patrick.net

The correction is here. I think it will be short lived but nonetheless watch out. 10%-20% cash would be prudent here at the minimum.

Patrick says

mell says

This is a big tech earnings week so we will know more. Also pay attention if results are good and stocks pop AH but give it back the next day in a red market, also a sign of a potential correction. Going to be an interesting week.

Shopify (SHOP) will report earnings on Feb 10th.

I frankly have too much in Shopify because they've done so well, but have not managed to bring myself to sell. So their earnings will be super interesting to me. Maybe it will punish me for not selling when I have an excellent gain, or maybe it will justify my paralysis.

Actually, most likely thing I think is that the stock won't move at all.

To a certain degree earnings don't matter right now. Only the speculative fever or lack thereof. Short term this is driven by sentent with this volatility.

https://www.longtermtrends.net/sp500-price-earnings-shiller-pe-ratio/
P/E is spiking... to "extreme bubble" range, expect market crash in very likely in 2021.

Still, last time I got entirely out, 2008, I missed some of the downturn, but then one of the greatest subsequent bull runs ever.

I'll sell some, but not all that much.

Blue says

https://www.longtermtrends.net/sp500-price-earnings-shiller-pe-ratio/
P/E is spiking... to "extreme bubble" range, expect market crash in very likely in 2021.

Think the fear of inflation is driving cash anywhere it can find a home. Everything is way out of wack.

I don't look at this stuff all that often.

I was flabbergasted today to see that some of the stocks in my account had climbed to P/E a bit over 30. For comparison I looked at SP500. According to this website it was 39 (https://www.multpl.com/s-p-500-pe-ratio). A different page on that website has the dividend yield at 1.50%

Holy freaking crap.

Yes, on the one hand things look very bubbly, but on the other hand, shit, what is the latest bailout, another 1.5 TARPs?

Maybe people are fleeing to equities in expectation of inflation. I don't really know.

Patrick says

Maybe people are fleeing to equities in expectation of inflation. I don't really know

In the runup to 2008, which anyone with any critical thinking could see was coming, during that time I read everything I could find about the Weimar inflation. Learned a lot. In addition to esoteric books buried in university libraries about Weimar, there's a long discussion about the hard times there in a recent biography of Oppenheimer. He was a grad student in Weimar during that time (it was where he made many contacts that he tapped in the Manhattan Project).

Germans who saved in mark bank deposits or Weimar treasury debt were completely wiped out. Those who had equities lost hugely, like about 80% or something like that. That's a horrible loss, but at least they retained some purchasing power compared to the marks.

Patrick says

Maybe people are fleeing to equities in expectation of inflation. I don't really know.

Thats what I'm doing. Was in bonds. I fled to foreign stock, New Administration is going to remove any Trump policies, and redouble its export philosophy. Alibaba etc is going to fucking rip, Unfortunately I'm stuck in a 401k thing that gives me very little control .

ThatGuy says

Unfortunately I'm stuck in a 401k thing that gives me very little control .

Is it with your current or former employer?

If it's a former employer, you should immediately roll it into a self-directed 401k rollover. There's no tax on that, and then you can invest your money as you see fit.

But if it's a current employer, you're kind of fucked, which I think was the exact intention of the 401k law: to trap employees in employer plans with limited high-cost choices that benefit the financial institution running the plan.

Its a current employer... I do have an IRA option, Fidelity for what its worth.

I've been using the 401k to re-finance existing loans.

For example, 2 years ago I had bought a new travel trailer at 6%, roughly $30k.

I took a loan against my 401k, now I pay myself 4%, That's a 10% swing.

Something like $5k in my favor in the end.

The internet is FILLED with hate for how I manage my finances.

Promises of 8% compounding are everywhere, but unfortunately I'm never realizing them.

I'm just paying off all my shit until its done I guess.

Paid debt with interest is the same as gaining said interest, no?

ThatGuy says

Paid debt with interest is the same as gaining said interest, no?

Yes. Tax-free to boot.

Fucking just spent that past 6 hours doing taxes. I'm about halfway done but not quite.

FuckCCP89 says

ThatGuy says

Paid debt with interest is the same as gaining said interest, no?

Yes. Tax-free to boot.

Right!

A penny saved is like 1.5 pennies earned, if you consider taxes.

Paying off a loan to save on interest is usually an excellent investment.

Fidelity has good mutual funds.

Re: debt

I ran up a credit card debt a couple of years ago and was going to pay it off by selling something, shares of a mutual fund or stock.

