Are we headed for a world wide meltdown?

...Black Swan shit is bound to happen all over the ding-dang joint. Chuck Schmuckmer says fixing inflation is easy-peasy. The problem is not the supply side at all. The problem is the demand side. His solution is to remove more of the supply of our $$ so we won't be tempted (able to afford) to demand any supplies. But he doesn't stop there. Oh no sir-ry Chucky. He also uses his Galaxy Brain to ensure those that supply us will also see more of their costs increase to help further restrict their supply side by demanding more of their $$ as well. A-N-D he gonna do it all with as litle opposition and input as he possibly can get away with.

See? Told ya it was simple as simple does. Crisis averted!
Black Swan. Always fresh, never frozen. It's what's for dinner... Originally Posted by Why_Yes_I_Do

Screw Chuck Schumer. He and his colleagues played a big part in getting us into this mess with their American Rescue Plan. Now their solution is to take more money from businesses and hard working Americans and spend it on whatever Congress and the President want to.

Ok, good to know. Your post seemed to strongly suggest you go with your pre-set strategy, in a non-wavering disciplined approach. Ditto CM's, I was left with the feeling that you both plow ahead without regard to changing conditions.

I'm down 4% this year.. The NASDAQ was down 4% TODAY. I pity those who buy-and-hold at all cost. With no-cost trading, and ease of exiting mutual fund positions, nobody should be stuck. Big Fund Managers are restricted in size and duration, we, the Individual participants are not. We need to use that as a strength! Originally Posted by Chung Tran

Not so fast Chung Tran. You must distinguish between lucky and smart. You've got your George Soros's and you've got your Forrest Gump's.

Both of us have been concerned for some time now that the Fed was way behind the curve on inflation. You figured months ago that would mean that they would at some point have to slam on the brakes, which would precipitate a fall in the market. Not many people were shouting that from the rooftops back in December. But now some very smart people, like Captain Midnight and analysts at Deutsche Bank appear to be coming around to your way of thinking (see link below).

I on the other hand didn't have a firm view of how all this would affect markets. On one hand, if the Fed aggressively raised rates, which I thought was the right thing to do, the market would probably go into a tailspin. On the other hand if the Fed went full fledged Zimbabwe, or more realistically full fledged Arthur Burns, maybe in the long term stocks wouldn't be a bad place to be. If inflation is 8% and interest rates are 2%, you lose money if you're invested in cash. If you're in stocks their earnings and dividends will increase with inflation.

I was cashed up because of tax related reasons, not smarts.

https://www.bloomberg.com/news/artic...-u-s-recession

Screw Chuck Schumer. He and his colleagues played a big part in getting us into this mess with their American Rescue Plan. Now their solution is to take more money from businesses and hard working Americans and spend it on whatever Congress and the President want to. Originally Posted by Tiny

That's how Liberals work. Government intervention in the market causes a crisis, Government proposes more government to fix the initial problem they caused. Rinse and repeat until the nation crashes.

Not so fast Chung Tran. You must distinguish between lucky and smart. You've got your George Soros's and you've got your Forrest Gump's.

Both of us have been concerned for some time now that the Fed was way behind the curve on inflation. You figured months ago that would mean that they would at some point have to slam on the brakes, which would precipitate a fall in the market. Not many people were shouting that from the rooftops back in December. But now some very smart people, like Captain Midnight and analysts at Deutsche Bank appear to be coming around to your way of thinking (see link below).

I on the other hand didn't have a firm view of how all this would affect markets. On one hand, if the Fed aggressively raised rates, which I thought was the right thing to do, the market would probably go into a tailspin. On the other hand if the Fed went full fledged Zimbabwe, or more realistically full fledged Arthur Burns, maybe in the long term stocks wouldn't be a bad place to be. If inflation is 8% and interest rates are 2%, you lose money if you're invested in cash. If you're in stocks their earnings and dividends will increase with inflation.

