And just like that Bitcoin is down 14% in 1 session..... who was the guy here that says that there’s a shit ton of volatility with this “currency”.... oh that’s right.. that was the owner of this thread
AND....as a companion article to the one above.....here is a very relevant and topical article for today. Opinion: Inflation is rising and so are investors’ fears about stocks https://www.marketwatch.com/story/i...-fears-about-stocks-11613703814?mod=home-page (BOLD is my opinion OR what I consider important content) "If inflation is a threat to the stock market, we should be running scared. That’s because inflation expectations have spiked dramatically in recent weeks. The 10-year breakeven inflation rate — what the bond market currently is betting inflation will average over the next decade — is now higher than it’s been in five years. As you can see from the accompanying chart, expected 10-year inflation stood at just 0.50% last March; this past week it got as high as 2.24%. In truth, inflation is not the threat to the stock market that most investors believe. If inflation continues to heat up in coming months and investors react by dumping stocks, you might want to consider it as a buying opportunity. These are the conclusions I reached after interviewing Richard Warr, a finance professor at North Carolina State University. Warr co-authored a seminal 2002 study in the Journal of Financial and Quantitative Analysis which found that equities actually are a good long-term hedge against inflation. His co-author was University of Florida finance professor Jay Ritter. Warr explained that stocks are a hedge because inflation impacts equity valuations in two ways which largely offset each other: Higher inflation means that future nominal earnings must be discounted at a higher rate when calculating their present value. Corporations are able to charge more when inflation is higher. Because of this greater pricing power, their nominal earnings in future years will be higher than they would have been otherwise. Notice the small net effect of these two factors: Nominal earnings will be higher but must be more heavily discounted. This isn’t just theory, by the way: Over the last 150 years, real (inflation-adjusted) growth rates for the S&P 500’s SPX, -0.19% earnings per share have remained relatively stable in the wake of changes in the inflation rate, while nominal EPS growth rates have tended to rise and fall in line with those changes. Investors typically focus on just the first of these two consequences of inflation, Warr said. That is, they (at least implicitly) realize that inflation reduces the value of future nominal earnings, but overlook that those nominal earnings will themselves be higher. This lopsided view is due to a trait that economists call “inflation illusion.” This illusion works to be the benefit of stocks when inflation is declining. When that is the case, investors extrapolate into the future the artificially high nominal earnings growth of earlier higher-inflation periods. The result is unreasonably high valuations. When inflation begins to rise, in contrast, investors make just the opposite mistake: They extrapolate into the future the lower earnings growth firms produced during the previously low-inflation period. This leads them to conclude that equity valuations must come down as inflation heats up. Rational versus behavioral models of investor behavior Notice that two distinct models of investor behavior are needed to explain the market’s reaction to higher inflation. The rational model shows that inflation should have little net impact on equity valuations, while the behavioral model predicts that investors will nevertheless behave irrationally. Might investors have learned from their past irrationality, and therefore not dump stocks if inflation heats up even more in coming months? Warr said that, while anything is possible, he wouldn’t bet on it. “Most current investors have lived most of their lives in a low-inflation environment, so they have had no opportunity to learn the lessons that history teaches us about inflation and the stock market.” If Warr is right, then rational investors in coming months will have an opportunity to pick up stocks at lower valuations. MY COMMENT SO true.....everyone below the age of 45-50 has NEVER experienced a time of inflation.....EVER....in their adult lifetime. BUT...they hear or see the word INFLATION.....and they FREAK OUT. It is just totally irrational. It is ALSO irrational that the FED has been chasing after.....NONEXISTENT inflation for the past 35 years. We are now seeing the TYPICAL fear mongering behavior by many in the media on the inflation topic. It is far from clear.....and in my opinion UNLIKELY....that we will have any issue with inflation....but....all the SCARE TALK in the media and among investors is going to CERTAINLY impact investor behavior in a very negative way....if the past is any lesson. CONSIDER.....how often do we see that the so-called experts are simply WRONG.......all the time. how often do we see that the fear mongering media is simply wrong....all the time. Personally....I give ZERO weight to predictions of this or that from so called experts. Half the time they have some axe to grind themselves. The other half......they DO NOT have a crystal ball any more than I do or you do. So.......YES.....there is NO inflation. BUT what if I am wrong....what will I do? As a long term investor....NOTHING. I will simply invest and maintain my holdings as usual. AND.....the probability is....even if we "ever" have some inflation....that stocks and funds will do just fine as usual...money will be made.....and investors will do well.
