patrick.net

I’m retirement age and I’m 90% stocks.
Damn the torpedoes, full speed ahead.
I’m lucky, my lousy WFC is up so I can sell some to buy more (moar) stonks.
It’s a little weird sometimes to see my shit suddenly drop the price of a (Florida) house.
Buy buy buy boys 😉
Edit:
I’m old enough to remember that people didn’t all have a 401k at work and didn’t have interest in an IRA because of the confusion.
I’m in Baja California Sur Mexico and my waiter friend was asking me about buying ETFs, although he makes just $400/month. Another waiter guy was interested too.
My Mexican female friend is interested and she has money, has a beer store on the road to another town on the beach.
Some young guys from Canada and Germany rented a house nearby and we talked about things; they were all investing also; one other guy was bragging about his crypto and the German kid said he’s still okay with the returns he gets in US stocks.
If young foreigners and middle class foreigners want to buy US stock ETFs, what does that tell you?
Interest rates are low and if the alternative to stocks is bonds, people will buy stocks.

3 days does not make a trend. Still have more than enough to retire in Caligulan splendor.

As long as dividends are still being paid, I'm good.

Would be nice to see housing prices drop, but better inventories needed first.

Do you guys see a play on KB, Lennar, etc .. in the coming months.?? P/E and debt currently looks decent on these, but as sales, then prices, then earnings, then building falls like dominoes as interest rates rise, P/E and debt ratios will look much different. Prices are at multi-year highs given the money they are currently making hand over fist...

With the total value of US stocks at about $53 trillion to start 2022, and the market down slightly over 5.5%, that's what about $3 trillion in lost equity so far.

Crypto is down even more on a percentage basis.

Residential housing is valued at about $40 trillion.

Tough to rationalize those numbers based on an estimated GDP of $22 trillion for 2021.

I don't expect the US as a whole to go more into debt than it did in 2021, but I could be wrong there. If it doesn't go even further into debt on a percentage basis, it'll cause havoc with our GDP...you know a recession.

With the shear amount of debt outstanding, what could go wrong?

People seem to be willing to take on any debt to buy a house.
I’m not surprised.
My friend sells houses in Santa Cruz CA.
She said that a lot of her buyers are using stock gains from high tech to buy.
She couldn’t resist buying a second house in Georgia someplace.
Interesting she used her husband’s recent inheritance.
The joys of matrimony 😉

While it is mathematically possible to achieve financial independence by continuously going further into debt, it generally ends in tears.

This is likely the bottom for a while, as today was opex, plus the Fed put is looming. Overall I don't expect the market to do that well in 2022, esp. tech will be battered if rates continue to rise, with their lofty valuations. However most cos. still make plenty of eps each quarter and we are not seeing any layoffs amongst the labor shortage, so I don't see a crash, just a correction.

mell says

tech will be battered if rates continue to rise

Rates going up one whole percentage point and it somehow causes an issue????

Booger says

Rates going up one whole percentage point and it somehow causes an issue

You could say it like that, and I would agree.

Or, you could say it like this, rates (and so interest payments to service debt) go up by one third.

One point only, up by a third.

This party's just getting started.

Booger says

mell says

tech will be battered if rates continue to rise

Rates going up one whole percentage point and it somehow causes an issue????

Many of the big tech cos. have far more debt than cash. With their massive net profit they can keep this going for a while, but when rates rise, so does the cost of adjustable rate debt and the cost to roll over maturing debt. Any slowdown in their earnings growth will immediately stop this expansion cycle and force them to focus on servicing their debt. Add in the cost of massive inflation and the outlook for tech is not good. Their previous p/e were based on continuous expansion, so they will get cut significantly.

My 'dead man's' portfolio has lost a few Hummers, but still, looking at the long term trend graph, it is just blipping around a trend line that is still massively up over the years. I gave up controlling the markets and investments with my statistics defeating, dragon slaying, magical future predicting ESP powers. It will be what it will be.

Musk had better get back to shilling Bitcoin.

Right now Tesla is sitting on a loss of over $400 million this quarter on its holdings of Bitcoin.

That's over 25% of its quarterly earnings.

If he can't pump it, who knows what happens to TSLA stock.

HunterTits says

Now is a good time to buy!

Better than at the beginning of the week ! ! ! !

So without getting into the weeds, all depends on FMOC rate hike decision on Wednesday.

2022 will be about reversion to the mean. We formed an upper channel on everything with covid stimulus, easy money and Trump. Now we have Biden, a tight fed and Covid is going away. Tech, except for the generals, is off 50%, if the Fed doesn't reverse course, the SP500 (below) will have the same fate. Be careful.

Never ending inflation eventually inflate stocks.

I've been expecting something like this ever since the scamdemic started, but I didn't realize stocks would get that enormous boost from the money showers. Now it seems to me that finally the many dead small businesses and the unemployment of the people who were kicked out of a job by Biden's mandates are rippling through the economy.

