patrick.net

I was wondering what to worry about and I recently saw that the President of the Federal Reserve Bank of Chicago is a shithead named Austan Goolsbee.

He may be worse than Janet Yellen, if that were possible.

Austan is a flaming liberal shithead, and he's going to probably wonder how a stock market dip or crash will affect Kamala's chances in November (answer; negatively).

Maybe he and his liberal ilk will suggest decreasing interest rates to bounce stonks back up before the election.

I'm pissed off at Vanguard; their website was fine and they fucked around with it and changed some shit so now I have to get used to the new stuff.
What assholes, oh well.

https://www.zerohedge.com/markets/retail-traders-furious-outages-hit-major-us-brokerages-amid-black-monday-chaos

Retail Traders Furious As Outages Hit Major US Brokerages Amid Black Monday Chaos

Huh, that's not likely to be merely coincidence. They should be able to handle the traffic.

I suspect that limiting trading with "outages" is just a globalist way to slow the crash.

Schwab's acquisition of Ameritrade isn't helping. I mean unless Schwab increased it's server capacity at the same time, but I bet that they didn't.

AD says

Currently Berkshire has about 50% of its liquid asset in Equity Securities (Stocks), 47% in Cash and Cash Equivalents (Cash), and 3% in Fixed Maturity Securities (Bonds).

Wow, that seems very bullish for Stonks! /s

Al_Sharpton_for_President says

If you invested $1 million in the average S&P 500 stock index fund, you'd be smoking fat cigars and doing $243,800 worth of hookers and coke.

If I had a million dollars, I'd already be smoking fat cigars. I don't want any coke. Don't need to blow out my heart at my age. And I'd feel like a fool giving a whore $1000 to fuck especially knowing that she is thinking that I'm a dumb ass while she's doing me. Just sayin'

clambo says

I was wondering what to worry about

Are you uncomfortable if you don't have something to worry about?

I guess I'm a worrywart by nature.

Booger says

LOL! Correct in the first and second phases of the drop, but will be less expensive to buy out her equity positions in the marriage at the crash bottom.

Nikkei 225 dropped about 20% from last Wednesday to close on Monday. Its up about 9.7% now in intraday trading.

Lots of volatility as expected

AMZN oversold based on ADX and then RSI

https://aiolux.com/reports/analytics-technical-indicators?symbol=AMZN&tab_name=adx

https://aiolux.com/reports/analytics-technical-indicators?scroll=pills-tab&symbol=AMZN&tab_name=rsi

GOOGL also oversold

Chakin AD for GOOGL and AMZN show "buying pressure" that is "strong"

Where's the Plunge Protection Committee in all of this?

clambo says

I guess I'm a worrywart by nature.

If I had to guess I would bet that you have 3 years of expenses in post tax cash equivalents and 30x in your retirement accounts.

Worrywarting is highly under rated.

I don't know what my annual expenses are, but they're not too much compared to most guys.

I'm actually wondering how I can spend it faster since you cannot croak with too much or the Estate Tax kicks in.

I think since I was a teenager I was worried about how assholes, idiots, and other shitheads would negatively affect me.

Topogigio Fauci, Janet Yellen, Biden, Pelosi, Obama, and a huge list of other assholes have tried to fuck things up for us all, except for welfare cases.

Stonks going down a bit doesn't affect me much, rather my mood.

Patrick says

just a globalist way to slow the crash.

Actually I believe it is to prevent the paroles from doing some timely trading, insuring that only the wealthy have the ability to buy and sell at this critical time,

PeopleUnited says

paroles

Assuming you meant "proles"? But parolees works too.

Always remember the significance of the passage of time.

Republicans better be careful touting this stock fall. The stocks will like rise back up before the election and the Dems will take credit.

https://www.coffeeandcovid.com/p/dont-mention-the-war-tuesday-august

Patrick says

https://www.coffeeandcovid.com/p/dont-mention-the-war-tuesday-august

Yeah and go back to the mainstream media crashing the economy in 1992 election cycle (Its the Economy, Stupid) and 2008 election cycle (Chuck Schumer on TV everyday with that smirk stating the economy is failing).

They are just hoping the Democrats get to the finish line this November with enough voters fooled about Harris and the economy.

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Bloomberg TV just said Home Depot is hurting given the current weak housing market. Its down 15% from its all time high in December 2021 (from $415 to $352) :-/

Considering inflation was about 25% since December 2021, that means Home Depot has a real loss of 36% since December 2021

Also Bloomberg TV had about 30 minutes of Bitcoin and crypto coverage, and was stating it is going to get more adopted (especially with Blackrock and Fidelity ETFs for Bitcoin) and about how Trump has been become more pro-Bitcoin

{ disclaimer: I own an equivalent of about 50.46% of one Bitcoin in a Bitcoin ETF }

Door Dash seems like a solid growth company based on revenue growth for last 5 years and how its net income or profitability is improving. It looks like it can be more than just a restaurant food delivery service.

