patrick.net

Read my thread on investing ...

http://patrick.net/post/1319120/2018-09-25-rin-spoke-with-his-financial-advisor

CBOEtrader says

Knowing when to steer clear of a downturn is the hardest thing to predict in finance, unless you are talking about 1 to 3 days out and are willing to spend 5 to 10% of your portfolio on puts into a crashing market.

I think you're thinking of the whole cap gains thing.

When one's not an active trader, keeping an eye on out of control corporate debt, is a way to avoid the downturn, when it occurs because even if the S&P corrects, places like P&G or Hormel will still gives dividends which will allow one to buy even more shares, given the lower ticker prices.

On the other hand, since other firms will still be needing to service their debts, despite a general decline in the markets (& possibly their business as a result), the dividend checks will be on the chopping board to make those interest payments.

One can buy companies, which still needs to get their balance sheets in order, after a general market decline but not before it.

CBOEtrader says

Rin says

When one's not an active trader, keeping an eye on out of control corporate debt, is a way to avoid the downturn

I've never done much fundamental analysis. Are you predicting a downturn? We havent even had a real scare in a few years, unless you count that hiccup earlier this year (DOW down 666 has 4chan all conspiracized )

Not a downturn ... though it is possible that the broad indices may see a downward slide after the rate hikes settled in.

The point is more that in general, increasing corporate debt, without exorbitant earnings per share increases, doesn't bode well for a dividend stock, esp when lending parameters grow tighter over time. So when one's an investor, with the "buy, reinvest divs, & hold" forever concept, the idea of a company which can't manage its debt profile, is not one to have in one's portfolio, esp if one's in a rate hike epoch.

But sure, if a downturn does kick in, would you rather be using your now, up ticked 8-10% dividend yield (up from 4% during a bullish peak) to buy more meaningful equities than a company who may be cutting dividends, just to make their creditors happy during the same time period?

In a way, we're saying similar things but from different perspectives.

The fact that numerous Fortune 1000s have increased their corporate debts by 200-300%, during the past few years, should have ppl worried. Because if there's a 2008 style crash, we may need to bailout a lot more than just the banksters and the automakers.

jazz_music says

New laws give banks the flexibility to "Holiday." --close and then reopen with all the money devalued or even removed in part at least.

@jazz_music Got a link with details? How did you hear about this? Thanks.

Patrick says

@jazz_music Got a link with details? How did you hear about this? Thanks.

@patrick . It's called a bail in. Thanks to dodd frank banks that are failing can grab your money
and basically give you an IOU as an unsecured creditor. http://www.kitco.com/commentaries/2015-06-22/If-You-Have-Money-in-a-US-Bank-Account-Be-Aware.html

Google bank bail in, there are tons of articles.

bob2356 says

Patrick says

@jazz_music Got a link with details? How did you hear about this? Thanks.

@patrick . It's called a bail in. Thanks to dodd frank banks that are failing can grab your money
and basically give you an IOU as an unsecured creditor. http://www.kitco.com/commentaries/2015-06-22/If-You-Have-Money-in-a-US-Bank-Account-Be-Aware.html

Google bank bail in, there are tons of articles.

Anyone who's not up to his eyeballs in debt is fucking stupid.

DASKAA says

Anyone who's not up to his eyeballs in debt is fucking stupid.

I'm not convinced individuals will get write-offs. Although if you don't own anything, I guess you have nothing to lose, as long as debtor's prison doesn't make a comeback in any form.

jazz_music says

A busted bank doesn't have to return your principal deposits. Unlike when YOU are the borrower and THE BANK is the lender

Stop being dramatic. You don't have to return anything either. Tell them to go fuck themselves, file for bankruptcy, and in 7 years you'll be in the clear to BORROW MOAR MONEY. Rinse. Repeat.

jazz_music says

DASKAA says

file for bankruptcy, and in 7 years you'll be in the clear to BORROW

pensioners can't do that

Of course they can.

They may not have 7 years left.

jazz_music says

More. This rather shrill article is from a precious metals hawkers's site.

https://www.moneymetals.com/news/2015/04/15/fdic-plots-a-bank-heist-involving-your-accounts-000694

... the bail-in. The easy part – the laws they needed had been in place for decades. But for added cover, they passed the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, a 1930's-styled, bank heist blueprint with a feel-good name.

Those laws altogether say your money in your bank account in your name is not your money. Those laws say the bank owns your deposited money, not you.

Wait...what?

Court cases have upheld for decades that putting your money in savings, a CD, or other banking products means you've become an “unsecured creditor.”

Your deposit is actually an unsecured loan to the bank with all the problems of counterparty ris...

Strategist:
I urge everyone to ignore this nonsense.
No one has ever lost money from FDIC insured deposits. Even uninsured deposits have been paid.

Patrick says

They may not have 7 years left.

Nobody is guaranteed another 7 years on this Earth.

jazz_music says
New laws give banks the flexibility to "Holiday." --close and then reopen with all the money devalued or even removed in part at least.

Patrick:
@jazz_music Got a link with details? How did you hear about this? Thanks.

He is talking about Venezuela. Please keep up.
Thank You

Strategist says

He is talking about Venezuela. Please keep up.
Thank You

Dodd Frank title II applies in Venezuela too? I never knew that. Amazing the things you learn on patnet.

https://www.bloomberg.com/quicktake/bail-in

The fundamental idea behind a bail-in is to pre-package and accelerate the insolvency process so that it can take place over a weekend to prevent financial shocks. By Monday morning, a wobbly bank can again be a viable institution, now owned by former creditors. ATMs should be well stocked, with plenty of funds available to satisfy counterparties. The bail-in process protects depositors whenever possible and identifies ahead of time which investors will lose money in the process. Equity is wiped out first to mop up losses. Junior debt and some senior claims are next in line to be written down or converted into new equity.

bob2356 says

Strategist says

He is talking about Venezuela. Please keep up.
Thank You

Dodd Frank title II applies in Venezuela too? I never knew that. Amazing the things you learn on patnet.

I read the US government actually profited by bailing out mortgages. Whatever they did worked, because we have one of the best economies in the developed world today. I don't understand why those losers who hate America keep bashing our economy in the face of overwhelming evidence to the contrary.
We just got back from socialist France. Bums and homeless everywhere in Paris begging for money. We only gave to an old man who wanted one of the six bottles of water we had just purchased from a small grocery store.

Strategist says

I read the US government actually profited by bailing out mortgages. Whatever they did worked, because we have one of the best economies in the developed world today. I don't understand why those losers who hate America keep bashing our economy in the face of overwhelming evidence to the contrary.

Huh? WTF does the bail in provision of dodd frank have to do with bailing out mortgages or the economy? I can't even think of an obscure connection other than they all happened in the same century.

Strategist says

We just got back from socialist France. Bums and homeless everywhere in Paris begging for money. We only gave to an old man who wanted one of the six bottles of water we had just purchased from a small grocery store.

You naven't visited any cities in the US? I see bums and homeless in every big city I visit anywhere. .