Sure, interest rates are up, but I think this downturn had to happen anyway. I really don't know how far it will go. Hopefully never will be cornered enough to be forced into selling, because that's how you really lose. At the moment, it's just theoretical. I had N number of shares yesterday, and still have the same number today.

I also suspect that Trump could tell this was going to happen sometime soon and didn't want to be president when it did, so he didn't fight the election fraud all that much.

Also interesting to me that we can have big consumer price inflation and big stock price deflation at the same time. So cash is not necessarily losing value if you plan to buy stock with it.

I went all cash a little while ago. When should I jump back in?

Patrick says

finally the many dead small businesses and the unemployment of the people who were kicked out of a job by Biden's mandates are rippling through the economy.

Or they are afraid of threat to shut off Fed's money spigot.

There was a very perceptive Duck person on Patnet a long time ago, way before I was active. He said that Fed and PTB's will do whatever it takes to make rich richer. However, the PTB's are in a bind now. Turn off money spigot and get a recession/depression and Trump analogue re-election. Keep money spigot on and get a 10% inflation (realistically, 20%) at which time day laborers are screwed and Hispanics leave plantation en masse and vote for someone like Trump or Pinochet - this has started (10% inflation does not matter for someone earning 1M/year, but person earning 20K per year is screwed). Perhaps someone who understands this better on patnet can explain most likely course of action for PTB's. Then again, our "elites" have degenerated into a bunch of idiots so they may be unpredictable.

https://wallstreetonparade.com/2022/01/can-the-fed-engineer-a-soft-landing-for-the-biggest-bubble-since-12000-tulip-bulbs/

WineHorror1 says

I went all cash a little while ago. When should I jump back in?

This coming week. At least for a while.

Bd6r says

the PTB's are in a bind now

Their hold on power is weak. Their enforcers, like private security, law enforcement, etc, are part of the Pitchfork Mob, not part of them. Kind of like the French army in 1789. They know their hold on power is weak. To prevent us from knowing so, they distract us with Bread and Circuses, or by Divide and Conquer by turning us against one another with contrivances like Culture Wars, etc.

To borrow a quote from Mario Draghi, they "Will Do Whatever It Takes", for as long as they are able to get away with it, to prevent us from becoming a Pitchfork Mob.

WineHorror1 says

I went all cash a little while ago. When should I jump back in?

This is a fascinating question, because it's not clear if purchasing power of your cash is embedded in your question.

you dollar cost avg into the market. Historically, events like the current Stock/Crypto downturns are the best time to buy.

See Q1 2020. Be thankful for the crash. It doesnt happen very often. Buy all the way down and back up!

"Its not a funeral, its a sale"

WineHorror1 says

I went all cash a little while ago. When should I jump back in?

I don't believe you really did this but on the off chance it's true - now you have to be right twice.

Ok, the following is not my opinion but that of another trader I know.

The large cap indexes, like the Dow30 or the S&P500, are weighted so heavily towards the behemoths of industry, that when a seismic change occurs, they tend to become lagging than leading indicators.

So after many years of easy money, the Fed is now tightening up. When that occurs, it's time to look at the forgotten index and that's that of the Russell 2000.

Here's Russ ...



The Russell 2000 represents the small to mid-cap companies which have a much more difficult time in raising capital, paying their vendors, etc, & can't rest on their laurels like let's say a Chevron or a Proctor & Gamble.

For one full year, the Russ was range bound & not able to make leaps and bounds like their larger cap peers in the Dow30 and S&P500. When this occurs, it gives a type of leading indicator that the market players have reached some level of exhaustion and the smaller firms feel it, long before the 'Big Dogs'.

The chart above is a weekly candle stick and thus, shows that the Russ is testing the lower end of the year long price box. If it's able to sustain, let's say 2 closes below the box, then for the most part, the market is in 'near crash' mode.

So keep an eye on this. If the Russ is able to stay within the price box and both the EUR and the GBP are able to counter the USD rallies successfully, then the market will go sideways and be 'ok'.

FYI, this is not my opinion but that of another trader.

Patrick says

I've been expecting something like this ever since the scamdemic started, but I didn't realize stocks would get that enormous boost from the money showers. Now it seems to me that finally the many dead small businesses and the unemployment of the people who were kicked out of a job by Biden's mandates are rippling through the economy.

Sure, interest rates are up, but I think this downturn had to happen anyway. I really don't know how far it will go. Hopefully never will be cornered enough to be forced into selling, because that's how you really lose. At the moment, it's just theoretical. I had N number of shares yesterday, and still have the same number today.

I also suspect that Trump could tell this was going to happen sometime soon and didn't want to be president when it did, so he didn't fight the election fraud all that much.