I decided to just let it ride; my investments went up 40%, but my debt decreased by a little bit.

I decided to delay paying it off until I left California so I would not pay 2 capital gains taxes to take money out of investments.

I redeem some shares only if necessary of my least favorite fund.

Eventually I have to start redeeming more shares to spend my money, otherwise why did I invest?

just_passing_through says

Fucking just spent that past 6 hours doing taxes. I'm about halfway done but not quite.

I spend 100 hours during the year and hopefully only an hour filing. Sent mine in last week and it was about 2 hours. I'll get my government loan back, which sucks I loaned it to them, but it's better than owing them this time of year. Seasonal income sucks. We learned owing close to $10k one year.

Situation is always so fluid as one job could be $20-30k swing for us in income. So great years we have to be careful with tax payments and withholdings and overpay. Don't know how it's possible, but this year is forecasting to be our best year ever. By a lot. Fingers crossed.

Patrick says

FuckCCP89 says

ThatGuy says

Paid debt with interest is the same as gaining said interest, no?

Yes. Tax-free to boot.

Right!

A penny saved is like 1.5 pennies earned, if you consider taxes.

Paying off a loan to save on interest is usually an excellent investment.

Patrick I have seen you have been strong advocate of paying of loan to save interest . Do you still advice the same in very low interest era like right now mortgage rate is 2.50% for 30 yrs and 1.99% for 15 yrs.
I feel fed already committed to keep the interest rates low till 2023 not sure if paying off partial loan or holding cash to investing in stocks will fetch more returns at the end of 30 yrs. I am still confused.

I am waiting for market correction, but so far have fetched good returns in 401K as my employer also allows to open brokerage link account in fidelity for self directed investment. I have been booking profits as and when market goes into greed to increase my cash position and invest when it goes into fear . I check this and it has paid off so far https://money.cnn.com/data/fear-and-greed/

Tix2fun says

Patrick I have seen you have been strong advocate of paying of loan to save interest . Do you still advice the same in very low interest era like right now mortgage rate is 2.50% for 30 yrs and 1.99% for 15 yrs.

Yes. Debt is slavery. As long as you have debt, you are not free.

Sure, interest rates are low, but nowhere can you find any investment with as much certainty as paying off debt. If you pay off 2% debt, then you save that 2% guaranteed, plus the taxes you would have to pay to get that 2% through work. So you're getting something like 2.5% guaranteed, immediately.

Or look at it this way, if you invest in US Treasuries, which are about as equally certain, you'd get only 2%, you'd have to pay federal income taxes on that 2%, and you'd be locked in and potentially losing to inflation.

Of course if you have any higher-interest debt, like credit card debt, pay that off first.

Or look at it this way, if you invest in US Treasuries, which are about as equally certain, you'd get only 2%,

10 year treasuries are about half that, which strengthens the argument of paying off existing debt first.

Thanks Patrick for your advice .I also agree being debt free gives you peaceful sleep and I am in favour of reducing debt when one is young vs extending it beyond 50 yrs of age. I have a target to reduce my debt to less than 40% when I turn 50. And by 55 yrs to less than 25%.I hope I can achieve my goals.

Peace of mind goes a long way. Only debt is my mortgage don't see getting out from that for now.

What should I do with the $50,000 in cash I have right now? I have no debt and I have a 401k with a current employer.

GlocknLoad says

What should I do with the $50,000 in cash I have right now? I have no debt and I have a 401k with a current employer.

Bitcoin/Ethereum....3x your money in the next 6month.

GlocknLoad says

What should I do with the $50,000 in cash I have right now? I have no debt and I have a 401k with a current employer.

Just save most of it for rainy day or after stock crash investment. Always good to have some cash in bank for lifes surprises.

RC2006 says

GlocknLoad says

What should I do with the $50,000 in cash I have right now? I have no debt and I have a 401k with a current employer.

Just save most of it for rainy day or after stock crash investment. Always good to have some cash in bank for lifes surprises.

This, and gamble a little in sectors that will do well in this administration, I'd recommend biotech (if you can handle the volatility).

New company I hired onto is allowing the Mega Backdoor Roth. I'm going to be able to stuff up to (I think) 58K into retirement accounts this year. I may be off by $500 or something.

just_passing_through says

New company I hired onto is allowing the Mega Backdoor Roth. I'm going to be able to stuff up to (I think) 58K into retirement accounts this year. I may be off by $500 or something.

I have a crazy setup like that at my company. 3 retirement accounts I can max out for some ridiculous amount. It's great.

