.” As with every similar episode across history, the unwinding of this bubble in the form of financial crisis is already quietly baked in the cake.

In defending the deranged and experimental notion of an “ample reserves regime,” the Fed is defending continued misalignment between monetary aggregates and economic output. It is defending exactly the element of monetary policy that contributed to a decade of yield-seeking financial speculation, forced $8 trillion of uninsured deposits into the banking system, encouraged the passive acceptance of enormous government deficits, leaves in place the fuel for future episodes of inflation, and has already produced trillions of dollars of losses both in commercial banks and in the Fed itself – invisible because the assets are not marked to market. Even as the Fed battles the flames of a fire-breathing dragon, it insists on keeping that dragon as a house pet.”

-John Hussman, September Market Commentary

Igy, please explain why I should read anything by John Hussman. He is a terrible investor and a terrible fund manager. His hallmark fund - Hussman Strategic Growth - has done horribly since its inception in 2000. It has only a one-star rating which is the lowest possible EXCEPT for another of his funds which is amazingly a ZERO star. I had not known that they gave out Zero stars before but Hussman managed to achieve it. Well done, John!

Sally Vix wrote:

Ghost of Igloi wrote:

“While the Fed has suspended the “zero interest” part of its experimental policies, it has been extraordinarily slow to reduce its balance sheet to a size that would allow it to manage interest rates without hundreds of billions of dollars of annual public expense. The Fed has done only half its job, and seems insistent on maintaining a ruinously bloated balance sheet. The real problem is that a decade of experimental distortion encouraged unprecedented speculation in every conventional asset class, not to mention fringe speculation in assets detached from any standard of value, including meme stocks, pictures of bored monkeys, and digital Pokémon posing as “currency.” As with every similar episode across history, the unwinding of this bubble in the form of financial crisis is already quietly baked in the cake.

In defending the deranged and experimental notion of an “ample reserves regime,” the Fed is defending continued misalignment between monetary aggregates and economic output. It is defending exactly the element of monetary policy that contributed to a decade of yield-seeking financial speculation, forced $8 trillion of uninsured deposits into the banking system, encouraged the passive acceptance of enormous government deficits, leaves in place the fuel for future episodes of inflation, and has already produced trillions of dollars of losses both in commercial banks and in the Fed itself – invisible because the assets are not marked to market. Even as the Fed battles the flames of a fire-breathing dragon, it insists on keeping that dragon as a house pet.”

-John Hussman, September Market Commentary

Igy, please explain why I should read anything by John Hussman. He is a terrible investor and a terrible fund manager. His hallmark fund - Hussman Strategic Growth - has done horribly since its inception in 2000. It has only a one-star rating which is the lowest possible EXCEPT for another of his funds which is amazingly a ZERO star. I had not known that they gave out Zero stars before but Hussman managed to achieve it. Well done, John!