What do you all think of Door Dash as a stock ?



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I generally avoid individual stocks, with a few exceptions which were very good for me.
I would ask myself before buying Door Dash; do I see the product/service being used by many people? Do I use their product/service?
Is the product/service very profitable with a high profit margin?
Are there competitors who offer a similar product/service?

I have used Uber Eats a few times after I was housebound for a week; I would not use it again unless it were absolutely necessary.

I haven't used Door Dash, nor has anyone I know.
I therefore would reject Door Dash as an investment for myself.

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Today's Investor Business Daily article

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Don’t discount the “big, dumb robot” of autopilot 401k contributions.

Al_Sharpton_for_President says

Don’t discount the “big, dumb robot” of autopilot 401k contributions.

Yep, they pour into the S&P 500 index funds no matter what, just like they did at the crash in 2008-2009 and as they are now.

Granted, perhaps there are less contributions now because the workforce has changed demographically and you have more poor workers who cannot contribute like the baby boomers and older Gen X did and do.

S&P 500 real gain is only about 3% above its October 2021 level



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S&P 500 is up only about 2% since October 2021 when adjusting for inflation.

https://www.multpl.com/inflation-adjusted-s-p-500

Buckle up?



https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve&field_tdr_date_value_month=202409

EBGuy says

https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve&field_tdr_date_value_month=202409

10 Year Treasury averages about 1.5% above government-reported annual inflation. And 30 Year Mortgage rate is usually 1.25% above the 10 Year Treasury.

Bond market traders may see less inflationary pressure as the rates such as for 10 Year have steadily decreased since it recently peaked around 5% back in 4th quarter of last year.

That is why I did not do anything with my IRAs which about of 50 percent of my IRA is in an investment grade bond fund with medium duration (about 6.5 years).

The bond fund's price dropped about 25% from its all time high (set in summer 2020) when inflation went from nearly 0% to +8%, and the Fed Funds rate went from 0.25% to 5.5%.

Now it is only down about 16% from its all time high. So hopefully the bond fund fares okay, while my total stock market index fund (the other 50%) drops in the Harris-Biden recession.

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EBGuy says

Buckle up?

From what I understand, 10-2 uninverts as we enter recession.

Al_Sharpton_for_President says

From what I understand, 10-2 uninverts as we enter recession.

Maybe the old rules don't apply to the current conditions.

Obsolete rules and economic models may be in play here.

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‘T-Bill and Chill’ Is a Hard Habit for Investors to Break

(Bloomberg) -- It’s been the ultimate no-brainer for more than a year: Park your money in super-safe Treasury bills, earn yields of more than 5%, rinse and repeat. Or as billionaire bond investor Jeffrey Gundlach put it last October, “T-bill and chill.”

Even now, with Federal Reserve officials poised to ease benchmark interest rates from a two-decade high — a move that would instantly push down yields on bills and other short-term debt — money-market funds are thriving. They raked in $106 billion this month alone and their balances, at $6.24 trillion, have never been higher.

Investors in cash equivalents appear to be perfectly happy to stay where they are for now, despite repeated advice to add exposure to longer-term bonds from the likes of Pimco and BlackRock Inc. — admittedly bond managers themselves. But their point is that while cash returns have nowhere to go but down, debt with longer maturities stands to benefit from capital gains in an environment of deep rate cuts.

“Logically speaking, it doesn’t make a whole lot of sense for $6 trillion-plus to be sitting in money market funds if the yield is going to go down,” Kathy Jones, chief fixed-income strategist at Charles Schwab & Co. “We had a lot of talk about rate cuts and they haven’t happened, so there may be a lot of people who are just actually waiting to see it happen.”

During this year’s bouts of bond volatility, cash has been a good place to be. Money-market rates, which are keyed off of the Fed’s current 5.25%-to-5.5% policy band, have held steady and offered no surprises.

That’s about to change. Fed Chair Jerome Powell signaled last week that rate cuts are coming in September. With inflation ebbing, “the time has come for policy to adjust,” he said, adding that “the direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook and the balance of risks.”

Money markets may continue to appeal, it’s the scope of rate cuts matters. Just 1 percentage point of reductions, for instance, would still leave bill rates in the range of 4%, an appealing return — especially after years of near-zero rates before the most recent tightening cycle, and at a time when longer-term US bonds are yielding far less. This may explain why retail investors are in no hurry to shift their holdings.

“For the first time in recent memory, cash is actually offering some yield and I can understand why people are sort of gravitating to that,” said John Queen, a portfolio manager at Capital Group, which oversees $2.5 trillion in assets. However well that’s worked recently, Queen recommends a classic strategy of diversification, investing in a mix of cash, equities and fixed income.

