Tariff relief rally

[W2R]

Most of us have had this ride before .Nobody started a lost a million thread so it is all good .

At least not yet....

One advantage to a 2008-2009 style crash, is that it is a great check on one's AA. If one can deal with a big crash like that without too much angst, then the AA is great. Or at least that's the way I see it.

 

[W2R]

Oh, and also we haven't yet started to hear the multitude of financial gurus proclaiming that "This time it's different!"

To me that's a good signal that this time, it's exactly the same....

 

[Boho]

boho where is my rally dammit!

After hours today. It will still be Thursday, which is defacto Wednesday, so I could still be right.

 

[pb4uski]

^^^ master of rationalization.

 

[Hamlet]

How do you pronounce "Huawei" ?

Yeah, that news is a little frightening. Things could go off the rails in a hurry if China chooses an escalating response.

 

[kgtest]

So sorry to read this, and I hope those affected at medium corps will be OK.

I have no idea but I wonder if it might be time for retirees to "batten down the hatches", as the saying goes, and hang on tight. We might be in for quite a ride.

As for the pheasants and peasants, I hope they all get through this ok too....

Thanks. 28 people were let go. So far so good.

 

[Dtail]

Thanks. 28 people were let go. So far so good.

How many total are employed in the company?

 

[kgtest]

How many total are employed in the company?

It was about a 1% reduction with most hiring on hold. A but of a reorg or as I say changing of the guard. Regional Bank. Everyone was surprised but then again not really these tarriffs ripped the profits right outta our customers hands....the midwest farmers

 

[Dtail]

It was about a 1% reduction with most hiring on hold. A but of a reorg or as I say changing of the guard. Regional Bank. Everyone was surprised but then again not really these tarriffs ripped the profits right outta our customers hands....the midwest farmers

Good you survived. 13 years to go. Hang in there.

 

[Go-NoGo]

Patience, young grasshopper...

A grasshopper walks into a bar, and the bartender says, "Hey, we have a drink named after you!"
The grasshopper looks surprised and asks, "You have a drink named Steve?"


Oh wait - I thought this was the "Funny joke Thursday" thread..
nevermind, carry on

 

[SecondCor521]

How do you pronounce "Huawei" ?

<literal>

"WHAH-way" is how I've heard it.

</literal>

 

[NW-Bound]

... As for the pheasants and peasants, I hope they all get through this ok too....

It will not bother me if someone says "Let the peasants eat the pheasants", because pheasants are good eats.

I only had pheasant once, when staying at a country inn right on the bank of the Loire River. And eel caught off the river too. And I recall even posted photos of the dishes here on the forum. This kind of dinner made my travel memories.

 

[MRG]

It was about a 1% reduction with most hiring on hold. A but of a reorg or as I say changing of the guard. Regional Bank. Everyone was surprised but then again not really these tarriffs ripped the profits right outta our customers hands....the midwest farmers

Sorry to.hear that. I spent a lot of time around farming and it's a tough business. Even worse when mother nature isn't your biggest challenge.

 

[pb4uski]

boho where is my rally dammit!

After hours today. It will still be Thursday, which is defacto Wednesday, so I could still be right.

Oops.... wrong again! Boho, where is that rally?

 

[Boho]

Oops.... wrong again! Boho, where is that rally?

I checked QQQ after hours on Thursday at Nasdaq.com and there was a point where the volume was listed at 1000 which is high (the highest on Friday was just 500). It closed up for Thursday's after hours period. I called it ahead of time. You snooze you lose.

 

[Running_Man]

There are some comments in this thread along the lines of if we got through 2007-2009 we showed we can get through anything. That was an extraordinary bear market in that the Federal government spent 8 trillion and the FED supplied 4 trillion in order to keep the banking system from imploding and net did next to nothing for the economy. The median 55-75 year old has about 200K in total assets of which about 60K are actual investments and the rest is real estate equity.

With so little savings and a huge supply of 55 and over people about to hit the job market wall another bear market, which very likely is just beginning will be devastating to the average 55-75 year old. By the end of it I expect many will have a total depletion of savings and forced liquidations of their housing.

