targatom2019
Recycles dryer sheets
so what if it the markets keep going up, will you go back in later in an up market ?
Is a depression priced in?
- Thread starter BigNick
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so what if it the markets keep going up, will you go back in later in an up market ?
pb4uski
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
targatom2019
Recycles dryer sheets
Reading comprehension is hard.
It's when English is not my first language. I only learned enough English to understand the market, make money in the market, not sell low then buy back high and retired at 50.
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Huh?
Small Cap has beat large cap by a large margin over the last 20 years. https://www.portfoliovisualizer.com/backtest-asset-class-allocation?s=y&mode=1&timePeriod=4&startYear=2000&firstMonth=1&endYear=2020&lastMonth=12&calendarAligned=true&includeYTD=false&initialAmount=10000&annualOperation=0&annualAdjustment=0&inflationAdjusted=true&annualPercentage=0.0&frequency=4&rebalanceType=1&absoluteDeviation=5.0&relativeDeviation=25.0&portfolioNames=false&portfolioName1=Portfolio+1&portfolioName2=Portfolio+2&portfolioName3=Portfolio+3&asset1=LargeCapBlend&allocation1_1=100&asset2=SmallCapBlend&allocation2_2=100
Small Cap Value has completely trounced large caps over the last two decades. https://www.portfoliovisualizer.com/backtest-asset-class-allocation?s=y&mode=1&timePeriod=4&startYear=2000&firstMonth=1&endYear=2020&lastMonth=12&calendarAligned=true&includeYTD=false&initialAmount=10000&annualOperation=0&annualAdjustment=0&inflationAdjusted=true&annualPercentage=0.0&frequency=4&rebalanceType=1&absoluteDeviation=5.0&relativeDeviation=25.0&portfolioNames=false&portfolioName1=Portfolio+1&portfolioName2=Portfolio+2&portfolioName3=Portfolio+3&asset1=LargeCapBlend&allocation1_1=100&asset2=SmallCapBlend&allocation2_2=100
Large cap value has beat large cap over the last two decades. https://www.portfoliovisualizer.com/backtest-asset-class-allocation?s=y&mode=1&timePeriod=4&startYear=2000&firstMonth=1&endYear=2020&lastMonth=12&calendarAligned=true&includeYTD=false&initialAmount=10000&annualOperation=0&annualAdjustment=0&inflationAdjusted=true&annualPercentage=0.0&frequency=4&rebalanceType=1&absoluteDeviation=5.0&relativeDeviation=25.0&portfolioNames=false&portfolioName1=Portfolio+1&portfolioName2=Portfolio+2&portfolioName3=Portfolio+3&asset1=LargeCapBlend&allocation1_1=100&asset2=LargeCapValue&allocation2_2=100
Yes, the US has outperformed international equities over the last few years. Unless you consider international value or international small caps. https://www.portfoliovisualizer.com/backtest-asset-class-allocation?s=y&mode=1&timePeriod=4&startYear=2000&firstMonth=1&endYear=2020&lastMonth=12&calendarAligned=true&includeYTD=false&initialAmount=10000&annualOperation=0&annualAdjustment=0&inflationAdjusted=true&annualPercentage=0.0&frequency=4&rebalanceType=1&absoluteDeviation=5.0&relativeDeviation=25.0&portfolioNames=false&portfolioName1=Portfolio+1&portfolioName2=Portfolio+2&portfolioName3=Portfolio+3&asset1=LargeCapBlend&allocation1_1=100&asset2=IntlSmall&allocation2_2=100
pb4uski
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
It's when English is not my first language. I only learned enough English to understand the market, make money in the market, not sell low then buy back high and retired at 50.
Then it looks like you have done well but still have more to learn.
The New York Times article specifically refers to results from the 2008 financial crisis onwards that don't include the brief 2000-2002Dot.com boom and bust:
"The years since the 2008 financial crisis have been marked by an increase in the consolidation of some industries, such as banking and airlines.
And as bigger companies have steadily grown, they’ve also snagged a larger share of profits. In 1975, the biggest 100 public companies in the country took in about 49 percent of the earnings of all public companies. Their piece of the pie grew to 84 percent by 2015, according to research from Kathleen M. Kahle, a finance professor at the University of Arizona, and René M. Stulz, an economist at Ohio State University.
