ER skeptics were right on Debt Ceiling

[donheff]

Mea culpa, mea culpa... I went to a lot of trouble getting into cash in anticipation of a major short term drop dues to a debt ceiling impasse. I thought the divisions and intransigent nature of many would lead to an impasse worse than 2011 this time so I executed a rare market timing strategy. Most of the board yawned and said this time will be like the other times. You were right.

I am blown away. Without any political point awards, I think it is safe to say McCarthy and Biden both came out winners. McCarthy is claiming a humongous spending cut and showed he could contain his squabbling minions, and Biden's crew (the man himself is quiet so far) claim they got more than they could have hoped for and lost nothing that wouldn't have gone under regular budget negotiations/impasses later this year.

And we got a win - a pause in political monetary brinksmanship until the next administration. I put in a buy order pre-opening today and got the opening prices getting back to close to where I want to be long term. I'm holding back some funds and may go a bit more to bonds until equities get more real. All in all it was a wash - i.e., a waste of effort. It could have gone better or worse.

 

[Winemaker]

Just wait until they fix Social Security!

 

[audreyh1]

It’s not over yet!?

I find just the thought of anticipating these short term events and taking temporary action to be draining and exhausting, so I just sit on my hands with my long-term investments.

 

[tulak]

Is it ever over? [emoji2]

I’m sure there will be more manufactured crises in the future. I find ignoring them is beneficial to both my mental and financial well being.

And really, it’s the unexpected crises that worry more. But not much you can do about those either.

 

[JoeWras]

I had to mute a friend on an old w*rk board we use to keep retirees in touch.

Every week for the last 6 months he'd put out a post how 5 people from one party were going to break the country.

Same thing, every time. It just gets old, ya know? Nobody responded. Actually, the board is dying, and I think his soapbox is part of the reason.

 

[MuirWannabe]

I bought my first option ever in anticipation of a blowup. A S&P put. It’s still out there for another month but worth less than half my original $13,300 investment. Of course, my main holdings have enjoyed the recent rise up.
It was an interesting learning experience with options.

 

[jollystomper]

You are not alone . There seems to be more profit in riling people up today than taking the calm "this too shall pass" approach . Unfortunately, as audreyh1 points out, that causes many to take short term actions that ultimately cause more stress than just sticking to a basic plan.

In retrospect it makes me glad to have started investing in time to experience things like Black Friday 1987, 1990-91 recession, dot com bust, great recession of 2007-2009, covid market impact, etc. Those experiences make it easier for me to deal with today's "crisis du jour" .

 

[OldShooter]

... In retrospect it makes me glad to have started investing in time to experience things like Black Friday 1987, 1990-91 recession, dot com bust, great recession of 2007-2009, covid market impact, etc. Those experiences make it easier for me to deal with today's "crisis du jour" .

Exactly. My going-in assumption in situations like this is: "This time isn't different." So far it has served us well.

​

 

[audreyh1]

Yeah, I promised to sleep through it, but little bits of news and comments would sneak in now and then.

I did keep buying my treasuries. You never know what will happen after you buy one.

One reason I don’t worry about near term big spikes or downdrafts is that they sometimes give me an opportunity to rebalance or tax loss harvest after the fact. If they are really short I’m likely to miss it, so I don’t worry about that either.

 

[madatrub]

It'll never be over. Next up are recession woes and China invading Taiwan. There's always something to be scared over.

 

[JoeWras]

Insects.

Hornets. Lanternflies.

 

[Montecfo]

Of course, what the issue is about is our burgeoning debt. I do not think we default administratively, but the government shows it has no intention of eliminating deficit spending, much less paying it down.

This leads to a devalued currency, inflation and a reduced standard of living.

 

[RetiredAt49]

Honestly, in addition to the media I also see topics/comments here too that spread the fear and/or suggest people should reduce equities…. Kinda like the “golden era for fixed assets” thread - among many others.