Pensions, which many in this group do have will be claimed and the pension funds, despite their probable desire to buy stocks at lower prices will be forced into redemptions to meet the growing boomer retirement. In 2007 the average pension fund held 86% funding, despite the large stock market rally since March 2009 the most recent data for 2017 is funding of 71%. More problematic is the ratio of active employees in the fund to actual retirees has dropped from 2.03 in 2007 to 1.38 in 2017, reflecting the demographic shift. A bear market is going to put a major dent in most of these public pension funds, which are all going to distribution mode and the net assets contained in these public pension is 4 trillion dollars.
https://www.nasra.org/publicfundsurvey

Before the answer of FIRE CALC shows this can all be lived through try to do the math for the average 65 year old retiring with 68K of investments, SS and a stock market that returns to the valuations of 1973-1974 (6PE). Because there is so little thought given to this possibility - as evidenced first and foremost by the lack of savings the median 55-75 has been able to accomplish, consumerism of the 70’s to the 2000’s is going to push into retirement a large group of people to confront economic reality starkly different than the go-go spending days of their youth. That is not so for the average person in this forum, yet the comfort in the worst case being 4% over the next decade as being debated in the King of Index investing thread will be severely challenged as the average retiree is going to be indirectly responsible for the selling a lot of stock, whether they want to or not and a bear market is sure to excelerate this process.

Since 55-75 year olds hold a great deal of stock in their meager balances, there is an implication of forced liquidations that is likely to occur that is going to be far larger than anything we have seen in decades. IF the bear market hits I shudder when I think of the potential outcomes, comforting long term investment sayings are no response to math. Timing, math and valuation are all arriving at the tarriff crossroads at the same time. It could be a Dicken’s of a time:

It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way—in short, the period was so far like the present period, that some of its noisiest authorities insisted on its being received, for good or for evil, in the superlative degree of comparison only.

The one factor that I am taking into account is the likelihood that the Federal Reserve has a very close eye on this as well and as such is very likely to strongly defend the S&P500. So inflation becomes a very possible solution to the potential bear market.

 

[njhowie]

Since 55-75 year olds hold a great deal of stock in their meager balances, there is an implication of forced liquidations that is likely to occur that is going to be far larger than anything we have seen in decades. IF the bear market hits I shudder when I think of the potential outcomes, comforting long term investment sayings are no response to math. Timing, math and valuation are all arriving at the tarriff crossroads at the same time. It could be a Dicken’s of a time:
...

The one factor that I am taking into account is the likelihood that the Federal Reserve has a very close eye on this as well and as such is very likely to strongly defend the S&P500. So inflation becomes a very possible solution to the potential bear market.

The first thing to realize is that it was the Federal Reserve that essentially forced many of these folks in to the market in the first place when they took interest rates to 0%, and kept it there for years - handcuffing all those retirees who had their nest eggs sitting in nice safe CDs and other no-risk fixed income instruments.

I've made the following argument many times over the past two years. As the market was continually hitting all-time highs and interest rates were slowly moving higher - those folks who were the unwitting beneficiaries of this entire scenario should bless their lucky stars and take the opportunity to migrate back to CDs and other non-equity fixed income which saw risk-free yields rising. I surmised that most of these folks would be unable to do it, to actively slowly migrate back to a more conservative allocation because their vision became blurred having experienced almost 10 years of out-sized average annual returns in excess of 10%. Pffft - 2% to 4% would not do it for them any longer, they wanted more. And so, we have retirees running around preaching 80/20, and some even at 100/0 trying to justify what they're doing, attacking anyone who questions their approach. Well, the cows are coming home.

Many folks are saying "The economy is great, who cares about an inverted yield curve? The recession may be a year or two off." Well, that may be so, but the stock market operates on perception and where things will be heading ... 6 months to a year in advance. Remember not so long ago when the talking heads began popping up saying they saw the end of the earnings recession coming in a few quarters and the market went up in advance of it actually happening? Same thing now. I am certain that the 80/20 folks will attack me, once again wheeling out the "market always goes higher" justification, and that's fine. We all sleep in the beds we've made and if they're comfortable in theirs, more power to them.

Anything is possible, and who knows what really goes on behind closed doors? However, coming to the rescue of the stock market is not one of the mandates of the Federal Reserve and I wouldn't be betting my retirement that they are going to save me if I were too heavily weighted in equities.

Should the Fed decide to pause the rate hikes, it may not halt the slide in the stock market. At that point, it would simply be confirmation that they believe the downturn in the economy has begun. Will this give justification for the market to rebound and go higher? Doubtful. It really shouldn't be a surprise. The IMF has been saying for months that they see a slowdown coming in 2019.

https://www.imf.org/en/Publications/WEO/Issues/2018/09/24/world-economic-outlook-october-2018

 

[RAE]

I've made the following argument many times over the past two years. As the market was continually hitting all-time highs and interest rates were slowly moving higher - those folks who were the unwitting beneficiaries of this entire scenario should bless their lucky stars and take the opportunity to migrate back to CDs and other non-equity fixed income which saw risk-free yields rising. I surmised that most of these folks would be unable to do it, to actively slowly migrate back to a more conservative allocation because their vision became blurred having experienced almost 10 years of out-sized average annual returns in excess of 10%. Pffft - 2% to 4% would not do it for them any longer, they wanted more. And so, we have retirees running around preaching 80/20, and some even at 100/0 trying to justify what they're doing, attacking anyone who questions their approach. Well, the cows are coming home.

