patrick.net

People don't understand inflation. The problem is not inflation.
The problem is that the government created a mechanism whereby tons of money CAN and MUST be printed, but at the same time wages are crushed, so corporate profits and assets go through the roof. All for the benefit of the rich. It is a (not so) subtle mechanism, hidden in plain sight.
All this of course with a bit of added instability when inflated assets realign with reality.
Only chumps mistake this for a long term trend.

Heraclitusstudent says

The problem is that the government created a mechanism whereby tons of money CAN and MUST be printed, but at the same time wages are crushed, so corporate profits and assets go through the roof. All for the benefit of the rich. It is a (not so) subtle mechanism, hidden in plain sight.

Why do you think wages are crushed?

Strategist says

Why do you think wages are crushed?

Primarily automation, but outsourcing as well

joeyjojojunior says

Strategist says

Why do you think wages are crushed?

Primarily automation, but outsourcing as well

I think wages are starting to pick up. Minimum wages for low skilled workers is increasing. The demand for technology jobs is out of sight. Unemployment is low. Corporate profits are up. Economy is improving. It all spells higher wages.
My 21 year old son graduated from college this year, and had a job waiting for him. 3 months on the job and he's making $7,000 per month. That's a lot of money for a 21 year old with no real experience. Southern California economy could be doing better than I thought.

Strategist says

Most people lose out by trying to time the market. Everyone thinks they can beat the market because they have no lose system or formula, and then they lose. Most fund managers with all their fancy degrees and skills, can't even beat the S@P 500.

I absolutely agree with that statement! True. True! True!!!

But, If you were fully invested for past 8 years, and maybe you will stay another year and rake another 10 or more percent and than exit and wait patiently for another opportunity (recession)?

I think that might be a smarter thing to do than stay invested considering historic timelines of bull markets. The odds are on your side.

Downturns come suddenly without warning and they happen quite fast. As long as you have strategy in place you might benefit from getting out year ahead of the downturn hugely.

You asked, so I'll tell you. I am odd. There is the truth of it. Over the past 30 years, over and over, I managed to build unique things that people in certain industries offered me huge money for, and four times I have walked away from enormous green, on principle. A number of people have told me I'm afraid of success, but I accomplished what I set out to do in every case, so I consider those good accomplishments in any light, but slimy greed beasts always seem always to cling to powerful new opportunities.

When I was a kid, I got a view of how greed, arrogance, and even religious pride could destroy good things and good people. Just because everybody is doing it, doesn’t make it alright. I don't care if God agrees with the principle or not. It has always been plain for me to see that we are pretending we don't see the disaster we are kicking down the road.

Have a kid in college? They are already seeing it and feeling all around them. Bachelor's degrees are worthless, student loans are enormous, downpayments out of reach. The only hope they have is your charity or early demise.

The bad part is, we can't wish away all the red. The national debt is their pensions, social security, health care, and untold future entitlements yet to be promised in exchange for votes.

Now though, the global debt beast is like Jupiter on the horizon of Io. It's so huge it fills our entire field of vision. We should have let the economy crash completely of its own weight, and let the true healthy survivors benefit, but instead we throw 800 billion dollar TARPS over the gaping hole to save privileged asset classes, and pretend we are actually going to pay that money back with interest in the future.

At this stage, it can't be fixed by crypto-currencies and derivatives, I promise.

anonymous says

Strategist says

Most people lose out by trying to time the market. Everyone thinks they can beat the market because they have no lose system or formula, and then they lose. Most fund managers with all their fancy degrees and skills, can't even beat the S@P 500.

I absolutely agree with that statement! True. True! True!!!

But, If you were fully invested for past 8 years, and maybe you will stay another year and rake another 10 or more percent and than exit and wait patiently for another opportunity (recession)?

I think that might be a smarter thing to do than stay invested considering historic timelines of bull markets. The odds are on your side.

Downturns come suddenly without warning and they happen quite fast. As long as you have strategy in place you might benefit from getting out year ahead of the downturn hugely.