My retirement portfolio (100% equities) is up just a little over 20% YTD. I get that some/most people in retirement can’t handle a 100% stock portfolio given the market swings but we have over a century worth of historical data and research that has shown an all stock portfolio has outperformed all other asset allocations over long time horizons (e.g. 30+ years).

 

[Graybeard]

There is no way they would let the country default on it's debt. Now China attacking Taiwan, that is a far more dangerous issue.

 

[Koolau]

The way this is all playing out in the news is (wait for it) CLICK BAIT! I have tried to treat it as such (Don't click!) YMMV

 

[audreyh1]

Yep, agree, Just Don’t Click!

 

[Quattro73]

Eh, I was hoping for a little more disruption to the longer end of the yield curve to take advantage of. Did not happen.

 

[PlayinwithFIRE]

In 2019, When COVID hit and the market tumbling, and I saw all the people dying across the planet and everything shutting down, I made what I thought was a thoughtful decision to pull cash to the side for my "2022" fund..which was essentially my eldest's college $ (which he would be starting in 2022) .

The reasoning was that we would be in this mess for awhile (and we were!) and we needed the funds in the very near term (we did !)..so lets secure to cash before we cant pay for 4 years of college. Secure the short term college costs. Seemed reasonable. I think its still sound reasoning.

Well, the market decided after about 3 months, it could care less that people were dying or that goods weren't moving and it roared back...leaving me on the sideline.

I eventually moved the $ back in, but lost a substantial recovery gain in the process.

College is still covered, so we weren't materially affected in that way, but i learned my lesson. I'm alot more pessimistic than the market

 

[donheff]

Eh, I was hoping for a little more disruption to the longer end of the yield curve to take advantage of. Did not happen.

Yeah, gotta admit it, me too. I live a few blocks from these nuts and feel immersed in it. I thought they would give s a scary ride this time and give us shot at easy pickings. I hope I have learned my market timing lesson.

 

[audreyh1]

In 2019, When COVID hit and the market tumbling, and I saw all the people dying across the planet and everything shutting down, I made what I thought was a thoughtful decision to pull cash to the side for my "2022" fund..which was essentially my eldest's college $ (which he would be starting in 2022) .

The reasoning was that we would be in this mess for awhile (and we were!) and we needed the funds in the very near term (we did !)..so lets secure to cash before we cant pay for 4 years of college. Secure the short term college costs. Seemed reasonable. I think its still sound reasoning.

Well, the market decided after about 3 months, it could care less that people were dying or that goods weren't moving and it roared back...leaving me on the sideline.

I eventually moved the $ back in, but lost a substantial recovery gain in the process.

College is still covered, so we weren't materially affected in that way, but i learned my lesson. I'm alot more pessimistic than the market

If you were just covering 4 years college expenses IMO you made the right move. Money that short term should not be risked. You left the remainder invested long term I assume, so you were fine.

 

[harley]

Insects.

Hornets. Lanternflies.

Spiders. Quicksand.

 

[DrRoy]

I find just the thought of anticipating these short term events and taking temporary action to be draining and exhausting, so I just sit on my hands with my long-term investments.

It's a fool's errand to try market timing for any reason. You have to do 2 events correctly. If the odds for each are 50-50, then 75% of the time you will get one or both choices wrong.

 

[Scubamax]

As the saying goes…..Time IN the market beats timing the market!

 

[JoeWras]

What's scary to me is our business leaders and political leaders buy into this and make dumb knee-jerk portfolio decisions.

For example: automobile manufacturing during COVID.

Somehow, with only a few exceptions (Tesla?), manufacturers decided in lock-step that car demand would crater for a few years.

Oh man, were they ever wrong. World over, we are collectively still paying for that decision that mysteriously was made by nearly every manufacturer.

 

[freedomatlast]

In 2019, When COVID hit and the market tumbling, and I saw all the people dying across the planet and everything shutting down, I made what I thought was a thoughtful decision to pull cash to the side for my "2022" fund..

March 2020 was the beginning of what's described above, not 2019.