I wouldn't worry about it gtrudeau88. That chart is not the key point of that article. It is ancillary information the author put at the end of the article.
People have been bitching about inflation for years. I remember how when the govt bailed out everybody in 08 and 09 and rates were down at the bottom, gold prices went through the roof as a hedge against hyper-inflation, which was supposed to come because of the amount of money we were supposedly printing. I don't recall inflation getting particularly getting out of hand, do you? Price increases in specific products does hurt the average guy sometimes. When gas hits $4 a gallon people people notice. If drought wallops CA for an extended period fruit and vegetable prices tend to go up and the average guy notices. But inflation overall? It's been so tame that I don't think we should worry about it.
AND....for those that are not SICK or the inflation topic....here is another little article on the topic that I really like: The True Challenge With Inflation Is That So Few Know What It Is https://www.forbes.com/sites/johnta...-that-so-few-know-what-it-is/?sh=3b1ed37b18df (BOLD is my opinion OR what I consider important content) "Radio Garden is a website that can be accessed through Google GOOG -0.8%, or in app form through the supercomputer in your pocket that is your smartphone. Radio Garden allows you to “explore live radio by rotating the globe.” In other words, if you’re interested in what they’re saying in Russia’s Moscow, you can listen to the broadcasters there very clearly from Moscow, ID, or anywhere else where you have a worthy internet connection. For those who are wondering, you can do all this for free. Contrast this with how things were 100 years ago. It was in the 1920s that radios became a thing. They were very expensive, must-have gadgets. RCA (Radio Corporation of America) was the Apple AAPL +0.1%, Amazon AMZN -2.4% or Google of its day by virtue of it bringing to market what for its time was a technological marvel. So what happened in the last 100 years? How is it that in 2021 crystal clear radio connections from around the world cost nothing, but radios that broadcast very few local stations very badly were so expensive in 1921? The simple, truthful answer is economic growth. Economic growth isn’t consumption as economists and their media enablers tell you; rather it’s a consequence of investment. Investment springs from unspent wealth, which means that the more wealth created, the more investment there is. Thanks to copious investment over the last 100 years the cost of communicating has plummeted, and so has the cost of accessing information from around the world. Curious what’s on the mind of radio hosts in Sydney? Just turn on your computer. It’s that simple. When capital that is always and everywhere a consequence of economic activity is matched with talent, productivity subsequently increases and prices fall. The savings left over after me meet our unmet needs relentlessly rush the future into the present. Economic growth is all about falling prices that we enjoy alongside progress. But wait a minute, some will say, economists believe that booming economic growth causes economies to “overheat,” with inflation the result. Jeanna Smialek and Jim Tankersley at the New York Times NYT +2.3%contend that economic growth has a downside. According to the reporters, too much economic growth causes “overheating,” and yes, inflation. In the defense of each, it could be that they’re just being polite. Figure that their beat is frequently the Federal Reserve, and the Phillips Curve dominates thinking inside the central bank. It’s accepted wisdom inside the Fed that economic growth causes prices to rise. Quoting Smialek and Tankersley in a recent A1 piece titled “Inflation Fears Fall By the Wayside In the Biden Era,” they indicated a fear among some economists that “overheating” could be a consequence of the $1.9 trillion stimulus bill due to “so many dollars chasing a limited supply of goods and services.” Maybe they’re being too polite? Indeed, their expressed analysis of what inflation is fails in at least three ways. For one, there’s no “stimulus” to begin with. Governments only have money to spend insofar as they arrogate to themselves a percentage of the growth already taking place in the U.S. economy. Translated for those who need it, the economic growth already occurred; hence the $1.9 trillion for Congress to redistribute. This won’t be $1.9 trillion plucked from Pluto or Mars, rather it will be $1.9 trillion taken from one set of pockets and placed in another set. Which means it won’t be $1.9 trillion in new consumption as much as Congress will depress the stimulated to the tune of $1.9 trillion in order to stimulate the depressed. And then let’s never forget that all demand begins with production, which is why economies can’t overheat. For there to be $1.9 trillion in consumption, there must be $1.9 trillion in production. These things balance, not to mention that the only closed economy is the world economy. Even if the “output gap” economists obsess over were real, it would be