Of the $6.24 trillion of cash parked in money market funds, roughly 60% of that is from corporations that have been stockpiling cash following the pandemic, while the rest is from mom-and-pop investors who are content to continue earning more yield than what they can earn by merely keeping that money in the bank. Those yields are also significantly higher than what investors can get by moving into longer-term Treasury bonds — though nothing like the stock market’s gains.

Even after the Fed starts lowering borrowing costs, money-market funds should continue to lure at least some cash from retail investors. That’s because they will still offer higher yields than banks and attract institutions that prefer to outsource cash management.

For some investors enjoying high rates on short-term savings, there is a growing recognition that this won’t last forever and they are becoming more attentive to the day when cash returns suddenly drop.

Steven Roge, chief investment officer at R.W. Roge & Co, a private wealth manager with $350 million of assets, says for much of this year the toughest discussions with clients were about teaching them the reinvestment risk of staying too long in a money market fund or high-yield savings account.

“Reinvesting in bond funds over time, that’s been a difficult conversation,” said Roge. “These talks are becoming easier with Fed rate cuts on the horizon.”

The lost opportunity for cash investors is that unlike bills, bonds generate capital gains from price appreciation as interest rates decline.

Bond managers highlight how a 10-year Treasury note yielding less than 4% today has already benefited from capital gains since the benchmark topped 5% less than a year ago. A Bloomberg index of 7 to 10 year Treasuries has gained 13.3% versus a cash return of 4.5% since last October.

Of course, for some the choice isn’t just between bills and longer-term bonds. Warren Buffett’s Berkshire Hathaway Inc. increased its holdings of Treasury bills to $234 billion in the second quarter after cashing in on investments in equities including Apple Inc. For investors like him, holding cash equivalents while rates are still reasonable makes sense until fresh bargains in stocks appear.

But from the perspective of fixed income, the math still works for owning a 10-year Treasury now yielding around 4% versus cash, should the bond market rally towards 3% as the Fed cuts towards a neutral policy setting. Longer-dated Treasuries would enjoy a double-digit return from price appreciation and coupon interest.

“In that scenario, no you’re not better in cash,” said Neil Sutherland, portfolio manager at Schroder Investment Management. “I don’t think it’s unreasonable to think that the 10 year could get down towards 3% and under that environment quite quickly you’re getting up to double-digit returns.”

Digging In

Don’t tell that to Bill Eigen, manager of the $10 billion JPMorgan Strategic Income Opportunities Fund. For him, the idea of moving money into a US 10-year note currently yielding around 3.82% has little appeal. His fund held 54% in cash at the end of July, according to the latest filing.

“You can get mid-5% in cash, get 6% in short-term investment grade floating rate,” Eigen said. “I won’t lend to the government for 10 years and get paid less.”

Eigen has been hoarding cash for a while, a move that has helped the fund return 9% over the past three years, compared with a loss of 6% in the Bloomberg Agg Index. But that was then.

As cash-equivalent rates start moving down — and by all estimates they will — “T-bill and chill” won’t be such a no-brainer anymore.

“Once investors look at what they’re getting, they’ll decide where they are isn’t that attractive anymore,” said Schwab’s Jones.

https://finance.yahoo.com/news/t-bill-chill-hard-habit-110000076.html

Al_Sharpton_for_President says

‘T-Bill and Chill’

Good article and post

Yeah, all about Risk Premium (investment return an asset is expected to yield in excess of the risk-free rate of return.)

That is why I knew Vanguard Total Bond Market Index Fund ETF would rebound after crashing about 25%.

So for those who have at least 40% of their IRAs and 401Ks in investment-grade bonds, it is HODL through a cycle like this.

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AD says

That is why I knew Vanguard Total Bond Market Index Fund ETF would rebound after crashing about 25%.

For every 1% increase in interest rates there is generally a 1% decrease in the price of a bond for every year of remaining duration.

I think the reason why Vanguard's bond fund dropped about 25% because the average duration of its bond portfolio (based on a bond ladder strategy) was around 6 years.

So with interest rates increasing from around 0.5% to 5% (~5% x 5 years), this may explain why Vanguard's bond fund dropped 25%.

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naturally 2021 and 2022 were disastrous for Vanguard Total Bond Market Index Fund ETD (ticker: BND)

just like naturally 2009 - 2011 were very good years for BND

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Over the very long run, the stock market has had an inflation-adjusted annualized return rate of between six and seven percent.

http://www.moneychimp.com/features/market_cagr.htm

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AD says

Over the very long run, the stock market has had an inflation-adjusted annualized return rate of between six and seven percent.

There is no such investment as "the stock market." At best, you can buy some index funds. In reality, a stock investor must choose from a small subset of stocks over his own lifetime with "your results may vary." Plus, in the "very long run" we are all dead.