You don't know when the downturn comes and goes. They use thousands of variables on Super computers to predict the GDP and still get it wrong. I do time the market at times, but for the retirement accounts I just invest in the S&P 500 and keep it there. The last few years I have invested mostly in the "ITB" as I am fully convinced the home builders will have a booming business in the next few years.
I think forecasting is more of an art than a science.

Strategist says

$7,000 per month. That's a lot of money for a 21 year old with no real experience. Southern California economy could be doing better than I thought.

Sounds like a lot but $84,000 paints a big-fat target on you for the IRS and FTB. Plus the 9.25% LA County sales tax, LOL.

Payroll and income taxes take your net income down to $5,000 per month. Then half your take-home goes to your 1B apartment. Spend $11,000 per year on stuff and that's another $1,000 in sales taxes. Car payment gas and State Farm takes the rest.

Putting $23,500 into the 401k and IRA (good luck finding $2,000/mo tho) can knock the income taxes down $8,000 to $11,000. Not bad getting a 35% return the first year, but that's the marginal tax rate you're looking at in CA.

Strategist says

You don't know when the downturn comes and goes.

Specific predictions are for chumps, however it is just as absurd to claim we know nothing.
In particular it doesn't take a genius to tell you that 8 yrs into the bull market and 200+% up from the lows, there are far more risks and less opportunities than there were in 2009. Therefore, it is reasonable to take some money off the table and buy bonds.
Don't be rash. Going 100% to cash is also a risk. But it totally make sense to reduce slowly exposure until the next recession hits, which it will statistically in the next 1-2 years.

joeyjojojunior says

Primarily automation, but outsourcing as well

driving home, it hit me all the immigration since the 80s has stopped 70s-style wage inflation in its tracks.

I don't care about the debt, if we need more money we'll print more, just like Japan.

But what keeps my up at night is:

https://www.bea.gov/newsreleases/international/intinv/2017/intinv217.htm

Bellingham Bill says

Strategist says

$7,000 per month. That's a lot of money for a 21 year old with no real experience. Southern California economy could be doing better than I thought.

Sounds like a lot but $84,000 paints a big-fat target on you for the IRS and FTB. Plus the 9.25% LA County sales tax, LOL.

Payroll and income taxes take your net income down to $5,000 per month. Then half your take-home goes to your 1B apartment. Spend $11,000 per year on stuff and that's another $1,000 in sales taxes. Car payment gas and State Farm takes the rest.

Putting $23,000 into the 401k and IRA can knock the income taxes down $8,000 to $11,000. Not bad getting a 35% return the first year, but that's the marginal tax rate you're looking at in CA.

We are in San Diego County, but not much difference from LA.
So far my son is living at home. I pay his expenses as if he is still a student. He drives the 2011 Prius we gave him 3 years ago. His only expenses are gas and personal expenses, and is saving most of his net pay check.
I have offered him the same deal as my daughter 4 years ago, when she graduated. Stay at home and I pay everything except for personal expenses. Save up $50K and I will match it for a down payment on a 3 bedroom condo. Rent out the other 2 bedrooms and most of the house payments will be met. In his case he may need to save up 75K as home prices have increased. It worked perfectly for my daughter, but my son is a different animal. I hope he takes my offer.

Strategist says

I think wages are starting to pick up. Minimum wages for low skilled workers is increasing. The demand for technology jobs is out of sight. Unemployment is low. Corporate profits are up. Economy is improving. It all spells higher wages.

I agree, but the GOP thinks this is intolerable so their tax plan is to monetize this potential and suck it all up. Rising wages are the last thing they want. They want higher corporate earnings and higher CEO bonuses, that's all.

Heraclitusstudent says

Strategist says

You don't know when the downturn comes and goes.

Specific predictions are for chumps, however it is just as absurd to claim we know nothing.
In particular it doesn't take a genius to tell you that 8 yrs into the bull market and 200+% up from the lows, there are far more risks and less opportunities than there were in 2009. Therefore, it is reasonable to take some money off the table and buy bonds.
Don't be rash. Going 100% to cash is also a risk. But it totally make sense to reduce slowly exposure until the next recession hits, which it will statistically in the next 1-2 years.