of no consequence in an economically interconnected world. After which it’s worth re-stating that actual economic growth is a consequence of savings and investment that render the individuals who comprise any economy quite a bit more productive. Which is why economic growth is a sign of falling prices. Individuals don’t “overheat.” By extension, economies don’t. Still, economists have conveyed to Smialek and Tankersley that inflation is what follows growth, and that fighting it is some brutal slog. Writing about new Treasury secretary Janet Yellen in the aforementioned A1 article, they somewhat fawningly reported that “Yellen spent the bulk of her career fighting in a war against inflation that economists have been waging for more than a half century.” Battle scars for Yellen? Suffering? No. Back to reality, inflation is a choice. So is a lack of inflation. There’s no fight about it. After World War I, Germany faced war debts and reparations that its political class didn’t want to pay back. So they foisted it on the citizenry by devaluing the mark. By 1923, $1 bought 4,200,000,000,000 marks. The devaluation was once again a choice. So was the currency reflation. When Germany decided the devaluation was a disaster, it ended it within a week through a reversion to currency-price stability. Inflation is devaluation. Exiting inflation isn’t a war, or a long, brutal battle in some imaginary battlefield. Ending inflation is as simple as monetary authorities reversing currency devaluation. In short, Yellen’s fight has been an imaginary one. In the 1970s there was a devaluation. That was President Nixon’s intent in severing the dollar’s link to gold. The devaluation of the dollar was decade-long, which was why the stock market and economy stagnated in a relative sense. Investors are buying future returns in currency when they invest, but in the 70s, dollar policy was all about a shrinking of the unit. In the Reagan 80s and Clinton 90s, the malaise-filled dollar policy that had defined the 1970s was reversed. The economy and stock market boomed. This wasn’t a fight. It was just a change in policy. No doubt there’s lots of mythology about what Fed Chairman Volcker did in the early 1980s, but it’s just that: mythology. It’s rooted in this Phillips Curve misunderstanding that says growth causes inflation, so a lack of inflation must be about central-bank engineered contraction. Nonsense. The mis-named “Volcker recession” was in reality a sign of growth as wealth moved out of inflation hedges (think land, rare art, commodities, rare stamps, etc.) and back into actual investment. Smialek and Tankersley add somewhere in their report that the 1970s inflation was a consequence of things like wage increases and an “oil embargo.” Of course to blame inflation for rising prices is like blaming wet pavement for rain. The reporters reverse causation. The dollar was devalued in the 1970s, which meant wages denominated in soggy dollars crept up as dollars were exchangeable for fewer goods and services. As for the oil embargo, no. “Arab oil” flowed to the U.S. just as much after the embargo as before. Rising oil prices were a consequence of a falling dollar, which was what the Nixon administration wanted in the 70s. Same with the Carter administration. When the dollar’s devaluation was reversed in the 80s and 90s, the price of oil plummeted. All of this speaks to the problem with inflation today. Few know what it is. It’s currency devaluation, which means there’s no inflation fight to speak of. Just don’t devalue, but if you’re devaluing, stop. Reverse course. Inflation will cease. There are no wars to fight. The reporting by Smialek and Tankersley borders on hagiography. MY COMMENT YES......some actual economic commentary that makes sense and is in line with ACTUAL economics in the real world. Anyone remember all the turmoil in the EU....Itlay, Greece, etc, etc in the 2008/2009 crisis. They were ALL playing around with their currency and devaluation.....flailing around in the dark. They caused more issues than they helped. AND....nothing seemed to work. That is the lesson of this article.....the FED and others in their chase after invisible and non-existent inflation for the past 35 years has NO tools other than currency manipulation and interest rate manipulation. AND all that time while they were JERKING the economy around.....there was NO inflation. GOVERNMENT creates....NOTHING.....and they RARELY solve anything either. In fact most of the time....when they take some action to "solve" a problem they end up making it worse......having the opposite affect.....or.....they create an even bigger different problem. I saw a little article today about the GameStop situation and the government hearings. What is the big solution GOVERNMENT is going to push for.....A tax on every financial transaction. A TAX on every stock or other trade. That is how government works. they see a situation....hold a hearing.....and impost a TAX to help the little guy. Of course it is the little guy that will pay the tax since it will ALL be passed on to the ultimate "customer"......or victim......YOU.
