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Why I'm In Cash, Mostly

By Bellingham Bill following x   2017 Jun 2, 11:06pm 2,721 views   19 comments   watch   quote     share  

#investing

1 APOCALYPSEFUCK_is_ADORABLE   2017 Jun 2, 11:22pm   ↑ like (6)   ↑ dislike (6)     quote        

I'm long bullets, yams, replacement barrels.

2 jazz_music   2017 Jun 3, 12:02pm   ↑ like (1)   ↑ dislike (1)     quote        

Yeah, I've been embracing safety for years now because I'm 65 years old and I see the collapse of real economy all around me everywhere I go while investors are taking their ride to the moon.

Later I found out that rounds of QE can turn night into day. Okay. Whatever. I understand that now, I guess, but I still don't like the set up for the big surprise at the end of the big trick.

As long as very few well-schooled people can experience steady employment, as long as the very biggest employers can set up scams where no American can qualify for job openings to accelerate pay compression, as long as housing remains a ridiculous sacrifice calling for multigenerational living and other house-sharing arrangements, car defaults are too high, stores close, fast food is even having a rough time keeping the doors open.

Our country is the fucking wild west open season for oligarchs with a huge faction of right wing bubble dwellers cheering their own demise because they've been propagandized to fear having any benefit from their paying taxes, or allowing the poor have assistance from tax funded safety nets. --all that they feel should go to the top oligarchs, and wars, as god intended.

Oil and mining companies trump the environment and right wing feels that wars can perpetually exist only on other peoples land. --what could go wrong? So many ways to end almost all life on earth except for the rich people who feel that, with enough police and surveillance, the sacrificial public can never touch them.

3 someone else   2017 Jun 3, 3:11pm   ↑ like (0)   ↑ dislike (0)     quote        

Bill, is your point that the S&P is too far ahead of corporate profits?

4 iwog   2017 Jun 3, 3:15pm   ↑ like (2)   ↑ dislike (2)     quote        

Patrick says

Bill, is your point that the S&P is too far ahead of corporate profits?

I think he's right. The disconnect between corporate profits and stock price is one of the reasons I went mostly to cash in 2014. Now it's a lot worse.

We've also got the death throws of retail to suffer through and it's not going to be pretty.

Regarding the two equities I'm currently invested in, this makes NAC a huge buy and ARLP at some risk although not nearly as much a risk as most stocks.

5 Bellingham Bill   2017 Jun 3, 6:03pm   ↑ like (0)   ↑ dislike (0)     quote        

Patrick says

Bill, is your point that the S&P is too far ahead of corporate profits?

yes and no, one can't compare P/E ratios of now to 1980s or 90s since inflation expectations and expected yields are so much lower now, so I can't say that the S&P 500 is too high just from this chart.

But it is interesting to me that before QE happened there was a pretty good correlation between the index and corporate profits.

having said that, corporate profits are flat now, and if they start going down then I do expect money to leave the market, since we're in such a volatile trading environment vs. the 80s or 90s.

Oddly, corporate profits were quite flat 1995-2002 and that didn't stop the dotcom bubble.

https://fred.stlouisfed.org/graph/?g=dY8N

shows the late 90s saw +6% GDP growth year after year so I guess that encouraged people to get into the market, kinda like Amazon stock today (great growth but no profits).

https://fred.stlouisfed.org/graph/?g=dY8W

shows we're not going to have demographic-driven growth, and this is compounded by the anti-immigrant party line now coming out of people currently ensconced in the White House. (the spike in 2000 is all the 1990s immigrants getting counted in the 2000 census)

And that's just it, the current Trump brain trust makes 43's crew look like MENSA members.

If they're not careful, they could really fuck things up, just like the Bush crew did 2003-2005. They weren't expecting their handiwork -- giveaway "supply side" tax cuts to the rich, two major wars/occupations, deregulation -- to fall apart so quickly, but man it sure did.

Current admin makes the Coolidge Republican era look competent.

6 tr6   2017 Jun 3, 6:18pm   ↑ like (0)   ↑ dislike (0)     quote        

iwog says

The disconnect between corporate profits and stock price is one of the reasons I went mostly to cash in 2014

There are some tech companies where profits are growing fast: Google, Facebook, not some much Apple, Microsoft, or Amazon. Oil companies such as Exxon and Chevron can't possibly make that much money in the long term with oil below 50. Retail is a disaster.

Have no idea why McDonalds went up 50% while its sales are 12% below where they were 3 years ago. Even better, it's 2.5 times its 2008 price while revenues are up less than 10% Can't explain all of that by its high dividend.

NAC is a great buy if you don't think about collateral damage from Illinois municipals blowing up sometime in the next year. I took 10% off the table last week, will sell all if we get to 15.50 which seems realistic now. I don't see it going back to 17 because it would mean that 10 years is at 1.4. If Fed raises in June and 10 years is at 1.4 then there is something wrong.

7 Bellingham Bill   2017 Jun 3, 6:18pm   ↑ like (0)   ↑ dislike (0)     quote        

iwog says

this makes NAC a huge buy

love those rising bottoms -- BTFD!