The current surge of megacap stocks suggests that many investors expect those companies’ slices to expand even more after the current economic implosion, in which smaller companies are widely expected to be the hardest hit. Small-cap companies — such as those included in the Russell 2000 — carry more debt, making them vulnerable to having financing cut off by bond markets. They’re less globally diversified, making them heavily dependent on the performance of the economy in the United States, the current epicenter of the crisis."
https://www.portfoliovisualizer.com/backtest-asset-class-allocation?s=y&mode=1&timePeriod=4&startYear=2003&firstMonth=1&endYear=2020&lastMonth=12&calendarAligned=true&includeYTD=false&initialAmount=10000&annualOperation=0&annualAdjustment=0&inflationAdjusted=true&annualPercentage=0.0&frequency=4&rebalanceType=1&absoluteDeviation=5.0&relativeDeviation=25.0&portfolioNames=false&portfolioName1=Portfolio+1&portfolioName2=Portfolio+2&portfolioName3=Portfolio+3&asset1=TotalStockMarket&allocation1_1=100&asset2=SmallCapValue&allocation2_2=100
But rather than cherry-pick data points why not look at the thrust of the article, which is that the dominance of mega-corporations with huge cash reserves and the ability to conduct most or all of their business online, which spurred massive growth in their size and influence in the years immediately following the 2008-09 crash, has been launched into warp drive by the unfolding of this pandemic.
But if you insist on using 2000-2020 numbers, try on these:
https://www.portfoliovisualizer.com/backtest-asset-class-allocation?s=y&mode=1&timePeriod=4&startYear=2000&firstMonth=1&endYear=2020&lastMonth=12&calendarAligned=true&includeYTD=false&initialAmount=10000&annualOperation=0&annualAdjustment=0&inflationAdjusted=true&annualPercentage=0.0&frequency=4&rebalanceType=1&absoluteDeviation=5.0&relativeDeviation=25.0&portfolioNames=false&portfolioName1=Portfolio+1&portfolioName2=Portfolio+2&portfolioName3=Portfolio+3&asset1=TotalStockMarket&allocation1_1=100&asset2=IntlStockMarket&allocation2_2=100
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Lsbcal
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
My guess is that the market will go down but the path down may be torturous. Consumer spending is in the dumpster.
CAVEAT: I am mad as hell. Stocks are going up without me.
CAVEAT: I am mad as hell. Stocks are going up without me.
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One reason that the market is up is because of the fed is flooding the market with liquidity to avoid a credit crunch similar to 2008. The fed is also buying corporate bonds which is like lending money to corporations. The government is also providing bailouts to citizens, small businesses, etc, etc
This also mean the government is printing money. When the government stops printing money, the market will decline. I would not bet that the government will print money forever. If data indicates inflation is beginning to rise, the government will either stop printing money and allow the market to decline or accept inflation.
The current goal of the government is to avoid hardships to people who lost their jobs and saving companies from bankruptcies which also save jobs. Remember what happen to GM in 2008, the government saved GM which saved jobs but GM stock became worthless. This is why Warren Buffet dumped the airlines to avoid something similar. The government will not save or bailout investors.
I do not have very large position in equities but if I did, I would check if I own companies that may potentially declare bankruptcy or needs a bailout under this current economic situation. Warren Buffet already went through this process so other investors should do something similar.
This also mean the government is printing money. When the government stops printing money, the market will decline. I would not bet that the government will print money forever. If data indicates inflation is beginning to rise, the government will either stop printing money and allow the market to decline or accept inflation.
The current goal of the government is to avoid hardships to people who lost their jobs and saving companies from bankruptcies which also save jobs. Remember what happen to GM in 2008, the government saved GM which saved jobs but GM stock became worthless. This is why Warren Buffet dumped the airlines to avoid something similar. The government will not save or bailout investors.
I do not have very large position in equities but if I did, I would check if I own companies that may potentially declare bankruptcy or needs a bailout under this current economic situation. Warren Buffet already went through this process so other investors should do something similar.