As for today.....another typical normal day in the markets. If we continue we will end up in a little correction.....if we are not already in one. The MEDIA and others are doing a good job of JAWBONING the markets down. Would I buy anything if I had cash siting around. YOU BET......I never like to have cash siting around so if I had any I would put it right in today.....for the long term. I HATE to have unproductive cash siting around. Would I TRY to invest as a market timer...or a trader....or as a speculator.....NO. Why...because the vast majority of the academic research shows that trying to time the markets and short term trade is a LOSING proportion for the HUGE PERCENTAGE of people that try to do so. Of course....the TOTALITY of the research ALSO shows that investing all in......all at once......beats market timing and dollar cost averaging. BUT....a lot of people just dont have the risk tolerance to follow this research. In that case....RISK TOLERANCE....is KING. EVERY investor MUST invest according to what makes them comfortable. Probably the greatest danger for any investor is to get out on a limb ahead of their actual risk tolerance. I see all the traders on various internet sites.....other than this one......and.....they NEVER seem to be able to beat the SP500 or any other UNMANAGED averages.....never. THEY never talk about their losers. AND.....their winners.....if they are making enough to justify the extreme risk they are taking......are taxed at 20-30% as regular income....plus their trading fees on top. They are either small timers taking extreme risk to make a few bucks....or if they are playing with REAL money.....and happen to make some gains....they are hit with a 20-30% DRAG on their gains for short term gain income taxes. The other observation that I have made over many decades is......I have yet to see ANY trader or short term market timing advocate or day trader......use those strategies with their RETIREMENT money. That money...they invest in a very different fashion...usually. SO.....for me and my money.....I dont care to follow those losing strategies.......I prefer to have my taxable money....all money....invested fully for the long term.....actually the way most people invest their money that they can not afford to screw around with and want to grow for the long term....their retirement money. Just my personnel opinion.....for......myself....everyone has to invest or trade....yes they are two very distinct things.... as they see fit.