I was cashed up because of tax related reasons, not smarts.

https://www.bloomberg.com/news/artic...-u-s-recession Originally Posted by Tiny

Gerald R. Ford
Presidential Library & Museum




https://www.fordlibrarymuseum.gov/li...rnsapapers.asp

Arthur Burns

The collection includes extensive files on U.S. domestic and international financial and monetary affairs, bank regulation and reform, administration of the Federal Reserve, and related issues. It also includes Dr. Burns' 1969-70 files from the Nixon White House on domestic and economic issues and 1981-85 files from his service as the U.S. Ambassador to West Germany.

Tiny,

smokers of the world unite.

Gerald R. Ford
Presidential Library & Museum




https://www.fordlibrarymuseum.gov/li...rnsapapers.asp

Arthur Burns











Tiny,

smokers of the world unite. Originally Posted by eccieuser9500

By damn, none of that stuff is good for you eccielover. If you think you're going to escape the big C just by switching from cigarettes to a pipe you're WRONG. Pipe smoking is associated with oropharyngeal cancer. You'll end sucking up your food through a straw in your throat. And you'll have to talk with some kind of voice box that will make you sound like a fucking robot from a bad 1960's science fiction flick. You know what else, everybody's going to think you got that shit from DATY. That's a common cause of HPV and throat cancer. They'll call you "pussy licker." And you won't be able to kick their asses because you'll be too weak. And when you start to yell at them with your squeaky little box voice, they'll just laugh at you.

I love you man, just don't do it. Say no to tobacco.

chucky boy.. to beat inflation, we must kill the trump tax cuts and tax you some more.

I've a feeling that this is not part of the debt reduction package.

what math is this? did he learn this from Ivy league universities? looks like it.

tax cuts did not cause inflation. overspending causes inflation!

chucky boy.. to beat inflation, we must kill the trump tax cuts and tax you some more.

I've a feeling that this is not part of the debt reduction package.

what math is this? did he learn this from Ivy league universities? looks like it.

tax cuts did not cause inflation. overspending causes inflation! Originally Posted by dilbert firestorm

This is from Modern Monetary Theory. I'm not aware of Ivy League economists who are proponents. The biggest promotor, Stephanie Kelton, got her degree from the wishy washy New School of Social Research. But there are Ivy League educated politicians and staff who love it because it provides cover for spending lots and lots of your money on whatever they want to spend it on.

This is just another indication of how the mainstream Democratic Party is being hijacked by the left. AOC and Bernie Sanders are big fans of MMT.

Actually if you jack up taxes and the government doesn't spend more money, maybe that would throw us into a recession. And inflation would go down. That's a case of the solution potentially being worse than the disease -- beheading to cure cancer. And don't hold your breath about the Feds spending less money, which would be required to make this work. Biden's proposed legislation last year, lots of additional spending partly offset by higher taxes, would have ballooned the deficit.

chucky boy.. to beat inflation, we must kill the trump tax cuts and tax you some more.

I've a feeling that this is not part of the debt reduction package.

what math is this? did he learn this from Ivy league universities? looks like it.

tax cuts did not cause inflation. overspending causes inflation! Originally Posted by dilbert firestorm

This inflation is mostly caused by supply restrictions...

But there are Ivy League educated politicians and staff who love it because it provides cover for spending lots and lots of your money on whatever they want to spend it on.

This is just another indication of how the mainstream Democratic Party is being hijacked by the left. AOC and Bernie Sanders are big fans of MMT.

. Originally Posted by Tiny

Neither party is going to cut spending...if you do not believe me go back and look at the data!

So to single out one party is disingenuous

….So to single out one party is disingenuous Originally Posted by WTF

WTF, Are you aware of any Republican politicians who are promoting MMT?

This inflation is mostly caused by supply restrictions... Originally Posted by WTF

Larry Summers, economist for the Obama and Clinton administrations, appears to disagree. He was shouting from the rooftops about a year ago that the American Rescue Plan (1.9 trillion) would ignite inflation.

Chungy got banned?!? He was actually making a positive contribution in this thread. I was going to complement him on that very thing. And what the heck is Lizzo gonna do now? That chunk of burn'n luv can't go sitting idle for very long.

