1) The market isn't going to drop 50% in the next 10 years.
2) If it did, I would still have way more than enough. Not only do I just HAVE enough invested money to still live comfortably on half, but in 10 years my wife and I will also be taking Social Security at that time to the tune of a little more than $50,000 a year (even more if we wait until after age 62 which we probably won't do), PLUS, I currently have about 3.5 years of expenses saved liquid, so even if the market lost 99% of its value in 10 years, I would just suspend taking from that pile and use Social Security and my liquid savings to live on until the market rebounded (because it would).
Flagpole ,,- if you say the market won't fall 50% in the next 10 years - we believe you! No one else in the world has beaten the Dow 35 out of the last 32 years!
ignoring unrealized losses at banks because of temporary loss of value of bonds is exactly the sort of thing that should be ignored. Because the bonds will mature at full value. Well, not ignored but not taken too seriously either. in any case, regional banks are up 53% over the past year. A year ago what was everyone worried about? You got it: unrealized losses on banks' bond portfolio.
and a potential recession.
While true in a way, that’s not the full story, which would include banks’ financial commitments, and the fact that the feds have backstopped them with new lending facilities.
I remain equivocal about this, I can see both the merits and demerits of such a policy.
So you're underperforming the S&P by a significant margin. All that work, bragging and boasting, and you could have made so much more money if you had stuck everything in the SPY.
Please remove yourself from this thread, it's embarrassing at this point.
Also, "all that work?" What work? I have money in mutual funds. No work at all on my part. That's actually part of my philosophy. Keep money in mutual funds so that I don't HAVE to do any work. Methinks you didn't know enough about me to comment.
Flagpole’s modus operandi of “follow along with what benefits the rich” is as good as any, depending on your position.
It’s good for the rich, but if you aren’t one of them, you won’t weather the storms as will they.
Flag believes himself rich because he and his wife have some public hack income and pensions, and “don’t need” the investments at any particular time. This perspective works as long as things don’t get too bad, which rarely happens.we
Ok I'm taking steps on my 'get ready for a trump presidency.'
just one relatively small piece:
Loading up on short term TIPS.
Inflation is picking up already, and add in food shortages and tariffs next year...and we should get at least a 3% inflation rate.
I'll sell longer term tips and intermediate term bonds to pay for the short term tips.
Still not sure what to about equities. The economy is roaring...can trump really mess up this kind of momentum? I think so, but I'm alone on that. I don't like being alone on a trade.
Short term tips have been doing pretty well lately already so I'm not alone on an island with that one. And if I'm wrong they'll still be fine.
Year to Date:
ST TIPS +4.77%
Generic short term treasuries: +3.66%
This post was edited 13 minutes after it was posted.
NYT published an editorial with the same thesis: DJT is a danger to American business, including:
Mr. Trump may seem like a novelty in American politics, but he is a familiar type in the broader sweep of world history. Right-wing populists often win elections by promising pro-business policies that will unleash economic growth. Once in office, however, they don’t just fiddle with the knobs; they break the machinery. They undermine economic stability by attacking and delegitimizing people and institutions, inside or outside the government, who might challenge or correct bad economic decisions. Turkey’s president, Recep Tayyip Erdogan, for example, fired three central bankers in two years, all of whom failed to fall in line with his demand to lower interest rates. The country fell into a currency crisis and eventually had to raise interest rates significantly to drag itself out. “It is this change to the nature of governing, more than individual policies, that is so dangerous to business over the long term,” as Roberto Foa and Rachel Kleinfeld argued recently in Harvard Business Review. “Populists undermine the operating environment capitalism depends on — most notably, free competition and a predictable rule of law.” Mr. Trump’s attacks on the integrity of federal data and on government experts are examples of the ways in which he already pursues these strategies. In August, for example, he claimed that a routine revision in employment data issued by the Bureau of Labor Statistics was manipulated to favor his opponent. Michael Strain, a conservative economist at the American Enterprise Institute, called this attack on the integrity of the agency “grossly irresponsible and completely inaccurate.” Business leaders often say they hate uncertainty about taxes and regulation even more than they hate taxes and regulation. Mr. Trump is the personification of uncertainty. During his four years as president, he demonstrated an alarming willingness to rewrite federal policies abruptly, out of spite, for favoritism or just on a whim. Planning to develop a property or make an acquisition that needs regulatory approval? Businesses might assume that a second Trump administration would be more supportive than Mr. Biden was or Ms. Harris would be. But a populist’s favor is capricious; there’s no way to predict who might end up on a Trump enemies list or why. Building a factory to make parts for electric vehicles? Counting on suppliers in other countries? Good luck.
“4% annualized returns for the world's dominant stock index would be pretty lame, and I think I can currently do better with bonds, with better returns and far less volatility. I would love the markets to drop 40-60% and give a new buy-in opportunity, and I think that day will come, but don't know when... could be this year, could be in 10 years.”
With what money would you buy in? You are having to re-invest bond interest to compound and keep pace with the equity markets, no?