You have a point about slowly reducing exposure, though It's still a form of market timing, which I don't think you should do so in a retirement account. Outside my retirement account, I even play around with options. The risk has never bothered me.

DEEPCGI so it's settled then - someone who stays in for 20 years of stagnation is in no way "screwed". The only one who is screwed is anyone who follows your advice and checked out years ago when the market was 6k.

And once again I agree with you that in the ultra long term there is NO DOUBT it all goes "poof" and the last bag holder gets nothing. However as I said a long time ago "inevitable" does not mean "imminent" a lesson you have yet to learn.

I too used to fear "debt" "inflation" and other social constructs. However the US is nowhere close to being consumed by these demons. Remember "bondzilla" which would punish the US for too much debt? Lol - what a steaming pile of BS that was!

The reality is for all its flaws the US is still the world's dominant hegemony. Like the UK which peaked 220 years ago we started our collapse 70 years ago but it won't will be for another hundred years before we have a true rival.

Thanks Because of how shitty the rest of the world is, like it or not, the US has the lowest carrying cost in the history of civilization- and no that's not an exaggeration. To position yourself on the other side of this bet is the epitome of foolishness.

So yes while it will inevitably collapse - the idea that it does so during your or my piddly existence on this planet is probably the riskiest conservative bet you can make. Good luck and all, but remember, you were warned.

#InevitableDoesNotMeanImminent

What makes you think I got "out" of anything at 6k or otherwise? You’d love my contact list and what they give me. I work for the high flyers but refuse to live amongst them.

The modern oracles like Buffet don't speak the truth, they say what their followers need to hear. It’s on the first page of the manual on how to be the chairman.

But definitely look more closely at China’s numbers. They are about 25 percent of the sales and 50 percent of the cash, right now. It’s unprescedented and unsustainable.

“Just print more.” Damn. The words of a vampire feeding off of young blood.

Except one stock that pays me a hefty dividend- based on what I paid for the stock-I have been out for two years now almost. If in, would be much closer to retirement-sigh.

But I guess lessons from the 2000 crash, before which I made a ton of money and then lost most of it. I set a target and it exceeded it and got out. Why I got into the landlord business as cash itching for a return and these highs were just too tempting. Almost easy to make money now-scarye asy. The rentals not expecting appreciation-but cash flow, decent area, always rented area but not appreciation.

I don't know, I am surprised by the ferocity of this rally and don't know how much it will go.

I did make one other investment in oil driller and that went south-Ensco. I am initiating some positons in TEVA-while beaten down to the teens-still the world's largest generic drug maker, but sizeable debt ratio. Lets see how this one fares. But not making substantial investment in stock and real estate is too high everywhere except in very few places that you don't accept appreciation. Stocks the only thing with "value" are with risks, everything else is sky high.

deepcgi says

I work for the high flyers but refuse to live amongst them.

That's because you work for them. You obviously couldn't live amongst them.

deepcgi says

The modern oracles like Buffet don't speak the truth, they say what their followers need to hear.

LOL. But you speak the truth? If there was any truth in what you say, you would be rich, instead of working for the rich.

I think I will stick to taking advise from the winners, instead of the losers.

I was referring to this quote: "if we need more, we'll print more money like Japan."

Point 1: The first major item that can't be predicted other than to say it is inevitable is the punctuated equilibrium. Ask Dr. Ian Malcolm next time you're at Jurassic Park, he'll tell you all about predictability in complex systems. He will also tell you that they STILL don't teach that in required science at US Universities, let alone when Warren Buffet went to school. Evolution is not a smooth ever-branching tree of mutations and adaptations the way Darwin painted it. It is ALWAYS punctuated with massive, rapid, equilibrium-shifting events. And it isn't just biology. It occurs in any sufficiently complex system. There is complexity in thresholds of forces which always disturb smooth continuous change. If H G Wells had created an invention he called the "personal computer' in one of his stories in the 19th Century, no matter how prescient or based upon logical research, he'd have been laughed out of both the literary and scientific societies. We are on the threshold of two new punctuated events. They will change everything.