8 Bellingham Bill   2017 Jun 3, 6:24pm   ↑ like (1)   ↑ dislike (1)     quote        

tr6 says

If Fed raises in June and 10 years at 1.4 then there is something wrong.

If history is anything to go by, the Fed's main job now is to get us into another recession by 2020.

blue is YOY % job growth, red is Fed pain index (Fed funds rate - CPI %)

9 tr6   2017 Jun 3, 6:27pm   ↑ like (0)   ↑ dislike (0)     quote        

Bellingham Bill says

If history is anything to go by, the Fed's main job now is to get into another recession by 2020

We are 4 hikes away from inverted yield curve. I guess we are not that far from 2020. Oh wait, Trump can nominate Gary Cohn to be the Fed chairman and he can start QE to buy up all the treasuries to pay for Trump's tax cuts.

10 tr6   2017 Jun 3, 6:49pm   ↑ like (1)   ↑ dislike (1)     quote        

In tech it's still all about Apple profits and revenues (since it's bigger than Google, Facebook, and Netflix combined) Just bought LG G6 for $280 at BestBuy. Bought an iPhone 7 for a family member for $350 ($300 off via target gift card) at Target at the end of March. It's only a matter of time before cheaper and better Android phones eat into Apple's profit margins. I know I made the argument a couple of years ago. Apple might have bought itself a bit of time with Samsung's exploding batteries last year.

11 someone else   2017 Jun 3, 7:03pm   ↑ like (0)   ↑ dislike (0)     quote        

Personally, I moved in the other direction, buying an iPhone when my Nexus Android phone died.

The extra cost is not significant to me compared to the increased ease of use.

One thing that's still driving me crazy is that there is no way to dismiss texts from the lock screen of an iPhone. You have to unlock the text and read the stupid text again even though you saw it on the lock screen.

Aside from that, I'm much happier with the iPhone.

12 tr6   2017 Jun 3, 7:11pm   ↑ like (0)   ↑ dislike (0)     quote        

Patrick says

Personally, I moved in the other direction, buying an iPhone when my Nexus Android phone died.

Patrick, for you Apple is a better company from the privacy perspective because that's their business model. I don't trust Google's privacy model and it maybe the reason to switch to Apple at some point. I would use all the same apps on iPhone that I do on Android. Google is better at maps, AI, and other things that you can install on iPhone and then lose your privacy again.

13 tr6   2017 Jun 3, 7:13pm   ↑ like (0)   ↑ dislike (0)     quote        

Patrick says

The extra cost is not significant to me compared to the increased ease of use.

It's not significant at all when Apple seems to have a major sale at the end of each quarter to meet their numbers. Watch for a sale at the end of June. The end of March sale was in Target. $300 off is a lot for an iPhone. I guess Apples thinks it's ok as long as corporate and government customers keep paying full price.

14 someone else   2017 Jun 3, 7:18pm   ↑ like (1)   ↑ dislike (1)     quote        

Yes, privacy was a huge issue.

Google makes money by selling your personal information to the highest bidder. If you have privacy, they don't make money.

I prefer to buy the device at full price and be somewhat more certain that my information is not being sold.

Apple maps seems pretty good to me. Haven't had a problem with it.

But I am annoyed that the Swiftkey app that makes it so easy to type on the phone refuses to work if I cut off its network access in settings. It feels it must report back everything I type. To whom and why, it doesn't say.

15 SubOink   2017 Jun 11, 9:59pm   ↑ like (0)   ↑ dislike (0)     quote        

iwog says

and ARLP at some risk although not nearly as much a risk as most stocks

@iwog, What would make you sell that position?

16 SFace   2017 Jun 26, 11:38pm   ↑ like (0)   ↑ dislike (0)     quote        

During times like these, a little bit of Jack Bogle wisdom will help.

I think people underestimate how much funds inflow, mostly automatic are flowing into us equity and that won't change anyone soon.

17 Bellingham Bill   2017 Jun 27, 6:01pm   ↑ like (0)   ↑ dislike (0)     quote        

SFace says

I think people underestimate how much funds inflow, mostly automatic are flowing into us equity and that won't change anyone soon.

agreed, I was fearful of the boomers cashing out, then I realized Gen Y was bigger . . .

(plus of course the great monetary expansion since the mid 90s has to go somewhere)

https://fred.stlouisfed.org/series/MABMM301USQ189S

18 JZ   2017 Jun 28, 12:28am   ↑ like (1)   ↑ dislike (1)     quote        

Long term, weighting machine.
Short term, voting machine.
Long term, wealth creation.
Short term, wealth transfer.
Long term, valuation.
Short term, technical speculation.

Stock market has two faces. Valuation is just one. You can NOT ignore the other one.

If you weight 10 years, over 95% probability that S&P will be lower than today's level.

Within 3 years? There is a good chance (>30%) that S&P could double if the 1% tries to fleece the 99% by luring their cash into the final gasp of the bull.

Of course the other 70% probability within the next 3 years short term would be to drop by half. After all,FED is tightening and you do NOT want to fight them.

19 ThreeBays   2017 Jun 28, 2:55am   ↑ like (1)   ↑ dislike (1)     quote        

Worth looking at revenue too. Amazon is a great example where profit is a "bug".

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