G36 says

GlocknLoad says

What should I do with the $50,000 in cash I have right now? I have no debt and I have a 401k with a current employer.

Bitcoin/Ethereum....3x your money in the next 6month.

I agree. Not sure I'd go all $50K into crypto at once, but start with $10K and ease your way into it.

This is the way I look at things. If your time horizon is at least 10 years, you shouldn't be holding onto cash except for emergencies. With the way the central banks are printing full tilt, all that inflation will find itself into liquid investment assets like stocks and crypto. Of course prices will fluctuate but you will win big in the end. This is why Warren Buffett just tells people to dump all their cash into stock index funds and hold on.

mell says

RC2006 says

GlocknLoad says

What should I do with the $50,000 in cash I have right now? I have no debt and I have a 401k with a current employer.

Just save most of it for rainy day or after stock crash investment. Always good to have some cash in bank for lifes surprises.

This, and gamble a little in sectors that will do well in this administration, I'd recommend biotech (if you can handle the volatility).

Lol that's why I got into ATHA last week, its one of a few long shots.

If I had $50k to invest, I'd drop it in BNGO

WookieMan says

I spend 100 hours

8 and I'm basically done except for a K1 I have to wait for on the 26th..

Bitcoin :)
No other asset class comes even close.

G36 says

Bitcoin :)
No other asset class comes even close.

Is that what you were saying as you watched bitcoin go from $20,000 to under $4,000?

WineHorror1 says

G36 says

Bitcoin :)
No other asset class comes even close.

Is that what you were saying as you watched bitcoin go from $20,000 to under $4,000?

@WineHorror1
heck ya! Think of buying Bitcoin below 20k.....buying opportunity of a life time.

man, 4K Bitcoin....last I checked you would have made over 10x

sry, a few minutes later it hit 44k. Want to provide you with the most recent price. (goes up quickly these days)

RC2006 says

mell says

RC2006 says

GlocknLoad says

What should I do with the $50,000 in cash I have right now? I have no debt and I have a 401k with a current employer.

Just save most of it for rainy day or after stock crash investment. Always good to have some cash in bank for lifes surprises.

This, and gamble a little in sectors that will do well in this administration, I'd recommend biotech (if you can handle the volatility).

Lol that's why I got into ATHA last week, its one of a few long shots.

Good luck! Phase 3 plays are extremely risky but if you hit it they pay well for a critical conditions where improvement is in dire need. If it runs into the read-out I'd sell 25%-75% (whatever your comfortable holding) just to hedge and keep the rest for the binary event.

Ppl, stocks like AT&t (T) and Altria (MO) are already beaten down vs the S&P500 index. With divs at 7+%, even with an additional slide in price, compounding your divs (DRIP) will get you to many more shares making it worth your while.

G36 says

WineHorror1 says

G36 says

Bitcoin :)
No other asset class comes even close.

Is that what you were saying as you watched bitcoin go from $20,000 to under $4,000?

@WineHorror1
heck ya! Think of buying Bitcoin below 20k.....buying opportunity of a life time.

man, 4K Bitcoin....last I checked you would have made over 10x

Really?!! So as you watched your profits between $20k and $4k evaporate and bounce around the bottom for months (a year(?)), you were like "Fuck yeah honkeys, load up the truck". Is that what you said/did?

I bought Bitcoin recently at around 15k in November.
I am saying anything below 20k was an opportunity of a lifetime. We are probably going to 100k (at least). So its still a great time to buy.
Did that help?

"I Guess It's Too Late to Get Into Crypto" -- a short story by Unknown

It's 2011. BTC has recently hit $32. I tell myself "Damn...I should have bought some when it was $0.50 a BTC. $32 is too expensive. Guess it's too late to get into crypto." BTC later falls to $2 and I don't buy any.

It's mid-2013. BTC has recently hit $220. I tell myself "Damn...I should have bought some when it was $32 a BTC. $220 is too expensive. Guess it's too late to get into crypto." BTC later falls to $70 and I don't buy any.

It's late 2013. BTC has recently hit $1100. I tell myself "Damn...I should have bought some when it was $220 a BTC. 1100 is too expensive. Guess it's too late to get into crypto." BTC later falls to $315 and I don't buy any.

It's 2017. BTC has recently hit 20k. I tell myself "Damn...I should have bought some when it was $1100 a BTC. 20000 is too expensive. Guess it's too late to get into crypto." BTC later falls to $3700 and I don't buy any.

BTC has recently hit $40000. I tell myself....