And doesn’t that presume the future opportunities to re-invest at the original rate?
but the way this sort of thing works is slow then fast
phase one is business people being happy about a right wing government...
phase two is when they start figuring out the details and if they really want to double the cost of their raw materials
then everyone gets worried at once
that I'm thinking about this, that trump is climbing in the polls and that the NYT today published an editorial on just that subject might mean we're moving from phase one into phase two. Would be nice to sell before the worry gets to widespread.
On the other hand, I think most Rs don't really think Trump is serious about his radical policies. And htey won't, until he does them.
Agip, I find this very interesting. And frankly, it's all part of my general impression of what to expect if he wins.
IF he wins: Markets will rise in the short term, but really only if Congress does not also go Republican. Markets prefer balance of powers. Markets will like his lower coprporate tax rates in particular.
Then markets will be very fidgety in that DJT represents uncertainty, which markets don't like, and his vague econimic platform (if you can call it that) is not taken seriously, so no one knows what to expect from all that bluster except that he will ensure (not insure) lower tax rates for business. The markets will dodge around with every hint of what is actually going to be implemented.
And to your concerns, the markets will most likely sink if even half of what he promises about tarifs and social security, for example, are actually implemented. But those are not a given, and his favorable handling of corporate taxes is.
My view is that it is too early to be positioning oneself for these possible outcomes.
Re:interest rates if T wins—I think the fed rate will fall. He was all over Powell last time, for lower rates. IMO Powell will either do it, or get fired for someone who will.
However, I really don’t have a follow-up guess as to what that will mean for the markets. You would think it would be good news
Agip, I find this very interesting. And frankly, it's all part of my general impression of what to expect if he wins.
IF he wins: Markets will rise in the short term, but really only if Congress does not also go Republican. Markets prefer balance of powers. Markets will like his lower coprporate tax rates in particular.
Then markets will be very fidgety in that DJT represents uncertainty, which markets don't like, and his vague econimic platform (if you can call it that) is not taken seriously, so no one knows what to expect from all that bluster except that he will ensure (not insure) lower tax rates for business. The markets will dodge around with every hint of what is actually going to be implemented.
And to your concerns, the markets will most likely sink if even half of what he promises about tarifs and social security, for example, are actually implemented. But those are not a given, and his favorable handling of corporate taxes is.
My view is that it is too early to be positioning oneself for these possible outcomes.
I guess it's a two-part arbitrage:
I think Trump is serious.
I think he will at least make a sincere attempt to expel large numbers of workers. Enough to do some damage to migrant-dependent businesses.
and I think Trump will succeed in putting tariffs on a good amount of stuff.
and I think Trump's success will hurt stock prices.
Most people think either
a) he's just kidding about tariffs and mass deportations
and/or
b) even if he succeeds it won't do a lot of damage.
I guess the reason I'm not selling now is b). that he may succeed in doing these things but they're not enough to derail supertanker America.
Uhhh, then illegals are going nowhere.
It’s just electioneering. It’s all about making promises, then blaming it on others when you don’t deliver.
(1) I don't think any of us will be on LRC to check this prediction in 2034 but maybe!
(2) GOLDMAN: "We estimate the S&P 500 will deliver an annualized nominal total return of 3% during the next 10 years (7th percentile since 1930) and roughly 1% on a real basis."
(1) We’ve been in this thread 11 years already. You don’t think we can tough it out another 10?!?
(2) That’s pretty close to my best guess, but I would point out that the “expected” value, or best guess, or average forecast, or whatever, is not the only possible outcome. I’d be keen to know their confidence limits, imagining they probably mean there’s something like an 80% chance of it being between, say, 0% to 8%, with a most likely / best guess value of around 3%.
That’s also my ballpark, which is why I have no problem with the 20-yr’s I bought at 4.15% having dropped in price. Temporary, and if not, it doesn’t matter to me.
The bond market seems to be sending a message to fiscal policymakers both in the U.S. and abroad that we have hit a breaking point with global public sector debt rapidly approaching the $100 trillion mark. The record-breaking gold price would concur.
“It’s not just the U.S. Treasury market that is becoming unglued. Look at the 10-year German bund yield today. It has shot up 10 basis points even in the face of a weaker-than-expected -0.5% slide in September producer prices (consensus was -0.2%) which took the YoY trend further into deflation territory to -1.4% from -0.8% in August!”
—David Rosenberg
This post was edited 20 seconds after it was posted.
I think he will at least make a sincere attempt to expel large numbers of workers. Enough to do some damage to migrant-dependent businesses.
and I think Trump will succeed in putting tariffs on a good amount of stuff.
and I think Trump's success will hurt stock prices.
Most people think either
a) he's just kidding about tariffs and mass deportations
and/or
b) even if he succeeds it won't do a lot of damage.
I guess the reason I'm not selling now is b). that he may succeed in doing these things but they're not enough to derail supertanker America.
Uhhh, then illegals are going nowhere.
It’s just electioneering. It’s all about making promises, then blaming it on others when you don’t deliver.
I think most politicians' promises are BS. Esp Harris'.