Point 2: There are many ways to create money from nowhere in a world of fiat. You have one barrel of sugar and you sell it on paper to 50 different people. As long as no more than one guy shows up to collect it, everybody is happy. And if two guys do, we'll just sell one barrel to 60 people on paper next year. Or we chop low quality mortgages into hundreds of pieces and mix them with a handful of diced higher quality mortgages, so that we can sell the asset above it's rating. We didn't correct for that financial nonsense after the hiccup in 2008, we doubled-down on it.

Of the 20 Trillion dollar national debt at least 30 percent of it is a promise to the kids - Social Security, Medicare, Medicaid, post military service funding, etc, and we have to make interest payments on that every year. The kids are the ones you are selling 30 percent of the debt to. Every time we 'need more' and create another trillion in treasuries, you are putting your headaches on a new credit card in their name. The debt does not just go away. Nor will it ever just be forgiven or forgotten. When the time comes, the money they were promised just won't be there for them. They will have to adapt by having no retirement. I'm sure future generations will find our use of the word "retirement" to be both amusing and frustrating. It never existed before in history and is already dead, now, because of the debt. I will never retire. There is no such thing.

About 7 trillion of our National Debt, at the moment, is owned by the kids. You're no hero for letting them stay at your house, or lending them bucks for down-payments, because frankly...they own your ass, already.

deepcgi says

he'll tell you all about predictability in complex systems.

Which is why predictions are for chumps, yet it's absurd we don't know anything. It's like climate deniers: we can't know anything because it's a complex system.

Well I can tell you confidently within a margin of 5% what the GDP will be next year.

There are lots of aggregate statistics that we do know.

I know I wasn't going to say anything for the rest of the year but the Dow did cross 23,000 today

So you Anti American bears I did do this for you!





Those who put their faith in political economic theory failed and those who only talked about political economic theory also failed in this cycle

Now, yes we are at the later stages of an economic cycle but that doesn't mean the markets or the U.S. economic is going to crash

Show some discipline .......

Follow the data.....

https://loganmohtashami.com/2017/10/17/dow-23000-now-what/

Glad to see you are back Logan!

You are a day late though. Yesterday we had a sentient bot on our hands and all he could do was continue to take a shit on America over and over again.

He very much fit your persona of the "anti-American bears" - the angry retirees who dominate this site.

Glad to see you are back Logan!

You are a day late though. Yesterday we had a sentient bot on our hands and all he could do was continue to take a shit on America over and over again.

He very much fit your persona of the "anti-American bears" - the angry retirees who dominate this site.

Glad to see you are back Logan!

You are a day late though. Yesterday we had a sentient bot on our hands and all he could do was continue to take a shit on America over and over again.

He very much fit your persona of the "anti-American bears" - the angry retirees who dominate this site.

Glad to see you are back Logan!

You are a day late though. Yesterday we had a sentient bot on our hands and all he could do was continue to take a shit on America over and over again.

He very much fit your persona of the "anti-American bears" - the angry retirees who dominate this site.

Oh how this picture grates on the misogynistic population here...

Logan Mohtashami says

The physical world has soooo many many behaviors which will generate unlimited data. One could chose to chase one set of data and others could chase other sets. Who is right? No matter what particular data says, the underlying principle is basically several equations discovered by Newton and Eisenstein.
For economic world the governing principle should be also as simple as "if you consume more than you produce, you will decay," regardless of the data says.
As for money systems to deal with the economic systems, there is always two aspects, discipline and elasticity. You need discipline to make sure Person A do not steal from person B. You need elasticity wish there is a shock to the economical system.
What is the right amount of mix between the two is up to a particular country and the phase of the country. Naming disciplined savers for future as "hoarders" and steal their wealth and put in the hands of "irresponsible" spenders buninglation under the name of lubricating the economy will corrupt the sound principles of the society which will make it "spend more than it produces" and the decay starts. What's inevitable is NOT imminent. True, let's party yo death.
Harvey Weinstein was partying till the inevitable and it suddenly happened. I wonder when that day will be for the central banks and
their minion rent seekers.

lol @ calling the 0.01% "responsible savers".