I'll tell you what, I will refrain from disparaging the redefinition of inflation so we can pretend it doesn't exist. I will just address the trading tax. There already is a trading tax. It just doesn't go to the government. Front runners set up mainframe computers beside the matching engines of exchanges, years ago. Their latency is so low, they can buy stock from another exchange and sell it into the co-lo exchange at a tiny markup before the transaction is able to query the other exchange to see if there is a better deal. Seeing no stock over there, since it was just purchased by the front runner, the market order fills a couple of cents higher in the local exchange. The NYSE moved their matching engine from NY to a large building in New Jersey so they could harvest billions from "co-locations". NASDAQ makes most of it's money from co-locations. The result is the front runner is able to skim money from a transaction that completes in a few milliseconds. The idea of a trading tax is to tax every trade, including the front runners. The tax need only be higher than what is skimmed by the front runners in order to eliminate their business model. The unintended consequence of a tax is that front runners will increase their markup to remain profitable. So, instead of skimming 2 cents, in the face of a 5 cent tax, they will start skimming 12 cents (they have a buy and sell on each transaction). Suddenly, even some of the low cognitive traders will realize market orders are a rip-off. I suspect legions of people will think front runners just showed up to the party. I believe there is a legitimate question about the value of trading and front running. If the market really is free, trading ought to be allowed. Perhaps front runners can be considered traders, to those who are able to convince themselves of anything. My thought is that front runners need to be disclosed, at the very least. They are parasites. Personally, I don't think the government is able to implement a tax in a way that will improve the situation with the front runners. They haven't demonstrated an ability to think on that level. Also a factor is the upward pressure front runners put on prices. The tiny price increases are a positive psychological force driving up valuations. People like WXYZ and I have benefited tremendously from front running activity based on simply buying and holding while front runners drive up prices.
Agree. We call those ALGOs and HFTs. Added a few TSLA PLTR Still holding BITCOIN, did not sell and will not add Leaning towards AI and EV
We will just have to disagree TomB16. Talking economics is like debating how many angels can dance on the head of a pin. As I have said before......I have had the inflation debate for decades with posters on other sites and it is just one of those issues that is NEVER resolved....like much general economic discussion. I GUESS the resolution....as usual....will be the history of the next ten years....which of course to us.....right now.....is a total unknown.
AS to the tax issue.....I dont believe there is a snowball in hell....chance of it ever happening. The good old boy system will make sure it never happens. Or if something happens....somehow.....it will be done in a fashion that protects the powerful......as usual. I see this the same way the politicians do....a fundraising opportunity....for the politicians from lobbyists and other special interests.
Not being argumentive X but as I previously mentioned the Treasury yields are commonly observed and most certainly caused the recent dip that created a buying opportunity for some. Some of these newer guys are recent buy ins and when we see a slight dip they often panic.
AND......before we get all carried away about today....the SP500 is down about 1.3% from the all time high....TEN days ago. I STILL expect that we will see a correction.....a drop of 10% or more..... some time over the next 12 months....perhaps a couple.
I'm not sure old school fundamentals matter, anymore. This is what you wrote a few pages ago, regarding my comment on the spiralling national debt. To paraphrase, "nobody gives a shit about fundamentals." I did not dismiss your comment. I definitely see value in your perspective. I care about fundamentals, including treasury yields, because I believe they will catch up to us, at some point. On the other hand, I'm also aware they might not catch up to us until I'm long dead.
YES they do Rustic1.....panic is a bad thing. NO matter how or why someone chooses to invest...panic and fear are the BIG killers. I dont personally think interest rates had much at all to do with this little few days drop.......I prefer to attribute it to the USUAL media feeding frenzy for clicks and sensationalism......and herd mentality.....and fear mongering. BUT....I guess you could say that this is a......chicken or the egg argument.
On the other hand, panic and fear is what will transfer wealth, over time, from the impatient to patient investors like us. Frankly, I enjoy a bargain. lol!
Much the way robinhood uses arrows. I hate to see the newer guys that are invested in SOLID companies panic sell when the sector rotates. They spend way to much time watching daily gains that to me are irrelevant in the longterm vision. Personally, that's why I have cash ready to employ.
Using TESLA as an example.....there is going to be some REAL BIG money lost on that stock over the next months. MUCH of it reflecting BAD investor behavior either....when they bought or when they will sell. At this point.....my opinion....the company going forward will have to make any stock gains based on FUNDAMENTALS......NOT.....internet message boards and BUZZZZZZ. I see as of this moment in time....that my accounts are down about 3.3% from their recent record highs. NOT unexpected in the current.......short term......market. DOW has come back nicely at the moment....but the ....NASDAQ....BUMMER. TODAY.....will be another day of hand to hand combat.....with knives.... in the markets. The price we ALL pay to make some money.