I think Trump's promises are not. For many reasons, but mostly having to do with his willingness to break rules to get them done. Harris isn't going to take money from the military budget to pay for her pet projects. But Trump absolutely will (and has) taken money from the military budget to pay for his pet projects. A terrible practice that undermines the republic, but he's willing to do it, so he can get more done. He'll do that for the deportations.
And he's a sales guy and he knows he has to deliver on a main promise or two. He has two main promises: mass deportations and tariffs. He'll get them done in some form.
One wild card is all those republican senators in farm states...will they carve out some kind of exemption for their farms? I kind of doubt it but maybe.
“4% annualized returns for the world's dominant stock index would be pretty lame, and I think I can currently do better with bonds, with better returns and far less volatility. I would love the markets to drop 40-60% and give a new buy-in opportunity, and I think that day will come, but don't know when... could be this year, could be in 10 years.”
With what money would you buy in? You are having to re-invest bond interest to compound and keep pace with the equity markets, no?
And doesn’t that presume the future opportunities to re-invest at the original rate?
Of course much was left unwritten in my earlier comments, but of course one must think about what to do with the cash paid out over time. But that’s a tomorrow problem. Of course I can’t assume it can be reinvested at the same rate, I’ll need to decide when the time comes. I’m faced with exactly that problem over the next 5 years, with a lot of cash being generated, some relatively uniform over time (bond and GIC income) and some lumpy (maturing instruments). I have a high conviction target portfolio ready in the event equities have become sufficiently less expensive, and will continue to buy bonds if they remain good value, relative to my objectives.
And sorry, to answer the other part of the question, I can free up cash by selling bonds, if the value proposition makes sense. I’ve got a lot of different ones to choose from.
I think he will at least make a sincere attempt to expel large numbers of workers. Enough to do some damage to migrant-dependent businesses.
and I think Trump will succeed in putting tariffs on a good amount of stuff.
and I think Trump's success will hurt stock prices.
Most people think either
a) he's just kidding about tariffs and mass deportations
and/or
b) even if he succeeds it won't do a lot of damage.
I guess the reason I'm not selling now is b). that he may succeed in doing these things but they're not enough to derail supertanker America.
Uhhh, then illegals are going nowhere.
It’s just electioneering. It’s all about making promises, then blaming it on others when you don’t deliver.
The critique of Biden-Harris economics is to import illegal immigrants to be cheap labor, consumers, and future voters. This has a short term economic benefit for businesses, and the economy. The obvious negative is continued large deficits, upside down government balance sheet local, state, and Federal. Continued funding of the lemonade stand and driving fake markets higher. The short sightedness of how the Country is managed, and the starkly weird policies only serve the rich and powerful. Maserati was on to this early on, and I never thought they would skate free. How wrong I was.
It’s just electioneering. It’s all about making promises, then blaming it on others when you don’t deliver.
The critique of Biden-Harris economics is to import illegal immigrants to be cheap labor, consumers, and future voters. This has a short term economic benefit for businesses, and the economy. The obvious negative is continued large deficits, upside down government balance sheet local, state, and Federal. Continued funding of the lemonade stand and driving fake markets higher. The short sightedness of how the Country is managed, and the starkly weird policies only serve the rich and powerful. Maserati was on to this early on, and I never thought they would skate free. How wrong I was.
yeah let's see how crapo and risch feel about this issue when the idaho ag biz is brought to its knees without those undocumented workers it depends on!
"Naerebout told KTVB in October 2023 the vast majority of dairy workers in Idaho are undocumented, because the federal government has not updated the agriculture visa work program since the 1980's. Dairy is a year-round job, while the current visa program is only for seasonal work."
This post was edited 1 minute after it was posted.
The critique of Biden-Harris economics is to import illegal immigrants to be cheap labor, consumers, and future voters. This has a short term economic benefit for businesses, and the economy. The obvious negative is continued large deficits, upside down government balance sheet local, state, and Federal. Continued funding of the lemonade stand and driving fake markets higher. The short sightedness of how the Country is managed, and the starkly weird policies only serve the rich and powerful. Maserati was on to this early on, and I never thought they would skate free. How wrong I was.
yeah let's see how crapo and risch feel about this issue when the idaho ag biz is brought to its knees without those undocumented workers it depends on!
"Naerebout told KTVB in October 2023 the vast majority of dairy workers in Idaho are undocumented, because the federal government has not updated the agriculture visa work program since the 1980's. Dairy is a year-round job, while the current visa program is only for seasonal work."
If Idaho dairy herds disappear the libs can cheer the reduction of carbon emissions from cow farts. :-)
yeah let's see how crapo and risch feel about this issue when the idaho ag biz is brought to its knees without those undocumented workers it depends on!
"Naerebout told KTVB in October 2023 the vast majority of dairy workers in Idaho are undocumented, because the federal government has not updated the agriculture visa work program since the 1980's. Dairy is a year-round job, while the current visa program is only for seasonal work."
If Idaho dairy herds disappear the libs can cheer the reduction of carbon emissions from cow farts. :-)
and we will, while we drink our soy milk and nibble on avocado toast, flown in on giant carbon burning airplanes!
This post was edited 54 seconds after it was posted.