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Dtail
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Bolded by me - but isn't that what the government is effectively doing with the huge emphasis being placed on how the stock market is performing?
Additionally, when the Fed flooded the markets in 2008, it did not lead to inflation, although the flooding was much less.
From economics theory, the printing of monies should lead to inflation, but not sure if it will.
I still believe there will be 2 opportunities for the markets to fall; either around July or November if there is a change in Administrations.
Otherwise, even without a V recovery, there might not be another leg down.
Just my crystal ball.....
I apologized to my UPS driver, retailers been splitting up orders into multiple single items shipments...driver said...NO NO, this is GREAT, I get to make more than one stop.
So UPS drivers are monitored and measured far more than any other employees in the company. One of the metrics they measure is the number of stops a driver makes on the road per hour.
These shipments are from the same vendor, but occurred at different times, so they are different shipments. Therefore, he gets credit for delivering to two stops at the same address by scanning the two different tracking numbers. It just means he doesn't have to be as rushed to make his daily numbers for management.
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I am with Aerides, on this one. I don’t believe many of the furloughed employees will be hired back by major corporations. I believe many were furloughed so they could get the help provided by the CARES ACT. I think over time, when business does not return to Pre COVID Levels, employees will not be asked to return, as companies cut all expenses to increase their earnings to make up for all the losses during the shutdown. Most all expenses continued for the companies including health care expenses for most furloughed workers even though sales and profits were drastically reduced. Public Companies will try to dress up their earnings by not bringing back employees, and cutting inventories and expenses.
So I sleep at night with 78% cash, 7% long positions and 15% invested in short mutual fund positions. I can offset sme losses in my short positions as the market creeps up by the Fed Printing Money, sell those positions, at some point and keep the short for when the market drops again, as I expect it will based on my comments above.
I agree with your November crystal ball. The FED is independent of the WH. However, The WH has a lot of influence over the Department of Treasury headed by Steven Mnuchin. I understand the connection because I was former federal employee for 34 years.Bolded by me - but isn't that what the government is effectively doing with the huge emphasis being placed on how the stock market is performing?
Additionally, when the Fed flooded the markets in 2008, it did not lead to inflation, although the flooding was much less.
From economics theory, the printing of monies should lead to inflation, but not sure if it will.
I still believe there will be 2 opportunities for the markets to fall; either around July or November if there is a change in Administrations.
Otherwise, even without a V recovery, there might not be another leg down.
Just my crystal ball.....
As far as inflation we should be aware that the debt to GDP ratio is important in predicting inflation and here are the countries with the highest ratio that I extracted from https://worldpopulationreview.com/countries/countries-by-national-debt/:
Japan237.54%
Venezuela214.45%
Sudan177.87%
Greece174.15%
Lebanon157.81%
Italy133.43%
Eritrea127.34%
Cape Verde125.29%
Mozambique124.46%
Portugal119.46%
Barbados117.27%
Singapore109.37%
United States106.70%
In 2008, USA debt increased from $9T to $12T but the GDP was $14.7T so the debt to GDP ratio was still under 100% even after the increase.
However, the USA debt is now about $22T with a GDP of $20.5T so we are over the 100% to begin with. Currently the USA GDP is now going down while the national debt is going up.
My point: The danger of inflation in 2020 is significantly higher than 2008 based on these numbers. The government will probably not let inflation get out of hand but there is a limit of how much increased debt our nation can tolerate. I suspect the government will push the envelope and increase the debt as much as possible because of the virus. Inflation will not happen during the bear market since low demand causes low prices because consumers are buying less. However, when consumers do start to buy more, prices may start to increase. When that starts to happen, they may have to increase taxes, decrease liquidity and raise interest rates.
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Bolded by me - but isn't that what the government is effectively doing with the huge emphasis being placed on how the stock market is performing?
Additionally, when the Fed flooded the markets in 2008, it did not lead to inflation, although the flooding was much less.
From economics theory, the printing of monies should lead to inflation, but not sure if it will.
I still believe there will be 2 opportunities for the markets to fall; either around July or November if there is a change in Administrations.
Otherwise, even without a V recovery, there might not be another leg down.
Just my crystal ball.....