Nobody, and I repeat NOBODY wants to steal the wealth of middle class responsible savers. There is no wealth tax. So all your other nonsense is just that.

And nice touch name dropping Harvey Weinstein. Bravo.

Damn! I'm slow!
Did anyone catch the misuse of the American flag in this thread & link?
Things can be subtle.

BlueSardine says

Which woman is Logan?

Logan Mohtashami says

So you Anti American bears I did do this for you!

Being bearish is not anti-American. Being bullish isn't anti-American. It is simply how one feels about an investment or prospects in general. There are very few people who are perma' anything.

Logan, you seem to believe in the mythos that America is immune to the world market and what is going on domestically and internationally. The demographics argument has to be the longest term play I've ever seen, and I've been long on things for over 15+ years at times. Magically the youth is not going to suddenly "work" us out of what is coming. There isn't much work out there, as Janet Yellen and the Fed can tell you. (they are highly suspicious now that their employment numbers are whack, because interest rates stubbornly refuse to rise.)

Logan Mohtashami says

Follow the data.....

Economics is made by people, not data, and we are not rational actors.

When people assure me something is guaranteed, when traders in general see a sure thing, running the other direction has served me well.

You see the VIX lately? Smooth sailing predicted ... indefinitely.

Rew says

America is immune to the world market

I have heard this theory for years

We will have the longest expansion with

Japan was slow
China had some issues
Europe had bond market scare event in 2012
Greece has their usual baby drama event ever few years
South America always has some country in trouble
Russia was in a recession
Manufacturing was in a recession here in the U.S.

None of this impact our business/economic cycle

Why? Because the U.S. has more than 100,000,000 workers that only run on domestic demand curve economics.

Are we entering the stages of a later economic and business cycle.

Yes, we can safely say that

Later stage economic/business cycle

A. Low unemployment rates



B. Fed Rate hike cycle has started we got that




C. Fed wage tracker prime age labor force wage growth is running at 3.8%. The make shift of the demographic profile in this cycle keeps a lid on top line wage growth looking stronger than it is because ages 55 and over have lower wage growth. So now is the time to look to see where we are with unit labor cost growth



D. Volatility has been dying for some time now... the duration of not have having a 5% pull back or a 3% pull has more to do with the credit risk in the market that was created with the strong dollar oil crash has gone away as soon as oil made its move up from $26 - $50 and now the entire world is growing together for the first time in 10 years.

My lord the bears where so awful in this cycle because they believe in political and ideological economic theory, very common with extreme left and right wing people ... Oh and look what this site is.






The reason the world is now growing together is that import volume moves with oil prices and exports are much more important to other countries than ours, so you lost the world economy impacting us now because globalism is winning!

You have my total blessing that we can say safely say that we have entered the later stages of the economic and business cycle, I would have like to waited for the U6 rate to get to its base floor 8% level but this last leg lower hasn't gotten us there yet, but close enough

Logan Mohtashami says

Interesting that this "floor" keeps rising over the last 20 years.

BlueSardine says

Oh how this picture grates on the misogynistic population here...

I was asked to speak about the macro economic trends of America and the housing market at this conference. I was very bullish on the future of America and told these women... Don't listen to men who hide behind fake names, trolls, bots and Anti Americanism .... the extreme left and right will be wrong about America like the bears have been wrong about America since 1790. Economic cycles come and go as we will have a recession at some point but the 2nd Great Depression people have lost their mind because they're old grumpy men and women.

On that final note...

Happy Halloween, Happy Thanksgiving and have a wonderful Christmas and a Happy New Year American bash hating group!

Don't ever forget what this country has given you and your family!

A chart Logan will never willingly show you...

http://stockcharts.com/h-sc/ui?s=%24SPX%3A%24GOLD&p=M&st=1980-01-01&en=today&id=p51165265404