Also interesting to me that we can have big consumer price inflation and big stock price deflation at the same time. So cash is not nece...

Makes me wonder if Trump knew he had to lose in 2020 so that the cheating, plandemic, great reset, etc. would be exposed to more people so that when the next election cycle comes, it's a clean sweep and real change can be implemented.

WineHorror1 says

I went all cash a little while ago. When should I jump back in?

Early 2023 waiting for the 3-year low last one in March 2020.

gotta to love value stocks!

stfu says

WineHorror1 says

I went all cash a little while ago. When should I jump back in?

I don't believe you really did this but on the off chance it's true - now you have to be right twice.

You're right, not ALL cash. I do have an account I have been in cash for about a year now because I was sure we'd run into problems. I'm not a big trader so that's why I'm asking.

Patrick says

Also interesting to me that we can have big consumer price inflation and big stock price deflation at the same time. So cash is not necessarily losing value if you plan to buy stock with it.

I think it is safe to say that expectations are driving the market. The pullback is directly related to consumer price inflation as the Fed has its feet to the fire to try to tame inflation via QT and interest rate hikes. Will be interesting to see what happens to RE in the long term.

Do I buy a house now or continue renting?

Lol!

If the rent is less then the cost of owning the equivalent house (interest, taxes, insurance, opportunity cost) then rent. Otherwise buy.

It's a complicated calculation, but not that complicated.

I'm no longer a fan of the NY Times, but they do have a good calculator for this:

https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html

I tend to ignore macroeconomics. You really don't know what is going to happen there, so just concentrate on value.

Patrick says

Lol!

If the rent is less then the cost of owning (interest, taxes, insurance, opportunity cost) then rent. Otherwise buy.

It's a complicated calculation, but not that complicated.

I tend to ignore macroeconomics. You really don't know what is going to happen there, so just concentrate on value.

Thanks Patrick for keeping it simple. We're moving to the Nashville area (from SCAL) and have never owned a home, so the wife is keen on owning. I'd hate to see the Fed ratchet up interest rates only to have me buy at the top of a bursting bubble, but I agree on the macroeconomic guesswork of that.

@porkchopexpress

I just added these two lines:

I'm no longer a fan of the NY Times, but they do have a good calculator for this:

https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html?source=patrick.net

porkchopexpress says

I'd hate to see the Fed ratchet up interest rates only

I'd wait a bit before buying anything to see what the fed is actually going to do in the first say, almost half of this year. If they crash the market further everything will go down. Gold, silver, houses, stonx, the price to get your nails done at the local asian stripmall.

"everything bubble"

The real problem with RE is there has been very little building since 08 and so we're supply constrained. Due to that RE may hold up pretty well.

House prices have actually gone up and there's no let down in sight as long as work from home is a big thing, rates are relatively cheap, inventory is restricted and unfettered immigration continues.

porkchopexpress says

Patrick says

Lol!

If the rent is less then the cost of owning (interest, taxes, insurance, opportunity cost) then rent. Otherwise buy.

It's a complicated calculation, but not that complicated.

I tend to ignore macroeconomics. You really don't know what is going to happen there, so just concentrate on value.

Thanks Patrick for keeping it simple. We're moving to the Nashville area (from SCAL) and have never owned a home, so the wife is keen on owning. I'd hate to see the Fed ratchet up interest rates only to have me buy at the top of a bursting bubble, but I agree on the macroeconomic guesswork of that.

If the price didn’t go too high there, try start looking for deals for your primary residence. I suspect the inflation will continue as the corrupt gov “spending” $T that we don’t have and lack of new building activity should push prices higher. But again it’s complicated math.

FJB says

porkchopexpress says

I'd hate to see the Fed ratchet up interest rates only

I'd wait a bit before buying anything to see what the fed is actually going to do in the first say

Remember, we're in a free market capitalist system and not a centrally planned Soviet system!

You can tell, because we have to know what a centrally planned, private central bank decides to do, and we KNOW they wouldn't be corrupt. I mean, if they MIGHT be corrupt, certainly they would be audited, right?

</sarcasm>

People, we're in the early stages of soviet style communism. Not what Marx stupidly wrote about, what happened in Russia.

richwicks says

You can tell, because we have to know what a centrally planned, private central bank decides to do, and we KNOW they wouldn't be corrupt. I mean, if they MIGHT be corrupt, certainly they would be audited, right?

Great argument for a decentralized currency or asset like bitcorn!

By June all mask mandates nationally and vaccine mandates will be over. Democrats can’t afford to lose midterms to what is now a flu.

They will pass a smaller build back better bill…. The stock market will roar back with all the new money and EV cars for everyone at a $15k discount. It won’t end well… but they really have no choice.

That or a new deadlier virus called Covid 2.0 hits our shores this summer and lockdowns all over again.