The 2008 money flood did cause inflation in the areas the money reached. Back then the $ never reached Joe Sixpack... it stayed in financial markets which inflated asset prices.
Short term there is inflation risk due to supply shocks related to shutting down the economy. Long term there is very little risk of inflation due to demand even with the deficit spending because, unless a permanent Ubi is introduced giving spending money to poor people, the money is not going to people with a high propensity to spend.
ElizabethT
Full time employment: Posting here.
Same here. Not a hugh amount, just 10%, but it simply felt like an appropriate action for us to take. We're still in the market at a level of 40%, and we're comfortable with that exposure at this point in our lives (ages 57/64) even with so much unsettled pertaining to pandemic fallout.
Dtail
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Yeah, just can't see any Admin letting things getting out of control related to 70's type inflation.
DrRoy
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
I totally agree with that. My comment was only relative to when we have hit the low point. Working our way back will be slow, at least until there is a vaccine.
Chuckanut
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
If these lock downs go on to long I would worry more about deflation.
I also agree that a depression is not priced in. However, the Fed is indeed connected to liquidity. People should understand that liquidity is more connected to "short term loans" that the Fed provides to banks. As an example, if someone loans you $1M, you now have $1M of liquidity. However, since it is a loan, you do have to pay it back. When the banks acquire short term loans from the Fed, the banks now have liquidity. The banks can now lend more money out. The banks pay back the Fed when borrowers pay back the bank loans. Here is a link that explains some of this.
https://www.bankrate.com/banking/federal-reserve/why-the-fed-pumps-billions-into-repo-market/
Quantitative Easing comes into play but this is an "exchange of securities". QE is the process which the Fed buys securities such as treasuries to increase the money supply. For example, both a house and treasuries are securities. When the Fed buys securities such as treasuries (or a house), it adds money into the system because now the system has more dollars which circulates. People would confuse this to the Fed printing money. In a sense it is really the Fed exchanging liquid assets for non liquid assets. Liquid assets that circulates increases liquidity and the money supply.
As far as printing money. The Fed is not involved in this. US treasury Department is involved in printing the paper dollars. We live in an electronic world so printing paper dollars is less of a factor.
I only use the term "printing money" when Congress decided to bail out unemployed people such as the recent $1200 per person checks. This is not a loan and this is not an exchange of securities. The money that is given to people simply adds to the federal debt. Anytime the federal debt is increased, then that is the time when you can use the term "printing money". Bottomline is that there are checks and balances in our system.
Too many checks, not enough balance.
pb4uski
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
I don't get it. If the $1,200 per person went to people who were employed, unemployed, underemployed, retired or whatever... how and why is it bailing out unemployed people?
I guess bailing out may be a misnomer. The point is the $1200 is not a loan, nor an exchange of securities. The term that I should have used in a "grant". Since it is not a loan nor an exchange of securities, $1200 comes from the general fund. Since the inflows to the general fund are taxes and the outflow are expenditures, the $1200 is an outflow which raises the national debt unless Congress raises taxes.
If your kids need some money because they got into debt and the parent pays the debt off, this is a grant but some parents would call it bailing out their kids. The government also calls the $1200 as a "stimulus" which they hope people will use the money to stimulate the economy so the government will get money back when their wages go up and the taxes go up. Fat chance that will happen so this means the general fund gets depleted and they have to borrow money which raises the national debt.
My main point is that Congress control the general fund, taxes, expenditure, and the national debt. The Fed and the treasury department do not. One valid comment to my previous comment is there are "checks" in the system but not enough "balance". This is a true statement due to our political system. Congress passed a law on a cap of expenditures but congress keep raising it.
Whether you call it bailing out, a grant, or a stimulus, it does not matter. What matters is how the government will pay for it.
Mr. Tightwad
Thinks s/he gets paid by the post
By raising taxes on those that already pay taxes.
pb4uski
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
So your main point was that the stimulus payments were paid for by the general fund by issuing debt which stresses the debt ceiling? If so, I would have thought that would be obvious.
But your main point really had nothing to do with unemployed people.
FWIW, I think the stimulus was misguided. A substantial part of the $218 billion paid was probably just saved rather than spent.
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