Totally agree with you on this. Like you, I have been concerned with equity valuations for a while now, which is why I DID take a significant chunk of $$ off the table and migrate back to CDs, when CD yields started rising a bit. Call it market timing if you like, but there is just no way in my mind that the markets can continue to produce the returns they have over the last 9 years or so. And yes, I know that it's nearly impossible to know when to get back into the markets when you do this, but at this point I have no need to get back into the markets in a big way for years, if ever, so I don't really care. I'm very happy to reap 3% CD yields, and sleep well at night. 80/20 may work out just fine for those that choose to stick with it over the long term, but I'm personally not willing to take that risk, at this point in my life.

Thanks njhowie and Running_Man for your thoughts - very interesting.

 

[mamadogmamacat]

isn't it just a matter of confirmation bias? If a person has enough to provide for their needs over however many yrs they are likely to have left by simply buying CD's that yield the same as inflation or slightly more or slightly less over time. then when that "works" for them it validates the plan does it not? The fact that they could have had more to spend, over the long term never really matters to them, or so it seems to me.

I'm confident that an 80/20, or even the 60/40 I'm comfortable with, will yield more over the long term, and so far history has proven this to be true. Maybe this time with the correction or even bear that we may be in will be different, but I seriously doubt it. So, there's my own version of confirmation bias but supported by historical fact at least, and why I can also sleep at night YMMV

 

[ERD50]

....Before the answer of FIRE CALC shows this can all be lived through try to do the math for the average 65 year old retiring with 68K of investments, SS and a stock market that returns to the valuations of 1973-1974 (6PE). Because there is so little thought given to this possibility - as evidenced first and foremost by the lack of savings the median 55-75 has been able to accomplish, consumerism of the 70’s to the 2000’s is going to push into retirement a large group of people to confront economic reality starkly different than the go-go spending days of their youth. ...

OK, but how is this different than any other time in recent history?

The math is the same as it ever was. A FIRECalc run anytime in the past would have told the person with $68K that they need to almost totally rely on their SS and any pension. A 100% historically safe WR for 40 years is ~ 3.2%, so that is ~ $2,100 a year.

-ERD50

 

[Running_Man]

OK, but how is this different than any other time in recent history?

The math is the same as it ever was. A FIRECalc run anytime in the past would have told the person with $68K that they need to almost totally rely on their SS and any pension. A 100% historically safe WR for 40 years is ~ 3.2%, so that is ~ $2,100 a year.

-ERD50

I am viewing at an overall level not an individual level, the pain will be felt at an individual level. In 1974 19% of the United States population was 55 and over now it is 30%. Now there is 4 trillion dollars in underfunded pension plans supporting that retirement of a very large segment of the population. Firecalc is irrelevant, so 15% of that total have 68K or less other than the pensions mentioned, which is almost on a percentage basis as many as there were retirees so the pressure on the overall population from the retirees is about double the exposure in 1973.

In 1972 these public pensions invested 25% in stocks and 75% in bonds (per Pew Trust study) now it is 72% Equities and alternatives, additionally the total value of the portfolio has soared as the benefits have been greatly increased for the retirees. So you have high amount of equities servicing a high amount of retirees with a minimal ability to cover their retirement. It is a receipe for disaster. There is nothing in the historical database for the United States, forget about Firecalc that can account for this. The average public pension plan has a median expected return of 8 percent as of 2012, and still they are at 71% underfunded. Think of General Electric on a much grander scale (the debacle of a pension at GE is not even in the number of 4 trillion of public pensions) , GE thought they ignore the problem and stock market would save them. Firecalc has not done GE much good.

 

[Free bird]

The fed is boxed in now. They will raise just to show [mod edit] isn't calling all the shots. In January they'll announce they've achieved nirvana or neutral as they call it. That might clear a path to new highs. 3200-3400

 

[kgtest]

It will not bother me if someone says "Let the peasants eat the pheasants", because pheasants are good eats.

I only had pheasant once, when staying at a country inn right on the bank of the Loire River. And eel caught off the river too. And I recall even posted photos of the dishes here on the forum. This kind of dinner made my travel memories.

Lol, I just realized the mistake. Blame it on the public education system...or my parents...but not me!

 

[Boho]

Another rally is coming within the next 24 trading hours. Probably beginning this afternoon. It's ridiculous for people to be selling because of the trade war hurting China. That just means it's even more likely to be resolved and I think most people were optimistic to begin with.

 

[braumeister]

Wow! Thank you so much for sharing your insight and prediction with us.