What happened to WTF? He needs to read this. He has a good dividend return from his public limited partnership investments, maybe 5% or 7% or whatever. Well, now he can increase it to 20%!!! All he needs to do is sell 20% of his position in a stock every year!

. Originally Posted by Tiny

9% yield....and the stock is up 30%.

I'm no expert. I like a company that pays a decent dividend and has a proven track record and isn't saddled with debt.

This inflation is mostly caused by supply restrictions... Originally Posted by WTF

Larry Summers, economist for the Obama and Clinton administrations, appears to disagree. He was shouting from the rooftops about a year ago that the American Rescue Plan (1.9 trillion) would ignite inflation. Originally Posted by Tiny

Although I believe supply disruptions have certainly been a factor, I agree that Larry Summers was correct a year ago when he described the $1.9 trillion of additional spending passed in March 2021 as the most irresponsible fiscal action in a very long time.

Remember, shortly after that, JPM analysts reported that household bank balances were about $2.5 trillion greater than the pre-pandemic trend would have indicated. In other words, prior covid relief measures were already in excess of that necessary to cover covid-era loss of personal income.

.

Your money, your decision, but... This is what you laid out.

For ease of discussion, let's say you had $100,000 in the Stock Market last November, as all-time highs were hit. You feel (correctly) that it is over-valued. Your discipline says sell 5%.. Great, now you have $95,000.

Today, 5 months later, your $95,000 is worth about $74,000, if your portfolio is reasonably allocated. You have the $5,000 ready to deploy.

Was a value drop of $21,000 worth saving (deferring, really) 23.8% in taxes? You would still have $16,000 more than you do now, and you would have $16,000 + the $5,000 you presumably sold in November, to deploy now, at much lower prices. So you can't exactly time when to get back in? You don't have to. If you knew a Bear Market was coming (it has, and I did), why stick to your discipline and lose value? I'm down the past 5 months, but only 4%. I would kick myself if I allowed my holdings to drop over 20% (as the averages have, since late November). Originally Posted by Chung Tran

Perhaps I failed to make my point in a sufficiently clear fashion, so I'll try to do so now.

First, consider this: If you can't maintain your cool during the occasional 20% (or more) selloff, perhaps investing just isn't for you. Charlie Munger famously said that if you wish to be a successful long-term investor, you have to steel yourself for the possibility that there's going to be a vicious bear market every now and then, and possibly featuring selloffs of 30% or even more.

My key point was that I like to always be realizing cash from my portfolios, especially when the markets are richly valued. In the case of many (non-dividend-paying) tech stocks, I trim about 5% a year over time from almost every position, in cases where I've realized significant gains. (I look at it as a de facto way of continually receiving dividend income).

This way, you have more chips to deploy after a bear market selloff offers you wonderful buying opportunities, as in 1974-1975, 1982-1983, 2002-2003, and 2009-2010. Be ready to jump in with both feet if a plunge of remotely similar magnitude occurs again. But don't think you can do well if you continually exit and reenter the market on a whim.

Have you ever seen Peter Lynch do that? Warren Buffett? (No, you have not!)

Although it looks like there are some rough seas ahead, there's no certainty a plunge remotely similar to those of the past will occur, although there are considerable risks.

For instance, there's a chance the Fed could panic and reverse course once again. (It's happened before!)

What if congressional leaders unhappy about a tanking S&P 500 haul the Fed chair in front of a committee and ask what the hell they're going to do about a 25% market plunge? What if markets suddenly get a shot of excitement over an anticipated swift pivot from QT back to QE as well as a policy rate reversal, as in 2019?

Markets can climb the proverbial "wall of worry" for a far longer period than some think. No one has any idea whether a bear market will begin soon, although on a sufficiently long timeline, you can expect that one will occur. Be ready.

In the meantime, a very important (but oft-forgotten) phrase should be kept in mind.

"I don't know!"

https://compoundadvisors.com/2022/i-dont-know

This is why in my view it's advisable to stay the course, but to be ready to seize attractive opportunities when they become available.

.